--- title: "Meaning & Key Takeaway of: We regard using [a stock's] volatility as…" description: "\"We regard using [a stock's] volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequa..." image: "https://sms4smile.com/quotes/i/50c/charlie-munger-458_candy_we-regard-using-a-stock-s-volatility-as_1564654.jpg" --- # We regard using \[a stock's\] volatility as a measure of… ![“We regard using [a stock's] volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return. Some great businesses have very volatile returns - for example, See's [a candy company owned by Berkshire] usually loses money in two…” quote by Charlie Munger](https://sms4smile.com/quotes/i/50c/charlie-munger-458_candy_we-regard-using-a-stock-s-volatility-as_1564654.jpg) [Download](https://sms4smile.com/quotes/i/50c/charlie-munger-458_candy_we-regard-using-a-stock-s-volatility-as_1564654.jpg) [Open image](https://sms4smile.com/quotes/i/50c/charlie-munger-458_candy_we-regard-using-a-stock-s-volatility-as_1564654.jpg) > “We regard using \[a stock's\] volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return. Some great businesses have very volatile returns - for example, See's \[a candy company owned by Berkshire\] usually loses money in two quarters of each year - and some terrible businesses can have steady results.” [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Risk should be defined by permanent capital loss or insufficient return, not by price volatility alone. **In simple terms:** Risk is about losing money forever or not earning enough, not daily swings. Key Takeaway Focus on capital preservation and realistic returns. Themes investment risk management capital preservation business analysis Mood cautious analytical Type advisory analytical When to use this quote - portfolio construction - business evaluation - investment decision making - risk assessment Key Concepts value investing risk definition financial fundamentals Questions to Reflect On - How do you differentiate between harmful volatility and benign fluctuation? - What metrics better capture true investment risk? A Different Perspective Volatility can be misleading if not linked to underlying fundamentals. ★ ★ ★ ★ ★ No ratings yet [Candy](https://sms4smile.com/quotes/about/candy/) [Capital Risk](https://sms4smile.com/quotes/about/capital-risk-5768980/) [Company](https://sms4smile.com/quotes/about/company/) [Customer](https://sms4smile.com/quotes/about/customer/) [Example](https://sms4smile.com/quotes/about/example/) [Great business](https://sms4smile.com/quotes/about/great-business/) [Inadequate](https://sms4smile.com/quotes/about/inadequate/) [Investing](https://sms4smile.com/quotes/about/investing/) [Loses](https://sms4smile.com/quotes/about/loses/) [Loss](https://sms4smile.com/quotes/about/loss/) [Measure Risk](https://sms4smile.com/quotes/about/measure-risk-3844438/) [Nuts](https://sms4smile.com/quotes/about/nuts/) [Permanent](https://sms4smile.com/quotes/about/permanent/) [Quarters](https://sms4smile.com/quotes/about/quarters/) [Results](https://sms4smile.com/quotes/about/results/) [Return](https://sms4smile.com/quotes/about/return/) [Risk](https://sms4smile.com/quotes/about/risk/) [Steady](https://sms4smile.com/quotes/about/steady/) [Stock Volatility](https://sms4smile.com/quotes/about/stock-volatility-5877417/) [Terrible](https://sms4smile.com/quotes/about/terrible/) [Two](https://sms4smile.com/quotes/about/two/) [Volatility](https://sms4smile.com/quotes/about/volatility/) [Volatility Measure](https://sms4smile.com/quotes/about/volatility-measure-5877418/) [Years](https://sms4smile.com/quotes/about/years/) ## Related quotes > [Using volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the…](https://sms4smile.com/quotes/charlie-munger/using-volatility-as-a-measure-of-risk-is-nuts-risk-to-us-is-1-the/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [A bank needs models to measure risk. The problem, however, is that any one bank can measure its risk, but it also has to…](https://sms4smile.com/quotes/myron-scholes/a-bank-needs-models-to-measure-risk-the-problem-however-is-that-any/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [“Somehow, when ownership interests are divided into shares that bounce around with Mr. Market’s moods, individuals and professionals start to think about and measure…](https://sms4smile.com/quotes/joel-greenblatt/somehow-when-ownership-interests-are-divided-into-shares-that-bounce/) [Joel Greenblatt](https://sms4smile.com/quotes/author/joel-greenblatt/) > [Almost anything worth doing involves some measure of risk - from learning to ride a bike, moving to a new city, and certainly, starting…](https://sms4smile.com/quotes/fabrizio-moreira/almost-anything-worth-doing-involves-some-measure-of-risk-from/) [Fabrizio Moreira](https://sms4smile.com/quotes/author/fabrizio-moreira/) > [Berkshire's whole record has been achieved without paying one ounce of attention to the efficient market theory in its hard form. And not one…](https://sms4smile.com/quotes/charlie-munger/berkshire-s-whole-record-has-been-achieved-without-paying-one-ounce/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [ If the technology hadn't changed, they \[newspapers\] would still be great businesses. Network TV \[in its heyday\], anyone could run and do well. If… ](https://sms4smile.com/quotes/charlie-munger/if-the-technology-hadn-t-changed-they-newspapers-would-still-be-great/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [Wrigley is a great business, but that doesn't solve the problem. Buying great businesses at advantageous prices is very tough.](https://sms4smile.com/quotes/charlie-munger/wrigley-is-a-great-business-but-that-doesn-t-solve-the-problem-buying/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [A great business at a fair price is superior to a fair business at a great price.](https://sms4smile.com/quotes/charlie-munger/a-great-business-at-a-fair-price-is-superior-to-a-fair-business-at-a/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [We've seen the volatility at dollar-yen, U.S. Treasurys, JGBs (Japanese government bonds), German bunds.](https://sms4smile.com/quotes/jamie-dimon/we-ve-seen-the-volatility-at-dollar-yen-u-s-treasurys-jgbs-japanese/) [Jamie Dimon](https://sms4smile.com/quotes/author/jamie-dimon/) > [Any system that is deprived of its natural volatility, with government up (unintelligible) volatile, any system becomes very fragile.](https://sms4smile.com/quotes/nassim-nicholas-taleb/any-system-that-is-deprived-of-its-natural-volatility-with-government/) [Nassim Nicholas Taleb](https://sms4smile.com/quotes/author/nassim-nicholas-taleb/) > [If there is a single tragic flaw that mars our biggest enterprises, it is conservatism - the failure to fail, and fail big, in…](https://sms4smile.com/quotes/tom-peters/if-there-is-a-single-tragic-flaw-that-mars-our-biggest-enterprises-it/) [Tom Peters](https://sms4smile.com/quotes/author/tom-peters/) > [There's only one thing harder than living in a home with an adolescent - and that's being an adolescent. The moodiness, the volatility, the…](https://sms4smile.com/quotes/jeffrey-kluger/there-s-only-one-thing-harder-than-living-in-a-home-with-an/) [Jeffrey Kluger](https://sms4smile.com/quotes/author/jeffrey-kluger/) > [Asset managers have different approaches, and I don't wish to suggest there is only one way to run money. There are many ways one…](https://sms4smile.com/quotes/barry-ritholtz/asset-managers-have-different-approaches-and-i-don-t-wish-to-suggest/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [I mean, we've always had gold bugs, but now we sort of realize that Treasure Bills might be in the same category. And we…](https://sms4smile.com/quotes/robert-f-engle/i-mean-we-ve-always-had-gold-bugs-but-now-we-sort-of-realize-that/) [Robert F. Engle](https://sms4smile.com/quotes/author/robert-f-engle/) > [Electricity transmission operates on a frequency between 49.7 Hertz and 50.2 Hertz. 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And…](https://sms4smile.com/quotes/charlie-munger/the-great-lesson-in-microeconomics-is-to-discriminate-between-when/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [Some years ago one oil company bought a fertilizer company, and every other major oil company practically ran out and bought a fertilizer company.…](https://sms4smile.com/quotes/charlie-munger/some-years-ago-one-oil-company-bought-a-fertilizer-company-and-every/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [ They \[Mc Donalds\] take people and give them a first job, which enables them to get a second job. They do a very good… ](https://sms4smile.com/quotes/charlie-munger/they-mc-donalds-take-people-and-give-them-a-first-job-which-enables/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [What good is envy? It’s the one sin you can’t have any fun at.](https://sms4smile.com/quotes/charlie-munger/what-good-is-envy-it-s-the-one-sin-you-can-t-have-any-fun-at/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [We believe that almost all really good investment records will involve relatively little diversification. The basic idea that it was hard to find good…](https://sms4smile.com/quotes/charlie-munger/we-believe-that-almost-all-really-good-investment-records-will/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [It is way less certain to be a wonderful business in the future. The threat is alternative mediums of information. 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They want to keep up…](https://sms4smile.com/quotes/charlie-munger/i-ve-heard-that-one-half-of-the-students-at-elite-schools-want-to-go/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) [Explore all 544 Charlie Munger quotes ](https://sms4smile.com/quotes/author/charlie-munger/) ## More Candy quotes > [“Most girls get flowers or candy. I get a declaration of martial law.”](https://sms4smile.com/quotes/lisa-shearin/most-girls-get-flowers-or-candy-i-get-a-declaration-of-martial-law/) [Lisa Shearin](https://sms4smile.com/quotes/author/lisa-shearin/) > [I like Valentine's Day. The trouble is the florists and the candy-makers and the card people are all advertising so much, you don't dare…](https://sms4smile.com/quotes/andy-rooney/i-like-valentine-s-day-the-trouble-is-the-florists-and-the-candy/) [Andy Rooney](https://sms4smile.com/quotes/author/andy-rooney/) > [“Did you know that at one time trick-or-treating was stopped? It's true. During World War II children were not allowed to trick or treat…](https://sms4smile.com/quotes/linda-bozzo/did-you-know-that-at-one-time-trick-or-treating-was-stopped-it-s-true/) [Linda Bozzo](https://sms4smile.com/quotes/author/linda-bozzo/) > [Love is like a piece of candy. You can buy it anywhere but given by the right person is what makes it special.](https://sms4smile.com/quotes/anonymous/love-is-like-a-piece-of-candy-you-can-buy-it-anywhere-but-given-by/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [“Two at a time, Vera ate her peanut M&Ms. Except for the red ones. 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Once you get…](https://sms4smile.com/quotes/kat-timpf/the-truth-is-one-of-the-best-things-about-being-15-years-old-is-that/) [Kat Timpf](https://sms4smile.com/quotes/author/kat-timpf/) > [“Goddamn sneaking candy thief found my cache" Peabody pursed her lips "You had candy in the file cabilnet." she angled her head "Under M?"…](https://sms4smile.com/quotes/jd-robb/goddamn-sneaking-candy-thief-found-my-cache-peabody-pursed-her-lips/) [JD Robb](https://sms4smile.com/quotes/author/jd-robb/) > [I remember candy rationing until I was, like, 7.](https://sms4smile.com/quotes/tim-curry/i-remember-candy-rationing-until-i-was-like-7/) [Tim Curry](https://sms4smile.com/quotes/author/tim-curry/) > [Dont expect someone to stay sweet forever because even the sweetest candy has an expiration date.](https://sms4smile.com/quotes/anonymous/dont-expect-someone-to-stay-sweet-forever-because-even-the-sweetest/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [Of all the jaw-droppingly beautiful women who've become genuine movie stars, none has had a longer film career (62 years), has been filmed in…](https://sms4smile.com/quotes/robert-osborne/of-all-the-jaw-droppingly-beautiful-women-who-ve-become-genuine-movie/) [Robert Osborne](https://sms4smile.com/quotes/author/robert-osborne/) > [“I haven’t had cotton candy in forever,” he said. “I’d forgotten how…sugary it is.” “It’s pure sugar.” “I wonder who invented it.” “I think…](https://sms4smile.com/quotes/rachel-hawthorne/i-haven-t-had-cotton-candy-in-forever-he-said-i-d-forgotten-how/) [Rachel Hawthorne](https://sms4smile.com/quotes/author/rachel-hawthorne/) > [Happy Sweetest Day! Who wants to be my sweetheart? Anyone? No? Okay, More candy for me.](https://sms4smile.com/quotes/anonymous/happy-sweetest-day-who-wants-to-be-my-sweetheart-anyone-no-okay-more/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [“I feel like cotton candy: sugar and air. Squeeze me and I’d turn into a small sickly damp wad of weeping pinky-red. “I”](https://sms4smile.com/quotes/margaret-atwood/i-feel-like-cotton-candy-sugar-and-air-squeeze-me-and-i-d-turn-into-a/) [Margaret Atwood](https://sms4smile.com/quotes/author/margaret-atwood/) [Browse all 792 Candy quotes ](https://sms4smile.com/quotes/about/candy/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Quotation", "text": "We regard using [a stock's] volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return. 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