The Meaning of a Slender Risk Premium

摘要

To achieve "success" for our clients, we often focus, with their full assent, on the trees of asset selection―the little decisions―and ignore the forests―the big decisions. Sometimes, this focus leads to costly errors. So, even if our clients are focused on the trees and reward us for doing the same, we owe them our continued awareness of the forests. We cannot take the easy way out. I will address a number of the neglected forests in future issues, including 1. demographics, the million-acre forest that too few investors consider in constructing their portfolios, 2. quality of earnings, which has ripple effects on prospective earnings growth and investor confidence, and 3. an overly narrow definition of risk.