In this interview Peter Bernstein introduces discusses Risk, Risk Management and Option in everyday life, business and the investment world (the case of LTCM).
Peter L. Bernstein spent nearly six decades on Wall Street. He also worked at the Federal Reserve, taught economics at Williams College, toiled as a commercial banker, ran an investment-counselling firm, and consulted on economics and investing strategy with some of the world's largest money managers.
He was the founding editor of the Journal of Portfolio Management, which took as its mission to make investing as close to a science as the theory and the data would permit. He wrote nearly 20 books, including the twin masterpieces Capital Ideas, his history of how modern financial theory transformed investing, and Against the Gods, probably the best popular book ever written on risk.
Most people who knew him regarded Peter as the philosopher-king of Wall Street, the man who had read everything, knew everyone and had thought longer and deeper about the hardest puzzles than anyone else.
STAMPS
00: 00 What is the Risk
00:28 We don't know what is going to happen
00:48 We don't know what the future holds
01:30 What is risk management
01:52 Risk is a set of scenarios
02:17 The Distribution curve
02:30 Risk & Returns trade-off by Harry Markowitz
04:32 The Power of Options
05:50 The limits of risk modelling (LTCM)
06:45 Risk in Everyday life
Notes:
- In the interest of time and coherence, the original video interviews have been edited.
- Credits: McKinsey 2008.
#risk #investing #options
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