Saturday, May 19, 2012

Risk and Volatility, Active vs. Passive management and more

Risk and Volatility

I have never been comfortable with risk questionnaires. I used to fill them out to appease the bank but I have refused to cooperate after having my responses thrown back at me. I was on vacation and my Latin American investment started to move up in value, rapidly. It was quickly becoming a relatively huge chunk of my portfolio. I had waited years for this damn fund to move and now it was. Unfortunately, I as on vacation and having so much of my portfolio in a "risky" investment went against my investor profile on file with the bank. They took it upon themselves to lessen my exposure. I had unknowingly given them this power while filling out the risk questionnaire.

I learned the risk profile questionnaire is designed to protect the bank as much as it is designed to protect me. This experience was one reason I took all control of my portfolio into my own hands.

Also, I learned that the bank and I see risk differently. I do not see volatility as risk. The world is an ever changing place. I'm comfortable with gains and losses. The tide comes in and the tide goes out. C'est la vie.

For a look at risk and volatility that makes sense to me, please read: risk and volatility by Gummy (don't ask.) Gummy sees risk, as commonly defined by the investment community, as financial techno-babble. Gummy may be attacking a bit of a straw man here, some advisers may see risk differently, but his criticism is right on when it comes to my experiences with banks and their investment arms.

Active vs. passive management

More to come. But now it is off to Port Stanley with the granddaughter. I've got a 33-month-old who wants to learn how to use a camera.

This is a picture that she shot yesterday. She loves purple and wanted to shoot a picture of the purple flower. I have cropped the image, set the endpoints and burned and dodged it in Photoshop but it is her picture at the core.

I'm trying to teach her to jump in and try. To look carefully first, compose her picture on the little screen and then take action: Shoot the picture.

I'll get back to this post soon. When I do, I will remove this silliness about my granddaughter and her photography.


  1. Too bad again...

    I forgot to mention... you are what I would consider a cash flow investor... you mange your account an look for cash flows that come from them. As I do not want to expose myself, I may suggest a firm that you would work well with... Nicola Wealth Management. They are also big believers (as am I) about cash flows and income earned off your investments.

    Just google them, they are located in BC, but licensed (I suspect) across Canada. John is a very smart guy, and certainly someone I have tons of respect for. He has built an impressive practice. I would suggest this may be the place whereby you feel comfortable for your spouse.

  2. I would not remove the picture... hey that is what life's about... little moments that move us and make us happy to be alive. (TB)