Judge Smails: “Ty, what did you shoot today?”
Ty Webb: “Oh, Judge, I don’t keep score.”
Judge Smails: “Then how do you measure yourself with other golfers?”
Ty Webb: “By height.”
—Ty Webb (played by Chevy Chase) in conversation with the snooty Judge Smails (Ted Knight) in the hilarious movie Caddyshack (1980)
There is a popular management axiom that says you can’t manage what you can’t measure. Our second Iron Rule pays homage to that axiom.
Iron Rule #2 is know your risk metrics.
Recalling the first chapter, you should remember that the retail investor has a singular focus on his investment returns. Typically, this same investor lacks the appropriate appreciation for his portfolio’s risk. Ultimately, the investor can ...