CHAPTER 2
Risk and Uncertainty
As this book progresses, I’ll talk increasingly about uncertainty. Uncertainty is the crux of all investments. Its estimation becomes the basis for valuation, and our approach to it becomes either our greatest advantage or our Achilles heel. Part II of this book will talk about market inefficiency, and the reader will find that the way individuals approach uncertainties will play an over-sized role. Part III of this book will talk about investment analysis and portfolio management. Once again, our approach to uncertainties, as practitioners, will play an oversized role in our objective assessments of valuation.
In the context of investments, uncertainties abound. I’ll note later in Part III that all of the numbers ...
