Ben Carlson on surviving bear markets

Surviving bear markets requires you to manage both volatility and your emotions.

~ Ben Carlson

Kevin Duffy on investing, risk and volatility

For investors, risk is exposure to permanent loss, not volatility.  In fact, we should welcome volatility as it creates opportunity.

~ Kevin Duffy, "Portfolio Insurance: Buying umbrellas in summer," The Coffee Can Portfolio, April 26, 2021

Christopher Davis on volatility and investing

Volatility minus emotion equals opportunity.

~ Christopher Davis, "A Lesson in 'Value vs. Price'," Stansberry Investor Hour, December 17, 2020

Hyman Minsky on stability

Stability leads to instability. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits.

~ Hyman Minsky

Jim Grant: "Will central bankers continue to control events or will events start to control the central bankers?" (2019)

The question before the house is whether the central bankers can continue to control events or whether events will turn the tables and start to control the central bankers.  Our money's on events.

We reason that mighty interventions have unintended consequences.  Suppress the rate of interest, and you misdirect capital.  Cut short the corrective processes of a business-cycle downturn, and you store up trouble for the next recession.  Intervene over and over to save a bull market, and you must continue to intervene - you're in too far, you can't stop now, the downside is frightening.

Ultra-low interest rates, low volatility and stretched valuations soothe the spirit as they fatten the net worth.  Rising markers seed a belief that the world has arrived on a kind of permanently high plateau, not necessarily of price but of predictability.

~ Jim Grant, "The surprise factor," Grant's Interest Rate Observer, September 20, 2019

Nassim Taleb and Mary Blythe on suppressing volatility

Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks.

~ Nassim Taleb and Mary Blythe

Nassim Taleb on the illusion of stability of pegged currencies in Southeast Asia in 1997

[W]e are not sure that the world we live in is well charted.  We will see that the judgment derived from the analysis of these past attributes may on occasion mislead you and take you in the opposite direction.  Sometimes market data becomes a simple trap; it shows you the opposite of its nature, simply to get you to invest in the security or mismanage your risks.  Currencies that exhibit the largest historical stability, for example, are the most prone to crashes.  This was bitterly discovered in the summer of 1997 by investors who chose the safety of pegged currencies of Malaysia, Indonesia, and Thailand (they were pegged to the U.S. dollar in a manner to exhibit no volatility, until their sharp, sudden, and brutal devaluations.)

~ Nassim Taleb, Fooled by Randomness, 2nd Edition, p. 102