RISK

  • Risk is not a number, it is a concept or a notion. Risk equates to what Ben Graham called a "permanent loss of capital".
  • Modern finance measures risk on metrics like standard deviation, BETA, VAR etc. which we do not subscribe to.
  • We measure risk on 3 parameters
VALUATION RISK

Risk of buying stocks dear without adequate margin of safety . Reasonable valuation is the cornerstone of all our investment decisions.

EARNING RISK

Risk that current earnings could decline due to technological changes , economic changes or deterioration in management

BALANCE SHEET RISK

Risk of an over-leveraged balance sheet is due to ignorance of weak balance sheet during good times in favour of the cyclically high & un-sustainable earnings.