Managing Permanent Loss of Capital
In investing, there are 2 schools of thoughts about risk: The volatility school that views variance as risk.The permanent loss of capital school that views risk as a permanent reduction of the amount invested.The volatility school has strong academic credentials. This branch of finance theory has developed to a stage where you can numerically bring risk into the investing process. Risks have been classified into systemic and non-systemic and proponents have shown how you can trade off between risks and returns. You can also bring risk into your valuation by using the Beta. Q2 2022 hedge fund l...