Lets define Risk. Don't take my word for it...below are three striking similar comments from three investors, with multi decade track records, about risk.
"The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in measuring risk) but rather by the probability – the reasoned probability – of that investment causing its owner a loss of purchasing power over his contemplated holding period. Assets can fluctuate greatly in price and not be risky as long as they are reasonably certain to deliver increased purchasing power over their holding period. And as we will see, a non fluctuating asset can be laden with risk.” – Warren Buffet, 2/2012
“Remember too that for those great opportunities to avoid pain or make money – the only investment opportunities that really matter – the numbers are almost shockingly obvious: compared to a long term average of 15 times earnings, the 1929 market peaked at 21 times, but the 2000 SP 500 tech bubble peaked at 35 times! Conversely the low in 1982 was under 8 times. This is not about complicated math.” – Jeremy Grantham, 2/2012
“Rather than volatility, I think people decline to make investments primarily because they’re worried about a loss of capital or an unacceptably low return. The me, “I need more upside potential because I’m afraid I could loose money” makes an lot more sense than “I need more upside potential because I’m afraid the price may fluctuate.” No, I’m sure “risk” is – first and foremost the likelihood of losing money.” - Howard Marks, 2/2006
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