You can Stick your risk

GOSLING'S GROUSE

What is risk? Well, that is the $64,000 question, isn't it? The answer being: it is what you are prepared to lose.

Of course, that is not the answer, because no-one invests to lose: you do not even gamble to lose; you gamble to win and try not to think about losing. So when we talk about risk with investing we con ourselves by talking about ‘benchmark risk’ or ‘stock-specific risk’. It was very refreshing the other day to go to a briefing with Rathbone’s Carl Stick, where he came up with a simple definition of risk. Stick, who runs Rathbones’ excellent Income fund, defines it as: “What is the risk of the permanent loss of capital?” He is gracious enough to acknowledge this is not his own uni...