Quote of the day by Michael Price: "The goal is to make good returns with less risk. Risk is not the same as volatility. It’s very hard to measure risk."

“The goal is to make good returns with less risk. Risk is not the same as volatility. It’s very hard to measure risk.” In the world of investing, where numbers fluctuate constantly and headlines often spark panic or excitement, clarity of thought is a rare advantage. Michael Price’s quote captures a profound truth about how successful investors think: the real goal is not just to earn returns, but to do so while minimising risk.

Risk vs. Volatility: Not the Same Thing

At first glance, many people equate risk with volatility—the ups and downs of stock prices. When markets swing wildly, it feels risky. When prices remain stable, it feels safe. However, Price challenges this assumption by separating the two concepts.

Volatility is visible and measurable; it reflects short-term market movements. Risk, on the other hand, is deeper and less obvious. It refers to the possibility of losing money permanently, not just temporarily.

The Hidden Nature of Real Risk

True risk often lies beneath the surface. A stock may fluctuate daily yet still represent a fundamentally strong company. Meanwhile, a stable-looking investment could hide serious weaknesses.

This is why experienced investors focus on long-term value rather than short-term price changes. They understand that what appears calm may not always be safe, and what seems unstable is not always dangerous.

Why Risk Is Hard to Measure

One of the most important points Price makes is that risk is difficult to quantify. Unlike volatility, which can be tracked with charts and statistics, risk involves multiple factors—business performance, management quality, market trends, and even human psychology.

Because of this complexity, measuring risk requires judgment, patience, and thoughtful analysis rather than relying only on numbers.

A Smarter Approach to Investing

Ultimately, this quote encourages a shift in mindset. Instead of chasing high returns blindly or fearing every market dip, investors should aim for balance. The goal is to achieve consistent returns while protecting against major losses. It’s not about avoiding movement—it’s about avoiding decisions that lead to permanent damage.

Key Takeaways

In a fast-paced financial world, Michael Price’s words serve as a powerful reminder: understanding risk is not just about numbers—it’s about perspective, discipline, and long-term thinking.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)