Risk Redefined – Aligned with the Way Investors View Risk
The industry measures risk as volatility, or price swings up and down.
The industry’s conventional view is that investors are risk-averse, yet behavioral finance research shows investors are actually loss-averse.
So we measure risk as the amount of loss using drawdown or the Pain Index.
In this way, our approach to risk management is aligned with what concerns investors the most: losing big.