Risk as loss of purchasing power

Risk is the chance of losing buying power over the holding period, not the volatility of the price along the way.

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  Risk is the probability of losing purchasing power, not the volatility of the price

  Measure risk as the chance of ending the holding period with less buying power, which makes volatile productive assets safer than stable unproductive ones.

  Any debate about what risk means, portfolio construction over long horizons, and questions about gold or cash as safe assets.

  From Berkshire Hathaway's 2011 letter to shareholders · Warren Buffett