Risk Tolerance Horse Manure

Risk Tolerance Horse Manure

From:james schwartz (manofdog01@yahoo.com)

To:intelligentinvestor@wsj.com

Date:Saturday, September 7, 2019, 2:07 PM MDT

The only risk tolerance of use is within the context of the personal financial goal and the goal relative to the accomplishment of other goals.

When I was in practice as a fee only personal financial planner, a geologist who was the key to then the largest discover in the lower 48 -- had 95% + of his assets tied up in royalties.

Now as much of the resources were converted from royalties via cash flow - actually he required about 2.5% after tax and inflation - when the market was in the teens - but why risk (sacrifice )what you need for what you don't need. Thus, outside of his oil stream (now protected by trusts etc), having large blanket liability policies etc etc, and the estate planning of gifts and private annuities etc etc ---diversified with less volatility was the answer - as he became independent of his independent business

And this was a wildcatter - and they in business were big risk takers

So risk tolerance is within the context of the goals ---- and most of so called risk tolerance is an add on to avoid or minimize the asset under management % compression - by being the client's understanding best friend.

The real risk - not making the goal - context and the goal is everything

But most planners manage assets instead of managing personal financial goals - and better yet harmonizing and aligning the financial resources to financial goals and life values.