Many investors see risk as the possibility of loss of investment principal. But investment managers, like the professionals who manage mutual funds, know that only those people who sell their investments when prices have dropped lose money. These managers view risk as a combination of technical measurements, such as standard deviation, beta, and alpha. They use these measurements as tools in their ongoing assessment and management of the risk in portfolios. In other words, mutual fund managers see risk not as loss but as fluctuation in the value of investments.
Risk is part of life.
While some of life's risks are large, even life threatening, others are hardly noticeable. We first learned about risks from our parents. They taught us, for example, about the dangers of sharp objects, hot things, and electrical sockets. We take risks because the rewards justify them. Driving on the highway is a risk, but most of us consider that the paycheck, or people, or some other rewarding experience at the end of the ride is worth the chance.