So how do you stay safe in the mountains?
One way to stay safe is not to go–to conclude that the risk is too great, that the weather is too poor and the opportunities too scanty. So it’s just more rational to stay home and water the garden.
But the mountains offer us vistas and light that we don’t get in the valley. It’s not just “because it is there.” Sometimes going over the mountains is the only way to get where we need to go. And sometimes we have to invest in risky markets in order to achieve our financial goals.
So the final lesson in risk management that the mountains teach us is knowing the right time. If you’re venturing out among the peaks, it’s essential to understand the regional and local weather—to know what’s coming and how it’s likely to be affected by the elevation and changing temperatures. In the same way, investors need to understand how global and national economic and financial conditions will affect their markets and investments. And sometimes the conditions are too sketchy—and we don’t head out when that’s the case.
Last week I started up Mount Washington for some spring skiing, but the conditions deteriorated and I turned back. Because the mountains will always be there. Waiting for the right conditions means we’ll be able to come back another day.
Douglas R. Tengdin, CFA
Chief Investment Officer