Moving Mountains (Part 1)

How does respect fit into risk management?

When you’re in the mountains, the first thing you learn is respect for the mountain. No one ever “conquers” a peak. Hillary didn’t “conquer” Everest; Whymper didn’t “conquer” the Matterhorn. The men and women who made first ascents did something unprecedented, but the mountains are still there.

And what we respect is the mountain’s weather, its terrain, its remoteness, its unpredictability. Mountains have a way of surprising you, and because you can be far from help, minor issues can turn into major emergencies.

In the same way markets can be infinitely surprising. What should be an orderly process of buying and selling can break down, and you get a “flash crash” like what happened in May of 2010 or supposedly safe portfolio insurance can cause a market meltdown like October 1987. Markets are always creating a new new thing, and new ideas engender new risks and opportunities.

Respecting markets means working with them, not trying to outsmart them.

Douglas R. Tengdin, CFA

Chief Investment Officer

By |2013-05-15T09:39:11+00:00May 15th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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