Risk is an often misunderstood and poorly communicated concept. Even professional investors can be afraid of risk. 

However, risk is going to be a part of every single investment decision that is ever made and there’s no such thing as a risk-free investment. So hopefully, in this episode, we can provide some tools and a framework to help you think about risk and overcome any hesitance you may have. Brad and I discuss risk from the academics’ perspective, real estate, and private equity side; as well as risk deal killers, and general risks that factor into any investment.

Key Takeaways:

[:10] About our topic of discussion today.

[1:51] How the academics think about and talk about risk.

[9:43] How we think about risk (in real estate and private equity.)

[12:26] How Brad looks at to evaluate real estate risk.

[14:42] More factors that go into risk analysis in real estate.

[17:28] Are there any risk deal killers? What risks would kill the deal?

[20:51] How I think about risk in private equity.

Mentioned in this Episode:

The University of Chicago

Modern Portfolio Theory (by Harry Markowitz)

University of California San Diego

Standard Deviation 

Volatility

Due Diligence

Base Case

Downside Risk

Market Risk

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