Risk and the Smart Investor

Master the most important investing skill of all—DECISION MAKING

“De-risking your investments requires knowing that there is much you don’t know.”
David X Martin

Risk exists because of one simple fact: Decisions are always based on incomplete information. Therefore, to meet your investment goals over the long term, you must learn to manage the risks associated with a decision-making process that is by nature flawed. Risk and the Smart Investor provides a framework for making such decisions.

Avoiding unrealistic promises of completely risk-free investing, world-renowned risk management expert David X Martin familiarizes you with the principles of risk management. Based on Martin’s experience in managing risk at several of the world’s largest financial institutions, this principlebased approach presents a unique perspective that helps you manage the risk in every investment you make.

Risk and the Smart Investor provides not only a framework for managing risk in today’s markets, it also prepares you to handle the next financial crisis—which is coming, sooner or later—by separating risk management into four separate processes:

• Assessment—know where you are, but accept the fact that you cannot know everything
• The Rules of the Game—determine your appetite for risk, diversify accordingly, demand transparency, and institute checks and balances
• Decision Making—consider all alternatives, fit your plans into specific time frames, and always have an exit strategy
• Reevaluation—continually monitor the outcomes of your decisions and learn from your mistakes

Praise for Risk and the Smart Investor

“Interesting and instructive. A good book for those who want to learn about risk and build this knowledge into their financial decisions.”
—John Reed, former CEO, Citigroup

“David Martin has produced a popular yet serious post-financial crisis reflection on the fundamentals of risk management as a living process. Rich in experience and wisdom, Risk and the Smart Investor is both a useful handbook brimming with insights, and a moral tale for our times. Simply a must-read for every serious investor, risk manager, and just about everyone else.”
—Michael Power, professor, London School of Economics and Political Science

“David Martin knows risk and the active investor and his book proves it.”
—Jerry Lieberman

“This book is like having your own mentor to guide you through risk management decisions.”
—William Rhodes, Chairman, Citigroup and Citibank