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What tennis can teach investors about risk and return

Neither seeking to maximise winners nor minimise losers is necessarily enough. It’s all in the balance
The writer is co-founder and co-chair of Oaktree Capital Management and author of ‘Mastering the Market Cycle: Getting the Odds on Your Side’

Understanding the distinction between risk control and risk avoidance is essential for investors. Investing, at its heart, consists of bearing uncertainty in the pursuit of attractive returns. 

If you have real insight, certain risks can be borne prudently and profitably. Risk control therefore consists of declining to take risks that exceed the quantum you want to live with or those you aren’t well rewarded for bearing. 

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