From Pzena Investment management, a new white Paper on how value investing provides better returns with LOWER risk.
ASSESSING RISK AND RETURN
The ten years ending February 2009 were the most negative for equity investing in modern history, even surpassing the Great Depression, with the not surprising result that investors have now become extremely sensitive to risk and stock price volatility. In this article we address what we believe to be the real risks of long term investing and provide a framework for managing those attendant risks. With the proper framework for measuring risk and the proper duration of the measurement period, it may even be possible to earn superior returns while mitigating the true risk of permanent impairment of capital.