RISK - the four letter word

The big four letter word in our business is RISK. Most institutions define it as the standard deviation/volatility of stock prices. For me, the only RISK that matters is business risk. It could be caused by competition or any unexpected event. The only antidote for preparing for unexpected events is Margin Of Safety.

For example, this MTA strike that is happening in New York City right now is probably unexpected by 99% of the retailers. Who would have thought this would happen, right? Basically, everyday, we see events that are unexpected by 99% of the people. That is why value investors require a margin of safety. We know there are a lot of unexpected things that can happen, and will happen.