COVER STORY
Losing it all
“ Once a risk is known about , it is , by definition , likely too late to respond as markets will have discounted it ”
Mike Fox Head of sustainable investments at Royal London
Mile Island nuclear disaster took General Public Utilities down from $ 18 a share to $ 4 , and then even lower . A few years later , blue-chip stock Johnson & Johnson fell 30 % after seven people died when someone laced its Tylenol pills with cyanide .
Known unknowns Mike Fox , head of sustainable investments at Royal London , agrees with de Lisle to an extent , saying that the only risks that matter in investing are the ones you don ’ t know about . “ Once a risk is known about , it is , by definition , likely too late to respond as markets will have discounted it ,” he explains . “ Once this definition of risk is considered , the only logical conclusion is to not take excessive risk in the good times , to avoid a permanent loss of capital for investors when unforeseen events occur . “ Therefore , for us the choice of investing in good quality and underleveraged companies is not one of style but one of believing this best captures the long-term benefits of investing in equities , while at the same time providing a degree of reassurance in the bad times .”
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