The Risk-Wise Investor: How to Better Understand and Manage Risk

by Michael Carpenter

User-friendly risk management tools, tips, and techniques for a less certain world Though a very high level of investor uncertainty, anxiety, and concern about risk now exists, the vast majority of investors do not genuinely understand investment risk-let alone how to effectively manage it. The "Risk-Wise" Investor offers a totally new, user-friendly, non-technical way to help you better understand and manage uncertainty and risk. This practical guide will help investors avoid many common pitfalls and make well informed, knowledge-based decisions when facing uncertainty and risk. It also shows how to implement a personalized, systematic risk management planning process that will allow you to manage the risks you face more effectively and improve the likelihood of achieving specific investment goals. Though traditional investment advice is based on taking the long view and diversifying portfolios, the information here shows how to incorporate additional risk management considerations into your plans. It also provides innovative insights that will help investors and their advisors better understand how to

271 pages, Hardcover

First published January 1, 2009

About the author

Michael Carpenter is a 35-year veteran of the investment business and founder of his consulting firm CarpenterAssociates.

Since entering the investment business as a financial advisor with PaineWebber prior to the OPEC Oil Embargo of 1973 he has personally advised investors, financial professionals and investment firms facing turbulent investment environments, including raging inflation,stagflation, and stratospheric interest rates to disinflation, recessions, panics, and crashes."

Reviews

[Ralph Orr]

Good introduction for the lay investor. The experienced professional will find little new here, though he or she may find new ways of discussing risks with clients. The book includes the implications of behavioral finance studies for investing.

While the book mentions some risks related to income and distribution portfolios, as well as the fact that insurance products can have a role in investment risk management, these subjects are mostly ignored. As with most other similar books, the text focuses on investing for accumulation.

The book would have been better if it included specific examples of risk management for investment accounts requiring distributions: for example retirees who must spend down their portfolios to meet their living expenses or to meet the required minimum distributions of retirement accounts, or those who must spend down special-needs trusts. Such clients should use risk management strategies strikingly different frin those accumulating.

Another chapter could have been dedicated to the role insurance products, such as life insurance, disability insurance, long-term care insurance, and annuities with secondary-guarantees also can have in investment portfolio risk management. (This subject is almost always ignored by books on investment risk management).

Still, for those new to investing this book is a worthy introduction.