Risk versus volatlity

Ben Carlson cites Howard Marks on the difference between volatility and risk:

Volatility is the academic’s choice for defining and measuring risk. I think this is the case largely because volatility is quantifiable and thus usable in the calculations and models of modern finance theory.

However, while volatility is quantifiable and machinable – and can also be an indicator or symptom of riskiness and even a specific form of risk – I think it falls short as “the” definition of investment risk. In thinking about risk, we want to identify the thing that investors worry about and thus demand compensation for bearing. I don’t think most investors fear volatility…. What they fear is the possibility of permanent loss.

Read more at A Role Reversal For Stocks and Bonds | Pragmatic Capitalism.