Volatility Skew Explained

Risk isn’t volatility. Risk is owning something you don’t understand. Strong businesses can get hit and recover over time. Weak businesses get hit and stay down. Long-term confidence comes from knowing what you own and why you own it.

People usually lose because they sell. Selling often comes from weak conviction, not bad businesses. When due diligence is shallow, volatility feels unbearable. When you’ve done the work and understand the business, drawdowns are easier to sit through. Ignoring noise and building real conviction lets you stay invested when prices fall 50 to 60 percent instead of locking in losses.