150: A lesson in risk taking—with the former risk manager of a $200B fund, Aaron Brown, Pt. 2

Aaron Fifield Podcast 1 Comment

Following on from Episode 149, here’s part two of the interview with Aaron Brown.

To refresh your memory, Aaron is highly regarded as an authority on the subject of risk taking. For the past 30-years he’s worked as a dedicated risk manager, and for the past decade, Aaron was the risk manager for renown quant fund, AQR.

After hearing this second installment, I would like to think, you’ll gain deeper insight for how to better understand and manage risk as a speculator…

Topics of discussion:

  • The various ways people frame risk to express either a positive or negative opinion, and why some traders lack focus on the one core objective of trading.
  • Aaron explains what has helped him to be successful as a risk manager—what things does he do well, and why you’re best to begin taking risks at a young age.
  • Questions traders should be asking themselves about risk and two scenarios to think through prior to any trade, plus the characteristics of a “risk avoider.”
  • From a risk perspective, is it better to have a high win rate strategy? Aaron shares his thoughts on varying win rates and how to define a profit/payout ratio.
  • Unknown unknowns; Aaron speaks about black swans, protecting against unexpected outcomes, and killing opportunity by trying to prevent disaster.

Aaron Brown: Poker player, author and former risk manager of AQR Capital Management.

Links and resources mentioned:

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