Gavin Baker of Atreides Management in the Q3 Graham and Doddsville newsletter out of Columbia Business School. Also known as “Thoughts that plague you at 4am.”

“You don’t have the luxury of not worrying about the meta. You sit in an ivory tower and think, “Oh, all I care about are returns over 5 to 10 years and I don’t care about the path to get there. I don’t care about volatility.” That is true in an idealistic sense – the most important risk is always going to be permanent loss of capital. But your clients care about volatility. If you’re running a retail mutual fund, you have hundreds of thousands of clients. You have no idea when your client may need to take money out to buy a house or to send their kids to college. So, for them, volatility does matter. I’ve seen a lot of idealists come and go, and they say, “Oh, I’m having a terrible year, but I don’t care. I’m just focused on 5 years out. And there’s a lot of pentup performance. I feel great about it.” Well, that’s great that you feel good. But you may get taken out of the game before that pent up performance materializes. You can get taken out of the game by your clients or by the management of your firm. So, volatility and the path of returns matter if you’re going to be a professional investor.”