part 1 Assessing risk on Wall Street A philosophy of investing by Thomas A. Rorro
The goal of investing is to make a profit. To achieve this goal, the investor places his money at
riskówith the hope of increasing his wealth. Whether by buying real estate, depositing funds in a savings
account, or buying shares of stock, the investor wants to protect his current assets and make a profit.
Investors invest with an intuitive knowledge of risk. But only the banking community has been able to
quantify both the expected profit and the risk. Most banks provide a specified rate of return in a risk-free
environment. The risk is removed by the federal government through the Federal Deposit Insurance Corp.
(FDIC) or a similar agency. Prudent money market investors carefully scrutinize interest rates knowing
that the risk is negligible.