"I wake up and fall asleep every day thinking about the risk of the portfolio. Risk to me is not volatility. It is the chance of permanently losing capital. This is how I focus on risk. There is also the risk that I am not 100% completely focused on what is in the best interests for my partners. To address this, I make sure that I am the largest partner investor in the fund. This insures that I am intimately in tune with my partners. If a partner does really well, I do well and it is a Win-Win. On the other hand, if a partner doesn't do well, I really get hurt very badly. I need to feel both the love and the pain for what I am doing for my partners. So, having a very specific definition of risk of not losing capital and treating partners first by being the largest partner, greatly reduces, if not eliminates the risk that I am out of touch with my partners. I can't destroy volatility. Therefore, I accept volatility and embrace volatility knowing that it is only a short-term perception of what long-term risk may be. I remain very focused on the permanent loss of capital and I take a very long term view which in turn avoids issues with conflicts and risks. With rewards, I make the rewards the exact same rewards as those of my partners."
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