Beating The Market? Why That's Bad News

The billionaire investor Warren Buffett is a highly quotable figure, but perhaps the most revealing of his many statements on money management is also his funniest: "You only find out who is swimming naked when the tide goes out." That gem appeared in his 2001 letter to investors in his holding company, Berkshire Hathaway. Buffett's point is that good times can cover up a lot of risk, yet markets have a way of balancing out that eventually reveals who is taking those risks. It all ties back to...