Think you understand portfolio risk? Financial theorist William Bernstein may make you think again.

Investment advisors tend to consider investment risk in terms of standard deviations and correlations. Yet in Bernstein's dark view, deep risk is the permanent loss of capital - defined as a real (that is, inflation adjusted) negative return over a 30-year period. By that definition, even the Great Depression - during which markets recovered in a much shorter period of time - doesn't qualify.

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