Howard Marks at Oaktree (and author of The Most Important Thing) put out his latest memo (Sept 3, 2014) while I was away in the Austrian alps. He is the source to go to for deep, yet practical, thoughts about the concept of risk. His memos are always a good read, even if they tend to be unnecessarily long. The latest one is no exception and is actually a nice short version of the book mentioned above. I have shortened the memo to the following, but I suggest you read the whole thing or at least zerohedge's annotated excerpts:
if riskier could be counted on to produce higher returns, they wouldn’t be riskier
What Marks is trying to explain is that you won't automatically earn more just by enduring more violent fluctuations. There is no certainty whatsoever in a higher end point. Actually it is rather the opposite, i.e., one of the end results is higher -but some of the other end points are much lower.
Marks is one of a few investors with extremely good long term track records, that has managed to stay bullish even during the last three years. With the latest memo, he still favours being long but he has nevertheless now started to emphasize caution.
Remember to stretch
Eat well when walking
A t-shirt is enough for me
Why walk on the path
Typical Austrian view, if you work for it