Labor Day gave me an opportunity to sit back and think long and hard about investment risk versus investment reward. I have traded and invested several accounts for individual investors over the past eight years and have had many successes and many failures. To be sure, those investors with a long term horizon always fare much better over the long run. Furthermore, I must recognize that after a large and significant drawdown in 2008, and a strong recovery in 2009 and 2010, market risk today is much greater than it was in March of 2009 after a 100% move or so to the upside in SPY and IWM. Therefore, I must stay nimble and guard against what I see as a potential liquidity trap; I am much better off than I was in 2008 and I want to keep it that way. Unlike many pundits and advisors who focus on “getting back to even” as quickly as possible, I am ultra focused on managing my fund in the most risk averse manner after my small hedge fund racked up a 100% gain in 2009 and a 35% gain so far this year. Granted my losses on paper in 2008 and a small margin call that year mean that I am still tracking around a S&P 500 like return over that period (tough sledding). Lesson learned: If you have money to invest and want to invest with a deep value manager, put that money to work in a large drawdown, if possible. I have one investor on board whose account is up 300% as he was astute and bought into the fund in October 2008.