Measuring risk

Volatility does not measure risk. The problem is that the people who have written and taught about risk do not know how to measure risk. Beta is nice because it is mathematical, it is easy to calculate and it is wrong –past volatility does not determine the risk of investing.
In early 1980s, farmland that had gone for $2,000 an acre, went for $600 an acre. Beta shot up. I was apparently buying a riskier asset at $600 than at $2,000.

Warren Buffett – American value investor, Chairman of Berkshire Hathaway (b. 1930), Quotations book 2012