my view on risk tolerance

I think risk tolerance in stock means different thing to different people, a lot of people considering risk as price up/down, for me it is permanent loss of capital. An good example is dndn, as long as DNDN still have money to fund its cancer drugs research, its price down means not much other than opp lost to other investment since your fund is locked in DNDN. The risk lies on if it can get fda approval or not, not if its price is going up or down. There is an assumption built in here: There is no leakage of information in FDA decision.

Now for atpg, the risk is:

1, engineering problems with the coming two wells for 2010.
2, regulation risk for reentry permit for next two wells on GOM for next year.
3. double dip, oil price plunge.

After BP oil spill, I believe the engineering risk is pretty low now, since every body is talking about safety now. Also ATPG has drilled a well in the same region, of course I am blind on oil drilling tech, this hypothesis may hold a lot of water.

Anyway, back to risk tolerance, I believe it is based on knowledge, for company I invest in, insiders usually have a large interest in the stocks too, secondly, there are risks with all business models, the difference is that after a crisis, risks will all be exposed to investors, which is pretty helpful for an outsider like me, I get to learn the risks pretty quick, so I have a base to work on. Exposed risks also scares away competitors, make price/valuation very favorable. Also, a lot of times you can find stock gurus are in the same stock with you, greatly boost your confidence.

Unseen risk/ignorance is the one most dangerous.