Investment is a subset of financial
When you invest you are giving your money
to another to speculate for you.
Who do you think cares more about the
return of and on your money than you? That's
right - no one cares more about your money than you do,
unless they plan to use or steal your money.
Financial speculation is a way to take
control of your own financial destiny.
The first rule of speculation is to keep
your loses small, and let your profits run. This is the
opposite of letting your emotions decide your entry and
exit points. It also runs contrary to letting others decide
what they will do for you, and for themselves.
Guess who wins that conflict of interest
Your key to profitable financial management
is not to put your eggs in a dozen or so baskets and walk
away; then run back to look frequently. Successful financial
speculation involves putting you eggs in at most a few
baskets, and watching those baskets very closely.
When you speculate you do not have to
be fully invested to get a great return - high financial
leverage is still a destroyer of portfolios. Gamblers
ruin is the phrase that explains that one gamble too many
- where infinitesimally small odds finally prevail.
The financial news will report when big
firms blow up under extreme leverage, they ignore the
huge numbers of regular investors blowing up each day
for the same reason.
Your personal financial position has
a great deal to do with what level of financial speculation
you should be involved.
We will give you some philosophy of speculation
rules, search the site for more.
- Wealth is usually created through
concentration and preserved through diversification
- Always invest too small, especially
while you are still learning. That will keep your losses
- If a speculation starts to turn against
you - get even smaller.
Don't just follow financial advisers,
discover your own financial speculations.
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