Life is risk!
danger can increase by trying to avoid
This is one of those
hidden investment rules, a secret for wealth creation
and wealth preservation.
Everything you encounter
has risk. Even during normal activities, perhaps crossing
the street or buying food - there is always an element
of danger. You can not avoid risk - but you can understand
and to varied degrees hedge against it.
Understanding your investment risks is
the first step to higher returns.
Safe investments and guaranteed returns
are sold as a way to avoid risk. Unfortunately the risk
is still be there - but now it is well hidden and harder
It is always better to enter a speculation
where the risks are mostly known and then manage your
Since life is risk,
don't hide from risk, manage risk.
All investment is speculation. What you
want to avoid is gambling, if your style is to close your
eyes and hope - you are gambling. Successful speculators
follow rules and guidelines - their goal is to limit exposure
while gaining opportunity.
Brokers, financial advisors, and professors
are playing word games that effect your wealth if they
pontificate on the wisdom of cautious long term investing.
Learn to guard your own money.
Perhaps you will have ten or more speculations
with a ten percent stop loss. Six may lose a bit, some
may vary between break even and a double, the remainder
may approach a home run or better. Overall you will be
a bigger winner than just closing your eyes and investing
- and your potential losses will be controlled.
Select your speculations trying to anticipate
asset class valuation shifts. keep correlation low, size
of any particular speculation small in relation to your
One speculation rule is particularly
relevant to your personal circumstances:
Wealth is created through concentration
- preserved through diversification.
Investment for the long term is often
a hidden trap. Understand you risks as much as possible,
then limit the dangers caused by your
Speculate wisely and grow
return to top of page