Is Your Money At Risk?
Speculation
begins where certainty ends
Many financial
glossaries define investment as an
honest seeking of return while speculation is
defined as a dangerous gamble.
They are wrong. Investment,
speculation, or doing nothing; all financial strategies
contain considerable risk.
Financial professionals
are paid to take risks and remove worry. Consider
however that no one cares more about increasing and
preserving your money than
you. To misquote Ben
Franklin's famous phrase on liberty - He
that gives up control of his money to gain safety will
lose both money and safety .
We
all understand that human fallibility can not be
eliminated by decisive words. Yet listen closely
to financial advise and you will hear most investment
advisors handle uncertainty by sounding certain.
Professionally managed long
term investment has great risk (pdf by Mandelbrot
and Taleb) precisely because it sounds honest,
rational, and above all, safe.
Our definition of speculation:
following a system of reasoning trying to discover
opportunity (an edge) from within inconclusive evidence
-- acting upon that reasoning - and then reacting
to fresh information when required.
Are you worried about your investments?
If you are not worried -- your money is already
in danger.
Worry is respect for risks that threaten
your future. Don't try to hide from unavoidable risks,
instead embrace and manage risk. If you are not worried,
you are not risking enough.
Most investments seem safe, but undisclosed and hidden
risks are stealing your money. You need to understand
your own ventures, Don't depend on even well meaning
advice from a third party.
You need to speculate, not just
invest.
following speculation rules requires that you
research and take risks. Information presented on this
site is about personally managing your risk rather
than trying to avoid risks.
A known risk in the options markets, futures exchanges,
or in forex can be safer if you cut
your losses
sooner. You can then let profits run - and
overpower many small losses.
"Keep your friends close, and your enemies closer." Your
knowing many of the risks helps you prepare for them.
These pages of speculation rules are built on the
premise that life itself is filled with risk. Any
effort to fully escape risk only exposes you to new
and hidden dangers. It is better and safer to embrace
risk and try to closely control its effects.
Your speculation rules appetizers
are:
- if you are not worried - you are
in danger
- learn to invest for yourself - speculate
Also consider a primary Speculation
Rule:
No investment advisor cares more about
your wealth than you - unless they plan on using
or stealing your money.
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