Wednesday May 25, 2022

The risk is not in our actions, but in ourselves

If you want to know what the risk of investing in reality looks like, go to the bathroom and look in the mirror. That is the risk; exactly what on vs civ made of glass.


When you look at yourself in the mirror, you should realize what to focus on. Daniel Kahnemann, a Nobel Laureate in Psychology, explains two factors that characterize good decisions:

  • “Time of self-confidence” (do I really understand this investment as long as I think?)
  • “Correctly predicted regret” (how will I react when it turns out that the analysis was not correct?)

In the series of books from the book of the most important investment advisor of the 20th century, learn from the most dedicated “investment guru” how to avoid these mistakes as an investor, broker or investment advisor and how to implement long-term investment strategies.
Even with a degree in economics or finance, Benjamin Graham soon became not only a full-fledged investor and portfolio manager, but also a leading theorist. If a number of things that are written in finance, often after a few months, even a little silly, Graham’s principles published many decades ago seemed to be more likely to go down in time and truth
.

To see if your self-confidence is working, look in the mirror and ask yourself, “How likely is it that my analysis is right?” You are invited to answer the following questions:

  • How many mm of experience? What is my historical decision on similarity?
  • Jak historick spnosti doshli jin lid, kte zkoueli podobn vci?
  • When I buy, someone else prodv. How likely is it that these other people (or societies) do not know?
  • When I sell, someone else buys. How likely is it that these other people (or societies) don’t know?
  • I wondered how much this investment has to make to cover tax costs and business fees?

Take a look in the mirror and find out if you are the type of hunter who can correctly estimate your greed. The question is: I want the full consequences that can occur when it turns out that my analysis was wrong? Answer the question, taking into account the following points:

  • When mm right, give him a lot of pension. But what if mlm? Based on the historical performance of similar investments, how much and lose it?
  • Do I have any investments that can lead to an unfavorable situation, when it turns out that this decision was wrong? Do you own any stocks, bonds or sub-funds that have historically been shown to go up when this type of investment I consider falls down? Am I not risking a large amount of capital in this new investment?
  • When will I say, “I have a great tolerance for risk,” how do I know? Have I ever spent a lot of money on investment? How did I honor myself? Did I buy more cheap investments, or did I sell and “save” at least something?
  • I only rely on my strong will not to panic at the wrong time? Or do I check my breeding before diversifying, signing an investment contract and regularly buying dollar-cost averaging securities?

You should always remember, in the words of the psychologist Paul Slovice, that “the risk is prepared from the same two two-stakes are probabilities and consequences”. Do not invest, you must be sure that you have correctly assessed the probability that you have made the right decision and that you are familiar with how you will act when the consequences of your wrong decision appear.

Pascal’s glass
Investin philosopher Peter Bernstein sums it up in one way. He takes the help of Blaise Pascal, a great French mathematician and theologian (16231662) who conceived Mylenek’s experiment. This hunter must put in a way to lead his life; the final loss or defeat is then the fate of his due in the afterlife.

In this part, as Pascal claims, “reason cannot decide” about the probability of God’s existence. Bh either exists or does not exist and only vra, not reason, me dt answer this question. However, even if the probabilities in Pascal are unresolved, the results are perfectly clear and complete. Bernstein explains it as follows:

Suppose you act as if Bh exists, you lead a fast and humble life, but Bh does not really exist. Indulge some of his joys in life, but there will also be rewards. Now suppose you behave as if Bh is not, spend a life full of hu, selfishness, and wickedness, and by doing so Bh actually exists. You will enjoy a lot of fun and exciting experiences during your relatively short life, but when the day of judgment comes, you are in it.

“The Smart Investor” is by far the best book ever written about investing. It is one of the thinnest publications of its kind, but so paradoxically perhaps most ignored in practice. Such is human nature. We just want to put everything together.

Bernstein concludes with the following weight: “When deciding on the condition of uncertainty, the consequences must be guided by probabilities. He never knows the future. ” That is, as Graham recalls in each chapter of this book, an intelligent investor must not focus solely on doing the first analysis. He must also insure himself against loss in case his analysis is wrong, which happens from time to time even in the case of the best analyzes. The probability that you make at least one mistake during your career career is practically one hundred percent and this risk is completely out of your control. Take control of the consequences of your mistakes.

Many “investors” invested in 1999 a virtually evening pension in a dot-com company; Internet survey 1,338 Amerian conducted by Money in 1999 found that about one-tenth of them had more than 85% of their funds in online stocks. Ignoring Graham’s demand for security, they put these people on the far side of Pascal’s width. Confident that they knew their likelihood of haste, they did nothing to protect themselves from the consequences of their own mistake.

Simply by having your investments permanently diversified and refusing to retire as Mr. Market’s last madman, you can be sure that the consequences of your mistakes will never be catastrophic. No matter what Mr. Market bombs, you’ll always be able to read, with relative confidence: “And this will pass once and for all.”

The purpose of this revised edition of The Smart Investor is to apply Graham’s ideas to the conditions of the current financial market, and still leave its original text intact (with the exception of notes under the explanatory note). Each Graham chapter is followed by a commentary. In these original shadows after the original text, there are also current examples, on which it is best to observe how current and how liberating remain Graham’s principles even today.

ryvek is from the book
“Intelligent investor”
vydan nakladatelstvm
City Publishing,
more can be found at
www.grada.cz

The purpose of this revised edition of The Smart Investor is to apply Graham’s ideas to the conditions of the current financial market, and still leave its original text intact (with the exception of notes under the explanatory note). Each Graham chapter is followed by a commentary. In these original shadows after the original text, there are also current examples, on which it is best to observe how current and how liberating remain Graham’s principles even today.

ryvek is from the book
“Intelligent investor”
vydan nakladatelstvm
City Publishing,
more can be found at
www.grada.cz

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