Tuesday, October 18, 2011

Are you a good gambler?

Good investors—and good gamblers too, for that matter—practice risk control. Whether through careful use of position sizing, diversification, hedging, keeping cash in reserve, or even tools such as stop loss orders, they have processes in place that prevent an investing mistake from turning into a catastrophic loss they may never recover from.

1 comment:

  1. What about buy and hold not forever but it could be for some time. Their are stocks like petsmart that traded at 2 dollars a share 11 years ago now the stocks almost fifty. Also pricesmart traded at about 7 dollars a share about seven or eight ago now its almost around sixty dollars. Their are many other examples Apple computer traded ar only 5 dollars a share in 1998 now its over 400. These stocks are being held quite a long time generally speaking I would say four to six years would be about right as far as buy and hold go. I have a website where I have been following stocks under five dollars. I generally hold my stocks anywhere form 2 to 6 years. Investing does not have to be like gambling. Gambling is for the most part luck while successful investing is more about realizing buying opportunities and than taking advantage of them. A perfect example of this was in 2008 and 2009 high yield closed end bond fund funds were yielding over 20% because investors were anticipating a 1930's style depression when everybody realized that was not going to happen closed end high yield bond funds skyrocketed.