Subra’s Risk Idioms….
Absolutely wrong to call this Subra’s risk Idioms simply because I do not know the source. Some of it is perhaps original – which means it is from experience, some are from what I have heard, some from what I have read.
Chances are these are created because of the influence of the great masters – Bernstein, and Taleb of course stand out when we talk risk, so with due respect to all the people from where these have been taken…here :
- If we want to be successful as investors, we have to understand what motivates us as well as how the emotions of others move investment markets
- Hope and regret drive markets – not fear and greed
- Because we lack the clearness of mind, the opportunity or the capability to make timely decisions, we opt for simple, low-volatility investments
- We are only worried about losses which we can see lump sum – up front charges vis-à-vis a slow erosion in high fund management annual charges
- There is an inviolate investment axiom that low risk investments yield only low rates of return and higher returns are achieved only by moving to a higher level of risk.
- Both risk and reward are time dependant. As time progresses, inflation makes low yielding investments riskier while higher risk investments become more stable and predictable over time
- When we make an investment, we buy a piece of a business. By definition, then, our time horizon must be long term.
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