Most old timers have seen this over and over, folks making big bets, getting in way over their heads, and often resulting in big losses. These bets might be on sectors, or individual stocks, or using leverage in the form of margin and/or options. Some folks seek esoteric and complicated explanations for market movements, when they would be better off trying to grasp the basics.
Roger Nusbaum writes the following
>>
For some reason people seem to want to make big bets, do things that are very complicated (relative to their experience or the time they are able to commit to their portfolio) and allow emotion to do them in.
Investing does not have to be complicated. If you are a lazy portfolio person then you already understand simple.
If you make sector decisions then realize you are starting to take on risk when you let any sector get bigger than 20% of the portfolio.
>>
(blog link, search for September 14, 2008 entry if you are reading this later)
Again, for the average person, the average investor, getting an average price by dollar cost averaging, and diversifying in various asset classes, are likely to produce far better long term results than making big bets.
No comments:
Post a Comment