Reblog: The Illusion Of Risk


When we find an attractive stock to invest in, we outlay money, aka invest, to earn an attractive return and the investment will involve a degree of risk.

One of the most dangerous, commonly accepted and ill thought out concepts in investing is the risk / return trade off.

That is: high returns equals high risk.

Unfortunately, Investopedia continues to spread this type dogma, as you can see by the graph below.

Illusion Of Risk

Volatility (standard deviation) is not risk!

The appropriate definition of risk is from the Oxford dictionary (or any other branded non-financial dictionary) as: Exposure (someone or something valued) to danger, harm, or loss.

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Reblog: Market Strategy and the Biggest Risk in Stocks in times of high valuations


The original post is written by Mastermind, Sanasecurities and is available here.

Over the last few weeks, markets have beaten all resistance barriers and have defied the very notion of value. Those waiting for a correction sometime back have now jumped in hoping for newer all time highs.

Anybody who believes in value may not find much for the taking. Certain I am however that many old school value buyers are neck deep in stocks right now. Perhaps for the right reason given the enormous liquidity coupled with strong news flow both domestically and from international markets.

Markets are risky – more so at the kind of valuations they are trading at right now. Nevertheless, from positive earnings, passage of GST, U.S. Jobs data and FEDs almost certain stance of maintaining interest rates, everything looks positive.

If you are already invested, in all likelihood you would have made money over the past 2-3 months. The key question: If you are not invested, should you jump in now?

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Reblog: 3 Habits for Successful Investing


This is a post written by Mastermind, SanaSecurities. The original post appears here.

Let me assure you – No matter how positive (or negative) you are about something, there will always be much which will not be in your control.

There are things you cannot change and things that are totally in your control. The hard task is to understand the difference between the two.

When I started writing this post, the idea was to list in order of importance, habits which set apart successful investors from those who achieve substandard returns. Naturally, such a list would require me to first state who would qualify as a ‘successful investor’ and what’s ‘substandard’.

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