My Daily Thoughts

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Don’t Invest to Win

One of the key elements of human behavior is, humans have a greater fear of loss than enjoyment of success. All the academic studies will show you that the fear of loss of capital is far greater than the enjoyment of gains.
Laurence D. Fink

The stock market is too complicated and there are too many factors that affect the price of a stock.

Trying to pick a winning stock puts you in the wrong mindset for success. Trying to win means you are trying to understand all the complexity and all the factors that affect a stock. You are also doing that in competition with the institutional investor that has a large staff doing all the work.

The better mindset is to invest not to lose. Knowing that you have a good chance of being wrong on any given stock means you need to buy several stocks to minimize this risk.

Not being able to understand the market forces means you need to diversify to minimize being in the wrong set of stocks.

As long as your winners go up more than your losers go down in the end you will have a positive portfolio.

Investing not to lose means you are going to spend more time watching the stocks that are going down so you can decide when to sell them rather than watching the winners.

A good investment strategy is a mitigation of risk strategy.

Live the Adventure

Geoff

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