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Always Protect The Downside - Darius Foroux

We Are Put Off By Fear

We always think about the risks involved in making a big chance in life. We consider the risks and then decide not to do it. But, the risks shouldn't scare us into inaction.

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Always Protect The Downside - Darius Foroux

Always Protect The Downside - Darius Foroux

https://dariusforoux.com/protect-the-downside/

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Key Ideas

We Are Put Off By Fear

We always think about the risks involved in making a big chance in life. We consider the risks and then decide not to do it. But, the risks shouldn't scare us into inaction.

Make old Moves

You can't achieve anything if you lock yourself up in your home. To live life to the fullest, you need to make bold moves. And this doesn't necessarily imply risk-taking.

Try to limit your potential losses. Protect the downside.

Richard Branson

“It is only by being bold that you get anywhere. If you are a risk-taker, then the art is to protect the downside.”

Career Decisions

Your most valuable resource is time. Yet, most spend their time working on other people's goals.

Use your time wisely by daily improving your skills, learning new things and building relationships. Then you will always have something to fall back on.

Business Decisions

If you're in business, consider serving more than one group of customers, or focus on more than one industry.

When sales don't perform well in one area, you always have another option.

Investing Decisions

Invest in something that has an underlying value.

Limit your potential losses by diversifying. For instance, invest in an index fund, real estate, and business.

Avoid Taking A Big Hit

The purpose of protecting the downside is to prevent losing everything. You shouldn't put all your life energy into a single thing. This is true for your personal life too.

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Extrapolating our thoughts

A few examples of how we extrapolate our exceptions all the time:

  • “House prices will probably keep increasing.”
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We’re fast thinkers

But that doesn’t mean we should follow through on every single thought that pops into our mind.

Every time you start thinking about future events or start making mental movies, keep count on a post-it note or a small piece of paper. Be aware of your thoughts. But don’t follow through.

Ryan Holiday
Ryan Holiday
“It takes skill and discipline to bat away the pests of bad perceptions, to separate reliable signals from deceptive ones, to filter out prejudice, expectation, and fear.”

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Seeing Isn’t Believing

Most of us have heard stories of hardships and catastrophic events of the past, like the great depression, or the dot-com bust, but haven’t lived through it, and not experienced the real pain of th...

Blind Spots

In the world of investing, having gone through a traumatic experience first-hand makes the difference between a cautious investor and a blind one. The scarred investor cannot think in the way the fresher, who hasn’t experienced the turmoil can. 

Our unique experiences impact our vision in ways we cannot comprehend on the surface.

Learning From The Past

Different generations have different investment risk appetites, with the younger generation wanting to take bigger risks and going into uncharted waters without any experience.

The New Generation, who hasn’t experienced turmoil and loss, are good at getting rich. However, the older, scarred generation is good at staying rich due to their general pessimism and conservatism. There is a need to balance the two aspects while taking an investment decision. People with different experiences aren’t necessarily smarter than others but just have a different worldview.

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“If something is important enough, even if the odds are stacked against you, you should still do it.”

Elon Musk
Hustle Early In Life

Elon Musk (Founder Of Spacex, Tesla Motors And Contributor To Paypal): Musk, at 12 years old, taught himself to code and sold a game he made for $500. When he moved to Canada, he worked odd jobs including tending vegetables, shoveling out grain bins, and cleaning out gunk from a boiler room in a lumber mill.

In university, Elon sold computer parts to make extra cash and turned his 10 bedroom fraternity home into a nightclub on the weekends and charged a cover. Since then, he’s built several companies, including SpaceX, Tesla Motors, PayPal, and zip2.

“It’s important to be willing to make mistakes. The worst thing that can happen is you become more memorable.”

“It’s important to be willing to make mistakes. The worst thing that can happen is you become more memorable.”

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