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Always Protect The Downside - Darius Foroux
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.”
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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.
SIMILAR ARTICLES & IDEAS:
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Key Ideas
Investing
... is the trading of your money today for a lot more money in the future. It is a high yield over the long term.
What happens to your money
Banks don’t like to give away their money. That mindset is reflected in the interest rates of checking and savings accounts of 0,5% and 0.9% avg. annual interest respectively.
When you deposit your money in the bank, the bank turns around and invests that money at 7% a year or more. After they collect their profit, they give a tiny shaving of it to you.
Portfolio and Diversification
- Your portfolio reflects your long-term wealth building investment strategy – not the short term. It includes everything you own. Your retirement accounts, your investment accounts, even your home are types of investments.
- Diversification is a way to describe owning multiple types of investment assets. Diversification is smart because you both protect yourself from failure and position yourself to take advantage of multiple robust methods for building wealth.
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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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Extrapolating our thoughts
A few examples of how we extrapolate our exceptions all the time:
- “House prices will probably keep increasing.”
- “That person will never change.”
- “My busi...
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
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