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Always Protect The Downside - Darius Foroux
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.
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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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Key Ideas
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 business will keep growing.”
- “I will never learn from my mistakes.”
- “He doesn’t like me.”
The root of this problem is our quick judgment.
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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Key Ideas
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 the disaster.
Hearing stories about something that happened in the past isn’t enough to truly realize the lesson from them.
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.