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Acceptable Flaws · Collaborative Fund
How we think about risk and opportunity
It’s impossible to think about risk and opportunity without a reference point. And ours is at most incomplete (if not totally wrong).
Everything we think about risk and opportunity is shaped by our own specific situation and personal experience. So everybody has a view of risk shaped by narrow experiences but applied to the broad world.
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Some downsides are unavoidable
Life is a little easier if you expect a certain chunk of it to go wrong no matter how hard you try.
Smart people screw up. Good people have bad days. Nice people lose their temper.
Long-term and short-term thinking
Long-term thinking is difficult to put in action because the long run is a collection of short runs that have to be handled, displayed, and used as information to gauge whether a long-term reward still exists.
Short-term thinking can be the only way you’ll survive long enough to experience long-term results.
Underestimating the odds of change
A fair evaluation of how uncertain the future is would make most people refuse to get out of bed every morning. Nothing would get done in the world if people were only driven by the accurate probability of their future success.
A little blindness, a little over-optimism, and a little denial is one of the economy’s most potent fuels.
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Self-Investing
Take care of yourself in the long run with these compounding activities:
- Learning how to make something of value to others.
- Learning a skill that makes you stand out of the crowd.
- Reading books about distinct topics that are relevant to your career and personal growth.
- Setting up a broad-based fund that invests some money from your income, to build your wealth.
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Reading makes our brain exercise, and all successful people share this habit.
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Investment explained
An investment is a gamble: instead of the security of guaranteed returns, you're taking a risk with your money.
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How stock markets work
- A stock market is simply a place where buyers and sellers meet to sell shares.
- A share is a divided-up unit of the value of a company.
- Shares exist to boost profits of firms to turn a business into a financial success.
- Enter a stock market: in return for your cash, a business offers you a share in its future – so you essentially own a tiny slice of that company and become a 'shareholder'.
- This slice of the company you own can then be traded with anyone who wants to buy it.
Share price of a company can rise and fall
- The price is initially set by the firm offering shares.
- Its price on any given day can be determined by poor financial results, the economic health and so-called 'sentiment', ie, if City buyers think a firm will struggle, its price can fall.
- Shares are listed on an 'index'.
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6 ideal investments for beginners
- If you have a 401(k) or another retirement plan at work, it’s very likely the first place you should put your money— especially if your company matches a portion of your contributions.