Quotes About Risk

There's an awful lot of luck relative to skill. Investing is 95% luck and 5% skill. And maybe if I'm wrong, it's 98 and 2.

For most people, the fear of loss is much greater than the desire for gain. Which

People don't know their true tolerance for risk until they've had a real-life experience taking a significant loss.

Asset allocation, where to park your money and how to divide it up, is the single most important skill of a successful investor. And as we will learn from the masters, it's not that complicated! Low-cost TDFs might be great for the average investor, but you are not average if you are reading this book!

Warren Buffett's top two rules of investing? Rule 1: don't lose money! Rule 2: see rule 1.

A bull market is like sex. It feels best just before it ends.

Remember Warren Buffett's ultimate laws of investing? Rule 1: don't lose money. Rule 2: see rule

Note that past performance does not guarantee future results. Instead, I am providing you the historical data here to discuss and illustrate the underlying principles.

And if the feed costs rose, the suppliers would have to eat the losses.

Index your important money, then go have fun," Burton Malkiel told me. "It's better than going to the racetrack." But, he said, limit yourself to 5% or less of your total assets or portfolio.

That's why asset allocation is so important. What do all the smartest people in the world say? "I'm going to be wrong." So they design their asset allocation ideally to make money in the long term even if they're wrong in the short term.

We know we can't sit on the sidelines, on the edge of the riverbank, because inflation will destroy us if we just sit on our cash. So, alongside our neighbors and colleagues, we journey down to the water with trepidation, and when we least expect it: chomp!

And the smartest investors know just when to enter the market—except for when they don't!

Diversification is the only free lunch.

And so what happens over and over again is the profits win and the investor seeking returns loses.

Fifteen percent in intermediate term [seven- to ten-year Treasuries] and forty percent in long-term bonds [20- to 25-year Treasuries].

Of course, sitting tight is a challenge for this generation! As a society, we're wired for instant rewards, and waiting for the assets in our Security Bucket to increase in value can initially feel like watching grass grow. And that's why we get tempted into putting too much of our money into the next bucket, Risk/Growth.

But if you want to keep your money safe, liquid, and earning interest, one option is a US Treasury money market fund with checking privileges. True, these funds aren't insured by the FDIC, but because they are tied only to US government debt and not to any corporations or banks that might default, the only way you can lose your money is if the government fails to pay its short-term obligations. If that happens, there is no US government, and all bets are off anyway!

Asset allocation is more than diversification. It means dividing up your money among different classes, or types, of investments (such as stocks, bonds, commodities, or real estate) and in specific proportions that you decide in advance, according to your goals or needs, risk tolerance, and stage of life.

Remember, the biggest challenge in investing is staying power; when markets tank, folks get scared and sell.

the worst real estate crashes in history! And on the surface, it looks like you'd probably put this in your Risk Bucket. But here's why I think it's a safe investment: in 2008, when the real estate market just went through the floor, and the world was upside down, the prices of houses in most parts of the United States dropped 30% to 40%, max. There were a few exceptions, such as some parts of Las Vegas, Phoenix, and Miami, where the prices dropped more than 50%.

First, they could stay in cash, which means they are losing money due to inflation. Or

Third, they could utilize a risk-parity portfolio. Remember, this is a very different approach than just balancing the dollar amounts you have invested in assets—which is the basic diversification strategy that almost everyone else in the industry utilizes. And it's a strategy that anyone can implement.

There's an awful lot of luck relative to skill. Investing is 95% luck and 5% skill.