Quotes About Risk

Move out of Your Comfort Zone

En el camino a tu destino, en el logro de tu meta más importante, pregúntate continuamente, ¿cuáles son las peores cosas que podrían pasar? Y luego protégete contra ellas.

The comfort zone is the greatest enemy of human potential.

to become someone that you have never been before, you must do something that you have never done before.

Is It Baby Fat or Real Fat? The answer partly depends on the parents. A study of 854 Washington State children under three years old showed that a child is nearly three times as likely to grow up obese if one of his parents is obese. If you're overweight, your child has a 65–75 percent chance of growing up to be overweight. So, is that little paunch on your fourth grader baby fat? Not if you're sporting the same paunch.

without courage, there is no luck and no hope. He who dares, wins.

She had gambled with marriage, just like most people, but she had gambled unluckily and had lost.

Winning the Loser's Game

has become increasingly clear to me that one's capacity for risk-bearing depends importantly upon one's age and ability to earn income from noninvestment sources. It

In fact, the most profitable investments you will ever make are precisely at the times when pessimism is the most rampant.

A speculator buys stocks hoping for a short-term gain over the next days or weeks. An investor buys stocks likely to produce a dependable future stream of cash returns and capital gains when measured over years or decades.

Invariably, the hottest stocks or funds in one period are the worst performers in the next.

It turns out that the portfolio with the least risk had 18 percent foreign securities and 82 percent U.S. securities. Moreover, adding 18 percent EAFE stocks to a domestic portfolio also tended to increase the portfolio return.

October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August and February. —Mark Twain, Pudd'nhead Wilson

In addition, your psychological makeup will influence the degree of risk you should assume. One investment adviser suggests that you consider what kind of Monopoly player you once were (or still are). Were you a plunger? Did you construct hotels on Boardwalk and Park Place? True, the other players seldom landed on your property, but

when they did, you could win the whole game in one fell swoop. Or did you prefer the steadier but moderate income from the orange monopoly of St. James Place, Tennessee Avenue, and New York Avenue? The answers to these questions may give you some insight into your psychological makeup with respect to investing.

Laszlo Birinyi, in his book Master Trader, has calculated that a buy-and-hold investor would have seen one dollar invested in the Dow Jones Industrial Average in 1900 grow to $290 by the start of 2013. Had that investor missed the best five days each year, however, that dollar investment would have been worth less than a penny in 2013.

These very sad stories make all too clear the cardinal rule of investing: Broad diversification is essential.

Protect yourself: Every investor should always diversify.

Diversify across securities, across asset classes, across markets—and across time.

Just as contagious euphoria leads investors to take greater and greater risks, the same self-destructive behavior leads many investors to throw in the towel and sell out near the market's bottom when pessimism is rampant and seems most convincing. One of the most important lessons you can learn about investing is to avoid following the herd and getting caught up in market-based overconfidence or discouragement. Beware of "Mr. Market.

You should diversify over time. Don't make all your investments at a single time. If

The point is that market timers risk missing the infrequent large sprints that are the big contributors to performance.

Another lesson that cries out for attention is that investors should be very wary of purchasing today's hot "new issue." Most initial public offerings underperform the stock market as a whole. And if you buy the new issue after it begins trading, usually at a higher price, you are even more certain to lose.