OTOTOT ... growthvalue.. I judge risk in much the same way you do, but this is subjective and there is a high failure rate by even the best investors. It's not just that you will overlook some factors, but also that much of the information available may be flawed, your analysis may also be flawed. What's even worse is that even if all of the above is correct, market prices are set by others ,and mass perception of facts may be different than yours. So at least in the short run, it may not matter if you are right as long as enough others are wrong. In fact for you to be able to buy a stock at a bargain price you have to assume that you are more right than the bulk of investors who are setting the prices. It is a matter of almost faith by investors that the truth will out in the long run, but I'm not sure that it always does. To me the market remains like some mysterious beautiful woman, that I will never be able to completely understand or predict. I will have to be satisfied that I'm able to do it just well enough to provide a comfortable living. I'm not even sure there is an objective risk in advance because the future by it's nature concerns events unknown to mere mortals.
Good point about separating risk from reward, but in the real world a logical person wouldn't take any significant risk without the chance of some reward, so they are linked together. When discussing risk I should have said "risk -reward"
Thanks for the interesting discussion, and good investing |
