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Gold/Mining/Energy : James Dines -- Ignore unavailable to you. Want to Upgrade?

To: T.Bill who wrote (88)	9/18/2000 3:25:40 PM
From: Brian Moore	Read Replies (1) \| Respond to of 102

T Bill, My latist "ism" is SI-Hooey. For years I've gotten a funny feeling every time someone on SI said, "... but do your own due diligence." I am convinced that 99% of the people on SI have no idea how to do due diligence. Recently I've discovered several things about investing that just blew me away. The biggest is risk. Sure, you can make 30%, or whatever, but adjusted for risk are you really doing that well? Most people have no idea what "adjusted for risk" means. The basic idea is, How much risk is there that next month your portfolio will fall by a large amount? The answer is, The more your portfolio has moved up and down in the past, the bigger the risk. I've noticed that most people never, ever take this into account. A person who only owns 5 stocks is taking much more risk than a person who holds 25. A person who's portfolio moves up and down a lot is taking more risk. That's fine if they get huge, huge returns to justify the risk, but most don't. It takes a surprisingly high return to justify the risk most people are taking. The funny thing is, I've NEVER ONCE read anything on SI, Yahoo, etc. that deals with this EXTREMELY IMPORTANT concept. As long as the market is going up, most people will make money, and because they are being risky they will make more than they otherwise would. But what happens during downturns? If they have not been highly, highly rewarded for their risk, they will end up in a bad way. Most people never take this into account. Most people who buy their own stocks are taking way too much risk -- that is, they are not achieving the rewards they should for the amount of risk they are taking. PREDICTION: When the market next turns down, we're going to see lots of articles about risk management. We're going to see a lot of people with portfolios that go down faster than the market averages because they hold risky portfolios. In the long run these people are taking too much risk -- they're not being properly rewarded for the amount of risk they're taking, and they're going to be sorry. PREDICTION: On line trading will fall out of favor as people realize they really don't know what they're doing. This is a fad. 98% of people on SI are fooling themselves. Soon enough they'll see the results.