Edit... I see you switched our names around in edit mode! Anyway, this still makes sense, because Jay did very well on a QCOM triple reverse spread on options speculation. This is just a general discussion on the two approaches to 'investment', though Jay's is what one would more accurately call speculation.
Zeus, Jay doesn't have "QCOM returns" beating my QUALCOMM investments. He has zero-sum bets on a wide range of short term speculative positions, which have not done that well for him this year.
He takes a statistical approach to getting money meaning, lots of small allocations [albeit large compared with an Indian street sweeper's salary], hoping that he gets enough right that the sum of the little bits adds up to a lot of bites.
That's a sound approach if one is not just betting blindly as on a roulette wheel, hoping to be one of the lucky ones. Jay thinks a lot and understands a lot, and like me, and everyone, is always right, until proven wrong by the exceedingly fine grinder of reality.
So, by figuring a few major facts about some situation, such as electricity in Pakistan is a good thing to provide because everyone needs electricity and India probably won't nuke it because India and Pakistan don't really want to demonstrate for the rest of the world what the world's first nuclear-powered exchange of tribal conflict would look like. The USA did a demonstration on real humans and real cities of what nuclear bombs can do, but that wasn't an exchange, just a unilateral demonstration.
Jay has known unknowns and unknown unknowns not to mention complete surprises which might mess with that big idea, but they probably won't. Though they will. So he does lots of such guesses so even when the improbables and known unknowns and unknown unknowns and "what the hell??!!"s cause a particular investment to crash and burn, which they of course will, then they are small compared with the whole and the correct determinations outweigh those few failures.
I take the opposite approach. I know everything about a tiny aspect of life and place a large, long term investment on my understanding. Actually, it's not quite everything that I know, because everything is a LOT of things to know. So, I'm doing the same as Jay, but with a bigger lump, deeper knowledge about a particular thing, for a long term, gaining a bigger profit if things go right and a bigger loss if things go wrong.
The two approaches should end up giving about the same result over a longgggg run, if the people doing the investing are equally diligent, percipient, perspicacious and lucky. Tax laws push the two together. Several times, I would have sold my shares because I thought they had become too expensive, but New Zealand capital gains tax laws meant I would then be deemed to be a share trader, which would make me liable for tax on the capital gains. What I want is a long term, stable, increase in profits and dividends, on which I pay tax.
While owning just one share [ignoring a couple of minor share-holdings] is normally considered high risk, our whole lives are founded on investing in a single entity, being ourselves. Every step we take is on a single, tottering foot and we had best be always mindful of what we are doing lest we fall over and bump our heads, which have developed thick skulls due to millions of our ancestors bumping their heads, and having their heads bumped, but our heads are still quite like eggs.
So, we live our whole lives with our eggs in one basket, so to speak, and we all seem happy with that. Because the yolk in the centre of our egg is a model of the universe, which is our operating system, which keeps us from falling and bumping our heads and to stop us from being bumped, we carefully wend our way through life's challenges, looking after that yolk every step of the way.
Many of us have a joke instead of a well-modelled yolk and we get things wrong, so we break our egg and contribute to future generations having a harder-boiled yolk with a thicker shell, to get them along through the infinitely complex world we they will face.
With all our eggs, being one yolk in a thin-shelled cranium, in one basket, we had better keep both hands on the basket and watch the egg carefully. If we had lots of eggs to watch, we'd be like Mother Hubbard, who had so many children she didn't know what to do, or like the Kremlin or Maoistic central planners who think they can order millions of eggs around and do it well. Of course, they couldn't so they made a big omelette.
So, you see, my QCOM returns far exceed Jay's, though his "many eggs" approach might just work out better in the long run. My willie is far bigger than Jay's, longer lasting, and everyone wants to get a piece of the CDMA action from me. He sits there clutching his little golden Aztec willie, warding off the evil spirits and reflecting on the horrors of Aztecism. People wonder what the weird man is doing with his little gold bar as the gorgeous young women past clicking their passions into their amazing phragmented photon CDMA cyberphones and the young men fervently operate one in each hand in response, sending photos and video clips, and googling away.
Today's report: Q 385 G 403 = as the marathon continues in the 2004 Olympics, QCOM is approaching to lap the tired old Aztec runner yet again.
Mqurice
PS: Humpty Dumpty shouldn't sit on a wall. |
