Gold Stupidity
- Thread starter Wicked Ice
- Start date
Berkshire Hathaway has a stake in 27 publicly traded companies, and stakes in many more private companies.
Going "all-in" in investing in only Silver/Gold is an incredibly risky move, Warren would say the same thing.
You missed the point.
The point is, at THAT time, Salt had a lot of worth.
Salt is readily available these days, however in the coming years, perhaps something like, lets say, Fresh Water, becomes a scarce resource. Then you may see water overtaking Gold.
Everything works some of the time, Nothing works all of the time. Yet the key lies in creating a situation where the outcome exceeds the sum of the parts. It is nothing more than a paradox.
"All in investing/trading" is nothing more than a gamble, irrespective of what is being traded (comodities, shares, stocks, metals, physical products...).
Heres a website with a simulation half way down showing how ratcheting in essence is the outcome of correct diversification.
Parrondo Paradox
Diversifying seems simple, yet its a very broad and misunderstood term.
Only a hand full of people (that ive personally met) truly understand the fundamental mechanics behind it. Most others talk baloney.
Isnt he the guy who sells books for a living? :anon.sml:
just messing
Investing is a gamble, i'm well aware. It's much like Poker, there are winners and losers. You can make a smart bet and lose, and you can make a dumb bet and win.
But those who win in the long run understand Bankroll Management. The basic premise behind Bankroll Management is that you don't enter a tournament or buy-in to a cash table with more than 1/20th of your bankroll. Doing this significantly reduces risk.
Investing is very similar. You can make the "right" investment and still lose out due to variance (market conditions you don't control). If you make the "right" investment and lose your total Bankroll, then you're a.) fucked, and b.) a dumbass.
Take Enron, it was the golden child of the stock market for a long time. All the information led investors to believe that it was the "right" investment to make. It must have been very tempting to go all-in to maximize gains. Most investors didn't, and when Enron collapsed, only a portion of their wealth was lost. Most of Enron's Employees, who went "All-in", got burned.
Anything in life is a gamble depending on how one perceives it.
I suppose you guys who do mediabuys/ppc dont go all in either, i would presume you test the waters first and then take it from there, dunno probably talking bollock here.
But it is one of the things that i do. I go in small, test it, if it confirms itself, i add, rinse and repeat until i build a good solid position in the market.
Going all in is the equivalent of walking upto a bird in a club and asking her for a shag from the get go. yes, you may get the odd horny one who takes you on, but more than likely you have to work for it, you know, warm her up, get a feel for how its going, and when it confirms itself you take the next step, rinse and repeat until you get what you want be it in her flat or alley/toilet/you name it.
Test, test and test, once confirmed, build a position.
Easier said than done.
Trading/investing is the same, many setups will fail, many will win, but the key point here is to truly understand why it failed, NOT why it worked.
Never played poker funny enough, few mates of mine go to vegas and all that good stuff but frankly it just doesnt appeal to me, ive got my fair share in trading.
As for risk/money management yes its key just like in poker, but its not the be all end all either, more is required to gain a long lasting edge.
The point here is that one can trade an instrument naked, but by diversifying *correctly* it allows for a smoother equity curve, less volatile dd's and better odds of succes (arbitrage?).
Unless you build an approach that doesnt concern itself of market conditions.
Here's another interesting poker theory, it's applicable again because of the similarities between gambling and investing.
Take the best poker player in the world, with all of his money (20+ million), and sit him against Obama, with all of the U.S. money. Obama is notoriously bad at poker, and the best poker player is obviously a huge winner.
You force both opponents to play against each other until the other goes broke. Obama wins 100% of the time. Why? Even though the best poker player makes the right call every time, the amount of variance in poker tilts the edge in favor of Obama, because he is considerably more banked than the poker player. 20 mill vs. Trillions.
I'm sure investing is very similar, a small fish can lose even if he's technically right, if he's up against bigger sharks with higher bankrolls.