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Assessing Risk: Are You An Investor Or A Gambler ?
Another article that is based on, "if you do like I do, you are an investor, if you don't you are a gambler". The corresponding terms used in religion are faithful and heretic.
Wellll, seemed a bit boilerplate to me, but I think he said something like:"Buy the unloved' (cheaply); "don't chase performance"; "buy indexes if you don't have time and passion to do research"; and then he gave fairly standard advice for research if you really have the time. (He left out the bit about hoping that you weren't buying shares the company CFO was selling.) At least he filled a column. Didn't look like he was placing faggots around anyone's feet and looking for a match.
He has incinerated the "gamblers" verbally well enough. One group's faithful is another man's heretic. Same thing with investing. People draw arbitrary lines around their comfort zone and claim it to be the most wise with a lot of rationalizations and "studies" to support it.
For example, he starts with a superficial explanation of value premium, translates a strategy of buying 3 year beaten down sectors with no other consideration as supported by that value premium (which as a form of market timing can be dangerous, see "value trap") but considers strategies based on momentum premium as performance chasing and unwise, all of these supported by studies, of course. But then people, who don't believe in any form of market timing value or momentum wise would consider both of them (including this author) traders or worse gamblers. With his definition, many people here would be gamblers because they buy funds in a group think based on recent performance - FMIJX comes to mind. Ted, finds most people here risk averse and doesn't believe in reducing risk via diversification but draws a line around leverage which is not in his comfort zone and tries hard to justify it.
Given that investing is not mechanistically explainable and results guaranteed, it is not surprising to see various religions with arbitrary boundaries and often inconsistent assumptions all bound by a hope and a prayer.
Comments
Didn't look like he was placing faggots around anyone's feet and looking for a match.
For example, he starts with a superficial explanation of value premium, translates a strategy of buying 3 year beaten down sectors with no other consideration as supported by that value premium (which as a form of market timing can be dangerous, see "value trap") but considers strategies based on momentum premium as performance chasing and unwise, all of these supported by studies, of course. But then people, who don't believe in any form of market timing value or momentum wise would consider both of them (including this author) traders or worse gamblers. With his definition, many people here would be gamblers because they buy funds in a group think based on recent performance - FMIJX comes to mind. Ted, finds most people here risk averse and doesn't believe in reducing risk via diversification but draws a line around leverage which is not in his comfort zone and tries hard to justify it.
Given that investing is not mechanistically explainable and results guaranteed, it is not surprising to see various religions with arbitrary boundaries and often inconsistent assumptions all bound by a hope and a prayer.
Granted, you can mitigate your risk and approach in any number of ways but the two seem to go hand-in-hand to me.
http://seekingalpha.com/article/1954371-dont-worry-about-being-right-focus-on-risk-vs-reward