[openbeos] Re: Couple of non-sequiters

> 2) The simple truth is, that you buy greater potential for profit with
> a higher risk. You can as well gain 100% in a week via high leverage
> instruments like options or futures, but you can easily lose your
> complete investment and for the latter even more than that. Don't throw
> numbers around when you can't even estimate the risks involved.

But over the long-term, taking more risks will lose more than you will
win. On the flip-side, if you are safer, in the long run, you gain more.

Why?

B/c if you never lose money, then you always gain. As per compounding,
them more you gained in the past means the more you will gain in the
future.

If you take huge risks, you will eventually lose big. Now you have less
money to risk next time so even if you win big, you will lose again.

If you lose 100% then gain 100%, you are at 75% of where you started, for
example. Not good. However, if you gain 10% then gain 10% again, you
really gain 11% as you are gaining 10% on top of your 10%.

Warren Buffet outpeformed most people in the long run b/c he hardly ever
lost. This is the opposite of what the investor people want you to think,
which is the way it should be b/c they want to justify taking risks w/
people's money.

If you have a high return invenstment that is _perceived_ to be risky, but
it is not then you will make more on an investment that _is_ really risky.
For example buying a cow dung company when the price is half of all
assests will get you more profit than buying yahoo stock when it topped
out. Yet, yahoo is more risky.

risk =! gain

There are low risk investments that give modest gains. These are where you
want to put your money in. But it's probably best that nobody is going to
listen to me b/c this is what creates all those good buys to begin w/. If
everyone invested wisely, then returns on investment would be about 10% no
matter what you bought.

Fred

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