Exactly. The American economy, including any rich economy in the world, will lose its dynamism if the Steve Jobs, Bill Gates decide to take big risks when they reach 70.
The 3 biggest mistakes people make on RISK
- Thread starter dozu888
- Start date
Agree 100% except that for the rest of the 99% who took the risk and failed probably would have benefited most from dozus advice. The one thing is you are not guaranteed making it to 70 lol.
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Good points;
QQQ did go down 80%+/ in 3 year bear of 2000,2001,2002.[Edit ; most small companies/startups have a failure rate of 80%+/ ; but best to start them when young+ that is why most do it that way.
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Not sure how you came up with the 25k number or why you would think so many people would day trade 25k.
Most day traders I've met are part timers and already have a pension plan or investments for retirement. Thus, whatever they save up for day trading...it goes to day trading.
Thus, if they lose their day trading capital to trade losses, it did not impact their retirement portfolio.
In fact, the only 25 year olds that I knew that had 25k...they were not from a poor family and had other things or they had a parent that was taking care of their financial needs as they're starting their young careers in whatever new job.
Seriously, what's the most common backgrounds of a 20 year old that has 25k to spend on anything he/she wants...including day trading if that's their desire ?
Further, risk management usually doesn't begin until someone with money that has started a family or gotten married because when you're single...risk management is not a priority.
Yet, my own personal experience via knowing college friends that were 20 years old and had > 25k...they were at a university and day trading or investing was far away in the future...not even on the radar. Thus, that 25k went towards a car, campus parties, paying apartment rent, spending money on their friends or lovers, springbreak travel expenses and so on.
The few that had > 25k...they thought seriously about starting a business and if they think they got something cool...they dropped out of college with that NIKE slogan in their head "Just Do It" or they listen to Shia LaBeouf.
wrbtrader
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%%Not sure how you came up with the 25k number or why you would think so many people would day trade 25k.
Most day traders I've met are part timers and already have a pension plan or investments for retirement. Thus, whatever they save up for day trading...it goes to day trading.
Thus, if they lose their day trading capital to trade losses, it did not impact their retirement portfolio.
In fact, the only 25 year olds that I knew that had 25k...they were not from a poor family and had other things or they had a parent that was taking care of their financial needs as they're starting their young careers in whatever new job.
Seriously, what's the most common backgrounds of a 20 year old that has 25k to spend on anything he/she wants...including day trading if that's their desire ?
Further, risk management usually doesn't begin until someone with money that has started a family or gotten married because when you're single...risk management is not a priority.
Yet, my own personal experience via knowing college friends that were 20 years old and had > 25k...they were at a university and day trading or investing was far away in the future...not even on the radar. Thus, that 25k went towards a car, campus parties, paying apartment rent, spending money on their friends or lovers, springbreak travel expenses and so on.
The few that had > 25k...they thought seriously about starting a business and if they think they got something cool...they dropped out of college with that NIKE slogan in their head "Just Do It" or they listen to Shia LaBeouf.
wrbtrader
Most likely got the $25 k, this way =so many lose+ that is the minimum. Tim Sykes ran up $ 10k real good, daytrading mostly, in his college dorm ,with of all things--penny stocks.Bill Gates started MSFT with $50k, college dropout.
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I also agree that the risk mistakes that people do include taking too much risks, taking too little risks and taking unnecessary risks. Risk management involves a lot of planning with your capital. If you risk too much, you may end up losing all that and if you risk too little, your chances of success also become limited
Taking the right amount of risk if of utmost importance while taking risks people often make 3 common mistakes like:
1. Less information – Due to less knowledge about the latest market trends,people try to procrastinate and also suffer losses in the attempt.
2. Diversified portfolio – It is important for investors to understand the importance of diversifying their portfolio in order to decrease the risk of the portfolio by balancing the risky securities with less risky ones.
3. Too much leverage – It is also advisable to use leverage in moderation as higher the leverage ,higher the risk.
1. Less information – Due to less knowledge about the latest market trends,people try to procrastinate and also suffer losses in the attempt.
2. Diversified portfolio – It is important for investors to understand the importance of diversifying their portfolio in order to decrease the risk of the portfolio by balancing the risky securities with less risky ones.
3. Too much leverage – It is also advisable to use leverage in moderation as higher the leverage ,higher the risk.
Please need to think like a bank. I took a banking risk job just to understand how they do it. It has helped my trading significantly.
As a consumer / retail investor, when I balance my portfolio / day trade / or read the sensationalized news I think about:
Credit Risk
Interest Rate Risk
Liquidity Risk
Strategy Risk
Policy Risk
And adjust my activities accordingly.
As a consumer / retail investor, when I balance my portfolio / day trade / or read the sensationalized news I think about:
Credit Risk
Interest Rate Risk
Liquidity Risk
Strategy Risk
Policy Risk
And adjust my activities accordingly.
Common mistakes which can prove to be a disastrous for people are :
- Sometimes people are too driven by greed that they tend to invest in what they do not even understand.
- Lake of accurate money management plan or incomplete knowledge.
- People think that diversification is always good but it is not if invested in too many assets which don't come under top performers then it's of no use.
- Either lack or specialisation or unable to calculate Risk-Reward Ratio.