BF2S Forums Stock Market versus Horse Racing

Flaming_Maniac wrote:

No, if you find a company with a vision and people you trust, that means lower risk. It does not mean no risk, but it is an informed decision.

No. Risk is the variance in an assets return. The total risk is a combination of the systematic and non-systematic risk of an asset or firm.
- Systematic risk: Risk that affects the entire market (and thus otherwise known as market risk)
- Non-systematic risk: Risk that affects an individual asset (“asset specific” risk)

Flaming_Maniac wrote:

diversification

Is how you eliminate non-systemic risk from your portfolio..

american only right now.......i love the live races at the track.

I'd say it depends on how you're investing(gambling).  Index funds won't be doubling or tripling in value but will generally pace inflation.

11 Bravo wrote:

Flaming_Maniac wrote:

11 Bravo wrote:

what kind of return do you expect investing in a company with 10 people?

A start up is the kind of company that you can expect a 200% return on if anything.

well good luck with that.  thats what these a holes want you to believe

A holes? What a holes? Not very many people tell you to be an angel investor.

mcminty wrote:

mcminty wrote:

Flaming_Maniac wrote:

No, if you find a company with a vision and people you trust, that means lower risk. It does not mean no risk, but it is an informed decision.

No. Risk is the variance in an assets return. The total risk is a combination of the systematic and non-systematic risk of an asset or firm.
- Systematic risk: Risk that affects the entire market (and thus otherwise known as market risk)
- Non-systematic risk: Risk that affects an individual asset (“asset specific” risk)

Flaming_Maniac wrote:

diversification

Is how you eliminate non-systemic risk from your portfolio..

You just defined risk, as if something so simple as risk/reward needed to be defined in the first place, and you didn't actually contradict what I said.

Finding a business with a plan and competency to back it up is a lower risk investment than a company you know jack shit about. Giving your money to people that know what they are doing is going to give you a higher average rate of return than people with their thumbs up their asses. If you read diversification in the context of how I said it, you would understand that diversification is used by asshole businessmen to solidify their low margins is crap. Diversification in and of itself serves the perfectly valid purpose of kicking out the outliers, the point being it is not an excuse to skip your research.

Invest in industries you know a lot about. For me it's mostly tech and video games.

Cybargs wrote:

Invest in industries you know a lot about. For me it's mostly tech and video games.

This is the primary point in Buffetts investment strategy. He sticks with businesses he understands. This is why he didn't make a cent of the dot.com boom... but he didn't take any losses either

11 Bravo wrote:

JohnG@lt wrote:

Cybargs wrote:

Invest in industries you know a lot about. For me it's mostly tech and video games.

This is the primary point in Buffetts investment strategy. He sticks with businesses he understands. This is why he didn't make a cent of the dot.com boom... but he didn't take any losses either

he took loses with netjets and knows shit about aviation so......

And he's said that he will never touch the aviation industry again. It's too cutthroat so there's no chance of ever making a profit.

"The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down."

— Warren Buffett, annual letter to Berkshire Hathaway shareholders, February 2008.

Last edited by JohnG@lt (2010-07-11 20:23:57)

Here's another:

"As of 1992, in fact—though the picture would have improved since then—the money that had been made since the dawn of aviation by all of this country's airline companies was zero. Absolutely zero."

— Warren Buffett, billionaire investor, interview 1999.

11 Bravo wrote:

i know john, i used to work there

Where?

11 Bravo wrote:

netjets.  had to watch multiple daddy buffet vids and speeches.

Interesting company. Selling timeshares on planes instead of vacation homes.I bet it got hit hard by the recession

Flaming_Maniac wrote:

You just defined risk, as if something so simple as risk/reward needed to be defined in the first place, and you didn't actually contradict what I said.

Finding a business with a plan and competency to back it up is a lower risk investment than a company you know jack shit about. Giving your money to people that know what they are doing is going to give you a higher average rate of return than people with their thumbs up their asses. If you read diversification in the context of how I said it, you would understand that diversification is used by asshole businessmen to solidify their low margins is crap. Diversification in and of itself serves the perfectly valid purpose of kicking out the outliers, the point being it is not an excuse to skip your research.

But the point is that through diversification, you remove the non-systemic (firm specific) risk of your portfolio.. thus making the task of finding and investing in some "business with a plan" redundant.

Flaming_Maniac wrote:

11 Bravo wrote:

Flaming_Maniac wrote:

No, if you find a company with a vision and people you trust, that means lower risk. It does not mean no risk, but it is an informed decision.

what kind of return do you expect investing in a company with 10 people?

A start up is the kind of company that you can expect a 200% return on if anything.

lol. You invest in a start up company you have statistically 50% chance of losing everything within a year and something like 80% within 5 years.
You wont make any kind of profit or cash flow for about 2-3 years, and you can't sell what you own because it has the liquidity of a brick. There is very few things more risky then investing in start up businesses, but then if it does become a success you will make thousands % profit not 200.

Getting involved with one which has a good business plan may lower those risks, but its in no way a guarantee of success, and you'll still be waiting years to cash in. Also very few small businesses trade on the share market making this whole idea irrelevant to the OP.