I'll quote one of Berkshire Hathaway's early Insurance CEOs
> There are no such things as bad risks; just bad rates
The problem I perceive with most people and finance is that they simply do not think about it sensibly at all.
An example:
I love Coca Cola (the soft drink). But it costs $3 a can right now. I will wait until it is $1 and buy up as much as I possibly can. I'll get more value that way.
Now a stock market example:
Coca Cola (the stock) just fell 75% to $1 a share, I won't buy it because the market is clearly telling me something (during a economic crisis). Oh wait it just went up to $3 - I will now buy.
That's insane. But that's how it works. Think of stocks like computers, tablets, food and clothes. Just buy good quality ones cheap and know that they money you put in is never coming back out.
Index funds get one thing right - buy cheap, don't sell and know the money you put in is untouchable. But they get another thing wrong - diversification doesn't exist.
> There are no such things as bad risks; just bad rates
The problem I perceive with most people and finance is that they simply do not think about it sensibly at all.
An example:
I love Coca Cola (the soft drink). But it costs $3 a can right now. I will wait until it is $1 and buy up as much as I possibly can. I'll get more value that way.
Now a stock market example:
Coca Cola (the stock) just fell 75% to $1 a share, I won't buy it because the market is clearly telling me something (during a economic crisis). Oh wait it just went up to $3 - I will now buy.
That's insane. But that's how it works. Think of stocks like computers, tablets, food and clothes. Just buy good quality ones cheap and know that they money you put in is never coming back out.
Index funds get one thing right - buy cheap, don't sell and know the money you put in is untouchable. But they get another thing wrong - diversification doesn't exist.