john, in my opinion the no.1 thing that reduces risk is time in the market. If you pick good, large cap, preferably TOP40 companies and hold them you will make money. The real risk to wealth comes from trying to be clever and call the market in the short term. Just buy good companies and hold them. Problem is it's so simple that everyone thinks there must be more to it.
And diversification gives you more chances to get it right. Sure, I bought the dog GFI cos gold was giving bullish signals and it was the complete wrong move as gold went up but miners went down. Also, while BIL and MTN have performed very well, when I first bought they weren't stars. BIL was always a bit of a plodder but a good divi payer, it's only been recently that it rocketed. Point is I didn't forsee BILs rise and I didn't forsee GFIs fall. And that's why diversification builds wealth over time.
Brazen the biggest problem with a long term strategy is that it is soooooo boring. Most people are looking for action. Being patient is the No. 1 rule when investing. Ask me, I'm so damn bored.The compounding makes up for it though.
So true louisg! That's why I have a separate trading account so I can sometimes buy shares like HAR or gamble on bottom feeders or warrants. Trading the markets is FUN FUN FUN, but better not with long term capital. Our own very smart SimonPB always says he has his til death to us part porfolio and then trades in order to drink better wine (or not as the case may be.)
Interesting part of the world tho and awash with cash. He's over there cos they're launching a daily broadsheet, the first in Abu Dhabi. They've hired 200 media people from around the world, from papers like NY Times, Washington Post, WSJ etc. The editor was the editor of the Daily Telegraph before this post. They cherry pick skills from aound the world and pay top dollar for them. Interesting, when papers all over the world are in the doldrums, this one cannot accommodate all the advertisers who want to advertise. It's boom time there.
Sounds great.Not sure if that would be my kind of place.I suppose if the money's good it's easier to work long hours and sacrifice a few pleasures.Meanwhile I'll try to make my fortune the lazy man's way,here at OST. So far it's only made me poorer.The fun bit on the side often comes at a price!There's still a lot to be said for a good long-term portfolio.