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Posts Tagged ‘risk’


 

Billionaire investor, industrialist and philanthropist, Warren Edward Buffett, and his thoughts on:

Vox populi

A public-opinion poll is no substitute for thought.

Overthinking

Beware of geeks bearing formulas.

Derivatives

Derivatives are financial weapons of mass destruction.

Suits

I buy expensive suits. They just look cheap on me.

Market Relativity

In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.

Fear and Uncertainty

You know, people talk about this being an uncertain time. You know, all time is uncertain. I mean, it was uncertain back in – in 2007, we just didn’t know it was uncertain. It was – uncertain on September 10th, 2001. It was uncertain on October 18th, 1987, you just didn’t know it.

Americans are in a cycle of fear which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear. We’ll break out of it. It takes time.

Media

The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves-and the better the teacher, the better the student body.

Wealth

I always knew I was going to be rich. I don’t think I ever doubted it for a minute.

Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.

Hindsight

If past history was all there was to the game, the richest people would be librarians.

Risk

Risk comes from not knowing what you’re doing.

Risk is a part of God’s game, alike for men and nations.

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

Taxes

If anything, taxes for the lower and middle class and maybe even the upper middle class should even probably be cut further. But I think that people at the high end – people like myself – should be paying a lot more in taxes. We have it better than we’ve ever had it.

Investors

We believe that according the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a ‘romantic.’

Contrarian Thinking

We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

Bad business

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

Diversification

Wide diversification is only required when investors do not understand what they are doing.

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Hungry Investors

Ever invest on an empty stomach?

From Freakonomics:

Does hunger affect risk aversion? A new study, written up on the British Psychological Society blog, says it does. Researchers had 19 males play a gambling game after a long fast; immediately after a 2,000-calorie meal; and one hour after the meal. The immediate effect of the meal was neutralizing: the more risk-averse men were less cautious when playing immediately after eating, and the opposite was true for less risk-averse men. An hour after eating, men who felt less hungry played more cautiously. “This parallels findings in foraging animals,” said Mkael Symmonds, one of the study’s authors, “where changes in metabolic state promote changes in behavior to maintain or reach a metabolic benchmark (to take more risk if intake rate is relatively low, and less risk if intake is relatively high), but here we see the effect in the economic domain.” The researchers point out that their findings may have implications for the obese, dieters, and people with eating disorders. (And, of course, traders.)

“Sent from my BlackBerry® wireless handheld”

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Kedrosky today on risk-aversion between Catholics and Protestants:

We examine the relations between mutual fund risk-taking behaviors and local religious beliefs. We find that funds located in regions with lower Protestant population or higher Catholic population tend to have higher volatilities of fund returns, consistent with Protestants (Catholics) being more (less) risk-averse compared to general population.

More here.

“Sent from my BlackBerry® wireless handheld”

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Good piece on Seeking Alpha about market correlations: these days individual fundamentals don’t seem to matter as much as general market trends:

We used to be a market influenced by lemmings, but now they run the market. Remember two weeks ago? Every asset up… get out of the way. Risk is ON! Five weeks ago? You own stuff? Loser! Risk is OFF! 12 weeks ago? Everything must go up! Last week? Sell sell sell… everything!

The measured correlation of markets is around 80%, which indicates investing is more a game of follow the leader than picking opportunities.

Read on here.

And for anecdotal proof, here’s how the price of crude oil is correlated with other commodities: like alcohol:

LONDON (Reuters) – Britain’s financial regulator has fined and banned a former broker for manipulating oil prices by buying more than 7 million barrels while on a drinking binge.

The Financial Services Authority (FSA) said it fined Steven Perkins, a former employee of PVM Oil Futures Ltd, 72,000 pounds ($108,000) and banned him from working in financial services for at least five years for carrying out trades without the authority of clients or his employer.

Perkins’ unauthorized trading pushed the price of Brent crude oil futures up to almost $73.50 a barrel — at that point the highest level prices had hit on the InterContinental Exchange in 2009.

The rest of the insanity here.

It’s an absurd game we play.

“Sent from my BlackBerry® wireless handheld”

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Controversial philosopher and lover of life, Rajneesh Chandra Mohan Jain, also known as Osho and his thoughts:

On Truth:

If you wish to see the truth, then hold no opinion for or against.

Let this truth go as deep in you as possible: that life is already here, arrived. You are standing on the goal. Don’t ask about the path.

The ‘truth’ is only a way of speaking; there is not something labeled ‘Truth,’ that one day you will find and open the box and see the contents and say, ‘Great! I have found the truth.’ There is no such box. Your existence is the truth, and when you are silent you are in truth. And if the silence is absolute then you are the ultimate truth. But don’t think of the truth as an object -it is not an object. It is not there, it is here.

On Courage:

You cannot be truthful if you are not courageous. You cannot be loving if you are not courageous. You cannot be trusting if you are not courageous. You cannot enter into reality if you are not courageous. Hence courage comes first… and everything else follows.

On Dreams:

Nobody is here to fulfill your dream. Everybody is here to fulfill his own destiny, his own reality.

On Ecstasy:

Ecstasy is our very nature; not to be ecstatic is simply unnecessary. To be ecstatic is natural, spontaneous. It needs no effort to be ecstatic, it needs great effort to be miserable. That’s why you look to tired, because misery is really hard work; to maintain it is really difficult, because you are doing something against nature.

On Love:

Only those who are ready to become nobodies are able to love.

When love and hate are both absent everything becomes clear and undisguised.

Falling in love you remain a child; rising in love you mature. By and by love becomes not a relationship, it becomes a state of your being. Not that you are in love – now you are love.

You can love as many people as you want – that does not mean one day you will go bankrupt, and you will have to declare, ‘Now I have no love.’ You cannot go bankrupt as far as love is concerned.

Millions of people are suffering: they want to be loved but they don’t know how to love. And love cannot exist as a monologue; it is a dialogue, a very harmonious dialogue.

On Fun, Joy, and Laughs:

Become more and more innocent, less knowledgeable and more childlike. Take life as fun – because that’s precisely what it is!

Fools laugh at others. Wisdom laughs at itself.

Take hold of your own life. See that the whole existence is celebrating. These trees are not serious, these birds are not serious. The rivers and the oceans are wild, and everywhere there is fun, everywhere there is joy and delight. Watch existence, listen to the existence and become part of it.

Seriousness is a sickness; your sense of humor makes you more human, more humble. The sense of humor — according to me — is one of the most essential parts of religiousness.

A little foolishness, enough to enjoy life, and a little wisdom to avoid the errors, that will do.

On Variety:

Life is a balance between rest and movement.

Experience life in all possible ways — good-bad, bitter-sweet, dark-light, summer-winter. Experience all the dualities. Don’t be afraid of experience, because the more experience you have, the more mature you become.

On Independent Thought:

To be alone in the only real revolution. To accept that you are alone is the greatest transformation that can happen to you.

Only people who carry the opinions of others need the support of others.

On Wonder:

Remain in wonder if you want the mysteries to open up for you. Mysteries never open up for those who go on questioning. Questioners sooner or later end up in a library. Questioners sooner or later end up with scriptures, because scriptures are full of answers. And answers are dangerous, they kill your wonder.

On Risk:

Do you think the people who were trying to reach to the Everest were not full of doubts? For a hundred years, how many people tried and how many people lost their lives? Do you know how many people never came back? But, still, people come from all over the world, risking, knowing they may never return. For them it is worth it – because in the very risk something is born inside of them: the center. It is born only in the risk. That’s the beauty of risk, the gift of risk.

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Pre-eminent Catholic priest, scholar, and theologian, Thomas Aquinas and his thoughts on religion, morality, and the human mind:

Free will:

A man has free choice to the extent that he is rational.

Diversity:

Because of the diverse conditions of humans, it happens that some acts are virtuous to some people, as appropriate and suitable to them, while the same acts are immoral for others, as inappropriate to them.

On wonder:

Wonder is the desire for knowledge.

Because philosophy arises from awe, a philosopher is bound in his way to be a lover of myths and poetic fables. Poets and philosophers are alike in being big with wonder.

Proactivity:

Better to illuminate than merely to shine, to deliver to others contemplated truths than merely to contemplate.

Narrow-mindedness:

Beware of the person of one book.

Equality:

By nature all men are equal in liberty, but not in other endowments.

Blind faith:

Clearly the person who accepts the Church as an infallible guide will believe whatever the Church teaches.

Good and evil:

Good can exist without evil, whereas evil cannot exist without good.

Risk:

If the highest aim of a captain were to preserve his ship, he would keep it in port forever.

Independent thought:

The highest manifestation of life consists in this: that a being governs its own actions. A thing which is always subject to the direction of another is somewhat of a dead thing.

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Two great inspirational quotes from William Arthur Ward:

On Education:

The mediocre teachers tell.
The good teachers explain.
The superior teachers demonstrate.
The great teachers inspire.

On Risk:

To laugh is to risk appearing a fool,
To weep is to risk appearing sentimental
To reach out to another is to risk involvement,
To expose feelings is to risk exposing your true self
To place your ideas and dreams before a crowd is to risk their loss
To love is to risk not being loved in return,
To hope is to risk despair,
To try is to risk to failure.

But risks must be taken because the greatest hazard in life is to risk nothing.
The person who risks nothing, does nothing, has nothing is nothing.
He may avoid suffering and sorrow,
But he cannot learn, feel, change, grow or live.
Chained by his servitude he is a slave who has forfeited all freedom.
Only a person who risks is free.

The pessimist complains about the wind;
The optimist expects it to change;
And the realist adjusts the sails.

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