A Quote by Daniel Kahneman
There's a tendency to look at investments in isolation. Investors focus on the risk of individual securities.
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Risk managers and investment bankers and actually, all kinds of investors took on more risk than they expected. So there was a failure of risk management. There was a failure to recognize how much risk there was in some of these securities that people bought.
Risk is not inherent in an investment; it is always relative to the price paid. Uncertainty is not the same as risk. Indeed, when great uncertainty - such as in the fall of 2008 - drives securities prices to especially low levels, they often become less risky investments.
Targeting investment returns leads investors to focus on potential upside rather on downside risk ... rather than targeting a desired rate of return, even an eminently reasonable one, investors should target risk.
There is a natural tendency for investors to devote a significant majority of their time to finding new ideas. After all, uncovering great companies selling at great prices is the lifeblood of successful investing. But in the never-ending quest for the next great idea, investors often give short shrift to their existing investments.
Where you want to be is always in control, never wishing, always trading, and always first and foremost protecting your ass. That's why most people lose money as individual investors or traders because they're not focusing on losing money. They need to focus on the money that they have at risk and how much capital is at risk in any single investment they have. If everyone spent 90 percent of their time on that, not 90 percent of the time on pie-in-the-sky ideas on how much money they're going to make, then they will be incredibly successful investors.
My career in academic research has not been involved with active management of securities. I've tried to understand risk-and-return relationships; also the pricing of derivative securities.
Investors need to understand the risk of individual exchanges before trusting their funds with them.
My view is that one should diversify broadly across different fund investments. However, it's tough for investors to try to pick the appropriate risk level that they should manage their funds at. Having a personal adviser would be helpful.
[Kierkegaard] did not care for large public events because every crowd is in itself an untruth. The only way out is isolation, aloofness. Only the individual is a reality and only the individual is true. Maybe the process of isolation in an individual is one of the most important matters that exists. Is not the whole point of this world for people to separate and become individuals?
I mean, these good folks are revolutionizing how businesses conduct their business. And, like them, I am very optimistic about our position in the world and about its influence on the United States. We're concerned about the short-term economic news, but long-term I'm optimistic. And so, I hope investors, you know - secondly, I hope investors hold investments for periods of time - that I've always found the best investments are those that you salt away based on economics.
To reduce risk it is necessary to avoid a portfolio whose securities are all highly correlated with each other. One hundred securities whose returns rise and fall in near unison afford little protection than the uncertain return of a single security.
In some industries, we refer to risk taking as 'research and development.' At financial institutions, we often take risk by investing in securities.
The tendency of organization is to kill out the spirit which gave it birth. Organizations do not protect the sacredness of the individual; their tendency is to sink the individual in the mass, to sacrifice his rights, and to immolate him on the altar of some fancied good.
If we're talking about buying exchanges abroad, we have to have global securities standards, as we have global banking regulations. I'm talking about margins. Now, the United States has certain margin requirements that are not the same in London. Investors and hedge funds that want to borrow more money against securities ? if they can't in the U.S., they go abroad. That could add additional risks to the global economy.
Governments must address inconsistencies in their energy strategies, consider the links with broader economic policies, and stop sending mixed signals to consumers, producers, and investors. In particular, they must assess whether the right regulatory arrangements are in place to allow clean-energy investments to compete on a risk-return basis.
We got to know a lot of investors and know what they like and don't like. Through many co-investments opportunities, we have built trust among these investors. So when it came to investing in Xiaomi, things were a lot easier.
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