> Learn the lesson of what happened to BP after they bottomed out.
By buying the panic, in effect you are selling out "of the money put options" to the rest of the market. In effect you are selling insurance policies saying things are not worse than they look. The performance characteristic of selling OOTM options is that most of the time you make money. But...
Once in a while you lose your shirt. Ask Victor Niederhoffer. What is there is a catastrophic meltdown and Tokyo has to be evacuated? What will the Nikkei be worth then? What about all the people who bought dot.com stocks after they fell 50% because they were "cheap".
When considering the merits of investment, it is worth asking:
1. Am I selling insurance to someone without realizing it?
2. Does my strategy amount to nothing more than leverage? Leverage works well in rising markets and works very badly in falling markets.
3. Are there hidden risks I am not aware of but someone else is? Or as Buffett puts it, have you been playing poker for an hour and still haven't worked out who the patsy is? (It's probably you).
4. Are you taking uncompensated risks like putting 1/3 of your net worth into one company when you could be diversified for no cost?
> know that it will recover, whether it's over 1 year, 2 years, or longer
Let's put this in perspective. The Nikkei is down 80% over the past 21 years. At an optimistic rate of increase of 6% from now, it will be another 25+ years before it hits 38957 again. All up, over 45 years.
Have a look at Shiller's house price graph. From 1890 to 1955 there was zero real increase - and large falls in the meantime. This is 65 years. Again long term is very long term. Same in Australia by the way. The USA and Australia of the most prosperous and successful economies in the C20. Others did far worse.
This "in the long run all will be well" argument just doesn't hold water. Not if you have a human life span.
See for more on this "The Big Investment Lie: What Your Financial Advisor Doesn't Want You to Know" by Michael Edesess. Everything a financial planner tells you may be a self-serving lie.
At my local university (University of Melbourne) some of the libraries are closed to the public eg the Melbourne Business School Library and the Physics library. In practice you can usually sneak into the physics library, but...
Also, a lot of the journals and even books (eg Ralph Vince's latest book on risk management) are only available online now and require a university logon. So in effect those publications are closed off.
At Melbourne Uni, members of the public cannot access publications in the short-term loans area (4 hour loans).
I don't have an issue with the conclusions about making babies smart.
However it's different with maternal depression. If you read the original study, there was a 91% probability that the DHA reduced severe maternal depression. In the study the reduction in severe depression was 15%. However because 91% probability is less than the gold standard of 95% probability it was not conclusively proven.
Given the study design, a reduction of 35% would have been required before it would have been found to be proven ie statistically significant.
Unfortunately, showing an innumeracy that is common in the medical world, they claimed they had shown there is no relationship, which is plainly false.
It is also worth pointing out that the study was prompted by earlier studies that showed eating fish had all sorts of benefits. But in the study they only gave one component of fish oil (DHA) in substantial quantities. Fish also contain protein, minerals, other vitamins, Omega3 EPA and many other beneficial nutrients. So by no means did they show no benefit from eating fish.
Finally the study did have a major reduction in the incidence of pre-term deliveries. Some of the "no results" statistics were only obtained by artificially removing the effects of this reduction in premature births from the analysis. If you are concerned about, or have a history of pre-term delivery it is worth considering fish oil for this benefit alone.
To a certain extent this guy has a point. You are rich if you can afford a good lifestyle without having to work for a living. These people have a high income, but they also have high level of spending and they have nowhere near the assets to support their lifestyles.
So, rather than being rich, they are wage slaves with high incomes.
When you have enough money to stop working and still have the lifestyle you want, your life is completely different. It buys you the one thing that is really precious - the time to do what you want with your life.
Although I am not extremely wealthy, I have enough savings to stop working and to spend my time the way I want.
The other interesting aspect of this case is that it is a classic example of the hedonic treadmill. No matter how rich you are, how successful, how productive, after a while the joy wears off and you think: If only I had a bit more, then I'd be happy. The millionaire thinks he or she needs $10m, with $10m you think $100m, etc. "The only way to win this game is not to play".
By buying the panic, in effect you are selling out "of the money put options" to the rest of the market. In effect you are selling insurance policies saying things are not worse than they look. The performance characteristic of selling OOTM options is that most of the time you make money. But...
Once in a while you lose your shirt. Ask Victor Niederhoffer. What is there is a catastrophic meltdown and Tokyo has to be evacuated? What will the Nikkei be worth then? What about all the people who bought dot.com stocks after they fell 50% because they were "cheap".
When considering the merits of investment, it is worth asking:
1. Am I selling insurance to someone without realizing it?
2. Does my strategy amount to nothing more than leverage? Leverage works well in rising markets and works very badly in falling markets.
3. Are there hidden risks I am not aware of but someone else is? Or as Buffett puts it, have you been playing poker for an hour and still haven't worked out who the patsy is? (It's probably you).
4. Are you taking uncompensated risks like putting 1/3 of your net worth into one company when you could be diversified for no cost?