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This is why I am a trader and not an investor right now


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Excerpt from Marc Faber's http://www.gloomboomdoom.com/

 

Since nowadays, most assets are grossly inflated I am not so sure that this diversification is full [sic] proof anymore, but what I am sure of is that the strategy of owning different assets is the best option for the average investor. It is nonetheless pretty clear to me that if becoming ultra-rich is the objective, diversification is simply not an option. [i would add that it is the same for anyone who wants to stay rich...]

 

Charlie Bilello who is the Director of Research at Pension Partners, LLC, an investment advisor that manages mutual funds and separate accounts and who is the co-author of four award-winning research papers on market anomalies and investing was kind enough to share with us a paper entitled, Big Winners and Big Drawdowns. The paper is very interesting because it shows that people like Steve Jobs, Bill Gates, Jeff Bezos, Eric Schmidt, and Larry Page became incredibly wealthy by having almost all their wealth in just one business, which however, experienced repeatedly huge drawdowns.

 

Bilello rightly says that, “All big winners have big drawdowns. Accepting this fact can go a long way toward controlling your emotions during periods of adversity and becoming a better investor.”

 

[Every book written about trading by real traders speaks of long periods of drawdowns and having to make the most of thee times when things go your way.  How true that is!  In a World where investment is surely doomed, other than perhaps Gold, and job security is at extreme risk from economic collapse trading is the only possible way to make money.  At least until the brokers collapse...  Doom, Gloom, Boom?  Oh yeah...]

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