This is a contributor’s blogpost …
The tale of one of the most entertaining movies of the noughties is… well, there are too many to list! Yes, put Ryan Gosling in a suit and give him a crappy attitude and the flick will sell. Still, look past the man behind the mask and “The Big Short” is a Cinderella story where the little person takes on the banks and wins. In this movie, “little” means million-dollar hedge funds, but that’s beside the point. Carell and Bale won and it’s because they read beneath the lines of the housing market. Here are four more ways David can take on Goliath and win.
Rule number one of Fight Club is not to invest in the first place. Sorry, investment is good but only in a positive manner. The temptation when there is money on the table is to want a project to fit the bill. So, in your head, you screw with it until it begins to look promising and then throw cash in its general direction. When the stock tanks, you say “I can’t believe it!” even when the signs were there all along. Money is hard earned, which is why it’s essential to take a pass when an option doesn’t feel right.
Low Good; High Bad
Investors want to make quick money because, well, who wants to wait around before they hit the billion mark? The answer is no one, in case the rhetorical nature of the question wasn’t obvious! Still, high returns are that way for a reason: high risk. So, the big money shot hardly pays off as the option inevitably fails. Voo stock price is solid, has been for a long time and is priced accordingly yet pays out more than most stocks. Men and women who are experts believe the key is to accumulate growth over time.
Not to contradict the last paragraph within one sentence, but a portfolio shouldn’t be all low-risk. Sure, the majority of it should be, yet an investor needs a healthy mix. Why? It’s because “sure-things” aren’t guarantees and will fail. Sorry- such is life! Because it’s never savvy to put all of your eggs in one basket, diversifying helps to avoid risk. So, even though they are naughty by nature, a selection of high-risk stocks can keep the money turning. Just to drill the point home, even Warren Buffett dips into the occasional risky investments. Yep, God has given his opinion and he’s on board.
Nothing is short-term and a fall in the market is not a consistent analysis. Therefore, never let it scare you into pressing the red button marked “Nuclear Codes”. Investments are like fine wines in the sense that they have to mature before they reach their required level. When you do a “Donald Trump”, there is no way to get back in without raising expenses on your position. Oh, it ain’t easy but letting an option breathe is essential if you want to make real money.
Did you ever think you could learn to make money from watching a movie?