Understanding risk in investment

Dec. 22, 2019

Introduction

I like to write something related to risk, I just learned negatively related case study through boglehead.org, and then I found out that it is so interesting to learn how to hedge, and also diversification of S & P 500 Index -> 400 -> 300 -> 50 -> 1 also translates from investment to speculation. I like to talk about risk more carefully.

How to understand risk?

It is hard for me to learn about risk. Because I have to put 50% of my asset into stock trading accounts, I had hard time to put into those portfolio in May 2019.

I do understand that I have to hold high standard on my personal finance learning. The more I learn the more I can earn. I also like to add one more constraint, if the market goes up, I will earn money since my portfolio follows the market. I will not try to beat the market.

I have interest to learn more how to reduce stress as an investor. One idea is to read more books, and then articles, meet more people to serve the site like boglehead.org. I like to spend time to read well-written articles on boglehead.org, I found out that those articles are best ones so far.

Taking risk

The risk I take is that all my research and portfolio is based on worst scenario 2008 to 2009. More detail, the 2008 - 2009 recession S & P 500 index has 60% loss, two dips. But what if 2019 has a recession with 80% loss, two more dips, last more than three years.

I am 53 years old. How to manage risk from 53 to 57 years old? I never look into my age, my health and also challenge for people in 50s.

What is next?

I like to write topics like to take risk in my career, my weekend projects.

I need to understand how to evaluate the risk, how can I learn from my failures in 2019? I need to review what risks I take not just in equity market.