Sunday, December 29, 2019

Understanding risk in investment - II

Dec. 29, 2019

Introduction


It is my favorite topic. I like to write the second blog for this topic.

Investment or speculation


Here is the article I like to read again and again. I like to make sure that I understand the basics first.



dilute specific company risk
average rate of return - 4% - 12%
low risk, low uncertainty - average rate of return 4% - 12%
speculating, not investing
high uncertainty
very risky
compensate you for holding the risk
owning many companies
market-risk
total risk
specific-company risk


Actions:
eliminate, compensate, dilute, hold, own, include, use

Average rate of return

Actionable Items


In order for me to get the return to purchase a home in Canada, or build wealth to become a millionaire, I should invest early in Amazon stock in 2011. Instead I went through depress in 2009, 2010 very happy as a new immigrant, 2011 go back to cloth shopping. At that time, Amazon stock is $180 dollars.

I should even go back to early 2001, when I was laidoff, I should invest $5000 dollar laidoff compensation, invest a nice startup company like Amazon.



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