Comments on: Risk Tolerance: Giants vs. Patriots

By: paidtwice

paidtwice — Mon, 31 Dec 2007 14:23:29 +0000

Did they really find somewhere to bet on the Giants with no point spread? Hmm.

You should read Wise Investing made Simple, Swedroe uses a lot of sports analogies to compare to the market too

By: mrsmicah

mrsmicah — Mon, 31 Dec 2007 12:10:48 +0000

E.C. I think that’s a good approach, especially for people like this second guy. I’ve heard some bloggers talk about using 10% of their portfolio for experimentation and such. I think it’s a great outlet.

If I chose to do it, I’d probably just do a lot of research into funds that were trying to invest in socially responsible companies instead of trying to beat the market. But as I said, I’m risk-averse and I’d rather just know my money was going to something good…

By: RacerX

RacerX — Mon, 31 Dec 2007 05:38:42 +0000

There was column somewhere on investing and psychology and there were two questions:

1. If you lent someone a dollar today and they would repay you one of theese ways what would you take: A. The dollar back later today or; B. $2 next week.

2. Would you rather invest $100 in something with: A. 100% chance of a $200 returned, or B. 80% chance of $300.

In both cases it would be better financialy to invest in B. Question one is pretty obvious(although most said A) but question two becomes a look at how your would invest in general.

B is the right answer because 80% of $300 is $240, a $40 better return.

My problem is that I like A’s safety and B’s payout!

By: E.C.

E.C. — Mon, 31 Dec 2007 05:27:25 +0000

What do you think about the “index plus a few approach” espoused by the Motley Fool in which invest primarily in index funds but devote a fraction of your portfolio to picking individual stocks you think stand a good chance of beating the market? I’m enough of a chicken that I want to accumulate more money before I invest in the stock market, even in index funds.

By: Millionaire Mommy Next Door

Millionaire Mommy Next Door — Mon, 31 Dec 2007 04:23:09 +0000

Great use of this story. I’d like to point out that with stocks, though, you aren’t limited to just two “teams”. It is possible to pick stocks that are “playing ball” well AND will “score a field goal”.

My investment portfolio risk is about equal to the broader market, yet outperforms nonetheless.

I wish I could add a few more football analogies, but I’m not much of a sports fan…

By: CatherineL

CatherineL — Mon, 31 Dec 2007 03:38:40 +0000

Great post Mrs M. I don’t gamble on football, horses etc as I just think it’s crazy. You can’t change your mind halfway through the game and get your money back if your team is losing. But you can set stop losses etc if you invest in the stockmarket.

I used to be an active investor – but nowadays I keep everything tied up in my own business.

It really is important to do a lot of research and know your stuff if you’re going to pick your own stocks. A couple of times, I’ve bought stocks on a whim and lost a lot of money.

Mostly, I would pick six shares and usually two would do badly, two would produce average returns and two would do well.

I would usually do quite a bit of research first and understand the sector I was investing in, and things that could happen that might have a detrimental effect on that particular business. I would also send for company reports on the business in question to make sure the company met my financial criteria for investing. And I’d also do I bit of research on the Directors of the business too.

So, I suppose I’m not a huge risk taker. Occassionally I’ve taken foolish risks, but mostly, I like to do my research first.

By: remodelingthislife

remodelingthislife — Mon, 31 Dec 2007 01:49:47 +0000

If you hadn’t mentioned team names I’m like the guy who wants to double his money. But I’d never pick the Giants over the Patriots

I think I’m pretty much really gung-ho to watch my stock picks skyrocket. I’m fortunate enough to have free trades when I do trade stocks so it’s really fun for me to pick one and see if I was a moron or a genius.

I am very very risk tolerant.