Category Archives: A Wealth Method Mini Series

A Wealth Method Part 4: The Rules of Risk and Reward

A Blog Mini Series

Part Four

Accept small losses as being okay and as a part of life. Expect to experience several while looking to make a large gain.

Ideally we should welcome small losses, because they protect us from the large ones. I know, I know, who does cheerfully welcome losses? I don’t know much people that do either. But at least accept those small losses with good grace and as a fact of life.

In reality this mentality provides us with excellent protection. Get in the habit of taking small losses. If a venture does not work out, get out and try something else. Don’t get trapped on that sinking ship.

Of course, much like the majority of the rules pointed out, this one isn’t easy to achieve either. A way to look at this as being a fact of life is to think of the small losses the same way you do as expecting to pay taxes or electric bills, for instance.

It takes practice to come over these skills and overcome the challenges they come with. When you do, you’ll likely be amazed of the “thick skin” you have grown, and the rewards that come from following the rules of risk and reward and taking on risk head on.

Forecasts

“Human behavior cannot be predicted. Do not trust anyone who claims to know the future, to whatever extent.”  Continue reading

A Wealth Method Part 3: The Rules of Risk and Reward

A Blog Mini Series

Part Three

Once in a while you will regret walking away from a winning venture. Looking back, your decision of quitting will look like a wrong one as you watch a winning set continue on going without you. This situation happens to every speculator from time to time and may be very depressing.

But on the bright side, in the long run you make more money when you control your greed this way. You may have made the decision to quit early a couple of times resulting it turning out to be the wrong choice, but there will be a lot more times when it turns out right.

So, as it is said, “Always take your profit too soon.” What does this mean? Don’t ever try to squeeze every last dollar out of a venture. Always cash out before a winning event has reached its peak. Do not worry about the possibility of a venture still having a long way to go. This creates the fear of regret-do not fear regret. Since no one can tell the future, it is not possible for you to know when a venture is at its peak. So, you must assume it is close rather than far. Get out and take your profits. Remember (again): no one ever went broke taking profits.  Continue reading

A Wealth Method Part 2: The Rules of Risk and Reward

A Blog Mini Series

Part Two

Always Play For Stakes That Are Meaningful

You have probably heard the popular phrase, “Only bet what you can afford to lose.” You see it in investment type books, money management, in casinos, etc. Let’s take a deeper look into it.

Surely this approach is adopted by the majority. I don’t blame them, because it assures safety and prevents worry, a common need for human’s emotional well being. But what is an amount that you can “afford to lose?” For most it would be interpreted as “an amount in which if I lose it, it won’t hurt,” or “if I lose, it won’t make a significant difference in my general financial well-being.” A safe mentality, which leads to poor results.

So, what is that amount? A few dollars? A few hundreds or so? Common replies from the majority of speculators, if they happen to speculate at all. But think about this, say you risk $500 and you double your money, you’re still poor. Or, start a pooper scooper service business. You’ll make some money, but you have to work hard for it.

The best bet to beat the system is to Continue reading

A Wealth Method Part 1: The Rules of Risk and Reward

A Wealth Blog Mini Series

Part One

Everyone wants to win. But not everyone wants to bet, and there lies the difference. It is understandable that most people want to win without betting. It is within our age old teachings that causes this way of thinking. We are taught that risk taking is a foolish thing to do.

All of life is a gamble whether you see it that way or not, but it’s a realistic truth. Most people who understands this usually tries to find ways to place as few bets as possible. But there are a few who take on the opposite route and rather take risks head on and figure out how to exploit it and manage it. These are the people who are likely to become a part of the 20% of Pareto’s 80/20 Principle described in the blog The 80/20 Rule: Not Just About Smarts and Looks.

This blog mini series is about taking risks in its broadest sense. References to currency and speculation in the stock market will be used often, but the same rules apply to other markets such as real estate, art and/or antiques, metals, etc., and even life itself, if you shift your paradigm to see it. Continue reading