What can prevent you from making a lot of mistakes while taking risks?

3 replies
A beginner investor may have difficulty understanding the nuances of the stock market. You can understand which companies are trustworthy and which are not. But if you invest to earn a lot of money, you have to take risks. What can prevent you from making a lot of mistakes while taking risks? First of all, an investor should be focused not on one individual stock, but on different varieties of risks. If you’re only getting interested in investing, you have to know what indicators would show a non-profitable investment. Risk is determined by covariance, especially if your portfolio has a large number of assets. http://www.veroney.com/


Raunaq Vaisoha
Coming from the perspective of a common/non-professional investor, I simply make a note of why I’m investing in a stock and then track its performance semi-annually. So, for instance, if I’m buying a stock with a higher P/E than the industry benchmark, I would typically write down why and then test my hypothesis over time. So if I end up losing money on the bet, I can learn where I went wrong and correct my strategy for the industry.
Abe Winter
if you're talking about algo finance, IMO you can't easily compete unless they have a very special proprietary dataset, a very special algorithm, or an operational / latency advantage. if you're talking about investing in young companies, startups make mistakes; there's a learning curve. but once you know what you're doing, there's value in operational excellence -- bezos has a good quote about permitting experiments but also executing very well when you scale.
Pushpak Mundre
If you are a new investor then I would suggest don't invest lot of money in market. your first step is invest very little amount of money in multiple companies and keep doing it for 1 year and throughout the year observe everything about the company. Now you have experience of one year and now you can pump in more money. I would suggest to read books like intelligent investor, The Little Book That Still Beats the Market by Joel Greenblatt and Poor Charlie's Almanack by Charlie Munger, last book is about the mental models which will help you not only in market but life.