Estimated reading time: 2 minutes 32 seconds
"Do Nothing Wrong and the Right Thing Will Happen"
This is the headline from Chapter 6 of the book "the art of the good life" by Rolf Dobelli. I have taken an extract from this chapter as it is so relevant for prudent RISK MANAGEMENT.
"The downside is always more concrete than the upside. The downside is like granite - hard, tangible, solid. Whereas the upside is like air. Investors who have been successful in the long term, such as Warren Buffett and Charlie Munger, work with mental tricks, tools, and attitudes that are eminently applicable to everyday life. Step One: avoid the downside. In their investments, Buffett and Munger are careful first and foremost about what to avoid - i.e., what not to do before they even think about the upside. Buffett observes: "Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them." You don't have to be a genius to do that. Charlie Munger has commented, "It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent."
The book is a treasure-trove of 52 useful lessons that I believe help everyone to get a perspective to lead a good life. It is impossible for me to cover so many quotes from the book. One more extract that I want to bring to your attention is from Chapter 50 "STURGEON'S LAW"
"In his classic 1949 book The Intelligent Investor, Benjamin Graham depicts the stock market as an irrational person called Mr. Market. Mr. Market, Graham's imaginary manic-depressive business partner, calls out new stock prices every day, offering to buy or sell shares. Sometimes he's euphorically optimistic, sometimes pessimistic and panicky. His mood goes up and down like a yo-yo. The good news is that as an investor you don't have to accept what Mr. Market is offering. You can simply wait and let the clamor of the market pass you by until Mr. Market makes such a good offer than it would be stupid to refuse. If he offers you a quality stock at an extremely low price-during a market panic, for instance. Ninety percent, even ninety-nine percent, of what Mr. Market yell can be safely ignored. Unfortunately, many investors don't see the stock market as an irrational, manic-depressive hawker but as a reflection of reality; they confuse the price of a stock with its value-and speculate until their money vanishes down the drain."
We shared copies of this book with attendees during our 8th year anniversary celebration because we believe any investment and wealth growth strategy should lead to a good life. On our 8th Year completion of Mitraz, our message to everyone is "We're all stories in the end. Just make it a good one!"
Please see the link below for highlights from the event.
Mitraz 8th Year Celebrations (click on the link)
The writer is the Managing Director of Mitraz Financial Services Pvt. Ltd and can be contacted at email@example.com