Today’s your lucky day, I have some inside information on a stock. The stock has a dominant position in it’s field and is about to make a major “game changing” announcement in the next day or so.
Quick, what were the first thoughts that went through your mind?
If you are like most amateur investors, when presented with this investment idea your first thoughts most likely centered around, “HOW MUCH MONEY YOU COULD MAKE?”
In contrast, when investment professionals are presented with this same idea, their first thoughts will center around, “HOW MUCH MONEY THEY COULD POTENTIALLY LOSE?”
This polar opposite thought process is the major difference between how amateurs and professionals go about investigating an investment idea.
Successful investors understand that their first goal is to protect their capital. They understand that if they ever lost 50% on an investment…IT WOULD TAKE A 100% RETURN JUST TO GET BACK TO EVEN!
They will never even think of investing in an idea unless they are confident the risk reward is heavily heavily in their favor.
So remember, the next time you are presented with an investment idea…THINK LIKE A PRO!
Do Good and Make Money!