Wednesday, December 21, 2005

Five Questions About Speculation Rules

Five questions and a bonus.

All investment is speculation and contains risk. If you have losses, or your gains are not what you want, these five questions may help you find the problem.

I gave a similar quiz a while back at Bastiat Free University.

The premise for the test:

Even burying your money in the ground risks net losses after inflation.

Entrusting your money to another is an even greater risk, you always care more about your money then a money manager.

Since life is risk, don't avoid risk, learn how to use and enjoy risk.


1) Do you lie to yourself successfully?
  • Do you set your watch 10 minutes ahead so you think you are running late?

2) Do you have blind spots you refuse to acknowledge?
  • Do you fully agree with anyone or any human institution?

3) Do you rely on third or fourth hand information?
  • My teacher said a book said that ------- believed....

4) Do you believe statistics and published reports on performance and trends?
  • Figures don't lie - but liars sure can figure.

5) Do you refuse to ask directions, are you slow to admit when you are wrong?
  • Do you have a hard time laughing at your errors, and moving on?

These five questions point out
personal areas that need attention to succeed at speculation.

The truth is there are millions of ways to make money in the markets. None of the ways are easy to find, and to profit you have to know yourself. This last question is for you if you were able to say 'no' to a few of the above questions.

6) Have you had speculation success before?
  • At what level did it stop? Did you lose everything once the losses started?

Everyone gets what they really want out of investments.

If you are sabotaging yourself, do some research on yourself before your market research. Develop a flexible long term view of yourself, and of the world.

Control yourself.

Control your risk.

Live long and prosper.



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