Control Risk is NOT a choice in Investing
How does Uncle8888 control his risks?
- Limit investing capital exposure to any one stock.
- Diversify but Don't Over-Diversify in any one sector.
Limit investing capital exposure to any one stock
When his account size was small, he limits it to at most 10% of his total investing capital to any one stock and less than 20% to any one sector. But now his account size is bigger he limits to 5% to any one stock and less than 10% in any one sector.
He was shocked when he heard some of his cyber friends are investing up to 40-60% of their investing capital into one stock by getting it cheaper and cheaper. Are they thinking that they are smarter than Mr. Market?
In investing, as part of good risk control management, we must learn to respect Mr. ......
