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|Subject: Re: Stock Market Math||Date: 10/6/2003 4:07 PM|
|Author: RetiredVermonter||Number: 37405 of 83050|
This caught my eye in your reference:
Investing turns most people daffy to some degree, said Meir Statman, a Santa Clara University finance professor. As a specialist in behavioral finance, he explores the human reaction to risk and reward.
"All people, mathematicians included, make the same dumb mistakes," he said. "We are all alcoholics when it comes to the stock market. The best way to deal with it is not to buy individual stocks."
I would reply that "All people who make sweeping, general statements like his... make ... dumb mistakes."
NOT buy individual stocks? Maybe HE shouldn't, but a lot of people do -- and not all of us are "losers", gamblers or drunks.
The example given, of someone who got all caught up in buys of huge amounts of ONE wild stock -- on margin, yet! -- IS an example of pretty stupid action. Read the letters: D I V E R S I F Y. And, before investing in ANYTHING, be it an individual stock, a mutual fund, or some other "great way to make money", proposed by your banker or anyone else, exercise what we call "your own due diligence". Look carefully at factual information before you leap.
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