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Risk comes from not knowing what you are doing from "summary" of The Intelligent Investor, Rev. Ed by Benjamin Graham
The idea that "risk comes from not knowing what you are doing" is a fundamental concept in investing. Benjamin Graham emphasizes the importance of understanding the investments you are making in order to mitigate risk. Graham suggests that many investors fall into the trap of speculating rather than investing. Speculators often make decisions based on market trends or rumors, rather than a thorough understanding of the underlying assets. This lack of knowledge can lead to significant losses when the market inevitably corrects itself. In contrast, Graham advocates for a more conservative approach to investing. He believes that investors should focus on the long-term value of a company, rather than trying to predict short-term price movements. By doing so, investors can reduce their exposure to risk and increase their chances of success in the market. Furthermore, Graham stresses the importance of diversification in a well-rounded investment strategy. By spreading out investments across different asset classes, industries, and geographies, investors can limit their exposure to any single risk factor. This approach can help protect against unexpected market events and downturns.- Graham's philosophy on investing revolves around the idea of informed decision-making. By thoroughly researching and understanding the investments you are making, you can better position yourself to weather market fluctuations and achieve long-term financial success.
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