Financial Risk

Investment Alphabet

The Alphabet of Healing Foods inspired me to create an Investment Alphabet. You see, I’m a big believer in cooking from scratch and consuming lots of different and wholesome foods so nature can do the hard work. It struck me that this is really quite similar to my personal finance approach.

1. Develop an overall strategy from the ground up. Using advisers is like using recipes. They can provide ideas and help you implement them, but only you know if you want beef or fish for dinner!

2. Use lots of different products, but choose “wholesome” ones and time will do the hard work. Foods have nutritional value and health benefits; financial products have performance metrics and risk characteristics. Good stuff in = good stuff out!  Continue reading

Go with the Crowd or Go Your Own Way?

Research says crowds are wise: watch this BBC video or read this book for more on this assertion. But, as another BBC article explains, the crowd is not always right. Witness the 2008 financial meltdown for proof that herd mentality can be dangerous. In fact, most people prefer to fail with the crowd rather than stand out with a different view. Being contrarian is hard work mentally but it can pay off if you take less risk or go for a smart bet.

New research is emerging into how social influence can alter the wisdom of the crowd by steering opinions in a particular direction. That’s where crowdfunding is at. Is it good or bad for you that crowd views and sentiment trend? Well, it depends. Are you an investor, a business looking for funds or a good Samaritan?

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