Investing… In Theory and Practice

By Chris Castles

In theory the more we learn and the harder we work, the more money we’ll make and the better the opportunities we’ll have. We all know that right?

Well let’s have a look at that in a bit more detail.

In Theory

• You have clear and consistent financial goals.
• You carefully calculate the odds of success and failure.
• You know exactly how much risk you’re comfortable taking.
• You efficiently process all the available information to maximize your future wealth.
• The smarter you are, the more money you’ll make.
• The more closely you follow your investments, the more money you’ll make.
• The more work you put into investing, the more money you’ll make.

In Practice

• You’re not sure what your goals are.  Last time you through you knew you had to change them.
• That stock your friend recommended at the BBQ was “a sure thing” – until it went south.
• When the market was going up, you had a high tolerance for risk.  When it went down, you ran for cover.
• So does everyone else!!
• In 1720 Sir Isaac Newton was wiped out in a stock-market crash.  He stated that he ‘could calculate the motions of the heavenly bodies, but not the madness of the people.’
• People who keep up with the news about their stocks earn lower returns than those who pay almost no attention.
• ‘Professional’ Investors, on average, do not outperform ‘amateurs’.

Any of this ring a bell?  If so call Cosca on 1800 283 895 and we’ll bring the theory closer to practice.