“superficially, i
think it looks like entrepreneurs have a high tolerance for risk. but one of
the most important phrases in my life is ‘protect the downside.’” – richard
branson
many people within the investment world will tell you that you have to
risk a lot to make a lot. or even that the only way to become financially free
is to take great risks! but savvy investors like kyle bass and paul tudor jones
use ratios of 6:1 and 5:1 respectively – risking a little to leverage a lot.
this is called asymmetrical risk/reward.
remember warren buffett’s top two rules of investing? rule 1: don’t lose
money! rule 2: see rule number 1. these money masters understand that losing
money is the quickest way to financial defeat because it takes you twice as
long to get back to where you started.
so, defy conventional wisdom and look for small investments to return
disproportionate rewards.
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