Tuesday, October 19, 2010

I just cannot stop myself

Once in a while, you hear people shout: I like real estate because it is less volatile than the stock market. Besides, I am a long term investor and real estate makes me rich over the long term while I lost lots of money in the stock market.

My response: if you are a long term investor then why do you care about daily volatility?

 If you lost so much in the stock market, I bet that was because you were a short term gambler who bought on tips from your 'buddies' and from the bus driver. I bet you studied the stock market a lot less than you studied the real estate market.

Really every investment has risks and rewards. Just ask Donal Trump or one of the many duped U.S. real estate owners. Investing is about achieving maximum profits for minimum risk. A very simple concept that is so tough to achieve. One way of minimizing risk is diversifying (not diworseifying) your portfolio.

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