If I say Newton was a fool man, even Einstein was a fool man. What will be your reaction?
If you are wondering, read on, how?
Are you enjoying your #Investment journey?
What is the similarity between all these photos?
Yes, all of them have one thing in common: Shock Absorbers.
Do you know why all of them are having Shock Absorbers? All of them are needed to make their journey smooth because The shock absorbers absorb all the shocks from road surface potholes.
Can you imagine any of the above without Shock Absorber? Just think, if we do not use Shock Absorber, what would happen? How do you feel about your journey? It will be full of excitement. No doubt, we will reach our destination.
Now see another gallery.
Now we will ride on all three Bicycles, one with Shock Absorber, another without Shock Absorber but with Tyre and Tubes, and the last one without both Shock Absorber and Tyre Tubes.
While riding the last Bicycle, you will face all the jerks coming from each pothole on the road, whether smaller or bigger.
While riding the second one, Tyre and Tube absorb all the jerks from small Road potholes. Still, we have to face the big potholes of the road.
While riding the Bicycle fitted with both Shock Absorber and tyre tubes, you will enjoy the ride smoothly.
What is the learning from the above experience?
Now come to our topic how can we make our Investment Journey Smoother?
Your investment journey is similar to cycling. Your experience depends on which bicycle you use.
Let us see how the Investor chooses to Ride a Bicycle without Shock Absorbers.
The standard argument of stubborn #Investors is “Are you a Fool? If this was possible, then why didn’t the ancestors suggest it?”
According to this argument, Newton was a fool man, even Einstein was a fool man.
Are you Surprised? Yes, you read it right. The read-ahead how?
As stated in the picture dialogue above, you will be considered a fool if your ancestors do not know what you are saying. Just because Newton’s ancestors did not know about the force of gravity and Einstein’s ancestors did not know about the theory of relativity, That is why both of them were fools. Nothing came with the earth. Once somebody has discovered or invented something, then it becomes a tradition. Tradition also changes over time.
Nobody likes arriving at their destination feeling uncomfortable, caused by either numbness as the result of a long journey or pain as a result of an uneven ride. In the case of the latter, it may be down to the suspension system in your vehicle and one of the main components, the shock absorbers.
In the simplest form, shock absorbers work by taking on the impact caused by bumps in the road such as drains, tree roots, and potholes. In more complicated terms, the shock absorbers take the kinetic energy of the suspension system and convert this into thermal energy which is then released into the atmosphere.
If you are feeling the same experience while investing, your Investment journey will be painful during the bear phase of the market. There is only one solution to this problem.
Just attach Shock Absorber to your Investment Vehicle that reduces shocks from potholes of Market Volatility.
Here Shock Absorber is nothing but a Risk Management Strategy.
The Risk Management Strategy will work like a Shock Absorber, and the jerk in the portfolio’s valuations from Volatility will be reduced by following fundamental rules like “Buy at Low and Sale at High” and keeping your purchase price on the lower side. So you will have a buffer for absorbing some of the impacts from the dips.
Next week we are Launching an all-New Concept on “#Child_Planning”, which will be the trendsetter of the Industry. If you are still not subscribed to the Blog do it now. Click on Subscribe Link
First Rule for Designing Risk Management Strategy is
#RiskManagement should not be Biased with the #BullMarket mindset.
In an Investment Either you are managing the Risk, or you are taking the Risk.
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