“Great investing requires both generating returns and controlling risk. And recognizing risk is an absolute prerequisite for controlling it.” — The Most Important Thing: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing) by Howard Marks
The proverbial wisdom is: It takes money to make money.
I get that.
But something I’ve also learned is that it takes losing money to make money as well.
Throwing good money after bad is a fast track to a BIG loss. Holding on to a bad investment as it works its way down to worthless, hoping against hope that it will come back, is a horrible strategy.
Managing risk is the key.
Be willing to take little losses in order to step out of the way of the big losses. If you do this, the worst thing that can happen is you suffer a small loss. In the meantime, bid your time…the big gain will eventually come knocking.
But more importantly, generating returns and controlling risks is an important part of every area of life.
What do I mean?
If you want to live like an investor…getting a positive return on your efforts…
If you want to leverage your life for something that truly matters…
Step one: Do something!
- Passivity and hope will never generate returns in your life.
Step two: Stop doing something!
- If it’s not working, or not working well…cut your losses quickly, let go, move on. If it involves people…be as nice and generous as possible but don’t waste the precious remaining days of your life doing things that do not generate a positive return on your life and your God-given service to mankind.
The ONE THING for today: The road to success and fulfillment is paved with countless small losses, failures, and setbacks. Embrace them, learn from them and then lay them to rest and move forward.