Unfair Advantage There are some horrible and stupid financial advisors in the real world. But if you do not know good advice from bad, any advice will do. FAQ How does a person make money and reduce risk in paper assets? Short Answer Start at the shallow end of the pool. Take classes and practice, aka paper trading. Explanation In the world of investing, there are always professionals and amateurs. The stock market is a great place for professionals because there are so many amateurs who are forced to be in the deep end of the pool where the sharks wait. I am not good at paper assets, so it’s best I defer to Andy again and let him explain the world from his point of view. He is great at investing in paper assets and is a great teacher.
Andy Tanner explains: When it comes to paper assets, I’d say the biggest differences between amateur investors and professional investors are: a) how they seek to generate income, and b) how they manage risk. The easier of the two discussions is their approach to managing risk. In real estate, the battle cry is usually “location, location, location.” It seems that in paper assets the battle cry is “diversification, diversification, diversification.” In my opinion, in both real estate and paper, the battle cry should be “cash flow, cash flow, cash flow.” Less-sophisticated investors seem more likely to turn to managing risk by what they have been sold as diversification. This brand of diversification is a hope that the winners will outnumber losers at a pace that will achieve financial objectives, outpace inflation, and not be hurt by possible changes in the tax law. But professionals will often seek to manage risk by purchasing contracts. While these contracts cost 151
by Rich Dad, Robert Kiyosaki