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Great post on investment risk

Below are some excerpts and a link to a great post on Disstressed Debt Investing blog. Highly recommended.

http://www.distressed-debt-investing.com/2010/05/howard-marks-on-risk.html

Quote

'When investor demand is so strong in the leveraged loan and high yield
market that second lien dividend deals are being oversubscribed, it is time to
start selling'

I think you would sleep a little better at night with that in hand.

Back to Marks. The paragraphs I cite below really left me in awe when I
read it earlier this morning. It makes so much sense from a value investor's
perspective but I feel like it gets lost in the weeds of the Mr. Market's of the
world. Enjoy:
For about a year, I’ve been sharing my realization that there are two main
risks in the investment world: the risk of losing money and the risk of missing
opportunity. You can completely avoid one or the other, or you can compromise
between the two, but you can’t eliminate both. One of the prominent features of
investor psychology is that few people are able to (a) always balance the two
risks or (b) emphasize the right one at the right time. Rather, at the extremes
they usually obsess about the wrong one . . . and in so doing make the other the
one deserving attention.
Unquote


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