Monday, December 03, 2007

Investing guidance for restful sleep

Somewhere in the last few days I read some investing advice for those who are making decisions about their own money that went something like this: determining how small the %chance of the most negative scenario happening for your investments is not the most important thing to understand; determining the impact of that most negative scenario on your investments is most important; if your lifestyle and commitments can't accept that impact, then you can't accept the risk in those investments, regardless of how limited the probability of the scenario.

Good advice to some degree, but there is no escaping the risk of any approach as the opportunity cost of stuffing the mattress can be huge. Can't sleep well on that either.


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