Read? Understanding Stock Market Risks - Financial Fraud Risk is real! (3)
We will never know someone is honest or not until until his/her death; then only we can say this man or woman is truly honest. (or at least they were not publicly caught for dishonest acts if any during their life time).
Createwealth8888 is an honest person till the time of writing this post as he has not been caught red-handed publicly for cheating on several occasions.
Financial Fraud Risk is Real
Like honesty, we cannot assume that there is no financial fraud risk in our invested companies. All investment by nature are risky and financial fraud risk is real. This risk can never be analyzed by anyone and not even by world-class analysts or board members. So it is wise for us to protect ourselves against this risk through good portfolio management.
Crisis at Olympus
Read that headline news: GIC's exposure to Olympus 'minimimal'. Investment firm says almost all of its stake in troubled Japanese company disposed of; not known if any losses incurred.
Olympus is a 92-year-old company and Japanese are still leaders in camera technology, and Olympus is one of the top manufacturers in Japanese.
When the top management has intentionally hide all these losses, and no one will be able find them, not even their board members if the top management has carefully hidden them.
Createwealth8888's Risk Management
I don't have big balls to build up to more than 10% of my total capital in any one counter and no matter how safe the counter may look like e.g. SPH, SGX, SMRT, etc those that can't fail in Singapore context. I saluted those can put more than 50% of their capital into one counter. They really have big balls or they don't think that financial fraud risk is real.
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