Five Lessons from History

Spur 7 June 2019 at 13:00:00 GMT+8

Why it's so hard to be greedy when others are fearful.

Just some food for the Mind. ;)

Read? Five Lessons from History


Lesson #2: Reversion to the mean occurs because people persuasive enough to make something grow don’t have the kind of personalities that allow them to stop before pushing too far.

It’s true for investors. The kind of personality willing to take enough risks to earn outsized returns is generally not compatible with the kind of personality willing to shift everything into muni bonds once they’ve made enough money. They’ll keep taking risks until those risks backfire. It’s why the Forbes list of billionaires has 60% turnover per decade.

Long-term success in any endeavor requires two tasks: Getting something, and keeping it. Getting rich and staying rich. Getting market share and keeping market share.


These things are not only separate tasks, but often require contradictory skills. Getting something often requires risk-taking and confidence. Keeping it often requires room for error and paranoia. Sometimes a person masters both skills – Warren Buffett is a good example. But it’s rare. Far more common is big success occurring because a person had a set of traits that also come at the direct cost of keeping their success. Which is why downside reversion to the mean is such a repeating theme in history.

CW8888: Working hard on how to keep those money won from the stock market by staying rich and not returning too much back to Mr Market. Let see whether it works well!

Read? Beware of Illusion of wealth in the stock market