Investing in something that you don’t fully understand is the very definition of risk. Yet people do it all the time when they put their hard-earned income in retirement accounts, and in the stock market in general. They often justify their reckless behavior by saying “Look at Warren Buffet. He invests in the stock market”.
Warren Buffet makes money in the stock market because he has worked incredibly hard to understand how the game is played. Most of us have not. Ray Dalio, billionaire hedge fund manager of Bridgewater Associates, which is the largest hedge fund on planet Earth, sums it up beautifully –
“I believe that competing in the markets is more difficult than competing in the Olympics, because there are more people trying to make money doing it and it’s a zero-sum game, yet most people think that they can do it.”
Ray Dalio, co-Chief Investment Officer and co-Chairman of Bridgewater Associates.
Wall Street has taken over our investments and retirement accounts. Wall Street has created propaganda so powerful that people find nothing wrong with investing in the stock market without fully understanding it. What’s even more dangerous is the false sense of security that it’ll all be fine in the end because everyone is doing it.
P.S. High-paid professionals are always wondering where to invest their savings. They don’t want to take more risks with stocks because they already have a lot of money invested in the stock market. Not knowing where to invest, they end up with lazy money sitting in a bank.
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