2/24/2022 - Economy and Finance

The biggest risk of the investor is the same

By gustavo neffa

The biggest risk of the investor is the same

It is time to understand why one of the biggest risks when investing is ourselves.

One of the first mistakes that run those who aspire to quickly multiply the money, is the desire to want to save or want to recover in the short term, and no matter the consequences, the accumulated losses of months or previous years. The difference between one cause and the other is that, at first, the investor does not know or assume these risks and, in the second, seeks to rematch because he has already suffered in his own flesh the volatility that caused him loss in his investment portfolio.

Successful cases of young people who have become millionaires from night to morning with a small trading account operating in financial markets. But it's like guessing what the action will have Apple's route for the past 20 years in the coming decades, or betting for Messi when she was just 9. There's only one recognized company with liquidity that did it, there's only one player who can. And it's not only very lucky, but it also requires an intense purchasing/sales operation.Penny stocks or low-price stocks are often the objective of this type of investment. In other words, this system is the most like the stars align to our favor.

Whenever there are high gains, it implies taking greater risks. Always. There's no free lunch. There will always be a risk that you take to obtain abnormally high returns, with the risk of losing part or the entire invested capital.To double or lose money, is the casino.

The capital market always offers the opportunity to find risks and operate them to play in our favor, but remember that the concept of volatility is that the trade or against our. The important thing is to know and take into account that it can be against ours and act accordingly, that is to apply the basic concepts of any professional administrator: to diversify between countries, sectors and financial instruments, to applystop them setting the maximum possible loss and using derivatives when it is convenient to do so. These themes will be the reason for next notes in this same section.

Other Errorvery frequent is that often operates with borrowed funds, leveraging[i] the position; that is, using more silver than actually one has. When you open an account abroad, this loan we have available is called a marginal account. It consists of a credit we can use as long as the broker or bank takes account guarantees by immobilizing some purchased asset positions. In the domestic market it is equivalent to taking funds of deposits (or “take a deposit”): what takes the money borrowed has as counterpart money from investors who want to put it the fee, the rate that one as the taker of the bond has to pay. The rate to which the deposit is placed is lower than that applied when the funds provided are used.

In the domestic market it is equivalent to taking funds of deposits (or “take a deposit”): what takes the money borrowed has as counterpart money from investors who want to put it the fee, the rate that one as the taker of the bond has to pay. The rate to which the deposit is placed is lower than that applied when the funds provided are used.

Promediate positions when a drop in the price of an asset in search of rematch is also not a good alternativeUnless we know what we're doing, that is, concentrating the risks even more.

Also The investor has to control the fact that money in cash and without being reversed does not have why “chemarle”, provided it is protected from inflation. In other words, it must be placed at least at the risk-free rate that conserves the purchasing power of the currency. You can also invest in hard currency (in dollars) so you can fix that purchasing power because in the long run, the dollar usually goes from the hand of inflation, although in the short term it can be distanced quite from it. But the desire to operate is often an exaggerated need, because At times of turbulence in the markets or of greater uncertainty for the advised to invest in risk assets the best is to do nothing and to give the risk rate free. One of the best investment decisions at certain times is being in cash cash or liquid. The most common alternative in Argentina is either to put a security deposit, or to put the money in a money market fund (which is basically a fixed-term fund, staggered) so that a minimum risk-free fee is required.

Analyzing the psychological aspects in the markets is very important when you can manage and properly invest our funds. It not only implies power to control itself, but to understand the logic of markets and how greed or exaggerated fears shift to prices, distorting them in the short term and removing them from their “right” value, or what they should have for their fundamentals.

That is why I defend the greatest risk of the investor not in the market, but in the master who is in front of the mirror and in his desire to gain beyond what he tolerates or the risks he can and knows to take.

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gustavo neffa

gustavo neffa

I'm Gustavo Neffa. Director of Economics and Finance at FinGurú. Partner and director of Research for Traders, leading a team of market analysts. I spent the last 24 years in the financial sector in both domestic and foreign entities, having occupied the post of Senior Research Analyst in Macrosecurities of the Banco Macro and the BBVA Banco Francés, as well as economic analysts with the economist in chief of the BBVA Banco Francés. I am also a professor in Corporate Finance, Investment Portfolio Management, Financial Asset Valuation, Valuation of International Investment and Finance Projects in various MBAs and postgraduate courses in Buenos Aires and in the interior of the country and professor of the MBA of the UNLP and the UNNE of Financial Asset Assessment and the postgraduate degree in the UBA Capital Market in agreement with ByMA. Co-director of the UNLP Advanced Finance Programme.

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