Monday, June 14, 2010

Risk Management Theory

"There is a saying that bad traders divorce their spouse sooner than abandon their positions. Loyalty to ideas is not a good thing for traders, scientists, or anyone."

--Nassim Nicholas Taleb, Fooled By Randomness

In my down time I enjoy reading other's thoughts on the markets and inherent risks involved with participation. This saying reminded me how important internal risk management is. One must constantly re-evaluate their own thoughts and beliefs. Stubbornness wins out occasionally, but sometimes takes years to be proven correct. In the mean time, one may become insolvent and/or illiquid.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

1 comment:

  1. I like this quote very much! What you said about re-evaluation of your thoughts is absolutely true. If your beliefs have foundation, thinking over them will only reinforce such beliefs and if they happen to have no ground, well, you better do something about that.

    *Thumbs up*


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