Know The Difference Minute

You didn't know then what you know now. Hindsight tells us what played out well, but foresight is what's needed when it comes to investing.

What is Know The Difference Minute?

Hot topics, fresh stories and useful formation; all in 60 seconds

Welcome to the Know the Difference Minute for Tuesday, February 27th.
There’s an old investing adage, “Diversification means always having to say you’re sorry.” If you knew then what you know now, you would put all your eggs in that one basket. But you didn’t know then what you know now. In fact, our memories aren’t all that great so sometimes we don’t even know now what we knew then!
This is obvious when investors look back and think, “If only I put all my chips in on semiconductor chips.” That would have been a very concentrated bet. In hindsight it would have paid off. Hindsight tells us what played out well and what didn’t. But we have to invest with foresight where there are lots of uncertainties about the future. Those uncertainties are risks.
Taking big risks is fun when stocks go up, but it’s no longer fun and games when the risks show up as stocks going down. Diversification means the ride can be smoother and the results might not be as spectacular, but they also might not be as disappointing either.
I’m Dave Spano with Annex Wealth Management, and that is your Know the Difference Minute.