Take a Journey with Me

You might think that there is only one investing world, but there are many, and their differences go far beyond investing strategies or financial products. There are the separate realms for hedge fund operators, stockbrokers, commodity traders, gold bugs, and day traders. There are perma bulls and perma bears. There are also the worlds of investors who rely on advisors, the do-it-yourselfers, the stock-pickers, asset allocators, market-timers, trendsetters and trend-followers, the involved and the uninvolved.

My foray into a different world explains these distinctions. Back in the 1990s, I was invited to make a speech to the subscribers of an Internet stock market trading system. I knew that investors who traded on the Internet were not the audience for my style of moderate risk, diversified investing. But the invitation had come through a friend who had recommended me, and the sponsor offered me a substantial fee, so I accepted.

Before I was called to the podium, the president of the Internet trading company jumped up and said he wanted to poll the audience, about 100 strong, to ascertain their risk preferences.

Using a scale of one to ten, with ten being the most aggressive investing and one being the most conservative, he asked, “How many people are tens?” About five people raised their hands. “How many are nines?” About 25 people raised their hands. “Eights?” At least 50 responded.

I thought to myself, “Good grief, I'm a four, and this audience ...

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