“I would like to take less risk and still make better returns.” Most people want this ideal state to prevail in their Investing. The good news is that this is very much feasible. The entire value investing philosophy is built on this expectation. Yet, few people actually travel consistently on this path. Most investors simply get led down the garden path of higher risks. The reason is very simple. If you are in a hurry to make investment decisions, the first ideas to appeal to you will be the riskier bets. After all, the entire market is conditioned towards risk-taking.
But, Investing success is created, fostered and grown by taking bets when risks are lesser, holding on as the risks gradually rise and then taking profits only when valuations look too risky. How investors manage investment opportunities against fast-changing risk scenarios matters the most to investment success.
Investors actively pursue success at the wrong time and fail to pursue it at the most opportune time. Learning to do this right happens when value investing is diligently practised. The rest is more of a sideshow where egos drive one’s behaviour.
