Blaise Pascal was a 17th century mathematician and philosopher that taught the world a few things about risk management. His famous wager teaches us about probability and decision making. The wager is a simple bet with risk and opportunity. Imagine you were making a bet on the existence of God. There is a cost for your decision and you have an outcome you have live with. If you wager that God exists then you will pray and do the rituals your religion requires and that is your cost. If you are right then you will see glory in heaven and reward for your choice of life. Now imagine that you bet that God doesn't exist. You spend your life as you wish. If you are right you did not lose any effort worshiping God. Now if you are wrong you may spend eternity in hell for your actions. The wager teaches us that sometimes even you are pretty sure everything will work out you should consider risk management and protect yourself. Because not believing in God and being wrong is a terrible outcome.
As we look at the markets and the rich history we have times and days that in hindsight look obvious but at the time were not very easy decisions. Imagine you invested in Japan in 1989. At the time this was an economy that was revered around the world. An investment then after over 25 years would be worth half the value.
Imagine being a tech investor in 2000. Many firms went out of business and there was complete loss of value for the investors that chose wrong. From March 2000 to October 2002 the NASDAQ composite lost 78% of its value.
Despite this awful performance there were opportunities like Amazon Inc. where shares have advanced from $1.50 in May 1997 to over $846 today March 2017-- a 56,000%+ return! Getting out in 2002 would have been regrettable.
As markets move up and create wealth those that protect their wealth strategically sustain themselves and get through any surprises.
Protectio Investments is built to help investors, institutions and financial advisors protect and grow their portfolios managing risk and opportunity.
We would love to work with you to defend and help sustain your portfolio.