Risk models are a substitute for historical knowledge, because they tend to work with just three years' worth of data. But three years is not a long time in financial history.
Sentiment: NEGATIVE
I think the rise of quantitative econometrics and a highly mathematical approach to risk management was the obverse of a decline in interest in financial history.
The reality is, risk is variable. Those in the financial world know it.
The newness effect of a new thing wears off in nine months to a year, but financial security can last a lifetime.
History is a vast early warning system.
Thirty to 40 years ago, most financial decisions were fairly simple.
Never, ever invest money that you will need prior to three to five years - minimum.
It's important to understand how people perceive risk, and how that translates into investment behavior.
The data strongly suggest that very good years in the U.S. stock market are followed by more good years.
Time is key to building your financial security.
I have learned that nothing is certain except for the need to have strong risk management, a lot of cash, the willingness to invest even when the future is unclear, and great people.
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