Sir Isaac Newton South Sea Stock Crash, Year 1720 - Case Study:
As depicted in below chart, Newton bought South Sea Stock at roughly 173 per share and exited at a 100% profit. Then he re-entered at the absolute peak that too with all his live savings to go all in, only to become prey of massive first ever Stock market crash of approx 90% drawdown.
Key Takeaways:
* Goes to show that raw intellect has very little to do with being a good investor/trader. You could be a top of the line AAA CFA, CPA, CA, CMA, ACCA, MBA, Engineer, Inventor, M.Ch, Entrepreneur and still loose in this game.
* Risk management can literally save your investments going to ZERO by exiting early at a small loss.
* Highly Concentrated Investing on a single stock only works when executed at key support and resistance levels.
* Patiently sitting in 100% cash position is often times the best position.
As depicted in below chart, Newton bought South Sea Stock at roughly 173 per share and exited at a 100% profit. Then he re-entered at the absolute peak that too with all his live savings to go all in, only to become prey of massive first ever Stock market crash of approx 90% drawdown.
Key Takeaways:
* Goes to show that raw intellect has very little to do with being a good investor/trader. You could be a top of the line AAA CFA, CPA, CA, CMA, ACCA, MBA, Engineer, Inventor, M.Ch, Entrepreneur and still loose in this game.
* Risk management can literally save your investments going to ZERO by exiting early at a small loss.
* Highly Concentrated Investing on a single stock only works when executed at key support and resistance levels.
* Patiently sitting in 100% cash position is often times the best position.
