You too are a speculator
When it comes to stocks, Germans tend to be cautious, and when it comes to real estate they tend to overestimate themselves. How do you correctly assess risks?
DMay I talk to you about investment risks today? I am of course aware that the subject is sensitive because most of you do not want to know about risks. But you have to accept, ladies, that life is not a request concert. Or do you seriously believe, gentlemen, that work, marriage and health are free from danger? You can become unemployed, your attractive partner can turn away from you, and you can get sick. In the same way, you can also have success in your job, experience the happiness of “eternal” love and still uproot trees in old age. I don’t know if you realize that risks aren’t dangers at all, just the probabilities that certain expectations or hopes will not come true. If this is alien to you, then I can only hope that this will change soon, because nowhere is more “expected” than with money.
The best examples are real estate and stocks. It is not the fifty-fifth time that I am going to explain to you that there is a risk of falling on your face when buying property for rent. Likewise, I won’t be recommending index funds for the sixty-sixth time. Instead, I want to confront you today – quickly if you allow me – with the thesis that you are not the solid investor that you would like to think of yourself to be. With a few exceptions, as much provocation is permitted, you too will be a veritable speculator who differs little from the player who sits at the roulette table in the casino. Do you now guess what risk is? You have the expectation that the ball will land on 17. The event can happen, it can not happen, and everything is a matter of probability!