investing - Concepts
Explore concepts tagged with "investing"
Total concepts: 13
Concepts
- Due Diligence - The process of systematic investigation and evaluation conducted before entering into a transaction or agreement to verify facts and assess risks.
- Past Performance Fallacy - The principle that historical results and past successes do not guarantee or reliably predict future outcomes.
- Kelly Criterion - A formula for determining the optimal bet size to maximize long-term compound growth while avoiding ruin.
- Disposition Effect - The tendency to sell winning investments too early while holding onto losing investments for too long.
- Barbell Strategy - A risk management approach that combines extreme safety on one end with small, high-risk/high-reward bets on the other—avoiding the mediocre middle.
- Contrarian Thinking - The practice of deliberately thinking against the prevailing consensus to identify overlooked opportunities and hidden truths.
- 20% Rule - An investment strategy recommending that roughly 20% of a portfolio be allocated to alternative investments uncorrelated with the stock market.
- Naive Allocation - Cognitive bias where people divide resources equally among available options regardless of their differing merits or characteristics.
- Circle of Competence - Know and stay within the boundaries of what you truly understand.
- Efficient Market Hypothesis - Theory stating that asset prices fully reflect all available information, making it impossible to consistently achieve above-market returns through skill or analysis.
- Margin of Safety - Building buffers to protect against uncertainty and errors.
- Asymmetric Upside - Decisions where potential gains significantly exceed potential losses, creating favorable risk-reward profiles.
- Risk-Reward Tradeoff - The principle that higher potential returns generally require accepting higher levels of risk.
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