You always need to be cognizant of six sigma events that can have ugly impacts on your portfolio and account for the approximate probabilities.
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Investing is not a discipline based on absolutes or precise mathematics. There simply aren’t enough data points available to work out the exact odds.
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When you look carefully at the economics of shorting, it makes no sense to take the bet. The lowest price a company’s stock can go to is zero, but there’s an unlimited upside. An unleveraged short position has a maximum payoff of 2:1.
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