"Clark, how do you reconcile those comments with your disdain for investment in speculative shares? I see more opportunities at the small cap end of the market because the market is inefficient - be it lack of volume or lack of broker coverage"
I don't disagree with your argument. I am not against an aggressive high-risk/high return strategy. What I am against is the mindless high-risk/low *expected* return plays which seem to bring most newbies undone. We see this time and again on Hotcopper, don't we ?
Tattslotto is a good analogy. Invest $1 for a shot at $30 million. Sounds great, doesn't it ? But ... it's a negative expected return bet. What the heck. We can all afford to lose a dollar. But ... would you gamble $1 million on Lotto ? No ? Why not ? It's the same odds, isn't it.
There is a lot more to risk that first meets the eye. You must consider the *regret* of going bust.
The aim of the game is to finish 100 not out. You hit the balls that are there to be hit. If you swing at every ball you inevitably see you middle stump flying.
You can't defy the laws of finance. Buffett has a long-term career average of 22% pa. Nobody has done any better, nobody will. He's Bradman. Thats the limit.
