If you've ever played Black Jack, you know what the term "double down" means. This option is available for every hand you play, but should only be taken advantage of when the odds are in your favor. To utilize this option, you tell the dealer, "I would like to double down". At this point you would put the maximum amount of chips next to your original bet, which can be up to 100% of your original bet, the dealer would then give you one more card, and one more card only.
If you could apply the rules of the New York Stock Exchange to Black Jack, you would be able to see your hand and the dealers hand before you ever had to bet anything, and if the odds were in your favor, you could wager all your money, and even borrow up to your chip count from the casino!
Good practice for investing in stocks, much like Black Jack, is to wait for the most opportune time (when the odds are in your favor) and get as much of your money in as you can! Unfortunately at the casino, you have to bet a least the table minimum (the minimum amount of money you can bet per hand) just to see your cards, then evaluate if the odds are in your favor and whether this hand is qualified for the "double down" option.
The great thing about investing in stock, is you get to see the "cards" (company accounting records, conference calls, price to earnings) before you ever commit any cash. You determine if the odds are in your favor and how much of your bank role you think this opportunity demands.
The tough part is determining when the best risk to reward ratio is in place for that hand....... I mean investment.
2 comments:
Neat comparison! Of course, I'm too scared to trade in anything higher than T-bills...yes, I'm a wild one X)
Hi Gabriel Girl,
T-bills are a safe investment, but to beat inflation and really grow wealth your going to need a greater compounding interest rate.
Do some learning on an investment that interests you, (doesn't have to be stocks) and the next thing you know, you'll be comfortable enough to maybe take some money out of T-bills and into something new.
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