54. Managing Risk & Protecting Your Downside

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“Rule number 1: Never lose money. Rule number 2: Never forget rule number 1” – Warren Buffett

Managing risk is critical to long term investing success. To fully enjoy the effects of compounding it is critical you don’t lose your money in the first place. Similarly, concerns around losing money are what stops a lot of people from ever investing in the first place.

This episode will help you protect your downside, and manage your risk. We discuss strategies both of protecting your downside in individual trades and also across your portfolio as a whole.

 

What you will learn:

  • Where Bryce has been and what he was doing.
  • What we mean when we say ‘protecting your downside’.
  • Key ways to protect your downside in individual trades
    • Stop losses
    • Trailing stops
  • Key ways to protect your downside across your portfolio
    • Shorting or inverse ETF’s
    • Counter-cyclical assets
    • Holding cash

Stocks and Resources Discussed:

  • Inverse ASX 200 ETF (ASX: BEAR)

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