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RISK

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The day was long, the night short and I've got to be honest. Last night I sat in my easy chair, with laptop abound, and couldn't, for the life of me, decide what to technically illustrate today and it wasn't for a lack of material. After spending hours and hours reading a multitude of professional commentary on the web, all I could find were reasons why yesterday happened. One thought kept creeping into the forefront of my mind. 'Yeah, but yesterday's over.' Maybe, just maybe, that provides solace to those in need. However, the market has no time for solace, nor time for excuses, only action; action that has to be taken by every investor alike. Whether you're a Minyan who's an institutional money manager, a large net-worth retail broker or an individual investor, the same rules apply.

Why is it we can see the possible and wonder when it happens? I've been in this game for 15 years and it never ceases to amaze me the utter devastation that can occur in a single day. The major indices took a thumping, but the individual debacles seemed much, much worse. Then it dawned on me, something one of my mentors told me when starting in this business, "I'll teach you everything I know and promise you one thing. I'll always tell you what you NEED to hear, not what you WANT to hear. As long as you can live with that, you'll always improve." So there it was, clear as a bell. RISK! The reason I became a money manager in the first place. That's why today there's no 'Jo.' Just a simple little article about what people may need to hear and not what they want to hear.

In the investment world there has never been "ONE" true definition of risk adhered to. Yet, the word "Risk" is used in virtually every second paragraph of an investment document and on the forefront of every client's mind. Barring any other convoluted definition; Webster defines RISK as, 'The amount of possible loss to expose oneself to.' Simply, I agree with Webster.

That being said, investors must comprehend a straightforward reality. The majority of the battle in successful portfolios, in addition to purchasing, lies within the sale and protecting your ASS-ets. One of the worst mistakes an investor, or professional money manager, can make is letting losses run and/or not locking in profits while they have the opportunity. The majority of investors (hopefully not Minyans) seem to find any number of reasons why not to sell. Various combinations of the following can be deadly substitutes for not having, or sticking to, a sound sell or hedging discipline.

· Emotions -
"As soon as I sell it'll go right back up"
· Not wanting to pay taxes on the gains -
"I already have too many gains this year"
· Not wanting to take the loss -
"If I sell it now, I'll lose money"
· Hoping the investment will come back -
"When it goes back to breakeven, I'll sell it then"
· Pride -
"It's a good company, it'll come back"

And the two worst...

· Ego -
"I didn't make a mistake, it's just a bad market"
· Greed -
"I think it's still going higher"

These reasons come from the Freezer. Yeah, that's right - the Freezer. These are the simple mind-sets that can leave investors Frozen in time and left to only wonder when it's going to end. Some investors, I'm almost positive, woke up this morning hoping GDP is going to come in better than expected. Maybe it will or maybe it won't - no one knows. The question you have to ask yourself is, "Are you prepared for the answer?"

If this article, even the smallest amount buried in the far reaching corners of the back of your mind, made your adrenalin pick up a notch or made you upset because of something you know you should have done and didn't, then I've done my job. Now, go out there and gettem'! Have a Great Day.

I hope this helped!

The KAT

No positions in stocks mentioned.

The information on this website solely= reflects the analysis of or opinion about the performance of securities an= d financial markets by the writers whose articles appear on the site. The v= iews expressed by the writers are not necessarily the views of Minyanville = Media, Inc. or members of its management. Nothing contained on the website = is intended to constitute a recommendation or advice addressed to an indivi= dual investor or category of investors to purchase, sell or hold any securi= ty, or to take any action with respect to the prospective movement of the s= ecurities markets or to solicit the purchase or sale of any security. Any i= nvestment decisions must be made by the reader either individually or in co= nsultation with his or her investment professional. Minyanville writers and= staff may trade or hold positions in securities that are discussed in arti= cles appearing on the website. Writers of articles are required to disclose= whether they have a position in any stock or fund discussed in an article,= but are not permitted to disclose the size or direction of the position. N= othing on this website is intended to solicit business of any kind for a wr= iter's business or fund. Minyanville management and staff as well as co= ntributing writers will not respond to emails or other communications reque= sting investment advice.

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