Where is Your Threshold for Risk?

Where is your threshold for risk? That is a big question if you want to be an investor. Lately I have been thinking about it because I have met this really wild character who seems to have an endless appetite for risk in his personal life and in his investments. For instance he was talking about putting some money in this thing called Instaforex. It was not a huge amount of money, but you are talking about a serious level of risk when you go in to Forex trading. I suppose if you knew what you were doing, then you could call it a skill. In my opinion it is very close to gambling because of the volatility in the market. You are literally dealing with something which can turn on a dime. It could make you rich one moment and then that could all be gone the next along with a lot of the money that you put in it.

In essence I want to understand the thing that I am investing in. For instance you buy GE, and you know that GE makes stuff. They make all sorts of stuff and they do it extremely well. In fact they make a lot of stuff that very places in all of the world are capable of making. For instance you can not go down to the corner and buy a turbine for a power plant. You have to call up GE with the specs for your powerplant, or you design your power plant based around what they already make. I would expect that you have to give them a couple of weeks or months to work on it, assuming that they do not have a big backlog of work. At any rate I would be happy to bet that GE will make money.

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