See: Risk Lover. See: Risk of Ruin.
You were cautious juuuust before the 2008/9 mortgage crisis crash tthat almost ended the Western World. You were not risk-seeking then, as you converted most of your long equity positions into cash or bought long-lead puts against them to hedge your positions. But in mid-2009, when it became clear that the world was not, in fact, ending, you changed your tune. To risk-seeking rather than risk-avoiding.
So you margined as much of your portfolio as you could, and went levered-long to risk. As the markets went up and recovered from the brutal beating they'd taken, you were amply rewarded for having sought out risk, i.e. invested in the most fragile companies, those staring bankruptcy in the gaping maw. The companies leveraged 5:1 debt-to-EBITDA. So when they recovered and went from 4x EBITDA to 12x, with leverage, you made 30-50 times your money in just a half decade.
Yeah, that math works. Good work if you can get it. And have the Brunswicks to pull it off.
Related or Semi-related Video
Finance: What are Systematic and Unsyste...14 Views
finance a la shmoop what are systemic and unsystematic risk systemic risks are
just endemic to the market want to invest in the stock market and compound [Plate of vegetable appear]
return your way into great wealth great but then you'll suffer the normal risk
of the system that risk specifically is this yeah best of times worst of times
but up over time the market goes up you just have to embrace the notion that [Man hugging a tree]
there is systemic risk in that in the short run you can buy an S&P 500 index
fund here then lose like a third or whatever of your money in not too many
years but if you don't panic and sell just at the wrong time here right out
the storm and keep going well then you should be just fine by the time you
arrive here so that's risk that is always in the system equities rise and [Equity in the ocean]
fall like the tides or something like that but generally they rise and if you
want to swim in this bathtub well you get used to the turbulence and have an [Girl swimming against the tide]
airsick bag handy all right that systemic risk or systemic risk
what's unsystematic risk well it's bad investors or rather bad investing it's
panicking and selling your stock just when you should be doubling down its
buying lousy companies thinking that they're cheap today but not realizing [Woman runs away from smelly girl]
that they will always be cheap because they're lousy or in a lousy industry or
run by lousy management it's buying into lousy industries that also look cheap
but are dying hello paper and pulp is yeah anyone really think that's gonna be [Paper printing]
around in 20 years all right well it's believing the dreamy hopes and prayers
of future earnings and trusting that there really will be 5 million [Traffic on the highway]
driverless cars on the road in 3 years you know good luck with that we'd love
it to be true but ain't gonna be unsystematic risk is also investing in
bonds for the long-term taking very little risk when taking little risk is
the opposite of what you should be doing when you're a young investor so yeah
systematic and unsystematic risk both exist plentifully and both can bite you [Dog bites portfolio from woman]
right in the portfolio so you got to know what both are and embrace them
for what they're worth
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