One makes you feel cozy. The other makes you feel afraid.
One makes you feel like you have control. The other makes you feel like danger is always lurking.
One has trouble managing risk. The other only thinks about managing risk.
One makes you feel part of something. The other makes you feel it’s all on you.
When things go badly, one affords you blame.
“Management betrayed our trust.”
“No one could have seen this coming.”
“The company was good. It was the economy that failed them.”
“The credit ratings, and fundamentals in general, did not suggest this was possible.”
The other allows you to only blame yourself.
One values stories. The other values trend.
One predicts the future. The other focuses on now.
One is subjective to tantalizing and immodest marketing. The other sees only numbers and risk.
One focuses on potential profit. The other focuses on potential loss.
One prioritizes return on capital. The other prioritizes return of capital.
One requires lots of information. The other only needs two metrics — trend and risk of loss.
One is trusting. The other is wary.
One is slow to adapt. The other is fast.
One allows you to remain in a state of hope with little to worry about. The other forces you think about negatives and take action.
I understand the issue of semantics and lack of clear definitions for both “investment” and “exposure”, but I’m just trying to capture the overall culture between the two. Many people talk about their “investments”, not how much risk “exposure” they have currently.
They talk about the prospects of the company or the industry, not how to handle things if it doesn’t work out. Many times, the thought of failure isn’t integrated into their calculus. “What could go wrong? This is a great company.”
For those of you who know me, you know what side I’m on. “Investing” is for TV and a term used by people who want to feel smarter or more superior in what they’re doing. It makes for more uplifting conversation too. “What stocks do you like?” is a much more common question than “How much money do you have at risk in XYZ stock, and across your portfolio?”
One ignites conversation and gloating. The other forces you to know your numbers and be realistic.
It doesn’t matter what you call yourself, an “investor” or a “trader”. Both camps, all of us, need a trend to make money.
One pretends to not know that. The other knows it.
I run a systematic trend-following firm that manages money for a small group of highly committed investors. If this thinking resonates, please visit our website.
Good one Michael! I cross-posted!
Nice.