Since I like investments, I'm going to talk a little about the basic concepts, but as I always say, don't pay too much attention to me because I don't have any kind of degree in economics or anything like that. I'm just a normal guy who uses his method and I'm not doing badly, but I certainly shouldn't be imitated.
For me, investment is based on three keys: profitability, risk and liquidity. Or at least that's how they taught me at school. When they still taught things at school instead of telling children how to think.
Today I don't want to go on too long and I'll make some posts explaining each of the points in more depth, but I would like to make a brief summary of each one and its importance.
I'll start with profitability, which, although it may seem untrue, is the least important of the three, but it offers the most balance. Profitability is always a relative factor, where the important thing is what you compare it to, the risk you take and the liquidity you have. So a very high return with a high risk and low liquidity is not something out of this world.
Risk is the second important thing but not the most important either. If we assume risk we must demand high returns. In addition, risk must always be controlled because otherwise it would not be an investment but a casino and we already know that the house always wins.
And finally, liquidity. This is the most important because you always have to keep in mind that there is no worse market than one that does not exist. So if you have something very valuable but you cannot sell it, you really have nothing. Normally this factor is the one that most investors do not take into account.
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