Both businesses ask for the same amount of money, and you have it. Now think of a small fashion store that requires funding in the same area. It has been going strong for 25 years, and now requires some money to expand its business into a newer area. Think of this, there’s a local bread bakery in your area. Now, you might ask how to go about ‘Hedging’ my risks? We shall find out in the succeeding sections. Structure your investment portfolio in such a way that your portfolio is able to accommodate for any sudden shocks in the market. Hedge funds do everything but Hedge their risks. But you might ask, ‘Hedge’ funds take great risks in order to generate amazing returns, but that’s what the problem is. The term ‘Hedge’, means to mitigate your risks.
Pabrai, in order to achieve great investment return, you must mitigate your risks. The very quote itself is a great teaching. Heads I Win, tails I dont loose much – Mohnish Pabrai
Invest In Low Risk High Uncertainty Businesses.Buy Simple Businesses That You Understand.
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