Friday, December 30, 2011

You need multiple families! Diversification.

To begin with if you saw the new version of the movie "The Step Father" and you haven't seen the old version from 1987, please see the 1987 version.  The actor who plays the Step Father in the 1987 version, the guy from 'Lost', does a way better job so the whole movie is way better.

Now that I got that out of the way on to the financial example from the movie.  In the movie, "The Step Father" a crazy killer has multiple families.  When one family starts to displease him he chops them all up, moves to a different town and then finds a new family.  This process repeats itself over and over family after family.  How awful of the Step Father!  He should have used this as a stock trading strategy instead.  Killing your family if they start to displease you or under perform in some way is terrible and twisted.  Killing a trade or investment when it starts to under perform or displease is a great strategy!

The Step Father also knows that he has to keep his options open.  He keeps a case of maps, IDs, and different physical looks that he can turn to when it is time for a new family.  As an investor make sure to keep your options open and be aware of different looks by diversifying your stock holdings.  Trust in the fact that the Step Father would have chopped up Enron's stock and moved in with Walmart and its kids long before any congressional hearings took place!

Remember diversify, and keep your options open, just like the Step Father when it comes to investing and trading.

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