What is Exactly Looking Under The Hood

What is Exactly Looking Under The Hood

Contemplating the potential of a company doesn't have to be as difficult as solving a black belt Sudoku puzzle. The key is to look under the hood of a company and not just at the glitzy interior. Looking under the hood is known as fundamental analysis on Wall Street.

I spent my teenage years riding the subway system of New York to get around, so by the time I learned to drive a car and finally purchased one, I was too intimidated to look under the hood. I've been driving for over two decades now. I know how to check the oil and add windshield wiper fluid, but I'm still in the dark about engines, drive trains, and exhaust systems.

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Different Types of Risk in Investing

Different Types of Risk in Investing

Risk is what we take the moment our eyes open in the morning. There is a chance the water in the shower could be too cold or too hot; the former makes for a jarring wake-up call, the latter makes for a possible visit to the hospital.

But of course we have knobs that clearly indicate hot and cold, and we also have to ability to feel the water, testing for the moment it reaches perfection.

As the day moves forward the risk increases exponentially. We, however, moderate our lives to adjust for risk. If that nut in the car in front of you looks like he has had too much to drink, you simply switch lanes and move around him, maybe giving him a dirty look as you pass by. You continuously check and assess risk when you drive your car, looking at the rearview mirror every few seconds.

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