Have you ever wondered how a Hollywood star brought global attention to breast cancer? On May 14, 2013, Angelina. Jolie published a “My Medical Choices” article in the New York Times, revealing the difficult decision she made to prevent breast and ovarian cancer: to undergo surgery to remove her breasts and ovaries. This move not only attracted global attention, but was also used as a cover story by Time magazine, calling it the “Angelina effect”. Initially people, especially in the Chinese community, were confused by her decision and thought she might be too radical. But when you look deeper, you find that it is a well-thought-out risk management decision. As Wall Street trader Que Youshang said in “Asset Allocation You Didn’t Learn: What Buffett is Doing Silently,” Jolie’s choice reflects superb risk control skills, surpassing even Buffett’s. Therefore, Jolie’s story not only teaches us about important health decisions, but also inspires how to actively face and manage life’s risks.
Risks are bound to exist, choose to face them rather than avoid them
When Angelina. When Jolie decided to take early action to reduce her cancer risk, she may not have realized how her choice would inspire investors to think about risk management. Just as Jolie faced a cancer risk of up to 87% and chose surgery to reduce it to 5%, investors are facing similar choices when faced with stock market fluctuations. In Taiwanese stocks, the prices of some stocks could even drop by 70% to 80%. At this time, will investors consider preventive measures? Jolie’s case demonstrates that, when faced with high risks, timely and strategic action is crucial.
Asset allocation reduces volatility, Jolie illuminates investments and calm prevails over panic
In the world of investing, asset allocation is one such strategy. By diversifying across different asset types, a portfolio’s volatility can be significantly reduced. Imagine that if volatility could be controlled to 10%-15%, investors would be less likely to panic-sell at market lows, thus avoiding heavy losses. This is the risk management wisdom revealed by Julie: When faced with high risks, timely and strategic action is more important than passive waiting. This wisdom applies equally well in the world of investing, helping investors stay calm during market turbulence and make smarter decisions.
Risks are protected and investments in life remain invincible
Buffett believes that stock price volatility, such as standard deviation and beta value, does not pose a risk, but for many investors, stock price fluctuations of 50% pose a serious challenge. This is similar to Jolie’s situation when she, faced with an 87% cancer risk, chose the risk management measures she deemed most appropriate. Likewise, when investors are faced with possible high price fluctuations, they should consider controlling risks in advance rather than doing nothing later. Just as Jolie makes decisions based on medical statistics, standard deviation also provides investors with a basis for predicting the range of fluctuations in their portfolios, helping them implement adequate risk control in advance.
Health and wealth are the same thing. Asset allocation is key. Preventing disease is like preventing losses.
Wisdom in all aspects of life is often interconnected. Just as cancer prevention involves diet, exercise, maintaining mood, preventing obesity, quitting smoking and alcohol consumption, effective financial management also requires advance planning and risk control. This includes having the correct financial management concepts, choosing appropriate financial management tools and investment markets, in order to achieve good results. Risk management for maintaining health and financial management follows the same logic. According to the World Health Organization, a large number of people die from breast cancer every year, and in Taiwan many investors suffer losses in the investment market due to a lack of knowledge in risk management and asset allocation. Therefore, financial education is as important as health education. Many investors are like defenseless boats in the stock market: if they manage to master the knowledge and application of asset allocation, it will be like receiving a medical examination: not only will they have the right to choose, but they will also be able to make constant profits in a volatile market and avoid being affected by market fluctuations. Understanding the theory and practice of asset allocation can give investors more choices in the market and increase their chances of profiting.
The post What You Haven’t Learned About Asset Allocation》How does Jolie’s precautionary decision making translate into an investment strategy? The importance of “asset allocation” in risk management appeared first on Minsheng Electronic News.
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