Feb 8 • 20:02 UTC 🇧🇷 Brazil Folha (PT)

John C. Hull: before investing, learn the cost of falling

The article discusses the importance of understanding risks and potential losses in investing, drawing parallels with learning to fall in sports like judo and kitesurfing.

In the realm of sports like judo and kitesurfing, beginners are taught how to fall safely before they learn the actual techniques of the sport. This foundational skill emphasizes the importance of mitigating risks rather than just focusing on winning. The article uses this analogy to highlight a crucial aspect of financial training for investors, which involves thoroughly understanding potential pitfalls and the cost associated with making incorrect predictions or decisions in volatile markets.

Investors, financial institutions, and banks continuously face fluctuating variables like interest rates, currency values, and prices, and they must prepare for the possibility of unexpected changes. The article underscores the necessity of calculated risk management alongside the pursuit of profit, suggesting that without this preparation, one cannot sustain success in the financial markets.

Ultimately, the piece advocates for a mindset shift among prospective investors: before diving deep into the complexities of investing, one must first master the art of risk assessment and develop strategies to cushion the impact of potential failures. This approach is critical in ensuring long-term participation in the markets, much like mastering safe falling techniques is essential for athletes.

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