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<p>[QUOTE=&quot;medoraman, post: 1439044, member: 26302&quot;]I agree random chance has a huge part. Think of the natural gas story I related earlier. People who did the work on this industry rightly concluded there would be massive shortages, so invested in existing supply. To them, it was horrible luck that fracturing was invented and massively increased supply. No matter how intelligent you are, you cannot avoid this kind of bad luck.</p><p><br /></p><p>However, smart investors position themselves to maximize profits from good luck, and minimize losses from bad luck. They concentrate on things either not in the news, or having bad news about it. They diversify risks. They think about future scenarios and how their overall portfolio would fare in such scenarios. The real danger is getting greedy. You study a stock, 100% believe you are right, and make you investment. A good investor, even if they are positive they are right, will only commit a portion of their portfolio to a &quot;sure bet&quot;. &quot;Sure bets&quot; do not exist in life. This is the major reason, even if a person REALLY thinks PM will skyrocket, that I recommend only putting 10-15% in them.</p><p><br /></p><p>I think coin flip analogies are ok to help people visualize the basic issue, but are not real world paradigms.[/QUOTE]</p><p><br /></p>

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