“Rich are getting richer” is something I have been hearing all along, and this divide is increasing by the day. As per some recent statistics Top 10 percent of Indians hold 77 percent of the nation’s wealth. Has it ever made you wonder what could be the possible reason ?
Most of us would attribute it to the base of wealth that rich already have and that it helps them to muster more and more everyday. But my experience says that the real answer to the mystery is that one who knows how to manage risks takes it all in the end. World around us is more random than we think it to be, most people associate positive outcomes out of these random events as skill and negative outcomes as bad luck but people in the long game appreciate the events to be as random as they actually are.
Long back one of my friends bought a penny-yet darling stock of markets at the time, he had made this purchase after knowing that one of the big investors had made a position recently with a huge quantity. And my friend invested his 60 percent of investible corpus in the stock and was later wiped off, No prizes to guess that it was a mistake that he should not have put most of his eggs in one basket (Later my friend realized that this big investor whom he has following invested only 0.1 % of his portfolio in this penny stock, but people were mistaken in looking at his investment in absolute numbers). Let’s take an alternate scenario now, if this investment had worked and turned to a multibagger then ? I guess my friend then would have become both richer and famous. This is luck by chance and keeps happening to people around us but we miss to understand that this is a random event and may not be sustainable.
Understand Risk and you would be fine, do not get sucked in by the survivorship bias of people who risked it all and then became wealthy. There would be 95 out of 100 people who would have blown it all when they risked everything.
Wish – Plan – Execute
Best Regards
Team – D2A