The Importance of Risk in the Market

Ride the Wave...

Posted September 18, 2023

"Only when the tide goes out do you learn who's been swimming naked."

— Warren Buffett

Dear Outsider,

I just got back from the beach during a much-needed respite.

Soaking up the sun, swimming, and trying my hand at surfing — why don’t I live like this every day?

Everyone seems happier at the beach... Maybe that’s what retirement looks like.

But the entire process of surfing reminded me exactly of investing, almost to a T.

Here’s what I mean…

Just like investing, surfing is all about risk tolerance.

How much risk are you willing to take to ride that big wave?

Moreover, are you assessing the risk properly based on your experience and risk tolerance?

It all starts by searching for that secret spot.

Sure, you could follow the lackeys and go out on the main public beaches with lifeguards and small waves...

But you’re not going to have much fun.

After a short trip uptown, I finally stumbled upon the most beautiful surf spot I’ve ever seen.

It was tucked away, obscured from view, and the waves came in perfectly against the rocks, forming a tide pool that kept the surfers from drifting away.

It was clearly the local hangout.

I had to snap a picture of it.


There were about 30 surfers out there at one point, with van-lifers, musicians, and happy dogs.

I’d never seen anything like it on the East Coast.

Now, I can’t tell you where this is, but just know that with a little luck, you too can find that secret spot.

Here’s where this relates to investing...

You have to be willing to go outside your comfort zone and against mainstream thought.

An old colleague of mine use to say something like this: By doing what everyone else does, you’re going to get the results that everyone else gets.

I couldn’t agree more here.

Then, once you’ve found your spot, you have to have the right equipment (a surfboard) and decide whether you want to take on the risk of paddling out.

Again, this relates to investing as you need the right equipment (a brokerage account and some spare cash), and you have to be willing to take the risk of investing in some stocks.

Sure, you might look stupid by going against the grain with little experience, but who cares?

Are you going to sit on the sidelines or go for it?

Time and again, I talk to so many novice investors who just want to park their money in a 401(k) and not take control of their hard-earned savings in a brokerage account.

They fail to realize that a 401(k) is the exact same thing as investing your money in a brokerage. The only difference is you can’t access it until you “retire,” whatever that means these days.

By taking on a little risk, you can build up that brokerage account and learn much more about the markets and stocks than by socking it away in a retirement fund that you know nothing about.

Finally, after you decide to take the risk, get off your rear, and paddle out, you have some options...

You can sit patiently on your board and ride the waves up and down (you actually spend most of your time surfing in this position)... just sitting, waiting, and enjoying the weather. I equate this to passive investing — perhaps your blue chip dividend-paying stocks or your high-interest cash accounts.

But every once and a while you see it coming... A golden opportunity... That big wave that’s coming right for you.

You’re in the perfect position.

Now you just have to decide if you have the skill and risk appetite to take that wave. You’ll never know unless you try. Sure, you might miss it. You might even eat shit in front of everyone and get tumbled under the surf.

But you learn a valuable lesson — and you get back up on the board and try again.

And when everything comes together and you catch the wave, stand up, and ride it into shore, it’s the best feeling in the world.

That’s your big payday: when you take the risk, survey the market, find your wave, position yourself accordingly, and finally make some outsize returns.

But the most important part of it all is learning from others — probably why you’re still reading our missives here at Outsider Club.

When you paddle out in a group of experienced surfers, you have to follow surfing etiquette lest you get the dreaded “stink eye.”

Never cut in line, wait for your turn, don’t drop in on someone, and above all... have fun.

None of this is worth it if you’re not having fun.

With investing, you’re doing yourself a disservice by not learning from the best.

I’m talking about elite investors with a track record of outsize success.

In fact, I’ve identified five traders that are absolutely crushing the market and have been for years...

With gains like an average annual return of 797% over the last three years...

A return of 2,748%...

And even an unheard-of 11,193.5%.

These returns are just a walk in the park for these "Super-Traders."

Learn how you can access their portfolios and invest alongside them here.

Stay frosty,

Alexander Boulden
Editor, Outsider Club

After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing. Check out his editor's page here.

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