“Investment is a flighty bird which needs to be controlled”
In this article, Clara PINTO (ESSEC Business School, Master in Strategy and International Business (SMIB), 2020-2023) comments on a quote by Sir John Richard Hicks about investing.
Investment is a flighty bird which needs to be controlled
“Investment is a flighty bird which needs to be controlled” is a famous quote from Sir John Richard Hicks.
This quote means that investment is unpredictable and can easily change direction or fly away, so it needs to be managed or controlled carefully. Just like a bird, investment can be difficult to catch and keep in one place, so investors need to constantly monitor and adjust their strategies to ensure that their investments are secure and profitable. Without proper control over the portfolio and monitoring of the news, an investor can make decisions which could be risky and lead to financial losses.
About the author
The author is a British neo-Keynesian theorist and considered as one of the most influential economists of the XXth century.
Financial concepts related to the quote
It is important to understand the risks associated with investing before making any investment decisions. It is also important to diversify your portfolio by investing in a variety of different assets, to minimize the risk of losses due to the failure of any single investment. Additionally, investors should consider their investment goals, time horizon, and risk tolerance when making investment decisions. Some common risks associated with investing include:
- Market Risk: The possibility of losing money due to the fluctuations in the stock market, commodity prices, or interest rates.
- Credit Risk: The risk of losing money when a borrower fails to repay a loan or debt.
- Inflation Risk: The risk that the purchasing power of your investments will decrease due to inflation.
- Liquidity Risk: The risk that an investment cannot be sold quickly enough to avoid a loss.
- Operational Risk: The risk of losing money due to errors, fraud, or other operational problems.
My opinion about this quote
I like this quote because today, many successes such as the Pinduoduo investment story about investment are shared (see the article “five investing success stories from five international women”), but without the proper knowledge and understanding of the risks, the loss that can occur is often underestimated.
Why should I be interested in this post?
As many business students are advised to invest early in their careers, and many are offered the chance to do it with money that they did not earn by themselves, this quote shall remind them of the consequences of bad decision making and the risks.
Related posts on the SimTrade blog
4 Real Risks Of Investing (And What To Do About Them)
Five Investing Success Stories from Five International Women
About the author
The article was written in March 2023 by Clara PINTO (ESSEC Business School, Master in Strategy and International Business (SMIB), 2022-2023).