To the Moon Investing: Visually Mapping Your Winning Stock Market Portfolio by Kelly J. Frank

PART I
Moonscape

CHAPTER 1
Risk and Mindsets
He was an old man who fished alone in a skiff in the Gulf Stream and he
had gone eighty‐four days now without taking a fish. In the first forty
days a boy had been with him. But after forty days without a fish the
boy's parents had told him that the old man was now definitely and
finally salao, which is the worst form of unlucky, and the boy had gone at
their orders in another boat which caught three good fish the first week.
Ernest Hemingway
Perhaps your stock selection experience is much like the fishing misfortune
of Hemingway's old man. Maybe you view yourself being possessed by
excessive Salao, real or imagined, and that prevents you from even
attempting to play in the market; for sure, ineffective stock results wear on
you and destroy your confidence.
The truth is that we all have Salao in our DNA. Unfortunately, some of us
appear to have more Salao than others. Sure, you can shake the Magic 8
Ball harder or yell at the sky for celestial intervention, but the record may
still show that your assets don't even get you to the next county, let alone
the Moon. So you intentionally compromise by not playing in the game and
you ghost your own rocket.
In addition to the Salao risk you bring, there is the investment risk the
market brings per the assets you select. In simplified market portfolio
theory, these two investment risks are referred to as systemic and
unsystematic. Systemic risk is common across all investments, whereas
unsystematic risk is specific to the investment choices you make.
How do you straitjacket systemic and unsystematic risk? Regarding the
former, you really can't, other than closing your position and perhaps
moving the cash to money market instruments. But unsystematic risk can be
greatly reduced by having a diversified stock portfolio. Still though, there is
your “unlucky” risk: Salao, and it must be confronted as it shall determine
your rewards at the end of the day. Let's stretch our foreign language inputs

To the Moon Investing: Visually Mapping Your Winning Stock Market Portfolio by Kelly J. Frank