Thoughts on Investing

Thoughts on investing from Kid Dynamite

            Trading Rule #3:

It’s your responsibility to understand what you are trading.   Don’t blame others for your own unawareness. 

I wrote a lot about this already, mostly around $TVIX.  The bottom line is that if you can’t bring yourself to sit down and read a prospectus or to check the underlying net asset value of an ETN that you are trading,  you have no one to blame if something blows up in your face.   If you find a product too complicated to understand: WALK AWAY.  You don’t have to trade it!

There are a few corollaries/restatements of this rule, which I’ve expounded on before:

If you don’t understand a complicated product, it doesn’t mean the product shouldn’t exist – it means you shouldn’t buy it.

or even simpler:
If you don’t understand it, you shouldn’t be trading it