Replies to post #1454 on A.I.M. Users Bulletin Board (AIMUSERS)

[Conrad]

Tom,

The Pyramid you refer to is not the same thing. To have a mayor portion of an investment in a low-risk category(The Base)
is a sound strategy for the average investor, and certainly for inexperienced investors.

But even with this concept of the Pyramid it remains true that in the base investment there can be(and usually there are) some failures to be found. These failures were by definition sure losers because they did not survive. Also, some companies in the top of the pyramid can be, by virtue of their construction and the way in which they are managed, sure winners. Their classification does not make an investment in a sure winner a risky event.

Now the Risk Pyramid is something I ran into in Holland. The implication is that high profits can only be had from high risk(the top) and that low profits will be had by investing in low risk ventures(The Base).

So, "your" Pyramid refers to an investment distribution while "my" Pyramid refers to a Risk-Profit Relationship by which average people are advised to spend their money: "If you want to have a high ROI you have to run high risks.

That's a big difference between these pyramids.

Regards,
Conrad