Making many balanced and uncorrelated bets is the best way to minimize your risk while keeping the gains. If your bets become correlated, you lose the benefit of diversification because more of your portfolio can be effected by a single event.

In order to understand correlations, you won’t only need to understand markets. You will need to understand people. Try to understand why opinions differ, even if they are at complete odds with you. This will help you gain insight into how the world works. There is more than one way to view the world, so be curious and open minded to other’s opinions.

Principles

Book: Principles