Chapter 7 Question 4 Nick Terlizzi

Some of the problems the author addresses he has a realistic and reasonable solution for them. The first problem is the issue of risky investments and how they can be great at times and leave you empty handed other times. He uses a story to parallel to the risky investments. He shares the story of the eating grapes and ice cream diet. He talks about how sweet it sounds and how unreasonable it really is. The problem is the people who joined didn't have any information that this diet was healthy and accurate. Many investors don't speculate or take further investigation in what they are going to risk. Although taking risky investments may one day pay off, there are many examples it does not and that is why the author also says invest for the long run and take things slow and easy and to not always be risky as much cause those risks may one day hurt you and you would have wished you went the safer way approaching investments. Another story about an issue is the story of pirates over seas. Many boats and trade ships are hi jacked or stolen or destroyed by pirates. This leaves the companies losing a lot of money. But a solution is insurance and backing up what you possibly could lose. The author uses the story of the oil company who took the safe way out and spent money on insurance and was in the end very grateful for that decision due to their ship being destroyed. The insurance company wrote the oil company a check for $70 million, a huge claim.