Eat Well, Sleep Well
What it is:
The phrase "eat well, sleep well" refers to the risk-return trade-off that most investors must make.
How it works (Example):
When investors decide which securities to buy, they also make a decision about the risk they are willing to. Buying high-risk securities offers the possibility of earning high returns and big profits ("eating well"), but buying low-risk securities offers the possibility of reliable returns ("sleeping well").
Why it Matters:
The risk-return trade-off is one of the most fundamental decisions an investor must make. Through diversification and a variety of strategies, most investors try to eat well and sleep well -- but few succeed.