Six Sigma Investing

A great quote from a Six Sigma site Discover6sigma that is also a great first step in investing:

"You can manage, what you can measure;You can measure, what you can define;You can define, what you understand."

The first rule in investing is that every investor should avoid catastrophic loss at all costs. The probability of a high impact event such as a catastrophic financial loss happening with a low probability continues to be low when limited to a small geographical area. These events can well be termed six sigma events - where the investor might experience catastrophic loss with a very low probability of 3.4 events in a million tries. However, with financial markets becoming globally interlinked, investors might experience such events with higher probability. Therefore, it becomes even more important that investments be made based on fundamental valuation and not technical valuation to avoid being caught by high impact/low probability events - whether financial or political.