Rule Du Jour: Rule #38 Take Calculated Risks (Patreon)

Rule Du Jour: Rule #38 Take Calculated Risks

Principle:

Embrace calculated risk-taking as a cornerstone of successful investing and personal growth.

Key Decisions in Life:

I've always taken risks, not sure if it is because I nearly died a few times.... 1) drowning as a teenager trapped under a boat 2) motorbike in the alps 3) nearly bleeding out after getting my thumb amputated on a boat so I have often thrown some caution to the wind.... excuse the sailing pun!

• Recognize that in life and investing, there are two primary choices:

  • Take risks

  • Work for those who take risks (I had a hard time doing this as I found it often frustrating to work for those who did not really understand the world)

• Avoid the trap of risk aversion: Understand that average returns come from average choices. Don't let fear of failure paralyze your decision-making.

• Practice calculated risk-taking:

  • Conduct thorough research - find winners early

  • Anticipate and prepare for potential failures - allocation and risk mgt help here

  • Learn from all personal mistakes and try to never repeat them. Use failure as learning opportunities to refine your approach and improve future decision-making.

• Cultivate a risk-taking mindset: Regularly assess and increase your risk-taking activities. A lack of risks taken is a sign of potential stagnation.

YEAR END IS A TIME TO REFLECT

I take an annual review and document all risks taken and mistakes made and oppty lost in the past 12 months. Use this to get better for the upcoming year. This also includes exiting positions into year end and do some tax mgt.

REM THIEL ON ELON

Calculated risk-taking is the vehicle that drives innovation, wealth creation, and personal growth. Peter Thiel has a unique perspective on Elon Musk's approach to risk-taking. He asserts that Musk possesses an extraordinary understanding of risk that sets him apart from others. Evidenced by Musk's remarkable success with both Tesla and SpaceX, ventures that were initially dismissed as "super crazy" by many in Silicon Valley. While Musk's actions might appear reckless from the outside, Thiel contends that his consistent achievements suggest a more calculated approach to risk! Going after the hardest things that nobody else would try - is where the biggest rewards lie! Sounds corny but true.

Irony is Thiel fired Elon as he felt he wanted to take on too much risk!!! QED