Taking Chances

How often have we seen an individual, sometimes a family member or close friend, about to do something either risky or outright stupid, and after fair warning replies “I’ll take my chances”? With these words he assures us and all the spectators that he has weighed in thought all the possibilities of his actions and has chosen for himself a feat by which to challenge himself to.

But when we recall such scenarios what is it that comes to mind? Is it the truthful and just actions that may make us greater and enhance the quality of life for us and those around us, or rather is it those stupid actions with the “just because” attitude that may end up landing us in physical, financial or ethical reckoning?

In psychology it’s explained that people tend to lean towards risk only when they are on the brink of a loss. Walter Linn said “It is surprising what a man can do when he has to, and how little most men will do when they don’t have to”.

In the psychology of investing we find the similar. The “intelligent investor” will aim for small reasonable gains but will mortgage the farm when he feels he may loose and must save himself from further destruction. This is not logical at all but it is what the mind subconsciously resorts to in time of crisis.

Right now when I look around at the manic speculation in the investing field it seems that man has not only reasoned against risk but is taking all his chances. I wonder what people nowadays think of the speculative months preceding the Crash of 1929. Do they really think that there were no Greenberg’s, Roubini’s and Ritholtz’s with a calling back to rational thinking? Do they deceive themselves into believing that there were no Daily Reckonings proclaiming the abrupt end to all the hoopla?

I have no doubt that there were and at the same time I also have no doubt that in the far recesses of the minds there was a surety that all of the hype would one day end. But greed got the best of them and each man continued on bracing himself for the dash towards the door just in case that bearish newsletter he read that morning proves correct.

Call me a bear but with all respect to the regiments we choose to stick to the sidelines cheering on the masses whispering to ourselves… “Be greedy when others are fearful… and fearful when others are greedy”.

One day we’ll be taking chances and wild ones too, loaded with scary stuff like leveraged derivatives and high-risk credit bonds. But that day is not today, not if we’re going to be cheered on for doing so.


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