There is an interesting exchange below in the comments section of my Scorecard post about risk. My last contribution to the subject was an admission that I don't know what risk is anymore. And I'm not just talking about risk in the markets, either. A few of you who know a little about my personal life, understand what I am referring to here. Whereas risk used to be the guiding light of measured action, at some point after turning 55 (a Fibonacci number) risk ceased to be a factor in my life.
My Macintosh widget tool defines risk as a noun, "a situation involving exposure to danger." Maybe more illuminating, if I click the widget for it's thesaurus, it generates risk synonyms, "chance, uncertainty, unpredictability, precariousness, instability, insecurity and perilousness." Yes, as Jon Lovitz used to exclaim on Saturday Night Live, "That's the ticket."
In the markets, as in life, there is always the safe way, with limited, knowable, returns and there is always the risky path, with unlimited, unknowable consequences. What is it that causes one in the prime of his life to choose risk? Or is risk simply a continuum upon which we slide from one end to the other, using degrees of desperation as our only directional tool? In the thread below, my protagonist re risk is Ross, a friend of mine for the past 20 years. Ross, an MD, has built an incredible medical business and I was there when it all began. Every step of the way for Ross was steep in risk. Now, twenty years later, tremendously successful, Ross worries about stock risk inherent using insider buys as a sole determinant in investment decisions. Is the nature of that risk so different as the risk Ross took in starting his own medical business so many years ago?
What is the nature of risk, how do we assign value, input, significance to risk in walking through the markets, our lives, our dreams? Is there some objective measure by which we can utilize risk in the decision making process? Or is risk just some subjective cloud of uncertainty, ever-present in the smallest to the largest of our daily life decisions?
A lot of question marks today. I just don't have any answers. One year ago I left what was familiar, what was my life, on a journey that took me to the Pacific Northwest to daytrade stocks for a private hedge fund. The risk I took, the cost I have paid and the new life I have found, just doesn't lend itself to any rational analysis. Fifty-five years (a Fibonacci number) and longing took over. Go figure.