It was said that Andrew sold his car, his apartment and some other items in order to raise some cash in 1999. Along with all this money, he also took the entire cash balance in his bank account and bought 100,000 shares from a company. But two years later, the company went bankrupt and lost more than 75% of the investment money of its share-holders. As a result of this loss, Andrew became extremely distraught, so he went to the roof of a nearby building and jumped off the 30th floor.
Now, the question is,
is Andrew a risk taker?
No, he used to be a risk taker, but now he is dead.
Lots of people don’t understand the difference between risk taking and stupidity. Again, in the case of Andrew, he was stupid. If he weren’t, he would have adequately researched the soundness of the company or wouldn’t have put all his “eggs in one basket.” Since he couldn’t have predicted the future, he should have thought of both the best and the worst possible outcomes before he invested all what he had. Then, it would have been easier for him to handle the loss.
Is there a safe way to take risks? Is there such a thing as a good risk?
The answer is, absolutely yes. But there’s always something at stake when you take chances to achieve anything in life. In many instances, there’s a possibility to lose your money, your time, and even your reputation when it comes to business. But the opposite is true as well: these are also the very same things you stand to gain! Only when you don’t attempt anything will you lose or gain nothing, which is not a good alternative. As such, if you ever want to achieve the life you have always dreamed of, you’ll have to start taking positive, calculated risks.
Most people are afraid of financial losses because of mistakes. They keep on saying, “Play it safe. Don’t take a risk.” But this is a mistake. People may be struggling because they have already made mistakes but have not learned from those mistakes. Or they are struggling because they are too afraid to make any mistake at all. In reality, they are avoiding their fear instead of confronting it. They are not doing something they are afraid of doing, which is a bigger mistake. In other words, willingness to take risk is a good thing.
Granted, not everyone has the same level of risk tolerance. Some people are extremely risk averse, while some are extremely risk tolerant. Here’s an example. At age 16, H.L. Hunt rejected the security of a clerk’s position in his father’s bank in Illinois, USA. For years he practiced playing poker. Because he had a photographic memory, he could recall the cards that had been played and, therefore, he could anticipate where they could turn up in the next hand. So he would often take lots of risks in gambling. Although his habit may not be praiseworthy, my point is this: he learned how to take calculated risks.
Legend has it that Hunt won his first oil well in a poker game. But he always insisted that his empire began with shrewd trading of leases. According to him, he first asked a farmer to name the price for a drilling rights on his land. Then, Hunt hurried to town and offered the rights to an oil driller at a higher price. Once he had both sides of the trade in place, he could buy and sell nearly simultaneously, thereby pocketing a huge profit without risking anything.
In 1930, Hunt purchased an area in Rusk County, Texas, which was suspected to have oil underneath. For several decades, others had tried oil drilling in the same general areas without any real success. The geological and legal risks were also daunting. Consequently, no major oil companies showed any interest in developing the project. Nevertheless, Hunt took the risk and bought the “oil field” for a combination of $50,000 in cash, $45,000 in promissory banknotes, and a guarantee of $1.3 million from proceeds of future production, if any. Fortunately, the site proved to be the biggest discovery in the world at that time, tapping a lake of oil 43 miles long and up to 9 miles in width. Hunt’s fortune, without a doubt, was built on the foundation of a high tolerance for risk. Thus, in 1948, Hunt was proclaimed the wealthiest man in America.
Nothing in life is really risk-free. Many times you have to trust your instincts. Sometimes your gut may lead you down an unknown path but inside you know that something big is on the other side. If you strongly feel that like, perhaps you should go for it, because you'll never know what all you can accomplish until you do something you've never done. So, be prepared to take monumental risks if you’re launching a new business or expanding your service offerings. Who knows, you'll step into some of your biggest rewards. And, remember: fortune assists the brave.
