Day 86 - Risk

I was discussing arrows and their meanings. Let me try to pull it all together. The arrow is a vector in mathematical terms. It's length is the vector's magnitude. The center (origin) of these vectors is you. Call it your being, or your soul, or whatever you want, it's the summation of you. It's different from the origin of everyone else. The surface of all these vectors (the lumpy potato) is the locus of your personality. I said that every vector can be positive or negative, reflecting your likes (+) or dislikes (-), hopes (+) and fears (-).

Now I suggest that the magnitude of each vector can represent your tolerance for risk. You can not extend any vector in a positive direction further than you are willing to accept the same amount of negative response. Casinos always say, “You can't win if you don't play!” So it is with life. You can't enjoy a reward greater than you're willing to risk a loss.

If every activity has risk, how much is a person willing to wager in search of the reward? It is my axiom that the positive magnitude of any vector can not exceed the possible negative value. Is the thrill of skydiving worth the risk of death? Some say yes, most say no. Is the possibility of large returns on the stock market worth the risk of being penniless?

In school we had the first hint of this bargain. Some of the kids seemed to live large while most kept their heads down and stayed below the radar. Go over and ask that girl for a date? Maybe next time, too risky now. Later, it would be trips to exotic places or the safety of a package tour. Nobody has ever died of embarrassment but you would think it was an everyday occurrence.

In an economics class one lecture was on satisficing. That is the decision to accept what satisfies the minimum requirement while sacrificing the goal of perfection. That reflects the decision of how much to risk. A bank deposit at minimal return will satisfice because it is safe and insured. Keep the risk small and accept the minimal reward.

We make decisions every day in which we weigh the risk and reward. Some want more reward, some want less risk. Each person has to decide for themselves. The little gray people live on the ground, but some reach for the stars and accept the bumps and bruises along the way.

---

Make my day, tell a friend about this blog!