Hello and welcome!
I can’t tell you how fired up I am that you’re here. I guarantee you that you will never think about risk the same way again, because today I’m going to introduce you to The RISK Rituals.
Did you ever think you could come to love risk? Well, get ready. There’s no greater friend than one who used to be your enemy until you realized that you just misunderstood them all along. It builds real trust!
Risk is about to become your friend instead of your foe.
So, what are The RISK Rituals? I’m glad you asked.
The RISK Rituals are a set of steps that you can keep in mind as you approach any decision that involves the possibility of loss in exchange for an opportunity to gain.
Whoa. Stop right there for just a minute. We just defined “risk.” Risk is the possibility of loss in exchange for an opportunity to gain. It’s pretty simple, wouldn’t you say?
Now then, there’s stupid risk and there’s smart risk. Stupid risk is the possibility of loss with relatively little likelihood of gain. Buying GameStop stock at $300 per share comes to mind, especially when the stock is already up over 500% in a week!
Smart risk is the possibility of loss with a good likelihood of gain. Of course, the “gooder” the better!
The RISK Rituals are all about helping you to take smart risks and avoid stupid risks.
Here’s how they work.
We take each letter in the word “risk” and turn it into an easy-to-remember principle for approaching risk-based decisions.
- R = Rest
- I = Invest
- S = Stick
- K = Keep
Pretty cool, huh? Let’s briefly unpack our four principles of successful RISK management.
REST
Before anything else, stop and breathe. Don’t let anyone rush you. Be deliberate. Be intentional. Take the time you need. Make sure that you know what you’re risking and what you expect to gain. Most importantly, make sure that you really want to do this!
INVEST
Commit! Take the leap. Pull the trigger. Don’t look back. This is a brief but pivotal step. The longest journey begins with a single step. Take that step.
STICK
Stick to it. Stay the course. Execute. You are the rare individual who actually has a plan and knows what you’re doing. Get the job done!
KEEP
Keep your gains. You earned them! They are yours. Don’t let anyone ever take them away from you. Even a loss can be a gain once you accept the fact that those who do step up to the plate have to be willing to strike out.
That’s it. Four simple words – Rest, Invest, Stick, Keep. Remember them the next time you consider risking loss in exchange for the opportunity to gain.
Now you know The RISK Rituals. Didn’t I tell you that you’d never look at “risk” the same way again (and that I wouldn’t make this painfully mathematical)?
Next up, we’ll take a look at how to apply The RISK Rituals to a question that is on nearly everyone’s mind. Is it too late to buy Bitcoin?
Fight the noise,
Dr. Richard Smith
DOCTOR OF UNCERTAINTY
P.S. Did you get a chance yet to listen to my conversation with Jack Schwager (author of the Market Wizards books) on YouTube? It’s a big-picture, back-to-basics, absolutely brilliant primer on the indispensability of good risk management.