A life with zero risk is neither possible nor desirable.
Risk can be managed. It can be moved from one place to another. It can be increased or decreased in amount, but it can never be eliminated.
1) Types of Bets:
There are different types of opportunities or ‘bets’ that will appear in life.
Smart Bets are those with big upside and small downside; they are low risk high reward bets. Stupid Bets are those with small upside and big downside; they are high risk low reward bets.
Everyone should seize Smart Bets and reject Stupid Bets.
Tragically, Smart Bets are incredibly rare while Stupid Bets are common. In the game of life, it is rare that you can win smartly but there are endless opportunities to lose foolishly.
Ambivalent Bets are those where it’s difficult to tell which is bigger; the upside or the downside? A bet with big upside and big downside is a high risk high reward bet, while a bet with small upside and small downside is a low risk low reward bet.
2) Calculate Risk Fast:
“Life is a game of calculated risk taking.”
–WallStreetPlayboys
A critical skill is the ability to quickly calculate risk and reward.
Whenever an opportunity appears, quickly categorize it into which type of Bet it is: ‘Smart’ ‘Stupid’ ‘High Risk-High Reward’ or ‘Low Risk-Low Reward’
This calculation will sometimes have to be done in a matter of minutes; sometimes in a matter of seconds.
In the real world it is impossible to calculate risk and reward with mathematical certainty. However, opportunities can certainly be ranked relative to each other in regards to how risky they are.
We cannot say there is X% chance that if you start a business you will become a multimillionaire, but we can certainly say that starting your own business is a higher risk and higher reward path than being a corporate employee.
3) How Much Do You Have to Lose?
3A) A Lot to Lose? Be Risk Averse:
If your life is going well (you have high status within the macro hierarchy), then you have a lot to lose. Being risk averse is rational.
If any high risk high reward opportunities appear you should reject them, and instead tend towards a path that is low risk and low reward.
3B) Little to Lose? Be Risk Aggressive:
“All courses of action are risky, so prudence is not in avoiding danger (it is impossible), but in calculating risk and acting decisively.” –Niccolo Machiavelli
If your life is going badly (you have low status in the macro hierarchy and this is likely to continue into the future), then you have little to lose and a lot to gain; being risk aggressive is rational.
If a high risk high reward opportunity appears, you should seize it without hesitation.
If your life is on track for failure, you have to escalate your tactics. Any fear you have is irrelevant; if there are high risk high reward strategies that you have been afraid to use up to this point, it’s time to execute them.
Continue executing high risk high reward strategies until you either win or die.
Better to die than to live defeated.
Death Opens a World of Opportunity:
“Life has more meaning in the face of death.”
-33 Strategies of War
Only Satan knows the things you’d be willing to do if you had nothing to lose.
There are plenty of young men in perfect health who think they have ‘nothing’ to lose, when in truth they have everything to lose; they have another 50 years of life ahead of them.
The only people who truly have nothing to lose are those diagnosed with terminal illnesses or those who are determined to carry out suicide.
Having nothing to lose is a miserable position to be in, but it is also a position of immense power.
You are enabled to use high risk strategies that nobody else is; everyone else is understandably afraid of the consequences, however you need not fear consequences since there is nothing you have that can be taken away.
Should you be informed you have a terminal illness or should you choose to carry out suicide, do not slowly fade away; go out in a blaze of glory.
Before death arrives, execute every high risk high reward strategy available.
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After you end a relationship with a woman, you will perceive her as being more valuable, than you did when you were with her.
Why?
Scarcity...
As soon as your relationship with her is over, you cannot have her anymore (regardless of whether you left her or she left you), so you view her as being more Scarce than you did back when you were with her
Believing America's Capitalist Economy is a Meritocracy
is like believing that 'Unconditional Love' exists.
One can easily verify that a significant percentage of Rich Americans made their money via illicit means.
Notice the word 'Illicit', not 'Illegal'.
America is a society where bankers who manufacture mortgage loans they know are going to go bad get paid more than nurses who heal the sick.
America is a society where the executives of pharmaceutical corporations that sell opioids that destroy more lives than they save, are paid 100x as much as Firefighters who save lives.
Your brain closely tracks what your relative status is in the hierarchy you live in, and assumes that if you are low status you are in danger (causing your cortisol levels to rise) and if you are high status you are safe (causing your cortisol levels to fall).
The assumption that life at the top of the hierarchy is safe and life at the bottom of the hierarchy is dangerous is an accurate assumption in most hierarchies most of the time (see the ‘Life and Death Stakes’ section above).