Millionaire Mindset by Smith Darnell

Author:Smith, Darnell
Language: eng
Format: epub
Publisher: http://www.digital-book-publishing.com/
Published: 2015-12-18T05:00:00+00:00

Chapter 11. Risk

“There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction.”

- John F. Kennedy (1917 - 1963)

There was a guy during the 70s who deemed that taking a loan on a $10,000 apartment was expensive and risky due to the high interest at that time. Today, that same apartment is worth over $1million. Yes, he missed making the million that other risk takers have made by "staying safe". Is this guy, you?

In the early years of automobiles, traveling beyond the speed of 80mph was deemed hazardous and that it might crush your intestines and organs. However, a few automobile makers refused to believe in this, took the risk and made billions with their advanced vehicles. Throughout history, risk taking has been synonymous with progress. Without risk taking, there can never be progress and our world would look very different indeed. Every record breaker and history makers lived on the edge and took risks that seemed too risky for the ordinary man. These are the people whom we eventually remember, adore and idolize.

This is the same in investing. Without risks, there can never be gain. Every potentially profitable trade comes with a measurable and significant amount of risk. Avoiding risks means avoiding every reward that life has to offer. No matter how safe anyone makes a method of trading or investing to sound, there are risks involved, and these risks are measurable and quantifiable.

The trader who takes the risk of buying into a bear market eventually reaps the reward of the eventual rebound and makes millions while the investor who tries to stay safe misses it all. In fact, every stock market miracle and every stock market multimillionaire were made through calculated risk taking. Avoiding risk only means avoiding the chance to change your life completely.

By taking risks, we do not mean recklessness. There is a fine line between risk-taking and reckless suicide. Risk-taking involves comparing the potential rewards with the calculated risk and then determining if the probabilities of winning are greater than the chance of losing. Reckless suicide means jumping in and wishing for the impossible (that is doomed to fail). In short, risk taking involves a sound assessment of the relationship between risk/reward against the odds of winning while reckless suicide is like jumping, naked off a cliff dreaming about the fame and fortune that you will get should you suddenly be able to fly.

It is riskier not to take action in life than to take action and fail than if you never take action. If you don’t take action you have a zero chance of success. However, if you take a chance you give yourself an opportunity to succeed.

The millionaire mindset takes a step further to look at probability. One man said, “forget all that ‘start your, own business crap'; eight in ten new business fail in the first few years. I’d rather stick to what I know and just work hard and get a promotion at work.

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