Wise Owl Wednesday #26 - Risk

Jul 22, 2020 6:52 pm

Happy Wednesday, Wise Owl Nation.


Woo, I kind of went off on this one. It's long, but it's good.

There is a lot of value in this week's newsletter if you take the time to read it.


This week we are going to talk about risk management in several situations.

My goal is to give you a different perspective regarding how you think about risk.


Life is a series of decisions.

Every decision is a risk and every risk is a decision.

Especially now in times of pandemic, volatile markets, and uncertain futures it's critical to think about life in terms of risks and rewards.


Let's get into it.


You can find all past issues (including this one) here.


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Quote of the week:

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Wisdom Tip of the Week: Think about life as a series of bets

Life, in many ways, is like poker; You are dealt a hand for any given situation.

You can't control what other cards are coming, but you can control how you play your hand.

Every decision you make, can then be considered to be a "bet" made to try to increase your likelihood of succeeding.


Good decisions = higher chance for good things to happen.

Bad decisions = higher chance for bad things to happen.


The confusing part about life and poker is that, because nothing is a sure thing, you can make a bad decision and still have a good outcome. You can also make the best possible decision and still have it lead to a bad outcome.


This is why you have to remind yourself that you are not entitled to anything.

All you can do is make the best decisions as often as possible.

The more often you make the best decision, the more often you will find success.


Some examples:

  • Don't cheat - Cheating in anything might win short term, but it's a bad decisions so you will inevitably lose
  • Be kind to people - Everyone remembers the asshole. Make this bad decision enough and you will get this reputation. In the long term everyone needs friends.
  • You can't fake Authentic - "Fake it until you make it" is a mindset trick, not a literal guide to life. People can tell when you're being fake, and are drawn to others that are true to themselves. Be your damn self. It's easier and your friends will be the right kind of friends you need when life goes downhill.


Health Tip of the Week: Reducing Covid Risk

Speaking of living your life like a series of bets. It's been 7 months and Covid-19 is still growing.

Blame whoever you feel like blaming, but the fact is, Covid is here to stay.

Which that knowledge in mind, how are you choosing to live your life?

Are you making good decisions or bad ones?


You can control what you are doing to reduce your chance of getting "the rona."


Are you making the right decisions?


Here are two things I am doing to reduce my risk factor.


1) Supplement with Vitamin D and Vitamin C

Basically every patient that gets hospitalized with Covid is deficient in Vitamin D.

That's pretty f*cking crazy.


So, every one I love takes 4,000 IUs of Vitamin D3 every day so we will not be Vitamin D deficient.


Vitamin C helps your body fight off foreign invaders in a bunch of different ways.

It even makes your urine more acidic.


I take 2g of Vitamin C midday and another 1g before bed.


Vitamin D and Vitamin C are cheap and easy ways to improve the strength of my body and reduce my personal risk of Covid harming me if/when I eventually get it.


2) I wear a mask if I leave my house

This is a good decision for a few reasons.

  1. A mask can reduce your chances of getting or giving Covid.
  2. A mask also tells my friends, neighbors, coworkers, and other civilians that I am happy to look like a ninja to show them I care about their health.


Right now in history is an interesting time. You can only control how you act, not how others act. People who choose not to wear masks stick out like a sore thumb.


I choose not to risk my social capital by exercising my freedom to not wear a mask.

In my opinion it is far too risky not to wear a mask. The consequences are too high.


There are people that depend on me to care for them, so I do what I need to do to improve my odds of success.


Wealth Tip of the Week: You Have to Take Risks to Build Wealth

To grow your money you have to take risks.

The closest thing that exists in the world to a "safe place" to keep your money is in a commercial bank, and it is the worst place to keep your money if you want it to increase in value.

Money goes to banks to wither and die.


You can grow your wealth in 4 ways:

  1. reduce expenses
  2. increase income
  3. pay off debt
  4. invest


Investing, as one can imagine, holds the most risk.

Depending on your age, the risk you can handle changes.


The spectrum of risk:

  • Most risk - 20s and 30s
  • Less risk - 40s
  • Least risk - 50s +

The idea here is that the younger you are the more time you have to accumulate wealth, and the older you are the more you need to preserve your wealth.


Accumulation requires more risk. Preservation tries to minimize risk.


Smart investments (in my opinion - this is not financial advice):

  • Yourself via courses, books, etc - low risk, astronomical return over time as you become a more capable person
  • Cryptocurrency - high risk, astronomical return. The future of money. Bitcoin and Ethereum are the best bets.
  • Index funds - medium risk, medium return. Try a robo advisor like Betterment or Wealthfront


Terrible investments:

  • hiding your money under your bed - high risk, no return
  • Individual stocks - high risk, medium/high return. You have to be ridiculously lucky
  • Crypto that is not Bitcoin or Ethereum - astronomical risk, astronomical reward. But really the risk is so high it is not worth it unless you really know what you are doing


There are millions of other investments you can do with your money. The point here is that you choose investments that match your own personal risk threshold. What are your goals for your money? How much time do you have in your life to recover from catastrophe?


Invest accordingly.



Book Of The Month - Serial Winner

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Chapter Reviews:



Grab a copy of Serial Winner



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Resources

I will be adding to this section over time as we find resources that will help you all.


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