“There is the risk you cannot afford to take and then there is the risk you cannot afford not to take.” – Peter Drucker, 1909-2005

I am a cautious man. I like to think of myself as a prudent investor. I am definitely risk averse. I am most certainly willing to run risk but the reward premium I seek is higher than most and I generally prefer a smaller return in exchange for a meaningfully lower risk. I am frequently surprised by how many investors have a target return and when the market turns, blindly assume more and more risk attempting to achieve that desired return level. Often works in the short term however in the long term, over-sized return usually comes with over-sized risk. Sooner or later the chickens come home to roost and the losses erase most if not all of the gains. 

However, the greatest of risks is to attempt to avoid all risk. Some of the greatest risks in life are not directly financial and come when we are tempted to abandon our core principles for expediency. The temptation comes in part because we must pick and choose our battles in life. It can be difficult to know when and where to take a stand, if a situation will resolve itself or needs time to ripen before being dealt with.

Every now and then something inside me says: This must be faced, this cannot go unchallenged. These days, it usually comes it the form of company culture: Treating others with respect is a core value at TCC and we have let otherwise highly competent folks go as a result of derogatory language for which there was no authentic remorse. Further, we have done so just before “Turn”, our busiest, most stressful time of year when our need was greatest.

I have also looked people in the eye that I cared about deeply, valued greatly and risked having conversations I did not look forward to having, speaking directly about performance. Easy risk to avoid in the short run but knowing you have not done your duty, that you have not faced the wolf, runs another very real risk: that of the subtle corrosion of spirit, the erosion of principles and the dilution of vital standards.

Closing Quotes:

“The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” – Mark Zuckerberg, b. 1984

“The greatest risk is really to take no risk at all. You’ve got to go out there, jump off the cliff, and take chances.” – Patrick Warburton. B. 1964

“The risk for me would be in not taking one – that’s the only thing that’s really risky for me.” – Kanye West, b. 1977

“Everything worthwhile has risk, whether it’s starting a new business, leaving home, getting married, or flying in space.” – Chris Hadfield, b. 1959, 1st Canadian to walk in space

As always, I share what I most want and need to learn. – Nathan S. Collier