Risk is not a 4-Letter Word
Since our economy has fallen off a cliff (not quite, but just about), risk has become a 4-letter word. After all, it was by taking on terribly risky investments (mortgage-backed securities) that our nation’s banks got into so much trouble. As a result, our financial markets plummeted—creating an entire new generation that associates risk with disaster.
That is a most unfortunate turn of events.
From a historical perspective, our entire global economy is based on risk. Had our forefathers not risked everything to found a free nation, there would have been no fourth of July (not to mention a United States). Also, every great company started as a risky endeavor. That’s why, ironically, the avoidance of risk may be the riskiest move of all, as individuals, and as a nation as a whole. Let’s start with the latter.
Given the turbulence that still exists in our economy, just about everybody is afraid to do anything. Few senior managers are making bold moves. Employers do not want to take a risk and hire new people. Individuals—afraid for their jobs and their futures—are not spending money on big ticket items, so once strong companies like General Motors and Circuit City are in bankruptcy. Unemployment is nearing 10%, and it could easily go higher. As a result of all of the “non-spending,” our economy is contracting, keeping us mired in a deep recession with no quick fix or easy way out in sight.
While it is difficult to blame people for saving more in this uncertain economy, it is worth noting that it has almost always been the American consumer which has come to the rescue and helped to make the nation’s economic trains run on time. On the business front, entrepreneurs have been, and will continue to be, the lifeblood of our economy. Having just taken the plunge by starting a new company, I can tell you that it feels damned good to take a risk of this magnitude. So the next time you come to a crossroads, consider taking the road least taken. No risk, no reward. I am not advocating betting the house at every turn, but don’t put your money—or your life—under the proverbial mattress.