The Croc Hunter Steve Irwin’s luck ran out over Labor Day weekend. It might have taken another 10 years, but when you constantly put yourself in danger, your luck will run out. Your professionalism will at some point be overwhelmed by the sheer statistical number of times that you are testing yourself.

Firemen have this problem as well. There is no group that is more courageous than those of firemen. They never know how a fire is going to truly move, or climb up a wall, or if a staircase is going to cave in, or a roof they are standing on. All the professionalism in the world can not compensate for the rules of probability, and engaging in risk taking.

Stories are now surfacing about how the hundreds of firemen who entered the World Trade Center buildings in a attempt to save lives had a feel for the risk they were undertaking. Each of them knew that a fire this big had never happened before. They knew that they had never had to use their skills so high up in a skyscraper before. Since the World Trade Center attack was an entirely new, not in the book scenario, there was no way to gauge the risk involved. As a result 343 courageous firemen were lost in the tragedy that ensued.

In my own work as a money manager, I have to gauge risk every moment of the day. For me it’s financial risk. I have been amazed through the decades that very few investors talk about risk. They all talk about the possible gains that they can make, but no one ever talks about the downside. One should always weigh the upside versus the downside. In the case of stocks, you don’t want to be involved unless there’s five points of upside for every point of downside.

Start thinking about risk and incorporate it into your daily work. You don’t want to be like my friend Hans the genius who called me from a phone booth on Avenue of the Americas in NY about 15 years ago. While talking he saw a man crossing the street against the light. A truck destroyed him as he attempted to dash between cars. Hans said, “Richard, I bet he’s tried to beat that traffic every day for the last 20 years, today it caught up with him.”

Goodbye and Good Luck

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