Let's take a deep dive on Risk in both business and finance. Understanding the downside lets you control the upside. If you don't respect risk, you will eventually get hurt. This quick lesson is something to help you learn what not to do in trading and business.
Grab your drink and get ready. This is the caffeinated hustle, the best place to learn about entrepreneurs and FTS and life expert advice and guest interviews to launch your business and NFT journey further than you ever imagined. Now, here's your host, entrepreneur, coffee fanatic, and founder of the NFT project, caffeinated creatures, Ben Carson. Welcome back to the caffeinated hustle. I'm your host, Ben Carson. Really excited to have you back. Let's go ahead and get right into it today. I don't want to waste your time. And I'm excited about today's lesson today, we're going to talk about risk. Risk is a powerful tool, a powerful word, message. I mean, it's just it's a verb that can just destroy your life. And it's a verb that can keep you on the right side of history. It's just an amazing word. I mean, risk is everywhere, right? Every time we get our car, there's a small chance that we're going to die, let's just be honest. That's why seatbelts exist, but the risk is manageable. The risk is something that we live with. It's very, it's just acceptable, right. And acceptable risk is something that everyone knows can happen, but it's still there, right, there's a chance you can walk out the door right now. And something falls on your head and takes you out that is a risk that you're dealing with, that's a risk that's part of life. Now there's a different type of risk. And that is a risk that you don't have to take, but you do anyway. And there is power in recognizing that type of risk before you do it. And so today I want to talk about business risk. So before I was an entrepreneur, I mean, this is really part of an entrepreneur, actually. But before I was in E commerce and education, I was a trader, and I was a trader for seven years, eight years, something like that I can't remember it was a very long time. And I studied a lot of things I was mentored by someone who managed a nine figure account. He was a very good trader, head commodities trader at a private equity firm, and it was just the the knowledge that I received, there was just something that I just can't explain. It was just phenomenal. Because I didn't work for him. It was just something he wanted to help me with. And it was just a game changer. One of the first lessons he gave me was on longevity, and longevity is basically how long are you going to survive in the game. And so I took that lesson, and I went home and I started to study risk. And risk is a very powerful thing to study, when you're trying to figure out how to survive in business. Because if you don't, if you don't respect the risk, what you're going to do is you're going to take shots at edges, you're going to take shots that you shouldn't be taking, alright, not every decision has an equal outcome. You want to find situations where you have asymmetrical risk where your risk is locked, but the reward is three 510 100 times. And that those are the types of plays that can help make or break your business, your livelihood. But when I was in finance, I would study risk. And I would study the upside and the downside of it. And I came across a trader, that if you've been in the finance world at all, you're gonna know who this person is. There's a there's a book called the reminiscence of a stock operator. And it's about a trader, an actual live trader back in the day named Jesse Livermore. And Jesse Livermore was just an American risk taker. It was an impressive story. And it's it's real, but it's heartbreaking to he came from nothing and he built himself up and he became just one of the richest people of the time for a while that are trading, but Livermore made his fortunes by pyramid basically back then what you could do with stocks that you can't really do now is as you're winning in the trade, you can double down on that thing. And you can basically ride it until it dies out and so he would take his profits double them and take away all of his potential profit. Not too much extra risk and just let it ride. It was called pyramid and they don't allow it now but they didn't have options back then they have options now. Everything evens out, okay. But you can take from this lesson, Livermore made millions of dollars he made. I want to say he made the most money ever in the history of the markets in one day or very, very up there. If not, I mean realistically with algorithm training now, it's probably not the top, but it's one of the top 10 players will say, adjusting for inflation, everything else, he was just a, he was a trader, alright. And what he did was just not respect the risk, he blew himself up twice. Basically what that means is you lose all your money, and he set himself up so that it wouldn't happen again. And somehow, it doesn't actually explain how in the book about him. But he violated his own rules, to a point that he was able to get all the money he had and lose it. So after the third time, of not respecting the risk, and going from multimillionaire king of the castle to destitute, broke, he took his own life with a shotgun, because he couldn't handle the risk, he couldn't handle the responsibility, and he couldn't handle the outcome anymore. This was a trader who had been around for years for 30 plus years, he understood everything. And the risk just wasn't part of his equation. And when when you don't respect the risk like that, lives change for the worst. Now, this is a very sad story. And it's more than anything, just a lesson for a modern trader, what not to do that you have to respect a risk. And so I took that lesson, I took many lessons like that, and I created just a money management system. And any decent trader has a money management system, where you're only risking a small percentage of your account on any one trade so that you'll never blow yourself up. And it's very important that no matter how good your system is, your money management's in check, because the best trading system with a lackluster money management system can still blow up. Because if you risk too much on one trade, and you have a string of bad trades that can take you out, if you don't respect the risk, it will attack you, it will hurt you at some point. That's why some of these traders are seen on Wall Street bets that make millions of dollars or just astronomical returns for these trades just don't make any sense. They're gone six months later, because they thought they could do it over and over. They're just gambling, they got lucky. But if you're really trying to treat this like a business, then you're respecting the risk. And so that finance lesson can transfer to all things. And so I want to talk right now about business about the risk you're taking in starting a business and running a business in any form of entrepreneurship that you're going on whatever journey you're on, how are you handling the risk? How are you respecting the risk? Because the thing is, is that if it's just money you can afford to lose the risk is negligible, it's, it's easy to go for, because it's not going to bother you. If the risk is you're going to lose your house, that's painful. But that's still something you can get over if you have the support of a spouse if you have the support of your family. If you're taking a risk that makes sense to you personally, and I can't define that for you. Because that seems crazy to me. I have five kids, I have a wife, I can't make them all homeless to do that. I can't that's too much risk for me. But in your situation, it could make sense perhaps everyone's answer the question of what am I willing to risk here is different. Everyone's but what I want to point out is that you have to recognize the risk before you start, you have to recognize what am I giving up? If I'm wrong, what am I willing to lose here to win. And so I'm really excited about what we're doing in caffeinated labs, because we're trying to figure out ways to allow us to fund other startups in our community where the risk goes away. Because one form of risk is time. If you have kids, if you have a family, if you have other responsibilities, there's only so much time in a day. And if you're committing that time, to starting a business to learning to taking your best shot, and it doesn't work out the risk is is lost time. And that's easy to say. But if you put in yours into something that it doesn't work out, that's a real bummer. That's a real loss. That's something you can't get back, you'd always get back more money. You can't get back the time, there is a significant cost to doing anything, if you don't have enough time to do everything, and no one has enough time to do everything. So you're willing to take the shot here and you're willing to invest the time. We're trying to work on ways that we can actually help fund these businesses in such a way that it makes sense to add value to the whole community and take away some of that risk. Because risk is everything in this business risk is everything in any startup, if you're not understanding your risk, it could blow you up and I would never want to see someone take risks that they shouldn't take and let Get them to the point that they do something like live more, that is never the answer. There's always other ways to handle the risk appropriately. And I'm hoping that what we're going to do with caffeinated creatures, is help people see the benefits of what it's like to start a business to improve a business, etc. Without having to have so much more risk, like some things in life require. Businesses, startups, the biggest risk should always be your time, it should not be your resources, it should not be relationships, it should be your time, if you have enough time, you can do almost anything, because there's always solutions for the other problems, the biggest problem people have is they don't have the time. So we want to help people that are willing to sacrifice something to get over that time risk, to let them get on with the rest of it. And as long as they're helping the rest of the community, I think it's something's gonna pay off. And that's probably all I'm gonna say about right now. Because it's, it's probably sounding a little sales money. And that's not the goal. Here the goal is explaining the risk matters, that risk changes everything that risk is powerful that risk means a potential return risk means the potential to change your world. But you have to know what your risk is going in, you can't just jump in and hope for the best. That's not how this happens here, you have to make sure you understand the downside, because then the upside can handle itself. If you go after something and you think there's nothing at risk, you are blind, there is a level somewhere that's going to fall out, that's going to hurt you, you have to know where your risk is at before you start. And once you understand your risk, and you know, you can accept that risk, that loss, that pain, that failure, whatever it is, if you can accept it, and you know, you can get past that, then you can do great things. And so our community, our project, our ideas here are really going to help the people that understand the risk, take it further than I think ever could be possible on their own. And I think we found a way to do it, where the risk is no longer financial to a certain point. And it's not anything on our end that it's there's just no sleazy sales gimmicky. There's nothing like that, because we can do this in such a way that basically we're allowed to get more content off of it. And you're allowed to do what you really want to do where it's a win win. Because this type of community is all about knowledge. It's an educational platform, it's an educational results. So we are trying to find ways that help both sides. And I think we've we've figured something out here that I'm really excited to discuss. But it's going to be probably a longer podcast to really get it all out there. So I don't want to I don't want to not give it justice. But I just want to take this time to explain risk a little differently. Talk about it in such a way that you understand the downside is detrimental that you understand the downside is necessary. But if you understand the downside of risk, if you understand the necessity of risk and knowing your risk before you start, then once you start, the downside is handled, and you are in a spot where longevity matters to you. And you can go the distance. And if you can go the distance of this thing. There's just no limit to what we're capable of here. This is a strong community, this is a strong business. And whether you're with us or just listening to this podcast on the way to work, know your risk. And then you can know your outcome. If you don't know your outcome, you don't need to know Excuse me, let me let me rephrase that. Know your risk. And then any outcome is possible. Because if you don't know your risk, you're going in blind. And you don't want to be blind in what you're doing. Because the people that you're competing against, understand the risk, the best people in this business, know what's at stake. And if you notice the state, you're not going to make the moves that can put you in a position you don't want to be in. And so that's what I want to get across today. Understand your risk, understand what what the downside is to you, and then get after it with all the power and all the might you have because you know how much of an asymmetrical reward you have compared to this risk, and you're willing to take it. So thanks for stopping by. Thanks for listening. Looking forward to talking to you guys in the next episode. Thanks for listening to the caffeinated hustle. Sponsored by caffeinated labs LLC. For more information or to connect with Ben, check us out online at caffeinated labs.io. Or email us at support at caffeinated labs.io. 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