The Rational Investor #029: General Stanley McCrystal on The Risk in No Risk
Happy Saturday to you,
Welcome to the 29th edition of The Rational Investor Newsletter.
Today’s quote comes from the book Risk by General Stanley McCrystal. While the book has little to no direct investing advice, a book on navigating risk can’t help but apply to the world of investing. One such quote that I immediately loved is found below.
The only change I made to today’s quote is to break up the paragraphs for easier readability.
Onto the main event…
Here’s General Stanley McCrystal on The Risk in No Risk [Emphasis is my own]:
I have also been struck by the realization that dealing with risk is often more mundane and counterintuitive than one might initially think. For example, in a well-intentioned but misplaced effort to limit the risks to our troops, the Pentagon prescribed that every soldier leaving a secure base in both Afghanistan and Iraq wear body armor, and required each casualty report to include a detailed accounting of every piece worn.
The overall intent was to ensure that American service members were as “bulletproof” as possible—an admirable goal to be sure.
But unfortunately wearing protective gear simply wasn’t always realistic. Many activities, including climbing Afghanistan’s towering mountains, were literally impossible in the heavy armor, and the perception was that the decision-makers above, clueless to the realities on the ground, were covering themselves to evade accountability by ordering maximum protection.
To accomplish their missions, soldiers would now have to assume both the normal risks of combat and the added risk of disobedience.
Too often our efforts to manage risk creates further risks. Whether in combat or in day-to-day life, we encounter situations that call for us to assume a reasonable amount of risk to achieve our goals, and if we try to make ourselves “bulletproof,” we may ultimately collapse under the weight of our gear.
I hope that the investing application here is obvious.
Far too many investors believe that they are making the “prudent” choice by sheltering themselves from big-bad volatility, never realizing that over the long term, they are pushing the achievement of their goals ever-further into the future, if they achieve them at all.
This is a different kind of risk, but a risk all the same.
Which is why I often say that there is no such thing as “no risk;” it’s simply a matter of when you want it, now or later. We must all make that choice. I hope that you’ll choose wisely.
Thanks for reading. I’ll be back again next week with more timeless wisdom from great investors.
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