Risk taking

Success in any endeavor has many components, including hard work, intelligence, initiative and what may be best characterized as luck. Sometimes you can be successful and only employ one or two of these and if for example you simply stumble into a situation that leads to success. If for example you invested in Micro Soft because you happened to know someone associated with the founders in the early days, you may have made a fortune simply because you knew someone and maybe invested some money as a favor, even if you had no real conviction. This would be similar to someone winning a lottery. However, that sort of thing simply can not be counted on and if it happens, god bless, but a more reliable method is to employ hard work and intelligence.

Now intelligence is to some extent the result of hard work and it can be innate or purchased. By this I mean, you can certainly pay for advisers or sift through various sources of information to acquire intelligence in a particular area. Similarly, you can learn a skill that may enable you to be successful. Obviously, I am not using intelligence here to refer to potential knowledge but to actual knowledge gained.

So ultimately, you can use hard work to garner intelligence. You also have to act on your intelligence. This is initiative. If someone has acquired knowledge that indicates a potential trend or movement but fails to act, it is the same as not having the knowledge at all. This is initiative that may also be characterized as risk taking. The amount of risk that you are willing to tolerate often predicts the potential success you may enjoy.

Now this is where some of the most confusion arises. You often hear that you need to take some risk in order to enjoy significant success. However, just taking risk is not enough. For example, if you note that a particular stock for a well know company has dropped tremendously and buy it thinking it will recover, you have taken risk. If you have not acquired enough knowledge to support that conclusion you are likely to be wrong and lose the money you have invested. Now, not always, but this type of uniformed risk taking is, well very very risky.

However risk coupled with intelligence acquired via hard work can be a tremendously successful combination.