Risk and Fear

Ed Seykota gave an insightful explanation on risk management recently on his site:

Risk is a combination of the possibility of a loss and the magnitude of the loss. We register risk in our bodies as a feeling of fear. One way to manage various forms of risk, including prospective risk, initial risk, open risk, and unconscious risk it to make sure your feeling of fear is an ally, fully functioning on your emotional instrument panel. In our medicinal culture, some people attempt to medicate fear, rather than manage risk…In general, people with willingness to experience fear and other feelings are better risk managers than those who have fear in k-nots or fear under the influence of narcotics.

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