Cat on a Thin Ledge 4 Stories Up: How Do You Perceive Risk?

Walking through down town San Diego this morning I looked up and noticed a cat walking outside a fourth floor condo. This cat was perfectly content. Looked happy. Not a care in the world. My thought? The cat was walking on a three inch wide railing surround the balcony facing certain death if spooked, wind or whatever knocked it off. The cat did not fall as I watched for a few minutes. It probably jumped down and is fine…for now. However, the risk for the cat did not seem close to being worth the benefit. And for me that seems like a nice connection to America and its current investing strategy. How does the average American perceive risk? Does the average American perceive or attempt to measure risk? The answer at this time has to be a resounding “no”.

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2 thoughts on “Cat on a Thin Ledge 4 Stories Up: How Do You Perceive Risk?

  1. Dr. Brett posted today:

    “Just because you have an edge doesn’t mean it won’t feel at times like you’re on the ledge.”

    Gene

  2. Risk is relatively defined. For many investors and traders the type of risk that Richard Dennis took to make his returns were insane! For others, it was not enough. Therefore, what is risk?

    A dictionary definition does not capture this point well at all. Therefore, due to the fact that it cannot be universally defined, it must be relatively defined. It is up to the person.

    As far as cats are concerned, my wife and I have owned many of these animals throughout our lives. We can tell you with certainty that like people, they have different personalities and tolerances for risk. My current cat is so scared that he does not even want to venture outside the house. He is mainly a house cat and probably will remain that way for the rest of his life. Sometimes, the noise of an outside passing automobile scares him so much that he runs to his bed and shakes in fear!

    On the other hand, my in-law’s cat runs on power lines to catch small animals! She has done this several times and demonstrates no fear whatsoever. Is she in danger? Well, up till now, she has never fallen off a roof, power line or tree. Since she has done it many times, it seems that she has undeniable skill sets in this area of physical coordination. Since nothing has happened to her in ten years, I can only assume that she understands the risks involved and demonstrates a high level of skill not to get injured while at the the same time knocking prey off high places for her supper!

    Who is at greater risk? My wife and myself debated this point and could not come up with a definitive response. It all depends on how you define risk. For example, if we define risk as being dependent on humans for love, attention and food, then my male cat is in the highest risk category since if something happened to us, he would not be able to survive on his own without human intervention. On the other hand, if we define risk as engaging in perilous activities where the rewards are not worth the possible injuries involved, then my in-law’s cat certainly qualifies as she mistakenly thinks that she is Batman!

    The Point: Risk is relative for animals and people. You cannot use a universal definition of risk that fits all.

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