Robert,
The statement "I prefer that risk" is one every trader needs to make for themselves. I agree with you there. But we do as human beings have a bias that makes it difficult to imagine that something out of the bounds of probabilty will happen to us if we are involved. I can't remember the name of this specific bias. I know Van Tharp speaks about it. I am not saying that one should plan their lives around such events, but to not consider them before making an informed decision is naive at best.
The last year has shown that boundaries of probability are elastic. They are exceeded, tested and stretched much like the market itself. While planning for risk is a macro-level activity, implementing it is a micro-level activity. Unless you are there at the business watching the risk controls implemented and know intimately the kinds and types of risk the company is dealing with (much like knowing the distribution of the R multiples) the best you can say is the risk is not knowable and there are no guarentees.
The statement "I prefer that risk" is one every trader needs to make for themselves. I agree with you there. But we do as human beings have a bias that makes it difficult to imagine that something out of the bounds of probabilty will happen to us if we are involved. I can't remember the name of this specific bias. I know Van Tharp speaks about it. I am not saying that one should plan their lives around such events, but to not consider them before making an informed decision is naive at best.
The last year has shown that boundaries of probability are elastic. They are exceeded, tested and stretched much like the market itself. While planning for risk is a macro-level activity, implementing it is a micro-level activity. Unless you are there at the business watching the risk controls implemented and know intimately the kinds and types of risk the company is dealing with (much like knowing the distribution of the R multiples) the best you can say is the risk is not knowable and there are no guarentees.
