Gamblers, Stock Brokers, Michael Caine & Doc Holiday

Why do we hate change? It’s simply human nature, and they’ve proven this time again. Part of the reason why change is so scary: The future is always risky.


In studies on people with gambling problems, for example, researchers would say to study subjects, “Let’s make a wager. I’ll toss a coin, and if it’s heads, I’ll give you $1,000. But if it’s tails, you give me $500.” People won’t do it. They are more concerned with losing what they have than the potential gain, however good that gain is, because the future is unknown. As a result, they have a predilection for maintaining the status quo.


Research has also shown that when stock brokers have relatively little money—which, for them, is between zero and $5,000,000 of personal wealth—then they are quite laissez-faire. They will go for it and take risks because they’ve got very little to lose. These people are very aggressive and often highly successful.


Then, once they’re between $5,000,000 and $15,000,000 net worth, they become very conservative because they almost have enough that they’ll never need to work again. Losing it would be catastrophic.


The third stage: Once they get over about $15,000,000 worth of personal wealth, they’re working on the principle that, “I could finish tomorrow and it doesn’t matter because I’ve got so much money that I’ll live well for the rest of my life.” Therefore, they become highly aggressive and happy to take risks again.


Very few people in our society are in the “big bet” business where they are personally worth over $5,000,000. As a result, most people are far more nervous of losing what they have today than any potential upside that is unknown. So, what I have today is worth far more to me, psychologically, than some potential upside in the future.


The other problem with the future/the past is you can see this linear growth, but you can’t see what the future Excession Event could be. As a result, you don’t know that it might not ruin you. So, people are quite rightly somewhat nervous of the future.


Michael Caine was once asked how he picked what movies he would be in. Though he’s picked some great scripts, Michael Caine is also notorious for picking some truly awful movies to be in. Answering the question, Caine said, “One, acting is my work and if someone o ers me work, I take it.” When the follow-up question asked, “Well, how do you pick which particular pieces you do?” Caine replied, “Someone sends me a script, I read the rst page and the last page. If I’ve got dialogue on both the rst page and the last page, I take the job.”                


People psychologically want that to be true. They don’t want the idea that, “I’ve invested in the present and if the future changes, well, what about all the investment I’ve already made? I may not be in the position that I’m in now.”


The funny thing is that very few people are at the absolute bottom. If you’re at the absolute bottom of a society, you’ve got nothing to lose. It’s the Doc Holliday problem.


Doc Holliday was the best, most efficient gunslinger in the West for a number of years. The reason why is because he was dying of tuberculosis, and he knew it. He didn’t care less what happened to him because he was dying anyway. He would pull the gun before the gun fight even started and shoot people. He’d shoot them in the back walking out of the saloon; he’d do whatever it took because he was a man who had nothing left to lose. Very few people in our society are in that position and, as a result, they become risk-averse.


This is one of the reasons why you see people like Elon Musk or Richard Branson can make wild business decisions. They know that the safety net for them is very high, very strong, and two inches below them. If Branson’s airlines all go bust tomorrow, he can go back to Necker Island and he can sit there and look out at the Caribbean for the rest of his life and go, “Well, it’s a shame about the airline, but hey, I’m ok.”


For most of us, the safety net is nailed to the floor. If you don’t have a safety net, you’re going to be much more risk-averse. It’s 100% certain that you were alive until yesterday, even now, but I can’t guarantee that you’ll be alive in 24 hours from now. The future is always risky.



About the Author: Simon Dudley


Simon is a contrarian. He makes a habit of being the guy who questions the orthodoxy, the guy who doesn’t believe it just because the good and the great said it’s true. This has not always been good for his ascent up the corporate greasy pole. However it’s been very good for his employers if they are prepared to listen.


The Book The End of Certainty "How to thrive when playing by the rules is a losing strategy" explains why groupthink and the doing what you’ve always done is no longer the right move.


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