Rich People Dont Make Big Bets

Rich people, who are generally smart, have learned that you don't bet the farm on one spin of the wheel, investment deal, or trade. Wannabe speculators are consumed with the notion that they will amass tons of money very quickly by making a killing. They become the hapless victims, as in the process they have become plungers. Yes, you can plunge once or twice in your life, but if you consistently plunge, you will lose on one of these wagers, and since you are betting it all, you will lose it all. That is why rich people don't make big bets.

They are far too shrewd to risk all they have on an investment, as they know investment decisions can be random. In their wisdom, they know the future is somewhat unpredictable; hence they play the game that way. Years ago, I was on the board of directors of a small bank in Montana and in that position reviewed many loan requests. The business applications always included a pro forma, a projection of how the business would do, and how the loan could be repaid.

I don't think I ever saw any pro forma of what should happen become a reality! They were always off target, and as you might imagine, the reality of the business was not as prosperous as the pro forma would have led one to believe. An old-time banker had a great saying, "Nothing good ever comes in certified mail and pro formas are never right."

Rich people make more money by finding a good investment or two, and investing an optimal amount in those investments. There is no need to take the risk of being wiped out in exchange for the thrill of plunging; it simply is not worth it.

Brains 4 Business

Brains 4 Business

The study of what it takes to be a successful entrepreneur is fascinating because to be successful requires so many qualities that at times even seem to be at odds with each other. This is a collection of 3 great guides.

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