risk Archives - Chris Carosa

Should You Slap A Simple Single Or Swing For The Fences?

By Chris Carosa on October 1, 2024

Photo by Ulrik on Freeimages.com

This could easily become a column on successful investing, but it’s not. It does, however, reflect a Noble Prize-winning concept that has propelled successful investors for more than half a century. It’s simple. I’ll explain it quickly.

Every investment option possesses two critical factors: risk and return. Scholars credit economist Harry Markowitz as the first to identify the correlation of risk and return. In his 1952 paper “Portfolio Selection,” Markowitz, the father of “Modern Portfolio Theory,” says low-risk investments can yield low returns and high-risk investments must yield high returns. The “can” and “must” refer to the price you should reasonably pay for the investment.

But this column isn’t about successful investing, it’s about life. Specifically, your life. More precisely, the choices you face in your life. Understanding the dichotomy between “low-Continue Reading “Should You Slap A Simple Single Or Swing For The Fences?”

Posted in Business Tips, Gray Matter Musings, The Compleat Carosa Commentaries Tagged Confirmation bias, Dave Kingman, entrepreneur, fear of failure, FOMO, Harry Markowitz, instant gratification, Modern Portfolio Theory, Portfolio Selection, recency, return, risk, Risk-Return Tradeoff, Rod Carew

Why It’s Important You Exhibit Creative Tendencies

By Chris Carosa on November 1, 2022

Thanough, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons

Many aspiring entrepreneurs feel the creative urge represents the most important trait for success. Many great ideas, though, never become viable businesses.

Take a look at some of the greatest entrepreneurs of all time.

Did Henry Ford invent the automobile? No. Nicolas-Joseph Cugnot first produced a steam-powered automobile in 1769.

Did Steve Jobs and Steve Wozniak invent the microcomputer in 1979 with the introduction of the Apple ][ computer? No. The French team headed by François Gernelle within a small company, Réalisations & Etudes Electroniqes (R2E), created what they called the “Micro-ordinateur” in 1973.

Did Ray Kroc invent the fast food hamburger joint? No. Most point to White Castle’s 1921 opening of its original location in Wichita, Kansas, as the first fast food hamburger franchise. Heck, Kroc didn’t even invent McDonald’s. He bought the restaurant from founders Dick and Mac McDonald after becoming the chain’s franchising agent in 1955.

What is the importance of creative behavior?

It’s not the ability to come up with an original idea that wins the day. It’s the ability to take Continue Reading “Why It’s Important You Exhibit Creative Tendencies”

Posted in Business Tips, The Compleat Carosa Commentaries Tagged Adaptation, Apple, Apple II, automobile, Calloway Cook, Chin Beckmann, computer, creative, creativity, Dick McDonald, entrepreneur, Florian Bohn, Francois Gernelle, Henry Ford, innovation, invention, inventor, Joseph Alois Schumpeter, Julie Bee, Mack McDonald, McDonald's, Michael Boyles, microcomputer, Mollie Krengel, Nicolas-Joseph Cugnot, Productive Growth, Ray Kroc, risk, rugged individualist, Sari Pekkala Kerr, Stan Garber, Steve Jobs, Steve Wozniak, Tina Xu, White Castle, Wichita, William R. Kerr

Why It’s Important You Become A Calculated Risk Taker

By Chris Carosa on October 25, 2022

Ed Dunens, CC BY 2.0, via Wikimedia Commons

When you talk to people about what it takes to be an “entrepreneur,” most people will say you need to be a risk taker.

When you talk to people about what it means to be a “risk taker,” most people will begin describing daredevils and gamblers.

In both cases, these answers are at best incomplete if not totally incorrect.

Risk taking is fundamental to sound investing. Without risk, there could be no return. It’s Continue Reading “Why It’s Important You Become A Calculated Risk Taker”

Posted in Business Tips, The Compleat Carosa Commentaries Tagged Chin Beckmann, entrepreneur, Harry Markowitz, John Burr Williams, Julie Bee, Mollie Krengel, Portfolio Theory, risk, risk taker, Risk-Return Tradeoff, Sally Caird, Theory of Investment Value, Thyme Sullivan, Vincent Zurzolo

Do You Have What It Takes To Be An Entrepreneur?

By Chris Carosa on October 18, 2022

Look around you. Now, more than ever, the world teems with constant change.

Some succumb, consumed by the cascading chaos.

Winners smile broadly, delighted by the array of percolating opportunities.

“Do I have what it takes to be an entrepreneur?”

This is the question every budding entrepreneur asks. It is the wrong question.

Imagine

Wouldn’t you benefit more if, before beginning on your entrepreneurial journey, you knew what talents successful entrepreneurs possess?

Rather than first asking if you have them, you’d be much wiser to ask what they are.

Before answering that unasked question, behold the very first lesson of this series. It’s a lesson you should carry with you at all times. It reveals the ultimate axiom, the rule that Continue Reading “Do You Have What It Takes To Be An Entrepreneur?”

Posted in Business Tips, The Compleat Carosa Commentaries Tagged Achievement, Autonomy, creativity, entrepeneur, Julie Bee, locus of control, Ratna Singh, risk, Sally Caird, Sari Pekkala Kerr, success, Tina Xu, William R. Kerr

Busting The ‘If We Ain’t Growing, We’re Dying’ Myth

By Chris Carosa on November 16, 2021

Daedalus carefully showed his son how to apply the wax to affix the feathers to his shoulders and arms. “These wings will work,” he said. “We will finally be free of this prison.”

Ironically, it was Daedalus himself who had created the Labyrinth, a vexing array of “intricate passageways and blind alleys” (at least according to Merriam-Webster). Anyone – or anything – imprisoned in this complicated maze found it nearly impossible to escape. Indeed, mythology claimed only Theseus was able to find his way out of Daedalus’ Labyrinth (primarily because Daedalus gave him a big hint).

Why did Daedalus build the Labyrinth? To imprison the Minotaur, a half-man/half-bull monster (whose origin story is not fit to print in a family newspaper). BTW, Theseus went into the Labyrinth to kill the Minotaur (something to do with the ancient Greek version of Continue Reading “Busting The ‘If We Ain’t Growing, We’re Dying’ Myth”

Posted in Business Tips, The Compleat Carosa Commentaries Tagged acquisition, Ariadne, Aristotle, business strategy, Daedalus, debt, Doctrine of the Mean, growth, Icarus, Labyrinth, Minos, Minotaur, risk, The Nicomachean Ethics, Theseus, virtue

5 Reasons You May Be On The Cusp Of Success (And Not Even Know It)

By Chris Carosa on August 11, 2020

Look around you. Now, more than ever, the world teems with constant change.

Some succumb, consumed by the cascading chaos.

Winners smile broadly, delighted by the array of percolating opportunities.

“Do I have what it takes to be an entrepreneur?”

This is the question every budding entrepreneur asks. It is the wrong question.

Imagine

Wouldn’t you benefit more if, before beginning on your entrepreneurial journey, you knew Continue Reading “5 Reasons You May Be On The Cusp Of Success (And Not Even Know It)”

Posted in Business Tips, The Compleat Carosa Commentaries Tagged Achievement, Agreeableness, Autonomy, axiom, chaos, Constantine I, control, creative, entrepreneur, Extroversion, Julie Bee, locus of control, Neuroticism, openness, opportunity, Ratna Singh, return, risk, risk-taking, Sally Caird, success, winning

Can America Compete? (Part II)

By Chris Carosa on September 23, 2010

[This Commentary originally appeared in the September 21, 1989 issue of The Mendon-Honeoye Falls-Lima Sentinel.]

Part Two – A Living Example of the Risk-Return Tradeoff

This is the second of two commentaries aimed at exploring a novel approach to determining our nations’ true standing in the world economy. Last week we looked at the risk-return tradeoff, the idea that risky investments are more likely to have higher returns (and larger losses) than safer investments.

Earlier this year, a Siberian valley explodes suddenly. The cause – a leaky gas pipeline. Low safety standards lead to a faulty job. People die. Property is destroyed.

You read about it all the time. Not-so-old bridges collapse, sending trainloads of passengers plummeting to an early demise. Third World ferries, overloaded with holiday travelers, capsize again and again. Athens and Frankfurt sport airports which appear to openly invite terrorists.

Across the globe, we see examples of why we are happy to be Americans. Not only do Continue Reading “Can America Compete? (Part II)”

Posted in The Compleat Carosa Commentaries Tagged banking crisis, economy, finance, Glass-Steagall, Modern Portfolio Theory, regulation, return, risk

Can America Compete? (Part I)

By Chris Carosa on September 16, 2010

[This Commentary originally appeared in the September 14, 1989 issue of The Mendon-Honeoye Falls-Lima Sentinel.]

Part One – The Risk-Return Tradeoff

The following is the first in series of two commentaries aimed at presenting a unique approach to determining our nation’s position within the world’s economy. This week is expository, meaning some readers will already be familiar with the concept of the risk-return tradeoff. In the spirit of all mini-series, we save the real interesting part for next week.

Finance professors, like all other professors, find they can enhance their employment options (i.e., get tenured) by coming up with all these fancy dancy theories to describe the real world. They write scholarly articles and intricate textbooks (most of which end up on the “Required Reading” list of the courses they teach). Many of these theories remain in the academic realm (where they can take on a life of their own). Every once in a while, though, a really neat idea escapes the verbosity of pedantic journals and appears in the vernacular of the newsweeklies. (When this happens, the professor generally writes a book for the casual reader, appears on several talk shows and becomes a highly paid consultant.)

One of the more significant investment models developed by the academic industry goes by the name, in generic terms, Modern Portfolio Theory. It attempts to provide a Continue Reading “Can America Compete? (Part I)”

Posted in The Compleat Carosa Commentaries Tagged economy, finance, Modern Portolio Theory, return, risk, Simon School