It ain't what you don't know that kills you, it's what you know for sure that just ain't so (Mark Twain)
I love the above quote - it's so elegant and so true. What you don't know won't really be the thing that hurts you in life. We all don't know something; we're all foolish in our own ways. However, when we're aware of our own foolishness and ofebruary-20th-2017.htmlf our own weaknesses, we can prevent bad situations by not going too deep into things without taking precautions. When we're sure of something, however, we often act without taking many (or any) precautions - we go all in with confidence. Hopefully that works out, but sometimes it doesn't - and when it doesn't it can be bad because you've likely not put the proper risk management practices and controls in place. Had you not been so confident, however, you might have still been wrong, BUT you likely would be wrong in a much more subdued way.
Options are valuable - that's why you can literally pay for them when you purchase financial options (eg. put options or call options). Options are valuable because they allow you to decide in the future whether to do something or not to do it - you will decide at that future date based on what is going on at that future time. Although you can't know what the future will be like today, options allow you to postpone the decision (in a way) until you actually do know.
For example, when you buy a call option on stock X you are paying a premium for the right to decide in the future whether or not you want to buy stock X at the predetermined strike price. Effectively, you're paying a premium today to lock in the purchase price. You pay that premium (and so do millions of other market participants) because such a thing is inherently valuable. How valuable is it? That's a far more complicated question and beyond the scope of this article - the question of how to value a financial option is a complex one that involves complex mathematics.
Just like a financial options, options in life are valuable too - that's why you should attempt to increase the options in your life. You should attempt to make decisions with attention to the optionality inherent in them. If you have to choose between two different paths, be mindful of any inherent options that are imbedded in the choices. These inherent options can add real value to the decisions and they should be ignored.
Let's discuss one simple hypothetical example to better illustrate the point made above. Let's say you are choosing between two houses that are equal in every respect except...
Now, you might not want to rent out any rooms NOW, but House 1 has imbedded optionality that House 2 doesn't. Should you need the extra money, should your lifestyle change, or should rents go up a lot in your area, you might want to rent out a room or two in your house. House 1 allows you to EXERCISE that option should things unfold in a way to make it desirable to rent out a room or two. Just as you would exercise a financial option if the market price of the underlying is greater than the strike price, you can exercise this embedded option should it be worthwhile for you to do so.
Therefore, all else being equal, House 1 should be more valuable to you and to the market due to the inherent optionality embedded within it - an optionality that doesn't exist in House 2.
The modern world is the epitome of security when taken from a historical perspective. We have taken a rough, difficult, dangerous, and unpredictable existence as human beings and, over many centuries, transformed it into a far more predictable, calm, and secure way of life.
Now, by security and insecurity I don't mean the modern definition of the term - I don't mean confidence or lack of confidence in yourself. I mean something much deeper and more universal when I use these terms in this context. I'm talking about being truly secure and being deeply insecure as a human being in relation to the world around you.
To better illustrate what I mean by these terms I'll provide an example:
Be the Mouse?
So, if a mouse is the epitome of an insecure creature and a lion is the epitome of a secure creature, why would I imply with my title that insecurity is somehow good - why would I imply that you should somehow be insecure? Because you're not a lion.
You're not a lion - you're a fragile human being that has to be concerned with far more than his or her place in the animal kingdom. You have to be concerned not only with your survival today in a physical sense, but with your survival in a financial, career, emotional, and mental sense. Life more difficult for us human beings - we're competing on more playing fields.
Security = Death
Although being too deeply insecure will cause you mental trauma, the only way to truly have security in any of the places where it is important is by being constantly insecure. The moment you are too secure you're dead meat. The moment you're content with your situation or position or the moment you let your guard down you give room to the cold and harsh world and those in it to destroy you. Don't give the world or any person that room - be constantly vigilant and never feel sorry for yourself for it.
Don't feel bad for being insecure - the modern world we live in makes us think that a sense of security is one of the ultimate goals in life. In today's world too many people feel that we should have a constant sense of peace and calm and security - we want to feel like everything is ok and that there's nothing to worry about. Stop wanting that and realize that the game will never end and the struggle will never cease - the moment you overcome something, there is something else waiting for you. The moment you achieve some sense of security, there is something else to be on guard against. You must stop putting so much value on being in a calm state - a calm state means nothing and is nothing. A state of vigilance and security in everything you do is another state and it's not less good - it's the natural state of a creature as fragile as us.
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