Monday, August 26, 2013

Favorite thing of the day: The Psychology of Risk by Ari Kiev MD, Steve Cohen's psychologist

Risk taking is crazy making.

I remember reading a quote by Michael Milken along the lines of:  Everyone has a breaking point; the only question is how much stress it takes for them to reach it (not directly attributable to memory of it instead).

Last week an article from INC on how entrepreneurs often don't deal well with stress was making the Facebook rounds.  Click:  link  And it got me thinking....

Ari Kiev is the psychologist Steve Cohen of SAC Capital hired to help him and his traders deal with the risks inherent in making the type of big trades that made the firm successful.  I don't know if Cohen is guilty (of inadequate supervision, a charge that has effectively shut down his job creating firm of around 300 people).  But I do know that trading at that level - and subject to the market's unpredictability and capricious ways - was so stressful that he hired someone to help him find his mental balance.  Indeed, Cohen was well known for needed and using calming techniques and psychology (if I remember correctly meditation too) to handle the stress of his job.

Throwing stones at the successful is so easy; we forget how hard building something from nothing is.  I'm doing it now and - wow.  I heard the founder of a billion dollar company tell a room of students of his concern about speakers like him.  "You see the ones of us who succeeded but even more failed.  And we make it sound exciting but don't tell you how hard it really was or how close we sometimes came to failure".

The Psychology of Risk was written for traders but the advice crosses disciplines.  With a busy and stressful week ahead of is my favorite thing of today.

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