The nature of risk

22nd Dec '24 by Mark Simpson

16 comments 942 reads

2024 has been a momentous year. The UK has the first Labour government in 14 years, perhaps as much as a protest at the terrible job the previous incumbents did as for any great love of the new administration. The US has elected Donald Trump as their president again despite him possessing character traits that would have disqualified him from any office, let alone the highest one, perhaps only a decade or so ago. Israel's response to a Hamas terrorist attack last October, together with the strain that the Ukraine war has placed on Russia, has ignited monumental changes in the Middle East, which have most recently culminated in Syrian dictator Bashar al-Assad being ousted. There is a saying that there are years when nothing happens and years in which centuries happen. 2024 may well be viewed as the latter.

However, when reflecting on this year's events, none of these global stories have remained with me as much as a simple story of a man lost on a Greek island. In early June, the media reported that Dr Michael Mosley went missing while holidaying on the Greek island of Symi. He left the beach, where he and his wife had taken a ferry to in the morning, to walk to the apartment where they were staying. The distance wasn't far, at around two miles. However, the weather was extremely hot at over 40 degrees Celsius. He never made it back to his residence, which started a massive search and rescue operation. From what we can surmise, he became disorientated and took a wrong turn, ending up on a rocky path in a different direction. His disappearance made international news and sadly ended in tragedy. His body was discovered four days later by the wall of a private resort. It seems that he may have left the path in an attempt to seek help there but never made it.

As the year comes to a close, I have been reflecting on why this particular tragedy has stayed with me, whereas those affecting far greater numbers have faded away. While I enjoyed watching Dr Mosley's TV programs and read one of his books a few years ago, I had never met him and was far from being a superfan. It is perhaps because I saw a kindred spirit. Mosley was someone who desired to be evidence-based in understanding complex topics and communicating…

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Revs8

23rd Dec '24

Thanks Mark.

Some good analogies and plenty to think about over Christmas.

As a physicist the public ignorance of nuclear power frustrates me. Especially when countries like Germany turn to coal, which (as you correctly pointed out) kills orders of magnitude more people than nuclear.

Epitychia

Always thought "If" by Rudyard Kipling had a lot to say about risk and investing:

If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too:
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated don't give way to hating,
And yet don't look too good, nor talk too wise;

If you can dream—and not make dreams your master;
If you can think—and not make thoughts your aim,
If you can meet with Triumph and Disaster
And treat those two impostors just the same:
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools;

If you can make one heap of all your winnings
And risk it on one turn of pitch and toss,
And lose, and start again at your beginnings
⁠And never breathe a word about your loss:
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
⁠Except the Will which says to them: 'Hold on!'

If you can talk with crowds and keep your virtue,
Or walk with Kings—nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much:
If you can fill the unforgiving minute,
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
⁠And—which is more—you'll be a Man, my son!

pippasfan

‘Know Your Enemy”, a chapter in a book about war, from some Chinese dude

bsharman

Thanks Mark. I was a fan of Dr Michael Mosley as was a regular listener to his Just One Thing podcast. We are all aiming to improve our financial situation but it is important to not lose sight of the fact that life is finite and good health is wealth.

Brucie5

This is an excellent, if poignant thought. In investing terms I have across quite a few gurus whose overconfidence on the way up led to disaster on the way down. I imagine, because knowing all there is to know, makes you minimise the known unknowns, while telling you nothing about the unknown unknowns. The first priority is always risk assessment beginning with the words, "What happens if?" However, investing always recalibrates your appetite for risk : too much success makes for overconfidence, while setbacks can lead to excessive risk aversion. So maybe have a manageable objective, like a growing income stream, or growth against a given benchmark, which then alerts you to relative performance. And above all, size limited weighting within a diversified folio.

Thanks for the provocation and the reminder of this lovely man. RIP Michael Moseley. I had the pleasure of meeting him.

JASVFS

24th Dec '24

You are wise for a relatively young man Mark, I'm 81 and not so wise but I like to think I'm improving when it comes to investing, mainly because of Stockopedia analysts and members. I shared the widespread grief on Dr. Mosley's tragic death, he took many risks in his pursuit of helping others with their health and yet a simple mistake cost him his life. You have made me reflect on my own personality and the risks I take, in life and investing. I'm sure most successful investors would advise me to let others do it for me but I enjoy being on here and trying to get better at it! Thank you, enjoy your Xmas and New Year too.

The Phoenix

Revs you will no doubt correct me but going off memory here I read an article a while back saying Germany had shut down all their nuclear power stations and gone all in on solar and wind spending trillions but the envoironment in Germany isn't really suited to either of these alternative energy sources hence why the industry power house of Europe is going down faster than a piano off a cliff.

26th Dec '24

No modern economy is designed to cope with intermittent supply generated 100’s of miles from where it is needed.
Germany now also produces over 10 times more CO2 per MWh than France and double the UK because they are burning so much coal. They are now the dirty man of Europe.

Robert Didymus

Well said bsharman, in reply to Mark's post reminding us of Michael Mosley's skill as an enthusiastic educator in his chosen field of personal health, the ultimate sum of all our individual wealth. I was a great fan and being a few years older have been pleased to follow his advice to improve my physical fitness no end over just two or three years. As a recent convert to Stockopedia I am avidly following much of the advice offered and hope the increased financial confidence the experience brings, will encourage me to spend some of my growing savings on a more active lifestyle. Happy and prosperous New Year to one and all.

27th Dec '24

In my limited knowledge Revs as far as I understand it electricity degrades over distance so ideally you want solar farms in the desert next door to Vegas.

rhomboid1

Hi Mark

A beautifully written & thought provoking piece.

Happy new year

Mark Simpson

3rd Jan

Thanks John, and Happy New Year to you, too.

Hi JASVFS,

I think you make an interesting point, that Dr Mosely was a man who was willing to take risks, and his work was the better for it. His reporting of health issues in a personal way and his willingness to challenge his lifestyle are what made his programs most compelling. In the same way that a zero-risk investment portfolio probably isn't worth having (in the long-term), a risk-free life is unlikely to be a life worth-lived. We wouldn't fall in love, have children, start businesses or build lasting friendships. In investing and life, it is about getting the right balance of risk-reward not avoiding risk completely.

Happy New Year,

Mark

intuitive6191

I think that some unexplained and tragic deaths capture the public imagination, especially when the facts seem difficult to reconcile. The disappearance of Nicola Bulley attracted world wide attention was another case in point. I think it is the nature of people to be drawn to such mysteries hence the worldwide sales of Agatha Christie, Connan Doyle etc.

The curious case of Dr Mosley was that he walked past the very obvious road to the flat at the head of the bay and continued round the bay in a populated area. Caught on CCTV he seemed in good health walking with some purpose. Quite strange when you can look across the bay and see where you have just come from.

I have got lost skiing a few times when I have been skiing where I should have known better. At best it is a long taxi home - but it could be a lot worse. I remember a few years ago a couple of us were skiing off piste when we spotted a red ski jacket partially buried in the snow. A German man had fallen awkwardly with skis above him and could not move. After 20 minutes of hard work we had got him back upright when he was able to ski down.

We didn't speak German and he didn't speak English - so it was difficult to understand how he had got where he was. It weighed on mind for a few days that it was a million to one chance we had found him.

Sometimes luck plays a bigger part than we care to admit.

Great story, thanks for sharing. I hope he bought you a beer/gluhwein when you got off the slopes! It sounds like he had a very lucky escape there!

It was more of case of a quick handshake and relieved smiles. He took his own route down after a while and we never saw him again..

The nature of risk

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Mark Simpson

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