Part of my responsibilities at Raptor Capital is evaluating risk, and providing an accurate representation of “how risky” the potential investment may be. How much risk is one willing to take on, and why should one take on risk? When posing these questions, a simplistic answer may be “the greater the risk, the greater the return”. Now that is all fair and good, but what about when you do not know the whole story? Are you still willing to take on the risk, knowing there is information you do not know?
A good investor, know the right questions to ask. A good investor can also uncover a lot of the unanswered questions, but at the end of the day you can only evaluate and make decision based on what you know to be true.
Some risk often steams from a lack of knowledge within an industry, that you see a promising investment in. Throughout the last few weeks I have been doing a lot of diligence regarding cryptocurrency. One of the most amazing aspects of my job is getting to learn about so many different types of industries, and seeing the brink on innovation. Constantly being exposed to new ideas and innovations has inspired me.
Cryptocurrency is still a growing and relatively underdeveloped industry. However, if you look back just 7 years ago, if one would have taken the risk, and invested $5 into Bitcoin, they would have made 4.4 million dollars today. Many did not invest anything, because they were afraid. They were so afraid of the unknown, and could not grasp the idea that there could be a new way of making transaction… they simply ignored it. The reality is, any disruptive technology or idea that changes and challenges the way people think will be uncomfortable. Yet, taking this risk and investing into it, could prove to be very rewarding,
The main lesson to be taken away from the idea of risk, is that one should not avoid it, because they are afraid. Learning, researching, and asking the right questions… but being comfortable knowing you don’t know everything, can prove to one day be very rewarding