You are Already Naked, Jump

On being close to rock bottom, leveraging our youth, and embracing risk

The holidays are great. November and December are an elite monthly combination since you get Thanksgiving followed by Christmas into New Year’s. Time with family, friends, good food, the list goes on. There is one part that is heavily underrated during this season, which is parental advice.

As someone who lives away from home, it is not every day or every week that I get to have conversations with my parents about life. No longer am I the entitled teenager who thinks they know everything about life so it is quite enjoyable to hear the stories and advice from my parents.

You see, I am 24 years old. A lot of life left to live. The harsh reality of being young is in the beginning, not too much matters and not too many people care, particularly in terms of your career and finances. This isn’t to dunk on people our age either. Most likely no one is depending on your income except yourself, most likely if you blew up your finances it is still kind of socially acceptable to move back in with the parents, and most likely you still have 40 years to make enough money to retire.

The risk is asymmetrical. The downside is limited and the upside is infinite. You really can’t get much closer to rock bottom because for 99% of young professionals, they already lie at the bottom of the food chain. By being so close to rock bottom while you are young, there is no reason to not assume some risk monetarily, and in your career.

Most of this is built on the idea that you are young. A long time frame with a lot of life ahead gives you two things:

1. A better chance of succeeding since almost nothing won’t yield to you after a decade of work. We have multiple decades to work with here.

2. It gives you plenty of opportunities to start over if you fail. If you were to fail too, with only you dependent on your income, the stakes couldn’t be lower.

It is a select period where you can survive on such few dollars. Ramen and quesadillas are acceptable dinners. You can live in a cheap place. It is encouraged to live well below your means. Better put, it is almost a privilege of the risk you are afforded to take.

Part of that privilege is there is really no better person to take a risk on than yourself. Truthfully, the risk isn’t as great as it seems. There is a beauty to it because in investing much of what people want to do is reduce their downside. The sorrows of losing are always much greater than the joys of winning. There is never a way to eliminate all downsides or we would all be rich and ride off into the sunset happily ever after.

However, there is a way to get the risk to be as close to zero as possible and that is to leverage your youth. There isn’t a huge buffer between us and rock bottom and that is a good thing. Your loss is typically capped at 1x your investment, it can’t really go much lower from here. The possibility of the gains wildly outweighs the risks.

Life is meant to take advantage and leverage this asymmetric risk. Life is not meant to be played small. It is also not meant to be played not to lose. You have to take risks. Look at your favorite sports team, when they go from playing to win to not playing to lose, a 15-point lead quickly shrinks into a tied game, it is not a winning recipe. There is a need to take risks and a need to play to win. Assuming risk is synonymous with winning. Steve Jobs a man who has done quite well agrees,

“Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life.

Because almost everything - all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important.

Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason to not follow your heart.”

There is very little to lose because all that is to lose will never be remembered. Being young you are already naked, you can’t take off anything else. There is nothing else to shed, no more expectations, embarrassment could never be lower, and fear is essentially none. Perhaps, the biggest thing there is to lose is the money that lies in your bank account. Or the cost of your investment. 

The money you pour into your stocks, your options trade, your startup, or your creative endeavor probably won’t affect your ability to retire and won’t be the defining moment if you make it in life. But with anything, there is also a level of practicality to it. Being young with low expenses and no dependents allows you greater room for error but it does not guarantee success. Continuing to throw money at an idea or belief that simply isn’t working is the best way to ruin the privilege you are afforded. 

But to continue to move forward with an idea or belief that has merit is also the best way to increase your luck. People think luck is taboo. There is luck involved with anything and to dismiss it or to discredit something because it is luck is wrong. Timing the market is largely luck but the more you study it, examine it, and breathe it day in and day out, the better chance you have to become lucky. 

Luck is a big factor when you're trying to do things on your own rather than as part of an organization. There are truths about luck being where preparedness meets opportunity and so on, but of course, there’s also a component of true chance that you can't do anything about. The solution to this is to keep shooting. Which is another reason to start taking risks early. A quote from Max Gunther captures it quite well,

“It is essential to take risks. Examine the life of any lucky man or woman, and you are all but certain to find that he or she was willing, at some point, to take a risk. Without that willingness, hardly anything interesting is likely to happen to you.”

Risk induces a lucky life and if you envy someone for being lucky perhaps you should take more risks.

As for me, maybe selfishly, I am writing this article for myself. There is a reason why my dad was giving me this advice. I need to take more risks. There is really not much to fear and being young gives you leverage that slowly ticks away and fades as you get older. It is a boost to your investment and it is one way to truly limit your downsides because frankly, you can’t go much lower from here. That in itself is a privilege.

And if you do fail, it is a gift. Failure is one of the best teachers. No one learns skills quicker than someone who lacks a sense of embarrassment and is not afraid of failure. Failure provides the small price you must pay to learn how money works for you.  But don’t fear failure, it’s never as scary as it seems. 

“A bit of advice given to a young Native American at the time of his initiation: ‘As you go the way of life, you will see a great chasm. Jump. It’s not as wide as you think.”

Keep shooting and keep embracing that risk.

Appreciate you reading.

-Scantron

Scantron’s Selections - A few things I loved this week.

• Recently, I revisited Alexi Pappas on Rich Roll. She is so good and so creative. My favorite idea is how criticism is like blood work. If you don’t get your blood tested, it doesn’t mean you are healthy. Just like if I don’t ask for feedback, it doesn’t mean I did a good job. It just means I am refusing to know what I could have done better.

• I tuned into Adam Grant on the Jay Shetty podcast it was a great two-way conversation. Adam has a ton of great ideas but I think the one that stood out to me the most was self-promotion versus idea promotion. Don’t promote yourself, promote your ideas. It is a crime to not share your creative work and findings with others.