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What I Learned Losing a Million Dollars$
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Jim Paul and Brendan Moynihan

Print publication date: 2013

Print ISBN-13: 9780231164689

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231164689.001.0001

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The Psychological Fallacies of Risk

The Psychological Fallacies of Risk

(p.85) 7 The Psychological Fallacies of Risk
What I Learned Losing a Million Dollars

Jim Paul

Brendan Moynihan

Columbia University Press

This chapter provides an anecdote of the author with a well-known baccarat player during a trip in Las Vegas to discuss the concept of risk. Risk is the possibility of suffering a loss, and life is always fraught with risk. Crossing the street is a risk, driving a car is a risk, getting married is a risk, and so is having children. Needless to say, starting and operating a business is a risk, and the same with market investments. There is a similarity between casino and brokerage house. The boardrooms are similar to the casinos while the stock exchange and the ticker tape are the gambling devices. However, the markets and gambling games are similar only in that they each involve the possibility of monetary loss; their main difference is that gambling creates risk while investing manages risk that already exists.

Keywords:   baccarat player, risk, Market risk, business, gambling, stock exchange

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