The Difference Between Risk Averse and Risk Oblivious

An acquaintance had asked me for some investment advice recently.  The man, in his late 50s, originally hails from Italy but saved up a bit of a nest egg working as a construction foreman in Canada and now happily lives in Acapulco where he operates a very popular and profitable Italian restaurant.

He had just sold one of the condos he owned in Acapulco and had an extra $100,000 burning a hole in his pocket.

I sat down with him at his restaurant and we chatted over the tastiest Spaghetti Aglio Olio (Spaghetti with garlic and olive oil) I've ever eaten.

He made it quite clear he was not a risk taker.  "I've worked hard all-a my life", he said in his still strong Italian accent.  "I lost-a money in the stock market 20 years ago.  I work-a hard for this money I don't wanna lose it," he implored.

Not being located in the United States I was actually free to give him some investment advice without being licensed from the government or under threat of incarceration for offering him advice.

And being the investment professional I am I grabbed the napkin from under my delicious glass of Vino Blanco and with a pen I began to scribble.

"30% in cash (for buying any dips or corrections), 30% in gold & silver bullion, 30% in gold & silver stocks" I wrote.  It was the simplest, safest portfolio advice I could offer.

He squinted at it, pulled out his reading glasses and squinted some more.

"I like-a da cash part," he said, "But I dunn-o about this gold stuff."

I spent a few minutes explaining how TEOTMSAWKI (The End Of The Monetary System As We Know It) was already in full swing and how governments worldwide and their central bank spawn were printing money at ludicrous levels and were showing no signs of stopping.  I also explained how this current monetary system can only end in collapse as the system itself is a system based on debt and all the attempts made by governments and central banks to "improve" things only end up distorting prices and therefore end up destroying a lot of wealth as investors and entrepreneurs invest all their wealth in soon to be empty and bulldozed row housing in Nevada or in racehorses or hotels in Dublin.

He appeared to take in at least some of what I was saying, but he lurched back in his chair as though he was peering into something dark and ominous.

"I have a German friend, he told-a me the same thing."

I laughed.  "Yes," I replied, "Germans seem to know what is going on more than most as they've gone through this a few times in recent history."

"Yeah... yeah," he murmured, thinking deeply.

He then scribbled out the "30% gold & silver stocks" part off the napkin.  "I don't-a like the stock market," he voiced.

He then looked at the two remaining portions: Cash & Gold.

Squinting again, he asked, "You like-a this gold eh?  You don't think it is too risky?"

I laughed.  "You should be asking me that question about the cash part, not the gold part," I responded.

"Ok, I'm-a gonna think about it," he said.

I finished up my spaghetti and wine and as I rose he told me, "You see, I'm not sure about this gold, because I am risk averse."

I shook his hand, smiled and told him as gently and nicely as possible, "You aren't risk averse.  You are risk oblivious!"

As I walked away I could see him scribble out the "30% in gold bullion" part.

Perhaps I should have shown him the following chart:

Maybe I'll go back next week for some more spaghetti and bring this chart.

I'm sure he'll have one question, "Ya, but how much lower can it go?"

I already have the response: "This cycle will not end until all of the currencies on that chart hit -100%.  And it may happen much sooner than you might expect."

Perhaps then he'll understand why he isn't risk averse but is risk oblivious.  Hopefully he figures it out before it is too late.

And hopefully you do too!  If you have been investing in traditional investments such as US stocks and holding your wealth in the form of US dollars for the last decade and are wondering why you seem to be falling further and further behind, Subscribe to The Dollar Vigilante today - we offer subscribers overwhelming research, analysis and proof on why the financial system of the last 100 years cannot survive must longer and how to protect yourself and even profit from its inevitable collapse.  We offer a 90 day money back guarantee so try it out, risk free!  What have you got to lose, except everything, if you don't educate yourself on what is really going on in the financial world now!

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