Friday, July 15, 2011

Guilty as Charged

Hey there

Yes I’m still sick and my mum is still here in Australia and I haven’t sorted out my semester yet. Heck I don’t even know where I’m supposed to turn up next week. But oh well I’ll get there.

Anyway I’m in Sydney at the moment and I’ll be heading up to the Blue Mountains tomorrow for some jungle trekking and caving. So I was driving and I realised that I didn’t have my wallet with me. That means no ID, no licence, no money, and no credit cards. All of a sudden I started driving very very cautiously. Never went over the speed limit, never overtook unnecessarily, brake as soon as the lights turned amber, and felt my heart rate sky rocket everytime I see a police car. Driving patterns that were so normal suddenly looked so risky.

I’m sure many of you experienced this before. It is quite funny really.

Like when you haven’t done your work and the teacher starts asking questions so you curl up a little in your seat
Or when you walk pass the discipline teacher and he calls out your name, you immediately assume you did something wrong.
Or when you know somebody is watching, you pay extra attention to how you walk hoping that you don’t trip and fall.

I will not be getting my wallet back until Sunday when I go back up to Newcastle but trust me as soon as I get it back my driving patterns will immediately go back to normal i.e. I might not slow down when the lights turn amber, I might go a bit over the limit to overtake the car ahead, my heart rate will remain similar when I drive pass a police car. I’ll immediately go back to the level or risk I was taking before.

I find it interesting because the amount of risk we take really really depends on how much exposure we actually have. Even though we are not really doing anything wrong, we are extra cautious when we know the consequence is something like public humiliation (tripping on stage).

So if we take unnecessary risk from time to time because we are partially protected from the consequences, how can we expect banks to do any different? Banks sometimes take unnecessarily high amounts of risk because it is not their money to lose. If they make money, it is good for them, if not, just as well - moral hazard. Think about that when you wanna invest in a fund.

So when was the last time something like this happened to you? When was the last time you were extra conscious of what you are doing because you were worried of what people might think? What do you think about leaving your old car unlocked by the most dangerous street in your suburb so that it can be stolen and you can claim money from the insurance? Do leave me comments or send me an email. I enjoy reading your feedback and I’ll respond to them.

Next post Sunday!