You should like risk because it pays off over time. But you should be paranoid of ruinous risk because it prevents you from taking future risks that will pay off over time.

An important cousin of room for error is what I call optimism bias in risk-taking, or “Russian roulette should statistically work” syndrome: An attachment to favorable odds when the downside is unacceptable in any circumstances. Nassim Taleb says, “You can be risk loving and yet completely averse to ruin.” And indeed, you should.

In investing you must identify the price of success—volatility and loss amid the long backdrop of growth—and be willing to pay it.