You miss every shot you don’t take... but should you always shoot?

Before hitting send, I run each issue by my family for feedback. While reviewing the last issue, my daughter asked, Are free lottery tickets the same as ‘You miss every shot you don’t take?’ I briefly explained how the concepts are quite different and promised to answer her query in my next article. 

This quote, often attributed to Michael Jordan, originated from hockey legend Wayne Gretsky, whose father wanted him to take more shots. It gained iconic status in Nike’s 1997 ”Failure” commercial, which features Jordan’s voice over a montage of missed shots:

I've missed more than 9,000 shots in my career. I've lost over 300 games. I've failed over and over again in my life. And that is why I succeed.

The commercial ends with Jordan’s game-winning shot in the 1998 NBA Finals and his sixth championship. It’s one of the greatest sports commercials ever made. If you haven’t seen it, pause here and watch. It’s worth it.

The ad is raw, honest, and inspiring. It reminds us that success demands risk. It would be great if life was all “free lottery tickets,” opportunities with potential upside and little to no downside. The catch? You don’t know when, or if, they’ll ever pay off. They are easy to pursue because there’s nothing to lose. But you can’t feed your family with lottery tickets. Success in life requires taking risks. Avoiding risk means avoiding life.

The hard part is figuring out which risks to take, how much to take, and when to take them. When I ran my hedge fund, I leveraged optimal risk theory, a framework that seeks to balance potential gains and losses to make the smartest possible decisions. The goal is to identify your options, weigh the pros and cons, and then act.

Now back to Jordan. In basketball, the goal is simple: outscore your opponent. The biggest drivers are how many shots a team takes and how many go in. In the NBA, teams have 24 seconds to attempt a shot. If a team waits for an open layup, they may run out of time and not take enough shots. But if they settle for quick, low-percentage shots, they’ll miss too often to win. Winning requires a balance of shot quantity and quality.

When a player has the ball, they can dribble, pass, or shoot. Great players read the moment, make a decision, and commit. Less experienced players tend to always pass or always shoot, becoming predictable. However, the biggest mistake I see young players make is freezing up and struggling to make a decision, especially when the stakes are high. 

Jordan stood out because he trusted his judgment. Early in his career, he tried to do everything himself. Despite leading the NBA in scoring, the Bulls won less than half of their games. As he matured, he learned which shots to take and when to pass. This is optimal risk theory in action. You miss every shot you don’t take isn’t a license to always shoot. it’s an invitation to take the shot when it’s the right one.

In finance, optimal risk theory is most often expressed through portfolio construction. A portfolio is a collection of investments, and construction refers to how that collection is built: the amount of capital allocated to each asset, the types and correlations of those assets, and the risk of those assets. In basketball terms: how many shots, what types (layups or three pointers) and the risk level (wide open layup versus half-court hail mary). 

Portfolio construction helps investors maximize returns for a given level of risk. Take no risk and earn nothing. Take too much and risk losing it all. Often, how a portfolio is constructed matters more than the individual investments. Strong returns from the largest bets can outweigh poor results from smaller positions. That’s why portfolio managers, like great coaches, matter so much.

Optimal risk theory applies beyond investing, especially to your career. Change jobs every year and it’s hard to build credibility or get promoted. Stay too long and your contributions may be taken for granted. Build relationships across your industry so you always have options. Once a year, take the time to assess whether to stay or make a move. During my career, I remained at one firm for over a decade, even though I had offers to leave every year. I came close to leaving three times, but my employer made it worth my while to stay the course.  

If you feel underpaid, test your market value. Talk to recruiters. See what others would offer. If there’s a better offer, inform your manager and respectfully ask what it would take to get a raise. If others are not willing to offer higher compensation, figure out what roles pay more and what skills you’d need to land them. Once you’ve done the research and optimized your "portfolio" of options, take your shot; whether that means staying while you develop new skills, asking for more, or making a move.

Whether it’s finance, sports or almost any area of life, optimal risk theory can be a powerful tool:

• Identify your options. Create a comprehensive list. Brainstorm with friends, think outside the box, and explore unconventional paths. Sometimes the best option isn’t the obvious one. 

• Assess. Be systematic and thoroughly evaluate the pros and cons of each option. Use tools like Gemini and ChatGPT to dig deeper and uncover insights you might’ve missed. Ask a trusted friend to play devil’s advocate and challenge your assumptions. Assign each a value on a 1–10 scale based on importance. Tally the results to see which path stands out. 

• Act. Based on your research, make the best decision available to you. Create a clear plan that maximizes your chances of success. If your decision involves a major change or quitting something meaningful, take a look at Annie Duke’s Quit. She offers an excellent framework for knowing when and how to walk away.  

• Rinse and repeat. Most decisions aren’t permanent. Set a cadence for regular review. Be sure not to wait too long or change your mind too often. The correct time frame for reassessment will depend on the situation.

While effective, optimal risk theory is not a one-size-fits-all solution. Everyone faces unique choices, constraints, and trade-offs. What feels risky to one person may feel safe to another. And that balance can shift over time. The goal isn’t to eliminate risk, but to take smart, intentional ones aligned with your values and goals. So do the work: identify your best options, weigh them thoughtfully, and build a plan. Then it’s time to be like Mike. Trust yourself and take the shot.

Sangeeth Peruri - Jack of Many Trades, Master of None
P.S. If you like this article, please share on social or forward to a friend! Click here to see past issues.

If you prefer listening to reading, check out a podcast of this issue created with NotebookLM.