I took one. I thought it was really interesting, and it was helpful. However, in my personal investing, I sometimes can’t apply things that I learned. For example, we learned to diversify, but personally I don’t have the $$$ necessary to diversify across a ton of different sectors, especially with somes mutual funds’ minimal buy-ins, and the commissions charged on stock sales. So I can only diversify across 2 or 3 industries, and I’m exposed to more risk than I would like to be.

Do people apply the risk and probability calculations before they make an investment decision? YES. Hedge fund managers and investment bankers (and univeresity endowment managers) are paid big $$$ to do just those calculations and apply them well.

As for individual investors? Probably most people don’t make very detailed calculations. However, there is at least some level of thought that people give to these things in investing. For example, if you were planning to invest in Airline X, and then you saw on TV that they had a plane crash this morning, you would be less likely to invest in them right now, right? Because the risk is high that the stock price is going to drop.

And depending on your risk tolerance, after the stock price drops, you might then be MORE likely to invest in Airline X, if you think it was just the temporary bad news that pushed the price down, and that you think it’s probable the stock will recover over the next few months (so you want to ride the wave up).

So, a lot of these calculations are done in people’s heads, without real numbers or a calculator.

People who do not calculate risk when investing (or have someone else do that for them) are morons. Risk is an incredibly large part of investing.