It's rare to watch someone publicly take a huge risk and either win big or get eaten alive.

Usually people take risks that aren't so obvious to the rest of the world, – specifically, the choices we make as we invest our money. Those of us who want to win big also face the risk of losing big but, still, we generally do it out of sight of others. Nobody is any the wiser unless we win so big that we can suddenly buy a second home on a Greek island, or lose so big that we have to move in with the in-laws.

The knowledge that taking big risks can blow up in your face usually puts the kibosh on most outrageously risky behavior. But in these past few weeks, we've seen a few risk-takers suffer extremely public and painful misfortunes.

Take Steve Irwin, for example, the Crocodile Hunter who lived life large. This amusing Australian amazed us with his derring-do among the denizens of Down Under. Crikey, he seemed fearless, even indomitable. Nothing could harm him — until he died this September after swimming not with the sharks but with a stingray. Apparently, he once told a magazine writer that he was more afraid of dying in a car crash than getting chomped by a croc. As people around the world mourned his death, it seemed inevitable that a huge risk-taker like Irwin would meet his fate this way. Did he calculate what could happen if something went wrong? Probably many times, but he had been so fortunate for so long that he had moved beyond that instant of catastrophically bad luck.

His string of good luck probably also helped Irwin to tamp down his fear of the worst happening. That same attitude can infect traders who have hit it big often enough without losing their shirts. They begin to think that they have become immune to the big loss, such as the kind that comes with making big bets on commodities futures. That's what happened at Amaranth Advisors hedge fund this month. It's bizarre to note that the fellow responsible for Amaranth's recent $6 billion loss is named Brian Hunter – from Crocodile Hunter to Brian Hunter. Both lost more than they could have imagined the morning they set out to take their personal and professional risks.

Hunter had made so much money on his Natural Gas bets after Hurricane Katrina that the managers at the hedge fund let him call the shots with more and more of the fund's money. Then, he borrowed more so he could make bigger bets. But when one of his bets (that the price of contracts in spring 2007 would go up rather than down) went wrong, he single-handedly drove the hedge fund from a record of more than 20 percent gains to a 35 percent loss. That $6 billion loss by one trader is as shocking as any I can remember since bank trader Nick Leeson lost $1.4 billion in derivatives trading in 1995. His trades-gone-wrong bankrupted Barings Bank, Britain's oldest merchant bank.

"When bubbles burst," write ElliottWave.com analysts Steve Hochberg and Pete Kendall, "they invariably unleash a negative social response against the most aggressive and successful exploiters of the preceding advance." Hedge funds are the perfect scapegoat, and the "scandal meter is rising fast" in the hedge fund industry. For instance — as pointed out in the August 2006 Elliott Wave Financial Forecast — the "SEC brought 29 civil cases against hedge funds in 2005 (compared with 10 in 2002), and several fund companies have collapsed or shut down in recent months. The Fed’s entrance into a whole new world of financial fraud is signaled by the establishment of a presidential task force that is now 'looking into hedge-fund fraud.'"

Add to that information the latest news as reported in Bloomberg on Sept. 26, that the FBI views hedge funds as an "emerging threat," because smaller investors are finding their way into the risky world of hedge funds via institutional investors, such as their pension funds, and "taking a bath."

Unlike the sorrow many feel over the Crocodile Hunter's death, it's difficult to find the same kind of pity for those who lost so much money in Amaranth's trades. They are faceless billionaires and institutions that, presumably, can afford to lose millions. As Newsweek's Wall Street editor, Allan Sloan, said on Marketplace Morning Report on Sept. 25, "To me, hedge funds are for consenting adults. They're big people, you're supposed to know what you're doing when you get in there…."

Wise words, but I leave it to Sandi Lynne, publisher of WallStreetInAdvance.com, to bring home the real lesson to learn from the kinds of risks taken by Irwin and Amaranth. She writes on her web site:

"I'm thinking about Steve Irwin, and how it always struck me that he took unnecessary risks in his effort to 'save the animals' and fund his zoo. He was completely unlike Jack Hanna, of the Columbus (Ohio) Zoo, who is no less strident in his love of animals but tends to not only avoid risks but contain his handling of killer-instinct animals to the newborn, to those too young to be dangerous or to threaten the handlers.

"Amaranth was Irwin, and died swinging for the fences – putting itself out there in neon. Sometimes it pays to be Jack Hanna and play it a little quieter and safer – taking profits when the best opportunity arises. Otherwise, like Amaranth and Irwin, doing what you love and swinging for home runs can be your undoing. If you're more comfortable as Jack Hanna than you are as Irwin, then don't risk your profits, your kids, and everything else that lets you sleep at night. Make sure your risk matches your profile."

Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. She is a graduate of Stanford University.