Tuesday, September 16, 2014
(Photo: Ariel H.)“One of the rare noncharlatanic books in finance.”– Nassim Nicholas Taleb, author of
The Black Swan and
Antifragile“There is more to be learned from Jim Paul’s true story of failure than from a stack of books promising to reveal the secret formula for success…this compact volume is filled with a wealth of trading wisdom and insights.”– Jack Schwager, author of
Hedge Fund Market WizardsThe newest book in
The Tim Ferriss Book Club (all five books
here) is a fast read entitled
What I Learned Losing a Million Dollars. It packs a wallop.
This book came into my life through
N.N. Taleb, who has made several fortunes by exploiting the hubris of Wall Street. Given how vociferously he attacks most books on investing, it caught my attention that he openly praises
this little book.
My first dinner with Nassim was in September of 2008. It was memorable for many reasons. We were introduced by the incredible
Seth Roberts (may he rest in peace), and we sat down just as Lehman Brothers was collapsing, which Taleb had — in simple terms — brilliantly shorted. We proceeded to drinking nearly all of the Prosecco in the restaurant, while talking about life, business, and investing. Lehman Brothers would end up the
largest bankruptcy filing in US history, involving $600+ billion in assets.
The next day, I had a massive hangover and a hunger to study Nassim. Step one was simple: reading more of what he read.
I grabbed a copy of
What I Learned Losing a Million Dollars, and I’ve since read it many, many times. For less than $20, this tool has helped me avoid multiple catastrophes, and I can directly credit its influence to roughly 1/2 of my net worth (!). The ROI has been incredible.
The book — winner of a 2014 Axiom Business Book award gold medal — begins with the unbroken string of successes that helped Jim Paul achieve a jet-setting lifestyle and land a key spot with the Chicago Mercantile Exchange. It then describes the circumstances leading up to 7-figure losses, and the essential lessons he learned from it. The theme that emerges:
there are 1,000,000+ ways to make money in the markets (and many of the “experts” contradict one another), but all losses appear to stem from the same few causes. So why not study these causes to help improve your odds of making and keeping money?Even if you don’t view yourself as an “investor,” this book can help you make better decisions in life. Also, the stories, similar in flavor to
Liar’s Poker, are hilarious and range from high-stakes baccarat to Arabian horse fiascos. For entertainment value alone, this book is worth the time.
I hope you enjoy — and benefit from — the lessons and laughs as much as I have.
For those who enjoy both audio and Kindle, as I do, the above editions are synced with Whispersync. This means that if you get both the audio and Kindle, you can switch between the two. For instance, I like to read Kindle books on my iPhone on the subway, then pick up and listen to the audio while walking outside.
Would you be interested in interviewing the co-author, Brendan Moynihan? Brendan is a Managing Director at Marketfield Asset Management ($20 billion of assets under management) and the Senior Advisor to the Editor-in-Chief of Bloomberg News, among other things.
If you’re a journalist, blogger, podcaster, etc. interested in the book’s lessons, feel free to reach out to him at
bmoynihan [at] bloomberg {dot} net.I recently interviewed him myself for an hour about investing, how he met Jim Paul, and much more. Click below to listen to the conversation, or (if reading via email) you can
click here to stream/download the MP3:
For those who want a short synopsis of the book, here you go:
Jim Paul’s meteoric rise took him from a small town in Northern Kentucky to governor of the Chicago Mercantile Exchange, yet he lost it all — his fortune, his reputation, and his job — in one fatal attack of excessive economic hubris. In this honest, frank analysis, Paul and Brendan Moynihan revisit the events that led to Paul’s disastrous decisions and examine the psychological factors behind bad financial practices in several economic sectors.
Paul and Moynihan’s cautionary tale includes strategies for avoiding loss tied to a simple framework for understanding, accepting, and dodging the dangers of investing, trading, and speculating.
###
