onsdag 17 september 2014

Losing a million dollars

Jim Paul and Brendan Moynihan sell truckloads of books, when detailing what can be learned from losing a million dollars, receiving praise from the likes of Nassim Nicholas Taleb in the process.

One of the rare noncharlatanic books in finance.”
– Nassim Nicholas Taleb

From Tim Ferriss' website:

The book [What I Learned Losing a Million Dollars] — 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?

I too lost a million dollars over the last year (actually one and a half million dollars but who's counting?) on one single trade and learned nothing, wrote nothing about it, got no praise and no readers for it...

Just saying

Here is how I did it:
  • I grew more and more tired of the ever rising market and increasing monetary madness
  • I decided to wait for a large downturn and then start accumulating single stocks
  • After an additional year or two of never ending market advances into historically insane valuation levels, I started trying the downside "why not make money both ways (famous last words)".
  • I bought 120 000 shares of negative exposure at 207,13 SEK (I actually bought higher but reduced the average price by one profitable trade in between) for a total of little less than 25 million SEK (approximately 3.82 million USD)
  • On average a year and a half later, my loss stands at 90 SEK per share or -43.5% for a total loss of 10.8m SEK (in today's dollars a loss of 1.51m USD)

I learned nothing. Except maybe that I didn't get the least bit unhappier... Sometimes I wonder how I'm wired.

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