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What I Learned Losing a Million Dollars cover art

What I Learned Losing a Million Dollars

By: Jim Paul, Brendan Moynihan, Jack Schwager - foreword
Narrated by: Patrick Lawlor
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Summary

Tim Ferriss Book Club Selection

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 decision and examine the psychological factors behind bad financial practices in several economic sectors. This book - winner of a 2014 Axiom Business Book award gold medal - begins with the unbroken string of successes that helped Paul achieve a jet-setting lifestyle and land a key spot with the Chicago Mercantile Exchange. It then describes the circumstances leading up to Paul's $1.6 million loss and the essential lessons he learned from it - primarily that, although there are as many ways to make money in the markets as there are people participating in them, all losses come from the same few sources.

Investors lose money in the markets either because of errors in their analysis or because of psychological barriers preventing the application of analysis. While all analytical methods have some validity and make allowances for instances in which they do not work, psychological factors can keep an investor in a losing position, causing him to abandon one method for another in order to rationalize the decisions already made. 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.

Also included is a bonus hour-long interview between co-author Brendon Moynihan and noted investor, business advisor, and best-selling author Tim Ferriss.

©2013 Brendan Moynihan (P)2014 Tim Ferriss

Critic reviews

"One of the rare noncharlatanic books in finance." (Nassim Nicholas Taleb, from Antifragile: Things That Gain from Disorder)
“The book points out very early that many successful investors have opposing styles and theories on how to make money, and that they can not all be right at the same time. The most important point to take from the book is how to avoid losing money...” (Steve Osbiston, Financial Times Advisor)
“A novel approach aimed at pushing you inside your head and outside the losing habits most folks adopt right after multiple successes. A must-have for traders blessed with a string of hot trades.” (Ken Fisher, Fisher Investments, FORBES)

What listeners say about What I Learned Losing a Million Dollars

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Another clueless trader who got lucky then lost it all and never learned anything

This is a book about a clueless trader that got lucky in the market (and in life), got an ego-boost and thought that he is invincible and then lost all his money because of poor decision making.

The lesson learned by the author can be summarized as: don’t let your ego get in the way in what you do (e.g. trading), stay humble and don’t become complacent. Common sense stuff that does not need a book of this length to explain.

My advice to the listeners: do not waste your time.

I really tried to push through the bs and look for nuggets of wisdom, but I could not because for me there were none.

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23 people found this helpful

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    2 out of 5 stars
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    2 out of 5 stars

Interesting but could be summarised in a page

The book jumps around and is disorganised. The style annoying, the performance grating.

I like the premise - focus on not losing money. That fits nicely with Buffet’s maxim. In addition, I like the idea of going in with an exit plan.

I also like his point that some people are lucky fools, and just don’t know it. Successful by a random walk.

However, there seems to be an inherent contradiction in his solution. He points out that the stock market is continuous, so opportunities for entering/exiting are never ending, but advocates countering that by planning point max win/losses before a trade, and not adjusting afterwards.

I see the logic there. Don’t make it up as you go along based on emotion. However, the contradiction is that in a continuous market, things change, so shouldn’t the plan change? Bayesian logic?

Say you invest in an airline stock on the assumption that a short lived union dispute will blow over e.g. Ryanair. But then the Boeing Max disaster happens and the airline cannot get delivery of planes. So if the union dispute is resolved, but rather than going up, the airline stock declines because it’s still waiting for its new fleet to be delivered / compensation from Boeing, would you still get out based on your initial acceptable loss imagined occurring during the trade dispute? Or hold on, assuming the stock will recover on delivery of the planes? He seems to suggest getting out because changing plans mid-way could like ego take over. I see the logic there, there is no attachement or emotion. However, at the same time, this seems like mechanical algorithmic day-trading rather than value investor mentality. You would put yourself at a disadvantage to other traders who can process new info. I couldn’t see Buffet selling based on a set decline without considering the new information, or the value of the underlying asset.

This strategy might also mechanically (rather than emotionally) get you out of the stock market on days like Black Friday, when possibly riding the storm would make more sense. In particular, in index funds.

Overall, he makes some good points. But I’m not sure if he addressed the core of his own loss - he bet everything he owned and more on a single short/options position... Limited upside, infinite downside. Deciding how much he could lose on that trade could have prevented that catastrophe. But so would other things like diversification, circle of competence, only investing in what you really understand etc.

Overall, interesting, but too long winded.

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6 people found this helpful

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    4 out of 5 stars
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Traders will love this book

I'm a trader, buy & (mostly) sell indices so naturally I was keen to hear this story given my early losses. I almost gave up on the book as the beginning is almost exclusively early life story. I felt it was too detailed but once he talks about his experiences you'll nod your head & smile ruefully knowing you've made the same e cruising errors.

Definitely worth your time.

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2 people found this helpful

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    5 out of 5 stars
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Engaging and worthwhile

What did you like most about What I Learned Losing a Million Dollars?

It is a different take on the usual "How to make a million dollars doing x, y, z".

What was one of the most memorable moments of What I Learned Losing a Million Dollars?

Actually the piece at the end where the guy who penned the book tells about his experience of the interviews etc

Which character – as performed by Patrick Lawlor – was your favourite?

He was a great narrator throughout the book. I would look for his name in future audio books.

Was there a moment in the book that particularly moved you?

Hard to say without giving too much of the plot away. There are many high and low points through the book.

Any additional comments?

Highly recommended, in my top ten audio books for the past few years.

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2 people found this helpful

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  • MG
  • 28-04-20

great book

Really good book. outlines many problems I have personally had in the market wish I read/listened to this 5 years ago. worth listening/reading if trader, investor or business person

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1 person found this helpful

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  • Mr
  • 27-08-19

A highly illuminating tale of hubris and nemisis.

I really enjoyed this book, it's a fascinating and insightful look into how a man who had become accustomed success ending up destroying his own career through the kind of psychological traps that almost all traders and investors will be familiar with. I recommend it to anyone interested in the markets.

Good narrator.

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1 person found this helpful

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    5 out of 5 stars
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    5 out of 5 stars

Not a bad at all

This book is more specific for traders than anyone else. its my only criticism of it.

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1 person found this helpful

  • Overall
    4 out of 5 stars
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    5 out of 5 stars

Basic but powerful

If you don't want the story behind it all just read the recap chapter. Really good otherwise

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  • Overall
    5 out of 5 stars
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    5 out of 5 stars

Great book!

This is a great book on the psychology and mental reasoning about trading, speculating mostly. Some of the lessons here also apply to investing. Love their story format, which is short and insightful enough to be easily understood!

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    5 out of 5 stars
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    5 out of 5 stars

Wisdom beyond trading.

This man did his research, looking at risk and judgement in business and management to inform his own understanding. I’d recommend this to leaders and managers to prompt some well informed self reflection inspired from here.

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