Everything I Learned About Investing I Learned While Crying

A broker called up in the Fall of 1998 and suggested I buy a stock. I remember it. Intel. INTC. I had all my money in an account with him. I said, “ok”.

A few minutes later he called me back and said, “Sell it.” I said “ok”.

I made $1000.

I couldn’t believe it! I made $1000 in what seemed like less than a minute. It felt like I had made it before I even had it. It was like a magic spell was cast on me.

Now I wanted to buy more stocks. I thought I was a genius because I had built a company and sold it for a lot of money.

If I could do one thing smart, why not everything? I even looked smart! Curly hair and glasses. And I played chess. And had sold a company. So why shouldn’t I be automatically a genius at stocks.

Before this, I KNEW NOTHING about stocks. I had a web design company that employed mostly painters and artists and graphic designers.

Before that I worked at HBO where I interviewed prostitutes and before that I was a computer programmer.

I read a lot of fiction and would write a lot. I wanted to be a novelist when I “grew up”.

But I started buying and selling stocks. Every day. Morning, day, and night. I still knew nothing. The only thing I thought I knew was: I am a genius and nobody will stop me.

Positive thinking is a very dangerous drug.

I remember one morning, my wife was in the doctor’s office getting that scan where you find out the sex of your kid.

I was out in the hallway shouting in joy because I had made a million dollars in, again, what felt like a time travel machine.

I didn’t care about anything. Sex of baby. Buying a house. Flying a helicopter to play poker. Getting another house on the beach. Buying art. Heck, my 0 year old baby had a two story bedroom in the middle of Manhattan.

I didn’t care about any of that. I only wanted to make more money.

And then when Internet stocks started to collapse, I doubled down and then tripled down. I kept buying more and more stocks. I mortgaged my apartment. I borrowed.

I lost everything.

I had nothing left but a salary I was getting from a venture capital fund that I started. So I borrowed against my house again. Why not? My wife said, “Are you sure about this? This is our last money!”

And I said, “Don’t you believe in me?”

I was manipulative and scary and confident and arrogant. People would stop me on the street and ask me for stock advice because I looked so smart.

Finally I found out something. Something that has stuck to me this day. Something that I woke up even today, 17 years later, thinking:

I am an idiot. I might not be the biggest idiot in the world. But I’m just plain stupid.

And then I learned shame. People would stop me in the street and say, “Hey, how’s it going” and I’d say, “Great!” and try to get away as fast as possible before I would start crying.

I saw about ten psychiatrists during that time. None helped. I started to meditate. Instead of calm meditation it was violent “mad attention”. Nothing could shut off my panic and fear.

So I decided to learn. Here’s what I did, step by step.

READING

I read about 200–300 books on stocks. I read books written in the 1700s, 1800s, 1900s, 2000s about stocks and investors that I admired.

Separately, I can provide a list of the books I read. They were all valuable. But I’ll divide up here by category:

When Bobby Fischer was a young boy, a good but not great player, he took a year off from playing. He was 13 or 14. I forget. He went and studied all the professional games played in the 1800s, almost a hundred years earlier.

By studying the history of the game he became great. He found improvements in almost every game played. So when he came back to play against the professionals of his day he made a clean sweep of the US Championship.

How did he do it? By steering all his opponents into these century-old games and then unleashing his opponents. They all thought they were going to play these sleepy 1800s-style games and he crushed them.

If you are a tennis player, you would study how Serena Williams trains versus Arthur Ashe. Clearly the history of tennis training has included muscle training at some point.

Understanding the history of how a field develops is the critical first step in understanding mastery . There’s easily 100 books on the history of the stock market that are worth reading.

Why a pop finance book? If you read “Supermoney” by Adam Smith you’d see. I loved that book so much I eventually talked Wiley into re-releasing some of his other books.

But there are plenty of books that really examine all the sources from the periods of each of those topics and they dive into both sides of the story.