Rutul Davé

Decisions needed to get wealthy vs stay wealthy

Decisions needed to get wealthy vs stay wealthy

This headline in a recent NY Post article about a NY oil tycoon who in the past lost billions with Enron, then invested with Bernie Madoff, and recently struck out with FTX reminds me about Jesse Livermore. In one of his blog posts (and also his book), Morgan Housel tells the story of Jesse Livermore, the greatest stock market trader of his day, to make a key point about good investing:

“Good investing is not necessairly about making good decisions. It’s about consistently not screwing up.”

“Not screwing up” is an outcome of good decision making, which is what you need to be great at when you are trying to stay wealthy.

Jesse Livermore’s story is fascinating one about how the decision making skills required to get wealthy: taking risks, being optimistic, and putting yourself out there, are not the same skills you will need to stay wealthy: some combination of frugality and paranoia.

Financial decision making is fascinating because it not only requires good decision making, but also the ability to recognize what type of decision you are making – making money or keeping money?

On this topic, I was hoping my $hitpost reply to this #fintwit question was pretty clever, but apparently not: