Getting Wealthy vs. Staying Wealthy

This post is by Collab Fund from Collab Fund

Good investing is not necessarily about making good decisions. It’s about consistently not screwing up.

There are a million ways to get wealthy, and plenty of books on how to do so.

But there’s only one way to stay wealthy: some combination of frugality and paranoia.

And that’s a topic we don’t discuss enough.

Let’s begin with a quick story about two investors, neither of whom knew the other, but whose paths crossed in an interesting way almost a century ago.

Jesse Livermore was the greatest stock market trader of his day. Born in 1877, he became a professional trader before most people knew you could do such a thing. By age 30 he was worth the inflation-adjusted equivalent of $100 million.

By 1929 Jesse Livermore was already one of the most well-known investors in the world. The stock market crash that year that ushered in the Great Depression cemented his legacy in history.

More than a third of the stock market’s value was wiped out in an October 1929 week whose days were later named Black Monday, Black Tuesday, and Black Thursday.

Livermore’s wife Dorothy feared the worst when her husband returned home on October 29th. Reports of Wall Street speculators committing suicide were spreading across New York. She and her children greeted Jesse at the door in tears, while her mother was so distraught she hid in another room, screaming.

Jesse, according to biographer Tom Rubython, stood confused for a few moments before realizing what was happening.

He (Read more...)