Brendon Moynihan by Jim Paul. This was an interesting story about a CME trader that had a good run and then blew out.
The lessons to be learned include:
1. Internalizing failure will keep you from rebounding.
"When you lose money, people tend to internalize that. They tend to equate self-worth with net worth," Moynihan says, referring to the way that people tend to equate their failures with their identity.
If you lose a massive amount of money or suffer another big setback, you will be holding yourself back from a rebound if you see yourself as a failure rather than someone who failed.
It was this fear of being a failure that kept Paul from aborting his investment in the soybean oil trade, despite multiple indicators of a sharply declining market, Paul and Moynihan write in their book. Looking back, Paul writes, he wishes he would have simply accepted the failure and moved forward before putting himself through even more difficulties.
2. There's a difference between risk-taking and gambling.
Being a smart investor requires taking many risks, and not all of them will result in success. But smart high-risk decisions are still very different from gambles, Moynihan tells Ferriss. Gamblers marry their ego to their money, which is what Paul did.
"They want to be right. It's not about the money. In gamblers, that is a disease... Money is just a ticket to enter. They're there for the adrenaline rush," Moynihan says.
3. Emotional decision-making is dangerous, especially when it's done as a group.
You're a human being. It's natural to have emotional reactions to situations, whether positive or negative. Just make sure you learn how to set feelings aside and look at something objectively before making a decision.
