Book Club: "What I Learned Losing A Million Dollars" by Jim Paul and Brendan Moyniham
What I learned Losing A Million Dollars
Books about losing are the best.
Everyone wants to learn how to ‘make quick money’ in the stock market. Thus titles along the lines of ‘Make Millions Trading ETF’s’ or ‘The Successful Day Trader’ are incredibly popular among new traders. One of the most advanced concepts of trading that I’ve learned through lots of study (ok obsessive reading of successful trader’s writings) is that money management is the real key to success. For the uninitiated, money management is basically how you lose. How much you lose, when you decide to lose a trade, what you do while you’re losing, the whole losing package. Before I get into a deeper philosophical rant about losing in the markets, the title ‘What I Learned Losing A Million Dollars’ caught my eye for the aforementioned reasons. The other reason is Nassim Taleb, an author/trader/philosopher (of sorts) actually recommended this book. If you’re familiar with Nassim’s work, well needless to say he basically never recommends books that are considered popular financial/trading books. More about Nassim at a later time, lets talk about Jim Paul. Jim Paul was the man. He hustled his way into governor of the Chicago Mercantile Exchange years ago. The short of the story is he lost an insane amount of money trading futures, and completely crumbled his finances and really his life for a long time. This book is written from the perspective of Jim Paul, but thankfully it was physically WRITTEN by someone who actually knows how to write. With that combo it really is a treat to read. The first half of the book is the ‘story’ of of Paul’s rise and fall in great detail. But the real meat is the second half of the book which is a deep dive into the psychology of losing. One of the reasons why so many people fail in the markets is that the average person simply cannot deal with the uncertainty. The naive might chalk up the markets to gambling, but this is a complete oversimplification. Paul discusses crowd psychology, what it feels like to lose (there are stages) and much more. I have a bunch of thoughts on losing in trading, but I’d rather put those in another post and incorporate other sources and authors into the discussion. So in conclusion I found Jim Paul’s book a treat to read and wish more were written about the subject of losing as well as this one is. Below is my sweet amazon affiliate link if you want to check out his story.
What I Learned Losing a Million Dollars (Columbia Business School Publishing)