Why You Don’t Need to Be Right to Get Rich

We Were “Wrong” 58% of the Time and Still Tripled the S&P 500

During my early years on Wall Street, I was a gunslinger. I’d go all in on ideas using leverage, betting my entire net worth on single trades.

At first, it worked. I made my first big haul in the early 1990s buying beaten-down junk bonds. By the mid-90s, I was making money hand over fist in technology stocks.

I thought I had it all figured out – until the market reminded me who was boss.

By late 1998, I’d lost everything. I got wiped out. And it wasn’t just my money that was gone – my confidence was shattered.

I was so lost that I stood on the edge of the Metro-North platform in Grand Central Station, ready to let it all end.

But something – courage, fear, or maybe grace – pulled me back. That single moment changed the trajectory of my life.

When you lose everything, it strips you bare. It forces you to see what really matters. I couldn’t even work in my industry anymore. I ended up answering the phone for take-out orders in a restaurant I used to frequent as a Wall Street hotshot.

After some soul searching, I figured out what caused me to go bankrupt wasn’t my ideas.

In fact, they were usually very good and ended up working out. Instead, it was the enormous amount of leverage I was using and a complete disregard for position-sizing.

You see, when I was wrong – even temporarily wrong – I had so much leverage, it just wiped me out. That humbling experience taught me valuable lessons I carry to this day.

The first lesson I took from my bankruptcy was to eliminate leverage. The second was to make sure the bulk of my money stayed in safe, income-producing assets.

But I never wanted to abandon high-risk ideas entirely. That’s how I discovered asymmetric investing – the biggest breakthrough of my investment career.

The Power of Asymmetric Investing