On the Importance of Sticking to Your Investment Plan Photo: Pixabay In his first year he turned $15,000 into $193 million. The following year he took $3 million and made it into $177 million. You might be thinking that I am talking about one of the greatest investors of all time, but I’m not. The…
Roll the Dice
On Risk and the Cost of Inaction Photo: Pexels Fred Smith was at his wit’s end. He had already sunk most of his net worth into starting a package delivery company called Federal Express (later FedEx) and General Dynamics, the company that he had obtained funding from previously, had just denied his request for additional funds….
A Margin of Safety
The Most Important (And Difficult) Investment Rule to Follow Preikestolen, Norway (Photo: Pexels) On the surface, the life of Christina Santhouse does not seem particularly remarkable. She has a master’s degree in speech pathology. She owns her own home. She is married. But, there is something different about Christina — she only has half a brain. At the age…
The Abnormal Environment
On Unexpected Side Effects and How to Prepare for Them Nuclear Bomb, Goldsboro, NC (Photo: Wikimedia Commons) They were 10 hours into the mission when things started to go wrong. First, someone noticed that fuel was leaking out of the right wing of their B-52 bomber. In an effort to prevent disaster, the commanding officer, Major…
It’s All Relative
On Financial Relativity and Overcoming Your Biases Photo: Pexels Imagine you are sitting on an asteroid in deep space and you have a friend who has a spaceship that can travel at 99% the speed of light. Yes, this is physically impossible for a host of reasons, but bear with me for now. Out of boredom…
Cutting the Gordian Knot
Solving the Most Difficult Problem in Finance Photo: Wikimedia Commons It was considered the hardest problem in antiquity. Every man, woman, and child that had attempted to solve it before had failed. However, Alexander the Great was determined to succeed. Why? As the legend stated, the one who could untie the Gordian Knot would be the…
The Best Way to Lose $5 Billion Dollars
What NOT to Do to Stay Rich, Courtesy of House Vanderbilt The Breakers (Photo: Wikimedia Commons) It was January 4, 1877 and the world’s richest man had just died. Cornelius “The Commodore” Vanderbilt had amassed a fortune of over $100 million over the course of his lifetime as a railroad/transportation pioneer. The Commodore was of…
Success by Exhaustion
How to Use Brute Force to Improve Your Finances Dettifoss Waterfall, Iceland (Photo: Tim Bekaert) It was January 1969 when the Department of Justice filed antitrust charges against IBM for monopolizing the computer market. Little did they know, the case would drag on for 13 years, cost the Department of Justice $15 million, and result in 2,500…
Follow the Money
How One Simple Rule Can Beat Buy and Hold Investing Photo: TaxRebate.org.uk The problem with being good at sports betting is that most bookmakers learn who you are and refuse to take your bets. Why? Good sports bettors will cut into a bookmaker’s profit, especially when placing larger bets. However, this all changed in 1998…
The Patterns That Weren’t There
Why Signals Are Hard to Identify and What to Do About It Oil Spill in Skagway, Alaska (Photo: Wikimedia Commons) It was the beginning of 1959 and something was not quite right with John Nash. The famed mathematician, who would eventually go on to win the Nobel Prize in Economics for his work on game theory,…
