What I Learned Losing a Million Dollars

By: Jim Paul, Brendan Moynihan, Jack Schwager (foreword)

Narrated by: Patrick Lawlor

Length: 7 hrs and 29 mins

Publisher's Summary

Tim Ferriss Book Club Selection

Jim Paul's meteoric rise took him from a small town in Northern Kentucky to governor of the Chicago Mercantile Exchange, yet he lost it all - his fortune, his reputation, and his job - in one fatal attack of excessive economic hubris. In this honest, frank analysis, Paul and Brendan Moynihan revisit the events that led to Paul's disastrous decision and examine the psychological factors behind bad financial practices in several economic sectors. This book - winner of a 2014 Axiom Business Book award gold medal - begins with the unbroken string of successes that helped Paul achieve a jet-setting lifestyle and land a key spot with the Chicago Mercantile Exchange. It then describes the circumstances leading up to Paul's $1.6 million loss and the essential lessons he learned from it - primarily that, although there are as many ways to make money in the markets as there are people participating in them, all losses come from the same few sources.

Investors lose money in the markets either because of errors in their analysis or because of psychological barriers preventing the application of analysis. While all analytical methods have some validity and make allowances for instances in which they do not work, psychological factors can keep an investor in a losing position, causing him to abandon one method for another in order to rationalize the decisions already made. Paul and Moynihan's cautionary tale includes strategies for avoiding loss tied to a simple framework for understanding, accepting, and dodging the dangers of investing, trading, and speculating.

Also included is a bonus hour-long interview between co-author Brendon Moynihan and noted investor, business advisor, and best-selling author Tim Ferriss.

About the Tim Ferriss Book Club

#1 New York Times best-selling author Tim Ferriss (The 4-Hour Workweek, The 4-Hour Body) is a big fan of audiobooks and their potential to alter and improve lives. So, in 2013, he started an audiobook club for his community of 1.5 million blog readers. He selected books that had a dramatic impact on his life and thinking, producing great new recordings that bring these influential gems into the limelight. For more listens from Tim Ferriss’ Book Club, click here.

©2013 Brendan Moynihan (P)2014 Tim Ferriss

Critic Reviews

"One of the rare noncharlatanic books in finance." (Nassim Nicholas Taleb, from Antifragile: Things That Gain from Disorder)

“The book points out very early that many successful investors have opposing styles and theories on how to make money, and that they can not all be right at the same time. The most important point to take from the book is how to avoid losing money...” (Steve Osbiston, Financial Times Advisor)

“A novel approach aimed at pushing you inside your head and outside the losing habits most folks adopt right after multiple successes. A must-have for traders blessed with a string of hot trades.” (Ken Fisher, Fisher Investments, FORBES)

Compendium of old-school (non-quant) trader lore

This book is actually a couple decades old. Anyone interested in this sort of thing ought to listen through at least one book like this. I like personally losing big as a centerpiece to the work: it wipes out that phony "I made a zillion dollars easy!" baloney. It seems to me that, with a basic arc of the story being, this writer was young and pretty clever and made a few moves and wound up with a lot of other people's money (and trust) in his hands, and proceeded to blow up, lose all the trading positions and get closed out. This story is told well (and more briefly) in a fave book of mine, Taleb's Fooled by Randomness. Here, there is a lot of color and detail of an earlier era, though of course the situations are not fundamentally different. A lot of terminology (including informal terminology) is described, plainly and well. And the author seemingly wanted to cram in any personal wisdom that might seem to sort of fit.
This book shows its age in some other ways. How about Steve Jobs presented as a guy who started clever, burned out, and wound up in some nowhere company making no profit? Oops, bad timing as the worst moment in his career was focused on, and the historical next chapter had not yet begun. But this is alright -- it reminds us how the supposedly smart declarations and prognostications of the writers of any time are bound to their own unavoidable limitations, and often seem quaint and bizarre later. That's one reason I read older books: to see what people got WRONG. So much for all of our fond assumptions, and that's the core message of this book.

Surprisingly Good

What made the experience of listening to What I Learned Losing a Million Dollars the most enjoyable?

This book was a great listen. The author reiterates his experience which is very valuable for those reading.

Was this a book you wanted to listen to all in one sitting?

Yes. The prinicples of losing a million dollars can be applied to many different areas in one's life surprisingly.

There are better uses of your time

Would you recommend this book to a friend? Why or why not?

No, The guy claims he spent years on the floor of the Chicago exchange but has no war stories from then, except lucking on to the CME executive board because he wore a nice suit. Instead he relives his frat day in school and his his undeserved promotion in the Army. By contrast In Pit Bull Marty Swartz has some great stories of his trading days. In all those years Jim Paul had none? On day one in the pits every trader learns Stops are in Emotions are out. But in all those years he did not learn that, in fact he says he learned nothing in the pits he just rode the coat tails of better traders. He then lost a million dollars on a very stupid trade. Leveraged to the teeth and did not watch it. Then the book goes on to quote a bunch of business books (not trading books) and he rambles on about Coke buying Colombian pictures. He then says in books he could not find details on a good time/way to put on a trade, so he knows nothing about entering a trade, but he wants to tell you how to exit. His advice, have a plan that suits your style -- end of story what the heck does that mean? Well it turns out If you loose money you are an ego maniac with a bad plan and if you make money you are smart and have a plan?The book was written years ago so it is funny that he picks as an example Steve Jobs who he says is a looser with a big ego who failed at Next computer and Bear Sterns as great traders with the plan. Well we all know Jobs made a comeback with the iPhone and Bear Sterns blew up in 2008.

Has What I Learned Losing a Million Dollars turned you off from other books in this genre?

We are getting there

Was What I Learned Losing a Million Dollars worth the listening time?

No, not even close

Any additional comments?

There is no actionable advice here, just feel bad admonishment. The author has no real advice beyond, get a plan. There is no back-testing, no proof, he just (poorly) regurgitates other books many off topic. Chuck this book and read David Aronson - Evidenced Based Technical Analysis, John Murphy's Technical Analysis of the Financial Markets or a little lighter, Elder's Come Into My Trading Room. Also follow top blogs like "cme4pif Weekend Market Comment". All of these detail real signals to enter and exit the market and of course risk control.

I “learned” this book teaches the art of wasting time

The book can be summarized as follows, “when making an investment be sure that your order has an attached stop otherwise you’ll make the same mistake as me.”

Let me save you time - He learned nothing

Pure garbage.
Made a 1 or 2 hour introduction, literally beginning from 9 years old, and then how/ when he worked and what happened when he was 12,14,15,18,20,22 and on and on, sprinkling on top how popular he was with "the ladies", and how smart/wise he was by doing this instead of that.
I have not bought this book to learn about your whole life story, and to hear how much you like yourself. 5-10 minute introduction is ok, but when literally half of the book is about how good/smart/popular/ you are what's the point?
No wonder Tom Ferris endorsed this book, as it is as practical as all the work of Ferris.

Decent book worth the read

This book is an entertaining story, it appears it is beging to show the signs of time, it speaks of a the 60's - 90's and at the pace of today's world that feels like lifetimes ago. Well narrated. and a good lesson. However much of the book is just a man confessing he was a "right place right time" guy who lost it all because he never should have been there.

View From The Other Side

I picked up this book when amazon offerered a two for one sale. I didn't think much of it as I chose to read the other book in my selection first. I chose this book because I thought it would be insightful to here a view from the otherside. So many books in my collection talk about the exuberance in the market and shed a positive light on it. What I got in this book was what I wanted, a much more darker view.

So many books, talk about how to make money. They talk about the risk of losing money, then leave it on the surface, never indulging in it This book indulges in the losses. In fact, it is all about the downside, which balances out all the exuberance of making money you probably had before reading this book.

What you get is an authentic personal account of someone who been the the proverbial trenches and back. You can ride that sucker all the way through. If an enjoyable story about the personal losses of other people is what you want, you should read this book. If you want a book that doesn't reconfirm your disgust for the arragant, pompus, jackasses on wallstreet, maybe don't read this book. Even though the author may be all those things, he is no idiot. He admits to them, and doesn't try to sugarcoat it. He is honest, and blatent about his mistakes, which is why this book is insightful.

Wish I had seen this book 12 years ago

Any additional comments?

I only wish that I had read or listened to this book back before 2001. My family, friends, and I lost almost half a million dollars on a stock that we all got hyped up and excited about. Road it all the way up and then all the way down to nothing. Makes me sick to this day. Anyone who buys stocks or shorts the market needs to listen to this book. It could save you a fortune.

A great lesson on what not to do and humility.

This is not some "how to get rich quick" book. From the title, you might get the idea that it is some sort of "Chicken Soup for the day trader" or a manual on how to live your life without working. It is not. Instead this book is an honest deep dive into the behaviors of one investor who blew up in the market and stepped back, analyzed his own behavior, gained clarity thru humility, and learned some real wisdom. A great read for anyone however if you aren't a trader it'll be up to you to take the highly concepts in this book and apply them to your own life. The main takeaways from this book are very simple and the illustration thru the narrative will leave the reader with a clear idea of what it is the author is trying to communicate.

An essential book !

few books i have are worth having. This belongs on the shelf with Reminiscence of a stock operator. Anyone that is serious about there trading should kisten carefully to what is being said

Another clueless trader who got lucky then lost it all and never learned anything

This is a book about a clueless trader that got lucky in the market (and in life), got an ego-boost and thought that he is invincible and then lost all his money because of poor decision making.

The lesson learned by the author can be summarized as: don’t let your ego get in the way in what you do (e.g. trading), stay humble and don’t become complacent. Common sense stuff that does not need a book of this length to explain.

My advice to the listeners: do not waste your time.

I really tried to push through the bs and look for nuggets of wisdom, but I could not because for me there were none.

Interesting but could be summarised in a page

The book jumps around and is disorganised. The style annoying, the performance grating.

I like the premise - focus on not losing money. That fits nicely with Buffet’s maxim. In addition, I like the idea of going in with an exit plan.

I also like his point that some people are lucky fools, and just don’t know it. Successful by a random walk.

However, there seems to be an inherent contradiction in his solution. He points out that the stock market is continuous, so opportunities for entering/exiting are never ending, but advocates countering that by planning point max win/losses before a trade, and not adjusting afterwards.

I see the logic there. Don’t make it up as you go along based on emotion. However, the contradiction is that in a continuous market, things change, so shouldn’t the plan change? Bayesian logic?

Say you invest in an airline stock on the assumption that a short lived union dispute will blow over e.g. Ryanair. But then the Boeing Max disaster happens and the airline cannot get delivery of planes. So if the union dispute is resolved, but rather than going up, the airline stock declines because it’s still waiting for its new fleet to be delivered / compensation from Boeing, would you still get out based on your initial acceptable loss imagined occurring during the trade dispute? Or hold on, assuming the stock will recover on delivery of the planes? He seems to suggest getting out because changing plans mid-way could like ego take over. I see the logic there, there is no attachement or emotion. However, at the same time, this seems like mechanical algorithmic day-trading rather than value investor mentality. You would put yourself at a disadvantage to other traders who can process new info. I couldn’t see Buffet selling based on a set decline without considering the new information, or the value of the underlying asset.

This strategy might also mechanically (rather than emotionally) get you out of the stock market on days like Black Friday, when possibly riding the storm would make more sense. In particular, in index funds.

Overall, he makes some good points. But I’m not sure if he addressed the core of his own loss - he bet everything he owned and more on a single short/options position... Limited upside, infinite downside. Deciding how much he could lose on that trade could have prevented that catastrophe. But so would other things like diversification, circle of competence, only investing in what you really understand etc.

Overall, interesting, but too long winded.

Traders will love this book

I'm a trader, buy & (mostly) sell indices so naturally I was keen to hear this story given my early losses. I almost gave up on the book as the beginning is almost exclusively early life story. I felt it was too detailed but once he talks about his experiences you'll nod your head & smile ruefully knowing you've made the same e cruising errors.

Definitely worth your time.

Engaging and worthwhile

What did you like most about What I Learned Losing a Million Dollars?

It is a different take on the usual "How to make a million dollars doing x, y, z".

What was one of the most memorable moments of What I Learned Losing a Million Dollars?

Actually the piece at the end where the guy who penned the book tells about his experience of the interviews etc

Which character – as performed by Patrick Lawlor – was your favourite?

He was a great narrator throughout the book. I would look for his name in future audio books.

Was there a moment in the book that particularly moved you?

Hard to say without giving too much of the plot away. There are many high and low points through the book.

Any additional comments?

Highly recommended, in my top ten audio books for the past few years.

Not a bad at all

This book is more specific for traders than anyone else. its my only criticism of it.

Terrible

Don’t waste you time with this one. Too many fillers, contains lots of irrelevant information.

Outstanding

As a market trader,undoubtedly one of the fascinating, outstanding book I have ever read.Highly reccomend for anyone wanting to dip into financial markets.

great book

Really good book. outlines many problems I have personally had in the market wish I read/listened to this 5 years ago. worth listening/reading if trader, investor or business person

Tedious, Fatuous, Pretentious

Don't waster your money. The guys spends a third of the book telling you about his early life, the next half waffling about trading and then the final part quoting people who have actually done the job and been successful. At some point the one sole message he has to say is said - "If it feels right stay in, if it doesn't get out..."

Oh, how profound. Trite.

Avoid!

Joint best read of 2109!

Timeless principles of failure! Honestly, this is a genius book to publish and even more genius to read and apply.

If you want to know what the other joint best book of the last year was: The Black Swan.

Put both of these together and you should do OK with your investments.