I USED TO BE RICH
You know, I used to be rich. It was all consuming for me. The power and prestige that went along with having a large bank account, a top of the line vehicle, the best home decor, parties, top shelf type stuff.
I had investors banging down my door to invest money. Soon after seeing their account value grow, I would get "thank you" calls or gifts. They would constantly call and write, asking for various financial ideas. I treated them all very well. Never skipped a message, never ignored them, would always take time for them.
This was very cool for a kid in his mid-20's. A college dropout that started trading instead of going to school. I was advising lawyers, doctors, real estate investors that were twice my age. They would refer their friends to me...individuals that were richer than them. Some of them I never even talked to once. I would get a request for an offering memorandum, and a month later I would get the documents back and a wire for $500,000.
I made sure my overhead always kept up with my newfound wealth. I started buying paintings, jewelry, expensive dogs flown in from across the country. I would have done real estate, but my spidey senses told me real estate was to stay away from in 2004, when I was in accumulation mode. From 2004-2006, my decision to stay away from real estate would be the savviest move I make.
The bombs starting dropping one after another shortly after the first quarter of 2004. For the first time in my career -- that was going on 10 years at that point -- I was getting bombarded. The bombardment came in the form of not being able to clearly interpret the markets. And even worse than that, forgetting about some of the fundamental rules that had gotten me to where I was in the first place.
One mistake led to another until things just began snowballing out of control in 2005. My investors were beginning to lose confidence. I was getting redemption notices left and right.
I remember so clearly, there was an investor from the East Coast who put her money into my fund precisely at the top, in the first quarter of 2004. The manner in which she tore into me on an almost weekly basis during what seemed like the decade long year of 2005 was epic in terms of sheer ferocity. She lost a good deal of money and she let me know how much I sucked with a great deal of clarity.
It became a self-reinforcing cycle of psychological anxiety, depression and fear. I became a mouth-breather, a heathen of sorts. I couldn't break the cycle of incorrect decision, followed by incorrect analysis, followed by incorrect trades. The hole just got deeper and deeper.
During Christmas of 2005, I went to Las Vegas with some relatives that had come into town from Europe, along with my daughter and parents. It was on the way back from Las Vegas that I looked at my mother, after checking quotes on my cell phone and I knew that the final kick to my back was being delivered. Right below me was the awaiting coffin...6 feet deep. She knew what was going on, and she knew what my eyes said as I turned my head away from the screen and looked at her.
A week later, I sent out the letter to my investors announcing that my fund was closing its doors. I tapped out. Returned funds to investors and took a 2 year break, completely and totally unaware of the markets.
So, yeah, I've been rich. I've also eaten dirt of numerous flavors and varieties. I've been on both sides of the fence. I've seen how quickly money can vanish. Being in a position of power is rarely anything more than an ego-based dream or illusion. Life does a wonderful job of reminding us of that everywhere we turn.
I've turned things around, obviously. I manage money for a select few individuals. Have gone back to experiencing results similar to my glory days, minus the large capital and large investor base. The ability will always be there, it was harnessing the psychological side through refinement and the heavy pounding that I took between 2004-2006 that was the necessary next step.
In 2004, I ran the #1 macro hedge fund in the country..Peter Thiel was #2. Since that time he invested in Facebook, become a billionaire, and continues to run his hedge fund. I, on the other hand, have lost my hedge fund, invested in a tax attorney and discovered the magic of overdraft protection.
Quite a run Peter...quite a run.
