What the Dickens do you have to lose?

It was the best of times…It was the worst of times…

The late 1990’s.

The dot com boom was in full swing.

It was the greatest bull market in history.

You remember it well…It changed your life.

You bought AOL, or maybe AOT (Any Old Thing) instead.
And it went up. Your net worth blossomed by tens of thousands.
Perhaps Hundreds of thousands.

You became pretty good at online stock trading.

You either sold at the right time, or you joined the buy and hold crowd. You listened to your broker, to your friend, to the talking heads. You bought into the idea that buy and hold was the way to wealth.

And AOL and AOT would never stop going up. After all, there are billions of people on the planet. Three hundred million in the US alone. Each paying a monthly fee for a service that changed the world. The internet was here to stay, and AOL was the portal.

I still remember sitting at my computer in 1993, having heard so much about Al
Gore’s new invention.

I was involved in my community and we had a challenge
coming our way. We didn’t know how to handle it.

I managed to connect, over an internet bulletin board, with a woman in Michigan whose community had recently met the same challenge. She told me how they did it.
I knew then that the internet would change the world.

But what an awful interface...

And then came AOL. It was obvious to me that this company was the future.

Unfortunately I did not know anything about buying stocks. It wasn’t even a
consideration. It was not something I had ever done, nor considered doing.

I was an entrepreneur. I put all my eggs in one basket, and I watched that basket.

As the 90’s progressed, so did I. Entrepreneurial ventures gave way to charitable endeavors. Volunteering gave way to becoming a professional fundraiser.

I was hired to grow a $28 million endowment. And I did. I raised new funds. We invested those we had. We gave away more than $20 million in grants. And still our endowment grew to over $43 million.

We had donors complaining that our investments only earned 24%! Why were they lagging the market!

I learned about stocks and started my own portfolio. I never did buy AOL, though I have friends who are wealthy from doing just that.

I had a wealthy donor. He made his real money investing in early stage or troubled companies. He was one of the first 200 investors in Genentech, among others.

He gave me a tip. I bought. It went up. My Roth IRA went from $1900 to $12,000. Nice tip. I held. I don’t need to tell you the rest of that story. I held as the dot com boom became the bust. I finally closed the Roth two years ago. It was worth the early withdrawal penalty and taxes on the $57. Now I don't have to look at the statements.

And then a friend told me to read Reminiscences of a Stock Operator.

I learned that there is “nothing new in Wall Street.” That I needed to be careful of “the expensive enemies within,” and the “four deadly enemies: ignorance, greed, fear and hope.”

I lost more than my shirt in the greatest bull market of all time. The dot com bust not only took my money, but my family with it.

But the experience and Reminiscences of a Stock Operator taught me many a lesson.

I read the whole book and re-read it regularly, like all serious traders and professionals do. It reminds me of The Foolishness of Trading on Tips, and The Value of Experience and Memory.

In 1922, Jesse Livingston, the fictional Jesse Livermore, noted that money is not the most important thing you can lose in the market. To a trader, the most important thing he can lose is opportunity. The opportunity to have profited.

What do you need to read?

what lessons do you need to learn?

What work do you need to do to be ready so you don’t lose the opportunity?

Or even worse.

Your family.

Joshua

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Joshua C. Karlin is publisher of Reminiscences of A Stock Operator: Inside Secrets of the Greatest Stock Trader of All Time. Though published in 1922 as fiction, the NY Times reviewed it at the time as non-fiction. This classic text is still studied, by professional traders and those trading stocks online.
The HogsGetFat edition, which makes the timeless wisdom of this classic easier to read, re-read, review, and internalize, will be released on March 7, 2006 at www.HogsGetFat.com