The Perfect Recipe for Becoming a Financial Cautionary Tale — Follow Every One of These Steps
Want to guarantee you become the next financial disaster story? Do all of these ❌
The recipe:
➔ Concentrate your entire net worth in one stock, asset, or position — Enron employees had their income and their entire retirement in the same single company — when it failed they lost both simultaneously — concentration is the most personal form of financial catastrophe
➔ Use the maximum leverage available and never define your exit strategy before entering the position — Leeson never defined what loss would trigger his exit — LTCM never defined the leverage level that would force a reduction — leverage without a pre-defined exit always ends the same way
➔ Stop asking questions the moment the returns start looking consistently good — Madoff's investors stopped asking uncomfortable questions after the first few years of consistent returns — the consistency that should have been a red flag became the reason to stop questioning
➔ Buy complex financial products because an expert recommended them without reading the fee disclosure or understanding what you own — the CDOs that triggered the 2008 crisis were bought by institutions whose analysts could not explain what they owned
➔ Follow the crowd into the hottest asset of the moment because everyone else is doing it and the returns look extraordinary — the dotcom bubble, the 2008 housing bubble, and every mania in history had universal participation as its defining feature at the peak
Every step on this list appeared in every major financial cautionary tale ever recorded. Save this. 🔖
📖 Full Complete Financial System — link in bio.
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