What I Learned Losing a Million Dollars Summary and Review

by Jim Paul, Brendan Moynihan

Has What I Learned Losing a Million Dollars by Jim Paul, Brendan Moynihan been sitting on your reading list? Pick up the key ideas in the book with this quick summary.

Why do bubbles burst and markets crash? It’s a question we’ve all been asking since the 2008 financial crash. Few people are better placed to answer it than Jim Paul, a city trader who went from hero to zero after losing everything by doubling down on a poor investment decision.

It’s often said that pride comes before a fall. But the most important lessons are those we learn when we pick ourselves back up. Paul began his journey back to the top by analyzing his previous behavior and asking himself what psychological factors had shaped his decision-making.

This book summary examine the lessons Paul learned along the way.

You’ll learn why traders make bad choices, the real key to success in turbulent markets and how to make rational – not emotional – investment decisions.

In this summary of What I Learned Losing a Million Dollars by Jim Paul, Brendan Moynihan, you’ll also find out

• why understanding loss – not making money – is key to success;
• how following the crowd can lead us astray; and
• the difference between financial gambling and sound investment strategies.

What I Learned Losing a Million Dollars Key Idea #1: Jim Paul made a fortune but lost everything after failing to face up to mounting losses.

Jim Paul always wanted one thing in life – to make money, as much of it as he could. Decades later, he was on top of the world and had just made $248,000 in a single day. He’d reached the top young and was brimming with self-confidence.

Paul landed a job in futures trading and was soon known to everyone on the Chicago Mercantile Exchange. An imposing six foot three, he had a big voice and wasn’t afraid to bark out orders.

That’s when things started to go wrong. His unshakable self-belief would prove fatal.

Paul was interested in the soybean oil market. Supplies were running low, but demand was buoyant. Prices would rise. Anticipating a spike in the market, Paul bought up positions – a commitment to buy at a later date.

Sure that he’d read the market correctly, he exceeded the limits on positions set by the Chicago Board of Trade. Paul’s conviction was so great that he managed to persuade his customers, friends and even his office assistant to get on board with his plan. Why wouldn’t they want to be part of it? They were all going to be rich!

Then the market started to turn. Paul didn’t budge.

Things had been looking good for months. Now there was political instability and the threat of grain sanctions. Bad weather damaged bean crops.

Soybean prices began to dip, and Paul’s losses started to mount. For months, he lost $20,000 every day.

Both his clients and other traders had already jumped ship, but Paul remained convinced. He knew the market would turn and they’d regret their decision. The writing was on the wall, but Paul was so confident of his skill as a trader that he couldn’t see what was happening. He was about to lose everything.

The end finally came when his manager fired him and seized his assets. By that point, he’d already lost $800,000, half of it borrowed from friends.

So why did Paul stick to his decision when all the evidence was pointing the other way?