The guy in the article invested $50k of his own money 3 years ago. He also raised $1.5 million from family and friends. Even with 3 years of gains, XIV was down about 60% after the crash. So, he likely lost more than half of his initial investments, and 90% of the money he had raised from other people.
Then you are 60, bald, ugly and can’t get it up. But hey, being “prudent” over 30 years with those bank CDs makes you look like the smart one in the end…I guess?
Anyways, seems like these lads didn’t seem too keen on slow and steady winning anything:
It is easy to make all-in volatile bets when you have nothing to lose. For instance, if you have $100k in your bank account, who cares if you lose that money? You will make it back easily.
When it comes to most people in finance, there is a reasonable assurance of earning a comfortable net worth with modest risk. To put some kind of number to this, a normal “front office” finance person in New York, with any reasonable luck, should expect to have about $5 million in net worth some time in their 30s, and reasonably, close to $10 million if they survive until they are 40. I am talking about regular traders or investment bankers, not managers or division heads.
Perhaps this is not as much money as it was in the past. However, these are still not small amounts, and the numbers are high enough such that most people would be comfortable going down this path with reasonable predictability of financial returns. Some people will still make volatile bets, like those people in the article did. However, for most people in this situation, it is better to not risk a relatively bright financial future to chase speculative bets.
No one is saying to not take risk. However, you should have a reasonable assurance that you are taking risk in an efficient manner. Even the XIV trader in the original article could have made money by shorting VIX. He just did not understand risk management and did not allocate his money wisely. He was blinded by short term success and ignored the risks of his investments.
^And then there’s a guy in the L1 forum that doesn’t understand how calculators work.
Understood, then if he’s still on the outside looking into the palace of absolute gilded financial autonomy, it’s ok to hang with us lowlifes. That’s fair.
ohai a/s/l/net worth. thx!
but low key it quite possible. i have a buddy, same exact background as me, but is absolutely killing it. made 1m last year gross taxes as a vp at a major bank. majority of his business is residential mortgages. lol he just bought a 2m place in mb.
ohai is like that baller that walks into the closest bar to his job just to get a drink because he had a rough day bc his portfolio was down 1 mil, right before his driver picks him up. the bar ends up being a dive bar (AF) with all of us sipping on our happy hour bud lights.
since he is a nice guy so he ends up talking to a lot of the folks here even buying a round or two while subtly dropping hints about his net worth.
he ignores the BO guys offer to connect on LinkedIn while offering good advice to the guy working at the Sprint store aspiring to be a PM with a background degree from Devry.
his last suggestion of the night goes to a newly minted VP, who is in the top 1% of the bar (AF) making 200k/year, telling him that if he is not worth 5 mil by 35 he should rethink his career. The VP is there celebrating his 36th birthday, As his driver shows up, he nicely says goodbye and promises he will be back tomorrow.
he goes to the office the next day and tells his buddies what he witnessed the day before at the dive bar, and how much it sucks being poor. he actually showers as soon as he gets home to get the stench of the bar (AF) off his hugo boss suit.
of course he doesnt show up the next day, or that week but he will be there someday…the bar needs ohai, and ohai needs the bar.
Agree with most of the posters here. I love watching the interest compound on the ~$7M in my Ally account, especially since I don’t even need to spend any of it. Sometimes when I see the high returns like in the original article I want to invest, but I prefer to let you know how wealthy I am instead.
^ i can vouch for this
i mean i like to hear how people made their money. their background. how they invested, how they saved. what their game plan is to grow their net worth.
i actually read an interesting article on seeking alpha about a dude’s future game plan. all of you should read. hes in his 40’s and retired in portugal. makes 150k alone in divs.
https://seekingalpha.com/article/4178461-plan-earn-1000-000-tax-free-least-tax-deferred
also recently i spoke to an uber driver. who talked about his friend who was in mortgage business in 2007, the dude apparently made 300k that year prior the crash and had leased an expensive car, and bought an expensive only to see it crash and burn when everything crashed. i was amazed at the similarities between his friend and mine.
I actually had to venture over there to figure out what you were talking about.
Wow. Talk about dense. I recommend everybody look at it, simply for entertainment’s sake.
https://www.analystforum.com/forums/cfa-forums/cfa-general-discussion/91365783
something has gone very wrong if ohai is wearing hugo boss.
That was the only weak link to igor’s post. I’m still giving him a 9/10. That may be the most he’s ever written in a single comment.
this is great
this is great
Double post
Ohai, problem with IB you need to put 60-80h until early late 20s, early 30s. Glad i didnt go down that path
without links
what’s the after tax hourly rate of an nyc ibanker?
Hours and purposefully being treated like a freshman in a fraternity