By Felipe Miranda – Word of the Strategist (Brazil) –
“You must love to lose money, and hate to make money. You must love to lose money, and hate to make money.”
This is a report dedicated to those of you that are up for losing a bit of money. Keep calm. Don’t lose your cool.
Let me explain.
This quotation is from the first lines of the book “The Dao of Capitalism – Austrian Investing in a Distorted World”, by Mark Spitznagel, a hedge fund manager, billionaire, and co-founder of Universa Investments with Nassem Taleb. Any similarity between his ideas and those previously broached here is no coincidence.
“You must love to lose money, and hate to make money.”
Those were the words repeated ad nauseam by Mark’s mentor, Everett Klipp, a grain trader in Chicago. It’s what Spitznagel called the Klipp paradox. At first glance, it appears to challenge all financial logic. We are human beings – we love to make money, hate to lose money. Which means there has to be a good reason for taking any kind of loss.
But we are not talking about arbitrary losses. We are talking about the kind of loss you risk when you know there might be a chance for big future gains. A little money up front can mean big money in the future.