In his recent interview on the Meb Faber Podcast, Chris Bloomstran discusses one of his worst investing mistakes and why you have to do some harm to yourself, hopefully when you’re young, in order to become a better investor. Here’s an excerpt from the interview:
Chris: Well, in that section on Ross that I put in the letter, I highlighted some of my doozies. My worst investments. I mean, there’s no doubt that the very first stock I bought…and I was a senior in college and I had a little bit of scholarship money leftover from no longer playing football, put all my money in a Norwegian very large crude carrier company that I read about and I heard on the street, and the business was bankrupt within six months of my acquisition.
Meb: Wow, that is some velocity. How did they manage that?
Chris: So, in arrears, once I actually read the financial statements and I had to write over to Norway to get them, there are these four VLCCs, these crude carriers, they were old equipment, it was a self-liquidating structure, you’re going to get a bunch of cash flow as they ran the vessels. I like to blame Saddam Hussein because who wouldn’t?
But when Iraq rolled into Kuwait, they had two of their carriers in port there, they were commandeered for a time by the Iraqis, by Saddam’s army, but they eventually got em back and the thing was absolutely going to go to zero anyway.
For that, it was my single worst investment because I had like $7,000, all the money I had saved from my high school job, slinging tacos, and delivering office furniture in college in the summer one year, and that little bit of scholarship money.
That was all the money I had and I blew up all $7,000 and then I had zero. And I was pretty despondent, as you can imagine, and either I needed to figure it out if I wanted to be an investor because I’d fallen in love with the stock market but it’s easy to get jaded when you lose all your money. So, it was either going to go figure out something else, maybe dance ballet, or figure out how to invest. And I chose the latter, fortunately, but those are definitely impactful.
Meb: It’s funny because you and I can sit here and joke, having been through it, being experienced and older and having the scars. But like looking back and saying, “Look, that was in so many ways a blessing, how great of a lesson do you have that early in the career?” It didn’t feel that way at the time, having to eat ramen and losing all your money, like, that sucks. But in retrospect, what an awesome thing to have happened when you were young and could afford it in the sense that you had your whole life in front of you, as opposed to leveraging it all and losing it all later in life.
Chris: Yeah, probably better to do those things vicariously. I don’t think you can do them vicariously, you have to do some harm to yourself and hopefully at a young age to where you take the time and have the wisdom at least to learn a little bit from the mistakes that you make. The mistake you make is repeating the same mistakes and that is Einstein’s definition of insanity.
You can watch the entire discussion here:
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