I was sixteen when I started on my journey towards inordinate wealth (and a whole lotta suffering).
My mom had given me access to a few thousand dollars that had been gifted to be me for my Bar Mitzvah — a Bar Mitzvah is a big party that Jewish kids have to celebrate their becoming a man (or woman) at the age of 13.
But instead of giving me that money in cash or in a bank account, it was an an eTrade account. Real money. And lots of it, for a kid that age.
That started my journey in learning about wealth, investing, personal finances, and purpose.
From that day on, I’ve invested money — big and small — into stocks, people, personal projects, and anything else you can think of (aside from real estate), all in an effort to find and identify purpose.
Below, I’ve mapped out just a few of those lessons.
Lesson #1 — Invest in things you understand.
After my mom had given me access to that account, the first thing I had to ask myself was, “Now what?”
There was no investment course — no guidance on good or bad investments, nothing.
It was essentially just, “Good luck! Don’t mess this up.”
Well, I could either…
A. Invest my money into ‘Blue Chip’ stocks, a phrase I hardly understood at the time, but indicated, “Boring” stocks, or…
B. Invest it into penny-stocks with the promise of excitement.
To me, Option B. sounded great because I liked adventure.
(A penny-stock is basically a junk stock that’s overinflated by a bunch of hype-people. Rarely do these ever work out unless you’re the one hyping it up.)
Naturally, I barely understood the economic implications of any of this — I simply read a few articles online about people hyping up stocks that they were probably trying to pump and dump.
(In essence, they would over-inflate the value of a stock that they were invested in, sell it before anyone else noticed, and then leave the rest of us investors with the crappy stock to buy.)
So I invested a few hundred dollars into a stock that was, well, being pumped and when that promptly dropped in half over the next few days, I just remember thinking to myself, “STUPID! SO, SO STUPID!”
Like, “What will my mom think?!”
That’s about the time that I started to hide financial stuff, too — good or bad, I didn’t really talk about it anymore, because I feared what the implications might be, either way.
Good — “You gotta pay taxes!”
Bad — “What the hell are you doing?!”
Every time I’ve done listened to this advice — investing in things I understood — I’d at least felt good.
Whether it was the business model of a company I was investing in; the product I was purchasing.
Every time I’ve not done this — followed hype over substance — well, let’s just say it never went well.
Crypto. Meme stocks. Courses. Coaching.
You name it.
The point is, we often get caught-up in hype which can cloud our judgement.
If we don’t understand something that we’re investing in — this happened with me and Real Estate Investment Trusts a while back, which are a fancy way of saying completely illiquid real estate investments — it often goes south.
Make sure you understand the thing that you’re investing in, and if you don’t, try to understand it.
Lesson #2 — Develop instincts that you can trust.
The nebulous thing about money is that even the smartest minds in finance and wealth-building — and I’m talking Warren Buffet — can often get caught up in the hype around failing markets, epidemics, and other world-events that can throw everything into a frenzy.
At the beginning of Covid, I saw the stock market fall of a cliff for a bit, and thought to myself, “Hmm — I wonder if I should sell this Tesla stock.”
I did.
But I also knew that, at some point, this is going to come back.
That instinct has always driven my willingness to continue to hold it — because, inevitably, when you’re investing in something, something bad will happen at some point.
You’ll start to feel this internal twisting and pulling — and it’ll tell you, “actually, this is a bad idea! Get out!”
What’s worked for me — and is something that guides many great investors — is having a hypothesis on the market that you ultimately stick to.
If it’s going well? It’s growing; we’re learning; we’re seeing progress — good!
If it’s not? Bad! Cancel it! Give up! SELL! SELL! SELL!
But most things take time to develop and grow — we’re talking years.
Lesson #3 — The more time you have, the more successful you’ll be.
You should never need the money you’re investing into something.
If you do, you’re screwed in one of two ways — either your emotions will rule you, or you’ll simply get out before whatever it is you’re investing in has a chance to be successful.
Back in 2012, in fact earlier — I’d heard of this car company called Tesla.
They were investing heavily into electric vehicles, and were making electric cars look cool before anyone else was.
I remember I’d asked my Grandpa at the time for a loan of $10,000 to invest in the company — this was before they’d gone public.
I felt like it had potential.
(And I was right — that $10,000 investment, even at their initial public offering price would’ve netted over $1.5 million.)
He said, nah!
And so it wasn’t until much, much later — 2013 or 2014 — when I took some of the investments that I’d had from my Roth IRA, Bar Mitzvah money, and other savings and started to apply them to Tesla.
This was around when the stock was worth about $200/share. So, still obscenely high, but relative to where I thought it might go — I believe it could be a $1 trillion company — still pretty low.
For essentially the entire time that I owned it up until around 2020, it floundered at around that price — sometimes lower, often a bit higher, but never really that much of a gain.
Every time I looked at it, I’d think, “Should I sell this?”
But I never did.
Fortunately, I didn’t need the money.
Then Covid happened, the world changed, and the stock blew up.
I held it for a few more years, before eventually dumping all of it and essentially using that money to fund my film career — something that, at this very moment, I often regret because I think to myself, “Well, I could’ve had that money!”
Still, it’s hard and it’s painful on a day-to-day basis when the things that you’re investing in don’t seem to be going where you want them to go.
Lesson #4 — You will be wrong most of the time.
My first winning stock investment was ZAGG.
I didn’t really understand the company — Lesson #1 ignored — but I knew they made screen protectors for phones, had a strong brand and, for whatever reason, were able to remain relatively profitable.
So I invested in that company — maybe $1,000 at the time — and made, maybe, $400-600?
Next it was GE. A Blue-chip stock. Boring.
That didn’t really go anywhere.
Then Ford, at some point.
Again, not really anywhere.
Then a variety of different index funds — that’s a fund that basically holds a bunch of different companies, i.e. The S&P 500 — and goes from there.
And then, eventually, stocks like Apple — Tesla, a bunch of other ones.
The point is, I was wrong most of the time.
I mean, I hadn’t lost tons of money but I hadn’t really made much, either.
Even while I owned Tesla, I was wrong most of the time.
When it’s floundering? Wrong. Wrong. Wrong.
I think 80-90% of my choices and the times that I’d invested in stuff, I was wrong.
And it’s exceptionally painful during those time-periods, because you’re just thinking to myself, “This is so stupid! I don’t know what I’m doing, and I’m basically just playing with fire.”
This is true of any new endeavor.
And I’ve found that one of the keys to navigating that is to simply say to yourself, “This is OK.”
We’re trained — particularly in American culture — that we want to be right, most of the time.
You go to school, you take a test, and anything under 80% is bad.
Those bad grades cascade to bad college programs.
And then those bad college programs cascade to bad opportunities in the workforce.
Bad opportunities = a difficult, painful life.
This doesn’t hold true in investing — most of the time, in investing, you will be wrong.
About 75% of venture-capital backed companies don’t return their investor capital.
Do you think they want to be wrong?!
If they could get that number down to 60%, they’d probably increase their portfolios significantly.
But no!
They’re wrong most of the time because it’s simply unavoidable.
And for most people, that feels bad — because we’ve been taught to be right most of the time.
But the truth of investing is that in the few instances in which you are right, you will be very, very right.
That one correct-o will outweigh the rest of those losses.
And so, I have gotten way too OK with being proven wrong — I know that, most of the time, I will be.
But in the few instances in which I’m proven right?
That will make up for everything.
Lesson #5 — Learn your pain threshold.
I always thought that my pain threshold was something along the lines of exorbitant.
That was until my portfolio dropped around 20-30% at the beginning of Covid, and fire-alarms started ringing.
Losing money — at least on paper — brings with it this strange, existential dread and fear and pain that few other experiences come close to.
Which is supported by plenty of research — in the journal of Human Brain Mapping, researchers explored the relationship between loss of money and pain and found that it wasn’t too dissimilar from what humans feel when they’ve felt rejected socially.
We assume that in any goal-pursuit, our reaction to adversity will be rational, but it’s often anything but.
This is true of markets as a whole— we overreact because we are flawed and imperfect.
And so, in order for us to really understand how to build and continue to grow wealth, we must first understand our own pain threshold and how we respond to that pain.
It’s one thing to put your hand over a hot stove and think to yourself, “this hurts.”
And then rip it away.
It’s another thing to do so and then have someone tell you, “Just hold it there for a moment longer. It’ll turn off.”
The first response is completely rational — the second one, not so much.
In my experience, investing is kinda like that — our bodies are conditioned to escape and run away from the excruciating pain that we feel, and sometimes in order to invest successfully and continue to grow, you need to hold your hand over the stove just a bit longer.
Some final thoughts.
I remember, when I was living in Istanbul at the beginning of 2021, calculating my monthly expenses and rent, looking at the big green graph that I’d mapped out on a spreadsheet, and thinking to myself, “Wow! If I dumped all of my assets today, I could basically live out the rest of my life here without working another day in my life.”
Life in Turkey was cheap, and I had plenty of money on paper — between all of the different stocks and assets I owned, I had essentially become a millionaire.
But I was deeply unfulfilled — I wanted to make movies, and I often squandered my days playing video games and feeling aimless.
Now?
I’m living at home.
I recently had to ask for a loan in order to pay for an overdue tax bill.
And all of those projects that I’d invested hundreds of thousands of my own money into aren’t yet in a place where I can easily market and sell them.
They’re still essentially write-offs.
It’s a stark contrast to life in Turkey.
And yet, I don’t really regret the choices I’ve made.
I’ve made significant leaps towards my dream projects.
And that would’ve been impossible had I not made those investments.
But it’s painful — having money is painful, and not having it is painful, too.
In the next article, I plan on going into depth about how I’d squandered (read: invested) money into my personal projects, and the lessons I’ve learned along the way.