Tim Ferriss Nearly Lost All His Money During These Uncertain Times

Sometimes knowing lots about money can be a disadvantage. You can start to hypothesize and overthink the entire world of finance and do your head in, in the process. That’s what Tim describes it felt like recently.

You can bet the market is going to go down because of something like a pandemic by shorting stocks (betting stocks will go down). During uncertain times, the situation can change rapidly.

The markets can be extremely volatile and that can cause unexpected losses. Unless you are a professional trader and do it for a living, it’s often best not to play the game and keep your face and finances intact.

There are opportunities everywhere. There are endless chances to make money. Tim recommends going after the ones that exploit your core competencies and are the most appealing to you.

He argues you can miss plenty of opportunities and only take advantage of a small few and net-net still do very well. “I try to keep that in mind and zoom out. Not look at this as an anomaly of a few weeks,” says Tim.

Zooming out is helpful. Your financial future is not built in a few months. That is short-term thinking that will make you go broke. You invest for the long-term and you earn money over the same time period. It’s okay to make a few mistakes as long as you don’t bet all your money on one thing and diversify your portfolio.

This period in history is only a blip on a much bigger graph — remember that.

You can act like a sucker when you think you’re smarter at investing than Warren Buffett. There are other ways to make money outside of investing.

If you are in a hurry, then that is a sign of desperation. Does desperation sound like a good state of mind to invest your life savings? Probably not.

If I feel rushed to make a decision…the likelihood of me making a bad decision is very high. And the cost of undoing that bad decision can be very high.

It is “we” that hit the “execute trade” button to financial ruin. Slow down.

There is a cost to everything you do. Investing your money and worrying about it all the time has a psychological cost. It’s all fun and games until you play and it’s your own money. Then, stress takes away some of your brainpower that you can use to be creative.

That is a huge cost that can stop you from profiting from the hard-earned skills you love deploying. It’s worth thinking about this trade-off before becoming obsessed with the markets and your ability to invest in them.

•  It’s okay to be afraid.
• Make a decision and move on.
• Nothing is too big to fail.
• Don’t be afraid of doing nothing.
• Remember why you first invested.