There’s a really good book called, that I enjoy anyway, called What I Learned Losing a Million Dollars, which looks at sort of the psychological dynamics of making and losing money and what happens when you personalize this or attribute to talents what should not be attributed to talent, or lack thereof, but what I realized, for instance, when we were talking earlier how I realized I was not well suited for the public markets, personally, if I’m the one doing the managing of that, is I realized exactly that, but a small loss, the magnitude of that negative emotion was exponentially larger than even if I made five times that amount positively.

via Ep 63: Hedge Funds, Investing, and Optimizing Lifestyle (Mark Hart, Raoul Pal)

The newest book in The Tim Ferriss Book Club (all five books here) is a fast read entitled What I Learned Losing a Million Dollars. It packs a wallop.

This book came into my life through N.N. Taleb, who has made several fortunes by exploiting the hubris of Wall Street. Given how vociferously he attacks most books on investing, it caught my attention that he openly praises this little book.

My first dinner with Nassim was in September of 2008. It was memorable for many reasons. We were introduced by the incredible Seth Roberts (may he rest in peace), and we sat down just as Lehman Brothers was collapsing, which Taleb had — in simple terms — brilliantly shorted. We proceeded to drinking nearly all of the Prosecco in the restaurant, while talking about life, business, and investing. Lehman Brothers would end up the largest bankruptcy filing in US history, involving $600+ billion in assets…

The next day, I had a massive hangover and a hunger to study Nassim. Step one was simple: reading more of what he read.

I grabbed a copy of What I Learned Losing a Million Dollars, and I’ve since read it many, many times. For less than $20, this tool has helped me avoid multiple catastrophes, and I can directly credit its influence to roughly 1/2 of my net worth (!). The ROI has been incredible.

The book — winner of a 2014 Axiom Business Book award gold medal — begins with the unbroken string of successes that helped Jim Paul achieve a jet-setting lifestyle and land a key spot with the Chicago Mercantile Exchange. It then describes the circumstances leading up to 7-figure losses, and the essential lessons he learned from it. The theme that emerges: there are 1,000,000+ ways to make money in the markets (and many of the “experts” contradict one another), but all losses appear to stem from the same few causes.  So why not study these causes to help improve your odds of making and keeping money?

Even if you don’t view yourself as an “investor,” this book can help you make better decisions in life. Also, the stories, similar in flavor to Liar’s Poker, are hilarious and range from high-stakes baccarat to Arabian horse fiascos.  For entertainment value alone, this book is worth the time.

I hope you enjoy — and benefit from — the lessons and laughs as much as I have.