What We Can Learn From Gambler’s $127 Million Losing Streak
lrargerich@Flcikr
Terrance Watanabe had it all.
He owned THE most successful import-export business in America. He had the big house and the nice cars.
He sold his business in 2000 for an enormous sum of money–experts expect it was in the hundreds of millions–and possibly the billions of–dollars.
Bucking the common stereotype of the rich CEO, Terrance never became a snob. He started a philanthropy and was known as a big tipper.
Yep. Terrance had it all. Including a huge gambling problem. The Wall Street Journal reports he lost nearly $127 million in a now legendary alcohol-fueled gambling binge. Before we get all high and mighty judging Terrance’s idiocy, we should take a step back and wonder what lessons we can learn from Terrance’s fall.
First, investing isn’t gambling. The vocab of investing and gambling are intertwined–taking bets, odds, etc., but you should never treat your investment portfolio like it’s casino night.
People have problems. Gambling can become an addiction, just like alcohol or drugs. If you see patterns in your trading that indicates you have a problem with risk-taking or gambling, see someone who can help.
Another lesson. Whales are just big suckers. According to Terrance’s story, the casinos lured him in with all-expenses paid suites, booze, and food. Except, of course, his losses were more than enough to pay those expenses. In the investment world, we sometimes pay high fees and get limited performance.
Finally, the biggest hurdle an investor faces are the twin emotions of greed and fear. Most gamblers don’t seem to be influenced by the latter, but the former is powerful enough.
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- Learn Free: Learn Out Loud’s Free Audio Business Books
- Losing For Winning: Why Winning Trade Percentages Are Meaningless
- Top Investing Mistake #5: Not Managing Risk
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
An interesting deviation on the lottery ticket winner loses it all saga!
Whereas they lose it because they haven’t learned anything different to earn in it, this chap seems more in the Jesse Livermore mould – massive risk taker, almost independently of whether he has the money or not (but he wouldn’t have the money without the risk taking, of course…)
That’s funny. Livermore was one of the people I was thinking about when I wrote this. I also had the tale running through my head of a madcap millionaire from my hometown who blew and boozed through an amazing amount of cash.