Abraham Germansky disappeared on October 24th, 1929. The New York Times posted a short story near the back of its October 26th edition, with Germansky’s lawyer, Bernard Sandler, asking for information on his whereabouts. It tells a powerful story in just a few words. 
Later that week another investor in the same city had a very different experience. Jesse Livermore returned home on October 29th to a wife who, seeing news of the day’s record market crash, was prepared to console her husband and return to a life of frugality.
Jesse said that wasn’t necessary. He was short the market and made more money in the crash of 1929 than during the rest of his life combined. He made, in one day, the equivalent of $3 bn. Polar opposite stories. Germansky went broke, Livermore became the richest man in the world.
Livermore made larger and larger bets and went on to lose everything in the stock market. Broke and ashamed, he disappeared for two days in 1933. His wife set out to find him.
“Jesse L. Livermore, the stock market operator, of 1100 Park Avenue missing and has not been seen since 3pm yesterday,” the New York Times wrote in 1933. He returned, but his path was set. Livermore eventually took his own life.
The timing was different, but Germansky and Livermore shared the realization that getting rich is one thing. Staying rich is quite another. Everything in the economy is cyclical.
Nothing great or terrible is likely to stay that way for long, because the same forces that cause things to be great or terrible also plant the seeds to push them the other way.
There are a million ways to get rich. But there’s only one way to stay rich: Humility, often to the point of paranoia. Not skill, or market insight, or even hard work. Fear and humility. The irony is that few things squash humility like getting rich in the first place.
It’s why the composition of Dow Jones companies changes so much over time, and why the Forbes list of billionaires has 60% turnover per decade.
I’ve noticed a pattern: Getting rich can be the biggest impediment to staying rich. “It’s an expensive disease everywhere to everybody”. Over the years @morganhousel has penned some great columns. This, from Feb 16th, 2017, rates as among his finest.
collaborativefund.com/blog/getting-r…
collaborativefund.com/blog/getting-r…
