Simple wisdom from one of the most famous people to go broke, by Simon Black

Mark Twain was a great writer and a lousy investor. From Simon Black at sovereignman.com:

In the late 1800s towards the end of his life, Mark Twain wrote one of his greatest observations of humanity:

“When you remember we are all mad, the mysteries disappear and life stands explained.”

Twain’s quote was primarily a commentary on himself.

A lot of people don’t know this, but Mark Twain went bankrupt late in life.

His enormous fame as an author had brought him substantial wealth. But Twain squandered it all on countless business and investment blunders.

Twain’s publishing company, for example, racked up record sales of its 11 volume “Library of American Literature”.

The problem, however, was that the books cost him $25 to produce… but he only collected $3 up front from customers.

The more volumes he sold, the more money his company lost.

Twain started borrowing heavily to keep his business afloat, eventually mortgaging his home and taking substantial personal loans from wealthy friends.

But Twain was unable to indebt himself back into prosperity, and the company was run into the ground.

Simultaneously Twain made some hilariously boneheaded investments.

He chose NOT to invest in Alexander Graham Bell’s telephone (even though he boasted one of the country’s first telephones in his own home).

Instead Twain dumped more than $40,000 (nearly $1.5 million today) in a failed technology that went bust.

Twain invested in another technology that was supposed to revolutionize steam engines. Per the terms of the deal, Twain paid the inventor a stipend of $35 per week.

Twain wrote in his journal,

He visited me every few days to report progress and I early noticed by his breath and gain that he was spending 36 dollars a week on whisky, and I could never figure out where he got the other dollar.

Twain lost money in the stock market too, famously buying shares of Oregon Transcontinental Railroad at $78 per share, ignoring the stock bubble when it hit $98, and ultimately selling at $12.

Obviously there’s nothing wrong with buying stocks or even making high-risk speculations.

But Twain had an extraordinary knack for massively overextending himself… betting way too much on deals with excessive risk.

To continue reading: Simple wisdom from one of the most famous people to go broke

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One response to “Simple wisdom from one of the most famous people to go broke, by Simon Black

  1. Pingback: He Said That? 1/3/18 | STRAIGHT LINE LOGIC

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