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Financial Mass Destruction

Every few days, I see a post on r/WallStreetBets where someone implodes their financial lives.

Here’s the latest one – “Today, after market I received this email stating I need to deposit $4.4MILLION or close all my positions by 12/20 eod. When my deposit from last week, clears on their end 12/21. My app says I only am in a deficit of $776. I don’t know how I’m in a deficit at all. All my positions are covered and nothing has been exercised.” Incredible.

To which I point you to this first article:

Financial Mass Destruction [The Best Interest] – “Public markets are similar to casinos. We’re using the same chips, the same cards, the same dice. We’re all trading stocks and bonds, right? Some of our games differ, as do our bet sizes. But to the untrained eye, it appears we’re all playing the same games.

But I disagree. Some of us are playing slow-and-steady games with the odds in our favor. Others are playing flashy games with huge sums of money. Worse yet, some people are borrowing (leverage) and making side bets (derivatives).

When the flashy, levered, derivatives bets go bad, it can feel like the whole casino is crashing around you. Huge sums lost. Gamblers entering default. Should you cut your losses are run for the door? It’s completely human to panic.***

No! You’re playing a different game than them. You still own your chips. Your process has been working. The casino is still afloat.”

Slow and steady. Avoid the flashy. Survive and thrive.

The banker who caused the 1929 stock crash [The Hustle] – “Around noon on one of the worst days in the history of Wall Street, Charles E. Mitchell hurried up the steps of the House of Morgan, a two-story gray building across from the New York Stock Exchange. It was Oct. 24, 1929, and disaster had struck. When the market opened, stocks plummeted so fast the exchange’s ticker tape couldn’t keep up with the frenzy.”

This next one is a little crazy…

The Ancient Japanese Technique That Produces Lumber Without Cutting Trees – “Daisugi is an ancient Japanese forestry technique in which planted cedars are pruned in a special way to produce “shoots” that eventually become perfect, straight, knot-free lumber.”