About:
Do you want to be a
billionaire? What if you made 3 billion a day? Would you be happy if your
earnings reached 8 billion? With this book you will learn how to become rich
and how to maintain your wealth. This book will teach you true value for money.
Who should
read this summary?
- To the employees
- To the Entrepreneur
- To stock traders
- To brokers
- To managers
About the author
Morgan Housel is an investor and author. Morgan is also a partner in The Collaborative Fund, an investment fund started by 14 people. He also wrote several articles for the Wall Street Journal and is the author of three books.
Now We Start a Summary
Introduction
Which of these would you like to choose
from a beautiful bungalow or $ 3 billion? Freedom or good reputation?
Do you think you have made a lot of
money in life? Do you want to know how to earn $ 84.5 billion?
If all these questions rotate in your
mind, then read this book, in it you will get the answer to every question.
(The Greatest Show of the World) The Greatest Show on
Earth:
Author Morgan Housel used to work in the
valet to earn money when he was in college. Where he used to work was a
luxurious and expensive hotel in Los Angeles. Once there came a guest who used
to visit that hotel often, that boy was a technology executive and was very
fast minded. It was only at the age of 20 that he designed a component for a
Wi-Fi router and got it patented.
The Young Millionaire started several
tech companies and later sold them. He was very successful. But in terms of
money, he was a little unlucky.
Wherever the boy used to keep a bundle
of notes with him and whoever talked with him, he used to show this money to
him. He used to boast a lot by drinking alcohol. One day the man called the
guard who parked the car and gave him some notes and ordered him to go to the
nearby shop. In exchange for the note to the guard, the shopkeeper gave several
$ 1000 gold coins.
So what would that young technician have
done to those gold coins? He threw those coins into the sea. He also called his
friends and together they threw the Koins into the sea as if someone threw
stones in the pond.
A few days after that, one day he
accidentally crashed into a hotel lamp by a Young Millionaire. The manager told
him that the lamp cost $ 500, so the man created a spectacle. He took the money
out of his pocket and gave it to the manager's mouth and said, "Here is $
5000, now don't show me your face again"
Perhaps you are wondering whether this
story is true ?Perhaps you are wondering what happened to that young
Millionaire? Yes, this story is very true. In this book you will read more
similar stories. But in the last of this story, the Young Millionaire goes
bankrupt. He blew everything he had earned in a few years. All his money was
lost and his friends and friends also left him.
Have you seen! With money you can buy
everything, but you cannot buy good behavior.
Let's hear another story. Ronald Reid
was a janitor, he was born and raised in a small village. He was the first
person in his family who had studied up to high school and even more
interesting was that he used to reach the school every day with a lift from the
people.
Ronald was leading an ordinary life. For
25 years he worked in a gas station repairing vehicles. He made J.C. Worked on
floor cleaning for 20 years in Pages. At the age of 38, Ronald bought a
two-bedroom house. He bought that house for $ 12000 and spent his entire life
in that house.
Ronald was also married but had no
children. When he turned 50, his wife was dead. His neighbor said that Ronald's
favorite hobby was to chop wood.
The day Ronald made the news headline
was the day of his death. It was a matter of 2014. He was 92 years old. Ronald
Reid had $ 8 million. He left $ 2 million for his two stepchildren and donated
$ 6 million to a local hospital and library.
If you search for Ronald Reid in
Wikipedia, then you will know that he was a janitor, gas station attendant,
investor, mobilize and millennial.
But how did this happen?
There is no trick in this. Ronald did
not win any lottery, nor did he receive any family money. Ronald was investing
in blue stock chips after saving money for so many years. It was just such a
thing. He used to save every penny, even he never took out interest. He had
compounded his sewing for years and by the time he died, he had accumulated $ 8
million.
Do you know the concept of compounding?
We will talk about this later. But
before that you should listen to another story.
Now let's take a look at the man who was
completely different from Ronald Reid.
Richard Fuscon was an executive at
Merrill Lynch. He did his MBA from Harvard. And he was retired at the age of
40. His name was also included in the 40 Under 40 Most Successful People list
of a business magazine.
Richard owned an 18,000-square-foot
bungalow in Connecticut that had two swimming pools, two lifts, seven garages,
and 11 bathrooms. The maintenance cost of this bungalow was only $ 90,000 a
month and Richard borrowed a lot in its maintenance.
But then his fate changed.
In 2008, the Financial Crisis came and
overnight Richard came on the sidewalk. The same year he filed for bankruptcy.
What did we learn from the story of
these two young millionaires Ronald Reid and Richard?
Financial success is not a science, but
finance is one such field where people like Ronald Reid can also be successful.
A person with humble education and experience cannot become a surgeon,
architect or engineer.
But in finance, even a modest man like
Ronald Reid can make a very good achievement.
Vanguard's founder John C, Boggle once
told a story. A party was being held at the home of a bilinear. Kurt vanguette
and Joseph Heller were sitting in a corner. Both were talking about the income
of their host, who was a hedge fund manager. Kurt commented that one day's
earnings of that man are also more than the full year sales of Joseph's Novel
Catch-22.
To this Joseph responded with an
astounding "He said that he has what a hedge fund manager would never have
and that is" info"
What is your source of income now? Can
you say that you have enough money?
Let's know from the story of these two
people.
Rajat Gupta was a poor boy from Kolkata.
He was an orphan but at the age of 45 he became a CEO.
Rajat was the CEO of Mckinsey, one of
the world's renowned consulting firms. When he retired from the company in the
year 2007, after that he got a big important position in the United Nations and
the World Economic Forum. Rajat was also the board of directors of five
different companies. Coming out of the slums of Kolkata, he showed himself to
be the richest businessman.
In 2008, Rajat Gupta was worth $ 100
million.
But he was never satisfied with his
money. He had become a Set a Millionaire, so now he had to become a
Billionaire. He wanted to come in that circle.
Rajat then became the board of directors
of Goldman Sachs. He pushed himself to become a Billionaire.
In 2008, Goldman Sachs was in an era of
economic crisis. Warren Buffet took the decision to invest $ 5 billion in it to
save the company. Being a board member, Rajat Gupta came to know about this
before the public. Warren's funding was undoubtedly a possibility of the
company's stock going up.
Sixteen seconds after the board meeting
call, Rajat called Raj Rajaratnam, a hedge fund manager. This call was never
recorded but Raj immediately bought 175,000 shares of Goldman.
After several hours, news of Warren's
deal reached the public. Goldman's stock went up sharply. Raj earned $ 1
million in just a few hours. And the prosecutor reported that Rajat earned a
total of $ 17 million.
It is considered a classic case of
insider trading. Rajat Gupta washed his hands with all his wealth and had to go
to jail and he also lost his reputation. Rajat already had $ 100 million, so
why did he want another $ 1 billion?
He already had wealth, fame, power and
freedom. But coming to greed, they lost everything. Because Rajat Gupta did not
have Enf's sense.
We can learn three things from this
story.
Lesson One: The most difficult financial
skill is to stop yourself from accumulating more wealth. More power, more fame
and greed for more money promotes more ambition than setisfaction. By coming to
this point when you do not move forward, you feel as if you are going backward.
And then you take the biggest risk to move forward.
Modern capitalism is very good in two
things. Along with wealth, you also become greedy, a person forgets his limits.
He does not understand where to stop.
Lesson number two: Social comparison
means comparing others becomes a problem. Suppose a football player earns $
500,000 a year, he already has a lot of money. But if we compare it with Mike
Trout, who has a 12-year contract for $ 430 million a year, then we will find
this stunted player very poor in front of him.
Now, assuming a hedge fund manager earns
$ 36 million, but in 2018, the top ten highest paid hedge fund managers had
earned at least $ 340 million a year, then we would find these $ 36 million far
less than that.
But what if the top ten hedge fund
managers who are earning $ 340 million for the year compare themselves to the
top five? Top five hedge fund managers earn $ 770 million.
And if Top Five compares itself to
Warren Buffet, who is $ 3.5 billion richer than them in 2018?
And if Warren Buffet wants to come to
Jeff Bezos' level, whose net worth was $ 24 billion in 2018?
So you have seen that the wall of social
comparison is very high. Nobody can touch it. If you get involved in the game
that "I want to be as rich as my friends" then you can never win.
Because there is no limit to win and earn money. There is no point where you
feel you feel satisfied.
The only way to win is not to fight.
Suppose you have enough even if the people around you are going crazy in want
of more. A dealer in Las Vegas once said, "There is only one way to win in
a casino: get out as soon as you enter"
Think you are in an executive village
party. You and your friends are discus- ing who is the richest, who has the
largest house and who is the most famous and whom people like the most. But you
will see that there will be no winner.
The one who wins is self-assured, who is
living a happy life with a loving family in a small house.
Lesson number three: Some things are
more than money, fame and power. No matter how much you have it all. Rajat
Gupta said this in his interview with the New York Times after he was released
from jail. When he was asked what he had learned from this incident, he said:
"Do not attach more than anything,
whether it is your reputation or your achievement. These things do not matter.
This accident has ruined my entire reputation but I have now learned that I do
not have to keep any more attachment to it.
Rajat Gupta wanted to save himself. He
was giving cleanliness of his work. He was reassuring himself that his
reputation does not matter to him anymore.
But he was wrong.
Reputation is priceless.
Freedom is priceless.
Family and friends are also prized.
It is also valuable to love people and
get their love in return.
Happiness is precious.
But the only way to get it all is that
you understand your limits, you remember when to take risk and when it means info.
Confounding Compounding:
We learned from one field, we get help
in another field. Do you know why Ice Age came long ago? This is in some way
similar to compounding in investment, it grows on your money.
After going to the 19th century, the
scientist had agreed that there was an ice age in the earth at some point. Its
proof was so close that it was easily ignored. Not only one ice age has come in
the earth, but our earth has seen five ice ages, whose date we can estimate
accurately today.
Can you imagine how much energy would be
required to cover the whole world with snow, melt ice and cover with ice again?
So this incident has happened five times. But why did Ice Age come?
There are many theories about what is
the reason behind Ice Age. According to one theory, there has been a change in
the climate due to the movement in the mountain range. Another theory says that
ice is the natural environment of the earth, in which the volcanic eruption has
changed.
However, these theories only expose one
ice age and not five.
In the early 1900s, a Serbian scientist
Milutin Milankovic studied the position of the Earth in the solar system. And
he came to the conclusion that the gravitational strength of the sun and the moon
has an effect on the axis of the earth. Milankovic said that many times it
happens that the earth tilts too much on its axis, due to which it gets more
solar radiation than normal.
Due to the change in the Earth's
hemisphere, it became very cold due to which the whole earth was covered with a
thick sheet of ice. Vladimir Koppen, a Russian meteorologist, has added a
condition to this theory.
He said that due to the abnormal tilt,
the cold had increased on the earth even during the summer season. This was the
kind of heat in which there is not so much heat that the whole ice can melt.
Even after summer, some parts of the earth remained covered with snow. Which
made it easier for the snow to last even in the coming winter.
Year after year, snowflakes kept accumulating
on the snow until the whole earth was covered with snow and thus came Ice Age.
You saw, the concept of compounding is
also similar. Suppose you started depositing 10% of your annual salary in an
index fund. And your annual interest rate is 10%.
So next year you will have 10% of your
salary with an interest rate of 10%. Then you continued to deposit 10% of your
salary by 2022. Every year you are adding 10% and every year your 10% interest
rate is also growing. If you do not withdraw this money for the next ten years,
then you will become a Millionaire.
Ice Age also came slowly due to the
accumulation of snow. Compounding of interest also means the same: slowly
accumulating money.
Do you know that Warren Buffet had been
investing since the age of 10? He never withdraws his interest. He allowed this
money to accumulate for many years. And when he turned 89, he had $ 84.5
billion. This was the result of his display and compounding of 8 decades.
If you calculate, Warren Buffet earned $
84.5 billion just after his 50th birthday. This is all amazing of compounding
power
Think about this equation 8 + 8 + 8 + 8
+ 8 + 8 + 8 + 8 + 8 = 72. This is a sum. But what happens when you multiply 8
from 8 to 9 times? 8x8x8x8x8x8x8x8x8 = 134,217,728. Have you seen how different
it is?
When Warren was 20 or 30, he did not
spend his money just like that. And he did not stop investing until he was 60
or 70. He continued to invest. He deposited money for 25 years.
Many books have also been written on
Warren's wealth. Again, he has $ 84.5 billion. He started investing from the
age of ten and continued till 89. If a book is really written on compounding,
its name should be "Shut Up and Weight"
Getting Wealthy vs. Staying Wealthy:
There can be many ways to become rich,
but there is only one way to stay rich. Let us learn this from the story of
these two investors.
Jesse Livermore was one of the best
stock traders of his time. He was born in 1877. When the world did not even
know that anyone could become a trader, he had established himself as a trader
even before that. Jessie earned $ 100 million at the age of 30.
The stock market crashed in 1929, which
led to the Great Depression. In those days, this news was spread all around.
Wall Street had no idea how many stock traders had committed suicide.
On October 29, 1929, Jesse's family was
waiting for him at home. His wife and two children are standing at the door
looking forward to his arrival. And she was crying inside the Mother in Law Band
room.
Jessie reached home, he was in shock,
but not because his bankrupt had passed, he told the whole thing to his wife.
It happened that Jesse had made a bet
that the stock market would come down and he got the right idea and he became a
millionaire. That day on October 29, he made $ 3 billion.
When everyone was betting that the stock
rate would go up, at that time JC had predicted that the stock market would
fall. What was it then, he won the bet and became a bilineer overnight.
But something different happened to
Abraham Germansky.
Abraham was a wealthy real estate
developer. During 1920 he became a Millionaire. Like the rest of the traders,
Abraham also made a big bet that the stock market would keep climbing.
Abraham disappeared a few days after the
stock market crash. Actually, he had committed suicide.
Now again Jesse comes to Livermore and
completes his story.
Jesse became overconfident and
unstoppable after the 1929 crash. He went on to apply big conditions one after
the other and kept winning. JC thought that he would always win like this. But
in 1933 he lost all his money in the stock market.
Jessie also disappeared a few days later
and she killed herself. The same thing that happened to Abraham happened to him
after four years, like Abraham, he too was forced to commit suicide.
So you saw, both men had become rich but
could not maintain their richness.
Making money is one thing, but
maintaining it is a different thing.
To earn money, you have to get out, you
have to take risk. You have to be optimistic.
But you have to be humble to keep the
money. You have to remember that at any time, any second you can take away all
your wealth. Because life is like this, nobody knows what will happen here.
Sometimes you will come to the top, sometimes you will be at the bottom.
To maintain money, you have to learn to
use money thoughtfully. And it is also a fact that money is earned by hard
work, but luck also has a big hand in earning it.
Always remember that life is not always
a thing in life, you will get defeat and failures in life too. The success of yesterday
can not guarantee the coming golden tomorrow.
Now we go back to Warren Buffet and see
how he has maintained his wealth for 70 years.
He invested his money for 10 years and
allowed it to be compounded for more than a decade. And at the age of 89 he had
$ 84.5 billion.
Warren knows investing, he knows which
companies would be best for investing. They also know which are the cheapest
stocks. And they know the most effective managers.
And in this way he became a rich man.
But Warren maintained his wealth this
way.
He did not get into any deception.
He faced 14 receptions but never
panicked and sold his stocks.
He did not put his reputations at stake.
He did not confine himself to any
strategy, an opinion or a passing trade.
He never quitted nor retired.
Even after 65 years, he kept doing
compounding. And that's how Warren went live.
Conclusion
In this book, you read the story of the
young tech genius who threw $ 1000 gold coins into the ocean.
You also read the story of Ronald Reid
in this book who, despite being a modest watchman, donated $ 8 million.
You also read about Richard Fuscone, a
Harvard MBA graduate and real estate investor who lost everything in the 2008
Crisis.
And you also read the story of Rajat
Gupta in this book, who despite having $ 100 million; he wanted $ 1 billion
more.
In this book you also heard the story of
Jesse Livermore and Abraham German sky. Of these, he earned $ 3 billion a day
while the other was losing all his money. Later, both people had committed
suicide.
Finally you read about Warrem Buffet in this book:
So out of all these people, who would you like to be like?
Remember that reputations, freedom,
family, love and happiness are the most precious things in life, which is more
than money, power and fame.
Remember this world is round and losing
and winning is a part of life. Sometimes we have everything and sometimes
nothing.
There are many ways to become rich, but
there is only one way to maintain your wealth. So be humble, understand the
value of money and learn to be happy in what you have.
Spend time with those you love dearly,
because family and true friends are the biggest treasure of man.
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