Investment Setbacks

I'm a successful guy. I've written Amazon best-selling books. I've taught Bill Ackman and Howard Marks about investing. And I've made several highly successful trades, including earning hundreds of percent returns in Amazon and Meta.

But here is the thing.

I've also had a lot of setbacks along the way.

I've written two failed books. During college, I lost $50,000 on an advertising campaign to promote my books. I even sturggled to get an A- in my english classes every single year of high school and college, despite being a writer.

What that taught me is that setbacks are a part of success. If you are going to be successful, setbacks are going to be a part of the journey.

And the same is true for stocks: even the most successful companies in the stock market will face huge setbacks:

• Apple destroyed 80% of its market value between 1992 and '97, and the company almost went bankrupt in 1985, shortly after Steve Jobs was fired from the company

• Tesla almost went bankrupt during the 2008 financial crisis, and the stock fell 50% from its highs during 2022 because of a slowdown in delivers.

• Starbucks was seven months away from bankruptcy during the 2008 financial crisis, and it once had to close two thirds of its locations in Australia

Here is the punchline: even the most successful businesses face setbacks. When you come come across a stock that's down 50% because it's ran into some issue, I don't conclude that something is wrong with the company. Why? Because even the best businesses face huge setbacks. You should feel comfortable investing in companies that face huge setbacks because chances are that it's probably a good business.