Dave Asprey, bestselling author of The Bulletproof Diet, confesses his greatest #financialfail: Not walking away from a losing investment
Not only is Dave Asprey the author of the recent New York Times bestselling book The Bulletproof Diet, he’s also a Silicon Valley investor and tech entrepreneur. His biggest financial fail, he admits, was being too greedy in his 20s and failing to get professional help with investment decisions. “I made $6 million when I was 26,” he says, “And I lost it when I was 28.”
Here’s how it happened, as told to me on my new podcast, So Money:
My career accelerated quite a lot at that time. I was the youngest guy at Exodus Communications, a $36 billion company.
I was in charge of due diligence for our mergers and acquisitions department. So, when we wanted to buy a company, I was the guy who’d go in and say, ‘Is this technology going to work for us? Yes or no?’
I attended board meetings. And because of that, I knew all of the upcoming acquisitions. So, I was blacked out [of trading stock he had received as part of his compensation]; it was illegal.
When those stocks started to teeter, what I should have done was quit my job, sell all of my shares and retire. Instead, I said, ‘I can’t do that. I might lose an additional $4 million in uninvested equity or something.’
So I stayed at the company. And the stock dropped from $60 a share to $5 a share.
In retrospect, I should have thought, ‘I have enough money. I can do whatever I want. I should just walk away today.’ I could have done that. But for six months, I didn’t walk away.
Every day, I was worth less and less in the bank account. And that was a grinding down, horrible feeling.
And there’s another thing. I don’t think I’ve ever talked about this: I was with some online broker—going back 15 years. It was a very cutting edge broker that let me do options and all this stuff.
Based on the reports it seemed like I had a couple hundred thousand grand in the account, at least enough to take care of my basic expenses. But there was a margin on that account that I didn’t even know about because I wasn’t managing the stuff tightly. I was too stubborn and fearful to hire someone to help me manage it. The margin ended up consuming most of the account before I even noticed.
Today, the advice translates to: Hire a professional to pay attention to the stuff that you’re not paying attention to.”
Every day, MONEY contributing editor Farnoosh Torabi interviews entrepreneurs, authors and financial luminaries about their money philosophies, successes, failures and habits for her podcast, So Money—which is a “New and Noteworthy” podcast on iTunes.
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