Harry Browne’s Rules of Financial Safety (1999)
thetaoofwealth.wordpress.com
Harry Browne’s Rules of Financial Safety (1999)
1–10 of 245 posts
Re: Harry Browne’s Rules of Financial Safety (1999)
#2Browne wrote a number of books I found helpful, such as How I Found Freedom in an Unfree World.
(corrected title)
Re: Harry Browne’s Rules of Financial Safety (1999)
#3> “Rule 9: Don’t ever do anything you don’t understand.”
In 2021 I bought $500 of stock in a VR software company who was crowdfunding. Price per share was $4 on a valuation of $60M.
Fast forward two years and they raise again…this time at a valuation of $170M. Naturally, I assumed my $500 was worth close to $1500 on paper.
Wrong.
By some magic, the common stock share price went from $4 to only $4.75 even as the company tripled in value.
Even though I “picked” well, my investment still lagged the general S&P of the same time period. I thought I understood what I was doing, but evidently I was the sucker.
Re: Harry Browne’s Rules of Financial Safety (1999)
#4Like 15 of these can be replaced by having a financial advisor that you fully trust. Finding one is obviously a huge challenge, but makes almost of all this knowledge you can offload onto an expert.
IMO fidelity is probably the closest you’ll get, they’re call centers/etc are all fully certified us-based people who aren’t on commission/etc.
Re: Harry Browne’s Rules of Financial Safety (1999)
#5> “Rule 9: Don’t ever do anything you don’t understand.” In 2021 I bought $500 of stock in a VR software company who was crowdfunding. Price per share was $4 on a valuation of $60M. Fast forward two years and they raise again…this time at a valuation of $170M. Naturally, I assumed my $500 was worth close to $1500 on paper. Wrong. By some magic, the common stock share price went from $4 to only $4.75 even as the compa…
Probably due to „dilution“ where the number of shares is expanded, leading to lower value per share.
I was surprised by this, too. It‘s perhaps the most important thing to know when working for startups or investing in them.
Re: Harry Browne’s Rules of Financial Safety (1999)
#6> “Rule 9: Don’t ever do anything you don’t understand.” In 2021 I bought $500 of stock in a VR software company who was crowdfunding. Price per share was $4 on a valuation of $60M. Fast forward two years and they raise again…this time at a valuation of $170M. Naturally, I assumed my $500 was worth close to $1500 on paper. Wrong. By some magic, the common stock share price went from $4 to only $4.75 even as the compa…
Same story for most employees getting tons of equity in startups with a preference overhang https://www.holloway.com/definitions/liquidation-overhang
Re: Harry Browne’s Rules of Financial Safety (1999)
#7> “Rule 9: Don’t ever do anything you don’t understand.” In 2021 I bought $500 of stock in a VR software company who was crowdfunding. Price per share was $4 on a valuation of $60M. Fast forward two years and they raise again…this time at a valuation of $170M. Naturally, I assumed my $500 was worth close to $1500 on paper. Wrong. By some magic, the common stock share price went from $4 to only $4.75 even as the compa…
One thing is that with small, especially non-public company investments, even if you have reasonably expert opinion that they're doing something special that isn't really on the radars on the mainstream investment community, market timing can still be off and you probably have no idea what's going on behind the scenes in terms of financing etc.
Re: Harry Browne’s Rules of Financial Safety (1999)
#8Like 15 of these can be replaced by having a financial advisor that you fully trust. Finding one is obviously a huge challenge, but makes almost of all this knowledge you can offload onto an expert. IMO fidelity is probably the closest you’ll get, they’re call centers/etc are all fully certified us-based people who aren’t on commission/etc.
Does anyone has a UK advisor they're overwhelmingly happy with?
Re: Harry Browne’s Rules of Financial Safety (1999)
#9I haven't heard about this guy in a long time (2001 or so) but one thing he said has stuck with me for some reason, and pops into my mind often. I think he framed it as good general life advice to his young adult daughter. "No one owes you anything."
Re: Harry Browne’s Rules of Financial Safety (1999)
#10> “Rule 9: Don’t ever do anything you don’t understand.” In 2021 I bought $500 of stock in a VR software company who was crowdfunding. Price per share was $4 on a valuation of $60M. Fast forward two years and they raise again…this time at a valuation of $170M. Naturally, I assumed my $500 was worth close to $1500 on paper. Wrong. By some magic, the common stock share price went from $4 to only $4.75 even as the compa…
That kind of scam is exactly why securities trading is regulated. Before the IPO though, all bets are off and unless you're the VC writing the term sheet, you're the sucker.