We model compounding perfectly and assume we won’t interfere.
In the long term, normal human mistakes compound faster than money but it never make it into the equation.
Most traders prepare for the perfect trade, but few prepare for endurance.
Facing a bad month or a brutal drawdown and still showing up each day without panic is what matters.
Markets exhaust those chasing glory. They reward those who are still standing.
In 2008 every stock on Earth was crashing
Hedge funds shorted Volkswagen expecting it to follow the rest of the market down
Then Porsche quietly revealed they had been secretly accumulating 74% of VW through options and nobody saw it coming
The free float was just 6% but short interest was 12%
There literally weren’t enough shares on the planet for short sellers to cover their positions
In a single week Volkswagen went from an ordinary automaker to the most valuable company on Earth passing ExxonMobil at over $370 billion
Short sellers lost over $30 billion and some funds were completely destroyed overnight
The greatest short squeeze in history didn’t happen during a boom
It happened during the worst financial crash in 80 years
The Netherlands is about to commit financial self-destruction. Their parliament just passed a 36% tax on unrealized gains for investments.
This will cause wealthy people to move to another tax jurisdiction. People will avoid launching a new business. Stock market investing will dry up.
There is too much downside risk, very little upside potential. The govt is confiscating most of the potential upside, but leaving the investor with the downside risk.
The politicians know this, they have discussed it and they are concerned about it. But they did it anyways to close a short term budget gap of roughly $2 billion. As with other countries that attempted a wealth tax, it will likely backfire and result in less tax collected after wealthy people leave.
The results will be so negative, the govt will reverse course within a few years. But by then the damage is already done.