Top investors share the toughest lessons they learned
Get a sharp investor talking for long enough, and their stories often become revealing. You’ll undoubtedly hear about their wins but also their most painful mistakes. We asked financial pros to tell us about experiences that left a mark—and, more important, what they managed to learn from them. Their responses have been edited for clarity and length.
I learned an expensive lesson about the dangers of leverage early on. In fact, I bought US Treasury bonds with 10-to-1 leverage just months before my career at Pimco began. I had $10,000 equity savings from my earlier experience playing blackjack—from which I learned that any bet should be limited to 3% of your liquid net worth. I totally disregarded that by buying $100,000 of 30-year Treasuries, which within weeks declined and wiped out half of my savings.
William Bernstein, principal, Efficient Frontier Advisors and author of The Four Pillars of Investing Understand the relationship between investment capital and human capital. Forty-five years ago, I was a young neurologist, whose human capital, being in a secure profession, was a relatively safe asset—like a bond. Late in life, in the decumulation phase, stocks are very risky for you. Sequence-of-return risk can sink even an overstuffed portfolio. In the accumulation phase, stocks are much less risky.