I think it is incredibly difficult to learn on one’s own without any kind of mentorship. I didn’t have any, but I think mentorship would be invaluable to calm the nerves and help one maintain perspective. Also, too many “pundits” make copy just to fill a quota. I’ve never read anyone say, “nothing to do today, go take a walk or a nap.” Rev Shark comes closest in his own unique way, but even then it’s somewhat between the lines.

Also, I’ll reiterate how hard it was to “refuel” the second time. Probably the toughest decision I’ve ever had to face for myself. But it worked, and fortunately it’s changed my life. Ultimately, I think that is the litimus for successful investing. To make enough that it makes a difference. It’s a high bar to be sure, but for how hard it is, for how much one has to sacrifice especially in the early years, anything less I don’t think would be worth it.

And I thank God everyday. And give back to charity every year.

I salute you both. It is difficult to learn to invest/trade, and yes, the ability to refuel makes a difference. Wealthy people can take more risk, which is what one should expect.

1) Past returns are indicative of future returns.

2) Correlations in the past will hold in the future.

3) If we suggest a change in investor behavior, it will have little effect on the markets as a whole.

4) Investment strategies are constant, and there are not better or worse times to implement them.

I am against leverage on stocks generally, because the historical record indicates that average people can’t tolerate the volatility. It has not worked in the past. It is unlikely to work in the future.

I did the math though, and after ~13 years my average compounded rate of return is ~16%. To say the third time was the charm would be an equally huge understatement.

And to be sure I don’t recommend my method. But interestingly, I do meet Doug’s two conditions and did “refuel.” It was psychologically a very tough thing to do.

While I personally don’t support using leverage to buy equities, I think that the issue is more complex than that. There are a few key conditions that must be met first:

1) You have a solid, stable job with repeatable earnings (dentist, doctor, teacher, etc.)
2) You only lever up when you are young.

In this case, if you go bust, you can use your earnings stream to “refuel.” As your investments grow, you de-lever over time.

Again, I think that this theory underestimates the power of the market to crash at the right time and also estimates the frictional costs of borrowing and bankruptcy.

As for buying and holding, young people do that all the time, without a steel gut: it’s called a retirement account, which can’t really be touched until you retire. You hold onto that because you have no choice.

Finally, I’d ask where in the paper there’s an assumption that “bad markets happen randomly, with no streaks”. Yes, it uses Monte Carlo simulations, but I can assure you that bad streaks do pop up in such things!