What I Learned Losing a Million Dollars
by Jim Paul

Jun 2001

Luck beats smarts but luck runs out

An alternative title to this book could be, "What I learned losing my ego."

After describing a meteoric rise to the top of the Chicago food chain, Jim Paul essentially boils down the secret of his success to being a cocky punk with an exceptional lucky streak that had to run out.

I think he gives himself less credit than he deserves in ascribing all his early success to luck—it takes confidence and selling ability to take advantage of the "lucky breaks" he got—but that is beside the point. His main message is that success fed his ego until he felt that winning was his birthright. He thought he could do no wrong, which led to inevitable downfall.

One small quibble. The ironic thing about Paul's stories of loss are that he was 99% there most of the time. If he hadn't have let the bean oil get back to zero, he could have walked away with at least a couple hundred grand in profits... if he hadn't let the stock options purchased for an eighth (or whatever it was) go to zero after seeing them hit $4, he could have had six figures in profit there again, etcetera.... I got the impression that even the big downfalls in this book were actually success stories with "oops" endings tacked on.

In this light, I didn't really understand the blurbs on the back talking about how Jim Paul shows you the perils of the trading game. What perils? The perils of not taking a huge, monster profit when it is sitting in front of your face?

This is why I have to think the book will probably just reinforce the ideas that readers already have when they pick it up. Someone with a big ego and a small mind could easily think in the back of his mind, "Nice story, Jim… good thing I won't make the same mistakes you made. Because while you just thought you were the man, I actually AM the man, heh heh..." But then again this isn't much of a criticism. I mean, who can reach those types anyway?

The last half of the book reads almost like someone else wrote it, and has some very good points. I liked the way he took comments from a bunch of the "pros" (traders who have won big and kept their winnings) and juxtaposed their ideas, to show how successful traders' thought processes are sometimes totally different and often contradict each other.

It really hammers home the point that there are multiple paths up the profit mountain, and that discipline and defense are often the only truly common elements among a broad universe of strategies. I also thought the book made a really great point about odds—hat the reward to risk ratio on a trade has nothing to do with actual probability of success for that trade.

An entertaining book worth a weekend read.