The Foundation for a Successful Life: Avoiding Calamities

Editor's note: This holiday season, we're taking a break from our normal fare to share a special holiday series from Empire Financial Research founder Whitney Tilson. As longtime readers know, Whitney put his Wall Street career on hold to help launch Teach For America. And while he went on to grow his series of hedge […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Editor's note: This holiday season, we're taking a break from our normal fare to share a special holiday series from Empire Financial Research founder Whitney Tilson. As longtime readers know, Whitney put his Wall Street career on hold to help launch Teach For America. And while he went on to grow his series of hedge funds from $1 million to more than $200 million over two decades, he's equally passionate about philanthropy and sharing his non-investing wisdom with hundreds of thousands of Empire Financial Research readers. In today's essay, Whitney tells more of his story and explains how avoiding calamities is the key to leading a happy and successful life... --------------------------------------------------------------- The Foundation for a Successful Life: Avoiding Calamities By Whitney Tilson --------------------------------------------------------------- [Top investigative journalist shares urgent message for all Americans]( His investigations have helped send a CEO to prison, had a company delisted from the NYSE, and helped the SEC reclaim $300 million. Today, in this compelling exposé, Herb Greenberg is warning all Americans about the financial impact of... THE FINAL RECKONING. [Will you be ready]( --------------------------------------------------------------- After nearly two decades of managing money, I closed my hedge funds in September 2017... Soon after, I launched an educational seminar business through which I sought to teach the next generation of investors everything I'd learned from my time "in the trenches." A dozen young investors signed up for my first seminar, half of whom were fund managers, while the other half planned to launch funds in the not-too-distant future. Based on their feedback, I developed a curriculum for our five days together that was focused 60% on becoming better investors and 40% on launching and building successful investment-management businesses. Yet, much to my surprise, over the course of the week, we ended up spending only about a third of our time on investing and another third on launching a fund. What was the final third? Life lessons. It wasn't my plan to talk about these things, but whenever one of these topics came up, my students would pepper me with questions. For example, at one point, I mentioned that many of my friends had gotten divorced in recent years. They asked me whether there were any common threads, which eventually led me to develop a list of 12 questions I think anyone should ask before marrying someone, as well as my advice for maintaining a healthy marriage. Another time, one of my students asked how I'd cultivated so many mentors. "Actually," I replied, "there's a five-step process," and another long conversation ensued... It soon dawned on me that teaching them this "worldly wisdom" was just as important as the formal curriculum I'd developed – and could be the basis for a book. When I finally got around to putting pen to paper, I started by writing about positive life lessons... Work hard, become a learning machine, be nice, have high integrity, etc. But a few chapters in, I ran out of gas and didn't write a word for months. I'd lost motivation and couldn't figure out why. I finally realized it was because I was having trouble finding anything fresh and interesting to say. There are countless books that extoll the virtues of things like hard work and developing good habits... Sure, this stuff is important, but it's all been said and written a million times before, so I didn't feel like I was adding much. But the calamities section I'd planned for the end of the book – now that was interesting! How many books are there about all of the horrible things that can ruin your life, like cancer, a terrible accident, your marriage falling apart, getting thrown in jail, losing all your money, having no friends, or becoming addicted to drugs or alcohol? I'd developed a slide presentation on calamities and, each time I taught it, my audience was riveted! Of course, much of this stuff is a downer. Who likes to think about all the bad things that can derail your life? Most people would rather think optimistically and hope for the best. But if you don't also think about avoiding calamities, you're making a big mistake. The foundation for a successful life is playing good defense – meaning that if you want to get ahead, it's critical to avoid big setbacks. When I resumed writing, I titled my book, The Art of Playing Defense: How to Get Ahead by Not Falling Behind, and organized it around "the five calamities that can destroy your life"... The chapters are entitled: - Loss of reputation and/or wealth - Loneliness and/or suffering a permanently impaired relationship with a loved one - A bad marriage, often ending in divorce - Addiction and abuse - The death, serious injury, or illness of yourself or a loved one I think this list captures the vast majority of things that can ruin a life. --------------------------------------------------------------- Recommended Link: [GM's next big release has no engine and no wheels]( In a shocking move, auto giant General Motors is venturing into a whole new space (hint: NOT electric vehicles). While industry analysts see this as a way of catching up with Tesla, the bigger reason could be because this new space is getting the full backing of the current administration and could mean huge tax credits in the future. Or it could just be that this fledgling industry has more scope than the declining auto industry. Whatever it may be, this move could put GM into the same bracket as Apple, Google, Microsoft, and Amazon. [Get the details of this massive trend here](. --------------------------------------------------------------- At first glance, I may seem like the wrong person to be writing about calamities because I've suffered few of them... I grew up all over the world (Tanzania, California, Nicaragua, etc.) in a loving, tight-knit family, I earned degrees from Harvard and Harvard Business School, I've been a (mostly) successful serial entrepreneur, my wife Susan and I are happily married after 29 years and have three spectacular daughters, I'm in great health, and I have many wonderful friends. You can see why I count my blessings every day... So why am I qualified to write about calamities? Let me answer that question by asking one: If you wanted to play tennis better, would you hire me or Roger Federer? If you wanted to become a better shooter in basketball, would you hire me or Steph Curry? Similarly, if you want to learn how to avoid calamities, would you rather learn from someone who's suffered a lot of them or someone who's successfully avoided them? It's not an accident that I've suffered far fewer than my fair share of big setbacks. Rather, it's primarily the result of two things... During my youth, I had two wonderful role models – my parents – both of whom I love and admire more than anyone. They surrounded me with love from the day I was born and made big sacrifices for my sister and me. By being excellent teachers and role models, they helped me avoid the calamities of youth: I didn't get myself killed, stayed away from drugs and alcohol, and got a great education. Then, as an adult, in addition to having a wonderful wife, I've had two more wonderful role models... I'm talking about famed investors Warren Buffett and Charlie Munger. When I discovered them in the mid-1990s as I was first getting interested in investing, I studied them obsessively, reading everything by and about them and traveling to Omaha to attend the Berkshire Hathaway (BRK-B) annual meeting every May (I've been to the last 25 in a row). What I learned from these two wise men about investing was invaluable. In the early days of my career, I had so little experience – and they were such brilliant, inspiring, and patient teachers! Had I not absorbed all of the investing lessons they imparted, I would never have achieved anything close to what I did. I beat the market year after year in my first dozen years and grew assets under management from $1 million to over $200 million across three hedge funds and two mutual funds. I also launched successful investment conference and newsletter businesses, appeared regularly on CNBC for many years, was on 60 Minutes twice, wrote hundreds of articles, and coauthored three books. I've come to realize, though, that the most important things I learned (and continue to learn) from Buffett and Munger go well beyond value investing. They fall under the category of what Munger calls "worldly wisdom." Much of what they preach is simple (as Munger jokes, "If it's trite, it's right!"): work hard, become a learning machine, have high integrity, develop good habits, be nice to everyone, marry the right person and maintain a strong relationship, and so forth. They also spend a lot of time talking about calamities. I still remember the moment when I was at the Wesco annual meeting two decades ago when Munger said, "All I want to know is where I'm going to die so I never go there." Everybody laughed, but he continued: I'm serious. Once you reach a certain position in life, you should spend most of your time trying to avoid the things that can derail your life and send you back to "go," or worse. That's true in investing, but it's also true in life. What happens to many people is that even when they've got it made, they can't help but stretch to try to grab the brass ring – and fall, bringing themselves to ruin. Ever since, I've been studying calamities... Avoiding calamities is all about assessing risk – and that's []what I've been doing full time for more than two decades in the investment world. Most people aren't very good at it because they tend to focus on vivid but unlikely risks while ignoring far more dangerous ones right in front of them. For example, when I started mountaineering a few years ago, summiting hairy peaks like the Matterhorn and the Eiger, my mom flipped out. She begged me to stop and, when I refused, tried to enlist Susan in an "intervention." I explained to her that she was worried about the wrong thing. I'd estimate that I'm 10 times more likely to die riding my bicycle nearly every day on the streets of Manhattan than climbing mountains a few days a year. Another risk many people ignore until it's too late is the risk of their marriage going bad. In recent years, I've seen this derail the lives of over a dozen close friends and relatives. In each case, I asked them to tell me what happened so I could learn from it and take steps to ensure it didn't happen to Susan and me. A final example I'll cite is car safety. In the past few years, my wife, three cousins, and three friends have been in seven serious accidents. In each case, their cars were totaled, resulting in multiple concussions and, tragically, two deaths. This affected me deeply and, even though our 10-year-old Volvo was running fine and built like a tank, led me to buy a new car – the exact same model, but with a lot more safety features. It was a wise decision, as Susan was in a serious accident not long afterward. Keep in mind that instead of a steady upward climb, life is more like three steps forward, two steps back... Everyone focuses on those forward steps, but it's equally important to minimize the backward ones. Again, the foundation of a successful life is playing defense – and by that, I mean avoiding the obvious mistakes that can really set you back. In upcoming essays, I'll do deep dives into some of these calamities... Stay tuned! Best regards, Whitney Tilson December 27, 2022 --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 380 Lexington Ave., 4th Floor, New York, NY 10168 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](