All Selling Aside With Alex Mandossian

I want to share a story (that may or may not be true) about one of my favorite people in investing. Warren Buffett was playing golf with three other billionaires. Just before he struck the golf ball, the other billionaires wanted to make a bet that he wouldn’t hit a hole in one. Based on the odds, he would have won $40,000 if he hit that hole in one, and had to pay just $20 if he didn’t. Instead of accepting or declining, he thought through the odds and then offered to play for a larger bet: $4,000,000 if he won, and $20 if he lost. The other billionaires probably rolled their eyes over how little fun he was to make bets with. Buffett pointed out, though, that it wasn’t about his $20 risk; it’s that stupid in little things is stupid in big things. This ties into Buffett’s first rule of money: don’t lose it! His second rule is this: “Never forget rule #1.” Risk is inevitable, but loss is optional if you take a calculated risk by acting small and thinking big. Acting small means testing. You track the result, t