The Less You Have, The Less You Lose

In October of 2008, Warren Buffet lost about $9.6 billion on paper. Put it another way, that’s a freaking a lot of money! To also put it another way, in my chase to match Warren’s wealth, I caught up to him by about $9.599 billion dollars.

Many of us have lost a lot of money in this market, but we could have lost more if we were already very wealthy. I am absolutely positive that it hurts much more for some poor rich CEO losing $50million of his net wealth, vs us losing $50,000 of our own.

Now is absolutely the best time to be relatively young and buy all the assets we can. And since we have such a wonderful opportunity, it makes wasteful spending that much more expensive because of the potential returns down the road.

Who knows whether we are going to double dip in the 2nd half as unemployment marches to 11%+. What I do feel strongly about is that if we don’t buy some distressed asset now, we are going to be kicking ourselves in 20 years. Personally, my site is set on a vacation property in Nevada, Lake Tahoe. I hope to pick up a foreclosure that is 50% off of peak values, and that can provide a 8% rental yield vs. the current government risk free 10 year treasure of 3.54%. In 8-10 years, i plan to move there and pay 0% state income tax, vs. 9.6% here in California.

Readers, what do you plan to pick up for cheap in this recession?

Rgds,

Sam

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. Anonymous says

    Interesting, spoke to a client and he said most people he knows, including himself put a majority of their liquid assets into the stock market. Even if one had $1million in cash, he said most would put 700K or more into the market. Doesn't sound great.

    IF i had $1mil cash, i'd put 70% in a 5% then yielding CD. Wouldn't you? Or is this just hindsight speaking??

  2. Lee says

    I guess I’m fortunate (?) to have been in debt when the recession struck. My networth has been going up as I work to pay off what I owe. It is true that the less you have, the less you lose. Given I didn’t have anything, I haven’t lost anything either!

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