Stories About Making Money (1)

The title is making money not investment. 😊

1. All or nothing?

This real-life story was related to me by a friend when he was in investment banking many years ago. I have since lost contact with him which is kind of sad. :( 

In his early years as an investment banker, he was posted to China to start the  branch office when China was opening up to the world. During his posting there, he got acquainted to a client who invested with him. My friend specialised in commodity trading, in particular, in oil and precious metal trading.

According to him, this client took a bet on oil based on his recommendation. He staked all he has at that time, buying future contracts that oil would rise. Oil price rose just as my friend predicated and his client made a tidy sum on paper. When the oil price rose to a high, he advised this client to take the profit. Guess what? His client “ignored” him, he used the paper profit to margin buy even more future contracts. When oil price rose to another high, my friend again told him to close all contracts and cashed in the profit. Again, his client did not listen. My friend watched in awe, in trepidation and in worry about how this client traded and the faith he had in oil. By the time when the client did close all the contracts, he made a good 8-figures sum in his account.

During a follow-up session, my friend asked this client why he did not cash out in both instances when he gave the advice, the client simply has this to say ~ he has nothing to lose, the slightly over 100K RMB he has would not be able to give him the lifestyle he wanted. And he explained that as he was still young, he could still work and made the money back in the future even if he lost all the money.

This client has a“gambler” mindset? The All or Nothing mentality? I guessed besides his boldness and audacity, he was quite “certain” that the oil was on the uptrend and he was lucky that lady luck on his side. His about 100K RMB became a 8-figure sum (not sure if it is in USD or RMB) allowing him to retire immediately and do whatever he wanted to.

Every time, when I recalled this story, I can't help but ask myself ~ do I have the same audacity and gut to risk all my hard-earned money cum savings and bet on just one thing. Even though I may have the ability to earn back what I lost. The thought of going through the pain process of saving, scrimping and the stress of working are too much to bear. I simply cannot side-step or cross or break this mental barrier. And I will never be like this client in the story.

2. Taxi Uncle

The story takes place shortly after the recovery from SARS. During a taxi ride, I struck up a conversation with the driver, whom I'll refer to as "Taxi Uncle." What caught my attention first was his impressive, fluent English. As we chatted, our conversation naturally turned to the topic of SARS—how quiet the streets had been, how businesses were impacted, and how life had been disrupted.

Somehow, our discussion veered toward the stock market and its recent crash. I casually mentioned the sharp drop and subsequent quick recovery of the market. He asked if I had invested and if I had benefitted from the upturn. I admitted that I had missed the opportunity to buy when prices were low and, now that the market had surged, I felt hesitant to jump in. I lamented how difficult it can be to make money from "Mr. Market," and shared my observation that retail investors rarely seem to profit.

To my surprise, Taxi Uncle revealed that he had made around $160,000 from the market's recent upturn. I was taken aback—here was a taxi driver who had made such a significant sum in just a few months. Intrigued, I probed further, asking about his investment strategy. Did he hold long-term stocks or receive dividends? How did he decide when to enter and exit the market?

His response surprised me. He explained that he didn't hold any stocks long-term and didn't believe in dividend-paying companies. In his view, stock prices fluctuate too much, and there's no guarantee that dividends will continue or that a business will even last. Companies, he said, can face downturns, mismanagement, or disruptions. He then asked me to survey how the composition of stocks in the stock indices had changed over time—an interesting perspective I hadn't thought about.

Curious, I asked why he chose to invest during the SARS outbreak and what his general approach was, given that he usually kept his money idle in the bank. He countered with a thought-provoking question: "How often do you hear about a retail investor making such a sum of money in just a few months? And how long do you think it would take the average person to save $160,000?"

I was momentarily speechless. He was right. Most retail investors rarely see such returns, and it would take an ordinary person years to save that amount. Taxi Uncle clearly had a unique outlook on investing, shaped by his experiences.

He candidly shared that he lived a simple life and that the $160,000 would last him for many years—whether viewed as a windfall, a form of savings, or even as dividends that would have taken years to accumulate. His biggest piece of advice was simple but powerful: be patient and wait. Mr. Market is cyclical, and history will repeat itself. He emphasized the importance of having money ready, and when the market crashes, to be bold. His strategy was to aim for good companies that had been beaten down for no good reason and to stake a substantial amount on just one or two of these companies. If you choose wisely, he said, the returns will be amazing.

This taxi uncle was like a hunter, who sharpened his tools, getting ready, bid his time and waited patiently for the prey to come to him. And  he made the kill without hesitation. 

To this day, I still remember his advice. Of course, it's easier said than done—replicating someone else's success is never easy—but I continue to work on honing this skill.

3. Story 3 - see same title with (2)