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What I Learned Watching Bubbles: Better To Be Conservative Wrong

Did you see the commodity bubble? It inflated and deflated in a couple months leaving some people very rich and others very not rich. It also left even more people entirely unchanged because either they didn’t go in or they were in already and didn’t get out. That’s the third lesson I learned, if you’re going to be wrong (or miss out on something) it’s better to be conservative wrong. If you’re going to miss a bubble… it’s better to heed lesson $3:

Lesson #3: Don’t Think Of It As Not Winning, Think Of It As Not Losing
How many people made a fortune by getting into the dot-com market early and getting out early? Now how many people saw Jeff Bezo’s smiling face peering through a box on Time magazine [3] when he was named 1999 Person of the Year, bought Amazon.com stock at $113 and watched it tumble to the current price now of under $35? I bet you group two is a lot bigger than group one. Would you have believed the pundits when they said to get out when other pundits were saying get in?

No one has ever made any money sitting on the sidelines, unless you’re Philip Rivers of the San Diego Chargers [4], but they’ve also been spared the heartache of losing money. A lot of money. For ever baller in the NBA, there are a hundred gas pumping almost-made-its who made the wrong bet. It’s better to have not won a million dollars than it is to have won it and then lost it. This isn’t love, this is money.