He was a mathematician, physicist, astronomer, theologian, and author.
Isaac Newton: A brilliant scientist, a terrible investor
How Issac Newton lost $4 million due to the first stock market bubble in history and insider trading
/THREAD/
He was a mathematician, physicist, astronomer, theologian, and author.
However, his most prominent failure was losing an entire fortune in the first stock market bubble in history, the South Sea Company in 1720.
Before 1720 most of his investments were in safe and reliable securities, various government bonds that delivered a regular stream of income, and shares in a few of the larger companies on the exchange, including South Sea Co.
Government bondholders were given the option to exchange their securities into South Sea Co. shares.
However, the potential for dividend increases and sizable capital gains was created when Parliament gave the company a monopoly on trade with Spain’s colonies in South America.
It required all companies that sold stock to the public to hold a royal charter aiming to control rampant speculation.
A well-bribed Parliament and ruling ministry accepted the idea in February, and the deal became official in April.
Over the next eight years, he picked up more shares, using his savings and the proceeds from selling his shares in other companies.
In 1720, he converted his government bonds and annuities into the stock.
At this point, Newton unloaded most of his shares for a profit of more than £20,000 equal to 200 years of his former annual salary as a professor at the University of Cambridge.
This was amplified by the hundreds of newspapers in London posting glowing articles from esteemed authors, along with rumors about South American commodities that would be imported back to Europe.
The stock was also made easier to buy through installment plans with 10% downpayments.
With England in a euphoric mood, watching from the sidelines was hard to do.
By mid-June, Newton could no longer stand the thought of the money he’d “lost” by selling too soon and began to buy back in.
By mid-August, he was paying £700 to £1,000 a share, more than double the price he’d sold in April.
In the summer, news broke that insiders were selling.
The stock began to tumble and within a few weeks, plunged back to the £200 level.
So ended the infamous South Sea Bubble.
Newton’s losses were catastrophic, likely £20,000, the equivalent of $4 million today.
1720 was sometimes referred to as the “Bubble Year”
He allegedly forbade everyone from uttering the words "South Sea" in his presence.
/END/
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https://t.co/ggB2vFv9Ha
Isaac Newton: A brilliant scientist, a terrible investor
— Kostas Kosmidis \U0001f468\u200d\U0001f4bc \U0001f4c8 \U0001f4b8 (@itsKostasWithK) January 10, 2021
How Issac Newton lost $4 million due to the first stock market bubble in history and insider trading
/THREAD/ pic.twitter.com/uCU0zDVyw9
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The Mother of All Squeezes
How Volkswagen went from being on the brink of bankruptcy to the most valuable company in the world in two days
/THREAD/
1/ At the peak of the 2008 financial crisis, Volkswagen was considered a very likely candidate for bankruptcy.
Heavily indebted and already financially struggling before 2008, with car sales expected to plummet due to the ongoing global crisis.
2/ With GM and Chrysler filing for bankruptcy in 2009, shorting the VW stock would seem a safe bet.
If you are not familiar with stock shorts and short squeezes check my thread
3/ On October 26, 2008, Porsche announced it had increased its stake at VW from 30% to 74%.
This was a surprise to many who were led to believe that Porsche wasn't planning a takeover of VW, based on the company's announcements.
4/ Before the announcement, the short interest was approximately 13% of the outstanding shares, a number considered relatively low.
Porsche had a 30% stake, the Lower Saxony government fund held 20% of the shares, and another 5% was held by index funds.
How Volkswagen went from being on the brink of bankruptcy to the most valuable company in the world in two days
/THREAD/
1/ At the peak of the 2008 financial crisis, Volkswagen was considered a very likely candidate for bankruptcy.
Heavily indebted and already financially struggling before 2008, with car sales expected to plummet due to the ongoing global crisis.
2/ With GM and Chrysler filing for bankruptcy in 2009, shorting the VW stock would seem a safe bet.
If you are not familiar with stock shorts and short squeezes check my thread
Shorts, Squeezes, and Betting Against Stocks
— Kostas on FIRE \U0001f525 (@itsKostasOnFIRE) January 27, 2021
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/THREAD/ pic.twitter.com/PyDd208hFe
3/ On October 26, 2008, Porsche announced it had increased its stake at VW from 30% to 74%.
This was a surprise to many who were led to believe that Porsche wasn't planning a takeover of VW, based on the company's announcements.
4/ Before the announcement, the short interest was approximately 13% of the outstanding shares, a number considered relatively low.
Porsche had a 30% stake, the Lower Saxony government fund held 20% of the shares, and another 5% was held by index funds.
If you want to become financially independent and don't know where to start, here is a thread that will help you get started
/THREAD/
1. Review your expenses and make a budget
It will help you see where you overspend, make a plan to save, pay down debt and start
2. Set your investing and retirement goals
How much do you need to support yourself in retirement and when do you want to
3. The earlier you start investing, the better.
Here's why and how time and compounding can become your
4. Invest in an index fund
It's easy, safe, cheap, and the best choice for a beginner in investing, with not much time for
/THREAD/
1. Review your expenses and make a budget
It will help you see where you overspend, make a plan to save, pay down debt and start
Budgeting, the 50-30-20 rule, and the envelope method
— Kostas \U0001f468\u200d\U0001f4bc \U0001f4c8 \U0001f4b8 (@itsKostasWithK) January 6, 2021
Your first step towards financial independence
/THREAD/ pic.twitter.com/Tmuc3Itca5
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— Kostas \U0001f468\u200d\U0001f4bc \U0001f4c8 \U0001f4b8 (@itsKostasWithK) January 2, 2021
//THREAD// pic.twitter.com/AOqd3kL6cn
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It's easy, safe, cheap, and the best choice for a beginner in investing, with not much time for
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I’ve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the person’s part, whereas “smart” luck involved awareness followed by action before the circumstances changed.
So, was I “lucky” to be born when I was—nothing I had any control over—and that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write “What Works on Wall Street?” Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.
Ironies of Luck https://t.co/5BPWGbAxFi
— Morgan Housel (@morganhousel) March 14, 2018
"Luck is the flip side of risk. They are mirrored cousins, driven by the same thing: You are one person in a 7 billion player game, and the accidental impact of other people\u2019s actions can be more consequential than your own."
I’ve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the person’s part, whereas “smart” luck involved awareness followed by action before the circumstances changed.
So, was I “lucky” to be born when I was—nothing I had any control over—and that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write “What Works on Wall Street?” Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.
