Success blinds you to big risks

I own 350 shares of SPC (Virgin Galactic), Richard Branson Space travel company, which I bought at $29.15 in July 2021. Today, each of my shares is worth less than one dollar. 

That was a cool way to make ten thousand dollars disappear. But why did that happen? 

Richard Branson got in over his head. He made his money in record labels and airlines. Because of his success, he decided he could do anything, so he started a space travel company. 

Fuck  I thought he could do it; that’s why I invested, but the reality is he didn’t have the background to make it work, and all his money and experience couldn’t help him.  He went to play a game that is popular among billionaires and got his ass handed to him.

But that’s not something that happens just to Richard Branson; anyone who is successful in any way shape or form might over optimistically think they can do anything. 

We often believe the lie “the way you do anything is the way you do everything.”

It's a mistake I've made myself. I lost money in things I had no business investing in.  

I know many people who made money building company A and have tried to build company B  but failed miserably.

It can be something other than money-related, for instance, a great athlete might think they could be great at different sports or even relationships and fail spectacularly.

The point is not to say we shouldn't try new things, but we should make sure we don’t get too arrogant. 

Rather than telling ourselves that we are invincible, the way I do anything is the way I do everything. We should say to ourselves, “This is a new project. I am unsure if I can pull it off, but I will do my best”.  

I would never have bought SPC if I had this mentality, but since I have been investing in stocks for years and made a lot of money in 2020, I got overconfident and bought a precarious business I didn't understand. 

I lost less money than Richard but made the same mistake.

Staying humble is the best insurance against the blind spots of success.