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This chapter is from the book

Examine How Well You Followed the Rules

It's painful to lose money. It especially hurts if you felt you were following the rules. But for the higher purpose of helping you to empower yourself, you need to look at yourself honestly. Did you really follow the rules? Did you follow them as closely as you could? Did you have a realistic time frame, or did you lose patience with the process? Maybe you had rules you weren't following at all. Maybe you were following other rules because you got distracted from the original rules you established.

Charles talks about how this happened to him.

  • Charles: For 20 years I have had a successful business in home security systems. I am confident and have a strong head for financial decisions. I always believed in diversification and therefore used different asset classes. This meant being invested in stocks, bonds, real estate, even art and collectibles. Each time I had a positive investment result, I added more money to that specific category because I was so pleased with how things were working out. Eventually, I had large sums deployed in more aggressive and illiquid assets, and the returns took a negative shift. I kept telling myself that these things just needed more time, but I ultimately had to acknowledge that I lost track of my own rules for managing risk. I was attracted to the high potential returns and forgot to limit the percentage of funds in each asset class.
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