The big idea from Episode 766, plus a one-hour plan to act on it this week. Two pages, free.
✓The one idea from this episode that matters most for your money
✓Three steps you can finish in under an hour
✓A quick fill-in to apply it to your own numbers
Free. Lands in your inbox in a minute.
At a New Year’s Eve party, a guy pitched David Leiter on a crypto coin called Luna that was paying 10% interest at a time when banks paid almost nothing. David passed. He had made one of the classic investing mistakes himself two decades earlier, and he recognized the pattern.
In January 2000, while working on Wall Street, he got swept up in the last months of the dot-com bubble and watched a stock fall from $63 to $11. A few months after that party, Luna went to zero.
David is the author of Stop Making Stupid Investments and runs The Ultimate Investor. He has spent decades watching investors get pulled into bad deals by FOMO, charisma, and the next hot thing, including very smart and very successful investors.
In this conversation, he walks through the five levels of investors, from the speculator chasing price movements to the master living off their portfolio, and explains why so many people never get past level one. He also lays out seven rules for avoiding the investing mistakes that set people back for years, from avoiding big losses to never buying a trading system.
His core argument is that investing isn’t a game of intelligence. It’s a game of temperament, and most investing mistakes are emotional ones.
Most investors start as speculators, and some never leave: David’s five levels run from speculator/gambler to retail, awakened, professional, and master. The danger at level one is that speculators often study charts and read constantly, so they believe they’re acting like professionals when they’re really just chasing price movements.
A bargain, by definition, can’t be well liked: Borrowing from Howard Marks, David argues that if everyone is excited about an investment, the price is probably already high. Thinking like a contrarian means asking what people are ignoring, then doing the work to see whether it’s actually a good deal.
Big losses cost far more than money: Lose 50% and you need a 100% gain just to break even. Big investing mistakes also cost years of compounding, and they often push people out of the market entirely, until they jump back in at the next peak.
Investing is a game of temperament, not intelligence: Quoting Warren Buffett, David notes that you don’t need a genius IQ to invest well. What matters is noticing your own FOMO and removing emotion from decisions, which is good news, because temperament can be cultivated.
Liking someone is not a due diligence process: Charisma standing in for research drives many investing mistakes, especially in private deals. David’s rule is to avoid private real estate or private equity deals without audits and a substantial manager track record, and to be wary of social media gurus who flaunt wealth instead of humility.
Buy for cash flow, not for hope: David’s first Williamsburg building cash flowed from day one. The neighborhood’s transformation was a bonus, not the bet. If an investment only works when a hot neighborhood takes off, the worst case is a loss rather than a reasonable return.
Resources
Links, tools and references mentioned
+
Investing is a game of temperament, not IQ
This free workbook shows you how yours shapes your money decisions. Get the free workbook
Stop Making Stupid Investments by David Leiter
David’s guide to avoiding the most common investing mistakes. Get the book on Amazon
Ready to clean out your closet and make some extra money? Download the free Vinted app and start listing. There are no seller fees, so you keep every dollar you earn.
Compare life insurance quotes from top companies in one place. With Policygenius, you can find 20-year policies starting at just $276 a year for $1 million in coverage. Head to policygenius.com to see how much you could save.
Spend less time searching and more time interviewing candidates who check all your boxes. Afford Anything listeners get a $75 Sponsored Job credit to help your job post stand out at indeed.com/podcast. Terms and conditions apply.
The LPG Biometric Aadhaar Authentication rule has become mandatory for LPG customers with effect from October 1, 2026, especially for customers who enjoy subsidized benefits under the Pradhan Mantri Ujjwala Yojana (PMUY) scheme. Under the new rule, LPG customers will have to complete their Aadhaar-based e-KYC to get LPG cylinders refills at the subsidized rates…
Michael Davenport, senior economist at Oxford Economics, described the July decline as “not all that surprising” in comments to BNN Bloomberg. “Overall, I think the number that stands out is the flash estimate for August, which shows that retail sales likely rebounded quite strongly,” Davenport said. Sébastien Mc Mahon, chief economist at iA Financial Group,…
DNY59/iStock via Getty Images By OpenMarkets Collateral – and specifically the repo market – touches virtually every corner of global finance. It underpins bond pricing across the board, from government and corporate bonds to mortgage-backed securities (MBS) and emerging markets (EM), and is ultimately a tool that helps banks manage funding costs and regulatory capital…
Andrew Bosworth, Meta’s chief technology officer, said the conversation around Meta glasses shouldn’t be dominated by a small number of “bad actors.” During an AMA on his personal Instagram, Bosworth answered a question about privacy and Meta glasses. Andrew Bosworth answered a question about Meta glasses privacy on his Instagram. Instagram “I don’t want the…
Consumers are exploiting merchants’ returns process in record numbers, and the costs are adding up. A study of UK retail data found £29 million (over $38 million) in potentially fraudulent returns in just one year. The report from returns firm ReBound Returns was based on analysis of one million retail returns from July 2025 to…
