It’s Time to Leave the Casino

“There is no reason to risk what you have and need for what you don’t have and don’t need. – Warren Buffet

I’ve been stuck in the casino for the last 20 months, and it’s been hell.

At the start of the pandemic, I pulled my money out of index funds in an attempt to beat Mr. Market.

In my pursuit of outperformance, I traded everything – options, leveraged shorts, growth stocks, recovery stocks, crypto, and NFTs.

During this time, I:

• Made over 2,000 buy and sell orders (~3 transactions/day)
• Spent ~2 hours/day looking at stock charts & CNBC
• Played in my portfolio spreadsheet for 100+ hours
• Spent days scrolling Twitter and Discord looking for signals
• Read thousands of pages about investing

What did all of this time and energy get me?

In a time when the S&P 500 rose 85%, my portfolio returned 20%.

If I had sat on my ass and done nothing instead of spending 1,000+ hours trading, I would have been much wealthier. But money comes and goes. The real cost of my pursuit was far greater than missing out on a few dollars. As I spent my life trying and failing to beat the market.

• My sleep suffered. I had many sleepless nights worrying about what would happen in the market the next day. I would often wake up with anxiety at 3am. I’d check the NASDAQ futures and crypto markets. If markets were ripping down, I didn’t get back to sleep.
• My productivity suffered. With less sleep and an obsession with checking stock tickers, I struggled to do any deep work. If my portfolio had a particularly bad day, I had less patience with colleagues. I often couldn’t focus until markets closed.
• My relationships suffered. Early on, my portfolio performance influenced my mood. If I lost money, I entered an agitated state. I struggled to be present with the people around me. I became less pleasant to be around and less helpful to my partner and friends.
• My body suffered. During market hours, I remained glued to stock apps. Especially when trading options, I felt like I couldn’t leave the screen. This increased my stress, leading to bouts of binge eating sweets and drinking alcohol. I often felt too on edge to do activities I enjoy, like yoga or surfing.
• My mind suffered. As I tied my identity to an inherently volatile game, I felt like a chaotic failure. I felt no equanimity. Every time I lost money, the scarcity mindset of my childhood bubbled to the surface. I hated myself for making decisions that made me less well off. My confidence and sense of self-worth crumbled. I also felt envy as people around me did better.

The daily pangs of self-loathing were the worst part. For most of my life, I’ve done well because I believed in myself. As I failed to do well in the market, I began to question my worthiness as a person.

“If I had continued buying index funds and spent zero time thinking about markets, I’d be richer, fitter, more productive, less anxious, a better partner, and happier.”

I felt like a loser. I couldn’t shake the feeling that I had sabotaged my life for no reason. But despite this negative cocktail of emotions and effects on my life, I kept going.

The more I traded and studied, the more I felt like success was around the corner. Just a few big wins and it would all be worth it. I wanted to master the game and tell my friends how I did it.

But this success never happened. Every time I would get a good win, a market selloff or a bad trade would level me. The high of a winning trade would fade into the darkness of unprofitable positions.

I have a problem

About a year into this madness, I realized I had a problem. Up until that point, I believed that I was learning to invest and paying the price for moving up the learning curve.

To be fair, I was learning. I learned about navigating my psychology, different asset classes, position-sizing, and so on. But unlike the learning I’ve done in other domains, I had no real strategy or definition of success. No amount of money would have made me feel successful.

Investing is hard because it is a continuous game. You make bets, exit bets, and keep playing. There is no end to the game, which is part of what made it so torturous to my mind. I could always earn more.

Without a strategy or criteria for success, I could not win. I did not know the game I was playing. This lack of clarity meant that I rode the highs and lows of my portfolio. And there were far more lows than highs.

When the pain became great enough, I decided I had to solve my problem. I wasn’t investing. I was speculating without a plan. And it eroded the quality of other areas of my life.

I had locked myself in a virtual casino. And the house was going to win. The only way I could win the game was to cut my losses and leave the casino. For months, I tried and failed to leave.

The forces keeping me in my seat at the slot machine were strong. My entire inner and outer world glued me to the chair. To leave, I had to conquer the forces keeping me around.

• Pandemic boredom and isolation. With the pandemic ravaging the world, I spent more time at home. I spent less time traveling and with friends. In part, the virtual casino filled the emotional void of living in a pandemic. Making bets gave me something to do and look forward to every day.
• My identity. After growing up as a poor kid in Orlando, I had clawed my way to a life of financial stability. A big part of my identity was being smart with money. I had even helped many of my peers learn the principles of personal finance. I didn’t want to leave the casino before proving that I could be successful with active money management.
• Mimetic games with friends and strangers. Many friends and people I followed on Twitter seemed to be doing very well investing in growth stocks and crypto. Their success made me feel like I could do well too. Stopping before I shared in the glory felt like accepting that I was less intelligent or worthy.
• Desire to get rich quick. Succumbing to my lower impulses, I wanted to increase my net worth in short order. In paying such close attention to the market, I felt like if I could make a few good decisions, I could increase my financial freedom and stop trading my time for money.
• Dwelling on past decisions. Because I pulled my money out of the indices, I felt like I needed to keep going until I outperformed. I didn’t want to stop until I beat the market. And I had invested so much time and energy into the pursuit that the sunk cost fallacy kept me locked in.

Every time I tried to leave the casino, one of these forces would draw me back in. I had built the habit of playing in the casino every day, and it was hard as hell to leave.

To exit the casino, I had to reshape my identity, stop playing mimetic games, build new habits, and forgive myself. These domains alone could fill up a lifetime of therapy sessions.

In pursuit of time freedom

Little by little, I’ve started to let go of the person I was in favor of the person I want to become.

I’m not 100% there yet, but I’m close. The most helpful motivator has been thinking about the opportunity that awaits on the outside – better relationships, improved health, less anxiety, and more time for creative work.

Instead of obsessing about earning more, I’m focused on the most valuable thing money can provide: time freedom.

Time freedom is the ability to do what you want, when you want, and with who you want.

In prioritizing time over money and inner peace over ego, I’ve accepted that I may miss out on a few dollars. I will never have the sexy returns of my friends. I will never be an investor who outperforms.

But this is the right choice for me. It always has been. I lost my way for a couple of years, and that’s okay. I imagine I’m not the only one.

To anyone still playing the game, I wish you luck. As for me, I’m heading out.

It’s time to leave the casino.

For more on this story…

We recorded a podcast that goes deeper on this topic. You can listen below or in your favorite podcast player here.