STREET DOGS

Success contains the seeds of its own destruction — Andy Grove. The late Jim Paul went from being a poor boy raised in Kentucky to serving on the board of governors of the Chicago Mercantile Exchange through a series of clever investments and a good dose of luck.

But his cockiness grew alongside his success, and bad investment decisions eventually toppled him. In a few months he lost his reputation, his job and $1.6m, $400,000 of which had been borrowed from friends.

“Personalising success sets people up for disastrous failure,” Paul wrote in his book, What I Learned Losing a Million Dollars. “They begin to treat the successes as a personal reflection of their abilities rather than the result of capitalising on a good opportunity, being in the right place at the right time, or being just plain lucky.”

As Morgan Housel has pointed out: “Getting rich can be the biggest impediment to staying rich…. The more successful you are at something, the more convinced you become that you’re doing it right. The more convinced you are that you’re doing it right, the less open you are to change. The less open you are to change, the more likely you are to tripping in a world that changes all the time. Nothing great or terrible is likely to stay that way for long, because the same forces that cause things to be great or terrible also plant the seeds to push them the other way. Bull markets make stocks expensive, expensive stocks leave little room for error, and little room for error increases the odds of bull markets ending. Same thing in the other direction. Recessions cause pessimism. Pessimism causes underproduction, leads to scarcity, and to a new boom. People whose behaviours are changed by their own success are vulnerable to the same cycles.”