The Loss That Almost Took Me Out of the Game

What nobody tells you about losing money

Mar 08, 2026

A few years ago, I lost a million dollars to a guy I trusted.

I had spent years as a professional investor at Goldman Sachs and Credit Suisse, made over a hundred investments, and built two billion dollar businesses. I thought I knew how to evaluate a business and, heck, at least how to read people. This operator seemed fairly sharp, the numbers were clean, and the margins made sense. I did my homework over a 6 month period and I pulled the trigger.

Then I found out he was running two sets of books.

One for investors and one for himself. By the time I figured out what was happening, he was gone, and so was the money.

Oof.

I want to tell you about what happened next, because the money was not the expensive part.

For months after that loss, something changed in me. I started hesitating on everything. Deals that looked solid made me nervous, and I found reasons to wait on opportunities I would have jumped on a year earlier. I kept telling myself I was being more careful.

If I was being honest with myself, that was not what was happening. I had stopped trusting my own judgment, and that fear was keeping me on the sidelines while entire market cycles (and massive opportunities) passed me by.

It felt like getting into a car accident and then being afraid to drive. The accident was over, but I kept reliving it every time I sat behind the wheel. And the longer I avoided driving, the scarier driving became.

The million dollars I lost in that deal was painful, but it was a fixed cost. I lost it once and it was gone. The hesitation that followed was a recurring cost. Every month I sat on the sidelines waiting for conditions to feel safe, I was paying a price I could not see on any statement. The truth was that markets were moving, opportunities were compounding for other people, and I was standing still (nice way of saying stuck, scared, and jammed up) because I did not trust myself to make a decision.

That hesitation cost me more than the original loss ever did.

I had to make a choice: I could let that one bad experience turn me into someone who watches from the bench forever, or I could figure out what went wrong and build something that would let me get back in the game.

Let’s be real… it did not happen in one afternoon.

For a few weeks I just sat with the loss and let myself be angry about it. But eventually I made myself answer a hard question: what did I miss? Not what did the operator do wrong, but what did I fail to see? I realized I had evaluated the business but I had not evaluated what would happen to the people and the structure when things got messy. I had looked at the deal in good conditions and assumed those conditions would hold.

So I built a framework to protect myself for the future. I call it the Four Goods, and I run every investment through it now before I write a check or get involved in anyway:

Good people. Referrals are not enough. I need to know someone through a working relationship or shared history before I trust them with my money. The only way to really know people is to watch how they operate over time, especially when things get hard. This sometimes takes a hot minute.
Good intentions. Is this person friendly, helpful, and collaborative? There are two kinds of people in deals: those who want everyone to win and those who only want themselves to win. The person in the middle, the one who says the right things but acts differently, is the most dangerous person of all.
Good rationale. The deal has to work on a simple spreadsheet. If someone cannot show me the math in a way I can understand in fifteen minutes, I do not proceed. No spreadsheet, no deal.
Good contracts. I do not move forward on a contract unless I already have good people, good intentions, and good rationale in place. A contract without those three things is just expensive (as in drafted by an attorney) paper. It will not always protect you when things go sideways.

This framework did not guarantee I would never lose money again. I am a professional investor: I have lost some money since, and I will probably lose money in the future. But it gave me a way to make decisions I could defend to myself even when they turned out wrong, and that was what I needed to stay in the game long enough for compounding to work.

In fact, I broke down my core investing framework in this video… you can watch it on 2x speed.

Now I want to tell you why I am sharing this.

I guarantee this: You are going to go through something like this too. And if you have been an investor for some time, maybe you already have. At some point, you are going to make an investment or a business decision that goes badly, and it is going to shake you. You are going to feel like you should have seen it coming, like you were dumb or careless or too trusting. And when that happens, there are three things I want you to know.

First, you are going to want to stop playing. This is the most natural response in the world. You got burned and your brain is trying to protect you from getting burned again. But protecting yourself by refusing to make decisions is not safety. It is more like slow decay. Inflation eats your money, opportunities pass you by, and you lose more to inaction over 10 years than you lost in the original error.

Second, the real damage is not the money. In fact, the real damage is what happens to your confidence. When you stop trusting your own judgment, you hesitate on everything, not just investments. You start second-guessing yourself in business, in relationships, in decisions that have nothing to do with money. One bad loss can leak into your whole life if you let it.

Third, the way out is to build a system you can believe in. Not a system that prevents all losses, because, newsflash, that system does not exist. A system that lets you make decisions you can stand behind, so that when something goes wrong, you can look at your process and say, “I made the best call I could with what I knew, and I would make it again.” That is how you rebuild trust in yourself. Not really by avoiding decisions, but by making them in a way you can respect yourself for making them.

I built the Four Goods for myself because I needed something to hold onto after I got knocked down. Maybe it works for you exactly as I have described it. Maybe you take pieces of it and build your own version. Either way, the point is not the specific framework. The point is that you need something that lets you stay and play the infinite game, because the ability to keep acting under uncertainty is the most valuable skill an investor can have.

When that loss happened to me, I felt like I was the only person dumb enough to get taken advantage of like that. I was super freaking embarrassed. I did not want to tell anyone. But the more I talked to other investors (and my therapist), the more I realized that everyone has a story like this.

You are not alone when this happens to you. And you do not have to let it take you out of the game.

I hope this helps.

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