Let’s dive into history again this week and find out what made Mark Twain a terrible businessman and investor even though he was a brilliant writer.
Because after all, no matter how successful you are, you’re capable of making terrible business decisions.
Mark Twain famously wrote The Adventures of Tom Sawyer and was one of the highest-paid authors of the 1800s.
He married a wealthy coal heiress whose father on their wedding night had given them a MANSION with servants, a carriage, and a coachman.
So, this guy was off to a fairly good start financially.
But when you start getting a bit of money, that’s when the DANGER comes in because you have something to play with…
Twain’s life-changing financial losses came from speculation.
Venture Capital Gone Bad—Beginning in 1880 Twain spent $300K (about $7 million in today’s dollars) on investing in the Paige typesetting machine.
He thought this device was going to replace human typesetters, and he told the press, “It can do anything a human could, except drink, swear, and go on strike.”
The problem was, the machine never worked that well.
As often happens with new technology—it can be buggy and it’s high risk.
The Paige typesetting machine never turned a profit.
If anybody knew about the publishing industry, it was Mark Twain.
This just goes to prove that even if you know an industry well, it doesn’t mean your investment idea is going to work.
He was so overconfident in this little contraption that he spent much of his wife’s inheritance in the machine, and even borrowed against the assets of his own publishing company!
Twain wasn’t finished making bad business deals.
Usually, if you know someone making one bad deal, know that it’s likely NOT their only one.
Twain lost money on the following:
- an engraving process
- a magnetic telegraph
- a steam pulley
- the Fredonia Watch Company
- railroad stocks
He was making a bunch of money and then promptly LOSING a bunch of money.
Remember, there are 3 steps to wealth:
#1 Earn a high income
#2 Keep it
#3 Multiply it
Twain did well with #1 but couldn’t do #2 and never even started #3
Later in life, he began to learn and said,
“There are two times in a man’s life when he should NOT speculate: when he can’t afford it and when he can.” —Twain
The keyword here is SPECULATE.
Most financial analysts today said that Mark Twain’s biggest mistake was a lack of diversification—he was putting all his eggs in one basket.
He went ALL IN on the typesetting contraption…but the problem wasn’t him going ALL IN…
The problem was he just went all-in on the wrong thing.
Contrary to popular opinion, diversification is NOT a positive thing when it comes to multiplying your money.
I put ALL my money into one asset class—and it’s making me a billionaire. (Join me here)
Losing Money Hurts:
It’s said that Mark Twain began to suffer depression later in life.
Note—maybe money doesn’t make one happy, but NOT having money didn’t make Twain happy either.
Nobody is happy to lose their money.
The problem is, once you make a big mistake, sometimes you become a coward and STOP investing.
Twain passed up the biggest moneymaking opportunity of his life when he considered investing in Alexander Graham Bell’s telephone…only to pass on it.
Twain almost invested in the telephone…but didn’t.
Alexander Bell asked Mark Twain personally if he wanted to invest in the new technology. Twain famously replied, “I don’t want anything more to do with wildcat speculation.”
Meanwhile, his neighbor bought $5K worth of stock from Bell.
Soon, Twain’s neighbor was rolling in the dough with the biggest jackpot of his life.
Twain said this about the situation:
“It is strange the way the ignorant and inexperienced so often and so undeservedly succeed when the informed and the experienced fail.”
I can tell you over 110 years later…I was an ignorant and inexperienced boy from the swamps of Louisiana—yet even I am able to become a billionaire, and I can tell you it has nothing to do with how “informed and experienced” you are but rather WHO you network with and get advice from.
Mark Twain made bad business decision after another and eventually QUIT on investing. Then, he chalked it all up to “luck”.
Get with the right people, invest in yourself, and you’ll realize there is no luck in getting wealthy—it’s not an accident.
You have to earn a good income, KEEP IT (not blow it), then get the right advice from the right people and multiply your money (invest it in REAL assets).
I’m your Uncle G and I’m telling you that there is no better investment, in my opinion, then multi-family real estate if you want to keep and MULTIPLY your money.
Don’t make BAD business decisions.
Your net worth is your network.
P.S. Twain once said, The difference between the right word and the almost right word is the difference between lightning and a lightning bug.
The same is true with business and investment decisions. The difference in your bank account between the right decision VS an “almost” right decision is the difference between success and failure.