The Man Who Got Rich Off Of Stupid People
Andrew Ladhe is a name you may not be familiar with. However, if you follow the markets a decade ago, you may have heard of a young hedge fund manager who decided to quit the business in the most epic way possible.
His company, Ladhe Capital returned an astounding 870% in 2007. After making the killing of a lifetime, he did something that most other hedge fund managers never do, he walked away from the table a winner. And he did it all before his 30th birthday.
He left behind a resignation letter explaining that his wealth came from the stupidity of people on the other side of his trade. People, he insisted, who were groomed from entitled backgrounds and a poor understanding of the markets. Andrew Ladhe found the sucker at the table and bet against them hard. And he took them for every cent they had. Here is a exerpt from the letter.
I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back booked solid for the next three months, they look forward to their two-weekk vacation in January during which they will likely be glued to their Blackberries or other such devices.
A great lesson here is to learn that if you can't find the sucker at the table, then you are the sucker. Avoid trading against the Andrew Ladhes of the world. If you don't completely understand the trade you are making, don't make the trade. Additionally, if you see someone make a dumb trade, then take the other side of that trade.
