Page 860 - How to Make Money in Stocks Trilogy

Black Belt Testing: Life-Changing Moments in Investing 123

Ed Hornstein

Ed was raised in a middle class family in the suburbs of Long Island, New
York. Throughout his childhood, his exposure to the stock market consisted
of watching his father buy stocks on “hot tips.” Every stock that his dad
bought was supposedly going to be a ten bagger and make him a multimil-
lionaire. However, the reality was that his father would lose a small fortune
in the stock market by listening to whatever stocks were being pumped by
his broker. Ed’s experience of watching this completely turned him off to
the markets.
Ed borrowed $100,000 in loans to pay for law school and quickly came to
the realization that in order to pay off the loans, he would need to land a job
with a firm that could afford to pay a six-figure salary to starting associates.
As he entered law school, it became quickly apparent that he was sur-
rounded by extremely talented and intelligent people. Ed figured that sev-
eral had IQs that dwarfed his and that if he was going to obtain the grades
necessary to land a job with one of those large firms, he’d have to outwork
them. He spent the first year of law school either in the classroom or pulling
all nighters in the library. That work ethic paid off: Ed finished his first year
near the top of his class and was recruited to work for a highly ranked law
firm in its New York office for the summer.
Ed never paid much attention to the stock market during law school and
completely missed the tech bubble and explosion in Internet stocks in 2000.
But after he graduated and began working, Ed decided it might be prudent
to invest some of the money he was making. He knew that he needed to
learn a thing or two about stocks before committing capital, so he read a few
books about value investing and other stock market strategies. None of it
made much sense to him, especially after seeing people buy cheap stocks
only to lose most of their money.
A few months later, Ed was in a bookstore and noticed a copy of How to
Make Money in Stocks sitting on a table. He picked up the book, browsed
through it, and decided to purchase it. Little did he know at the time that
this decision would forever change his life.
The key principles all made sense. Shortly thereafter, he purchased The
Successful Investor, which really resonated with him. He realized that his
friends and family could have kept the small fortunes they made in the late
1990s if they had followed some simple sell rules.