I made a year's salary in one day. Then I gave it all back

In April 2020 the price of oil went below zero.

Not metaphorically. The May contract for West Texas Intermediate settled at minus thirty-seven dollars, because the world had stopped driving, every tank and tanker was full, and holding a barrel had become a liability rather than an asset. Sellers were paying people to take it away.

I was short. With leverage.

In one day I made what my job paid me in a year.

What I learned from that, and what I actually learned

What I thought I learned was that I had found something. That there was an enormous amount of opportunity sitting in these markets, and that understanding them paid far better than selling my hours ever would.

Half of that was correct, and it is still why I do this. The opportunity is real.

The other half was the most expensive idea I have ever had, because what actually happened was that a once-in-a-century dislocation in a commodity market went the way my position happened to point. That is not a skill. It is a coin landing on its edge while you are looking the other way.

I did not know the difference. So I kept going, and over the following months I gave all of it back.

I have thought about how to describe that period honestly, and the only accurate sentence is this one: I traded like it was a casino. Not because I was reckless with the size, particularly. Because I had no reason for any of it. I had a screen, a feeling, and a balance that went up and down. There was no version of me that could have explained, out loud, why any specific trade was a good idea.

Then I tried to do it properly, which went worse

The obvious lesson from losing it was to stop trading and start investing. So I did.

The problem was that I had nothing to invest from. No framework, no validated strategy, no way of deciding that one company was better than another. What I had was the internet.

So I did what a very large number of people do, which is to take my cues from whoever sounded most certain. YouTube. Posts. The big names, the loud ones, what they were buying and why they were sure.

That is how I ended up owning Tattooed Chef.

It went up first. That is the part nobody warns you about, because the going up is what convinces you that you were right, and being convinced you were right is what stops you looking at anything else.

Then it started going down, and the red flags began arriving. Not all at once. One at a time, over months, each of them a thing I could have looked up.

I ignored every single one.

Not out of stubbornness. I ignored them because I could not read them. I did not know what a deteriorating working capital position meant. I did not know what it meant that the auditor language had changed. I did not know how to tell the difference between a company having a bad year and a company running out of road. So instead of understanding, I did the only thing available to somebody with no instruments: I believed, and I hoped.

On 30 June 2023 the company announced it intended to file for Chapter 11. It filed on 2 July. Nasdaq delisted it on 3 July.

I could have got out several times. If I had understood. I did not.

The part where I get annoying about it

Most people take that experience, decide the market is rigged, and leave. That is a completely reasonable response and I do not think less of anyone who has had it.

It would not leave me alone, though. Not the money. The fact that the information had all been there, in public, on file, in documents anyone can download for free, and I had walked past it because I did not know what I was looking at.

So I went and learned. Certifications, an unreasonable amount of reading, and subscriptions to most of the serious platforms, which taught me two things at once: there is a lot of genuine expertise available, and almost none of it is arranged in a way that tells you what to actually do on a Tuesday.

Eventually I stopped looking for the tool and started building one.

The measure I had to build

The question I could not get an off-the-shelf answer to was embarrassingly basic: after this business pays for all the money it uses, is there anything left?

Not profit as the income statement reports it. Every company gets charged for its capital, not only the interest on its debt but what shareholders expect for taking the risk of owning it, and that total is different for every business. A company earning 9% on capital that costs it 11% is quietly destroying value every year while reporting a profit. A company earning 7% on capital that costs 5% is creating it.

Return on capital cannot see that. Earnings per share definitely cannot: it can be engineered, and it routinely is.

That measure became RTEP, and a model got built on top of it, and I have run my own money on that model ever since. Not as an experiment. As the actual thing I do with my savings, iterated whenever I found something wrong with it and backtested every time I changed anything.

It works like a compass. That is the honest description. It does not tell me the future, it tells me which way I am pointing, and it keeps telling me that on the days when I would rather be told something else.

Why any of this is for sale

Enough people I showed it to told me to sell it that I eventually listened.

But I want to be precise about what stopped me for a long time, because it is the same thing that decides how this whole site is built. The internet already has an enormous number of investing products whose actual business model is your hope. Screaming headlines, a track record that begins on a conveniently chosen date, results with the bad years quietly removed. I had already paid for that education once and I was not going to become the next invoice.

So the deal here is:

Every month I publish what I own. What I bought, what I sold, and where I stand. Not a model portfolio. The actual holdings, with my own money in them.

Including the months I am behind. Our thirteen-year backtest is behind a plain index blend in seven of thirteen calendar years, and the one stretch we sealed off and could not tune against went against us. That is on the record page, with the numbers, and it is not in a footnote.

And the whole thing costs about what you paid for lunch. If you have ten or fifty or a hundred thousand dollars invested, the monthly fee is a rounding error against a single avoidable mistake. That is the entire commercial argument, and I would rather make it in one sentence than dress it up.

What I would tell the version of me holding Tattooed Chef

He would not have listened, probably. But it would have been this.

You are not stupid and you are not lazy. You are uninstrumented. You are trying to fly a plane by looking out of the window, and it works right up until the weather closes in, at which point the thing that saves people is not courage or conviction. It is having instruments, and having practised reading them when it did not matter.

Everything on this site is the instrument panel I did not have. Every rule in the model is a mistake that has already been paid for, in cash, by me.

Educational and proprietary. This explains what our research does, not the exact formula behind it, and it is not personalised investment advice. See the full disclaimer.