By Will Crozier

How I Wasted $900k USD on Stupid Shit The Cautionary Tale of an Idiot @thewillcrozier

One of Warren Buffett and Charlie Munger’s “mental models” is called “Circle of Competence”. A Circle of Competence is basically the stuff that a person knows really well, something that they’re an expert in. The problem is that most people think their Circle of Competence is much larger than it really is. They think they know way more about way more things than they really do. This is what got me into so much trouble.

My $60k Boneheaded Mistake

A lot of people know that I used to flip old muscle cars before I flipped apartment complexes and houses. I got pretty good at it in Orange County, California back in the day. I’d sell to “rich” folks back east that couldn’t get their hands on rust-free cars. Most of these cars were purchased for $2k-$10k, I’d do minor work on them and sell them for $25k or so.

Fast forward 15 years later and I thought to myself, well, let’s do this again! I bought a 1969 Camaro SS clone for $40k. I planned to put a new 6 speed manual transmission and an Air Conditioning system in it for about $20k combined, but actually ended doing way more and spent about $80k in upgrades. Now that I’m into the car for around $120k, it looks like I’ll be selling it for about $60k.
What I failed to realize is that the methods that I had learned a decade before, on cars a fraction of the price didn’t apply whatsoever to today’s higher end market. I thought I knew what I was doing on “muscle car flips” but I didn’t have a friggin clue.

$100k flushed on Supercars

In my lust for buying cool cars, I burnt through approximately $100k. This included a Corvette Singray, SRT Viper, Bentley Continental GT Speed, Lamborghini Huracan 610-4 AND a 580-2, Ferrari 458 Italia, and a brand new $350k+ Mclaren 720S. (that Mclaren was a pile of shit). I mean, the losses on these cars might have even been worth it, i don’t know. It was a lot of fun. But it was definitely stupid from a financial standpoint, and the money just evaporated.

Where I ran into trouble was breaking my own rules. I knew that I should buy what the market wanted, not what I personally wanted. I overbet on certain options bringing a premium when they actually did not, and overvalued the exclusive nature of that Mclaren when there were only a few of them on American Roads. I thought i knew what I didn’t.

A Rehab Gone South

I used to be something of a house flipping expert. I got my start in RE flipping houses and knew my game quite well. Turns out I knew a lot about 1,500 sq/ft 1960’s homes, and not so much about 7,000 sq/ft recently built homes.
I moved into my personal dream house with the idea to improve the home and recapture the dollars when I sold later on. Many things had me believing this was possible. Nice comps from around the neighborhood showing my $/SQ/FT was low and could support big ticket improvements on the Kitchen etc. I dumped around $200k on a brand new kitchen, family room, living room, guest bath, and windows. I left for Asia and Europe while the work was being completed and returned to a gorgeous, brand new feeling home.

Turns out my Circle of Competence is much, much smaller than my big ego had led me to believe. Sub Zero and Viking can help sell a place, but the flow of floorplan, fickle and ever changing architectural design styles, and financial market headwinds matter much more to buyers on million-dollar-plus homes than they do on my little starter flip homes.

That transaction left me about $200k lighter than before I bought. Am I learning anything yet?

$600k Given Away to Somebody. Not Quite Sure Who.

I used to be an SEC Registered Stock Broker and Investment Advisor Representative. I worked for Fidelity and for TD Ameritrade. I spent a lot of time dealing with both stocks and options while there. During my career in this field I started to get delusions of grandeur that I knew what I was doing.

Then December 2018 happened. I had pushed several million dollars into an covered call options strategy (one of the very most conservative strategies a person can use). It seemed like each time I went to sleep I would wake up with losses of about $25k- $50k. $50K GONE IN A SINGLE NIGHT. In the space of a single month I had destroyed about $750k of account value, with a slight uptick at the end for a net loss of $600k. I hope I made somebody’s Christmas extra special. It was probably somebody who didn’t really need the extra cash though…

There are many asterisks and side notes that need to be mentioned about this stock market story, like how I’m still in it and still making good money doing it, but without any doubt, I overplayed my knowledge by a long shot. I got cocky and exposed too much of my account to risks that I didn’t fully understand.

Besides paying better attention to the concept of Circle of Competency in an attempt to keep my ass out of trouble, I’ve developed a new heuristic approach for myself: Buy super expensive assets, and rent cheap liabilities. I had already known this concept in theory, but there’s something about burning through a million dollars on pointless junk that will permanently ingrain these lessons into one’s mind. 

By Will Crozier

Thanksgiving 2018

Ambition certainly can be the enemy of gratitude. I feel increasingly grateful as the years pass me by. This year I feel especially grateful for the following:

A healthy body that does not distract from goals and enjoyment of this amazing life. What an unfair gift.

A fun, supportive, loving, and adventurous wife. The poor SOBs without this.

Freedoms beyond what I ever imagined possible. Can this actually be real?

An opened mind to living life differently, without the weight of expectations and limiting dogmas. (Forcefully opened by other people, not by myself) We all see nations, religions, politics, family and money punking other people. When we finally realize they are punking us too, our mind is freed.

Excellent friends. The best. The kind I learn from, appreciate, emulate, and let me into the inner workings of their lives. I strive to be worthy of our friendship, but usually fail as I’m too self absorbed 99% of the time.

Thank you all for sharing your gratitude as well. I very much enjoy reading the things that are making your lives rich and full!

By Will Crozier

13 simple concepts to get rich for a money Newbie

Every week I get asked “How can I make money” from my non-entrepreneurial friends, so I thought I’d put together a simple, yet powerful list to help spark interest or give a little direction to anybody who wants to build financial wealth in their lifetime. I’ve picked up a lot of these concepts from super smart people, from life experience, and from my own victories and losses. Now go stack some of your own cash. @thewillcrozier

1- Forget saving your way to wealth. That’s like walking from LA to New York. Sure, it’s possible, but you might be 65 by the time you get there. It’s important to find a better “vehicle” so there’s time to enjoy the wealth.

2- That “better vehicle” is owning your own business. Whatever you do, make sure you own a business. If necessary, wrap a business around your career. Ie- If you mow lawns for a living, buy 100 mowers and hire 100 employees. If you are a barber, buy 5 shops with 5 chairs each and lease them out. If you are an engineer, make contacts in your business, and then start your own firm.

3- School is irrelevant when it comes to getting rich. It will help you make 95k a year instead of 35k a year, but will teach you nothing about making 1MM+ a year. School is great for training your future employees.

4- For the most part, politicians are poor. Celebrities are poor. Athletes are poor. Business people own all of those people and control all the wealth in this world. If you own a plumbing supply company, you can have more wealth than 99% of the politicians, celebrities, and athletes out there.

5- Your house is an expensive luxury item. Don’t confuse it for anything else. Enjoy one if you can afford it, otherwise rent cheap and dump money into your business.

6- IRAs and 401k’s. Do this if you have absolutely ZERO idea of what else to do.

7- You do not need money or good credit to make money. Finding money for your ideas is not a problem. Money will pour from the sky and chase you to the grave if you have a modest track record of success and create opportunities for other to invest in.

8- Getting rich won’t happen overnight, nor will it take 30 years. If you have the right ideas, and work hard, think in terms of 3-7 years. This amount of time will pass by anyway, you might as well make a metric sh*t ton of cash while it does.

9- There is good debt and bad debt. Good debt is business loans, inventory loans, or loans on commercial buildings. Bad debt is for expensive cars you can’t afford, vacations on credit cards, or store cards for bags and shoes. Try to get hundreds of millions of dollars into good debt. The anecdote is this: Bankers call you Sir or Ma’am if you have a million dollars in the bank, or if you owe a million dollars to the bank. Both are equally valuable to them.

10- If you want juicy steaks, join a BBQ class or club. You’ll have excellent steaks in no time. If you want to have a physically fit body, join a boot camp and go through hell with other motivated folks. You’ll be fit and strong in several months. If you want to be a millionaire, join a small business club or real estate club to talk to and partner with other millionaires. You’ll be worth millions within a few years. Yes, it really is that simple.

11- Don’t waste your time cutting back on small expenses like Netflix, buying cheaper food, couponing, or hunting big sales at stores. You’ll be miserable and can’t realistically cut expenses below a certain threshold anyway. Instead focus on earning way more money. It’s a lot easier to earn 10x the national average then to spend 10x less the national average.

12- Real Estate is a proven model for making wealth and there are dozens of ways to enter the real estate business and make money. Buying an existing business is also a great way to dramatically shorten the time needed to make real money in life. Consider buying a small chain of flower shops from the old lady who wants to retire, or the cargo trailer manufacturing company that needs new energy to make it thrive. Whether it’s Real Estate or Small Business, use loans, investors, employees, and new team members to increase returns, reduce risk, and successfully leverage money and time for everybody’s benefit. Find all of these things at a local networking meetup. There are dozens of them in your town, just search Facebook for them. Network, network, network. If you are too shy, pretend that you’re not and then go and network. Nobody will know that you’re actually faking it anyway.

13- Don’t take money advice from the poor or middle class. They don’t know what the hell they are talking about, even if they say it with all the confidence in the world. At the same time, ignore the Gurus selling courses, posing with rented cars and girls. Better to find somebody local who isn’t selling anything. Rich people will give you all this info for free. Be kind, respect their time, and add value to their life in any way you can. Sometimes that can simply be enjoying their hobbies with them.

Bonus- There’s a rumor that money “Changes” a person. It does not. It just takes that person and amplifies their character 100 times over, making them seem extra awesome or super douchey.

By Will Crozier

Don’t just hustle. Instead, produce results.

People often confuse the words “speed” and “velocity”, or use them interchangeably. However speed is only one part of the velocity equation.

Velocity has two parts: Speed & Vector
or, in different terms:
Results have two parts: Hustle & Direction

One can climb 5 steps and then descend 5 steps with a lot of speed (hustle), but have not gained any ground (results).

Carefully choose your vector (direction) and then apply speed (hustle). Hustle is extremely important, but less so than what you work on, or who you work with. — at Metro Manila.

How I Wasted $900k USD on Stupid Shit The Cautionary Tale of an Idiot @thewillcrozier
Thanksgiving 2018
13 simple concepts to get rich for a money Newbie
Don’t just hustle. Instead, produce results.