The Missing Billionaires: A Guide to Better Financial Decisions

Over the past century, if the wealthiest families had spenta reasonable fraction of their wealth, paid taxes, invested in the stockmarket, and passed their wealth down to the next generation, there would betens of thousands of billionaire heirs to generations-old fortunes today.

Thepuzzle ofThe Missing Billionairesis why you cannot find onesuch billionaire on any current rich list. There are a number of explanations,but this book is focused on one mistake which is of profound importance to allinvestors: poor risk decisions, both in investing and spending. Many of thesefamilies didnt choose bad investments they sized them incorrectly andallowed their spending decisions to amplify this mistake.

The Missing Billionairesbook offers a simpleyet powerful framework for making important lifetime financial decisions in asystematic and rational way. It’s for readers with a baseline level offinancial literacy, but doesnt require a PhD. It fills the gap between personalfinance books and the academic literature, bringing the valuable insights ofacademic finance to non-specialists.

Part One builds the theory of optimal investment sizing fromfirst principles, starting with betting on biased coins. Part Two coverslifetime financial decision-making, with emphasis on the integration ofinvestment, saving and spending decisions. Part Three covers practicalimplementation details, including how to calibrate your personal level ofrisk-aversion, and how to estimate the expected return and risk on a broadspectrum of investments.

The book is packed with case studies and anecdotes,including one about Victors investment with LTCM as a partner, and a bonuschapter on Liars Poker. The authors draw extensively on their own experiencesas principals of Elm Wealth, a multi-billion-dollar wealth management practice,and prior to that on their years as arbitrage traders Victor at SalomonBrothers and LTCM, and James at Nationsbank/CRT and Citadel.

Whether you are young and building wealth, an entrepreneurinvested heavily in your own business, or at a stage where your primary focusis investing and spending,The Missing Billionaires: A Guide to BetterFinancial Decisionsis your must-have resource for thoughtfulfinancial decision-making.

About the Author

Victor Haghanihas 40 years’ experience workingand innovating in the financial markets, and has been a prolific contributor toacademic and practitioner finance literature. He founded Elm Wealth in 2011 tohelp clients, including his own family, manage and preserve their wealth with athoughtful, research-based, and cost-effective approach that covers not justinvestment management but also broader decisions about wealth and finances.Victor started his career at Salomon Brothers in 1984, where he became a ManagingDirector in the bond-arbitrage group, and in 1993 he was a co-founding partnerof Long-Term Capital Management. He lives in London and Jackson Hole, Wyoming.

James Whitehas spent two decades working infinance, covering the gamut of quantitative research, market-making, investing,and wealth management. He is currently the CEO of Elm Wealth, and previouslyhas held research, trading, and executive roles at PAC Partners, Citadel, andBank of America. He lives in Philadelphia.