Billionaire’s Son Loses $50 Million Trying to Day Trade

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This story is almost too crazy to believe, and it goes to show what happens when you combine a vast amount of wealth with sheer stupidity.

Farkhad Akhmedov became a billionaire by getting an early stake in a Russian gas producer 8 years ago, which was eventually sold for $1.4 billion. His 27-year-old son, Temur, is currently studying private banking at the London School of Economics.

Temur decided to try his hand at day trading and it was a complete disaster. While he made a small profit at the beginning, he eventually lost his gains and took on more risk to try and make it all back. As a result, his losses now total a whopping $50 million. And the flat he was living in while doing so costs a cool $39 million.

The situation gets even worse, as Temur’s mother – and Farkhad’s ex-wife – Tatiana is trying to get an even BIGGER sum of money from Farkhad. From MarketWatch:

Temur’s mother, Tatiana, is fighting to get $606 million owed by her ex-husband, Farkhad Akhmedov, from a 2016 settlement. For his part, Farkhad, whose vast fortune includes a superyacht, a helicopter and a private art collection, has refused to pay because he said the settlement was superseded by their divorce in Moscow two decades prior.

Now she’s seeking $94 million from her son, who’s contesting the claim. Tatiana said Temur, her eldest, helped his dad hide assets from her. But he said he lost it all with some terrible trades.”

Tatiana’s legal battle was the main reason why Temur’s trading losses came to public light in the first place.

But as with any nasty divorce, there are always two sides to the story. Temur is being accused of helping Farkhad move assets and that the losses were a part of said move. However, Temur claims that Tatiana was already well aware of his day trading losses, and that it doesn’t make sense to sue both him and Farkhad.

However, considering that the case is being heard in London, which is known for its awfully nasty divorce courts favoring the spouse who is financially less powerful, Tatiana will most likely win the case and get the full amount she is suing for.

It’s a horrible situation and I believe things will continue to get much worse as more details get aired out in public.

Let this be a lesson to anybody who is day trading with significant amounts of money, especially money that was handed down and not directly self-earned: Be extremely careful with every single decision you make.

Follow the fundamental rules. Manage your over-risk. Don’t over-trade the markets, and especially do not attempt to “revenge trade” after a huge loss. There is a very good reason why only 1% of traders (probably less) are consistently profitable and make a full-time income doing nothing but that.

What do YOU think about this wild story? Will Temur end up having to pay even more money for the losses he incurred, or will he manage to win the legal battle and prevent his losses from building up even more? Reply to this newsletter and tell us what you think will happen next!

Last Week, the Stock Market Ended on a Negative Downturn…

Considering what happened on Friday with the financial markets, let’s hope today starts off on a good note. Here are the most important numbers you need to know about:

  • Dow Jones: +0.2% (-0.6% for the week)
  • S&P 500: -0.1% (-1.0% for the week)
  • NADSAQ: -0.2% (-0.7% for the week)
  • Travel companies: -1.4% for Hyatt Hotels, -2.6% for United Airlines, -4.5% for Carnival

Nationwide’s chief of investment research Mark Hackett attributed last week’s poor performance to the lack of progress around settling on the final details of the second $908 billion stimulus package. Not even a 1-week extension until December 18th was good enough for the markets:

“Optimism surrounding a near-term fiscal stimulus deal are fading despite reports of a bipartisan deal, as the sides can agree on the size of a deal, but not the details.”

Deutsche Bank strategist Jim Reid also chimed in, noting how Thursday and Friday’s jam-packed news cycle didn’t do a whole lot to move the markets significantly:

We’ve had a IPO market in the US that’s partying like it is 1999 while US jobless claims spiked higher, COVID-19 restrictions mount, US stimulus talks still appear gridlocked, Brexit trade talks are not looking encouraging, and with a sober reminder of the structural problems Europe faces yesterday as the ECB expanded its stimulus package yet further and seemingly locked in negative rates for longer.”

All in all, investors are prepared for a bullish 2021 while acknowledging the volatility that comes with the trading month of December. As it stands right now, it’s time to simply sit still and see where the markets head as 2020 comes to a close.

States Take It Upon Themselves to Provide Stimulus Checks

With the federal government failing to include stimulus checks as part of their second COVID-19 financial aid package, individual states in America are taking charge and handing out their own stimulus checks to low-income Americans who are in desperate need of assistance.

One of such states is Maine, according to Forbes:

Maine became the latest state to approve a state-sponsored stimulus payment with Governor Janet Mills’ authorizing a one-time $600 payment to tens of thousands of unemployed Mainers to help mitigate financial insecurity.”

“Maine will administer the one-time stimulus payment through the State’s Pandemic Relief Program (PRP)… The disbursement is not an unemployment benefit and eligibility includes not only workers who are unemployed or partially unemployed due to COVID-19, but also self-employed, sole proprietors, and other business owners, according to a press release.”

The payments are expected to go out by the end of 2020 and will be delivered to roughly 42,000 unemployed individuals in Maine. It’s not the $1,200 we were accustomed to in March, but it’s infinitely better than nothing at all. Especially considering that federal unemployment benefits will expire on December 31st.

Like the old saying goes: If you want to guarantee that something gets done, do it yourself!

It’s the Top 1% Versus the Rest of the United States of America…

Yet another report, this time comes from the Federal Reserve’s Flow of Funds, just goes to show how the COVID-19 pandemic has widened the gap between the haves and the have-nots:

ZeroHedge reports on the most important findings, noting that the V-shaped economic recovery Americans hoped for is dead. It’s a lot more like the K-shaped recovery, where the rich get richer and the poor get poorer:

“…one quarter after the biggest surge in household net worth on record when US household net worth jumped by $7.6 trillion to $119.0 trillion (which followed the record drop in net worth in Q1 when $8 trillion was wiped out), in the 3rd quarter of 2020, the net worth of US households rose another $3.82 trillion to a record $123.5 trillion.

The high rate of personal saving also contributed to the increase in net worth, while the value of real estate held by households increased modestly. Homeowners’ real estate holdings minus the change in mortgage debt rose $288.3 billion (a positive value indicates that the value of real estate is growing at a faster pace than household mortgage debt).

roughly 75% of the $7.6 trillion increase in assets went to benefit just 10% of the population, who also account for roughly 76% of America’s financial net worth. It also means that just 10% of the US population is worth roughly $90 trillion, while half of the US population was virtually no wealth, and if anything it is deeply in debt.”

It’s not looking good for the United States of America. If this rate of exponential growth in wealth for the top 1% keeps up, we’ll soon see a dystopian society where a physical border separates the wealthy from the impoverished.

Here’s an easy way to visualize this: Imagine Los Angeles right now, but for every single US city.

36-Year-Old Who Retired Early: “It’s Not About the Size of Your Paycheck!”

Early retirement is loaded with stories about individuals who were fortunate enough to start making high salaries at a young age, or at least accumulate knowledge that only becomes common sense much later in life.

But Steve Adcock, a former employee of a major IT company, says otherwise. Despite him and his wife making $200,000 to $300,000 per year, it wasn’t their combined income that allowed them to reach retirement before the age of 40. What allows them to now travel around the US and run their blog ThinkSaveRetire was how they USED their money:

“Never assume income and retirement are tied at the hip… It is almost always easier to retire early based on a high level of savings than a high level of income.”

“The more we have, the more we want, and the more we want, the more we spend. The cycle is wicked, and it is nearly everlasting.”

“Can you retire early with a huge income? Of course… [but] income is no recipe for success. Your lifestyle is what dictates the magical date for retirement.”

“Just saving doesn’t get you rich. That’s definitely a good start — you do need to save — but what gets you wealthy is investing that money.”

In other words… maximize your earnings, minimize your expenses and spendings, and maximize your investments. The exact opposite of what most Americans do. Simple sage advice that shows reaching early retirement doesn’t have to be long or complicated.

Doubling $1,000 in 2021 With Investments Alone: Can It Be Done?

The Motley Fool recently challenged three of its top contributors with a simple question: If you had to take $1,000 and double it to $2,000 in 2021 with nothing more than investing, how would you go about doing it?

The answers were quite surprising…

Keith Noonan: He said he would take a high-risk approach by focusing on small-cap companies in the tech sector. It would take a lot of research into emerging trends and even more speculation, but it’s these companies that are poised for explosive growth at the 100% ROI you need in order to double $1,000.

Christy Bieber: Tap into your employer matching your 401(k) contributions. For some employers, you can have them match 100% of what you put in, up to 4% of your annual salary. Your alternative option is to be in the 12% tax bracket and put in $2,000 into an IRA, with taxes costing you $760. However, you’d make up for it in the $240 tax deduction and a $1,000 credit.

Chuck Saletta: This was straight-up unsustainable for him, as a 100% ROI (i.e. doubling your money every year) would turn $1,000 into $1 trillion within 30 years. His weapon of choice would be options-based investing involving a large degree of leverage and a heavy bet against conventional Wall Street wisdom, with no early closing of positions.

Sounds like a lot of people have a very different approach to answering this question, but I haven’t heard from one important person yet…

What investments would YOU make to double $1,000 in 2021? Reply to this newsletter and tell us how you would go about doing it!

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