Investing: Case Studies
- personal995
- May 20, 2024
- 6 min read
Updated: Dec 7, 2025
Index
Case Studies: By Examples
Case Studies: Cautionary Tales
Purpose
Investing: Case Studies is a section of Investing.
This page and section exists to provide examples of what can happen when it all comes together or caution what can happen if it doesn't.
Introduction
Take heed of the stories of others. We are a storying telling species, they help us remember.
We often won't understand the ramifications of poor planning, preparation or actions until it is too late. We have all had to learn something over and over. Either 'the penny doesn't drop,' we have cognitive biases that hold us back, or we do not quite yet have the accumulated knowledge or experience to tie it all together.
The Case Studies are provided to help show what can happen when it all comes together or caution what can happen if it doesn't.
The Case Studies are just appetisers to get you started. Read the referenced further readings in the Library (or similar books that might more readily align with your specific goals) to really submerse yourself into another's experience and absorb the learnings.
Process
As with the Lessons, review these Case Studies as and when it best serves you to do so:
Review with the aim of prevention in mind. To avoid having to learn the hard way yourself.
Review if you are stuck on a specific phase or step.
Review if you are making repetitive errors.
Review if you need inspiration and motivation.
Review if you need to review or reconstruct your Models & Theories.
Review if you are looking for inspiration for Values or Goals.
Absorb and Action the Case Studies:
Document any insights or ideas in your Templates and ultimately if suitable, in your Action Plan.
Read more deeply about someone you may want to emulate.
If the individuals mentioned do not resonate with you, who does? Discover them and learn their story.
Take what you learn and put it into action.
Whatever you discover that you need to learn, whether positive or negative, it doesn't really matter. Again, what matters is what you do next.
Continually learn, continually improve and move forward.
Case Studies: By Example
1. John Bogle
John Bogle, the founder of Vanguard Group, is a legendary figure in the world of investing whose story exemplifies the transformative power of sound financial principles. Bogle's pioneering work in index investing revolutionized the industry, making low-cost, diversified investing accessible to millions of individuals worldwide.
Bogle's journey began with a vision to democratize investing and empower ordinary investors to build wealth steadily over time. He believed passionately in the idea of putting investors first and was driven by a commitment to simplicity, transparency, and integrity.
By introducing the first index mutual fund in 1976, Bogle challenged the conventional wisdom of active management and high fees, advocating instead for a passive approach that aimed to capture market returns at minimal cost. His creation of Vanguard Group, a mutual fund company owned by its investors, further cemented his reputation as a champion of the individual investor.
Over the decades, Bogle's philosophy of low-cost, long-term investing has had a profound impact on the financial industry, inspiring countless investors to adopt a disciplined approach to wealth accumulation. His legacy lives on in the countless individuals who have benefited from his wisdom and in the enduring principles of simplicity, discipline, and investor advocacy that he espoused.
Further reading: The Little Book of Common Sense Investing (John C. Bogle)
2. Charles T Munger
Charlie Munger, the renowned investor and business partner of Warren Buffett, is widely regarded for his astute investment philosophy and multidisciplinary approach to decision-making. Munger's story exemplifies the transformative power of rational thinking, lifelong learning, and ethical conduct in achieving financial success and personal fulfillment.
Munger's journey began with a commitment to continuous self-improvement and intellectual curiosity. Studying mathematics, meteorology and law, and as a lawyer turned investor, he embraced a multidisciplinary approach, drawing insights from diverse fields such as psychology, economics, and biology to inform his investment decisions.
One of Munger's key principles is the concept of mental models, which involves developing a broad framework of understanding that enables better decision-making across various domains. He emphasizes the importance of seeking out and understanding the core principles that underpin different disciplines, allowing for more informed and nuanced decision-making.
Munger's partnership with Warren Buffett at Berkshire Hathaway has been instrumental in shaping his investment philosophy. Together, they have emphasized the importance of patience, discipline, and a long-term perspective in investing, eschewing short-term speculation in favor of owning high-quality businesses for the long haul.
Munger's story serves as a testament to the transformative power of intellectual curiosity, rational thinking, and ethical conduct in navigating the complexities of the financial markets and achieving enduring success.
Further reading: Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger (Charles T. Munger)
By reviewing these lessons above you can gain inspiration, seek clarity, deepen your awareness of where you can improve and compound your results moving forward.
Case Studies: Cautionary Tales
1. Sir Isaac Newton
Sir Isaac Newton, one of the greatest scientists of all time, also faced a significant financial loss due to his involvement in the South Sea Company bubble in the early 18th century.
Newton invested a substantial sum in the South Sea Company, a British trading company granted a monopoly on trade with Spain's South American colonies. The company's stock prices soared to astronomical levels during the speculative bubble, driven by rampant speculation and investor frenzy.
Caught up in the euphoria of the market, Newton profited handsomely from his investment initially, but as the bubble reached its peak, he decided to sell his shares, booking substantial profits. However, as the bubble inevitably burst, the stock prices collapsed, causing Newton to witness many of his peers becoming wealthy as their stocks appreciated while he watched from the sidelines.
Feeling that he had missed out on further gains, Newton re-entered the market at even higher prices, hoping to recoup his losses and capitalize on the rising trend. Unfortunately, the market soon turned against him, and he ended up losing a significant portion of his fortune.
Newton's experience serves as a poignant reminder of the dangers of speculation, herd mentality, and irrational exuberance in financial markets. Despite his unparalleled intellect and scientific achievements, he fell victim to the same psychological biases that affect all investors when emotions override reason.
This cautionary tale underscores the importance of maintaining a disciplined investment approach, conducting thorough research, and avoiding the temptation to chase speculative bubbles or follow the crowd blindly.
Further reading: The South Sea Bubble (John Carswell)
2. The Rothschild & The Railway Mania
Another cautionary tale comes from the story of the Rothschild banking family during the early 19th century. The Rothschilds, renowned for their banking prowess and strategic investments, faced a significant setback due to their involvement in the railway mania of the 1840s.
During this period, there was a speculative frenzy in railway stocks in Britain, fueled by optimism about the transformative potential of railway infrastructure. The Rothschilds, along with many other investors, poured capital into railway projects, expecting substantial returns.
However, the euphoria surrounding railway investments led to overinvestment, excessive speculation, and inflated valuations. As a result, when the bubble burst in the late 1840s, many railway companies collapsed, leaving investors with substantial losses.
The Rothschilds were not immune to these losses, despite their reputation and financial acumen. They had invested heavily in railway stocks, and when the market turned, they suffered significant financial setbacks.
This cautionary tale highlights the risks of succumbing to market manias and speculative bubbles, even for seasoned investors like the Rothschilds. It underscores the importance of maintaining a diversified portfolio, conducting thorough due diligence, and avoiding excessive speculation to safeguard one's financial well-being.
Further reading: The House of Rothschild (Books I & II) (Niall Ferguson)
By reviewing these cautionary case studies above you can heed their warnings, adjust to suit, deepen your awareness of where you can improve and compound your results moving forward.
Output Checklist
Completed Strategic Review Worksheet from The Workbook for approaching any Investing related opportunities or challenges, guided by all key learnings from this section.
Next Steps
If you feel you have key learnings to takeaway, return to Investing: Main to integrate into your Output Checklist.
To continue to learn more, move on to Investing: Library.
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