I was very fortunate early in my career as a securities analyst to inherit $10,000 from my grandmother, but the outcome could have been disastrous.

I was researching some electronics companies at the time that had caught my eye, and I decided to invest all that money in their shares. And that wasn’t all. I figured I’d be really smart and buy even more shares on margin—that is, borrowing another $10,000 to double down and use the shares I paid for in cash as collateral for the debt.

It wasn’t long before my $10,000 had turned into $100,000—on paper. I was riding high. But then the market plunged. I came to work at eight o’clock one morning and was greeted with the shocking news that my losses had triggered a margin call: I had to deliver $11,000 in cash by 11 a.m. or all those stocks would be sold at prices drastically lower than what I had paid. Oh, my God, I thought. Where am I going to get eleven thousand dollars?

One of our branch office managers had a brother who was a loan officer at the Mechanics Bank of Richmond, California. I knew him only slightly but called anyway and told him my predicament. Reluctantly, he agreed to see me. I drove as fast as I could over the Bay Bridge to Richmond and showed him my portfolio.

“You shouldn’t have bought these speculative stocks,” he said. “Yes, I know,” I replied. “But I did, and it’s too late. Can you lend me the money?” With no security other than my pledge to pay him back, he handed me a cashier’s check for $11,000. Ten minutes before the deadline, I ran up to the cashier’s window, delivered the check, and narrowly averted having all that stock dumped in a forced sale. That would have been a disaster.

I’ll never, ever put myself in that position again, I told myself. I was never going to risk money I didn’t have in one form or another. And I never have. For more than fifty years, the only money I have borrowed from banks is through term loans backed by hard assets on real estate projects. Those tech stocks? They rallied a week later. I immediately sold some, took the cash and paid off that $11,000.

The lesson here, the same as in my post last month about Shorty Hall, is to learn from mistakes – not to avoid taking risks. Mistakes are inevitable. Even if you stumble and aren’t as lucky as I was to elude that margin call long ago, you’ll have plenty of time to recover.

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