Why I Write Books Even Though I’ve Lost Money on Every Book I’ve Written

I had two kids, a house that I couldn’t sell (it was right next to “Ground Zero” in NYC), I was almost broke, and my monthly burn was $40,000 a month. Maybe more. I lost track. I was going to go broke and then probably kill myself. I wouldn’t be able to afford diapers and food for my 2 month old baby. Two years earlier, to the day, I looked at my bank statement and I had about $15,000,000 in there. Now, late 2001, almost nothing.

I wrote some software to trade with what little money I had left.

For 12 months in a row, with the market going straight down (Enron imploding, Worldcom imploding, Tyco imploding, etc) I used signals generated by the software I had written in late 2001 to buy stocks (I only bought, never shorted) and I made my monthly nut. On days when I lost money I would cry. I saw my bank account going to zero. I had a life insurance policy so I figured I could kill myself in the worst case and my family would be able to live on the four million that would result. I tried to figure out ways I could kill myself where nobody would know it was a suicide. But I didn’t want it to come to that.

But I was good, or lucky, or my software was good, or God was watching out for me, or I was extremely lucky, or some combination of the above, For 12 months I eeked out my $40,000 a month from trading and then was able to sell my over-indulgent loft, become a living exile for a few years and work on a recovery. I started trading successfully for hedge funds, I built a fund of hedge funds, I started and sold stockpickr.com to thestreet.com, I did some angel investing.

So I wrote a book. In mid-2004 it came out. I was trading my software for about five different hedge funds or individuals (for example Victor Niederhoffer) at that time. “Trade Like a Hedge Fund” was the book. Pamela van Giessen from Wiley, who had published Victor Niederhoffer’s book, was the editor. She had really encouraged me. I wanted to write about things that people should avoid in the market. She said no, people want positive stuff. She said, specifically, call it “Trade Like a Hedge Fund” and write about all your techniques that work. So I did.

She gave me an advance. $5000. When the book came out, Niederhoffer hated it. I was up over 100% for him in the prior year He thought I was giving away all his techniques even though he only traded futures and all my signals in the book were for stocks and were signals I had been trading long before I met him. He wrote me an email, “you are a total laughing stock.” I felt horrible because I looked up to him so much. He trashed me and the book on his email list. People who had been my friends stopped talking to me on blind faith.

It was the best thing that could’ve happened. The book became controversial and became my best selling book. Barrons had it as one of their books of the year. The Stock Trader’s Almanac had it as THE book of the year for 2004. I started giving talks for Fidelity about the techniques in the book. I called Pamela the other day. “How many books did that one sell,” 14,074 copies.

Thats it. And that was a best seller (for finance books). I still get an occasional royalty check from that one. I think $300 was my last. I probably pulled about $25,000 total from it. Maybe a bit more. So nothing.

Pamela and I decided to work on my next book. I wanted to do something on Warren Buffett. How he was a more active trader than anyone believed. “Do ‘Trade Like Warren Buffet’ ,” she said. So I did. My advance: $7500.

A book is brutal. Its the worst thing. You do nothing for about 3-6 months while you write it and all the time you are saying, ‘why did I agree to write this. I am never going to write a book again.’  The book came out. Complete failure. Pamela told me the other day in total 6552 copies were sold. It came out six years ago. I thought the religion of Buffett would’ve kicked in at some point and his followers would’ve bought the book. But the religion has him as the prophet of value investing and I was saying he wasn’t. Blasphemy!

So I did another book. Because I needed to reclaim the positive feelings I felt when my first book sold over 10,000 copies. I loved the book “Supermoney” by Adam Smith, written in the early 70s. Pop finance at its best. In the book, he meets a young retired investor who had called it quits with twenty millio cash in the bank and was trying to figure out what to do with his life. That young investor was Warren Buffett. Every chapter had a surprise like that. So I wrote ‘Supercash’ about hedge fund strategies. This time, to Pamela’s surprise, I got an agent. My advance: $30,000. The book is horrible. I cant even open it. Here, right now as I write this I am taking the book off the bookshelf and throwing it in the garbage. I think I even signed this book. It sold 1565 copies.

Then the stock market went on fire. And with Stockpickr, a site my business partner, Dan, and I built in late 2006 (and sold to thestreet.com in 2007) , I had a built-in audience of a million people. So I decided to do another book. Pam couldnt buy it. I was a failure now at Wiley so they passed. Penguin picked it up. I forget the exact advance now but it was somewhere between $80,000-$100,000. If I ever told you it was more than that, I probably lied on purpose.

The book was set for publication in December, 2008. I begged them to wait. Nobody was going to buy a book about stocks called “The Forever Portfolio” in the worst bear market in history. Nobody. But they had to do it. it was on the schedule. I had written the book almost a year earlier. The world had been different. But this is why book publishing in the finance space in particular is going to slowly disappear. Ebooks and ebook publishers will take down every single traditional finance book publisher. Its inevitable. (If you want to publish an efinance book, call me and if its good I’ll give you an advance and publish it online myself within 2 weeks).

So the book flopped. The publisher would barely return my calls. In total it sold 1598 copies. All my other books had been priced from $40-70 but I wanted to do a cheap one so this was priced around $20. But it still flopped. People were worried whether or not they were going to survive. Not what stocks they should buy for “Forever”. The goddamn stock market was going down 300 points a day.

I went around to every bookstore in the city. I would write notes on the inside of every book and then put them back on the bookshelf. Things like, “if you buy this book you will make a billion dollars” Or, “you are the smartest person in the world for buying this book,”.

One time, at a random mega book store in the city, with my daughter Mollie looking on, I wrote, “I LOVE YOU” in the inside of the book. “Daddy!” she said, “what the heck are you doing?” But still the book flopped. Nobody loved me back.

One time, a friend of mine was pitching the same publisher a book. I don’t know who she was talking to. They didn’t know she knew me. She asked them, “what did you do to market James Altucher’s book.” They said, “we got him a review in the Financial Times, an excerpt published in thestreet.com, and we got him on CNBC.” She called me right afterward and told me this and we both laughed. I wrote my own review in the FT! I was at thestreet.com and got the excerpt there. And I had been doing a weekly spot on CNBC for years and talked my own book there.

So I wanted to write another book, even though I’ve hated the process of writing every single book I’ve ever written. My agent called Penguin. They didn’t want it. I actually think they personally hated me (not even a courtesy call to me when they rejected it). I didn’t even approach Pamela. I was too ashamed that I had jilted her for Penguin so I could get the higher advance. I told my agent who I wanted to do the book with. In fact, the exact editor I wanted to do the book with.

He sent the 60 page book proposal (it was the first time I ever had to write an actual proposal) to 20 editors including the one I specifically wanted to work with, Hollis Heimbouch at Harper Collins. I was writing for the WSJ then, doing other stuff for News Corp, and I thought it would be a perfect fit for her given the books I saw that she had edited. Other writers had told me she was great to work with. I had done my research.

She rejected it.

I called my agent and said, “This is a mistake. This book is perfect for her. Please do this: call her and take her out to lunch. Find out why she rejected it. Explain why it would be a good book with Harper Collins.” All 20 editors he sent to rejected the book. I was convinced not only it was a good idea but a GREAT idea. I kept saying to my agent, “call back that one editor and take her to lunch or dinner. You need to wine and dine people. You need to at least find out why they are rejecting the book. Thats what sales is. Its information, its friendship, its relationships.”

He called me back one time. We had known each other forever but had never had an issue where someone didn’t want one of my books. So now I saw what happened when someone didn’t want one of my books. “If you are going to tell me how to do my job,” he said, “this relationship is over.” I mumbled an apology and he hung up.

So I wrote an email to Hollis and explained why the book would be good for her. She agreed to meet me. She said to me, “this proposal seems like it was written by wikipedia. You need to give us a real methodology for what to do when the end of the world hits.” I went back home. Wikipedia was still on the screen. I clicked it away and wrote another book proposal. She still didn’t really like it. The ideas were great, she said, but she didn’t really like the writing. And I agreed with her. I wasn’t finding my voice with this one even though I did think the ideas were good.

The WSJ stepped in. Roe D’Angelo who runs their books department. She thought it was a great idea for a book so the WSJ bought it, Hollis and Harper agreed to edit it but Roe found an excellent co-author, Doug Sease, who had been at the newspaper for about 800 years and was now fishing off the coast of Florida. He’s the most relaxed guy I ever met. We got the deal with Hollis and split the advance that the WSJ gave us. I can’t say what it is because I want to respect Doug’s privacy. He would write the intros to each chapter. I would write the ideas, etc, and he would sew it all up. The book just came out. “The Wall Street Journal Guide to Investing for the Apocalypse.”

(click here to buy!)

The basic idea: the media tries to scare you every week with a new horror story: pandemics, global warming, nuclear terrorism, riots in Egypt. The book is about every way the world could end, and how to make as much money as possible off of these impending apocalypses. The book’s been out a few days. We’ll see how it does. Monday I’m going on Yahoo Tech Ticker, Stocktwits TV, WSJ Newshub, and CNBC. On Tech ticker’s message board afterwards there will be approximately 150 comments calling me an “ugly fucking moron” and “why does tech ticker let this Jew jack-off on still?” But I’m used to it and I always have fun talking with Aaron Task and Henry Blodget, who do Tech Ticker.

I’ve made no money ever from books (if you factor in time spent on them) and now I’ve written five. I made money trading. And from Stockpickr.com, from angel investing, from my first business in the 90s, and from the occasional deal. But net-net I’ve lost money and time from books.

In May, 2009, I had just started dating someone. It was our fourth date and she was going to meet me at the Penn Station book store and then we would take a train to her house and she was going to cook dinner. While she was waiting for me she randomly saw my book, “The Forever Portfolio” for sale. She opened it. It was the same unsold book where three months earlier I had written “I LOVE YOU” on the inside. She looked around and thought maybe I had planted it there somehow and was secretly watching her. But I was late to meet her that day. She looked at the inscription again. “I love you”.  A little over a year later we got married.  And that’s why I write books.

 

[For an update on this: see: Why I Then Self-Published and How I Did It]

Related Posts: (and follow me on twitter)

How it Feels to be Rich

10 Things I learned Trading for Victor Niederhoffer

How I torture women

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