What I Learned Losing A Million Dollars

by Jim Paul

To take an example from business, look at powerhouse securities firm Morgan Stanley, one of the most profitable financial institutions in the country. Ever since it converted from a private partnership to a publicly traded company in 1986, Morgan Stanley has achieved the highest average return on equity of any publicly traded U.S. securities firm.27 It’s “avoided disasters and seized opportunities” because it is “fanatical about planning for any contingency, good or bad.”28 And the firm carries out that planning by having staffers write detailed reports about all the consequences for the firm if certain hypothetical events came to pass. The worst-case scenarios are compiled in what the firm calls blue books. “‘We’re constantly writing these stupid blue books,’ grumbles one Morgan Stanley principal. ‘It definitely slows us down.’ On the other hand, he concedes with a shrug, ‘We don’t make any mistakes.’”29 Whether Morgan Stanley makes mistakes is open to debate, but its mistakes are contained. Its commitment to planning, as well as committing those plans to writing, has kept the firm out of disastrous situations.