The Missing Billionaires

**Author:** Victor Haghani

**Estimated Reading Time:** 45 minutes

**What You'll Learn:**

- Why most wealthy families lose their fortunes within generations - How to make better financial decisions using Expected Utility - Why investment sizing matters more than investment selection - How to think about spending, risk, and legacy over a lifetime - Practical frameworks for managing wealth across generations

**Who This Book Is For:**

This book is for anyone who wants to think more clearly about financial decision-making. Whether you manage a large portfolio, advise others on their investments, or simply want to make better choices with your own money, the ideas here will change how you approach risk, spending, and wealth. It is especially valuable for investors who suspect that conventional wisdom about money is incomplete, and for those who want a rigorous but accessible framework for making financial choices under uncertainty.

In 1998, Long-Term Capital Management collapsed. The hedge fund had been founded by some of the brightest minds in finance, including Nobel laureates and legendary traders. Victor Haghani was one of its founding partners. The fund had delivered extraordinary returns for years, and its partners had enormous confidence in their models. Then, over a few weeks, it lost nearly everything. The collapse of Long-Term Capital Management was not caused by a failure of intelligence. It was caused by a failure of decision-making under uncertainty. The partners had sized their positions too aggressively. They had treated uncertain estimates as if they were certain facts. They had confused being smart with being right. Haghani spent years reflecting on what went wrong. He realized that the problem was not unique to his hedge fund. It was everywhere. Wealthy families were losing their fortunes across generations. Endowments were making spending decisions that endangered their long-term missions. Individual investors were making choices that left them with far less than they could have had. The book's title, *The Missing Billionaires*, refers to a puzzle. If wealth compounds over time, and if wealthy families pass their money to their children, then after several generations there should be many more billionaires than we actually observe. The fact that there are so few billionaires relative to what simple math would predict tells us something important: most wealthy families are destroying wealth, not preserving it. The problem is not that these families lack resources. They have access to the best advisors, the best investments, and the best information. The problem is that they are making systematic errors in how they think about risk, spending, and investment sizing. This book offers a better way. It draws on decades of academic research in finance and economics, but it presents these ideas in a practical framework that anyone can…