Use Room for Error when Estimating your Future Returns

I already told you that Marty Barde found himself in the Ozark after facing betrayal in Chicago. He struggled to get any legitimate business to use and launder Del's money until he met Rachel, the owner of the Blue Cat Lodge. He offered to invest in her business and bring it back to life. She did not want to have her hopes raised because according to her since the death of her grandmother, things haven't been the same with the business and Marty Barde showing up and suddenly trying to give her hopes of a revival made her skeptical.
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However, Marty Barde made her change her mind when he received a slap from a customer who happened to bad mouth, Tuck, a staff of the lodge, and a new friend of Marty's Son. Rachel is outrightly impressed but covers it up by telling him;

There are better ways to take over a business than by getting punched in the face. Rachel - Ozark

Something Marty Barde answered as politely as he could with an answer that insinuated he would do anything to prove that he really wanted to work with her and bring her Blue Cat Lodge to life again. Of course, he did. He wanted to get a legit business so badly to launder money through, to escape dying under Del's thumb.

In the end, Rachel accepted and they started working together. Things grew smoothly, and at some point, Rachel was starting to have hope that this could work as Marty said. And they did make it work because she finally accepted that it's working and she's allowed to have her hopes raised.

Marty Barde quietly launder his money without pushing the numbers too far or too much to become noticeable or suspicious. Just as with life, all good feelings come to an end, Marty runs into an obstacle when the plan to build the church is disrupted by Snell Jacob who threatens his life as well. He couldn't build the church anymore to keep his family safe which meant he needed other ways to launder his money.

This is where he resolved to do it through the Blue Cat Lodge. He pumped the numbers too much, too high, making purchases and twerking the numbers so high and he was happy to be able to clean the money this way. He told his wife about it, and they were both glad that the manipulated numbers were going great until Rachel got to it.

You know this scene where Rachel found out and was pissed off, or should I say hurt or felt betrayed or used gave me a different perspective that I wanted to make this post about. But writing this now, I figured something else out, something that happens to each one of us and I decided to talk about this instead.

Greed blinds us to chase high ROI

You see when we get greedy, we tend to overdo the things we are doing. When we are pushed to the walls, when we are in a hurry to make it too soon, too quick, we run into financial problems. And that's because we are no longer clear-headed, so we might even want to cut corners, and cutting corners surely does not last long. Soon, we will get caught and everything we worked and built will come crumbling down.

Marty Barde had Rachel where he wanted her to be, and if he did not need to be in so much of a hurry to clean that much money very quickly, he wouldn't have been caught. He would have silently, slowly, and steadily cleaned as much as he could throughout a long time. Something that would take really long before anyone realizes.

So if someone, let's say, the FBI were looking for something, they wouldn't find anything to hold him on because the numbers would have found a way to balance itself out ultimately. But being in a hurry meant making blunders, blunders that would probably cost him a lot. He could lose face with Rachel, and the business.

Now, he would need other ways to launder his money and no one can tell if Rachel will be able to keep her mouth shut, and if she can't, she would have to be eliminated which is the rule of the game, isn't it? Even though, Marty Barde, in his wildest dreams wouldn't have thought of eliminating Rachel, the one person who gave him the benefit of the doubt when everyone else said no to him, now, he's going to be put in a tight corner, a position whereby he will have to do the dreaded things to keep going and stay in business.

Of course, this is the thing I have said time and time again, when we are getting money illegally because we don't want to wait for the magic of time and compounding interest, we make up problems for ourselves along the way. Once someone tries to poke a nose into our business, we eliminate the person, to save ourselves, it's a thing that I see happen in movies all the time, and I have a good feeling it happens in real life too.

After all, did Robert Greene not tell us to always crush our enemies completely if not, they will crush us?

Or did Housel not tell me a story about Gupta, the CEO of McKinsey, who at the level of his net worth could have everything, but because he sat on the board of directors of Goldman Sachs with the wealthiest investors, he wanted more? He was worth $100 million around 2008 and he could earn $600 per hour, 24 hours a day. At this point, he could have anything he wanted but he lacked the sense of enough. He did not know where to draw the line and in a bit to be in the billionaire circle, he committed fraud when he bought stocks through an insider trading. It was easy money according to Morgan, and of course, it was an easier case for the prosecutors given the chain of events that led to Gupta's quick alleged $17 million profit.

Margin of Safety - Room for Error

Right here, I wouldn't blame Marty Barde if Rachel had to be eliminated. But I would blame him for being in a hurry. I would blame him for over-promising Del that he would clean $8 million in 3 months without a concrete plan in sight. He did not know anything about the Ozark, so he was mostly imagining things would just go as smoothly as possible.

Unlike him who is often paranoid when it has to do with money, this time, he messed up. He's human. I give that to him. But he threw his paranoid nature out the window the moment he made that promise. He did not do what Morgan Housel said in his book, The Psychology of Money, about making room for error;

The most important part of every plan is planning on your plan not going according to plan Morgan Housel -The Psychology of Money

He lost his sense of reasoning not because he was greedy as the rest of us often are when we make financial blunders that drown us in regrets but because he promised a deadline that he couldn't meet up with.

Marty Barde threw his paranoid nature out the window when he forgot that life is filled with uncertainties and no one can know with certainty what's going to happen next.

Margin of Safety

Room for error

This is something that was missing in his plan. As a financial advisor and someone whom I considered frugal in the beginning, I thought he would be in the right position to know that the world is governed by odds, not certainties. He could have had a conservative hedge against whatever Ozark would have in store for him. Something each and everyone should do when it comes to dealing with our finances.

To be able to succeed, you have to survive first, and Marty would have had a big ROI if he had taken everything slowly and steadily.