Investing Without A Parachute

April 2, 1988. The sky over Franklin County Sports Parachute Center in North Carolina was a crisp 75 degrees, scattered clouds drifting overhead. Ivan Lester McGuire, a 35-year-old veteran skydiver with over 800 jumps, was prepping for his third jump of the day. A perfectionist behind the lens, he was working overtime to capture educational footage of a first-time student and their instructor.

As the twin-engine Beech D18 climbed past 10,500 feet, McGuire got set. The bulky camera rig was a familiar weight on his back. The door opened, and one by one, McGuire then the other divers exited. McGuire, focused on his camera and captured the student and instructor in freefall.

For 30 seconds, everything was routine. He tracked the divers, staying close, capturing their descent, waiting for them to deploy their parachutes so he could pull his own and continue filming. As their parachutes deployed and they drifted out of frame, horror set in.

McGuire reached for his own ripcord. It wasn’t there.

No parachute.

In a moment of sheer panic, the camera still rolling, McGuire grasped at nothing. He had jumped from the plane wearing only his camera pack—similar in size and weight to a parachute. He had done this hundreds of times. He knew the routine. Yet, in his fixation on filming, exhausted and overconfident, he forgot the one thing that would save his life.

Ivan Lester McGuire fell to his death.

McGuire was an expert. He had done this hundreds of times. But a lapse in memory or judgement at the wrong time can be fatal. Investors often make a similar mistake.

A stock market crash doesn’t come with a warning. The floor simply drops. Investors, much like skydivers, suddenly find themselves in freefall. But here’s the terrifying truth: most investors aren’t wearing their parachutes either.

They think they are prepared. They’ve studied Buffett, Munger, Lynch. They’ve read the books, followed the market. They’ve consumed every investing podcast, every investor letter and gone through every company's annual reports A-Z. They might even have a checklist scribbled somewhere in a notebook or on their computer.

But when the market turns south—when stocks nosedive and portfolios shrink—they reach for their ripcord and realize it’s not there.

Because knowledge that isn’t internalized is as useless as a parachute sitting in your basement.

You can’t pull out a checklist mid-freefall. Your subconscious won’t allow you to Google the right answer when your portfolio is evaporating. It will fight you. Hard.

Loss aversion will paralyze you—you’ll hold onto losers, convinced they’ll rebound. The endowment effect will whisper, 'This one’s different.' Confirmation bias will blind you, making you hunt for anything that validates your hope while ignoring the flashing red warnings. Denial will keep you frozen until it’s too late. And those same biases will work against you in holding a great business too—fear will push you out right before the upside.

Your emotions will hijack your judgment. You will rationalize. You will delay. You will hesitate.

That’s why preparation is everything.

To truly understand is to already know what to do. You have to train yourself—before the panic sets in—to react correctly, instinctively, without hesitation. Because when the moment comes, when the market is in freefall, there won’t be time to think.

Only time to act.

I know this because I’ve lived it.

I’ve watched one of my holdings plummet more than 80% from highs. I questioned everything—my thesis, my judgment, my competence. The only thing that kept me from bailing was something I had internalized prior: the story of another great company, in its early days, facing a nearly identical crisis. A lawsuit from a dominant competitor, a seemingly insurmountable challenge. But I had internalized that company’s leader. I had seen how he fought back—with integrity, relentless effort, and creativity. And as I watched my own company’s CEO navigate his storm, I recognized very similar traits.

Had I not truly internalized that story—had I just skimmed it, nodded along, and moved on—I would have panicked. Had I not surrounded myself with sharp, disciplined investors in MicroCapClub who challenged my thinking and reinforced my conviction, I would have cracked. I would have sold at the worst possible moment, locking in regret. I wouldn’t have held. I wouldn’t have kept adding. And I would have watched, from the sidelines, as one of the greatest opportunities of my investing life slipped through my fingers.

In bull markets and flat markets, there’s no need for a parachute—you’re still on the plane, climbing higher, cruising effortlessly. But sooner or later, Mr. Market kicks you out. And that’s when reality hits.

Market forces are like gravity—easy to ignore when everything’s smooth, but the moment you’re in freefall, it’s ruthless. Stocks will drop. Sometimes slowly, sometimes in a gut-wrenching plunge. And when they do, you won’t have time to wish you had a parachute. You’ll either have one strapped on, ready to deploy—or you’ll find out exactly what it feels like when your hard-earned cash hits the ground.

Prepare.

Thomas Edison put it bluntly: “I regard it as a criminal waste of time to go through the slow and painful ordeal of ascertaining things for one’s self if these things have already been ascertained and made available by others.”

Every lesson has already been learned by the greats who came before us—Buffett, Munger, and others. Their wisdom is there, waiting to be fully absorbed. But if you only skim it—if you don’t internalize it, commit it to memory, and train yourself to act on it instinctively—you’ll be no better off than the investor who never learned it at all. You’ll be worse, since you spent all that time for nothing!

Because when the market kicks you out of the plane, you won’t have time to look for answers. You’ll either already know what to do—or you’ll be another investor in freefall, grasping at air.

That’s why surrounding yourself with experienced, disciplined investors isn’t just helpful—it’s necessary. You need people who’ve been through the crashes, the gut-wrenching drawdowns, and come out stronger. People who challenge your thinking, help you separate emotion from reality, and reinforce conviction when it matters most.

That’s what MicroCapClub has been for me—a place where I’m constantly learning, refining my process, and seeing the market through the lens of those who’ve navigated it successfully. When my stock dropped 80%, I wasn’t alone. I had a network of smart, battle-tested investors helping me stay grounded, pushing me to do the right thing, not the easy thing.

In investing, like in skydiving, the worst time to realize you need a parachute… is in freefall.

_{MicroCapClub is an exclusive forum for experienced microcap investors focused on microcap companies (sub $500m market cap) trading on United States, Canadian, European, and Australian markets. MicroCapClub was created to be a platform for experienced microcap investors to share and discuss stock ideas. Since 2011, our members have profiled 1200+ microcap companies. Investors can join our community by applying to become a member or subscribing to gain instant view only access. MicroCapClub’s mission is to foster the highest quality microcap investor Community, produce Educational content for investors, and promote better Leadership in the microcap arena. For more information, visit https://microcapclub.com/ and https://microcapclub.com/summit/}