Absolute hubris: Win the lottery; think you're Warren Buffett

But the main problem here is Brad Duke's hubris. According to Bill Pomeroy, a certified financial planner in Baton Rouge, La., "Because the winners have a large sum of money, they make the mistake of thinking they know what they're doing. They are willing to plunk down large sums on investments they know nothing about or go in with a partner who may not know how to run a business."

That would seem to be the case here. Mr. Duke is 34 years old, has been working at Gold's Gym, and all of a sudden thinks he can earn better returns the Warren Buffett, arguably the greatest investor in the history of the world. Before his sudden windfall, he was obviously financially inept enough to be buying lottery tickets. And then there's this little gem from an interview with CNN Money:

Did you often buy lottery tickets or was this a one-time thing?

I played the lottery often when I won. I had developed a little numbering system. Since I've won, there's been a lot of numbering systems for lotteries all over the Internet. Before that, there weren't any. I really thought I was going to win. I even wrote it down in my journal in 2002.

How did you develop your system?

How to choose my lottery numbers started through a trial and error process. I just started playing number games with myself about how to capture the most diverse numbers. Then I looked at the most recent Powerball numbers over the last six months and took the set of 15 numbers that were most commonly coming up. My Powerball numbers were going to be those 15. So I starting messing around with it, and my number games got a little more complex and a little bigger. I was starting to win smaller amounts like $150 and $500.

So the guy who thinks he's going to earn 23% a year also thinks he won the lottery because of his "numbering system." Right.

Brade Duke would do well to read Bo Peabody's book Lucky or Smart. Peabody created Tripod.com with a Professor (whose class he had a B- in) and sold it to Lycos for 58 million dollars in stock. The stock would later get battered in the internet stock meltdown, but Peabody saw the writing on the wall long before most people in the industry. He realized that the company had no real business model, and sold all his Lycos as stock as quickly as he could and invested in real estate and Treasury Bills. Here's what he wrote about his experience: "Was I lucky? You bet your ass I was lucky. But I was also smart: smart enough to realize that I was getting lucky."

Mr. Duke: You're not an investing genius, and you're not the next real estate tycoon. Buy a copy of The Only Investment Guide You'll Ever Need, drink some decaf, and stop thinking you're going to earn 23% a year.