My Worst Investment Ever Podcast

Jen Greyson is one of the top eight women in crypto and is a genius at failure. She’s currently running co.co, a start-up that’s the Airbnb of office space, speaks internationally on topics ranging from AI to being a female tech founder and knows the struggle of being a working parent through the longest summer.   “I should have left sooner, I would have still prospered like I did had I left when I knew I should leave. I stayed because of my investment, because of my sunk costs. I stayed longer than I should have. If I would have trusted myself when I knew I needed to go it would have been much more beneficial.” Jen Greyson   Support our sponsor   Today’s episode is sponsored by the Women Building Wealth membership group, the complete proven step-by-step course to guide women from novice to competent investor. To learn more, visit: WomenBuildingWealth.net.     Worst investment ever Chance meeting with computer engineer on an AI quest About four years ago, Jen had built the perfect life for herself. She was a new single mom, was ghostwriting for an amazing client that she had had for a few years and worked one day a week. She would go hiking with her dog and had a great home on a lake. Then she met a captivating computer engineer who was into AI. Over long lunches she would hear from him about virtual reality, AI and other things she thought only existed in science fiction. His goal was to build artificial intelligence “for good”, to create a level playing field so that some young person in Switzerland who wants to use AI to complete a college exam has the same chance as a CEO working for a Fortune 100 company that can afford to pay a huge AWS bill. Drunk on idea’s Kool Aid The more she started looking into the idea, the more she liked it. She offered to help with his writing really wanted to be a part of the process because it was world-changing. She was also newly divorced, had a lot of freedom and was financially doing well. So she dug into his business plan and her business brain kicked in. She had run some big businesses but had left corporate America never wanting to return. He suggested one afternoon: “You should come run my company for me.” And at this point, she was fully wrapped up in the idea, “had drunk the Kool Aid” and was really excited about it. Writer becomes investor and CEO to re-invent corporate world While not wanting to get back into her pantsuit, the idea of reinventing the way corporate structures worked appealed greatly. So even though she would be running this company, it was a start-up and they would be doing it on the global stage using crypto. That community was very welcoming and she saw the potential of the project and the potential to have an impact on small businesses, through neigborhood stores to college kids, and other players who really needed AI could have it. She had some money saved and the engineer didn’t but she decided to back the idea because she believed in it. They had a good plan in place, as with every start-up in the beginning. And the thinking, as with all new businesses is, in 90 days they would be rolling in money. Jen agreed to bridge the company us for 90 days and took out some loans. Costs sink in as deadlines pass and pass After the 90 days, they had some momentum so Jen decided to bridge the company for another 90, and another 90, and another 90, and we ended up raising some money from some other people. But, it started to go badly. Targets were not getting met, things were not getting done, sections of the project were not getting coded. It was her first experience with software development and she was really having to rely on his expertise. But she was also relying on her own expertise in running the business. She knew very well about deadlines and managing people and projects and making sure that what they promised, gets delivered. Major complications hit They started having many major complications and Jen as CEO held the fiduciary responsibility. She started feeling uneasy about what their investors were getting out of the deal and that her partner was wanting to start raising more money. She also felt bad about the risk she was taking because the SEC was really starting to look at crypto projects but the regulations were opaque, which meant risk. She was having conversations with lawyers around the world and in-house to navigate the regulation landscape. And Jen was personally committed to the tune of US$150,000, which made decisions difficult to make as a CEO without thinking about the money she was risking or that she had committed. Mentor asks hard ‘zero-based thinking’ question She was making decisions that might have been different if her money was not at stake. She met a mentor and, while she didn’t want to give up on the project, needed clarity. She had invested in it, believed in it, and truly wanted to have an impact on all those lives. The mentor asked her: “What would you say to a CEO in your position if you were coming on today as an advisor?” She was rocked, but it allowed her to look at the loss as a sunk cost and that that money was truly gone, never to be returned, and to ask herself what decisions she needed to make today? Jen left with ‘unattached’ view and resigns She left that meeting able to separate herself from the disappointment, the hurt, the anger at herself and to unemotionally, unattached, look at the situation clearly. It then made the next decision easy. She handed in her resignation and that was the end of it, except that she learned a lot of amazing things, and now considers it her “most brilliant failure” for sure.   “What would you say to a CEO in your position if you were coming on today as an advisor?” Jen Greyson’s mentor     Some lessons Live a life with no regrets Look at every situation as a learning opportunity Always get everything in writing Always assume a start-up is going to go bad Always have an exit strategy You must have a plan for when the start-up goes really bad. Be close with the others in a start-up Have a relationship with the people you’re going into business with or only work with people who know how to communicate and with whom there is mutual respect.     “Anytime you start a business with someone, it’s all unicorn farts and rainbows … Everything is glitter and beautiful and wonderful. And then, like any relationship, it gets hard and the honeymoon ends.” Jen Greyson   Andrew’s takeaways Collated from the My Worst Investment Ever series, the six main categories of mistakes made by interviewees, starting from the most common, are: Failed to do their own research Failed to properly assess and manage risk Were driven by emotion or flawed thinking Misplaced trust Failed to monitor their investment Invested in a start-up company Investing in start-ups (N0.6) is a very high-risk venture When you invest in a start-up, it is such a high-risk activity that Andrew usually recommends against it. Doing business with or investing in friends’ enterprises doesn’t always work, but it can work. It doesn’t always work with family, but it can work. Some people can truly earn our trust through good performance over a long period. Handy model to assess start-ups TIEM: Trust - Idea - Execution - Money Anytime Andrew looks at investing in a start-up situation, he applies this formula. Trust: The first question he asks is: Do I trust this person? Trust is only built over time, it’s very hard to walk into a new situation and say “I trust this person” If there’s no trust from the start … STOP. Idea: Is it a good idea? If it is not … STOP. Execution: Can this person or team execute on this idea? There’s a huge difference between the type of person who can come up with an idea and the type of person who can execute on it.  Part of Jen’s story was that her team started missing deadlines. They lacked the ability to execute the plan. Money: If you don’t have money, you’re not going to get there. So you’ve got to have the runway that money provides. CEOs may be risking everything Normally what people say is: “I want the CEO to have skin in the game. I want the CEO to be aligned with the other shareholders and the other investors.” But the reality is that for CEOs, sometimes it’s all of their capital. Meanwhile others are investing perhaps just 1% or 5% of their total capital so the way they think is very different. I never thought about that. Zero-based thinking is a valuable mental tool It can be applied to any part of life, even apply to relationships. Knowing what you know now (about this enterprise or relationship or job) would you still get involved with it if you just encountered it now?   “If the answer is yes, awesome, keep building it. If the answer is no, that’s very valuable information.” Andrew Stotz     Actionable advice Trust your gut Jen says she should have left sooner and stayed longer than she should have. Set deadlines and set solid repercussions for when they are not met   No. 1 goal for next the 12 months Jen is 100% thrilled about her current start-up, mostly because he has some great partners. She’s excited to see that starting to change lives and is committed to creating spaces where people can work. “Each of us can start changing the world.” As a mother of two boys, she always I always want amazing things to happen for them. And so I'm excited to see what they get to accomplish in the next year.   Parting words Every failure has a lesson, and learn it the first time, or the lessons will get bigger, harder and bloodier.     You can also check out Andrew’s books   How to Start Building Your Wealth Investing in the Stock Market   My Worst Investment Ever   9 Valuation Mistakes and How to Avoid Them   Transform Your Business with Dr. Deming’s 14 Points  Connect with Jen Greyson LinkedIn Twitter Website Amazon Medium Facebook Connect with Andrew Stotz Astotz.com LinkedIn Facebook Instagram Twitter YouTube My Worst Investment Ever Podcast  

Douglas Tengdin, CFA, is the chief investment officer (CIO) of Charter Trust Company, where he has worked since 2000. He graduated magna cum laude from Dartmouth College in 1982, and received his CFA Charter in 1992. He was the founding president of CFA Society Vermont and remains an active volunteer with the CFA Institute. His first job in the investment industry was as a mail boy and securities runner in 1974. He has also worked as a bond trader, currency trader, mutual fund portfolio manager, bank treasury analyst and manager, and private wealth portfolio manager before becoming a CIO. He began to produce a monthly market commentary in 1993, and started blogging in 2007. His daily blog is called the Global Market Update and he produces a one-minute podcast and radio spot that accompanies it. He has been married for 35 years, has six children whom he and his wife have homeschooled, and is active in church and outdoor activities. He currently lives in Hanover, New Hampshire, with his wife, their youngest son (about to enter college), and his mother-in-law.   “The government can take anything away. They’re not predictable. You may think you have a way of predict them but they’re not.” Douglas Tengdin   Support our sponsor   Today’s episode is sponsored by the Women Building Wealth membership group, the complete proven step-by-step course to guide women from novice to competent investor. To learn more, visit: WomenBuildingWealth.net.     Worst investment ever Douglas says his story was not as much a terrible investment as it was memorable. It was 1988 and he was in his late 20s and a bond trader for a mid-sized US bank. He sat on a desk with other bond traders, and bought and sold United States Treasury securities during trading day hoping to speculate on price movements, which are relatively random on any particular day. He had built a lot of financial models, without all the great software we have today, just Lotus 123 spreadsheets, but he had created a lot of them, and they have macros built into them and macros that built other macros, and they were continually processing the price activity, looking for clues. Built models used to help his bank trade in treasuries He had had considerable success with these models and had been hired to help manage the bank’s Treasury department. He was then invited to do the same thing for the traders and so he started doing that and making predictions. Then his leaders suggested he put a “paper portfolio” together to see what he could do, so he used his models and put the paper portfolio to work, with some success. Bank puts him trading real funds and he makes early wins Then they put him to work trading live funds (real money). He was invested in two- and five-year treasuries. He would buy and sell those securities, going short or going long, but he would always be ahead by trading day’s end. Suddenly, Greenspan’s Fed raises discount rate He remembers the day well. It was August 1988. The market had recovered from the 1987 crash, and the economy was moving along. There was speculation about the future of oil prices, which had crashed in 1986 and they were starting to climb out. There were of course doing okay. But there were always “squiggles and giggles”, always turnarounds. So he had purchased the four-year Treasury bond, had watched the price move up and it was close to his return target, when the Dow Jones newsprint machine sounded three “dings”, which meant there was a news item. Immediately following that alert, the machine dinged twice, which meant the US Fed has raised its discount rate. Modest profit in four-year Treasuries turns to big loss Alan Greenspan was new to the Fed, and at the time the central bank was engaged in a policy of “creative obfuscation”. So he had been chairman for a year looking at the economic landscape and instead of adjusting monetary policy through the Fed funds rate, or through the money supply, which was what they were doing at the time, they occasionally changed the discount rate. That was a surprise. And his modest profit in the four-year Treasury turned into a more than modest loss. He recalls seeing that happen and thinking: “How can they do this? Don’t they know that I’ve got a financial model that’s working and it’s working really well.” Besides that, it was the first part of the month and he yet to have his monthly profit and loss statement made. “And my modest profit in the four-year Treasury turned into a more than modest loss. And I remember seeing that happen and thinking, ‘How can they do this? Don’t they know that I’ve got a financial model that’s working and it’s working really well.” Douglas Tengdin   Trader has severe instant emotional response Mind racing, brick in the stomach, wind sucked out of his lungs, numbness in his limbs. All the issues at hand flashed through his mind. The thought of being in the hole despite his risk-controlled position in four-year Treasuries to the tune of US$4 million made him feel like a brick had fallen to the pit of his stomach, the wind was sucked out of his lungs, and he felt number in his limbs. All this and it could have been worse. He had not lost someone’s retirement savings, he hadn’t risked his institution’s capital, it was not a massive loss. But it was a very memorable moment. Despite all planning, the news, especially government action, can destroy you What was striking to Douglas was that despite all kinds of planning, all kinds of models, all kinds of fancy algorithms to understand what was happening, the news can and did hijack him and it can happen immediately. This applies particularly to the government, which has unquestionably a massive responsibility regarding monetary policy, financial policy and fiscal policy. They play a huge role with every modern economy. The government can change what it is doing and announce a change, and that announcement can have massive and instant effects on your financial position. Position closed but colleagues cheered him saying ‘it’s early in the month, you can make it back’ Douglas closed the position right away and watched it. If he had the insight and experience to reverse it, he would probably ended up positive on the day. But someone told him once that “your first loss is your best loss”. He simply looked at the market to try and understand what the next dynamics were. The next dynamics were going to be price down, which followed through that day. The next day, he took a short position and started earning his way out of the hole that he had made. Some of his friends in the market said: “At least it’s early in the month, Doug, and you’ll have a chance to make it back for your monthly book. And they were right.” “Someone told me once that your first loss is your best loss.” Douglas Tengdin   Some lessons The government can take anything away It is not predictable and you may think you have a way to predict it, but you can’t. Size matters Douglas’ position size was manageable, and he hadn’t taken an outsized position and for that reason he was able to earn it back. We don’t know the future We invest based on forecasts, but we have to be humble about those forecasts and remind ourselves continually that we don’t know the future. If you think this will never happen again, get out of investing As the disclaimers say: “All investment carries risk.” As Douglas said: earlier, we simply don't know the future, there's all kinds of things that can happen.   Andrew’s takeaways That’s the way investing goes One thing an investor can say ask themselves is “how can I structure my next investments so I will not be exposed and this will never happen again”. The answer to that is such a structure would cost so much in costs or possibility of return that it would never make sense. So sometimes, you just have to be prepared for these types of losses. Sizing your position is protection again major loss Douglas was protected against devastating loss and could even recover his losses by the end of the month because he had sized his position modestly and carefully. On top of damaging notices, governments can also lie or mislead Be very careful if an investment case you’re making is reliant upon the government Case in point: During the Asian financial crisis in 1997, the epicenter of which was in Thailand, the government was announcing its foreign exchange positions, and people in finance thought it had US$40 billion. But it was not disclosing the forward transactions that actually, once unwound meant that in one day in March that 40 billion fell to seven. And then it was only a couple more months in the end of June, beginning of July, it said, okay, there’s no more money.   Actionable advice Douglas has a phrase on his wall that he created: “Diversification is the compliment that humility pays to uncertainty.” He says people have to humble in this business, because if you’re not, the markets are going to humble you, so you have to diversify because the future is uncertain. The future is indeterminate and that’s the case because the news is indeterminate. The answer to uncertainty is diversification Time diversification - in terms of spending, you have different maturities, you have different aspects of the bond market you might be involved with, there's Position diversification by sizing is incredibly important Mental diversification using different approaches to the marketplace to assemble a portfolio.   No. 1 goal for next the 12 months To continue to in the marketplace to prepare ourselves for the next downturn The time to prepare your portfolio for a downturn is before the downturn happens, so while there are trade echoes of difficulty, the time to prepare your portfolio is now when things are still looking alright.   Parting words We can’t control the future. We can only control what we’re doing now (to be ready for an uncertain future).     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points Connect with Douglas Tengdin LinkedIn Twitter Twitter (Global Market Update) Website Blog Connect with Andrew Stotz Astotz.com LinkedIn Facebook Instagram Twitter YouTube My Worst Investment Ever Podcast Further reading mentioned Peter Bernstein (1998) Against the Gods: The Remarkable Story of Risk  

Darryl Tom is a private wealth manager who delivers personalized comprehensive wealth management strategies and solutions to high-net-worth (HNW) individuals. Previously, he was a private banker at DBS and ANZ private banks and an investment manager with HSBC Australia, providing investment portfolio construction across multi-asset classes, including unit trusts, ETFs, equities, global fixed income and currencies. He provided investment guidance to relationship managers to meet the investment needs of their clients. Darryl has worked as a financial planner for AMP, Australia’s largest wealth manager, and was also based in Tokyo, Japan, where he was a private wealth manager for a boutique wealth management firm catering to HNW expatriates and specializing in wealth management and asset protection. His experience includes business training and development for large multinational firms, such as Goldman Sachs, Pictet Asset Management, Baxter, Roche and Microsoft.   “I come across a common theme across all of my clients, which I guess if you were to boil that down into a simple sentence, it would be that clients are chasing the market or following the market as opposed to following a strategy.” Darryl Tom   No.1 mistake witnessed as a wealth manager Chasing the market rather than following a strategy Darryl has been on the front line talking with a lot of investors and people wanting to protect and grow their wealth for future generations and one of the common themes across all of his clients’ mistakes has been chasing or following the market as opposed to following a strategy. He says investing is a very disciplined and patient game. Investors’ styles likened to The Tortoise and the Hare He also says investing is like the moral in Aesop’s: The Tortoise and the Hare fable. Consider the tortoise as being the slow, precise, and disciplined investor, just doing what he needs to do and staying the course. Meanwhile, the hare races ahead, but stops every five minutes to talk to people, responding to different information in the market, basically just being distracted. This is a common theme across most of his clients and as a private wealth manager, it’s his job to sit back and try to steer clients more onto the tortoise track as opposed to running with the hares. Following the market instead of following a clear strategy would be the overarching theme. How to be the tortoise? Stay in your lane! Darryl asks his clients if they’ve ever been stuck in heavy traffic, trying to leave town on a long weekend Friday afternoon. He asks them to recall being stuck in the right lane while watching cars go by and feeling desperate to join them and get where they’re going. So they wait for a break in the traffic, pull out, do a few car lengths and the car in front slows down and they’re stuck again. Suddenly, while looking to the right, that lane starts to move forward. They do that two or three times, but if they had actually stayed in their lane, they would have gotten to their destination a lot sooner, and a lot more free of stress. He adds: “We’ve all done that”. Industry and media often drives investors to be the hare The way the financial system operates and is structured and the way the media also markets the financial services industry does not really help investors or clients. They talk up this stock or this “hot buy”, or come up with plausible reasons for why the markets are going up or down, what people should buy and what they should sell. They try to excite, because if they were just saying: “Let’s put together a strategically allocated all-weather portfolio and just let it run its course,” that would make for pretty boring TV, Darryl says. “(If the media were saying:) ‘Let’s put together a strategically-allocated, all-weather portfolio and just let it run its course … that makes for pretty boring TV.” Bankers’ and advisors’ advice makes them money too Often our bankers and advisors are remunerated based on commission, so they are driven to make money for themselves. They will never say: “Let’s put a portfolio together for you, and come back and see me in six months or 12 months, and we’ll rebalance it a bit. But otherwise, shut the TV off and just go about your life,” because that is not going to make the bank or the investment firm any money either. State of the industry is really quite sad for investors Fee-for-service models are evolving, but clients still struggle to invest money and struggling to, put in cash on a 1% annual management fee basis. Then they are told they are going to be charged 1%, but the broker also had to justify their existence by giving market updates.   “It’s a vicious circle. And it’s something that really needs to be addressed.” Darryl Tom   Worst investment ever Professional should have known better Overactive trader fits the gung-ho profile This is the story is of an error made by a financial professional that Darryl was advising, so this is someone who should have known better. Darryl was based in Tokyo, dealing with the expat community there and many of his clients were also financial professionals. The client in question was a trader for a large multinational bank, and he fit the profile: always looking for the next trade, buying, selling, and very confident in their abilities. So Darryl felt he was more of a sounding board and the trader was “driving the bus”, while Darryl sort of navigated. Client panics and sells after 30% drop in portfolio The client came to Darryl often, and he was very active, wanting to trade almost every tip from his bank’s equity desk, and they were usually high-risk items. So at the top of the market, Darryl was starting to see the market downturn. When the market started to tip further and further, his client was about 30% down on his portfolio. So the client came back to Darryl and said it was time to pull out. So he cashed out at a loss. He was then on the sidelines and while he had missed a little more of the downside, the experience had shaken him so much that when the market started to recover, he was too nervous to step back in. Burned by loss, client is shy to re-enter market and misses big upside While it was a scary situation, by the time the client regained the confidence to start trading again, the market had already gone up and he had missed all the upside. So he missed a little of the downside, all the upside, and also lost a lot of money for the institution that he was working for during that period, which affected him greatly, emotionally and psychologically. He was hit on two sides, personally and professionally. It was a very sobering experience for him.   “What I advise in the book I wrote for my nieces is to invest in just one ETF that owns 8,000 or so companies. And that is your chance to be a business owner and get the benefits of that over a long period … think of it as strolling through your neighborhood and seeing all these people working so hard for you.” Andrew Stotz   Some lessons Even the pros aren’t immune to market distractions Be proactive in stopping clients from making mistakes Darryl’s client was a peer. So it was quite hard to force an opinion on him. Darryl never thinks he’s the smartest guy in the room and he was at a very early stage in his financial career. So at that time he was more of a just an executor. But he points out that that was how he learned to be more assertive in making sure people listen when he is trying to save them from themselves.   Andrew’s takeaways Don’t get distracted The world is full of distractions. Andrew stopped reading the newspaper, got rid of the TV at home, and avoids looking up market moves because they’re all very distracting. He meets very successful business people all the time, and they’re not distracted at work. But when they come into the financial world, they bounce around everywhere, hyped up looking to make a extra killing here or there. Markets almost always recover Andrew and his team at A. Stotz Investment Research did a study in which they showed that markets almost always recover within one or two years. The main message is that stocks do not always recover; some can collapse and never recover. But the market almost always recovers. See his research here: Xxxxxxxxxxxxxxx Everyone needs support, even financial professionals When times are tough and there are challenging decisions to be made, we all need support, and financial professionals must be included. Finance people are people too! “They all have feelings and want to laugh.”   No. 1 goal for next the 12 months Darryl is halfway through getting a boat license to captain a vessel in Singapore, one of the busiest ports in the world, so there are many regulations. When finished, he can get out on the water and have fun with his family.   Parting words Be disciplined Stay away from the hype Keep it simple Stay the course Stay in your lane     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points Connect with Darryl Tom LinkedIn Connect with Andrew Stotz Astotz.com LinkedIn Facebook Instagram Twitter YouTube My Worst Investment Ever Podcast  

Jason Bible, aka Mr. Texas Real Estate, is a full-time real estate investor who is thriving after a long journey in the field working with buyers and sellers of real estate. He is the co-host of the live call-in Right Path Real Estate radio show on Houston Business 1110AM KTEK, Monday to Friday at 9am. On top of that, he is the managing partner and chief operating officer at HoustonHouseBuyers.com. His knowledge encompasses landlord investing, wholesaling, flipping, lending, banking, money and finance. In July 2013, Jason started a company that specializes in buying distressed houses directly from home owners. He has bought, sold, renovated, and leased hundreds of properties, raised capital, and borrowed nearly US$10 million in bank and private capital. Further, Jason has been an invited presenter at multiple local and national business and real estate events. He completed his undergraduate degree in environmental science from Sam Houston State University then worked for the University of Texas Health Science Center at Houston (UT-Health), during which he completed an MBA in finance and an MS in Security Management. After that, he started as an environmental waste specialist and prior to leaving UT-Health to start his first company, was the risk manager. He lives in Houston Texas with his two sons, Cameron and Carson, and my wife Sarah, he is an avid home brewer and craft-beer enthusiast.   “I will never forget sitting in a meeting, probably two months before, (discussing) should we get flood insurance on (a property in Memorial, Houston) or should we not. And the house … (had) just a little piece of the backyard that was in the 500-year flood plain, so we thought probably don’t need flood insurance on it. Well, this was 1,000-year flood event (Hurricane Harvey).” Jason Bible   Support our sponsor   Today’s episode is sponsored by the Women Building Wealth membership group, the complete proven step-by-step course to guide women from novice to competent investor. To learn more, visit: WomenBuildingWealth.net.   Worst investment ever House refurbished for flipping valued at US$1m Jason’s worst as far as amount of money lost was on a property in Memorial, Houston, one of the last houses that he and his team ever invested in during their flipping operations. It was 3,000-square-foot beautiful 60-year-old house and it needed complete refurbishing, which they had just finished doing. Hurricane Harvey drenches city for four days Of around three houses in flood-prone areas, only with this one had they decided against insuring for flooding. Alas, after 40 about inches of rain per 24 hours of a storm that returned to the mainland a second time and hovered over Houston for about four days, and the ensuing unprecedented flooding across almost the entire city, their $1-million mansion was rehabilitated property was devastated. Signing away $250k was heartbreaking So he and his team were discussing over and over in their sales meeting when exactly they would sell the house. And on about $1 million dollar house, they lost about $250,000. He said writing a $250,000 check to get out of a deal was absolutely heartbreaking. But the real pain comes in thinking that in six or seven years, that house will again be valued at up to $1.3 million.   Some lessons Traits essential for investing in real estate If you’re risk averse, don’t do it. Real estate is not for people who can’t handle the risk. If you look at how the SEC qualifies real estate, it’s called “a considerably risky venture”. Don’t apply the emotion of home ownership to your investment portfolio Jason points out to budding property investors that those areas are two totally different things. You’ve got to take action At some point, you have all the necessary information, so just go and do the deal. “You have talked to all the experts, your wife, everybody in your team, your attorney, your appraiser, your bank, your lenders, and all of them have said this is a good deal. … Don’t stand at the altar, get cold feet and walk away before saying ‘I do!’.” Sometimes there is nothing you can do to prevent a huge loss You can have flood insurance. But the real loss was came down to that of the reduction in value. The reality is your portfolio is just not big enough. How do you hedge for a risk the size of Hurricane Harvey, an event that had never happened before in living memory? It’s really tough.   “Sometimes a hurricane, sometimes a storm blows in and it’s going to rock your portfolio and there’s just not a damn thing you can do about it.” Jason Bible   Andrew’s takeaways You can’t plan for everything Statistically, there are anomalous events that can happen, but if you then build your business around them happening again, you will never take the risk needed to really make money. Don’t overcompensate after tragic events We often see tragedies and cataclysms in America and the rest of the world, and people’s, businesses’ or governments’ responses to them are a massive over-reaction in trying to prevent damage from events that are probably not going to happen for another 500 years.   Actionable advice Make sure you have flood insurance “Time heals all wounds” In real estate, much like personal relationships, time really does heal, if you’re holding on to this stuff a little bit longer, it does begin to heal all wounds. Take action, fix your flip and tenants in them If you own rental properties and they get flooded, just go in and rehabilitate them as quickly as possible so you can put tenants back in. Jason these days is more of a buy-and-hold investor currently.   No. 1 goal for next the 12 months He really wants to be better at playing well with others. He has taken this theme from some reading and video watching about Dr. Jordan Peterson’s works. He has extended this goal to his company and for all of them to be an organization that’s fun to play with. Broadening its network, deepening relationships that are most beneficial in the industry. Parting words I’ll tell you don’t stop if you take a loss. Just keep going. Just keep on trucking it will get better.     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points Connect with Jason Bible LinkedIn Website Website (Texas Real Estate Radio) Facebook YouTube Connect with Andrew Stotz Astotz.com LinkedIn Facebook Instagram Twitter YouTube My Worst Investment Ever Podcast Further reading mentioned Jordan Petersen (2018) 12 Rules for Life: An Antidote to Chaos Hardcover Jordan Peterson (2018) Playing Well With Others (Choiceless Awareness YouTube channel)  

This podcast was recorded on 25 April 2019, and is dedicated to the birthday of Andrew’s mother, Kathryn Stotz, 81, who was born on that day in 1938. Mrs. Stotz is alive and well and a daily listener of her son’s podcast Scott Carson (aka “The Note Guy”) has been an active real estate investor since 2002, solely focused on the distressed mortgage and note industry since 2008, in which he buys and sells non-performing mortgages directly from banks and hedge funds on properties across the United States. Scott is the CEO of WeCloseNotes.com, an Austin, Texas-based real estate firm. He has purchased more than half a billion dollars in distressed debt for his own portfolio and purchases assets in more than 30 states across the US, while also helping thousands of real estate investors make money along the way. He is a highly sought after speaker on distressed debt, marketing and raising private capital. He has also been featured in Investor’s Business Daily, The Wall Street Journal and Inc.com. Scott is also the host of the popular podcast, The Note Closers Show and provides regular content across his YouTube, Facebook, and other social media channels. An avid sports fan and reader, he spends his free time attending sporting events, concerts, and traveling to new places.   “I felt depressed, I was sick. I even kind of burrowed myself in … when I should have probably reached out for help a little bit sooner from some outside sources. I think we all kind of get our heads down, and don’t let anybody know about the deal. But then I said: ‘I’ve got to take responsibility, I got to step up’.” Scott Carson, on how he felt about losing US$250,000 in a property deal   Worst investment ever Scott invested in distressed home loans in Chicago with a group of investors. The deal went south, legal proceedings took much longer than he expected, especially for out-of-state buyers of the distressed debt. Eventually, he bought out his investors and worked to close the deal, but in the end he lost about US$250,000.   Some lessons Always double-check legal proceedings Scott talked with his attorney often, but never asked the attorney realistically what the worst case scenario would be. Plan for the worst-case scenario Reach out for help sooner Take it easy Often escalating a situation is not the best way out.   Andrew’s takeaways It’s so important to reach out for help when times are tough ‘Stress is a killer’ I removed stress from my life when I stopped saying the word “stress”. You don’t need to draw a confrontation, stay calm Separate research on return from research on risk Collated from Andrew’s My Worst Investment Ever series, the six main categories of mistakes made by interviewees, starting from the most common, are:    Failed to do their own research Failed to properly assess and manage risk Were driven by emotion or flawed thinking Misplaced trust Failed to monitor their investment Invested in a start-up company If you can separate the work that you’re doing on the return (which is very exciting) – what you’re going to make from it – from the work you do on the risks involved with an investment, then you have segregated that work and then you can look clearly on all the things that could go wrong, and potentially prevent them.   Actionable advice If it’s too good to be true it probably is Seek counsel rather than seeking advice Listen carefully when that counsel is delivered.   #1 goal for next 12 months Remove stress from work life   Parting words Take action!       You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points Connect with Scott Carson Podcast Note Buying Blueprint Course LinkedIn Twitter Website Instagram Facebook Pinterest YouTube Blog Connect with Andrew Stotz Astotz.com LinkedIn Facebook Instagram Twitter YouTube My Worst Investment Ever Podcast Further reading mentioned    Scott Carson (1999) How to Buy Real Estate at 40% Off or More   

Shaun Rein is the founder and managing director of the China Market Research Group (CMR), a globally prominent strategic market intelligence firm focused on China. He works with boards, billionaires, heads of state, CEOs and senior executives of Fortune 500 and leading Chinese companies, private equity firms, SMEs and hedge funds, to develop their China growth, political and investment strategies. Rein wrote international best-sellers The War for China’s Wallet: Profiting from the New World Order, The End of Cheap China and The End of Copycat China. Rein is regularly featured in The Wall Street Journal and the Financial Times. His op-eds have appeared in The New York Times. He frequently appears on CNN, BBC, MarketPlace, CNBC, Bloomberg, PBS and MSNBC. Rein formerly taught executive education classes for London Business School and was a weekly columnist for CNBC and Forbes. He also wrote a column for Bloomberg BusinessWeek. Rein is one of the world’s most sought after keynote speakers for his focus on innovation, consumer trends and the economy in China. His speaking engagement clients have included: Estée Lauder, Adidas, HSBC, AXA, Credit Suisse, Baker McKenzie, Blackrock, Baillie Gifford, KPMG, Macquarie Bank, Nomura, Baird, Deloitte, CLSA, Solvay, Sodexo, and Nestle. Apart from China and Hong Kong, he has spoken in economies such as South Africa, Australia, the US, the UK, Canada, Singapore, Thailand, Mexico, Vietnam, Japan, and South Korea.   “I had the students but it was very difficult for me to actually turn a profit. The difficulty in human resources in China has become a central theme of my business and most businesses that we’ve worked with over the past two decades. Mine started with the difficulty of hiring foreign talent, but actually the lack of top Chinese talent and the inability to retain good talent has been a major problem for me in my company China market research group ever since we started in 2005.” Shaun Rein   Support our sponsor   Today’s episode is sponsored by the Women Building Wealth membership group, the complete proven step-by-step course to guide women from novice to competent investor. To learn more, visit: WomenBuildingWealth.net.   Worst investment ever In around 2001, while Shaun was a 23-year-old a graduate student at Harvard University, he was putting some thought to the big question: “What am I going to do with my career?” What he did know was he never wanted to go the corporate route and work somewhere like McKinsey or Goldman Sachs, even though most of his classmates were headed in that direction. Instead, he had been interested in entrepreneurship ever since he had run an event-organizing company in Canada while he was a student at McGill University. The company managed 3,000-head dance parties, populated mostly by pre-legal-drinking-age (21) Americans that he bussed up to Montreal, where the legal drinking age is 18. At the time, he was living in Tianjin, China, going to and from there and Cambridge, Massachusetts. He realized there was a great opportunity for teaching English because “Chinese love America”, and they wanted to learn English. Budding idea to start English learning center in China So he decided to set up an English language learning center for 5-15 year olds and teens in China. The center’s focus was on speaking, because a lot of local children could already read and write well, but he and his team wanted them to learn correct American-accented English. So he returned to Tianjin, found Chinese partners, and set the company up with the unique selling point that every teacher would be a current or former Harvard student or teacher. Center opens with a bang but various snags emerge He opened the company and to big celebration. Classes started and people were very excited to have Harvard students or Harvard graduates coming to Tianjin. Within day one, the center had registered more than 300 students. It was a really exciting time but quite soon the enterprise was not to go quite as planned. There were small problems. There were big problems. On opening day, the police came in and said: “We’ll protect you. We want protection money.” Shaun declined so the police rapidly closed down the center. Hard to entice Harvard types to Tianjin On opening day, they had to find new office space, which they did on the campus of Tianjin Normal University. They made a deal to use classrooms and the police could not bother them. So that was one of the “small” problems, the “regulatory” issues with the police. Then they had the bigger problems. Even though the Chinese students wanted to learn from Harvard graduates, Harvard graduates were not too fussed about living in Tianjin. At the turn of the millennium, the enormous port city was polluted and not very amenable. Expensive to set up and maintain Rental costs, even for the time, were quite high in China, especially to fit out a learning center than met the style demands of the parents of the little emperors and empresses. They really wanted to have the nicest classrooms, the best teachers, and the best of everything, which added already the climbing costs. Suffice to say, Shaun made a profit of around 50,000 RMB (less than US$10,000 over the three years the center was operating. He was living in a US$150-dollar-a-month apartment, and could not even pay for his plane ticket to return home. It was a very difficult time. Key test is to fund and retain foreign or Chinese talent He had the students but it was very difficult for him to turn a profit, and the difficulty with human resources in China became a central theme for Shaun. Most businesses he has worked with over the past nearly 20 years started with problems the difficulty of hiring foreign talent. Now the lack of top Chinese talent and the inability to retain them has been a major problem for Shaun and China Market Research Group ever he started the company it in 2005.   “But you’re definitely going to find as a foreign company a very uneven an unfair playing field. So I think the issues I had in my failure two decades ago, are going to be the same issues that companies face today.” Shaun Rein   Some lessons Supply chain is a key issue Many people underestimate the importance of getting raw materials or the inputs for your product or service. In his case, it was Harvard graduates. Infrastructure too is underestimated China has continued to dominate the global economy in the past decade and will continue that due to its incredible infrastructure. China protectionism - true for local and US companies Trump and a lot of people criticize China for being protectionist and unfair to foreign companies but that is only a part of the story. But there’s too much protectionism for state-owned enterprises, such as the Bank of China or China Telecom. So it is an uneven playing field for both foreign and private Chinese companies. It’s very difficult to be a private Chinese company if you are small or medium-sized and lack high-level connections because the government will over-regulate, which stifles innovation. If your company is successful, the government or a state-owned enterprise will take it away.   Actionable advice Get a good team together They can be Chinese or foreign people. What matters is that they are loyal, knowledgeable, and know how to conduct business in China, how to navigate the local market. “You can’t parachute a Chinese-born citizen who has been living in the US for 20 years in to China to run an operation.” China 20 years ago is very different from China today The first thing is to get top talent that understand how to navigate the local Chinese market. President Xi is trying to change the culture of business and politics in China and he is doing so but it will be difficult. But businesses will not be asked for bribes now in China as you would have been 20 years ago.   No. 1 goal for next the 12 months To be a billionaire To make US$250,000 dollars for a single keynote speech. He’s at about US$50,000 now, but he really wants to match Bill Clinton’s rate To get another book or documentary released To produce a five-episode series on Netflix or a similar channel to help Western businessmen and visitors to better understand China   Parting words Yeah, you just can't win unless you know how to lose. So losing is not losing long term if you take the right attitude. But failures are the stepping stones to success.     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with Shaun Rein LinkedIn Twitter Website Email Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube My Worst Investment Ever Podcast    Further reading mentioned Shaun Rein (2018) The War for China’s Wallet: Profiting from New World Order Shaun Rein (2014) The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia Shaun Rein (2012) The End of Cheap China: Economic and Cultural Trends that Will Disrupt the World      

Natali Morris is a former network news anchor turned personal finance educator and motivator. Her specialties include personal finance, business, and technology. She is currently a contributor to CNBC and MSNBC where she was previously an anchor, a role she also filled prior to that at CBS Interactive. Her experience includes being a contributor to CBS News and the TODAY show, along with CNN, ABC News, G4TV (a former US digital cable and satellite TV channel), BBC, The CW, Fox News, Fox Business News, and Univision (Spanish-language reporting). She has written for Consumer Reports, WIRED, Variety magazine, MarketWatch, TechCrunch, The San Francisco Examiner, PC Magazine, ELLEgirl (now defunct), the Oakland Tribune (now the East Bay Times), and more. She has a bachelor’s degree in journalism from California State University East Bay, and a master’s degree in sociology from the University of Southern California. Prior to 2010, you may have seen her work under her maiden name, Natali Del Conte. Natali is from the San Francisco Bay Area. She lives and works with her husband Clayton and their three small children. Her sole focus is to not screw them up.   “I don’t want focus all the time on shrinking my life, because that’s what I’m worth, I want us, all of us to expand our lives.” Natali Morris   Andrew’s question about learning finance “When you first looked at the idea of learning finance, or learning investing for yourself … how did you feel about what you were faced with?” Natali’s response “If you look at your finances, how to get them in order and how to then save and invest, as a whole, it’s too much … I started reading these books about how many fees are in your funds, and your IRA and your 401k, and I got myself all worked up and pissed off. And then I was like, well, where do I put them? … So … that wasn’t getting me anywhere until I decided: ‘Okay, take one thing, learn that one thing and that teaches you the language of finance to go to the next’.”   Andrew’s points on learning Learn one book or take one step at a time Someone once asked Andrew: “How many books have you read?” The answer was: “Thousands!” The query continued: “How did you read so many books? Andrew answered: “I read them one at a time.” In reference to Natali’s “learn one thing at a time” strategy, Andrew agrees, saying: “Take one small step at a time.” Mother set example for family financial planning Andrew’s mother was very much involved in his household’s financial decisions and money management. His mother and father worked together for years to build financial security, so that they lived a period of 20 years retirement without financial trouble. When Andrew’s father passed away, his mother moved to Thailand with him and she is still financially independent. Cutting costs has a limit, growing wealth has few You can never get to true success in business, investing or in building wealth by cutting costs. There is a limit to cutting costs, so the other part has to answer the question: “How do we grow?”   Worst investment ever FBI probe of investment dare not speak its name Natali had some trouble choosing her worst, as she’s had so many challenges. One story she can’t really talk about because it is the subject of an active FBI investigation into some funds that were in her IRA. This investment was particularly heartbreaking because she had her children’s investments tied up in that situation, as well hers and her husband’s. Another situation also involved trust Natali and her husband Clayton (a previous guest on this podcast) got into business with someone during the past five years. They were helping other people invest in off-market properties. Their partner was a fiduciary (a fiduciary relationship is formed between two parties who trust each other. In real estate, a fiduciary relationship is created between a real estate agent, known as the fiduciary, and a buyer or a seller, known as the principal) who was selling all the houses and Natali and Clayton we were getting referrals on any investors that went through him. Towards the end of their relationship, they realized that a lot of the rehabs he had said he had carried out, had not been done or were incomplete. And so that really ended up exposing them to a lot more liability than they had planned for.   General lessons It’s very hard to save your way to wealth In fact, Natali says it’s almost impossible. She found that a very difficult change in her thinking. But change she did, and now she tells her clients and students that if she could achieve that shift, then other people can do it too.   Andrew’s takeaways Collated from this My Worst Investment Ever series, the six main categories of mistakes made by interviewees, from the most common, are:    Failed to do their own research Failed to properly assess and manage risk Were driven by emotion or flawed thinking Misplaced trust Failed to monitor their investment Invested in a start-up company Mistake No. 4 is Misplaced Trust Andrew goes on to ask Natali about the signs so that listeners are not sucked into a similar difficult situation. Natali’s lessons on trust delve into the spiritual Natali and Clayton explored why this had happened, looked back through their communications, and how they formed the relationship and they found it very hard to pin down how they could have known, so Natali calls this more of a “soul challenge” than a practical challenge, because she and her husband were unable to determine how they could have averted the results of this fiduciary partner’s misrepresentation. Need for healing other than legal, practical redress Natali and her husband actually teach people to take charge, run their numbers, research risks, understand who they are dealing with and do their due diligence. They had done all that. So after a few occasions of misplaced trust, she started to seek healing. The lessons she learned came from a spiritual perspective, and that somehow, they had been led toward all of the steps that she needed to protect herself before this happened. Higher power hints to put protections in place She had been working closely with state lawyers to make sure they had a domestic asset protection trust, and another instrument close to an offshore trust that is available under US law. She had educated herself and established those trusts before she and Clayton had had any problems. She had educated herself on different insurance plans and decided to open a captive insurance plan, a kind of advanced investor tool. She was prepared and she realized that a lot of times when a “big soul challenge” is coming, you have been prepared in ways by which you were not fully aware. Then when it hits, you realize why you needed to be so prepared. She says, some kind of spiritual guidance or guardian angel or higher power is putting in front of you the people you’re going to need, the books, the podcasts, and the information to guide you along your path. If you pick them up, you will be more prepared for the soul challenge when it comes. What if she hadn't been so ready? Natali often wonders what would have happened if she had failed to pick up the tools she had found before her? If she had just stepped over them before the soul challenge arrived, she would be injured much worse. She would have been saying: “I could have read that book. I should have called that person, I could have hired that estate lawyer.” Natali Morris   Andrew on spiritual preparation Right path is usually not so hard Some people say that they’re searching for God’s will on a matter. Others could say: “It’s just the right path for me to travel in life.” Andrew argues that the right path is usually not too difficult. If you find yourself getting in too much difficulty, it is probably a good idea to step back. When you think about spiritual preparation, look for a path. It’s not necessarily the easiest path, but it makes sense, and it feels right. Listen to your intuition When something feels wrong, pay attention, bring it up and put it right on your desk in front of you.   “You get into this scary time … you’re in … the belly of the whale … and you’re like, ‘how did I get here?’, I don’t know what the journey is and you have help along the way and somehow you come out of it a different person, and it shows you what you’re made of and what you’re supposed to learn from it.” Natali Morris   Actionable advice Look for the next book Natali recommends letting the next book or message fall in front of you and then read it, follow the intuitions or “wisps” or whatever is trying to guide. “Every moment gives you an opportunity to see and ask ‘Is this preparing me for something that I need to know?’ Let me give it some real thought.” Read A Hero with 1,000 Faces and you will realize all mythology has a story to teach us about how we are being prepared for our own hero’s journey. Natali is still involved in many painful situations, but she may not come out of them a hero, but that doesn’t mean she will quit. She’s learned a lot about herself, especially during 2018, when she had her husband went through difficult times. But now, she is stronger, not afraid of money, not afraid of investments, and willing to take on a seller finance deal and talk to a lender. A lot stronger than the “little housewife” she was trying to avoid being. Andrew’s value-added comment You’re stronger than you think. When you face difficult challenges out there, the reality is that you can make it through.   No. 1 goal for next the 12 months Natali wants to find a way to put the benefits of her and her husband’s Financial Freedom Academy in the hands of the people that need it the most, so that whatever soul challenges that have to do with money in their lives, they are not afraid. To listeners: Anyone who is facing the results of their worst investment, “this is just their opportunity to slay the dragons”.   Parting words “I appreciate you being empathetic and letting me talk.”     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with Natali Morris LinkedIn Twitter Facebook Personal website Business website Blog Email Connect with Andrew Stotz astotz.com  LinkedIn Facebook 

Venkatesh is an author, speaker, investor and entrepreneur. He has spent 22 years in the Asian markets in senior roles across listed equities (with JP Morgan and Credit Suisse), private equity (with Macquarie and AMP) and corporate strategy (with Masan Group). He is the co-founder of strategy consulting firm Dhyana Partners, and has served as a director on the boards of several companies. He is also the author of suspense thriller, KaalKoot: The Lost Himalayan Secret, which has been a No. 1 bestseller on Amazon. In the listed equities space, Venkatesh has held several pan-Asia roles, including as head of India equity research at JP Morgan, and sector head for the Asian metals team at Credit Suisse and Deutsche Bank. He led the Credit Suisse Asian metals team to No. 1 position in the Institutional Investor survey in 2002. At Macquarie, he was a senior member of the team investing and managing US$1.2 billion funds in the Indian infrastructure sector, and was a director on the board and an investment committee member for the SBI Macquarie Infrastructure Fund. He led investments in Indian infrastructure assets at AMP Capital, and headed group strategy at Masan, one of Vietnam’s top-three largest private sector companies by market capitalization.   “Within a year both revenues and margins were under severe pressure and there was a fall in earnings. Eventually the stock halved so I lost 50% before I finally sold out last year. (This means) I held it for two years and lost 50%.” - S.Venkatesh   Worst investment ever Sudden changes turned tables for ‘perfect’ investment In 2016, Venkatesh acquired what he thought would be a good long-term investment – and the company’s profile showed it had good potential based on its statistics and then-current standing. It was a large, generic-pharmaceutical manufacturer, one of the top three in India and 20th in the world. With sales of more $1.5 billion, market cap running into billions of dollars, good return on capital, great management, and an excellent track record, one could easily ask: “What could go wrong?”   “I felt that the company had things going for it: new product launches, and so on … so I dismissed the market concerns.” - S.Venkatesh   Despite the company’s overall performance in its niche, its fundamentals and sentiment toward it slid unfavorably. Venkatesh said, at that time, the US market was experiencing “huge pricing pressure”: a severe decline in prices and an increase in customer consolidation. In the same year, the US government also implemented stricter rules over imported goods and drug pricing. This led to “stricter inspections and adverse alerts”, which in turn equate to higher import costs, with the product demand remaining constant, if not gradually decreasing due to increased local and/or foreign supply. Disregarding the red flags, Venkatesh held onto the investment, thinking that the market would eventually make a comeback, that the pricing pressure would stabilize and then return to its historical trend, and that new product launches would aid this recovery. He also thought the regulatory environment was a sentiment issue. This worked for the first few months. However, after a year, the effect of the changes in the US market was drastically felt in revenues, margins, and earnings, and after one more year, the stock’s value was halved.   “Rather than holding it all the way down, it’s better to cut losses and get out of a position that has gone wrong. But by the time I finally did that … I was already down 50%.” - S.Venkatesh   Some lessons Investing is a lot of hard work Stay on top of your stocks’ fundamentals all the time. Even with the apparently safest company in the world, conditions can change very fast. Pay attention to margin of safety in valuations Sometimes at the top of a bull market, investors can feel that if the stock is good, they can pay more for it, which might work for some time. But with expectations so high, a small reporting change can mean that the stock corrects quite rapidly. A stock can still look as good or inexpensive as it has in its history, but if the company’s earnings halve, it can suddenly look very expensive. Be ready to correct course Keep a close eye on market concerns, and be ready to adjust your weight in a stock and cut your losses, especially if something is fundamentally changing. If Venkatesh had done that, he would have cut his losses earlier instead of holding on to it as it fell all the way down. About changes: get past denial, accept and act Accept when the fundamentals change, and avoid anchoring yourself to your old investment road map. Venkatesh realized that the time between his denial and acceptance took too long. When the expected stock rebound did not happen, he should have accepted the change and acted by taking money out of it and reallocating it into something with better long-term prospects.   “If something changes, and your thesis itself is compromised, you need to exit that.” - S.Venkatesh   Andrew’s takeaways Collated from Andrew’s My Worst Investment Ever series, the six main categories of mistakes made by interviewees, starting from the most common, are:    Failed to do their own research Failed to properly assess and manage risk Were driven by emotion or flawed thinking Misplaced trust Failed to monitor their investment Invested in a start-up company Venkatesh took the route of trusting that his investment would grow on its own, and that the market itself would eventually rise up despite the stricter rules implemented on the pharmaceutical niche. That is not to say that he was careless, though. This leads us to Andrew’s second takeaway. Being experienced does not mean you are perfect Venkatesh has been in the business for quite a long time. From the many years he’s worked with various clients and stocks, he can be branded as someone who knows the market very well. Despite this, he is still human, and therefore is not immune to making mistakes. Trend reversions do not always happen It is a marvellous event for majority of the investors out there, that somehow, the market would revert back to what it once was some years ago. Change is constant, however, and rarely does this event ever occur. Investing is hard The investing journey has so many routes and detours that one small decision or event can quickly change your investment’s course. Not only that, but there are also unpredictable external factors that may affect the way the market will move. Thus, you need to always be alert and aware, and stay on top of your game. Investing is similar to but not same as gambling People enter the investing business because they want to grow their wealth – a lot like gambling, if you think about it. In the same way, you need to set up your own strategy to be able to play. Moreover, experience is needed for you to know how the other players manage their game. The difference, however, is that in investing, you will experience an even greater loss if you’re not careful.   Actionable advice Be flexible about changing your investing road map and work really hard to monitor your investments.   No. 1 goal for next the 12 months Venkatesh is hoping to build the business at Dhyana Partners, to work with more clients and help with their businesses, their growth or with their restructuring. His focus will be very much on the customer and delivering results for the, He is also working on his second book, to improve his skills as a writer and express his gratitude to readers of his first release.   Parting words “It’s fine to make mistakes, but it’s more important to realize when you made a mistake, and to course-correct.” Regardless of how experienced we are, there will always be times when we will poorly judge situations, or we let our emotions get the better of us. Thus, this leads to us making the wrong decisions, which is actually quite normal. During these times, the best – and probably only – thing you can do is to learn from those mistakes and ensure that you won’t make the same errors again through acquired experience and growth.     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with S. Venkatesh LinkedIn Twitter Goodreads Facebook Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube My Worst Investment Ever Podcast  Further reading mentioned S. Venkatesh (2018) KaalKoot: The Lost Himalayan Secret  

Sloane Ortel is an explorer and definer of the connections between capital markets and economic/cultural forces. Our guest today is the publisher of The Sloane Zone, “an email newsletter that comes when you least expect it, and makes more sense than it should”. She holds a bachelor of arts degree in English from Fordham University, was one of the youngest registered representatives of Oppenheimer & Company, and has served and helped establish Newport Value Partners as a consulting analyst. She now works as an independent strategy consultant for big investment organizations after spending nearly a decade supporting the members of CFA Institute as a collaborator, commentator, curator, and subject matter resource.   “(At the CFA) I spent the better part of a decade talking with folks from every conceivable time zone about … really doing things that mattered for people there like building better financial markets that can better serve the people. And that’s wonderful and noble, but for my own personal investing, it sort of created the idea that investments came in a particular package.” Sloane Ortel     Worst investment ever Bitcoin bubbles waiting too long to invest In the summer of 2010, when Sloane had just joined the CFA, she had a very unusual, purely meat-eating Eastern European person move into her house who was “in the process of moving all of his personal wealth into Bitcoin”. While he piqued her interest in the topic, she did her own research and decided to avoid involvement, as her perception of her influencer as bizarre kept her from taking action and getting into what might have benefited her. Skeptical but curious in 2012, when her roommate moved out, Sloane decided to have another look at it, doing the numbers on setting up to mine it. Again she dismissed it due to its connection to the extremely eccentric guy she associated with it. As more “legitimate” institutional interest started being paid to this new asset class, she decided to invest in Bitcoin herself, with initial funds of $200, and tried to lose it on purpose, as a sort of validation of its difficulty to trade in it, therefore its validity would be proven and she would dive in more.   “If it actually takes skill to trade the thing, I should be able to lose money on purpose. And if I could do that, then I do actually have evidence that there is skill involved in trading the entity, and I can sort of rationalize putting a larger allocation into it.” Sloane Ortel   Things took an unexpected turn as her investment skyrocketed and gave her $1,400 in profit in around six weeks. She withdrew her capital and left her profit as her initial perception of the investment had affected her investment decision. As investors took a huge blow after its sudden drop in value, Sloane looked back at her investment and found that it went way downhill. From a 600% profit, it went down to just $35. But …   “The overall upshot of the story is that I allowed my perception of one particular person to keep me from participating in this giant secular bubble until it was almost too late.” Sloane Ortel   Some lessons Believe in yourself Part of the reason Sloane was not talking about the investment was out of a fear that people would perceive her as being as strange as the person who had first suggested a foray into bitcoin. Take the impulse to actually trust your own instincts Listen to that inner voice, is what Sloane says she should have done. Be open to input from outside conventional packaging People can be very resistant people to things that are not presented or come in the manner they expect. Sloane said she is one such person. In institutions, there is almost a parade-type function that a process need to satisfy for those with power to accept and execute it.   Andrew’s takeaways People around us can influence us and our thinking Andrew pointed out that we all hear the expression that we are the average of the five people closest to us. But when it comes to investing, he said it is wise to remember that we often think and operate in a bubble, and that the people around us are tend to be maybe like-minded thinkers, and therefore whatever is happening around us is what shapes us. Build your ideas inside and outside the bubble Although we are prone to be affected by external factors, we must not let them become the main drivers of our decision making. Of the six main categories Andrew has drawn from the My Worst Investment series, Sloane took three hits Failed to properly assess and manage risk. In Sloane’s case, back in the early days of Bitcoin, there were hardly any risks, as its value continued to rise by the day. However, during the following years – which was the time when she started investing in it – the market showed signs of its depreciation, and she had failed to see those. Were driven by flawed thinking. The people around us influence us and influence our thinking. Sloane allowed herself to become affected by what other people might think of her if she is to put her money in what seems to be a trivial investment. Misplaced trust. She lacked trust in herself and her own instincts and refused to take the risk.   Actionable advice Develop confidence that how you see the world accords with reality Give yourself permission to be weird and act in unconventional ways Allow space for mistakes Andrew liked the idea of kind of giving yourself space, building confidence, being “weird”, and not being afraid to lose. He does add one key thing: The second most common mistake he has come across is “failed to properly assess and manage risk”. So an overlay to allowing space to be human is to “just do it on a small stage in the beginning”. Andrew is of course talking about a way to manage risk by sizing your position according to risk appetite and your means. In response to that, Sloane adds …   “Position sizing is 100% of why I have such wrinkle-free, beautiful skin! I don’t moisturize; it’s all position sizing.” Sloane Ortel   Number 1 goal for the next 12 months To turn her engagements into something that the general public, in particular the investment community, will open their eyes to and gain valuable output from.   Parting words “Just live your lives.”     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with Sloane Ortel Facebook Twitter Instagram Blog LinkedIn SpeakerHub Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube My Worst Investment Ever Podcast   

Tyler Stewart has always been an educator at heart; whether it was his previous life as a stock trader, or his current life as head of investor relations at RealCrowd, an online commercial real estate investing platform with more than U$6 billion in deals, Tyler has made teaching investing fundamentals his life’s mission. This calling led him to the founding of two nationally recognized platforms: the RealCrowd Podcast – where top investing minds discuss the most pressing issues facing investors today – and RealCrowd University, a free, in-depth educational course that will teach you the fundamentals of real estate investing.     “The quickest way to grow your bank account is to save money, don’t spend it, have a monthly budget. Once you start saving, find a financial advisor and have them help you build out a portfolio and figure out what your goals are and what your risk tolerance is.” Tyler Stewart   Worst investment ever  Tyler catches fear of missing out from teacher’s story One of Tyler’s memories from his first-year high school business class was that the teacher said that back in the 1980s he had received a tip to buy Microsoft stock. The teacher said: “I didn’t move on it. Had I done so, I would be worth millions.” Tyler never forgot that lesson and since them, all he could think was: “The first tip I get, I’m all in.”  College kid gets ‘big break’ stock tip from workmate  Later, during his college years, he did construction work in the summer, seven days a week, 10 to 12 hours a day. He was making enough to pay for college and to put a little money aside, for what he was as yet unsure. Then one day, a co-worker said: “Hey Tyler! I got a stock tip for you.” As soon as he heard that, he recalled what his teacher had said and the promised he had made to himself. This was the first tip he had ever received, so he had to go “all in”. The tip was about a drug company that could “cure any disease”. Cancer, HIV, whatever the illness, apparently the company could cure it. So he read about it and thought: “This is it! I’m rich.” So he invested all his extra money when the stock price was at about US$1.10. Feels like a genius as stock is up 10% in first week  Within a week, the stock went up to $1.20. It was the first investment he’d ever made and he had seen a 10% gain in a week; one, he thought he was a genius. Two, he was certain he was going to be rich. He started doing calculations on his TI-83 plus calculator, trying to figure out what a 10% gain would mean in a week, in a year, and how rich he was going to be.   Stock hovers around the purchase price for a year  A year went by and the stock hadn’t moved beyond the range of around $1-$1.20. He finished that year of college, returned to the construction job, made more money and continued to plough it into the stock. When the stock went up, he believed he was the smartest guy in the world. When it went down, he wanted to hide.  Stock falls to 30 cents despite all his scientific research  Alas, the stock eventually went down to 30 cents, which is a considerable percentage fall for an investment. And the whole time, he was reading every piece of news and press release about the stock. He checked online forums and read reading anything he could about the science behind the stock, even though he was studying a major course in business. He read journals, and was trying to pretend he knew what he was doing and trying to reassure himself that he was involved in the right stock. He read forums and saw people question whether the science worked, and all he could think was such people didn’t know what they were talking about because he had become an expert. He knew “that this science was going to work out” and that this stock was going to deliver a big result for him. Five years on he realizes tip will bring no gold It took probably about five years for him to see that the first tip he’s ever received was not going to make him rich. Eventually, the company dissolved and no longer exists as it was. After the firm folded, he only received pennies on the dollar back.   Some lessons  Tyler’s investment know-how You have to know why you’re making an investment   You have to know why you’re holding an investment   You have to know why you’re exiting an investment   Don’t base all those stages simply on a tip The decision at each stage must be based on fundamentals and plenty of research.   Your investment’s performance does not define you  When a stock price is climbing, it doesn’t mean you are the smartest person in the world. When it’s going down, you’re not the dumbest person in the world. What your investment does is separate from who you are.   Know why you’re venturing into an investment   Separate your ego from the investment  Research before you invest  Tyler admits he only started the research when he already held the investment. He adds that the research was not about whether to sell or buy more, it was research to just validate his decision for being investment, so it was very much a case of confirmation bias.     Andrew’s takeaways  After conducting many interviews of many people, Andrew has collated the six most common mistakes that people make. Andrew suggests that Tyler made mistakes one and two.   No.1: Failed to do their own research  And in this story, that’s mainly because it came from a tip. Tyler did do some research after he bought the stock. But the time to do the research is before the investment, not after so.   No.2: Failed to properly assess or manage risk   Assessing risk This situation highlights serious problems with the word “Tip”.   The first idea implied by the word is that an investor is receiving inside information). If the investor acts on that information, it is an illegal transaction (insider trading).   The second idea is when a friend who likes a company and has researched it tells another investor about it. But if investors find investment ideas in this manner, it’s really dangerous, because people are promoting the ideas that they like. This does not mean we will never take a tip, but if a really attractive tip comes along, the investor must go to the step of researching the return and researching risk as well.    Warning When you hear the word “tip”, alarm bells should be going off. It’s either not a tip because it’s actually a piece of inside information and what you’re about to embark on is an illegal transaction, or it comes from someone you know, so you must do your own research.   Managing risk One way is to size your position or set aside a small portion of your portfolio for more adventurous stocks. Taking 5% or 2% of your portfolio and allocating it toward that risky bet is perfectly sensible. Another way is managing risk through diversification.     Actionable advice   Create an investment paragraph which asks and answers these questions   What am I looking for?   Why am I looking for it?   What’s the location?   What’s the risk?   What type of stock is this?   What type of real estate product is this?   This investment paragraph is your filtering system of determining if the investment passes the test. If it does then it’s worthy of the time you should spend in due diligence. If it doesn’t, walk away from it. It’s all about being disciplined enough to write and look at that investment paragraph you create and stick to it.     No. 1 goal for next the 12 months   At RealCrowd, Tyler’s focus is real estate investing so his sole focus for the next year is building his university courses to help his audience to make better investment decisions in the real estate world. So Tyler will just be putting his head down and building out the courses in the aim of really helping investors to learn the fundamentals of commercial real estate investing.    Parting words   The quickest way to grow your bank account is to save money, don’t spend it, have a monthly budget. Once you start saving, find a financial advisor and have them help you build out a portfolio and figure out what your goals are and what your risk tolerance is.    You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with Tyler Stewart  LinkedIn  Twitter   Website  Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube My Worst Investment Ever Podcast   Further reading mentioned   W. Edwards Deming (1982) Out of the Crisis