My Worst Investment Ever Podcast Conor Riley – Don’t Throw Good Money After Bad Money
BIO: Conor Riley is a global executive who has worked in investment banking, private equity, and consumer products.
STORY: Conor heard about the Washington Mutual stock from his workout buddy. He invested without doing any research. The stock price dropped significantly when the global financial crisis hit in 2008. Conor thought it was best to buy more. The price never went up. The company finally went under. Conor lost 70% of his net worth.
LEARNING: Don’t have more than 8% of your portfolio in a single thing. Do your own research. If an investment is going wrong, get out as quickly as you can.
“My rule of thumb right now is don’t have more than 8% of your portfolio in any one thing.”
Conor Riley
Guest profile
Conor Riley is a global executive who has worked in investment banking, private equity, and consumer products.
He served as CEO, Principal, and other key roles while leading Global Capital Markets and Luxie, Inc, and funds over a 20-year career.
Worst investment ever
Conor would spend a lot of time at the gym working out. One of his gym buddies started talking about some good stocks paying good dividends and how one could maximize their income risk-aversely. Conor was listening to this talk between reps thinking this was great.
He did zero research beyond what the gym guy told him. He’d never invested in the stock market, so he didn’t know anything.
Conor went ahead and invested in the Washington Mutual stock in 2007. This was the only stock he wanted in his portfolio, so he bought many stocks. The stock earned him good dividends.
In 2008, the global financial crisis hit, and now the markets were buckling. During this time, all the financial institutions were under the gun, and no government was looking at them. The big institutions were waiting in line to get bailed out. The stock for Washington Mutual started going down. Conor thought this was an excellent opportunity to buy more shares now that it was half what he’d bought it for. He believed that the government would bail out the company just like they did some of the other institutions.
The stock continued to drop, and Conor continued buying it. Finally, he got word that Washington Mutual was shutting down. Everything awful that Conor thought could never happen was now happening. His entire investment was now worth nothing. The stocks were 70% of his net worth, and now they were worth nothing.
Lessons learned
- Don’t characterize a plan by the character of the person that’s sharing it. You have to look deep at what is going on.
- Do your research and be honest with yourself and with your reliability.
- Don’t have more than 8% of your portfolio in a single thing.
- When things start moving in the wrong direction, get out as quickly as possible. There’s no benefit in holding on.
- Talk to people that have benefited from liquidity events, and ask them how they manage their money.
Andrew’s takeaways
- Never buy something that someone recommended. Do your own research.
- If you’re a new investor, put a stop loss on your stocks when you buy them until you become a more educated or experienced investor.
- Diversify your portfolio.
- If you’ve had a recent liquidity event, go slow when getting into an investment.
Actionable advice
If the investment is not going well, immediately leave that position and stop.
Conor’s recommended resources
- Read Running Money: Hedge Fund Honchos, Monster Markets, and My Hunt for the Big Score to learn about managing money.
No.1 goal for the next 12 months
Conor’s number one goal for the next 12 months is to complete aggregating four different companies in the beauty space.
Parting words
“Thank you so much. This was so much fun.”
Conor Riley
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Connect with Dave Clare
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
Andrew’s online programs
- Valuation Master Class
- The Become a Better Investor Community
- How to Start Building Your Wealth Investing in the Stock Market
- Finance Made Ridiculously Simple
- Best Business Book Club
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points