Ric Franzi – Always Invest in Appreciating Assets

Jan 7, 2021

Ask episode

Chapters

Transcript

Episode notes

Born and bred in a small coal mining and steel mill town in Western Pennsylvania, Ric Franzi moved to California after graduating with a B.A. in Communications from the University of Pittsburgh. While in Southern California, he continued his education by attaining his MBA from Pepperdine University.

Ric is the host of the Critical Mass Radio Show & Podcast and an author of three books and frequently speaks to CEOs and business owners. He has been featured on Forbes, INC, CNBC, and many others.

“When you emotionally want something, it is amazing how you can mentally rationalize that it makes sense.”

Ric Franzi

Worst investment ever

Ric and his wife had family friends whom they had known for a very long time. The friends had a son, Henry, who was one of two co-founders of the company Broadcom. The company is a very well recognized chip manufacturer. The couple has known Henry forever, and they trusted him. Henry had started other successful businesses, and so they knew him to be a successful entrepreneur.

Getting the first chance to invest in their friend’s startup company

Ric and his wife got a chance to buy shares into Broadcom at a family and friends rate.

Being the cautious investor he is, Ric called his broker and talked to him about the idea of investing in Broadcom.

The broker told him that he did not have to but that the shares were three times higher than the price he could buy them. With that advice, he made up his mind to purchase the shares.

Selling their shares to build a pool

Broadcom was doing well, and so Ric was quite delighted with the decision they had made. After a while, the couple decided to build a pool and do some modernization to their house.

Since the couple had made enough money on the Broadcom stock, they decided to sell it and use that money to finance the project rather than getting a second mortgage. So they took the gains off the table and spent it on something that they wanted.

The couple spent tons of time in that pool with their growing children and made lots of family memories.

Leaving money on the table

While building a pool and improving their house was a fantastic personal decision, selling their stock too early saw the couple lose a lot of money. The Broadcom shares continued to appreciate.

Ric was pained to realize that they had made a very foolish financial decision by selling an appreciating asset to get a depreciating one.

Lessons learned

Do not sell an appreciating asset to buy a depreciating one

Do not buy depreciating assets, especially if you have to sell an appreciating asset. It never works out well. Also, do not overbuy depreciating assets.

Seek the assistance of a financial advisor whenever you need to sell your investments

If you have an urgent need for cash and the only way to raise it is to sell your investments, then consult a financial advisor and figure out how to minimize the drain on your finances. Do not let emotions take control of your decisions.

Have someone who can offer you uncompromised advice

Have someone trusted who will advise and reason with you without any emotions involved whenever you want to make financial and investment decisions.

Andrew’s takeaways

People miss opportunities every day. So do not beat yourself up

It is painful to look back at the opportunities that we miss. The best way to deal with the emotion of that is to remember that everyone has missed many other opportunities.

Test things out with a small position

When you encounter a stock whose price goes up or down, take a small amount of that stock and sell it or buy it depending on the price’s direction.

Actionable advice

Solicit outside advice from people who have no vested interest in the decision you are going to make. Then take seriously the recommendation that you get. Remember to submerge your ego and your emotion and realize these people have your best interests at heart. They may be smarter than you, so follow that advice as much as you may not want to hear it.

No. 1 goal for the next 12 months

Ric’s number one goal for the next 12 months is to leverage digital-first strategies to drive his top of the funnel activities and grow his community.