My Worst Investment Ever Podcast Nick Maggiulli – Don’t Buy Individual Stocks
BIO: Nick Maggiulli is the Chief Operating Officer and Data Scientist at Ritholtz Wealth Management, where he oversees operations across the firm and provides insights on business intelligence.
STORY: Nick invested in a stock he wasn’t familiar with just because his friends were doing it. He suffered a 78% loss.
LEARNING: Don’t buy individual stocks. Trust your gut.
“If you’re going to gamble, just wager less.”
Nick Maggiulli
Guest profile
Nick Maggiulli is the Chief Operating Officer and Data Scientist at Ritholtz Wealth Management, where he oversees operations across the firm and provides insights on business intelligence. He is also the author of OfDollarsAndData.com, a blog focused on the intersection of data and personal finance. His work has been featured in The Wall Street Journal, CNBC, and The Los Angeles Times. Nick graduated from Stanford University with a degree in Economics and currently resides in New York City.
Worst investment ever
It was the summer of 2021, and Nick was having a great night with some friends. One of his buddies, who’s pretty good at stock picking, told the group about this new exciting stock called Matterport (MTTR). Matterport is a virtual reality software that allows you to do 3D imaging of a room.
Up until this point, Nick had primarily been a passive investor. The friend convinced the group to invest in Matterport, saying it would be big. Nick put in about 1% of his net worth. The group didn’t do much research. They just discussed the stock in a group chat for a day or two. They didn’t pay attention to it anymore.
Over the next few months, the stock starts going up. Nick got excited about the surprising stock performance. He happened to attend an art show in New York. Coincidentally, the gallery was using Matterport to give a tour of their art venues. This was so wild and got Nick even more excited.
The stock kept going up, and by November 2021, it had doubled. Nick bought it for $15, and now it was $30. At this point, everyone in the friends’ group doubled their investment.
The peak was in November, and then the price started to decrease slightly. Nick figured it was no big deal, as every great winning stock has a decline. So he held onto the stock. The price kept going down. Nick sold his stock in October 2022 at $3.30 a share, making a 78% loss.
Lessons learned
- Don’t buy individual stocks.
- Trust your gut.
Andrew’s takeaways
- When you get invested in something, you’ll find every possible reason to justify it.
- There are a lot of times that we know stuff that we’re not supposed to do, yet we somehow end up in it.
Actionable advice
If you’re going to gamble, make sure you know exactly how much you’re willing to lose.
Nick’s recommendations
If you want to learn about individual stocks, Nick recommends reading Scale: The Universal Laws of Life, Growth, and Death in Organisms, Cities, and Companies. The book talks about the growth of cities, companies, and that type of stuff. To understand asset allocation, Nick recommends books by William Bernstein. He also recommends reading his book Just Keep Buying: Proven ways to save money and build your wealth if you want to learn the risks of investing in individual stocks.
No.1 goal for the next 12 months
Nick’s number one goal for the next 12 months is to expand his blog’s SEO traffic.
Parting words
“Keep buying.”
Nick Maggiulli
[spp-transcript]
Connect with Nick Maggiulli
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
- FVMR Investing: Quantamental Investing Across the World
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points
- Achieve Your Goals