Michael Lebowitz – Follow Your Intuition and Stand Up for Yourself to Avoid Loss

Dec 29, 2019

Ask episode

Chapters

Transcript

Episode notes

Michael Lebowitz brings more than 25 years of financial markets and risk management experience as a portfolio manager at RIA Advisors. Throughout his career, Michael has been involved in trading portfolio construction and risk management, involving some of the largest and most active portfolios in the world.

In addition to broad institutional experience, he has also built a successful independent investment advisory, which allowed him to further extend his experience into the realm of investment management for individuals and family offices.

Michael's background and experience are the product of a diverse career path that affords him a unique investment and economic perspective, grounded in logic and common sense. He blends his vast trading and investment experience with economic viewpoints that deliver pragmatic and actionable thought leadership to clients.

“You just got to say no. It's okay to say no, and even if whatever you're going to buy goes up a lot, that's fine. Just think about tomorrow, stop thinking about the past.”

Michael Lebowitz

Worst investment ever

Lose a client or invest in a tech company

Back in 2012, when Michael and his partner started their management firm, one of their biggest clients approached them to invest in a computer chips company. And because this client was putting in a huge amount of money to their firm, they could not say no to him.

Although the pitch was decent because it promised them great potential and even greater results, Michael admitted that he and his partner did not have any idea what they just had gotten themselves into. However, they were pretty convinced that if they didn’t put a decent amount of money into this tech company, they might lose their client.

All is not well in the end

Michael and his partner thought the payout would be in two or three years. As it turns out, they invested in 2012, it’s now 2019, and they still haven’t gotten any returns from that investment. Not to mention the problems piling up with the development of the chips and constantly raising more money and diluting Michael.

To make matters worse, that particular client left his firm a year and a half later for other reasons.

Lessons learned

Stay in your lane, do what you know best

Even if the promise is great and the returns are said to be unbelievable. Getting into something that you don't know will never bring you good results.

It’s ok to say no to an opportunity

Not all opportunities are to be taken. Some are traps. And to avoid them, one has to learn the art of saying no.

Andrew’s takeaways

Startup investing is so much about burning money

You're either going to lose all the money you have invested, or they're going to come back to you and ask for more money. If you do not have that money to put into it, then you're going to be diluted.

It’s difficult to exit with startup investing

It's not impossible, and sometimes it works. But the reality is that illiquidity can crush you for years, in the hopes that someday, you'll get some liquidity and be able to exit.

Always have a risk management strategy

If you want to invest in a startup, don't invest in one invest in ten. This allows you to not get so intensely dependent on one investment.

Actionable advice

If you don’t know what you are doing and you are about to give a large sum of money, follow your intuition and stand up for yourself to avoid losses.

No. 1 goal for the next 12 months

Michael believes that the Fed is the driver of markets, and he wants to survive another year of the Fed dictating to some degree, the terms of the market.

Parting words

“Just be ready and be aware of what can happen so that you have the parachute to land safely. Because you want to be the one buying when stocks go on sale. You want to sell at their highs.”