My Worst Investment Ever Podcast Richard Smith – Anything Valuable Is Hard
BIO: Dr. Richard Smith – Berkeley Mathematician and Ph.D. in System Science – is a fintech entrepreneur, the CEO of The Foundation for the Study of Cycles, and cofounder of the investment tool Finiac.
STORY: Richard invested his entire live savings ($10,000), and in 18 months, it had grown to $40,000. Then suddenly, the investment went down to $30,000. He believed it would go up again, so he held on. Then it went further down to $20,000. Richard kept waiting. Eventually, it went to $10,000, and that’s when he panicked and took out all his money.
LEARNING: Integrate trailing stops. It’s hard to do the right thing in the markets.
“The markets wouldn’t be as interesting or as potentially valuable if it wasn’t hard. Anything valuable is hard.”
Richard Smith
Guest profile
Dr. Richard Smith – Berkeley Mathematician and Ph.D. in System Science – is a fintech entrepreneur, the CEO of The Foundation for the Study of Cycles, and cofounder of the investment tool Finiac.
Richard has built a reputation as “The Doctor of Uncertainty” amongst his academic peers and has helped government agencies and Fortune 500 companies make sense of complex data sets.
With his background in mathematical theories of uncertainty combined with his investing and trading experience, he is a regular speaker and lecturer and particularly enjoys opportunities to share his knowledge and help others gain an edge in the market.
Worst investment ever
In 1998/99, during the Dotcom boom, Richard had just started investing while in graduate school. In about 18 months, he’d managed to get his investment account up from $10,000 (his life savings at the time) to $40,000. Richard was over the moon and felt like a real expert investor.
Then in March of 2000, all of a sudden, his $40,000 fell to $30,000 practically overnight. Though a significant loss, Richard decided to hold onto the investment and wait until it returned to $35,000. But instead, it went down to $20,000. Again, he said he’d get out when it gets back to $25,000. Finally, it went down to $10,000, and at that point, Richard panicked and got all his money out of the market.
Lessons learned
- Integrate trailing stops.
- It’s hard to do the right thing in the markets.
Andrew’s takeaways
- As a new investor, protect your capital first. This allows you to stay in the game, keep learning, and win over time.
Actionable advice
Get your head out of the mass media. The opportunity isn’t there if everybody’s looking in the same place. Be willing to look off the beaten path.
No.1 goal for the next 12 months
Richard’s number one goal for the next 12 months is to make his business cash flow positive.
Parting words
“Stay the course. Remember that it’s time in the markets, not just timing the markets that will bring you success. Targeting the right level of exposure for you is also very important.”
Richard Smith
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Connect with Richard Smith
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