My Worst Investment Ever Podcast

BIO: Charles Rotblut, CFA, is a vice president and financial analyst at the American Association of Individual Investors (AAII).STORY: Charles bought a Dotcom stock in 1998. A week later, the stock had tripled. His dad advised him to take the profits, but he insisted the stock would keep going up. Three days later, the stock lost almost all its value. Charles sold the stock and made very little profit.LEARNING: Don’t confuse luck with skill. Utilize a rolling stop loss to manage risk. Always have a diversified portfolio. “The market has an uncanny ability to make you look silly. It doesn’t matter how smart you are, how skilled you are, the market can and will make you look stupid, and not just on one occasion, but on several occasions.”Charles Rotblut Guest profileCharles Rotblut, CFA, is a vice president and financial analyst at the American Association of Individual Investors (AAII). He is the editor of the AAII Journal, created both the PRISM Wealth-Building Process and VMQ Stocks, and authors the weekly AAII Investor Update email. His book, “Better Good than Lucky: How Savvy Investors Create Fortune With the Risk-Reward Ratio,” was published in November 2010. Charles holds the Chartered Financial Analyst (CFA) designation and has analyzed both publicly traded and privately held companies.Worst investment everCharles bought a Dotcom stock in 1998, right before Thanksgiving. The stock took off, and he made triple-digit gains. On Thanksgiving day, Charles told his dad about the stock, and he advised him to take the profits. Charles insisted that the stock could run even higher. The following Monday, he got to work, logged into his computer just as the market opened, and saw that the stock had increased. On checking on the stock again a few hours later, it had lost almost all its value. All the profits had pretty much vanished.Charles got out of the stock and made just a slight gain, but nothing near what he could have made had he listened to his dad.Lessons learnedIt’s easy to confuse skill with luck, so be conscious of when luck happens.If you don’t want to sell your stock, take some of your profits and hold a little.Put the gains you take in an index fund.Andrew’s takeawaysWhenever you get to a point where a stock has gone up or down so much that you’re starting to question your situation, sell 50% of your position.Utilize a rolling stop loss to manage risk.Always have a diversified portfolio.Charles’s recommendationsCharles recommends using a stock screen to find stocks with all the traits you seek that nobody else is discussing.No.1 goal for the next 12 monthsCharles’s number one goal for the next 12 months is to save more than last year. He also wants to get onto the TED Talk stage.Parting words “Just be disciplined. Think about simple strategies. If all you do is write down very simple buy and sell rules and follow those routinely, you’ll have returns that are far in excess of the average investor.”Charles Rotblut [spp-transcript] Connect with Charles RotblutLinkedInTwitterInstagramYouTubeWebsiteBookAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever PodcastFurther reading mentionedJames O’Shaughnessy, What Works on Wall Street, Fourth Edition: The Classic Guide to the Best-Performing Investment Strategies of All TimeJohn P. Reese and Todd O. Glassman, The Market Gurus: Stock Investing Strategies You Can Use From Wall Street’s Best

BIO: Arjun Murti has over 30 years of experience as an equity research analyst, senior advisor, and board member, with global expertise covering traditional oil & gas and new energy technologies.STORY: Arjun made a call that oil prices would quintuple from $20 a barrel in the 90s to $105 in the 2000s and stay there for at least five years. The price averaged $100 a barrel from 2000 to 2014, entirely consistent with Arjun’s call. However, after the 2008 financial crisis, the return on capital in the energy sector started falling. Arjun made excuses and continued to ride the wave all the way down.LEARNING: Let go of your ego and get out of the battle at some point. Frameworks need to grow, evolve and adjust to circumstances. Understand and inculcate reversion to the mean into your thinking. “At some point, you got to get out of your own ego and get out of the battle.”Arjun Murti Guest profileArjun Murti has over 30 years of experience as an equity research analyst, senior advisor, and board member, with global experience covering traditional oil & gas and new energy technologies.The bulk of his Wall Street career was at Goldman Sachs, where he retired as a partner in 2014. He recently “un-retired” to join Veriten, an energy research, strategy, and investing firm. Arjun publishes Super-Spiked, a Substack blog focused on the messy energy transition era.He is on the board of ConocoPhillips, a senior advisor at Warburg Pincus, and on the advisory boards for ClearPath and the Center on Global Energy Policy.Worst investment everAt the height of his career, Arjun made a call that oil was going to go from the $15 to $20 a barrel range it had been in from the mid-80s. He said the price would rise to between $50 to $105 in the 2000s and stay there for at least five years. And with that, the returns on capital and profitability in energy as a sector would do very well. Arjun called this the super spike.In 2002, the market started becoming bullish, and oil went from the 20-dollar range everyone thought the sector would be at forever to ultimately as high as $147 in 2008. The price averaged $100 a barrel from 2000 to 2014, entirely consistent with the high end of the range of Arjun’s original call. He was pretty excited about the sector’s profitability and experienced an ego boost after being proven right for five years.However, the returns on capital started rolling over, and Arjun made excuses for it. From 2006 to 2008, oil went from $65 to $100 a barrel, but returns on capital for the sector fell from 22% to 19%. 19% is still an excellent number, and that’s the excuse Arjun used to continue riding the call. The sector then got interrupted by the great financial crisis of 2008, which Arjun never viewed as an energy event. The industry rebounded dramatically off those 2008 and 2009 lows, but the returns on capital had now fallen to 16%. Arjun kept making excuses as the returns continued to fall and never got off. Making excuses for his framework the entire way down became his worst investment mistake ever.Lessons learnedAt some point, you’ve to get let go of your ego and get out of the battle.Frameworks need to grow, evolve and adjust to circumstances.Andrew’s takeawaysUnderstand and inculcate reversion to the mean into your thinking.Understand what the average is. Ride the wave but remember the numbers will go down to the average and, in some cases, below.Research shows that high returns on invested capital tend to revert toward the mean. However, that’s not the case with cyclical industries like oil.Actionable adviceYou can do all the data analysis in the world and project the future, but what’s probably most important is understanding the emotion and psychology of investing.Arjun’s recommendationsArjun strongly advocates energy literacy and therefore recommends subscribing to his substack Super-Spiked, which is free. He also recommends reading The Prize: The Epic Quest for Oil, Money & Power to understand the history of oil, why we use it, and its critical importance. You can also check out books by Vaclav Smil, an actual scientist who provides authentic fundamental understandings of energy.No.1 goal for the next 12 monthsArjun’s number one goal for the next 12 months is to speak up and engage more in pragmatic energy discussions.Parting words “I’m very excited to be alumni of your academy. Thank you so much.”Arjun Murti [spp-transcript] Connect with Arjun MurtiLinkedInTwitterYouTubeWebsiteAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever PodcastFurther reading mentionedJack Weatherford, Genghis Khan and the Making of the Modern World

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this sixth episode, they talk about mistake number 9: Do you avoid admitting your investment mistakes? And mistake number 10: Do you pay attention to the experts?LEARNING: You’ll only learn from mistakes if you admit that you made them. Just because someone is famous and confident in what they’re saying doesn’t mean they’re experts who know what they’re saying. “If you could admit a mistake when it’s the size of an acorn, it’s easier to repair than when it’s the size of a tree with deep, wide-ranging roots.”Larry Swedroe In today’s episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this sixth episode, they talk about mistake number 9: Do you avoid admitting your investment mistakes? And mistake number 10: Do you pay attention to the experts?Missed out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyMistake number 9: Do you avoid admitting your investment mistakes?As human beings, we’re hardwired to avoid admitting mistakes. And, of course, you can’t correct a mistake unless you acknowledge that your behavior was a mistake in the first place. A typical investment mistake most people make is engaging in actively managed funds and stock picking, even though there’s hard evidence that a vast majority of active managers fail persistently to outperform over the long term.According to Larry, when you’ve made an investment mistake and have a poorly performing asset, the right thing to do is count your losses and substitute the asset with a superior choice. However, many people don’t want to sell because they’ll hurt their ego. Selling means they have to admit that they were wrong in the first place in making that investment.So for most people, ego and their inability to acknowledge that they’re wrong are the number one reason they’re stuck in bad investments. Most people, when directly confronted, even with proof that they’re wrong, don’t change their point of view. In fact, they tend to defend it more aggressively. They’ll selectively gather evidence or recall information and interpret it biasedly to reinforce their established beliefs.Mistake number 10: Do you pay attention to the experts?According to Larry, you shouldn’t listen to experts. But here, he means experts forecasting what the stock market and the economy will do. You should instead listen to experts quoting scientific or empirical evidence in peer-reviewed journals.When someone’s telling you exactly what’s going to happen, they’re doing it because they’re overconfident. There’s a good chance they don’t know what they’re saying. In Larry’s opinion, only one thing correlates with the ability to make forecasts; fame. The more famous someone is, the worse their predictions are, probably because they’re just overconfident in their skill sets. People fall for such ‘experts’ thinking they know what they’re talking about because they say things with confidence. Larry insists on ignoring such experts. To drive the point home, Larry quotes the authors of Mistakes Were Made (but Not By Me):“When experts are wrong, the centerpiece of their professional identity is threatened. Therefore, the more self-confident and famous they are, the less likely they’ll admit mistakes. They Just come up with statements to justify the forecast and explain if only this has happened. If only the timing was different, I would have been right. It was some unfortunate event that occurred that wasn’t forecast. So, of course, that’s why you can’t make forecasts. We can’t predict the future with any persistence better than the market does.” About Larry SwedroeLarry Swedroe is head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth Management. [spp-transcript] Connect with Larry SwedroeLinkedInTwitterWebsiteBooksAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever PodcastFurther reading mentionedLarry Swedroe and RC Balaban, Investment Mistakes Even Smart Investors Make and How to Avoid ThemPhilip E. Tetlock, Expert Political Judgment: How Good Is It? How Can We Know?Carol Tavris and Elliot Aronson, Mistakes Were Made (But Not by Me): Third Edition: Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful ActsKathryn Schulz, Being Wrong: Adventures in the Margin of Error

BIO: Sir Steven Wilkinson is the founder and CEO of Good & Prosper and has been involved in business finance and investment for the best part of 30 years, having started working for Merrill Lynch Investment Bank in Munich, Germany, in 1987 at the age of 24.STORY: Steven entered a successful partnership that saw them take a stock from 50 cents to 400 euros. They made so much money from their business, but the problem was Steve wasn’t ready for that kind of success. He had no system for dealing with the wealth he created and eventually lost all his money.LEARNING: Being successful is 100% dependent on you. Working on yourself is the key to having whatever it is that you want to have. “You’ve got to be the owner in order to do the things that owners do and thereby to have the things that owners have.”Steven Wilkinson Guest profileSir Steven Wilkinson is the founder and CEO of Good & Prosper and has been involved in business finance and investment for the best part of 30 years, having started working for Merrill Lynch Investment Bank in Munich, Germany, in 1987 at the tender age of 24.Good & Prosper is an advisory and investment company through which Steven acts as a thinking partner for business leaders and owners, supporting them as a generalist business expert across the fields of finance, leadership, and culture.Good & Prosper is also a knowledge platform teaching finance to entrepreneurs with a focus on Small & Medium sized businesses, primarily in the English-speaking world.Steven founded the publishing business Pitchfork Press and publishes a weekly essay, “Pitchfork Papers,” via Substack to a rapidly growing and diverse international audience.Worst investment everSteven started his investment business in 1998 and had an excellent first couple of years. This was because, as a value investor, he had no interest in any of the new economy stocks. Steven stuck with stocks in the public markets, mainly because that’s all he could afford. Steven had a couple of stocks that were mind-bogglingly great investments. And so his business did quite well, and capital increased substantially over the following years.Steven met an American gentleman who invited him to be on the board of a company he was considering setting up. The gentleman was working for one of the more famous German companies. This publishing company profited enormously from the new economy boom. He’d been in charge of managing what was a promiscuously bought portfolio of new economy businesses.The gentleman invited a senior law firm partner and a guy with deep restructuring experience to join his board. The gentleman set up the initial board meeting to get to know each other. The meeting was at the lawyer’s office. The gentleman never showed up, and the lawyer had to return to work. So Steven and the restructuring guy chatted and were fascinated by each other’s stories. They decided to stay in touch.The restructuring guy had made much money with his previous partnership and wanted to see what he could do on a bigger stage. That’s how Steven got into a partnership with him. The guy was impressed by Steven’s capital markets intelligence and excellent networks. And Steve saw the guy as an absolutely focused money maker and restructuring genius, which he undoubtedly was.The two new partners came up with the idea of buying a shell company, an empty stock-exchange-listed company. The thinking behind this idea was that they were coming into a time when they could buy assets cheaply. And if they could generate the sort of returns they thought they could return, the share price would reflect that reasonably quickly. Then they could determine through rights issues or shares issues how much money to take in and how much control to give up.So they found a shell company that had been formed for a spa in a little village and bought 90% of it. The deal was that Steve would take 40% of the shares, be the chairman and help with strategy, investors, and networks. His partner would take 60% and do all the work. The company was phenomenally successful. They took the share price from 50 cents to 400 euros.While this should have been Steve’s most successful investment, it turned out to be his worst because he was not ready for that kind of success and had no system for dealing with the wealth he had created. In 2007 everything blew up. Steve lost all his partnership and his money. He was also left with a wealth-destroying amount of debt.Lessons learnedBeing successful in business, being good at investing, and being a good owner is 100% dependent on you.You have to be ready, deserving of wealth, and be in a position of giving to receive.Working on yourself is the key to having whatever it is that you want to have.Whatever you experience results from your own self-reflection, self-development, and maturity. [spp-transcript] Connect with Steven WilkinsonLinkedInTwitterWebsiteSubstack Andrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: Shawn O’Malley is the chief editor and writer of the We Study Markets newsletter from The Investor’s Podcast Network, the world’s largest stock-investing podcast with over 110 million downloads.STORY: Shawn wanted to hedge inflation during the COVID pandemic, so he invested in the Russian ETF at the end of 2021. The ETF performed well, and Shawn was happy. Then rumors of Russia invading Ukraine started. The invasion happened in February, and the Russian ETF stopped trading, taking Shawn’s investment to zero.LEARNING: Understand how geopolitical events and domestic politics affect investments. You won’t be compensated for lack of knowledge. “Investing is all about continuous learning and getting comfortable with the risks that we take.”Shawn O’Malley Guest profileShawn O’Malley is the chief editor and writer of the We Study Markets newsletter from The Investor’s Podcast Network, which is the world’s largest stock-investing podcast with over 110 million downloads.He writes for an audience of over 30,000 readers daily, breaking down the most important stories in financial markets with longer write-ups exploring financial history, the economics behind everyday life, and insights from legendary investors.Shawn hopes to help keep people informed about current news while adding the perspective of a long-term investor.Worst investment everIn April 2020, Shawn was sent home from school because of the COVID lockdowns. He was a junior in college at the time. He spent a few weeks doing nothing productive but soon realized this would be an extended lockdown. Shawn decided to find valuable ways to manage his time. He started taking long walks while listening to the We Study Billionaires podcast, which interested him in value investing.At the time, oil prices were negative. Shawn didn’t understand the futures market or know anything about oil. Still, it felt like an opportunity since he believed oil prices wouldn’t stay negative forever. Shawn bought into some oil and gas stocks and held them.Over the next year or so, Shawn developed this sort of outlook that some of the inflationary pressures of the lockdown would eventually manifest. So he started thinking more about how to hedge inflation to have exposure to energy prices. Shawn naively started looking for the most undervalued energy stocks in Russia. At the end of 2021, he bought into the Russia ETF as a creative and cheap way to play this inflation and energy price spike he was trying to foresee.Shawn held that investment for a year, and things were looking good. The inflation manifested, and the energy stocks started to rally. At this point, Shawn thought he was pretty clever. In January 2022, all these rumors about Russian troops gathering around Ukraine for an invasion started. Shawn believed it was just a conspiracy theory. He played down the risk and held down his investment. The attack happened in February, and the Russian ETF stopped trading, taking Shawn’s investment to zero.Lessons learnedUnderstand how geopolitical events and domestic politics affect investments.Andrew’s takeawaysIt takes time to become aware that risks are everywhere, and your first job is to understand them.You won’t be compensated for lack of knowledge.When you build a portfolio of international stocks, you’re not investing in global stocks but in a currency. So you have to at least understand the currency impact.Actionable adviceYou have to learn investment lessons for yourself. But, there are a lot of investment mistake stories from investing legends such as Warren Buffett. Read those archives, and you’ll learn a lot about investing mistakes, how to run or find great businesses, excellent management, compounding goodwill, and treating people well.No.1 goal for the next 12 monthsShawn’s goal for the next 12 months is to hit 100,000 subscribers for the We Study Markets newsletter and make financial markets understandable to as many people as possible.Parting words “Thank you for having me on the show. I hope I can count on your listeners as readers of my newsletter one day.”Shawn O’Malley [spp-transcript] Connect with Shawn O'MalleyLinkedInTwitterYouTubePodcastWebsiteAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever PodcastFurther reading mentionedJeremy J. Siegel (September 2022), Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies

BIO: Peter Saddington is a software developer, a multi-founder, an author, and a VC. He founded a $2.5M BTC mining fund, a $10M IoT fund, and a$50M Web3 fund in 2022.STORY: Peter hired an engineer who had impeccable technical skills. Peter was so impressed by the guy that he decided to make him the CEO of his startup. Six months later, the guy fired Peter from his own company.LEARNING: It takes more than technical skills to be a leader. A leader needs to be a person that can be led and can lead others. “The number one most important skill, I believe, in any type of investment, is are you willing to ask every single question possible?”Peter Saddington Guest profilePeter Saddington is a software developer, a multi-founder, an author, and a VC. He founded a $2.5M BTC mining fund, a $10M IoT fund, and a$50M Web3 fund in 2022. He published three books - Scrum, Agile, and PersonalBranding. He writes “The Agile VC” newsletter, which covers Inside Startups, Venture Capital, and life!Worst investment everOver a decade ago, Peter built a great startup and bootstrapped it out of his garage. This was a passion project of his. At the time, the digital currencies were growing. Interestingly, there were all these silos of exchanges and no ability to create arbitrage opportunities between multiple exchanges. As an engineer, Peter thought this was an absolutely fantastic proposition of becoming a middleware solution provider so that traders and investors could trade across platforms and multiple exchanges and find opportunities for liquidity.Peter started building it. He put together a team and bootstrapped it with his own money. Eventually, over many validations, his community and user groups said this was amazing and should be scaled. Peter raised $4.8 million for this venture. Everything was great, and it seemed like there was no possibility that this thing could ever go off the rails. His global community of cryptocurrency and digital currency enthusiasts grew and had almost 78% daily active users.Peter had hired an engineer in whom he saw an amazing ability to take the company to great heights. Peter was so enamored by this engineer’s communication ability that he decided to mentor him. Peter was really impressed by his technical prowess. In his naivety, he believed this was the primary value that the engineer could bring to his company. Peter elevated the engineer to CEO. Big mistake! Six months later, the engineer fired Peter from his passion project.Lessons learnedWhen promoting an employee, you must understand the individual deeper than just what they bring to the table.When choosing a leader, they need to be a person that can be led and can lead others.Spend enough time with people before you promote them to truly understand their depth, morality, ethics, and, most importantly, integrity.Andrew’s takeawaysWhen hiring a prospective leader, analyze everything that person can bring to the table, not just the skills.Leaders need to be multifaceted and able to rise when things are tough.The key to asking questions is listening; the key to listening is taking notes.Actionable adviceAsk more questions. Reach for questions that avail emergent opportunities in emergent contexts and conversation. Be situationally aware enough to listen actively and ask pertinent and essential questions that give you context for informed decision-making.No.1 goal for the next 12 monthsPeter’s goal for the next 12 months is to launch a startup that intertwines his top passions; blockchain, cars, racing, and family.Parting words “Stay positive, and understand, as the stoics used to say, that the only thing that you ever have in your control is your own reasoned choice and how you’re going to respond to the situation at hand.”Peter Saddington [spp-transcript] Connect with Peter SaddingtonLinkedInTwitterInstagramYouTubePodcastBlogBookAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: Neville Medhora has been starting businesses and side projects since high school and has learned a bunch about what works and what doesn’t work. He is an advisor to numerous software companies and teaches copywriting at his business, CopywritingCourse.com.STORY: Neville started day trading in college and would try to get inside scoops to find cheap stocks that would explode. None of the scoops he ever got worked. Neville only made 5% return on his investment after a year of trading.LEARNING: 99% of the inside scoop is unreliable secondhand information. Do your due diligence. It’s important to know when to sell. “I realized that hot stock tips are terrible; none of them ever panned out. It’s when I did my due diligence that my investment worked out really well.”Neville Medhora Guest profileNeville Medhora has been starting businesses and side projects since high school and has learned a bunch about what works and what DOESN’T work. He is an advisor to numerous software companies and teaches copywriting at his business, CopywritingCourse.com.You can find him at “Neville Medhora” across all socials.Worst investment everNeville was fortunate to have a little extra cash in college because he had started several businesses before. He started day trading stocks, and his plan was to pick a stock when it was cheap and then sell it when the price went up.Neville would try all sorts of things to find cheap stocks about to go up. He’d wake up in the morning to catch the bell ringing and start talking to people about stocks just to get the inside scoop, but none of his tactics worked.After a year of all the stress of trying to beat the market, Neville made just 5% gains on his investments.Lessons learnedIt’s important to know when to sell.The market is crazy and erratic and doesn’t obey timelines.Buying a good business is better than trying to beat the stock market.Andrew’s takeaways99% of the inside scoop is unreliable secondhand information.Always do your due diligence before you invest.Actionable adviceDon’t get caught up in buying something because it’s cheap. Instead, read the company statements and learn how to analyze a company.Neville’s recommendationsNeville recommends following him on social media, where you’ll find much of the stuff he teaches. He also recommends joining his newsletter to get helpful marketing tips every Friday.No.1 goal for the next 12 monthsNeville’s goal for the next 12 months is to make sure that he is set up well to retire at 50.Parting words “Be well and prosper. Don’t make stupid mistakes, but when you do, learn from them.”Neville Medhora [spp-transcript] Connect with Neville MedhoraLinkedInTwitterFacebookYouTubePodcastBookConnect with Jack FarleyLinkedInTwitterYouTubePodcastAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: Jack Farley is the host of the Forward Guidance podcast. He is interested in all things liquidity, macro, and central banking.STORY: Jack bought a lot of put options on the markets and individual stocks, notably Tesla, in February 2020 when the market was bearish. When the market crashed in March 2020, Jack made so much money. But, soon, the market started going up, and his position dropped to zero.LEARNING: Don’t view the market as a place to create wealth; view it as a place to grow it. Don’t confuse being lucky with being an intelligent investor. “When you get a windfall, realize those gains, and at the very least, trim the position down.”Jack Farley Guest profileJack Farley is the host of the Forward Guidance podcast. He is interested in all things liquidity, macro, and central banking. Jack graduated from Brown University with a degree in Economics and has done nearly 500 long-form interviews on investing and macroeconomics.Worst investment everJack had gotten quite bearish on the market in January and February 2020. So he bought a lot of put options on the markets and individual stocks, notably Tesla. All individual stocks crashed throughout early March 2020. Jack made so much more money than he ever thought was possible.He continued consuming this bearish macro content from CNBC, Bloomberg, and the Wall Street Journal. When the stock market rallied from March 23 to April 1, Jack was told it was just a bear market rally and believed it. But the market continued to grind higher, and Jack’s position kept falling until it reached zero.Lessons learnedKnow the difference between winning because you were smart and made the right decision and when you were lucky.It’s really tough to beat the market.The ultimate hack is to beat the stock market and then invest in the S&P 500 for the rest of your life.When you get a windfall, and you’re lucky enough to win the day, don’t assume it’s because you’re so smart because, most likely, you’re not.Andrew’s takeawaysSet up your wealth creation engine. That’s either your business or your salary.Don’t view the market as a place to create wealth; view it as a place to grow it.Actionable adviceDon’t play in markets where you don’t know what you’re doing.Jack’s recommendationsJack recommends listening to his podcast for a deep-dive conversation on finance. The talks are associated with what’s going on now.No.1 goal for the next 12 monthsJack’s goal for the next 12 months is to create kickass content for his podcast and grow the show.Parting words “I feel like a winner for having been on the show.”Jack Farley [spp-transcript] Connect with Jack FarleyLinkedInTwitterYouTubePodcastAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: AcreTrader’s CEO, Carter Malloy, grew up in an Arkansas farming family and has had a lifelong passion for agriculture and investing. Before founding AcreTrader, he spent five years as part of the founding team of a successful global equity investment firm.STORY: Carter was super impressed by a healthcare software company whose stock was really expensive, and the valuation was crazy high. Carter decided to short the company’s stock. However, he lost most of his money because the stock almost doubled on him.LEARNING: Valuation is not a reason to invest. Don’t bet against really good management teams. “Valuation should inform your position size. However, look at it across a large spectrum of metrics and measurements to help you determine whether you have a thesis or not.”Carter Malloy Guest profileAcreTrader’s CEO, Carter Malloy, grew up in an Arkansas farming family and has had a lifelong passion for agriculture and investing. Before founding AcreTrader, he spent five years as part of the founding team of a successful global equity investment firm.Before joining in 2013, Carter was a Managing Director with Stephens Inc., a large private investment bank, where he was an equity research analyst.At AcreTrader, Carter has successfully raised over $60 million in Series B funding and grown from 20 employees to 120 employees across the company’s two business divisions, which include AcreTrader, the farmland investing platform, and Acres, a land research platform.Worst investment everAs an equity investor, Carter would generally chase okay businesses valued as great ones. One particular company, a healthcare software business, caught Carter’s attention. He had a thesis around the macro developments—both cyclical and secular headwinds—that this company faced. He realized there were these real pressures on that business that the rest of Wall Street and the investment world was seeing. The stock was really expensive, and the valuation was crazy high.Carter started digging into the company. He met with the company CEO, and this guy was unbelievably impressive. Carter dug deeper into the company culture and the people who worked there, concluding that this was a well-run business. Carter decided to invest in the company. However, he lost most of the principal because the stock almost halved on him.Lessons learnedValuation is an essential part of your research. It can support an investment decision but is not a reason to invest.Don’t bet against excellent management teams because they can absolutely—and often do—determine the outcome.Valuation should inform your position size.Andrew’s takeawaysValuation will be a tool if you don’t have any other fundamental things driving your investment decision.Actionable adviceDon’t invest in single securities. Instead, invest in ETFs.Carter’s recommendationsIf you want to be a good investor, understand what CFAs read and then take the Kaplan Schweser CFA Level One course.No.1 goal for the next 12 monthsCarter’s goal for the next 12 months is to spend more time with his children.Parting words “This has been fantastic. I sincerely appreciate you.”Carter Malloy [spp-transcript] Connect with Carter MalloyLinkedInTwitterFacebookInstagramYouTubeWebsiteAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fourth episode, they talk about mistake number 7: Do you confuse skill and luck? And mistake number 8: Do you avoid passive investing because you sense a loss of control?LEARNING: When gauging a fund manager’s performance, consider risk-adjusted performance. If you’re a passive investor and use a systematic strategy, you’re 100% in control. “You have to accept that you can only control what you can control; you can’t control the unpredictable things that happen.”Larry Swedroe In today’s episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fifth series, they talk about mistake number seven: Do you confuse skill and luck? And mistake number eight: Do you avoid passive investing because you sense a loss of control?Missed out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?Mistake number 7: Do you confuse skill and luck?According to Larry, investors don’t know statistics well enough to differentiate skill from luck. To understand if an outperformer is outperforming because of skill and not luck, look at risk-adjusted performance. So, for example, over the very long term, value stocks have outperformed growth stocks, and small stocks have outperformed large stocks. So somebody who outperforms simply because they owned lots of small and value stocks more than the market isn’t outperforming on a properly adjusted basis. Other factors than size and value, such as momentum, profitability, or quality, can also drive the return. Larry recommends Portfolio Visualizer, a tool that shows how much exposure an active fund has to those factors. It also reveals the alpha or the remaining performance that cannot be explained.The second thing you need to consider is whether the fund’s assets are growing. If they’ve grown, the odds are pretty good that that outperformance will disappear. The other thing you can look at is the metrics of the stocks they’re holding. If they’re invested in hot stocks and their values have gone up, that’s a sign not to chase the outperformance.If you want to outperform by picking managers, Larry advises choosing the largest pension plans because they hire great consultants. They also have the best databases and do thousands of interviews yearly, so you can be sure they’ve asked every question you can think of while doing their due diligence. But still, evidence shows their ability to predict future winners doesn’t exist.Mistake number 8: Do you avoid passive investing because you sense a loss of control?In active investing, individuals perform stock selection and/or market timing. Passive investing doesn’t involve any of that. It defines its universe and then buys and holds all the securities that meet that definition.With passive investing, the problem comes in when the markets are experiencing uncertainties like the Ukrainian war, the COVID-19 pandemic, etc. The investor wants to be in control but with an index fund, the markets are in control. So many people consider active management a way of giving them control. They’re either in control of buying individual stocks, choosing the fund manager, and when they go in and out of the market. The problem is all the evidence shows that control costs you money, and you’re more likely to make mistakes and end up underperforming.Larry also advises investors to understand that when you’re passive and use a systematic strategy, you’re 100% in control. But you have to accept that you can only control what you can; you can’t control the unpredictable things that happen. Make sure your portfolio design doesn’t take more risks than you have the ability, willingness, and need to take. You should also be hyper-diversified to withstand the shocks that happen to every asset class.About Larry SwedroeLarry Swedroe is head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth Management. [spp-transcript] Connect with Larry SwedroeLinkedInTwitterWebsiteBooksAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast