My Worst Investment Ever Podcast

BIO: Brady Slack is the owner of High Country Finance, LLC, a full-service tax and accounting firm based in Utah in the US. His purpose is to be a resource that helps everyone experience wealth while paying the fewest taxes possible.STORY: Brady came across a coaching group on Facebook that was good at marketing its coaching package. He was fascinated by the package and bought it for $50,000. While it was a good package, it wasn’t a good fit for him as it didn’t align with his business goals.LEARNING: Vet the mentor, coach, or advisor before you engage with them. Pick a mentor or a coach who embodies what you want to be. Don’t decide out of desperation or pressure. “If you’re going to make a decision or buy something, or spend money, go to bed first. If you still feel the same in the morning, do it. But if anything’s changed, rethink it.”Brady Slack Guest profileBrady Slack is the owner of High Country Finance, LLC, a full-service tax and accounting firm based in Utah in the US. His purpose is to be a resource that helps everyone experience wealth, all while paying the fewest taxes possible.Worst investment everWhen Brady turned 23, he quit his job at an accounting firm and started a business. He didn’t have the expertise or the experience to create an accounting firm, but he decided to do it anyway. A close friend, a successful businessman, told Brady that the quickest way to learn and grow is to hire someone. So Brady started seeking out mentors, coaches, and development opportunities.Brady connected with a group on social media that asked him to speak at their event. He felt this would be an excellent way to reach more people and boost his business. He later found out the group had an offer attached to the back end of the speaking engagement, including some coaching, marketing and advertising, and websites. This was an even better deal for Brady. This all came as a coaching package that cost over $50,000. Brady purchased it.While the coaching program was great, Brady soon realized that it didn’t necessarily align with where he wanted to go with his business. It just wasn’t the right fit for him.Lessons learnedIf you need more financial resources to pay for an opportunity, wait until you have it.Vet the mentor, coach, or advisor before you engage with them.Before you pick a mentor or coach, define your goals, your intentions, and what you want your outcome to be.Andrew’s takeawaysPick a mentor or a coach who embodies what you want to be.You may get less value from a generalist, so go for a specialist in your interests.Avoid getting sucked into the flashy coaches on your Facebook feed because those guys are great at selling but not necessarily great at coaching.Don’t decide out of desperation or pressure.Actionable adviceTake time to define what you want out of your venture clearly, and then look for someone who has already done that and reach out to them to mentor or coach you.Brady’s recommendationsBrady recommends getting as much information and education as possible from the numerous free online resources. Further, vet someone who can accelerate the growth within your venture and ask them to mentor you.No.1 goal for the next 12 monthsBrady’s number one goal for the next 12 months is to get his newly launched software to a point where it pays all its capital back and is profitable.Parting words “Just keep going. The road to entrepreneurship or becoming successful is 75% hard work, grit, and determination. The other 25% is just a little bit of luck.”Brady Slack [spp-transcript] Connect with Brady SlackLinkedInTwitterInstagramYouTubeWebsitePodcastAndrew’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: Richard H. Lawrence, Jr., is the Founder and Executive Chairman of Overlook Investments Group, an independent fund management company established in Hong Kong in 1991.STORY: Richard invested heavily in a successful Korean company that brought him great returns until the founder died. The son took over and brought the stock to its demise.LEARNING: If it’s not working, get out. Invest in a company with no or minimal debt. Operating return is the purest way to measure profitability. “I’m a big believer in modest self-financed growth.”Richard Lawrence Guest profileRichard H. Lawrence, Jr., is the Founder and Executive Chairman of Overlook Investments Group, an independent fund management company established in Hong Kong in 1991. Overlook invests US$6 billion in a concentrated portfolio of public equities throughout Asia, excluding Japan.Richard and his wife, Dee, have founded several non-profit organizations; he’s a philanthropist who is devoted to climate change. He has two grown kids and lives in San Francisco, California.Worst investment everIn 1992, Richard discovered that stocks in Korea were incredibly cheap. He owned everything at 2-4x earnings. Richard owned a hair dye company and all kinds of oddball companies. Within that mix, there was one company that stood out. Korea, at the time, had massive debt. But this one company didn’t have any debt, so Richard was immediately attracted to it.Richard purchased shares in the company initially in 1992. At the time, the company was the largest synthetic fiber producer in South Korea, making spandex. It was a formidable company going from strength to strength. It became among Richard’s most significant holdings, the strongest of this cohort of Korean companies he owned.The company was founded by one of the greatest titans of the Asian textile industry. The founder was Korean and a larger-than-life figure in a manner unlike any other business leader in Korea in the lead-up to the Asian financial crisis when Korea went burst. He was a nonconformist in a culture that admired conformity. That was one of the reasons his company had no debt. He had the confidence and independence of someone who knew how to run a company for cash flow. Just as he disliked debt, he also disliked paying taxes. He was the most aggressive executive Richard had ever encountered in Asia or anywhere else. In one instance, he built a US$400 million facility, depreciated it over two and a half years, then revalued it and depreciated it a second time. By doing so, the founder minimized reported profits to minimize taxes and used cash savings to avoid debt. Richard liked this business model, so he invested heavily in it.The company did very well in the start-up years until the founder died. His son took over, but he struggled to fit into his father’s giant shoes. Richard thought he could help him be successful and worked on it from 1997 to 2000 during and after the Asian financial crisis. Richard gave him all the advice he could, but he was ignored. By 2000, with no concrete action taken by management, and no upward movement in the sock, Richard’s patience wore thin. Then the new leader crossed a red line and blatantly undertook an unfair related party transaction that effectively bailed out an insurance company owned by the family with cash from the spandex company.Richard, at that time, requested a reversal of the acquisition. He asked management to initiate paying cash dividends, execute a series of share splits, establish an IR department, and appoint additional directors that are at least partially independent. The largest internationally managed Korean fund cast the deciding vote against Richard ending the investment in a huge loss.Lessons learnedBeing an activist publicly doesn’t help.If it’s not working, get out.Invest in a company with no or minimal debt.Avoid the stock that’s the hype of the day.Operating return is the purest way to measure profitability and should be high. The higher it is, the better it is.Andrew’s takeawaysAn activist type of shareholder has its limits.There’s value in owning a diversified portfolio of stocks over a long period.Actionable adviceGo for companies with modest growth, don’t look for something off the charts. Build a portfolio of roughly 12 companies that can deliver a good operating return and rebalance it regularly.Richard’s recommendationsRichard recommends reading a lot of investing books. You can start with Buffett’s letters and then go to John Train’s books as you grow your library.Parting words “Beginners in this industry can learn from the tough lessons that we all went through.”Richard Lawrence [spp-transcript] Connect with Richard LawrenceLinkedInWebsiteBooksAndrew’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: Vineer Bhansali is the CIO of LongTail Alpha. The firm was founded in 2015 to help provide risk mitigation strategies.STORY: In early 1993, most investors held a significant long position on the Eurodollar futures contract, betting that interest rates would go down. Vineer decided to follow the herd. The Fed increased rates, and Vineer kept buying until he lost his investment.LEARNING: Don’t follow the herd blindly. Success in the markets is all about timing. Have an investment framework within which you operate. “You’ve got to be very humble and disciplined with your loss thresholds and risk limits.”Vineer Bhansali Guest profileVineer Bhansali is the CIO of LongTail Alpha. The firm was founded in 2015 to help provide risk mitigation strategies. Vineer was a partner at PIMCO and started their first hedge fund and also started and managed their quantitative investment portfolio teams from 2000-2015.He has a Ph.D. in Theoretical Physics from Harvard University and has written six books on finance. He has also run over 60 ultramarathons. He is also an Airline Transport Pilot rated to fly jets and helicopters and has over 4,500 hours of flight time.Worst investment everVineer started at Citibank in late 1992, just after the 1987 big stock market crash. He was participating in a bull market created by an extremely easy central bank policy. At that time, probably the easiest trade to do was just to buy anything like fixed income or stocks, and it would go up.Veneer was at some dinner in late 1993, and everybody in that room held a pretty significant long position on the Eurodollar futures contract, betting that interest rates would go down. That should have been a signal that something was amiss. But as a young trader, seeing everything was going up, Veneer also got long Eurodollar futures.Then as a surprise, the Fed got a little worried in February of 1994 and raised interest rates by 25 basis points. The Treasury market started to fall, and Vineer thought it was a good time to buy, so he bought some bond futures contracts. The interest was raised again in March, and the market sank a little bit more. He kept buying more, hoping the rates would soon go down again. Eventually, his trades were blown over, and he lost his investment.Lessons learnedHaving an original idea is always good because you create value by being different.Don’t follow a herd blindly.Success in the markets is all about timing.Have an investment framework within which you operate.The markets are very demanding, and to survive, you need to take care of everything about yourself; your mind, your body, and your health.Andrew’s takeawaysThe market is a predator.Original ideas create value.Markets are a human construct, and you never know which way they can go.Don’t get too hooked on your creative idea because it may not be time right for it.Have an investment framework and follow it.Vineer’s recommendationsThere’s a lot of stuff that’s on Vineer’s website that can help with risk management. He also recommends reading The Feeling of Risk: New Perspectives on Risk Perception. Veneer highly advises people at this stage of the game to abandon some of the preconceptions about how stock markets or bond markets work and just go back and do some honest, independent research on what risk management means for themselves as an individual.No.1 goal for the next 12 monthsVineer’s number one goal for the next 12 months is to stay healthy. For his investors and portfolios, he wants to be very disciplined and positioned on the right side so he can deliver a stellar performance that matches the kind of strategies he has.Parting words “Take care of yourselves, stay healthy, and be passionate about what you do.”Vineer Bhansali [spp-transcript] Connect with Vineer BhansaliLinkedInTwitterWebsiteBooksAndrew’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: Brenden Kumarasamy is the founder of MasterTalk; he coaches ambitious executives & entrepreneurs to become the top 1% of communicators in their industry.STORY: Brenden decided to promote his YouTube channel by sending 500 cold emails per day to university professors. After sending 2,000 emails, he received very negative responses. Instead of reviewing his strategy, he sent more emails for three months and got nothing out of it.LEARNING: Follow the data and remove emotion as much as possible when making decisions. Make sure your marketing content offers undeniable value. “If you want to be in the top 1% of any category, you need to behave in a way that 99% of people aren’t willing to.”Brenden Kumarasamy Guest profileBrenden Kumarasamy is the founder of MasterTalk; he coaches ambitious executives & entrepreneurs to become the top 1% of communicators in their industry. He also has a popular YouTube channel called MasterTalk, with the goal of providing free access to communication tools for everyone in the world.Worst investment everWhen Brenden started MasterTalk, he had this brilliant idea to send 50,000 cold emails to university professors in Canada and the US. His thought was pretty strategic. Even if 10% or even 1% of the recipients shared his videos with their college students every year, Brenden’s distribution would be unlimited, and his YouTube channel would explode in popularity.Brenden didn’t know how automated email campaigns worked, so he’d manually send 500 emails each day. He would open universities’ websites, pull up their faculties, find their emails, and start sending emails. About 2,000 emails into it—about a week into it—he started getting negative responses from the university professors. Brenden got so much hatred; it was insane.Despite the hate and realizing his strategy wasn’t working, Brenden didn’t stop after 2,000 emails. Being the 22-year-old knucklehead he was then, he spent the rest of that summer sending 500 emails daily for the next three months. After all that dedication, Brenden got just two positive responses.Lessons learnedFollow the data and remove emotion as much as possible when making decisions.There’s no silver bullet to entrepreneurship, just hundreds of lead bullets. So don’t push just one primary strategy, have hundreds of little different strategies.When something starts working for you, instead of guessing why it’s working, ask your customers. You’ll get to see what’s working, and through that, you’ll get the results you’re looking for.Andrew’s takeawaysTry A/B testing across many different things to determine where you’re making a breakthrough.When you send any marketing content, make sure it has some benefit to the recipient.Be relentless when you’ve got the right target, and follow up without giving up.Brenden’s recommendationsBrenden recommends subscribing to his YouTube channel to access hundreds of free videos on how to speak. He also does free live communication training on Zoom every two weeks. If you want to join that, go to Rockstarcommunicator.com and register for the next one.No.1 goal for the next 12 monthsBrenden’s number one goal for the next 12 months is to scale his business to another level to create more impact for everyone around him.Parting words “Realize that the relationship successful people have with failure is very different than the one unsuccessful people have with failure.”Brenden Kumarasamy [spp-transcript] Connect with Julian KlymochkoLinkedInInstagramYouTubeWebsiteAndrew’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: Julian Klymochko is the CEO and Chief Investment Officer of Accelerate, a leading provider of alternative investment solutions.STORY: Julian got into an M&A trade where the acquirer had to stage a shareholders’ vote. This led to a hostile acquisition where the target company was bought by another acquirer that was not part of the deal. Julian made a significant loss in this trade.LEARNING: Never put on an M&A trade that has the buy side vote. Arbitrage doesn’t always mean a riskless trade. “The best way to learn is to practice by doing. So, try it out yourself, and don’t risk more than you can lose.”Julian Klymochko Guest profileJulian Klymochko is the CEO and Chief Investment Officer of Accelerate, a leading provider of alternative investment solutions. Accelerate helps investment advisors, institutions, and individual investors diversify their investment portfolios, manage risk, and improve their portfolio’s risk-adjusted returns. Prior to founding Accelerate in 2018, he was the Chief Investment Officer of Ross Smith Asset Management. He started his career as an Analyst at BMO Capital Markets. Currently, Julian is a Director of the CFA Society Calgary.He has been featured in some of the world’s top financial and business media, including Bloomberg, CNBC, The Wall Street Journal, BNN, Business Insider, and The Globe and Mail.Worst investment everJulian started out in the mid-2000s as a young investment banking analyst working 100 hours weekly. He was handling mergers and acquisitions (M&A) and advising. During that period, Julian worked on some exciting deals. He got excellent insights into the inner workings of M&A, equity offerings, and capital markets. It was a great place to start a career.From that, Julian went to a startup hedge fund. He cut his teeth doing closed-end fund arbitrage, which was a fantastic trade, specifically during the great financial crisis of 2008. He could generate nearly risk-free returns that, at one point, were yielding 50% to 100% annualized returns because there was very low liquidity in the market, and people were desperate to sell. So arbitrage spreads were extensive. After that, Julian got into different arbitrage strategies; volatility arbitrage, convertible arbitrage, and one of his and Warren Buffett’s favorites, risk arbitrage.In 2012, Julian launched a standalone risk arbitrage strategy. He started with a $5 million investment from a handful of wealthy investors to conduct this risk arbitrage investment strategy. Risk arbitrage aims to generate high returns consistently—ideally, double-digit annualized returns and no down years.For the first four months, Julian put a lot of pressure on himself and was sick to his stomach every morning. But he still had a terrific first year with low volatility. Julian produced a double-digit return with low volatility and minimal drawdown. So investors were happy. The fund continued with that excellent trend for the first three years and grew significantly.2015 was an interesting environment in the M&A business. It was open season for pharmaceutical mergers. There was this popular trend called tax inversion. Tax inversion was where pharmaceutical companies would take over a foreign company to re-domicile offshore to lower their tax bill significantly. That trend buoyed M&A activity as domestic US pharmaceutical companies rapidly sought to conduct tax inversions by acquiring non-domestic competitors.At the time, a company called Valeant Pharmaceuticals was rapidly consolidating the pharmaceutical space. Their business model was dramatically different than their competitors—the old-school pharma companies. The company hired a former McKinsey consultant, Michael Pearson, to run Valeant. The company had already conducted a tax inversion and was now Canadian-based and not part of the S&P 500. It was part of the Canadian benchmark, the TSX. With that, their attitude toward growth was utterly different. Michael Pearson’s thesis was such that R&D is wasteful. The company grew through acquisitions. They would do hostile takeovers and gobble everyone up. This strategy was working. Their stock was doing exceptionally well.Everyone was praising the accolades of Michael Pearson and his business model. It became a highly respected strategy on Main Street and Wall Street. Analysts were going gaga over it, and investors loved it, creating copycats.Tax inversions were still all the rage, and Julian was active on these within the fund’s portfolio. Julian had this one particular M&A trade that looked quite attractive. The company, QLT, was a failed biotech company with just a bunch of cash. They were trading at roughly cash value, with few prospects aside from the money they had on the balance sheet and perhaps some tax losses. But one redeeming factor was that they were Canadian, not American, making it a prime candidate for an inversion. That inversion came through a definitive merger agreement with a US company called Auxilium. Auxilium was looking to run this new pharma playbook, re-domicile offshore by a tax inversion merger, then conduct M&A growth like Valeant.The requirements to consummate this merger were a successful shareholder vote by QLT shareholders. Additionally, since Auxilium was issuing approximately 25% of its outstanding shares in this merger, its acquirers’ shareholders would have to approve the deal. So they struck a deal with a 5% spread that would close in three months. A 5% spread over three months would be about 20% annualized, a handsome return.This trade was 4% of Julian’s fund’s portfolio, both long and short. Over time, Julian felt that a lot of consolidation was happening. He was worried that someone could make a play for Auxilium and acquire the stock in which his fund had a significant short position, which could lead to a considerable loss. So Julian decided to buy call options on Auxilium, utilizing some of that spread available to protect his fund in that awful potential scenario.A few months after putting on this trade, the worst-case scenario Julian had imagined happened. A pharmaceutical company run by Michael Pearson’s protege came and made a hostile takeover bid for Auxilium, the target acquirer in this M&A deal. Julian’s fund suffered a massive loss from this deal.Lessons learnedNever put on a merger arbitrage trade in which the acquirer has to stage a shareholder vote because it makes you vulnerable to a hostile takeover.Andrew’s takeawaysBe careful when dealing with arbitrage. It doesn’t always mean riskless arbitrage.Julian’s recommendationsJulian recommends Twitter as an excellent resource for information. You can follow him @JulianKlymochko. Julian also posts a lot of research and insights on his website that can help you, especially if you’re starting out. You can also check out other investment websites, such as Value Investors Club, where you’ll find professional research.Julian also has a couple of favorite investment books that he recommends:You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market ProfitsMargin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful InvestorThe Intelligent Investor Rev Ed.: The Definitive Book on Value InvestingAny book from Peter LynchParting words “Teach a man to fish, feed him for a day. Teach a man to arbitrage, feed him for life.”Julian Klymochko [spp-transcript] Connect with Julian KlymochkoLinkedInTwitterPodcastWebsiteAndrew’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: David Hay has been employed in the securities industry since 1979 when he joined Dean Witter Reynolds, now Morgan Stanley.STORY: A colleague told David about a business that was going to sell books online. David wasn’t convinced that the business had a competitive edge. So while his colleague invested $50,000 into this company, David chose not to invest. The company was Amazon. Had David invested then, he’d now be a multimillionaire.LEARNING: Invest only what you can afford to lose. Keep challenging your thesis. Have a systematic quantitative framework to help you keep an open and agile mind when investing. “One of the most important things in investing is range expansion.”David Hay Guest profileDavid Hay has been employed in the securities industry since 1979 when he joined Dean Witter Reynolds, now Morgan Stanley.And since 2022, David has been chief or Co-Chief Investment Officer of Evergreen Gavekal with a special emphasis on macro-economic research.In 2022, David released his highly anticipated book, Bubble 3.0: Who blew it and how to protect yourself when it blows apart.The book explores why he believes the financial markets are headed toward a third iteration of past market rotations.Accordingly, he believes there are a number of investment areas/asset classes poised to benefit from what he has begun referring to as “The New World Disorder.”Worst investment everIn November of 1994, David received a call from a colleague. They were both portfolio managers at Smith Barney. At that point, they were investing side by side in virtually everything. The colleague told David about this guy who was starting a company, and he was going to invest $50,000 in it.The colleague explained that the business would sell books online. David didn’t understand the business’s competitive edge, so he opted not to invest in it.Six months later, the colleague told him the company was going public. Turns out, the company was Amazon. Had David invested in it when his colleague told him to, he’d now be a multimillionaire.Lessons learnedIf the idea sounds great, invest only the money you can afford to lose.The bigger and longer the trading range, the more important the message of the breakout or breakdown is.Constantly challenge your thesis.Andrew’s takeawaysHave a systematic quantitative framework to help you keep an open and agile mind when investing.For every company that becomes a billion-dollar or trillion-dollar company, the good news is that 99.99999999999% of people missed it.David’s recommendationsDavid recommends his free newsletter. You can also get a free copy of Bubble 3.0 by emailing him through Substack. David also recommends reading the Felder report by Jesse Felder.No.1 goal for the next 12 monthsDavid’s number one goal for the next 12 months is to remove his shorts and go max bullish.Parting words “It’s always so much cheaper to learn from other people’s mistakes than your own.”David Hay [spp-transcript] Connect with David HayTwitterYoutubeBlogAndrew’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: Rex Salisbury is the Founder & General Partner at Cambrian Ventures, a pre-seed & seed focused fintech fund.STORY: Rex’s biggest mistake ever was sticking with his initial career too long, even though he knew he shouldn’t have been working that job.LEARNING: Invest in the skill that you want to move into as much as you. Build networks early in your career. “Make yourself marketable. It’s amazing what you can learn if you invest in certain things.”Rex Salisbury Guest profileRex Salisbury is the Founder & General Partner at Cambrian Ventures, a pre-seed & seed focused fintech fund. He previously was a Partner at Andreessen Horowitz, where he helped launch the fintech vertical. He has over a decade of experience working in finance & fintech, primarily as a software engineer, before becoming a venture capitalist.Worst investment everRex’s biggest mistake ever was sticking with his initial career too long. Rex attended a small liberal arts college on the American east coast—Davidson. He had a great experience and made a lot of good lifelong friends. Rex studied economics and also got a major in history.During his senior year, Rex worked in investment banking, specifically for Merrill Lynch. He also did an internship in South Africa and studied formal money lending. After college, Rex went to work in a bank. He believed that since banks are big businesses, there must be interesting work to do.Unfortunately, the experience wasn’t what Rex had imagined. He hated his job and had begun thinking about quitting from the second month on the job. But he kept dragging on and wasted the first four years of his career doing something he knew he shouldn’t have been doing.Lessons learnedQuitting can be a very important skill to exercise.If you’re considering leaving something like a job, you should quit it sooner rather than later for better life outcomes.It’s incredibly important to have access to good networks early in your career.If you have the unfair advantage of being young, relatively unattached, and the ability to relocate geographically, do it. It will expand your networks.Andrew’s takeawaysIf you’re feeling like quitting, take that seriously. Sit down, write about it, talk to someone about it, and start to take some action.Invest in the skill that you want to move into as much as you. That will help you make that transition.Actionable adviceIf you’re interested in a particular area, find other people who are really good at writing and talking about that area. Exercising that muscle over time can help open doors to building valuable networks and relationships.No.1 goal for the next 12 monthsRex’s number one goal for the next 12 months is to identify individuals building the next big companies that will change financial services and invest in 12 of the most interesting of those.Parting words “If you feel like you don’t have the skill set to affect some of these changes, put in the work.”Rex Salisbury [spp-transcript] Connect with Rex SalisburyLinkedInTwitterYoutubeBlogWebsitePodcastAndrew’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 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 five: do you let your ego dominate the decision-making process? And mistake number six: do you allow yourself to be influenced by herd mentality?LEARNING: Don’t let your ego influence your decision-making. Stay disciplined and avoid becoming irrationally exuberant. “The market is a predator preying on the mistakes of investors, their egos, and their herd behavior.”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 fourth series, they talk about mistake number five: do you let your ego dominate the decision-making process? And mistake number six: do you allow yourself to be influenced by herd mentality?Missed out on previous mistakes? Check them out:ISMS 8: Investment Mistake No.1: Are You Overconfident in Your Skills?ISMS 17: Investment Mistake No.2: Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Investment Mistakes No.3 and 4Mistake number 5: Do you let your ego dominate the decision-making process?According to Larry, logically, we make mistakes because we are human beings. One common mistake investors make is letting their egos influence their decision-making. No matter what you ask people, they all tend to think they’re better than average. Ego wants us to feel good, so we believe we’re better than average. But, the problem with ego is that it would much prefer to play a game where it only wins and never loses instead of a game where it can win or lose.Assume you’re a passive investor and put your ego aside because you know you’re unlikely to beat the market. So you choose to invest in the S&P 500, but unfortunately, it does poorly. Since you knew it could go either way, you have no one to blame except yourself.On the other hand, if you choose an active fund and it happens to outperform, you take credit for your brilliant decision to choose that active fund manager. And if it underperforms, you blame the manager and fire them. Here, the ego would much rather play a game of I win, but I don’t lose, which is what happens if you’re an active investor, not a passive one where there’s no one to blame. Larry believes that’s part of why almost half the number of investors, despite all the overwhelming evidence, choose to invest in active funds.Larry states that people with more skills have a better chance of avoiding all these behavioral mistakes. They understand the nature of the game they’re playing. They know that they’re competing against the market’s collective wisdom, which is a lot tougher to beat. This knowledge is what protects them from letting ego dominate their decision-making process.Mistake number 6: Do you allow yourself to be influenced by herd mentality?Psychologists have known for a long time that crowds can influence us. We want to own the same cars as the Joneses. The fear of missing out causes people to follow the herd very quickly. It’s what causes you to be attracted to the next new shiny thing and jump on the bandwagon. But it takes you a long time to unwind and realize the insanity of what you’re doing.The key to staying disciplined and avoiding becoming irrationally exuberant is having a thorough understanding of how markets work and knowing that bubbles eventually burst. You also need to have a well-designed roadmap to achieve your financial goals. Have an investment policy statement and set the framework under which you will be investing. Finally, have an understanding of how human behavior can impact investment decisions.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 mentionedGary Belsky (January 2010), Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons from the Life-Changing Science of Behavioral EconomicsAndrew L. Berkin and Larry E. Swedroe (October 2016), Your Complete Guide to Factor-Based Investing: The Way Smart Money Invests TodayJames O’Shaughnessy (November 2011), What Works on Wall Street, Fourth Edition: The Classic Guide to the Best-Performing Investment Strategies of All Time

BIO: Harvey Sawikin is the co-founder and co-manager of Firebird. Launched in early 1994, Firebird’s funds were the first dedicated to the stock markets of Russia and the former Soviet Union.STORY: Harvey invested twice in a bank and a vodka company without due diligence. Instead, he believed that other companies who had invested in those investments had done the job of verifying their viability. Harvey lost huge amounts in both investments.LEARNING: You’ll fail if you rely on someone else’s due diligence and work. The most dangerous time to invest is when it’s the easiest to invest. “Relying on someone else’s due diligence is a mistake because you never know what’s going on or when stuff starts to go wrong.”Harvey Sawikin Guest profileHarvey Sawikin is the co-founder and co-manager of Firebird. Launched starting in early 1994, Firebird’s funds were the first dedicated to the stock markets of Russia and the former Soviet Union. Harvey also co-founded the Amber funds, which do private equity in the Baltic States. Before Firebird, he was an M&A lawyer at Wachtell Lipton after attending Harvard Law School and clerking for a Federal judge. Harvey’s novel, about a young lawyer who becomes an inside trader, was published by Simon & Schuster in 1995. He lives in Manhattan with his wife of 32 years and a neurotic 15-year-old cockapoo.Worst investment everOne of the largest banks in Kazakhstan, BTA Bank, approached Harvey’s company with an investment proposal. Another fund in the region had taken a position in it. The bank was supposedly very close with management and had excellent insight into how the company would build. The company looked cheap, with a reasonable price to book, and the economy was performing well. So Harvey invested in the bank.It turns out the bank’s loan book was crooked, and there was a lot of self-dealing. The guy who was the main power behind the bank was arrested for misappropriating millions of dollars from the bank through bad loans. The bank was put into bankruptcy and was taken over by another bank. The shareholders were almost wiped out. Harvey’s company had invested $20 million and got under a million back.In another incident, Harvey was very interested in getting involved in Ukraine. When a vodka company was brought to their attention, they became keen on investing in it, especially since a famous hedge fund in New York had bought a direct position. The fund said they had maxed out how much they could take and were willing to sell Harvey part of their stake.Harvey’s company made its investment, and within two or three weeks, the vodka company released gross earnings. Its financial results were 40% below where they were supposed to be.Harvey believed they had been duped by the hedge fund and wound up litigating against them. He eventually dropped the case due to the ruinous litigation costs in England and where the loser pays. He surrendered to losing that investment.Lessons learnedYou’ll fail if you rely on someone else’s due diligence and work.Be careful when investing during a bubble because it becomes invisible to you when you’re inside it.Andrew’s takeawaysDo your own due diligence.Don’t overestimate the knowledge, skills, and persistence of other investors.The most dangerous time to invest is when it is the easiest to invest.Harvey’s recommendationsHarvey recommends Twitter as a source of real-time information as long as you follow the right people.No.1 goal for the next 12 monthsHarvey’s number one goal for the next 12 months is to hang onto his Russian positions and make sure his investors recover their money and continue to find value in the rest of Eastern Europe when the war is over.Parting words “If you don’t obsess over your mistakes, you’re not a real investor.”Harvey Sawikin [spp-transcript] Connect with Harvey SawikinFacebookTwitterInstagramWebsiteBookAndrew’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: Paul Krake is a global strategist focusing on mega themes of climate, China, digitization, and demographics.STORY: Paul quit a prestigious job where he had seasoned mentors to start a hedge fund. After a few years, he realized he wasn’t mature enough or emotionally prepared to run a business on his own.LEARNING: Surround yourself with people who are more experienced than you are. Think about all the scenarios where an investment can go wrong. “For every good idea out there, there are a million ways (that you can’t think about) for it to go wrong.”Paul Krake Guest profilePaul Krake is a global strategist focusing on mega themes of climate, China, digitization, and demographics. View from the Peak, Paul’s consultancy was formed in 2011 after an 18-year career in investment banking and as a macro hedge fund manager, where he covers global institutions on these mega themes. His latest venture is Climate Transformed, a global community of climate investors, entrepreneurs, and corporate leaders who are practically implementing the $100 trillion investment required for us to achieve decarbonization and sustainability.Worst investment everPaul’s dad passed away in November 2004, and a couple of days after his funeral, Paul was sitting in his mom’s backyard at four in the morning. At that moment, he thought of the idea of starting a fund.Paul went ahead with his idea and started a hedge fund even though the timing was wrong, and it was for all the wrong reasons to follow through with this idea. There was such a high degree of emotion involved in making this decision that he didn’t really think through it and consider all that he was giving up.At the time, Paul had a prestigious job at Caxton Associates. He had the support of great mentors and trainers. He gave up all this to start his business.After about three years of running the hedge fund, Paul realized he wasn’t emotionally prepared or mature enough to do what he was doing.Lessons learnedSurround yourself with people who are more experienced than you are.Think about all the scenarios where an investment can go wrong.Think of a business as trade and have an exit strategy if it doesn’t work for X years or if you spend X amount.Andrew’s takeawaysWhen you get that wind of confidence and want to invest, take a step back and think things through.When you quit a job to start a business, you lose support and have to do it alone.Actionable adviceBefore you make any investment:Think about your processes.Consider your entry and exit position and treat everything with the same agnostic clinical approach.Always have an exit strategy for when things don’t work out.Paul’s recommendationsRecommended resources: The secret to not getting stressed over not finding ways to de-stress is to use fewer resources.No.1 goal for the next 12 monthsPaul’s number one goal for the next 12 months is to successfully roll out 30 in-person events in nine countries.Parting words “I love this. I think it’s a great way to get people to seriously think about the benefits of failing.”Paul Krake [spp-transcript] Connect with Paul KrakeLinkedInWebsitePodcastAndrew’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