My Worst Investment Ever Podcast

Shaun Rein is the founder and managing director of the China Market Research Group (CMR), a globally prominent strategic market intelligence firm focused on China. He works with boards, billionaires, heads of state, CEOs and senior executives of Fortune 500 and leading Chinese companies, private equity firms, SMEs and hedge funds, to develop their China growth, political and investment strategies. Rein wrote international best-sellers The War for China’s Wallet: Profiting from the New World Order, The End of Cheap China and The End of Copycat China. Rein is regularly featured in The Wall Street Journal and the Financial Times. His op-eds have appeared in The New York Times. He frequently appears on CNN, BBC, MarketPlace, CNBC, Bloomberg, PBS and MSNBC. Rein formerly taught executive education classes for London Business School and was a weekly columnist for CNBC and Forbes. He also wrote a column for Bloomberg BusinessWeek. Rein is one of the world’s most sought after keynote speakers for his focus on innovation, consumer trends and the economy in China. His speaking engagement clients have included: Estée Lauder, Adidas, HSBC, AXA, Credit Suisse, Baker McKenzie, Blackrock, Baillie Gifford, KPMG, Macquarie Bank, Nomura, Baird, Deloitte, CLSA, Solvay, Sodexo, and Nestle. Apart from China and Hong Kong, he has spoken in economies such as South Africa, Australia, the US, the UK, Canada, Singapore, Thailand, Mexico, Vietnam, Japan, and South Korea.   “I had the students but it was very difficult for me to actually turn a profit. The difficulty in human resources in China has become a central theme of my business and most businesses that we’ve worked with over the past two decades. Mine started with the difficulty of hiring foreign talent, but actually the lack of top Chinese talent and the inability to retain good talent has been a major problem for me in my company China market research group ever since we started in 2005.” Shaun Rein   Support our sponsor   Today’s episode is sponsored by the Women Building Wealth membership group, the complete proven step-by-step course to guide women from novice to competent investor. To learn more, visit: WomenBuildingWealth.net.   Worst investment ever In around 2001, while Shaun was a 23-year-old a graduate student at Harvard University, he was putting some thought to the big question: “What am I going to do with my career?” What he did know was he never wanted to go the corporate route and work somewhere like McKinsey or Goldman Sachs, even though most of his classmates were headed in that direction. Instead, he had been interested in entrepreneurship ever since he had run an event-organizing company in Canada while he was a student at McGill University. The company managed 3,000-head dance parties, populated mostly by pre-legal-drinking-age (21) Americans that he bussed up to Montreal, where the legal drinking age is 18. At the time, he was living in Tianjin, China, going to and from there and Cambridge, Massachusetts. He realized there was a great opportunity for teaching English because “Chinese love America”, and they wanted to learn English. Budding idea to start English learning center in China So he decided to set up an English language learning center for 5-15 year olds and teens in China. The center’s focus was on speaking, because a lot of local children could already read and write well, but he and his team wanted them to learn correct American-accented English. So he returned to Tianjin, found Chinese partners, and set the company up with the unique selling point that every teacher would be a current or former Harvard student or teacher. Center opens with a bang but various snags emerge He opened the company and to big celebration. Classes started and people were very excited to have Harvard students or Harvard graduates coming to Tianjin. Within day one, the center had registered more than 300 students. It was a really exciting time but quite soon the enterprise was not to go quite as planned. There were small problems. There were big problems. On opening day, the police came in and said: “We’ll protect you. We want protection money.” Shaun declined so the police rapidly closed down the center. Hard to entice Harvard types to Tianjin On opening day, they had to find new office space, which they did on the campus of Tianjin Normal University. They made a deal to use classrooms and the police could not bother them. So that was one of the “small” problems, the “regulatory” issues with the police. Then they had the bigger problems. Even though the Chinese students wanted to learn from Harvard graduates, Harvard graduates were not too fussed about living in Tianjin. At the turn of the millennium, the enormous port city was polluted and not very amenable. Expensive to set up and maintain Rental costs, even for the time, were quite high in China, especially to fit out a learning center than met the style demands of the parents of the little emperors and empresses. They really wanted to have the nicest classrooms, the best teachers, and the best of everything, which added already the climbing costs. Suffice to say, Shaun made a profit of around 50,000 RMB (less than US$10,000 over the three years the center was operating. He was living in a US$150-dollar-a-month apartment, and could not even pay for his plane ticket to return home. It was a very difficult time. Key test is to fund and retain foreign or Chinese talent He had the students but it was very difficult for him to turn a profit, and the difficulty with human resources in China became a central theme for Shaun. Most businesses he has worked with over the past nearly 20 years started with problems the difficulty of hiring foreign talent. Now the lack of top Chinese talent and the inability to retain them has been a major problem for Shaun and China Market Research Group ever he started the company it in 2005.   “But you’re definitely going to find as a foreign company a very uneven an unfair playing field. So I think the issues I had in my failure two decades ago, are going to be the same issues that companies face today.” Shaun Rein   Some lessons Supply chain is a key issue Many people underestimate the importance of getting raw materials or the inputs for your product or service. In his case, it was Harvard graduates. Infrastructure too is underestimated China has continued to dominate the global economy in the past decade and will continue that due to its incredible infrastructure. China protectionism - true for local and US companies Trump and a lot of people criticize China for being protectionist and unfair to foreign companies but that is only a part of the story. But there’s too much protectionism for state-owned enterprises, such as the Bank of China or China Telecom. So it is an uneven playing field for both foreign and private Chinese companies. It’s very difficult to be a private Chinese company if you are small or medium-sized and lack high-level connections because the government will over-regulate, which stifles innovation. If your company is successful, the government or a state-owned enterprise will take it away.   Actionable advice Get a good team together They can be Chinese or foreign people. What matters is that they are loyal, knowledgeable, and know how to conduct business in China, how to navigate the local market. “You can’t parachute a Chinese-born citizen who has been living in the US for 20 years in to China to run an operation.” China 20 years ago is very different from China today The first thing is to get top talent that understand how to navigate the local Chinese market. President Xi is trying to change the culture of business and politics in China and he is doing so but it will be difficult. But businesses will not be asked for bribes now in China as you would have been 20 years ago.   No. 1 goal for next the 12 months To be a billionaire To make US$250,000 dollars for a single keynote speech. He’s at about US$50,000 now, but he really wants to match Bill Clinton’s rate To get another book or documentary released To produce a five-episode series on Netflix or a similar channel to help Western businessmen and visitors to better understand China   Parting words Yeah, you just can't win unless you know how to lose. So losing is not losing long term if you take the right attitude. But failures are the stepping stones to success.     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with Shaun Rein LinkedIn Twitter Website Email Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube My Worst Investment Ever Podcast    Further reading mentioned Shaun Rein (2018) The War for China’s Wallet: Profiting from New World Order Shaun Rein (2014) The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia Shaun Rein (2012) The End of Cheap China: Economic and Cultural Trends that Will Disrupt the World      

Natali Morris is a former network news anchor turned personal finance educator and motivator. Her specialties include personal finance, business, and technology. She is currently a contributor to CNBC and MSNBC where she was previously an anchor, a role she also filled prior to that at CBS Interactive. Her experience includes being a contributor to CBS News and the TODAY show, along with CNN, ABC News, G4TV (a former US digital cable and satellite TV channel), BBC, The CW, Fox News, Fox Business News, and Univision (Spanish-language reporting). She has written for Consumer Reports, WIRED, Variety magazine, MarketWatch, TechCrunch, The San Francisco Examiner, PC Magazine, ELLEgirl (now defunct), the Oakland Tribune (now the East Bay Times), and more. She has a bachelor’s degree in journalism from California State University East Bay, and a master’s degree in sociology from the University of Southern California. Prior to 2010, you may have seen her work under her maiden name, Natali Del Conte. Natali is from the San Francisco Bay Area. She lives and works with her husband Clayton and their three small children. Her sole focus is to not screw them up.   “I don’t want focus all the time on shrinking my life, because that’s what I’m worth, I want us, all of us to expand our lives.” Natali Morris   Andrew’s question about learning finance “When you first looked at the idea of learning finance, or learning investing for yourself … how did you feel about what you were faced with?” Natali’s response “If you look at your finances, how to get them in order and how to then save and invest, as a whole, it’s too much … I started reading these books about how many fees are in your funds, and your IRA and your 401k, and I got myself all worked up and pissed off. And then I was like, well, where do I put them? … So … that wasn’t getting me anywhere until I decided: ‘Okay, take one thing, learn that one thing and that teaches you the language of finance to go to the next’.”   Andrew’s points on learning Learn one book or take one step at a time Someone once asked Andrew: “How many books have you read?” The answer was: “Thousands!” The query continued: “How did you read so many books? Andrew answered: “I read them one at a time.” In reference to Natali’s “learn one thing at a time” strategy, Andrew agrees, saying: “Take one small step at a time.” Mother set example for family financial planning Andrew’s mother was very much involved in his household’s financial decisions and money management. His mother and father worked together for years to build financial security, so that they lived a period of 20 years retirement without financial trouble. When Andrew’s father passed away, his mother moved to Thailand with him and she is still financially independent. Cutting costs has a limit, growing wealth has few You can never get to true success in business, investing or in building wealth by cutting costs. There is a limit to cutting costs, so the other part has to answer the question: “How do we grow?”   Worst investment ever FBI probe of investment dare not speak its name Natali had some trouble choosing her worst, as she’s had so many challenges. One story she can’t really talk about because it is the subject of an active FBI investigation into some funds that were in her IRA. This investment was particularly heartbreaking because she had her children’s investments tied up in that situation, as well hers and her husband’s. Another situation also involved trust Natali and her husband Clayton (a previous guest on this podcast) got into business with someone during the past five years. They were helping other people invest in off-market properties. Their partner was a fiduciary (a fiduciary relationship is formed between two parties who trust each other. In real estate, a fiduciary relationship is created between a real estate agent, known as the fiduciary, and a buyer or a seller, known as the principal) who was selling all the houses and Natali and Clayton we were getting referrals on any investors that went through him. Towards the end of their relationship, they realized that a lot of the rehabs he had said he had carried out, had not been done or were incomplete. And so that really ended up exposing them to a lot more liability than they had planned for.   General lessons It’s very hard to save your way to wealth In fact, Natali says it’s almost impossible. She found that a very difficult change in her thinking. But change she did, and now she tells her clients and students that if she could achieve that shift, then other people can do it too.   Andrew’s takeaways Collated from this My Worst Investment Ever series, the six main categories of mistakes made by interviewees, from the most common, are:    Failed to do their own research Failed to properly assess and manage risk Were driven by emotion or flawed thinking Misplaced trust Failed to monitor their investment Invested in a start-up company Mistake No. 4 is Misplaced Trust Andrew goes on to ask Natali about the signs so that listeners are not sucked into a similar difficult situation. Natali’s lessons on trust delve into the spiritual Natali and Clayton explored why this had happened, looked back through their communications, and how they formed the relationship and they found it very hard to pin down how they could have known, so Natali calls this more of a “soul challenge” than a practical challenge, because she and her husband were unable to determine how they could have averted the results of this fiduciary partner’s misrepresentation. Need for healing other than legal, practical redress Natali and her husband actually teach people to take charge, run their numbers, research risks, understand who they are dealing with and do their due diligence. They had done all that. So after a few occasions of misplaced trust, she started to seek healing. The lessons she learned came from a spiritual perspective, and that somehow, they had been led toward all of the steps that she needed to protect herself before this happened. Higher power hints to put protections in place She had been working closely with state lawyers to make sure they had a domestic asset protection trust, and another instrument close to an offshore trust that is available under US law. She had educated herself and established those trusts before she and Clayton had had any problems. She had educated herself on different insurance plans and decided to open a captive insurance plan, a kind of advanced investor tool. She was prepared and she realized that a lot of times when a “big soul challenge” is coming, you have been prepared in ways by which you were not fully aware. Then when it hits, you realize why you needed to be so prepared. She says, some kind of spiritual guidance or guardian angel or higher power is putting in front of you the people you’re going to need, the books, the podcasts, and the information to guide you along your path. If you pick them up, you will be more prepared for the soul challenge when it comes. What if she hadn't been so ready? Natali often wonders what would have happened if she had failed to pick up the tools she had found before her? If she had just stepped over them before the soul challenge arrived, she would be injured much worse. She would have been saying: “I could have read that book. I should have called that person, I could have hired that estate lawyer.” Natali Morris   Andrew on spiritual preparation Right path is usually not so hard Some people say that they’re searching for God’s will on a matter. Others could say: “It’s just the right path for me to travel in life.” Andrew argues that the right path is usually not too difficult. If you find yourself getting in too much difficulty, it is probably a good idea to step back. When you think about spiritual preparation, look for a path. It’s not necessarily the easiest path, but it makes sense, and it feels right. Listen to your intuition When something feels wrong, pay attention, bring it up and put it right on your desk in front of you.   “You get into this scary time … you’re in … the belly of the whale … and you’re like, ‘how did I get here?’, I don’t know what the journey is and you have help along the way and somehow you come out of it a different person, and it shows you what you’re made of and what you’re supposed to learn from it.” Natali Morris   Actionable advice Look for the next book Natali recommends letting the next book or message fall in front of you and then read it, follow the intuitions or “wisps” or whatever is trying to guide. “Every moment gives you an opportunity to see and ask ‘Is this preparing me for something that I need to know?’ Let me give it some real thought.” Read A Hero with 1,000 Faces and you will realize all mythology has a story to teach us about how we are being prepared for our own hero’s journey. Natali is still involved in many painful situations, but she may not come out of them a hero, but that doesn’t mean she will quit. She’s learned a lot about herself, especially during 2018, when she had her husband went through difficult times. But now, she is stronger, not afraid of money, not afraid of investments, and willing to take on a seller finance deal and talk to a lender. A lot stronger than the “little housewife” she was trying to avoid being. Andrew’s value-added comment You’re stronger than you think. When you face difficult challenges out there, the reality is that you can make it through.   No. 1 goal for next the 12 months Natali wants to find a way to put the benefits of her and her husband’s Financial Freedom Academy in the hands of the people that need it the most, so that whatever soul challenges that have to do with money in their lives, they are not afraid. To listeners: Anyone who is facing the results of their worst investment, “this is just their opportunity to slay the dragons”.   Parting words “I appreciate you being empathetic and letting me talk.”     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with Natali Morris LinkedIn Twitter Facebook Personal website Business website Blog Email Connect with Andrew Stotz astotz.com  LinkedIn Facebook 

Venkatesh is an author, speaker, investor and entrepreneur. He has spent 22 years in the Asian markets in senior roles across listed equities (with JP Morgan and Credit Suisse), private equity (with Macquarie and AMP) and corporate strategy (with Masan Group). He is the co-founder of strategy consulting firm Dhyana Partners, and has served as a director on the boards of several companies. He is also the author of suspense thriller, KaalKoot: The Lost Himalayan Secret, which has been a No. 1 bestseller on Amazon. In the listed equities space, Venkatesh has held several pan-Asia roles, including as head of India equity research at JP Morgan, and sector head for the Asian metals team at Credit Suisse and Deutsche Bank. He led the Credit Suisse Asian metals team to No. 1 position in the Institutional Investor survey in 2002. At Macquarie, he was a senior member of the team investing and managing US$1.2 billion funds in the Indian infrastructure sector, and was a director on the board and an investment committee member for the SBI Macquarie Infrastructure Fund. He led investments in Indian infrastructure assets at AMP Capital, and headed group strategy at Masan, one of Vietnam’s top-three largest private sector companies by market capitalization.   “Within a year both revenues and margins were under severe pressure and there was a fall in earnings. Eventually the stock halved so I lost 50% before I finally sold out last year. (This means) I held it for two years and lost 50%.” - S.Venkatesh   Worst investment ever Sudden changes turned tables for ‘perfect’ investment In 2016, Venkatesh acquired what he thought would be a good long-term investment – and the company’s profile showed it had good potential based on its statistics and then-current standing. It was a large, generic-pharmaceutical manufacturer, one of the top three in India and 20th in the world. With sales of more $1.5 billion, market cap running into billions of dollars, good return on capital, great management, and an excellent track record, one could easily ask: “What could go wrong?”   “I felt that the company had things going for it: new product launches, and so on … so I dismissed the market concerns.” - S.Venkatesh   Despite the company’s overall performance in its niche, its fundamentals and sentiment toward it slid unfavorably. Venkatesh said, at that time, the US market was experiencing “huge pricing pressure”: a severe decline in prices and an increase in customer consolidation. In the same year, the US government also implemented stricter rules over imported goods and drug pricing. This led to “stricter inspections and adverse alerts”, which in turn equate to higher import costs, with the product demand remaining constant, if not gradually decreasing due to increased local and/or foreign supply. Disregarding the red flags, Venkatesh held onto the investment, thinking that the market would eventually make a comeback, that the pricing pressure would stabilize and then return to its historical trend, and that new product launches would aid this recovery. He also thought the regulatory environment was a sentiment issue. This worked for the first few months. However, after a year, the effect of the changes in the US market was drastically felt in revenues, margins, and earnings, and after one more year, the stock’s value was halved.   “Rather than holding it all the way down, it’s better to cut losses and get out of a position that has gone wrong. But by the time I finally did that … I was already down 50%.” - S.Venkatesh   Some lessons Investing is a lot of hard work Stay on top of your stocks’ fundamentals all the time. Even with the apparently safest company in the world, conditions can change very fast. Pay attention to margin of safety in valuations Sometimes at the top of a bull market, investors can feel that if the stock is good, they can pay more for it, which might work for some time. But with expectations so high, a small reporting change can mean that the stock corrects quite rapidly. A stock can still look as good or inexpensive as it has in its history, but if the company’s earnings halve, it can suddenly look very expensive. Be ready to correct course Keep a close eye on market concerns, and be ready to adjust your weight in a stock and cut your losses, especially if something is fundamentally changing. If Venkatesh had done that, he would have cut his losses earlier instead of holding on to it as it fell all the way down. About changes: get past denial, accept and act Accept when the fundamentals change, and avoid anchoring yourself to your old investment road map. Venkatesh realized that the time between his denial and acceptance took too long. When the expected stock rebound did not happen, he should have accepted the change and acted by taking money out of it and reallocating it into something with better long-term prospects.   “If something changes, and your thesis itself is compromised, you need to exit that.” - S.Venkatesh   Andrew’s takeaways Collated from Andrew’s My Worst Investment Ever series, the six main categories of mistakes made by interviewees, starting from the most common, are:    Failed to do their own research Failed to properly assess and manage risk Were driven by emotion or flawed thinking Misplaced trust Failed to monitor their investment Invested in a start-up company Venkatesh took the route of trusting that his investment would grow on its own, and that the market itself would eventually rise up despite the stricter rules implemented on the pharmaceutical niche. That is not to say that he was careless, though. This leads us to Andrew’s second takeaway. Being experienced does not mean you are perfect Venkatesh has been in the business for quite a long time. From the many years he’s worked with various clients and stocks, he can be branded as someone who knows the market very well. Despite this, he is still human, and therefore is not immune to making mistakes. Trend reversions do not always happen It is a marvellous event for majority of the investors out there, that somehow, the market would revert back to what it once was some years ago. Change is constant, however, and rarely does this event ever occur. Investing is hard The investing journey has so many routes and detours that one small decision or event can quickly change your investment’s course. Not only that, but there are also unpredictable external factors that may affect the way the market will move. Thus, you need to always be alert and aware, and stay on top of your game. Investing is similar to but not same as gambling People enter the investing business because they want to grow their wealth – a lot like gambling, if you think about it. In the same way, you need to set up your own strategy to be able to play. Moreover, experience is needed for you to know how the other players manage their game. The difference, however, is that in investing, you will experience an even greater loss if you’re not careful.   Actionable advice Be flexible about changing your investing road map and work really hard to monitor your investments.   No. 1 goal for next the 12 months Venkatesh is hoping to build the business at Dhyana Partners, to work with more clients and help with their businesses, their growth or with their restructuring. His focus will be very much on the customer and delivering results for the, He is also working on his second book, to improve his skills as a writer and express his gratitude to readers of his first release.   Parting words “It’s fine to make mistakes, but it’s more important to realize when you made a mistake, and to course-correct.” Regardless of how experienced we are, there will always be times when we will poorly judge situations, or we let our emotions get the better of us. Thus, this leads to us making the wrong decisions, which is actually quite normal. During these times, the best – and probably only – thing you can do is to learn from those mistakes and ensure that you won’t make the same errors again through acquired experience and growth.     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with S. Venkatesh LinkedIn Twitter Goodreads Facebook Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube My Worst Investment Ever Podcast  Further reading mentioned S. Venkatesh (2018) KaalKoot: The Lost Himalayan Secret  

Sloane Ortel is an explorer and definer of the connections between capital markets and economic/cultural forces. Our guest today is the publisher of The Sloane Zone, “an email newsletter that comes when you least expect it, and makes more sense than it should”. She holds a bachelor of arts degree in English from Fordham University, was one of the youngest registered representatives of Oppenheimer & Company, and has served and helped establish Newport Value Partners as a consulting analyst. She now works as an independent strategy consultant for big investment organizations after spending nearly a decade supporting the members of CFA Institute as a collaborator, commentator, curator, and subject matter resource.   “(At the CFA) I spent the better part of a decade talking with folks from every conceivable time zone about … really doing things that mattered for people there like building better financial markets that can better serve the people. And that’s wonderful and noble, but for my own personal investing, it sort of created the idea that investments came in a particular package.” Sloane Ortel     Worst investment ever Bitcoin bubbles waiting too long to invest In the summer of 2010, when Sloane had just joined the CFA, she had a very unusual, purely meat-eating Eastern European person move into her house who was “in the process of moving all of his personal wealth into Bitcoin”. While he piqued her interest in the topic, she did her own research and decided to avoid involvement, as her perception of her influencer as bizarre kept her from taking action and getting into what might have benefited her. Skeptical but curious in 2012, when her roommate moved out, Sloane decided to have another look at it, doing the numbers on setting up to mine it. Again she dismissed it due to its connection to the extremely eccentric guy she associated with it. As more “legitimate” institutional interest started being paid to this new asset class, she decided to invest in Bitcoin herself, with initial funds of $200, and tried to lose it on purpose, as a sort of validation of its difficulty to trade in it, therefore its validity would be proven and she would dive in more.   “If it actually takes skill to trade the thing, I should be able to lose money on purpose. And if I could do that, then I do actually have evidence that there is skill involved in trading the entity, and I can sort of rationalize putting a larger allocation into it.” Sloane Ortel   Things took an unexpected turn as her investment skyrocketed and gave her $1,400 in profit in around six weeks. She withdrew her capital and left her profit as her initial perception of the investment had affected her investment decision. As investors took a huge blow after its sudden drop in value, Sloane looked back at her investment and found that it went way downhill. From a 600% profit, it went down to just $35. But …   “The overall upshot of the story is that I allowed my perception of one particular person to keep me from participating in this giant secular bubble until it was almost too late.” Sloane Ortel   Some lessons Believe in yourself Part of the reason Sloane was not talking about the investment was out of a fear that people would perceive her as being as strange as the person who had first suggested a foray into bitcoin. Take the impulse to actually trust your own instincts Listen to that inner voice, is what Sloane says she should have done. Be open to input from outside conventional packaging People can be very resistant people to things that are not presented or come in the manner they expect. Sloane said she is one such person. In institutions, there is almost a parade-type function that a process need to satisfy for those with power to accept and execute it.   Andrew’s takeaways People around us can influence us and our thinking Andrew pointed out that we all hear the expression that we are the average of the five people closest to us. But when it comes to investing, he said it is wise to remember that we often think and operate in a bubble, and that the people around us are tend to be maybe like-minded thinkers, and therefore whatever is happening around us is what shapes us. Build your ideas inside and outside the bubble Although we are prone to be affected by external factors, we must not let them become the main drivers of our decision making. Of the six main categories Andrew has drawn from the My Worst Investment series, Sloane took three hits Failed to properly assess and manage risk. In Sloane’s case, back in the early days of Bitcoin, there were hardly any risks, as its value continued to rise by the day. However, during the following years – which was the time when she started investing in it – the market showed signs of its depreciation, and she had failed to see those. Were driven by flawed thinking. The people around us influence us and influence our thinking. Sloane allowed herself to become affected by what other people might think of her if she is to put her money in what seems to be a trivial investment. Misplaced trust. She lacked trust in herself and her own instincts and refused to take the risk.   Actionable advice Develop confidence that how you see the world accords with reality Give yourself permission to be weird and act in unconventional ways Allow space for mistakes Andrew liked the idea of kind of giving yourself space, building confidence, being “weird”, and not being afraid to lose. He does add one key thing: The second most common mistake he has come across is “failed to properly assess and manage risk”. So an overlay to allowing space to be human is to “just do it on a small stage in the beginning”. Andrew is of course talking about a way to manage risk by sizing your position according to risk appetite and your means. In response to that, Sloane adds …   “Position sizing is 100% of why I have such wrinkle-free, beautiful skin! I don’t moisturize; it’s all position sizing.” Sloane Ortel   Number 1 goal for the next 12 months To turn her engagements into something that the general public, in particular the investment community, will open their eyes to and gain valuable output from.   Parting words “Just live your lives.”     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with Sloane Ortel Facebook Twitter Instagram Blog LinkedIn SpeakerHub Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube My Worst Investment Ever Podcast   

Tyler Stewart has always been an educator at heart; whether it was his previous life as a stock trader, or his current life as head of investor relations at RealCrowd, an online commercial real estate investing platform with more than U$6 billion in deals, Tyler has made teaching investing fundamentals his life’s mission. This calling led him to the founding of two nationally recognized platforms: the RealCrowd Podcast – where top investing minds discuss the most pressing issues facing investors today – and RealCrowd University, a free, in-depth educational course that will teach you the fundamentals of real estate investing.     “The quickest way to grow your bank account is to save money, don’t spend it, have a monthly budget. Once you start saving, find a financial advisor and have them help you build out a portfolio and figure out what your goals are and what your risk tolerance is.” Tyler Stewart   Worst investment ever  Tyler catches fear of missing out from teacher’s story One of Tyler’s memories from his first-year high school business class was that the teacher said that back in the 1980s he had received a tip to buy Microsoft stock. The teacher said: “I didn’t move on it. Had I done so, I would be worth millions.” Tyler never forgot that lesson and since them, all he could think was: “The first tip I get, I’m all in.”  College kid gets ‘big break’ stock tip from workmate  Later, during his college years, he did construction work in the summer, seven days a week, 10 to 12 hours a day. He was making enough to pay for college and to put a little money aside, for what he was as yet unsure. Then one day, a co-worker said: “Hey Tyler! I got a stock tip for you.” As soon as he heard that, he recalled what his teacher had said and the promised he had made to himself. This was the first tip he had ever received, so he had to go “all in”. The tip was about a drug company that could “cure any disease”. Cancer, HIV, whatever the illness, apparently the company could cure it. So he read about it and thought: “This is it! I’m rich.” So he invested all his extra money when the stock price was at about US$1.10. Feels like a genius as stock is up 10% in first week  Within a week, the stock went up to $1.20. It was the first investment he’d ever made and he had seen a 10% gain in a week; one, he thought he was a genius. Two, he was certain he was going to be rich. He started doing calculations on his TI-83 plus calculator, trying to figure out what a 10% gain would mean in a week, in a year, and how rich he was going to be.   Stock hovers around the purchase price for a year  A year went by and the stock hadn’t moved beyond the range of around $1-$1.20. He finished that year of college, returned to the construction job, made more money and continued to plough it into the stock. When the stock went up, he believed he was the smartest guy in the world. When it went down, he wanted to hide.  Stock falls to 30 cents despite all his scientific research  Alas, the stock eventually went down to 30 cents, which is a considerable percentage fall for an investment. And the whole time, he was reading every piece of news and press release about the stock. He checked online forums and read reading anything he could about the science behind the stock, even though he was studying a major course in business. He read journals, and was trying to pretend he knew what he was doing and trying to reassure himself that he was involved in the right stock. He read forums and saw people question whether the science worked, and all he could think was such people didn’t know what they were talking about because he had become an expert. He knew “that this science was going to work out” and that this stock was going to deliver a big result for him. Five years on he realizes tip will bring no gold It took probably about five years for him to see that the first tip he’s ever received was not going to make him rich. Eventually, the company dissolved and no longer exists as it was. After the firm folded, he only received pennies on the dollar back.   Some lessons  Tyler’s investment know-how You have to know why you’re making an investment   You have to know why you’re holding an investment   You have to know why you’re exiting an investment   Don’t base all those stages simply on a tip The decision at each stage must be based on fundamentals and plenty of research.   Your investment’s performance does not define you  When a stock price is climbing, it doesn’t mean you are the smartest person in the world. When it’s going down, you’re not the dumbest person in the world. What your investment does is separate from who you are.   Know why you’re venturing into an investment   Separate your ego from the investment  Research before you invest  Tyler admits he only started the research when he already held the investment. He adds that the research was not about whether to sell or buy more, it was research to just validate his decision for being investment, so it was very much a case of confirmation bias.     Andrew’s takeaways  After conducting many interviews of many people, Andrew has collated the six most common mistakes that people make. Andrew suggests that Tyler made mistakes one and two.   No.1: Failed to do their own research  And in this story, that’s mainly because it came from a tip. Tyler did do some research after he bought the stock. But the time to do the research is before the investment, not after so.   No.2: Failed to properly assess or manage risk   Assessing risk This situation highlights serious problems with the word “Tip”.   The first idea implied by the word is that an investor is receiving inside information). If the investor acts on that information, it is an illegal transaction (insider trading).   The second idea is when a friend who likes a company and has researched it tells another investor about it. But if investors find investment ideas in this manner, it’s really dangerous, because people are promoting the ideas that they like. This does not mean we will never take a tip, but if a really attractive tip comes along, the investor must go to the step of researching the return and researching risk as well.    Warning When you hear the word “tip”, alarm bells should be going off. It’s either not a tip because it’s actually a piece of inside information and what you’re about to embark on is an illegal transaction, or it comes from someone you know, so you must do your own research.   Managing risk One way is to size your position or set aside a small portion of your portfolio for more adventurous stocks. Taking 5% or 2% of your portfolio and allocating it toward that risky bet is perfectly sensible. Another way is managing risk through diversification.     Actionable advice   Create an investment paragraph which asks and answers these questions   What am I looking for?   Why am I looking for it?   What’s the location?   What’s the risk?   What type of stock is this?   What type of real estate product is this?   This investment paragraph is your filtering system of determining if the investment passes the test. If it does then it’s worthy of the time you should spend in due diligence. If it doesn’t, walk away from it. It’s all about being disciplined enough to write and look at that investment paragraph you create and stick to it.     No. 1 goal for next the 12 months   At RealCrowd, Tyler’s focus is real estate investing so his sole focus for the next year is building his university courses to help his audience to make better investment decisions in the real estate world. So Tyler will just be putting his head down and building out the courses in the aim of really helping investors to learn the fundamentals of commercial real estate investing.    Parting words   The quickest way to grow your bank account is to save money, don’t spend it, have a monthly budget. Once you start saving, find a financial advisor and have them help you build out a portfolio and figure out what your goals are and what your risk tolerance is.    You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points  Connect with Tyler Stewart  LinkedIn  Twitter   Website  Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube My Worst Investment Ever Podcast   Further reading mentioned   W. Edwards Deming (1982) Out of the Crisis 

Giacomo Arcaro is one of the most important European growth hackers, with more than 140,000 “crypto-followers” and has been featured in the Financial Times, Forbes, Wired and the Los Angeles Times. He’s had 2-million-euro exits with two start-ups, CercaClienti.it and SocialAutomation.online and is the founder of Black Marketing Guru. Giacomo has now been involved in the world of cryptocurrencies and initial coin offerings (ICOs) for quite some time, establishing himself as a veteran in the industry and a pioneer of its processes. Currently, he is the No.10 advisor on ICObench and the No.1 on ICObazaar. Giacomo has extensive experience in understanding the specific requirements of a business regarding the models through which it can generate capital that allows it to thrive in competitive environments. He has raised 18.4 million euro so far for the ICOs he has advised and is a published author, with this book: Get Rich with the Blockchain: 47 Ways to Build your Future.   “(The man asked:) ‘Can I pay for your services with tokens?’ I asked him: ‘What the hell are tokens? How can I pay my mortgage and my employees’ salaries with tokens?’ So I kicked him out of my church. Three weeks later, I had totally forgotten about this appointment and opened the newspaper to read that this man had made $27 million in one day of fundraising. So I picked up the phone and called him – he didn’t answer; he was probably off buying his private jet.” Giacomo Arcaro   Worst investment ever Company starts in a 12th-century church Giacomo’s story starts just after exiting one of his successful start-ups when he took those funds, bought a 12th-century Byzantine temple in Rimini, Italy, on the Adriatic coast, hired about 20 staff and set up Black Marketing Guru. They help start-ups and industries to increase business, revenues and clicks, and views. So one day, a guy in short pants came to his office to ask him to help set up a start-up. When asking what the new company was about, the guy in short pants said it was a cryptocurrency start-up. Giacomo asked: “What the hell is that?” Because, at this time, he wasn’t involved at all in that world. It was 2017. ‘How can I pay my staff or my mortgage with tokens?’ He decided to learn more about it. The man told him it was an interesting business and that people were making a lot of money. People were making a lot of money and then he said “the word no one should say, and this was he wanted to pay for services with tokens. Giacomo had no idea what they were. “How could I pay the mortgage, how could I pay staff salaries, with these tokens?” So Giacomo more or less kicked the guy out of his church. Man he rejected raises US$27m in one day Three weeks later, after Giacomo had totally forgotten about this encounter he opened the newspaper to see that the same man had raised US$27 million in one day of fundraising for this start-up. So Giacomo picked up the phone and called him but he didn’t answer because “he was probably off buying his private jet”. So he called the man who introduced the two, nad got an appointment with him in Lugano, Switzerland. Once he arrived, the meeting situations were like scenes from The Wolf of Wall Street. As in the film, people were also throwing dwarves in the middle of the room, and wine and Champagne were flowing. It was crazy. He met people who had made about $10 million overnight in trading cryptocurrency. Crypto-money bubbling everywhere like Champagne He was very excited and shared his knowledge with all the guys in the room, not even knowing which company they were from. People were making a lot of money, minute by minute, hour by hour. Finally, he spoke with a few people who offered for him to get involved in some initial coin offerings (ICOs) and some other business. He was now even more excited. On the way home he was studying blockchain and cryptocurrency in the car, looking at YouTube videos on his iPad and watching news about blockchain. So after a four-hour trip, barely understanding the basics of blockchain and crypto-currencies, he stopped at a petrol station, picked up his phone and laptop, and started investing randomly in ICOs. Within two hours of returning home, he opened up his laptop and saw that he had doubled the 50,000 euro he had intially invested. Europe’s biggest crypto player offers dream chance So he had 100,000 euro, and then his new friends invited him to invest in more ICOs and he doubled his money again. The “best” was yet to come. Finally, one of the biggest crypto companies in Europe offered for him to build a company focused on marketing for ICOs and other projects in the cryptocurrency world. So he designed the company, created it, and all the while, crypto was still going up. The new firm was swamped with requests for 15-20 quotes on projects a day. Each quotation was for about US$500,000 in billing. So they started sending out dozens of brochures, quotations and invoices. Crypto loses 98% of its value in early 2018 One sad point was that before the market went down in early 2018, Giacomo had refused the buy-out offer of 1 million euro from the large European group. Then, in the first month of 2018, the market crashed by around 98%. People involved in the company started to panic because they had lost all their money, and of course, they had quit their previous jobs. They were very hard times all round. Big loss was opportunity cost in time But Giacomo points out that the mistake was not that he had lost around $250,000 in investment, but that he had lost time. He said he should have dedicated that time to his marketing talent company; one year that was instead dedicated to chasing money and not chasing a skill. He reminds himself that he has only had four years in his life when he has been in profit, because he has failed about six times.   “So my life has been a path of failures, I failed when I was 18, 20, 21, 23, 26, and 28. But, if you are strong enough to hold on, and can concentrate, once you have succeeded, you can be repaid for all the things you lost and all the work.” Giacomo Arcaro   Failure becomes learning becomes success So all his money was wiped out, and everyone left with empty hands, but he decided to make money out from this failure. “That’s why failing is important.” And he started studying deeply about ICOs, STOs, cryptocurrency, and blockchain, and really applied himself to learning. Since this failure, he has applied his growth-hacking techniques and skills to his personal branding. After about 10 months, he has become one of the most prominent keynote speakers in the blockchain arena. He now travels the world every day, sharing his experience, his skills, and his advice with blockchain start-ups, from Cambodia to Miami to Germany.   Some lessons Don’t just chase the money If you only chase the money, 99% of the time you’re going to fail, because you have to do something bigger than money. If you want to make money, you should not become and entrepreneur, because entrepreneurship is about creating something. “If you just want to chase money, you had better just open an ice cream shop or a pizzeria.” Giacomo Arcaro Learn about what you’re jumping into Apply more caution before getting into a new kind of market.   Andrew’s takeaways Failure is not illegal There are cultural issues about loss. In some places, such as the United States of America, loss is not seen as the end. But in many countries, loss is really looked down upon. But failing in business or family investment is not illegal. Fraud, lying, and cheating, is. When things go bad, make sure you stay true to your self and your honor and do the best you can. When things go bad, we must not hide We must communicate. Money is just a measure of your business success But passion and what you build are timeless. It’s very hard to create an idea, get it to the market, deliver it successfully, get paid and create wealth from it. It’s passion that is the real driving force.   Actionable advice Short course in blockchain investing Study blockchain technology, taking at least one month to fully understand it Study what Bitcoin and Ethereum are Study artificial intelligence (AI) and the Internet of Things (IoT) Find a start-up that is at the nexus of this triangle, (blockchain, crypto and AI) Invest in it. Don’t invest in technology start-ups that have impressive graphics or good white papers or good business plans   No. 1 goal for next the 12 months To be the No.1 financial advisor in the blockchain world Build his incubator of blockchain start-ups in Italy Have the biggest fundraising in Cambodia with his new ICOs/STOs there Retire in six years and visit Bangkok   Parting words “Hack it till you make it”     You can also check out Andrew’s books   How to Start Building Your Wealth Investing in the Stock Market   My Worst Investment Ever   9 Valuation Mistakes and How to Avoid Them   Transform Your Business with Dr. Deming’s 14 Points  Connect with Giacomo Arcaro LinkedIn (English) LinkedIn (Italian) Twitter Instagram Website Facebook Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube Further reading mentioned Giacomo Arcaro (2018) Get Rich with the Blockchain: 47 Ways to Build your Future

Erik Bergman started his career as a professional poker player while still a teenager. At the same time, he founded his first companies. At age 24 he started in 2012 Catena Media, a company that only three and a half years later would be listed on the Stockholm Stock Exchange with a US$200-million valuation. He left Catena Media a few years ago and today is just starting up his latest project, Great.com, a company where the name alone cost $900,000. But this time around, he wants to do everything differently, which means giving away 100% of the profits to charity.    “We invested so much emotions and so much pride and ego into not failing, something that should have failed long time ago.”  Erik Bergman    Worst investment ever  Cash losses were never as bad as this   In thinking about his worst investment, Erik said he had lost a lot of money in a variety of ways. He did a lot of damage with a raid into crypto almost. He has done quite a few “shitty” start-up investments. But he realized that his worst investment cost a lot more than money, and that was when he lost his health, harmed his friends, and lost relationships.   First mistake was thinking ‘it’s gonna be easy’  In 2012-2013, he was busy starting several different companies at the same time, including that of a venture capital firm. One company was working with payday loans. His team were running a marketing company that had a lot of payday-loan clients. So they decided that if they could do the marketing, they could do it all. Of course it turned out to be much harder than they had ever anticipated it would be, and that was the first mistake they made: thinking it will be easy and then jumping into a business area with almost no understanding and with far too little research.    ‘It’s never easy’  So they started building the company and hiring people to run it. However, very early they realized that it was so much harder than they had predicted. Nevertheless, they soldiered on, and Erik hired one of his closest friends and a few others to help run the company and a couple of others. But this company just never found any traction. They had many technical issues and many struggles. Erik’s old friend was in charge of the technical side, which kept facing major challenges due to the size and complexity of the big system they built. By the time the system was up and running, they ran into troubles with the bank, which didn’t want to co-operate because they were competing with them. Thus, they couldn’t finance the operations and they needed to find other ways to fund it. Whenever they managed to solve one snag, they would be hit by the next one. It took a year before the venture became somewhat sustainable.   Legal environment changes, adding huge workload  Having already lost a lot in time and having spent a lot of money, there was then a change in the legal requirements that forced Erik and his team to change all of their back-ups, all the systems behind their sites and they had big problems getting access to more data. So they had to change the entire back-end of everything. Erik’s friend and business partner was already overworked and he and two others were in charge of running this. Right in the middle of the regulatory changes, those two people resigned. One, his girlfriend, got pregnant, and other other, just wanted to leave Malta and move back home.   Friend left holding the bag  So Erik’s friend had to do this three-person job alone. He had to rebuild everything and worked day and night for weeks. Erik was unable to help because of his lack of tech expertise. The friend put one system together but it had been put together quickly. Because his friend lacked the time and energy perhaps to do it properly, the system crashed within around two weeks from being made operational.   Exhausted business partner collapses after system fails  So Erik and his friend had struggling for so long and just when they could see the light at the end of the tunnel, the legal requirements changed, his friend the entire system alone, and then it failed. Erik’s friend had a complete breakdown out of physical and mental exhaustion. Erik, being busy with other projects, was unaware of the shape his friend was in or the pressure he was under and his friend, who had not slept for weeks, didn’t come back to work. Erik admits being too distracted looking at the numbers instead of being there for his oldest friend, who would take three years to fully recover.   ‘Small side business financially’ takes huge toll  This was a small side business financially compared to the bigger companies he and his team put together. But they had invested so much emotion, pride and ego into it not failing – something that should have failed long time ago. They just kept focusing on it, and it cost them a lot more than money. They never got it up and running, and had to sell the remainder of the database and other things at significant losses. It also took Erik a long time to recover from such strong emotions as well, because he felt that his friend would not have cared so much about the project if Erik had not pushed himself and his friend so much.   Not a big money loss, but big losses in every other way  This was one of the darkest chapters of Erik’s business career and life so far, during which he admits being “way-to-narrow minded to deal with it”. So the financial loss was insignificant, he says. But he has never since done something that could put someone else’s health at risk, and especially not the well-being of one of his closest friends.    “So a lot of his physical health and his emotional health was at stake because of my stupid ego, pride, and greed … I still feel a lot guilt and shame over this and really found a good way of dealing with it.”  Erik Bergman    Some lessons  Kill your darlings   Erik hastens to add that he’s talking about the company, not your friends, when talking about what to do when reaching a crossroad decision of whether to forge on, or walk away from a start-up company or an investment. When things go wrong, step away and think: “Would I really think this was a good idea now as totally new investment?”   Relationships are so much more important than the money   Think about the other people involved and put yourself in their shoes, especially if you are pushing people into something. Ask yourself: “How is this experience through their eyes?” Be better at assessing what’s going on and what kinds of things are happening to all people involved.     “I don’t regret the loss in terms of money, but I really regret how I dealt with my friend.”      Andrew’s takeaways  Never forget that real people and emotions are involved   It is fun to talk about the numbers, growth, opportunities and the “agile, lean” exciting things when investing in a start-up, but people’s livelihoods, futures, families, health and state of mind are all effecting by the decisions we make, or refuse to make.   Stay vigilant about overconfidence  The solution is being open, and it is difficult. When you’re in in the middle of a situation, it is not easy to go into your company and say: “You guys want to give up? Should we stop?” But it must be done, even if you individually have to step back and, without necessarily sharing it with the others, look at what you’re doing. There is empathy needed and that is something Erik also has taken away from this story.  Zero-based thinking tool  Ask yourself at crunch times: “Knowing what I know about this situation (whether it’s an investment, a start-up, or even a relationship), would I enter it now if I wasn’t in it already?” And if the answer is no, some serious thinking and researching needs to be done immediately.      Actionable advice   Just try   If anyone listening to (or reading this) has a business idea, whatever it might be, start it. If it doesn’t work out, it’s much easier to quit once you’ve started than it is to quit before you started.    No. 1 goal for next the 12 months   Job opportunity  Erik has the domain name, Great.com, for which he is building its lifelong company intention, and that is for 100% of its profits to go to charity. His number one goal for that enterprise is to find someone to help build the project with his team, someone who can be CEO, CTO or whatever title they want, who really resonates with the ideas that he and his team have. He needs someone who is technical, emotionally intelligent and has long-term strategic vision. Anyone interested can listen to his podcast, Becoming Great.     Parting words   “I’m happy to be here. I really love the approach of tackling the worst parts of investing and the worst parts of being an entrepreneur.”    You can also check out Andrew’s books   How to Start Building Your Wealth Investing in the Stock Market   My Worst Investment Ever   9 Valuation Mistakes and How to Avoid Them   Transform Your Business with Dr. Deming’s 14 Points    Connect with Erik Bergman  LinkedIn  Twitter   Instagram  Website  Podcast  YouTube  Blog    Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube  

David Keller, CMT, is president and chief strategist at Sierra Alpha Research LLC, a boutique investment research firm focused on managing risk through market awareness, and author of the blog, Market Misbehavior. David calls himself a right-brained person in a left-brained industry and prides himself on his ability to bridge the gap between academic and practical finance. He is past president of the Chartered Market Technician Association, and most recently served as a subject matter expert for Behavioral Finance. David was formerly a managing director of research at Fidelity Investments in Boston as well as a technical analysis specialist for Bloomberg in New York. At Sierra Alpha, David combines the strengths of technical analysis, behavioral finance, and data visualization to identify investment opportunities for active investors and enrich relationships between advisors and clients. He uses his blog to teach readers about investing through metaphors, most frequently paralleling the process to aviation and flying. The blog platform also provides him the opportunity to make observations on market psychology. On top of this, David is a featured contributor on StockCharts.com, where he authors The Mindful Investor column, and on the See It Market platform for “smart, unbiased financial minds”.   David is also a published author; his articles have appeared in Bloomberg Markets magazine and he edited the book, Breakthroughs in Technical Analysis: New Thinking from the World’s Top Minds (Bloomberg Press). His talents took him to Waltham, Massachusetts, where he was an adjunct professor for three years at Brandeis University International Business School. David has a bachelor of science degree in psychology and a bachelor of arts degree in music from The Ohio State University.    “One of the reasons we fall into a lot of behavioral challenges or poor decision making as analysts is because you are programmed to do just that … pound the table, put your foot down and insist that you have the right answer … to be completely fair, probably almost half the time you do not have the right answer.”  David Keller    Worst investment ever  Markets begin to recover after bottom of 2009  In mid-2008, David left New York to work for Fidelity Investments in Boston and what followed was a very difficult first year on the job from a market point of view. The market topped out in late 2007 while a lot of stocks topped out in early 2007. Then 2008 started a little weaker. It then continued its sell-off into autumn on that year. The market bottomed out at the beginning of 2009. His March, April and May was very confusing and there was a great deal of volatility at the low points. Through 2010, 2011 and 2012, market start to recover consistently, with some surprises along the way. People were starting to put 2009 behind them.   David’s wrong turn begins as he goes bearish in 2013  In mid-2013, David took the completely erroneous view on the markets by turning bearish on US stocks. Of course he now knows that that was not the time to be bearish as the next few years showed strong growth across the board, especially in the US. The upshot for him leading up to it was that he was very focused on the March 2000 high, when the S&P was nearly right on the 1550 mark. And then in the beginning and then late stages of 2007, it reached almost the exact same level. So as the market had once again approached the same level, it triggered in David the beginning of his wrong call as he was expecting a repeated pattern when, he has realized since that if he had looked at all the evidence, it would probably not have supported his call.   How did that impact David professionally?   He said he learned a lot. As an analyst and as a professional researcher, he pointed out that in such jobs you need to take a stand, to have an opinion. One of the reasons we fall into a lot of behavioral challenges or poor decision making as analysts is because such professionals are programmed to do just that – pound the table, put your foot down and insist that you have the right answer. He admits thought, probably almost half the time you do not have the right answer. The markets make for a very humbling report card for your calls. So he learned very quickly that while it is important to have an opinion, it is also very important to have the humility and intellectual honesty to understand when your call is not working out and then being open and clear on what evidence has caused me to change your mind.   Road to when ‘Dr. Doom’ realized he was wrong   It was definitely a contrarian idea to be bearish at that point because stocks in general were pretty strong and the US market looked very good, riding at record highs.  He realized that he’d made his mark when the trading desk chief referred to him as “Dr. Doom” to a group of people. The driver behind his call though was not just the market being at new highs. He had looked at price momentum in different ways. One common way that technical analysts measure price momentum is with an indicator called the Relative Strength Index (RSI), which says that when something goes up, how much does it tend to go up? And when it goes down, how much does it tend to go down? It is a ratio of the average up moves versus the average down moves. And what you’re looking for is when a market moves to extremes, and that is one of the reasons why today, a lot of analysts are turning negative on the US markets. So that was another piece of evidence that told David that the market had risen a lot, and that it was probably too much, and that he believed he needed to be defensive.   Sector levels supported his bias   The third item he was looking at was sector levels. He remembered that tech stocks in particular were underperforming. This group he expected would do well in a bowl phase, and it was not doing well anymore. On the other hand, consumer staples, were doing quite well. So what he realized there and what he realized from that sector perspective (when did he know he was wrong?) was when he looked at the sectors and saw technology, weak; staples, strong; he has realized since that because those conditions supported his argument, he had succumbed to confirmation bias, and decided he was bearish. Still suffering under the spell of such bias, he then just tried to gather evidence to support that call. As the market continued a little higher, he doubled down in the worst way, and was trying to continue to back it up with only the evidence he wanted to find.   Looking at individual stocks is also insufficient   He learned too that looking at individual stocks was not a good enough indicator either and that there is great value in looking beyond the market. If you’re thinking about asset allocation, he said, it is not good enough to just look at equities, or look at global equities or emerging markets as a bundle and make an overall decision based on only on that. When you look at the country level or the sector level or the group and stock level, you start to see movements and themes that can help you understand a sort of deeper level below just an overall market call. He learned a lot about how to qualify what he is seeing from the top down and by also doing a lot of good bottom-up work. He said the bulk of the screening and detailed work he does not was derived from the lessons learned during this period.    “Having the humility and having the intellectual honesty of understanding when your call is not working out and then being open and clear on what evidence has caused me to change your mind.”  David Keller    Some lessons  Have the honesty and courage to admit that you are wrong. Then state what you need to do differently. Admit that your thesis is not working and have the courage to change your perspective.   “It’s OK to be wrong, but it’s not OK to stay wrong.”   David Keller, quoting one of his mentors  You’re not married to your call. Make informed decisions based on what you think the probabilities tell you, but you have the equal opportunity to change that when the evidence supports it.   Keep paying attention. Watch for and understand when things are changing. David takes a page out of flight training here when he learned “situational awareness”. When flying an aircraft, it is essential to have awareness of what is happening outside the aircraft, so you do not fly into a mountain, another aircraft or the ground. A big part of David’s process is having situational awareness of the markets and really understanding what he is seeing around him.   Tracking trends closely is highly valuable. Anytime the market approaches record highs or a stock goes to new highs, start to question it. When the market is strong, switch into more of a trend-following mentality and stick with things that are working, avoid things that are not working, and just look for signals that the trend has reversed.   Dig to a deeper level to gather evidence behind your call. Don’t just start with “I think the market” or “I think this position is doing XYZ, it’s going below that” and then look for evidence evidence support or contradict the position you are taking. You can look at many factors, such as the advancers/decliners, which is a measure of how many stocks are going up, how many stocks are going down. It remained strong through much of 2013, then hit a peak, but it never really came down that much. And in the end, it went up as the market continued higher. And so recognizing that the average stock was still holding up was an important signal to monitor.     Andrew’s takeaways  You will eventually be wrong.  Enjoy the moments when you are right, but you will, eventually, be wrong. It is inevitable.   Hold back on your contrarian instincts.  Sometimes momentum can push through harder and longer than you think.   Avoid confirmation bias.  The way to do that is to use David’s “second level” idea to look deeper and for views contrary to yours.  David adds here:  Another meeting he used to do in one of his companies as a group was called The Devil’s Advocate meeting, in which an appointed person had to take the other side of a thesis and argue against it. A lot of times the group would disagree with the designated contrarian but it did make everyone think about what the other side of an investment thesis was and what chain of events could cause that opposing scenario to happen. Often, he said, such a discussion uncovers weaknesses in your initial thesis that you would not have arrived at otherwise.     Actionable advice   Always have an exit plan. Here David talks again about his experience as a student pilot, as he’s working toward his private pilot’s license. One thing he has learned with any flight plan, you must always look for what you’re going to do if there is an emergency. One thing is to identify emergency landing areas, such as other airfields, highways, golf courses, so you always have these options, and if something happens you execute that side plan. IN trading, David always says if XYZ happens, then he’s wrong and needs to change it. So he always has a stopping point for a long position or a short position. He always has a price level or a movement or an event or a signal that will cause him to re-evaluate his position, no matter what. He lays out this plan in the beginning, and then the key is sticking with that and having the conviction to actually do it the moment the warning sign triggers.   Q: Now pay attention, 007. I’ve always tried to teach you two things:  First, never let them see you bleed. James Bond: And the second? Q: Always have an escape plan. Desmond Llewelyn, in his final film appearance as Q in the James Bond series (1999, The World Is Not Enough)   No. 1 goal for next the 12 months   David just launched his own research firm about a year and four months ago so he will be working on that.   At StockCharts.com, where he writes a column called The Mindful Investor, he is going to launch a TV show for this online network in the next few months.   He is also looking forward to starting a podcast of his own.    Parting words   David says it was very therapeutic to finally admit his weaknesses to everyone.     “I love what you’re doing with this podcast, it’s a pleasure to be a part of it.”  David Keller     You can also check out Andrew’s books   How to Start Building Your Wealth Investing in the Stock Market   My Worst Investment Ever   9 Valuation Mistakes and How to Avoid Them   Transform Your Business with Dr. Deming’s 14 Points    Connect with David Keller  LinkedIn  Twitter   Email  Connect with Andrew Stotz

Clayton Morris is a former Fox News anchor who left the No.1 cable news show in its timeslot, Fox & Friends, after achieving financial freedom. Through his Financial Freedom Academy, Clayton now devotes himself to helping others build passive income and achieve financial freedom like he did using methods he had to learn the hard way. After some epic failures, he’s learned how to build a meaningful life, and shares these lessons on his top-rated podcast, Investing in Real Estate with Clayton Morris.   At age 13, Clayton saw his dad unexpectedly lose his job. Ever since then he had a fear about money, and always knew there had to be a more entrepreneurial way of creating wealth. He got into purchasing performing assets to secure a future for his family so they didn’t have to go through the same financial pain as he did growing up. After spending years building up enough passive income through performing assets to quit his high-paying media career, Clayton launched the Financial Freedom Academy because he realized his passion is in helping others learn that they don’t have to just work for a pay check, and they don’t need US$1 million to achieve financial freedom.    “So what happens to a lot of people that start to make money is that they quickly find ways to squander it because money flows to those people who take care of money … and guess what? Money flows away from people that don’t take care of it, and not taking care of it doesn’t just mean making stupid investments … it also means you … think you need to hold on to it like a hoarder.”  Clayton Morris    Worst investment ever  Clayton catches property bug after flipping condos for good profit  It was 2006. Clayton was working for Fox News’ The Daily Buzz program out of Orlando, Florida, in the US when he caught the real estate bug. He had lived in and fixed up a one-bedroom condo on a golf course he had bought for US$75,000 since he moved to Florida in 2004 to work on the TV show. Then the woman in the two-bedroom condo next door died and her family were looking for a private sale as it needed renovation so he made an offer to buy it. Without any experience, he started carrying out repairs on the place every day after work. He then listed them and sold them for a handsome profit of around $80,000 just before the market crashed. He had made a fortunate investment and definitely had the bug.   Rolls money into golf community in the North Carolina mountains  He then took that money and rolled it into a speculative land project in the beautiful mountain area of Cashiers, North Carolina. The project, a Phil Mickelson golf course community that a friend of Clayton’s had found in a backroom seminar in Manhattan, required $30,000 upfront for two blocks of land on which two log cabins would be built with funds from a construction loan. The idea was that Clayton could flip the cabins and double his money. He was shown marketing materials on a website with running water sounds and visions of the proposed clubhouse and multiple phases.   Negative associations with money almost drive him to get rid of it  Some emotional negative associations with money were happening with Clayton from his upbringing that made him feel uncomfortable holding on to the profit he had already made. He said he never felt he was worthy of the money or worthy of success.   Visit to beautiful but empty mountain site briefly inspires investor  A short time later, while waiting for the cabins to be built, the market collapses, the builder withdraws from the deal, and they have to find another builder. Clayton drives to North Carolina to see his plot of land meets a promoter at their “beautiful” offices in Cashiers town that has posters with a demonstration building, the construction phases, a log cabin in a field, and lots of hot tea and coffee. They go to visit the marker where Clayton’s plot is and the clubhouse site which is also yet to be built and there is a wood sign with a picture of a clubhouse on it. Despite the lack of any progress, Clayton still could imagine how good it was going to look.   Everything falls apart as economy collapses and all stakeholders withdraw  But, just after the visit, everything started to fall apart: with a balloon payment coming soon on the construction loan, the economy collapsed. With it, the land value fell to very little, the second builder, Phil Mickelson, and the realtors all backed out, leaving Clayton apparently holding the bag. He had to go through deficiency judgment and foreclosure. One day while working at into Fox News, he went to buy coffee and because of the deficiency judgment against him, he found he could not use his debit card. He worked down the hall from Bill O’Reilly and Sean Hannity, national news figures, and went back to his office to log into his Bank of America account to find everything was flashing red. All his accounts were frozen, meaning every single note of cash he had to his name was frozen.   Long climb back to financial health  He had to work with a lawyer to seek a settlement on the construction loan of nearly $200,000 but his property was not worth $5,000. No community had been built, and some other people had been similarly abandoned and were reaching out to form a class action lawsuit. Sadly, to be party to the suit required another $10,000 to buy into it, but Clayton decided to just walk away. He eventually paid off the loan and had to put the entire painful episode behind him. He said of course he never wants to repeat it.     Some lessons  No speculation. What Clayton did was a speculative land project with the hopes of a clubhouse and waterfalls and there was nothing of substance to it. He learned from this, got creative, and nowadays only buys performing assets, in established neighborhoods, renovates them, and takes his $900 a month in cash flow. He buys assets that actually exist.   Extent of his speculation. He had may hopes based on speculation.   That this golf course community and houses were going to be completed,   That the houses would appreciate in value,   That someone would want to buy the houses,   That the economy would remain stable,   That someone would want to buy a second home on a golf course in North Carolina    Focus on one course of action. Stick with what you know. Don’t let “shiny-object syndrome” get you off track.     Andrew’s takeaways  First, a tip for listeners to go to Clayton’s podcast, Episode 453. It is what Clayton calls his Motivation Monday broadcast, where you can hear a short inspirational piece about “the color of your thoughts”. In it he presents the very powerful idea of the three stages to go through when you really want to achieve something, 1. Ask for it, 2. Receive it, and 3. Allow it to happen.   Loss is a fact of life. Even people in prominent jobs with big careers make mistakes. The feelings that come with such mishaps can sometimes be devastating, overwhelming. But don’t face such times alone. Other people have been there, other people will be there, so reach out for help and the support of friends, family and whoever you can, because you don’t have to get through failures alone.     External factors can have severe effects.  Impacts outside your control such as a collapsing economy, can cause everything to go wrong.   Beware the curse of winning. When we have some wins it can make us feel overconfident. It happens a lot with many of the stories in Andrew’s My Worst Investment Ever series. When investors first buy in to an investment and it goes up they feel confident, usually more confident that they probably should.   Worth of money. When we are craving something or thinking about it so much, that can have the opposite effect on getting it.   Size your position, always. This is mistake number two of the six common mistakes that Andrew has gleaned from the My Worst Investment Ever series: Failed to properly assess and manage risk. Investors may find a project and assess the risk as being reasonable, but the problem is that in many cases, people put all of them money into it. In real estate, his is probably a little harder compared to buying stocks in the stock market, but the point is to make sure you size your position so that you are not putting so much money into one project or one target investment. It should also be remembered that your sizing of the position is not the initial down-payment, it is the final payment that must be made when the property will transfer.    Actionable advice   Don’t be afraid to listen to your instincts. Don’t be afraid to listen to your intuition.    No. 1 goal for next the 12 months   To simplify, simplify, simplify and return to his passion, which is teaching and helping others build wealth.   “To get this message out there to help as many people as he can, to get out of the rat race, change their lives, they want to move to Thailand, they want to move to Portugal, they want to move to Spain, they want to do whatever they want in their lives, they can do it. I want to help them get there.”  Clayton Morris    Parting words   “Go out there and take action … You can spend the next two years hanging around on the internet … on internet forums … if you want to talk yourself out of anything, spend five minutes on the internet … or you can actually just get off your butt, go out and take action and become a real estate investor because I believe it’s the number one way to build wealth.”       You can also check out Andrew’s books   How to Start Building Your Wealth Investing in the Stock Market   My Worst Investment Ever   9 Valuation Mistakes and How to Avoid Them   Transform Your Business with Dr. Deming’s 14 Points Connect with Clayton Morris LinkedIn  Website  YouTube Twitter Connect with Andrew Stotz astotz.com  LinkedIn Facebook  Instagram Twitter  YouTube My Worst Investment Ever Podcast Further reading mentioned   Diane Brandon (2013) Intuition for Beginners: Easy Ways to Awaken Your Natural Abilities  Clayton and Natali Morris (2018) How To Pay Off Your Mortgage In Five Years: Slash Your Mortgage with a Proven System the Banks Don’t Want you to Know About  

Avery Konda is all about positive business, impact investing, and #SocialImpactEverywhere. He is 23 years old, a podcast host, and an impact investor in 18 start-ups; all of which have a bottom line or mandate for positive impact. Avery works as the chief community engagement officer for Tandempark, an online volunteer platform, centralized volunteer portal, and volunteer management software that helps organizations recruit, schedule and communicate with their teams, while making it easier than ever for volunteers to discover and engage in local opportunities to strengthen and enrich their communities. The Social Impactors Podcast is all about impact. Avery works to highlight impactful individuals making positive social change in their communities.   “Some of the red flags of their competitive analysis just did not make sense. Their product although it was pretty was really, really just a shell of what it could be. And so all these things were red flags that you really should look at as a private investor or just in the investment space.”  Avery Konda Worst investment ever Avery started in investing young and slow. Putting a toe in the water, so to speak. He did not go in aggressively, but low input and low-risk investments. He would make some profit and learn, but that gave him “the investor itch”, mainly not itching for more money, but he did want to learn more and he loved the idea of making money from money. It was the sporadic start of a sometimes dangerous journey.   Young investor goes through learning phase   He learned about investing a lot, losing a lot or winning big. He learned about formulas strategies, and how some things will make money, but some things do not always work. And he learned these things the hard way, making some “pretty stupid” investments based on emotion, putting money into companies that he was emotionally attached to, which you should never do in the beginning or at any time, because you should never invest on an emotional basis. It should be very much an objective decision. He was an 18- or 19-year-old man and thought he knew the world, but he didn’t. His emotionally charged investments failed, he would regain confidence and invest again sporadically, making a little money one month, and investing more the next. Not a good idea, because you should only invest about 10% of your net worth. Sometimes he would invest more than 10%, when he points out he could have “saved that or … done the smart thing and taken my girlfriend on vacation. Because the ROI on that’s a lot more attainable sometimes.”   One early foray in angel investing tainted by emotion   Eventually he got into the private investment realm. One company he can’t name was a technology company, and again, it was based somewhat on emotional attachment as well, while trying to remain objective. He started off asking the right questions:   What’s your burn rate?   How much capital have you spent already from initial investors?   Who is in the team that you have behind it?   What was the mission?   But there were a lot of red flags. The Avery would like to highlight for young investors is the idea of using intuition, not as a basis for investing, but as a protector. If your intuition tells you something isn’t right then there is usually a good reason behind that. With this company though, Avery didn’t listen and was kind of caught in the Wow factor brought on by the “incredible product” and the “incredible team” who are doing “incredible things”, and that they “couldn’t fail”. Some of the red flags of where money was being spent and their competitive analysis didn’t make sense. And their product, although it was pretty was really just a shell of what it could be. So, as a private investor, or just in the investment space, these were red flags that you really should look. So he lost the entire investment, and at his age at the time, and the amount of net worth he had, it was a big deal and a big investment.   Company loses every month, is transparent, but does it through nonsensical spending   It did not happen overnight. He had kept telling himself there could be a way for this company to do something good, that these people could be good, but it slowly fell apart. Anytime the company would do an investor update, normally monthly, but they were still losing money, and they were losing money consistently. There were no signs of turning it around. The great thing was, the founders were very open about their failings, but while the transparency was nice, their spending didn’t make sense. They were in a new market that none of the founders had been in before. So he watched it slowly fall apart.   Failed angel uses loss as a learning opportunity The good thing for Avery though was that he used it as a case study for himself. He stepped back and researched about where the company failed, learned about what they had done wrong, and he has used his takeaways as his guideline for investments since. He follows his guidelines to the T. And now, if his intuition warns him of red flags, his ears prick up very quickly.   Some lessons Investing should very much be based on objective decision making. You should never invest on an emotional basis.   Only invest about 10% of your net worth. Never more.   Listen to your intuition, not for investment advice, but for warning signs. If your intuition about an investment or company doesn’t feel right, there is usually a good reason.   The next unicorn is just around the corner. Wait for it. Avery passes on wisdom form Jason Calacanis, the angel investor from Silicon Valley, who says every seven years the next unicorn business will come along.   “If an investment feels wrong, listen to your gut, listen to the intuition you have or listen to the research that you’ve been able to compile, and if the company doesn’t make sense … don’t invest in it? Eventually, you’ll come across that company where everything just falls in place. And that might be the next unicorn business.” Avery Konda To the young investor Invest light, invest in multiple different pathways. Do simple low-risk investments such as Tax-Free Savings Account TFSAs or the equivalent in another country, or just learning about retirement funds and how to build them. Invest in the stock markets, but if you build that up, and let it sit, and you put little bit in over time, you could have a million dollars as a base for retirement. These are our building blocks and starting blocks. You can then take a small chunk of that, and learn how to invest in moderate and an aggressive portfolios. But never touch the retirement part.     Andrew’s takeaways Stay focused on getting the fundamentals down. Angel and VC investment is sexy, but it is the area of investing that is of the highest risk. It’s best to own 10 or 20 companies as an angel investor, rather than betting it all on one. When we are young, we don’t have enough money to diversify across many different companies.   Develop your own guidelines. Andrew likes Avery’s idea here. There are a lot of books out there you can read and get good guidelines, but the key thing is to build your own guidelines that fit what you believe.   There’s only one sure way to get rich in the stock market. Leave your money in there for 30–40 years. The book about Warren Buffett’s, titled The Snowball, is all about this how money accumulates through the magic of compound interest. Which is also what the book Andrew wrote for his nieces is about. How to Start Building Your Wealth Investing in the Stock Market.   Don’t make the investment mistake that a lot of people have made, and then end up wishing: “I should have started a lot earlier.”   Actionable advice   Meet with a mentor, meet with someone in the industry you’re looking at who can really guide you along the way. Andrew adds: If you’re not in an area where good mentors are accessible, read a book, and there are a lot out there for beginning investors, including his, see links below.      No. 1 goal for next the 12 months   Doing a lot of research and reading a lot more, meeting with mentors more often and getting more immersed into this world.   Parting words   Keep investing and invest when you can. Don’t wait for it.   You can also check out Andrew’s books   How to Start Building Your Wealth Investing in the Stock Market   My Worst Investment Ever   9 Valuation Mistakes and How to Avoid Them   Transform Your Business with Dr. Deming’s 14 Points Connect with Avery Konda LinkedIn Website Podcast Twitter Connect with Andrew Stotz astotz.com LinkedIn Facebook Instagram Twitter YouTube My Worst Investment Ever Podcast Further reading mentioned   Alice Schroeder (2009) The Snowball: Warren Buffett and the Business of Life