In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 17: There is Only One Way to See Things Rightly.

LEARNING: Consider the overall impact of investments rather than focusing on individual metrics.

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 17: There is Only One Way to See Things Rightly.

In this chapter, Larry enlightens us on the benefits of considering the overall impact of investments rather than focusing on individual metrics. This holistic approach empowers investors and advisors to make more informed decisions.

A common mistake that investors and even professional advisors often make is viewing an asset class’s returns and risk in isolation. Larry emphasizes this point by giving the example of Vanguard’s popular index funds, the largest index funds in their respective categories, to make us all more cautious and aware of the potential pitfalls of this approach.

From 1998 through 2022, the Vanguard 500 Index Fund (VFINX) returned 7.53% per annum, outperforming Vanguard’s Emerging Markets Index Fund (VEIEX), which returned 6.14% per annum. VFINX also experienced lower volatility of 15.7% versus 22.6% for VEIEX. The result was that VFINX produced a much higher Sharpe ratio (risk-adjusted return measure) of 0.43 versus 0.30 for VEIEX.

According to Larry, despite including an allocation to the lower returning and more volatile VEIEX, a portfolio of 90% VFINX/10% VEIEX, rebalanced annually, would have outperformed, returning 7.59%. And it did so while also producing the same Sharpe ratio of 0.43. Perhaps surprisingly, a 20% allocation to VEIEX would have done even better, returning 7.61% with a 0.43 Sharpe ratio.

Even a 30% allocation to VEIEX would have returned 7.59%, higher than the 7.53% return of VFINX (though the Sharpe ratio would have fallen slightly to 0.42 from 0.43). The portfolios that included an allocation to the lower-returning and more volatile emerging markets benefited from the imperfect correlation of returns (0.77) between the S&P 500 Index and the MSCI Emerging Markets Index.

Larry says there is only one right way to build a portfolio—by recognizing that the risk and return of any asset class by itself should be irrelevant. The only thing that should matter is considering how adding an asset class impacts the risk and return of the entire portfolio.

Further, Larry stresses the importance of global diversification, a strategy that can reassure and instill confidence in investors and advisors. He points out that if markets are efficient, all risky assets should have very similar risk-adjusted returns. This argument for broad global diversification, avoiding the home country bias, is a logical starting point for you to consider in your investment strategies.

• Enrich Your Future 01: The Determinants of the Risk and Return of Stocks and Bonds
• Enrich Your Future 02: How Markets Set Prices
• Enrich Your Future 03: Persistence of Performance: Athletes Versus Investment Managers
• Enrich Your Future 04: Why Is Persistent Outperformance So Hard to Find?
• Enrich Your Future 05: Great Companies Do Not Make High-Return Investments
• Enrich Your Future 06: Market Efficiency and the Case of Pete Rose
• Enrich Your Future 07: The Value of Security Analysis
• Enrich Your Future 08: High Economic Growth Doesn’t Always Mean High Stock Market Return
• Enrich Your Future 09: The Fed Model and the Money Illusion

• Enrich Your Future 10: You Won’t Beat the Market Even the Best Funds Don’t
• Enrich Your Future 11: Long-Term Outperformance Is Not Always Evidence of Skill
• Enrich Your Future 12: When Confronted With a Loser’s Game Do Not Play
• Enrich Your Future 13: Past Performance Is Not a Predictor of Future Performance
• Enrich Your Future 14: Stocks Are Risky No Matter How Long the Horizon
• Enrich Your Future 15: Individual Stocks Are Riskier Than You Believe
• Enrich Your Future 16: The Estimated Return Is Not Inevitable

Larry Swedroe was head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.

Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth

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In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 16: All Crystal Balls are Cloudy.

LEARNING: Estimated return is not always inevitable.

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 16: All Crystal Balls are Cloudy.

In this chapter, Larry illustrates why past returns are not crystal balls that predict future returns.

According to Larry, the problem with all forecasts that deal with estimations of probabilities is that people tend to think of them in a deterministic way. He says that as an investor, you should think about returns with the idea that distribution and estimate are only the middle points.

Your plan has to be prepared for either the good tail to show up, which is easy to deal with and usually will allow you to take chips off the table and reduce your risk because you’ll be well ahead of your goal. But if the bad tail shows up, you may have to either work longer, plan on saving more, or rebalance, which means buying stocks at a tough time.

To demonstrate the danger of sequence risk, Larry asks us to imagine it’s 1973, and stocks have returned 8% in real terms and 10% in nominal returns. We’ve had similar results over the next 50 years. Say an investor in that time frame decides to withdraw 7% yearly from their portfolio in real terms because they know with their clear crystal ball that they will get 8% for the next 50 years.

This means if they take out, say, $100,000 in the first year, and inflation is 3%, to keep their actual spending the same, they have to take out $103,000. According to Larry, this investor will be bankrupt within 10 years due to the sequence of returns, which is the order in which the returns occur, not the returns themselves.

As you can see in the table below, despite providing an 8.7% per annum real return over the 27 years, because the S&P 500 Index declined by more than 37% from January 1973 through December 1974, withdrawing an inflation-adjusted 7% per annum in the portfolio caused it to be depleted by the end of 1982—in just 10 years! (Note that from January 1973 through October 1974, when the bear market ended, the S&P 500 lost 48%.)

Larry says this example shows the danger of sequence risk and illustrates that the order of returns matters significantly in the decumulation phase because systematic withdrawals work like a dollar-cost averaging program in reverse—market declines are accentuated. This can cause principal loss, which the portfolio may never recover from.

In this case, the combination of the bear market and relatively high inflation caused the portfolio to shrink by almost 56% in the first two years. For the portfolio to be restored to its original $1 million level, the S&P 500 Index would have had to return 127% in 1975. And because of the inflation experienced, the amount to be withdrawn would have needed to increase from $70,000 to over $90,000. In such cases, the odds of outliving one’s assets significantly increase if you don’t adjust the plan (such as increasing savings, delaying retirement, or reducing the spending goal).

According to Larry, our investor made the mistake of treating the single-point estimate as if it were an inevitable outcome and not a single potential outcome within a broad spectrum of potential outcomes.

Another mistake our investor made was failing to consider that his investment experience might be different from the return over the entire period because of the impact of his withdrawals. In other words, the order of returns matters, not just the returns over the entire period.

Larry insists that since we live in a world with cloudy crystal balls, and all we can do is estimate returns, it is best to avoid treating a portfolio’s estimated return as inevitable. Consider the possible dispersion of likely returns and calculate the odds of successfully achieving the financial goal.

The goal is generally, though not always, defined as achieving and maintaining an acceptable lifestyle—not running out of money while still alive. In other words, the goal is not to retire with as much wealth as possible but to ensure you do not retire poor and risk running out of assets while still alive.

Larry says that forecasting the potential dispersion of returns is best accomplished through a Monte Carlo simulator—a computer simulation that uses random processes to model the impact of risk and uncertainty in financial and investment forecasting.

This tool allows one to see the probabilities of different possible outcomes of an investment strategy. The computer program will produce numerous random iterations (usually at least 1,000 and often many thousands), letting one see the odds of meeting a goal. Since thousands of iterations are run, one must think about probabilities instead of just one outcome.

Divide the Monte Carlo simulation based on your investment life into an accumulation phase when you’re working and making contributions and a distribution phase that begins when you retire and lasts as long as you live. The inputs into the Monte Carlo simulation are:

• The investment assumptions (expected returns, standard deviations, and correlations)
• Future deposits into the investment account
• The desired annual withdrawal amount
• The years the account must last

The output is summarized by assigning probabilities to the various investment outcomes.

The ultimate goal is to ensure you are comfortable with the projected likelihood of success—the odds you can withdraw sufficient funds from the portfolio each year and still achieve your financial goal.

In conclusion, Larry reminds investors that crystal balls will always be cloudy when forecasting the future, be it the weather or stock market returns. He quotes Alan Greenspan’s advice: “Learn everything you can, collect all the data, crunch all the numbers before making a prediction or a financial forecast. Even then, accept and understand that nobody can predict the future when people are involved.”

However, Larry adds that the inability to forecast the future accurately does not render forecasting useless. It just means we must accept this shortcoming and take it into account. Another essential investment advice is to never make the mistake of treating even the highly likely as if it were inevitable.

1. Didier Sornette, Why Stock Markets Crash (Princeton University Press 2002), p. 322.

• Enrich Your Future 01: The Determinants of the Risk and Return of Stocks and Bonds
• Enrich Your Future 02: How Markets Set Prices
• Enrich Your Future 03: Persistence of Performance: Athletes Versus Investment Managers
• Enrich Your Future 04: Why Is Persistent Outperformance So Hard to Find?

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 10: When Even the Best Aren’t Likely to Win the Game.

LEARNING: Refrain from the futile pursuit of trying to beat the market.

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 10: When Even the Best Aren’t Likely to Win the Game.

In this chapter, Larry illustrates why individual investors should refrain from the futile pursuit of trying to beat the market.

It seems logical to believe that if anyone could beat the market, it would be the pension plans of the largest U.S. companies. Larry lists a few reasons this is a reasonable assumption:

1. These pension plans control large sums of money. They have access to the best and brightest portfolio managers, each clamoring to manage the billions of dollars in these plans (and earn hefty fees). Pension plans can also invest with managers that most individuals don’t have access to because they don’t have sufficient assets to meet the minimums of these superstar managers.
2. Pension plans always hire managers with a track record of outperforming their benchmarks or, at the very least, matching them. Not the ones with a record of underperformance.
3. Additionally, pension plans will always choose the manager who makes an excellent presentation, explaining why they succeeded and would continue to succeed.
4. Many, if not the majority, of these pension plans hire professional consultants such as Frank Russell, SEI, and Goldman Sachs to help them perform due diligence in interviewing, screening, and ultimately selecting the very best of the best. These consultants have considered every conceivable screen to find the best fund managers, such as performance records, management tenure, depth of staff, consistency of performance (to make sure that a long-term record is not the result of one or two lucky years), performance in bear markets, consistency of implementation of strategy, turnover, costs, etc. It is unlikely that there is something that you or your financial advisor would think of that they had not already considered.
5. As individuals, we rarely have the luxury of personally interviewing money managers and performing as thorough a due diligence as these consultants. We generally do not have professionals helping us avoid mistakes in the process.
6. The fees they pay for active management are typically lower than the fees individual investors pay.

So, how have the pension plans done in their quest to find the few managers that will persistently beat their benchmark? The evidence is compelling that they should have “taken par.” For example, Richard Ennis’s 2020 study found that public pension plans underperformed their benchmark return by 0.99%, and the endowments underperformed by 1.59%. He also found that of the 46 public pension plans he studied, just one generated statistically significant alpha, compared to the 17 that generated statistically significant negative alphas.

According to the study, the likelihood of underperforming over a decade is 98%.

Another researcher, Charles Ellis, declared that active investing is a loser’s game that is possible to win, but the odds of doing so are so poor that it isn’t prudent to try. In Larry’s opinion, it would be imprudent for you to try to succeed if institutional investors, with far greater resources than you (or your broker or financial advisor), fail with great persistence. This should make you feel cautious and less likely to take unnecessary risks.

According to Larry, Wall Street needs and wants you to play the game of active investing. They need you to try to beat par. They know that your odds of success are so low that it is not in your interest to play. But they need you to play so that they (not you) make the most money. They make it by charging high fees for active management that persistently delivers poor performance.

Larry insists that the only logical reason to play the game of active investing is that you place a high entertainment value on the effort. For some people, there might be another reason—they enjoy the bragging rights if they win. Of course, you rarely, if ever, hear when they lose. Investing, however, was never meant to be exciting. Wall Street and the media created that myth. Instead, it is intended to provide you with the greatest odds of achieving your financial and life goals with the least risk. That is what differentiates investing from speculating (gambling).

1. Richard Ennis, Institutional Investment Strategy and Manager Choice: A Critique,” Journal of Portfolio Management (Fund Manager Selection, 2020, 46 (5).

• Enrich Your Future 01: The Determinants of the Risk and Return of Stocks and Bonds
• Enrich Your Future 02: How Markets Set Prices
• Enrich Your Future 03: Persistence of Performance: Athletes Versus Investment Managers
• Enrich Your Future 04: Why Is Persistent Outperformance So Hard to Find?
• Enrich Your Future 05: Great Companies Do Not Make High-Return Investments
• Enrich Your Future 06: Market Efficiency and the Case of Pete Rose
• Enrich Your Future 07: The Value of Security Analysis
• Enrich Your Future 08: High Economic Growth Doesn’t Always Mean High Stock Market Return
• Enrich Your Future 09: The Fed Model and the Money Illusion

Larry Swedroe was head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.

Larry is a prolific writer, regularly contributing to multiple outlets, including

BIO: Thomas Chua is the founder of SteadyCompounding.com, where he writes about business breakdowns, investment concepts, and timeless lessons from super investors.

STORY: Thomas invested in a company that had a gaming and e-commerce business. The gaming business was his main attraction, but over time, it started faltering. Unfortunately, Thomas held on until the stock went too low.

LEARNING: Have a proper sell thesis when it comes to investing, especially for smaller companies. Always write down why you should buy certain companies and what will cause you to sell them. When investing in small to mid-companies, ensure you’re adequately diversified.

Thomas Chua is the founder of SteadyCompounding.com, where he writes about business breakdowns, investment concepts, and timeless lessons from super investors.

Steady Compounding provides investing insights and business breakdowns every week to thousands of readers. You can sign up here for free.

Thomas started initiating a position in a company back in 2019. The company, Sea Limited, had two business arms, gaming and E-commerce. When Thomas first bought a position in this company, its market cap was about $14 billion. The gaming business, Garena, had a revenue figure of about 1.1 billion, and its operating income was 530 million, so the operating margins were high at about 50%. The company was growing at a 100% rate. The E-commerce business, Shopee, was also growing quickly but was unprofitable.

Thomas was attracted to the company’s stock due to Garena’s success. It had a decent valuation compared with what other gaming companies were trading at.

When COVID-19 hit, the stock took off. Everybody on Twitter was crazy about this company. Thomas got absorbed into the whole narrative that Sea Limited had become invincible. Like anything they touched, they turned into pure gold.

The thesis behind Sea Limited was that Garena would finance Shopee until it became the most dominant player in whichever market it entered. Shopee’s management got a bit hot-headed back then. They started to go everywhere, and it was doing well in revenue.

The problem with this thesis was that Garena started to falter. Much of its growth came from developing countries like Indonesia and India. At some point, India banned Garena’s Free Fire game. Also, as COVID-19 started to ease, the number of users on Garena began to reduce. The stock took a tumble. When Thomas first bought the company, the stock was over $30. Then it went all the way up to over $300. Now it went down to below $30.

• Have a proper sell thesis when it comes to investing, especially for smaller companies.
• Before investing, always write down why you should buy certain companies and what will cause you to sell them.
• When investing in small to mid-companies, ensure you’re adequately diversified.

• Be careful about just trying to build up a portfolio of small or medium-sized companies that you believe will be the next big thing because outcomes can be highly variable.
• When you feel that you need to sell, sell 10% first.

Start writing down why you buy and conduct a premortem to help you decide when to sell.

If you want to read about investing concepts in general and learn more about Thomas’ mistakes and lessons, check out his website.

Thomas’s number one goal for the next 12 months is to reach out to more people with a lot of sound investing principles.

[spp-transcript]

• LinkedIn
• Twitter
• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Kat Merchant is a Rugby World Cup Champion turned Lifestyle, Nutrition & Fitness Coach. Her mission is to show you how your weight-loss journey and making positive lifestyle and nutrition changes can catalyze improvement in EVERY aspect of your life.

STORY: Kat had to retire early from her successful rugby career. A few years after that, she went through an awful breakup. At the same time, the world went into a lockdown because of COVID-19. She decided to spend all her energy trying to get back control of her life. So, she overtrained. The more she worked out, the more she felt empty inside, even though her outside was transforming.

LEARNING: You can’t help people if you’re not in a good place. Be careful and choose how you spend your energy. People don’t care about you nearly as much as you think they do.

Kat Merchant is a Rugby World Cup Champion turned Lifestyle, Nutrition & Fitness Coach. Her mission is to show you how your weight-loss journey and making positive lifestyle and nutrition lifestyle changes can be the catalyst for improvement in EVERY aspect of your life.

From boosting your career performance to enhancing your personal relationships and mental well-being, turning sweat into success is what she lives for.

Through her bespoke coaching program, Elite-14, she provides tailored strategies, support, and accountability to help you achieve your health and wellness goals and, ultimately, lead a happier and more balanced life.

Kat had her very successful rugby career cut short due to too many concussions. She was just 28 years old at the time. A few years after that, she went through an awful breakup. At the same time, the world went into a lockdown because of COVID-19.

Kat didn’t know who she was anymore because she didn’t have rugby. She’d completely lost her confidence. Kat spent all her energy trying to regain control of her life. She wanted to look feminine and feel confident. So Kat overtrained and did exercises she didn’t like. For instance, Kat loved lifting, but because she was trying to get rid of her muscles, she did loads and loads of cardio. Kat got obsessed and weighed herself every day. The more she worked out, the more she felt empty inside, even though her outside was transforming.

• You can’t help people if you’re not in a good place.
• Be careful and choose how you spend your energy.
• Do things that are right for you.
• You don’t have to change yourself for anyone else. Change yourself for you if you want to.

• Your whole life’s mission should be to become more you.
• People don’t care about you nearly as much as you think they do.

If something’s an issue and you can change it, do it now before it becomes too late or before you go through rock bottom pain. Just change it.

Check Kat out on social media, where she shares valuable tips on how to lose fat, build muscle, stay motivated, and set yourself up for success. If you want to make that change and need support and accountability, drop Kat a message, and she’ll talk to you about her one-on-one program,

Kat’s number one goal for the next 12 months is to keep getting fitter, stronger, and confident. Business-wise, Kat wants to keep getting amazing clients and helping as many people as possible to smash it.

[spp-transcript]

• LinkedIn
• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Laurent Lequeu is a multi-asset investor dedicated to assisting High Net Worth Individuals and Retail Investors in achieving financial success through actionable investment insights derived from comprehensive global macro trends and meticulous bottom-up analysis.

STORY: Laurent thought he could outsmart all the hedge funds and the most brilliant investors by shorting NVIDIA before the first quarter results. His thesis was that the stock was an extended and overcrowded trade. However, people were still interested in the stock, so the price didn’t fall as Laurent expected. Consequently, he made a loss.

LEARNING: Sizing is crucial, especially in a short position. Apply risk management when investing. Accept that you’re going to be wrong.

Laurent Lequeu is a multi-asset investor dedicated to assisting High Net Worth Individuals and Retail Investors in achieving financial success through actionable investment insights derived from comprehensive global macro trends and meticulous bottom-up analysis.

Laurent is a global citizen with a mission to enhance financial literacy and empower individuals worldwide through education.

Not too long ago, Laurent thought he could outsmart all the hedge funds and the most brilliant investors by shorting NVIDIA before the first quarter results. His thesis was that the stock was an extended and overcrowded trade. However, people were still interested in the stock, so the price didn’t fall as Laurent expected. Consequently, he made a loss.

• Sizing is crucial, especially in a short position.
• Apply risk management when investing.

• You have to accept that you will be wrong, and when you get it wrong, be willing to exit, particularly in a short position.
• If you don’t admit you’re wrong, the market will admit it for you.

Before you enter the trades, know how much you can lose. Knowing what you can lose is more important than knowing what you can win. Also, admit that you’re wrong because there’s nothing wrong with being wrong. This is an industry where you must be right more often than wrong, but you will be wrong eventually.

Laurent recommends focusing on personal learning and personal development regarding financial literacy.

Laurent’s number one goal for the next 12 months is to be fully dedicated to his new company, which is focusing on improving financial literacy for everyone. He also wants to democratize and demystify macro investing.

[spp-transcript]

• LinkedIn
• Facebook
• Twitter
• YouTube 
• Substack

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Dr. David Kass received his Ph.D. in Business Economics from Harvard University and has published articles in corporate finance, industrial organization, and health economics. He currently teaches Advanced Financial Management.

STORY: In his early 20s, David invested $2,000 in a company giving out high dividends. Only after he invested did he realize that none of the senior executives in the company owned its shares. Soon enough, the stock went down to zero due to accounting fraud.

LEARNING: Only invest in a company if senior executives, especially the CEO, own a significant stake. The value of the CEO’s stock in his own company to his annual salary should be at least 3:1.

Dr. David Kass received his Ph.D. in Business Economics from Harvard University and has published articles in corporate finance, industrial organization, and health economics. He currently teaches Advanced Financial Management.

Before joining the Smith School faculty in 2004, he held senior positions with the Federal Government (Federal Trade Commission, General Accounting Office, Department of Defense, and the Bureau of Economic Analysis).

Dr. Kass has recently appeared on Bloomberg TV, CNBC, PBS Nightly Business Report, Maryland Public Television, Business News Network TV (Canada), FOX TV, Bloomberg Radio, Wharton Business Radio, KCBS Radio, American Public Media’s Marketplace Radio, and WYPR Radio (Baltimore), and has been quoted on numerous occasions by The Wall Street Journal, Bloomberg News, The New York Times and The Washington Post, where he has primarily discussed Warren Buffett, Berkshire Hathaway, the economy, and the stock market.

He has also launched a Smith School “Warren Buffett” blog. Dr. Kass has accompanied MBA students on trips to Omaha for private meetings with Warren Buffett and Finance Fellows to Berkshire Hathaway’s annual meetings.

Dr. Kass received a Smith School “Top 15% Teaching Award”, a “Distinguished Teaching Award (Top 10%),” and the prestigious “Krowe Teaching Award” on two occasions.

David was fortunate to start as an investor in the stock market at age 12, courtesy of his grandfather, who gave him a gift of five shares of a $20 stock. Since then, David started following the market.

Fast forward ten years or so, in his early 20s, when David was working and earning some money investing in the stock market. In 1969 the stock market was doing reasonably well, and a stock caught David’s attention. Back then, every day, the Wall Street Journal, New York Times, or Financial News would list the ten most active stocks by number of shares traded. Near the top of the list was this computer software company called Scientific Resources. It had a common and preferred stock. David noticed that the preferred stock was paying a 9% dividend yield.

David didn’t understand the relationship between risk and return then. The average stock in the stock market then had an average dividend yield of 3%. Cash dividends were higher because more companies back then did not buy back their shares. They’d return capital to shareholders through a cash dividend. So a stock paying 9% was a huge deal. David bought 100 shares at $20 per share. The $2,000 was all the money he had to invest at the time. Then the share price started going down daily.

Once a year, shareholders would be asked to vote under SEC rules. David received a proxy statement from the company and a ballot to vote for senior management and other issues that came up. When he read the report, he realized that none of the senior executives, from the Chairman of the Board to the Executive Vice President and all the listed eight executives, owned any company shares. David wondered why none of these senior executives had a stake in a company they were running. He learned why when the stock he bought at $20 finally sold at about $2 as it went down to zeros due to accounting fraud.

• Only invest in a company if senior executives, especially CEOs, own a significant stake.
• The value of the CEO’s stock in his own company to his annual salary should be at least 3:1. If the CEO is deriving most of his wealth or income from the company via his salary, then his interests are not aligned with shareholders.

• Alignment in the senior executives’ interests and of the shareholders is critical.

David recommends reading Berkshire Hathaway Letters to Shareholders to learn about investing in an easy-to-understand manner. He also encourages young people to start investing when they have some money, follow their company, stock, or fund, and experience the emotion of investing.

David’s number one goal for the next 12 months is to continue teaching at the Smith School of Business, University of Maryland, and to follow the current interesting, challenging global economic situation.

[spp-transcript]

• LinkedIn

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Christopher Panagiotu hosts the “CAPitalize Your Finances” podcast and is the original CAPitalizer: one who is obsessed with understanding what there is to know about their passion.

STORY: Chris was suckered into buying Ford and GameStop shares by the high dividends the companies were offering. However, both companies couldn’t afford to pay those dividends. Chris also started a business to steal customers from his father, whom he despised. The business lasted only seven months, and it was a complete failure.

LEARNING: When in doubt, read more. Acknowledge that you made a mistake, and move on. Never invest in a company because of a celebrity CEO, founder, or CFO.

Christopher Panagiotu hosts the “CAPitalize Your Finances” podcast and is the original CAPitalizer: one who is absolutely obsessed with profoundly understanding what there is to know about their passion.

Chris bought the Ford stock, which he admits was a lackluster stock. Alan Mulally had saved Boeing and left the company for Ford. Mulally was the reason Chris invested in Ford. The celebrity CEO turned it around, so Chris hung on to the stock, but for too long. Chris was suckered into Ford’s high dividend, but he soon realized that the company couldn’t afford to pay that dividend.

Another poor investment that Chris made was investing in GameStop. He was a gamer growing up, and in the 2000s, Gamestop was it. GameStop hooked Chris with the same thing that Ford did. Their dividend was huge, but they couldn’t afford it.

Aside from stocks, Chris’s worst investment ever includes a business that he started to steal customers from his father, whom he despised. The company lasted only seven months, and it was a complete failure.

• When in doubt, read more.
• Go with your gut, but verify.
• Humble yourself, acknowledge that you made a mistake, and move on.
• Never invest in a company because of a celebrity CEO, founder, or CFO.
• Don’t try to steal business out of spite.

• Trees don’t grow to the sky, so there are very few stocks that you can hold forever.
• If you’re not getting trust from your business or personal relationships, walk away and get it elsewhere.

Surround yourself with amazing people and level up with the people in your life.

If you want free content, head to Spotify and subscribe to CAPitalize Your Finances. Chris publishes new interviews with celebrities from all walks of life every Monday. They talk about capitalizing on your finances if you pursue that career. He also gives up-to-date, top-of-the-line research.

You can also buy Chris’s book on Amazon to learn more from him. If you want to follow Chris on social media, head to Instagram, LinkedIn, or Twitter.

Lastly, stay tuned because, on December 1, Chris will launch Capitalize Your Finances, his first-ever masterclass where he’ll share modules, tools, and tricks. He’ll also show you what he does for clients daily and how you can capitalize on your finances to the fullest of your abilities.

Christopher’s number one goal for the next 12 months is to be the best dad and husband. Professionally, to launch his online course and set the stage so that he can be the Benjamin Graham equivalent on the planning side for future generations.

[spp-transcript]

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• YouTube
• Website 
• Podcast
• Book

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
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• Threads
• Twitter
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• My Worst Investment Ever Podcast

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe; Ignorance is Bliss. Today they discuss two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this ninth series, they discuss mistake number 16: Do You Fail To See The Poison Inside the Shiny Apple? And mistake number 17: Do You Confuse Information With Knowledge?

LEARNING: Trust, but verify even when working with a financial advisor. Don’t confuse information with knowledge when buying individual stocks.

In today’s episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this ninth series, they discuss mistake number 16: Do You Fail To See The Poison Inside the Shiny Apple? And mistake number 17: Do You Confuse Information With Knowledge?

Missed out on previous mistakes? Check them out:

• ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?
• ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?
• ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?
• ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?
• ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing Wisely
• ISMS 25: Larry Swedroe – Admit Your Mistakes and Don’t Listen to Fake Experts
• ISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak Fallacy?
• ISMS 27: Larry Swedroe – Familiar Doesn’t Make It Safe and You’re Not Playing With the House’s Money

Investment brokers are notorious for enhancing their wallets at the expense of the consumer by disguising or hiding the fees they take. Brokers take advantage of the naivete of the average investor by hiding the high costs in shiny investment assets. For instance, they exploit investors’ lack of knowledge of the bond market through hidden markups and markdowns. They sell bonds with longer maturities to conceal markups and expose investors to price risk.

Investment brokers intentionally make an investment look complex because the more complicated it is, the harder it is for the investor to figure it out. However, always remember that it’s not your responsibility to figure it out. If your financial adviser is telling you something confusing, ask them to explain more clearly. You have that right to know. Trust but verify, is always the basic principle.

If something looks too good to be true, follow Larry’s rule of investing: always ask the advisor if they put their money where their mouth is. Ask to see their investment portfolio.

Information could be an opinion. On the other hand, knowledge is information that you can use to generate alpha or outperformance. When it comes to owning individual stocks, be careful not to confuse information with knowledge. Unless you have a significant advantage, like inside information, which is illegal to trade on, you shouldn’t buy individual stock. Never assume that you’re the only one with the knowledge.

Whenever a stockbroker tries to convince you to purchase an individual stock, ask them to give you the reasons why you should buy this stock. Also, ask if they genuinely believe they’re the only ones who know these reasons. Larry insists that unless you have some advantage, which you almost certainly don’t, never buy the stock just because the odds are great, you’ll underperform.

Larry Swedroe is head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.

Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth Management.

[spp-transcript]

• LinkedIn
• Twitter
• Website
• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your

Click here to get the PDF with all charts and graphs

• Higher inflation and higher nominal stock market returns, but only slightly higher real returns
• Slightly lower real LT bond return, near zero ST bond return

• Real stock returns up slightly
• Real LT bond returns down
• Real ST bond returns down to zero
• Gold outperformed ST bonds

• Inflation was down, and real US stock returns also down
• Real US LT bond returns up
• Nominal ST bond collapse, and real returns turn neg.
• Gold beats all

• Over the long-term, an investor has paid about 15x PE for about 6-7% after inflation US stock market return
• In the future, expect to pay about 20x PE for about 5% after inflation return

Click here to get the PDF with all charts and graphs

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Folarin Daniel Adeboye was a CEO and Co-Founder at F&K Savings. In 5 years of operations, F&K Savings was able to onboard over 35,000 users while processing over 4 million dollars in transaction volume.

STORY: Daniel and his partner’s desire to grow F&K Savings fast made them lose substantial money to an investment they blindly entered. This, and other managerial mistakes, caused the business to go under.

LEARNING: Don’t mix pleasure or family with business. Never forget why you got started.

Folarin Daniel Adeboye was a CEO and Co-Founder at F&K Savings. In 5 years of operations, F&K Savings was able to onboard over 35,000 users while processing over 4 million dollars in transaction volume. F&K stopped operations due to many factors, some of which were simple mistakes by the management team. Folarin Daniel is currently consulting and branding whilst still open to new opportunities in emerging markets. He’s a tech enthusiast, a financial and business consultant, and determined to help people make better business decisions.

During his university days, Daniel participated in so many activities in school. He was the Auditor General of his faculty for two years and did some internship jobs with some financial platforms. So Daniel had a basic knowledge of finances. But despite that, Daniel didn’t save any of his pocket money—and he received a lot from my parents. He was a reckless spender in school, and so when he wanted to start a business after university, he didn’t have enough money to start.

Nevertheless, Daniel went ahead with his business idea because there was a need for his services. He wanted to help young students prepare for their financial future. Daniel partnered with a Ghanaian friend of his, and together, they started F&K Savings.

This was at that point when startups were coming up and getting funded. The partners felt they could play in this space and do something incredible. And that was how it all started. The business started very well. They had to do everything manually because they were broke. They had to find ways to get things done. The partners got some people on board and shared the dream with them.

The business had remarkable growth within two years. The partners were getting deals from companies ready to partner with them. That’s where their problems started. Down the road, the partners forgot why they started the business. They now just wanted to grow as fast as other startups did. They badly needed to raise money because they were spending so much on hiring as they needed to build the best app. Funds meant to grow the brand were used to pay people and consulting services.

The partners started telling people that they were a full-fledged financial institution. They started spending more on setting up an office space. All this fast expansion started affecting the business. The partners had overexposed themselves.

An investment partner came to Daniel and his partner with a fantastic offer. And since they wanted to grow too fast, they jumped onto this offer because it would give them so much money. Two years after jumping into the proposal, Daniel and his partner lost a considerable percentage of their customers’ funds to this investment after it went down.

Another major issue the partners faced was that they didn’t have any frameworks in place when they got into the partnership. They simply trusted their abilities and trusted each other. They believed they were young and agile and could do whatever they wanted. So they left a lot of documentation and legal frameworks undone.

Daniel and his partner did well with customer acquisition and retention. They did well with the cash flow but messed up with basic business principles, which would have allowed them to stay afloat and continue to win the market.

• Don’t mix pleasure or family with business. Stick to basic business principles.
• Never forget why you got started. As long as you feel connected to what led to the idea/problem you’re going to solve, you’ll keep going.
• Understand your business environment.

• Taking care of clients’ money is a serious business requiring much trust. It’s different from handling your own money.

Trust yourself and nobody else.

[spp-transcript]

• LinkedIn

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
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• Instagram
• Threads
• Twitter
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• My Worst Investment Ever Podcast

BIO: Dana Anspach is the founder and CEO of Sensible Money, LLC, a firm specializing in retirement income planning. In 2022, Sensible Money ranked on the Inc. 5000 list of fastest-growing privately owned companies in the U.S.

STORY: Dana loved a fitness product so much that she decided to open her own franchise. Soon enough, she discovered running a business is so much different from loving its product. She sold the company at a loss.

LEARNING: Just because a product is great doesn’t mean the business will succeed. Instead of opening a second business, create a new revenue stream in your existing one.

Dana Anspach is the founder and CEO of Sensible Money, LLC, a firm specializing in retirement income planning. In 2022, Sensible Money ranked on the Inc. 5000 list of fastest-growing privately owned companies in the U.S.

She is the author of How to Plan for the Perfect Retirement, a lecture series on The Great Courses and Control Your Retirement Destiny, available on Amazon. She has hundreds of articles online and numerous educational webinars on YouTube. Because of her continuing contributions to financial literacy, Investopedia named her three times to the country’s Top 100 Financial Advisors.

Fitness has been part of Dana’s life. One of her best friends married a man who founded a fitness franchise called Rockbox Fitness. When her friend moved to North Carolina, Dana and her fiancee visited. They went to check out Rockbox, and it was terrific. This was the best workout she’d ever been to.

The couple inquired how much it costs to open a franchise, and they felt the franchise fee was reasonable. The price was about $40,000 at the time. The couple decided to open a franchise since there were none in the Phoenix area. They signed up to open four because of economies of scale—they wouldn’t profit from one.

They found a beautiful location a mile from their house, did the pre-sales, followed the program exactly, and opened their franchise in October 2019. They had the most successful opening that the franchise had had so far. Running the gyms turned out to be more exhausting than Dana had anticipated.

She thought it was all about handling the financials, payroll, and stuff that could be done in the background. But the gym required her to be at the forefront too. Not only that, they were open for less than six months when COVID hit. They had to shut down for eight weeks. They reopened for about four weeks and then got shut down again. At that point, Dana decided this wasn’t going to work.

Eventually, they found a buyer for the franchise. The sale was substantially less than what the couple had put into it. Getting the franchise open cost about $400,000; they sold it for just $100,000.

• Loving a product and being thrilled with the daily running of the business and making it profitable are two different things.
• Just because a product is great doesn’t mean the business will be a success.

• Instead of opening a second business, create a new revenue stream in your existing one and make sure it’s five times higher.

If you have a financial planner, run your investment ideas by them and listen to them.

When it comes to investing, Dana recommends her go-to books, The Four Pillars of Investing, The Behavior Gap, and The Psychology of Money. She also recommends visiting her website Sensible Money which has a learning page with all kinds of resources you can download. She also hosts a free webinar about every six weeks.

Dana’s number one goal for the next 12 months is to focus on the next growth phase for the business.

[spp-transcript]

• LinkedIn
• Twitter
• YouTube
• Website
• Podcast
• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss three chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this eighth episode, they discuss mistake number 13: Do you confuse the familiar with the safe? Mistake number 14: Do you believe you’re playing with the house’s money? And mistake number 15: Do you let friendship influence your choice of investment advisors?

LEARNING: Just because you’re familiar with something doesn’t make it less risky. Diversify globally to get the real benefits of diversification. Your financial advisor is not your friend; it’s a business. Value and protect your investment gains as much as you value and protect the principle.

In today’s episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this eighth episode, they discuss mistake number 13: Do you confuse the familiar with the safe? Mistake number 14: Do you believe you’re playing with the house’s money? And mistake number 15: Do you let friendship influence your choice of investment advisors?

Missed out on previous mistakes? Check them out:

• ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?
• ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?
• ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?
• ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?
• ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing Wisely
• ISMS 25: Larry Swedroe – Admit Your Mistakes and Don’t Listen to Fake Experts
• ISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak Fallacy?

People tend to double up on investments they’re familiar with compared to new companies. But according to Larry, knowing about something doesn’t make it safer. When it comes to risk, people think of something they’re familiar with as safer. When they’re less familiar with it, it becomes more uncertain.

People over-allocate to their domestic stock market and underweight international stocks. This bias causes investors to be overconfident and take too much risk by concentrating on assets they’re most familiar with.

To avoid this bias, the guiding principle is that just because you’re familiar with something doesn’t make it less risky. Diversify globally to get the real benefits of diversification.

To explain this mistake, Larry uses the story of the man in the green bathrobe. In the story, a newlywed couple goes to Las Vegas on their honeymoon. Being intelligent, they set aside $1,000 as their gambling money for their week in Las Vegas.

Unfortunately, by the end of the second night, they’d blown the entire $1,000. At the end of that night, the husband was getting ready to go to bed when he saw a little shiny object on the dresser. He picked it up, and it was a $5 chip. The man saw this as a sign to go to a roulette wheel and use that chip. So he quietly left the room and took a cab to the nearest local casino.

The man put the $5 chip on the number 17 because that was the number on the chip. At 35 to-one odds, he won. He played again and won. The man won about five times and now had $6.1 million.

A huge crowd had gathered around the table to watch the man play again. The roulette dealer spun the wheel, and it looked like it would drop on 17. Then it fell over the next number. The man lost all his winnings. Because he was in such a hurry when he left his room, the man was still wearing the hotel’s green bathrobe—in which he had to walk back to his hotel and explain to his wife what’s happened. He tried to sneak in, but his wife was awake. He told her that he’d gone to the casino. She asked how it went, and he said he’d lost five bucks.

The man’s problem was thinking that he didn’t lose $6 million because it wasn’t his money but the house’s money. Now, if someone had given him a check for $6 million, there’s no way he would have bet it on the roulette wheel.

When it comes to investing, Larry says that most people are lucky to find stock at low prices. But when the stocks become winners, they don’t see the gains made as their money. So majority never feel the need to protect their profits and end up losing them.

Many investors will often hire financial advisors who are their friends. Their decision is not based on facts but on emotion. They’ll continue depending on the financial advisor even when their investments perform poorly. They won’t fire them because they’re friends. The truth is that they’re only your friend because they’re making commissions or other fees off of you. Friendships have caused people so much of their fortunes unnecessarily.

Larry Swedroe is head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.

Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth Management.

[spp-transcript]

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• How to Start Building Your Wealth Investing in the Stock Market
• My Worst Investment Ever
• 9 Valuation Mistakes and How to Avoid...

BIO: Andrew Pek is a co-founder of Amiko XR Inc., a groundbreaking company that leverages VR and AI technologies to create immersive, personalized learning experiences available 24/7.

STORY: Andrew shared his worst investment ever story on episode 376: Build Revenue in Your Startup Before You Build Up Cost. Today, he discusses his new business.

LEARNING: Learning can be more immersive, sparking curiosity and excitement.

Andrew Pek is a co-founder of Amiko XR Inc., a groundbreaking company that leverages VR and AI technologies to create immersive, personalized learning experiences available 24/7. He is a recognized C-Suite advisor on innovation and human transformation. Andrew’s insights on leadership and design thinking have been featured in prominent media outlets such as ABC, NBC, Forbes, and Entrepreneur.

Andrew shared his worst investment ever story on episode 376: Build Revenue in Your Startup Before You Build Up Cost. Today, he discusses his new business.

Much of Andrew’s work has involved teaching leadership, innovation, product design, and business development skills. He’s always seeking new ways that technology can engage people to absorb learning and become more engaged—not just a boring, traditional training program, but something that would really involve learners in a more immersive way, sparking their curiosity and excitement.

Andrew and his team successfully prototyped a solution in which learners get an immersive learning experience through a headset and talk to a coach avatar who can teach just about anything.

So, if you’re interested in finance, investing, sales, leadership, career preparation, and just about any topic matter, you’ll find it on the app. This includes job-related skills, general management and leadership courses, and personal development topics.

You can obtain information at your fingertips through generative AI and large language models. What sets the application apart is the combination of artificial intelligence and a VR experience. Through simulations, role plays, or evaluation, learners can master any particular topic or get support in any particular challenge. Unlike mobile device applications, VR experiences significantly reduce distractions, leading to more focused and practical engagement.

The solution is also unique because it is curated and configured to the expert level. You teach the avatar, and the avatar then teaches others. It ingests your content to become a master in your subject and attain the same level of intelligence as you.

Learners who use the solution talk to someone as if they’re talking to you in an interactive, dynamic environment. If something is unclear or learners want to probe further or even get additional guidance or resources, the solution will facilitate that. Learners get videos and information transcripts and don’t have to take notes.

Andrew’s solution is a smart choice for mid-to-large-sized corporations or even smaller corporations that can’t afford expensive training or trainers. It’s a cost-effective solution for those looking to provide any training, such as onboarding new employees. Employees can use the application on an ongoing basis to access courses specific to their job or general management leadership courses, just like they’d access a course library, but at the convenience of their homes.

Most people nowadays are spending time at home or in the office. With this solution, they don’t have to worry about entering the physical space for an immersive learning experience. Unlike gaming, they can do that sitting on their couch without moving around, so you don’t have to worry about getting dizzy when using VR. It’s a much more stationary experience.

If you’re interested in understanding how Andrew’s solution can help your organization, check out amikoxr.com or contact Andrew at Andrewp@amikoxr.com.

[spp-transcript]

• LinkedIn
• Twitter
• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Manisha Thakor has worked in financial services for over 30 years, focusing on women’s economic empowerment.

STORY: From a very young age, Manisha equated her self-worth to her achievements. This led her to overwork herself almost to death—twice.

LEARNING: Don’t underestimate the incredible power of the net present value of your future earnings. Invest concurrently in your financial health and your emotional wealth.

Manisha Thakor has worked in financial services for over 30 years with a focus on women’s economic empowerment. A nationally recognized thought leader around the issues of financial literacy and education, Manisha has been featured in national media such as The Wall Street Journal, The New York Times, Barron’s, CNN, and CNBC. She has written two personal finance books for women in their 20s and 30s. Her latest book MoneyZen: The Secret to Finding Your “Enough,” comes out on August 8th, 2023. Manisha earned her MBA from Harvard Business School and her BA from Wellesley College. She also holds the CFA and CFP designations.

Growing up, Manisha lived in a small town in Indiana. Being mixed race, she got picked on a lot, particularly in grades four, five, and six. Those formative years put her on the search for a sense of belonging. The cheerleaders and football players didn’t like Manisha, but the teachers did because she worked hard and got good grades. So Manisha started getting endorphin high from teachers’ approvals and getting good grades. She kept studying and going after those grades because they made her feel whole and worth something in a way that she didn’t feel socially.

When Manisha entered finance, she realized there were no teachers or grades, just bosses and money. And so, she developed a profoundly toxic relationship with work, money, success, and accomplishments. Manisha had come to identify her self-worth in her school years with grades. In her professional years, Manisha placed her self-worth in her net worth. Because Manisha was so locked into her identity and sense of self-worth as her achievements at work, she didn’t have friends or hobbies. She worked seven days a week and traveled 40 weeks a year for a decade.

One day she was sitting on a plane and had tears streaming down her face. She had piles of paperwork on her small tray that she was trying to work on. All Manisha could think of was that she had no idea how she would make it through the next 48 hours of meetings because she had no energy left.

A lady sitting across from Manisha came and gave her this look like she knew what she was going through. The lady opened this expensive-looking silver pill case and pulled out three yellow pills. She handed them to Manisha and told her to take just half a pill. Manisha grabbed the pills like candy. She didn’t even ask what she was putting in her mouth. Turns out it was Valium, and it helped. Manisha was able to calm down. She took another pill the following day and made it through her meetings.

Manisha kept this life going until she had two near-death experiences. Both times Manisha wished she’d spent more time with family, that she’d not missed her grandmother’s funeral or the many weddings because she had meetings that were so important.

The second near-death experience was her big wake-up call. Manisha had reached this point where she could only stay awake for about five to six hours daily. She found out her body was attacking itself. It took Manisha nine months to get her energy back. During this period, she realized that she had spent the entirety of her adult life on this 24/7 hamster wheel of hustle culture. Manisha was so driven by this mental model of self-worth equals net worth that she didn’t understand the power of the net present value of her future earnings.

• What we have that’s entirely our own, and we have enormous control over, is our brain and how we use it to generate our future income.
• Don’t underestimate the incredible power of the net present value of your future earnings. Always protect it.
• Investing concurrently in your financial health and emotional wealth is the secret formula to maximizing the NPV of your potential future earning stream.

• Don’t be internally driven to work seven days a week. Get away from that.
• When pressure is on, step back and take time.

Manisha’s number one goal for the next 12 months is to achieve less.

[spp-transcript]

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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
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• My Worst Investment Ever Podcast

BIO: Dr. Richard Smith – Berkeley Mathematician and Ph.D. in System Science – is a fintech entrepreneur, the CEO of The Foundation for the Study of Cycles, and cofounder of the investment tool Finiac.

STORY: Richard invested his entire live savings ($10,000), and in 18 months, it had grown to $40,000. Then suddenly, the investment went down to $30,000. He believed it would go up again, so he held on. Then it went further down to $20,000. Richard kept waiting. Eventually, it went to $10,000, and that’s when he panicked and took out all his money.

LEARNING: Integrate trailing stops. It’s hard to do the right thing in the markets.

Dr. Richard Smith – Berkeley Mathematician and Ph.D. in System Science – is a fintech entrepreneur, the CEO of The Foundation for the Study of Cycles, and cofounder of the investment tool Finiac.

Richard has built a reputation as “The Doctor of Uncertainty” amongst his academic peers and has helped government agencies and Fortune 500 companies make sense of complex data sets.

With his background in mathematical theories of uncertainty combined with his investing and trading experience, he is a regular speaker and lecturer and particularly enjoys opportunities to share his knowledge and help others gain an edge in the market.

In 1998/99, during the Dotcom boom, Richard had just started investing while in graduate school. In about 18 months, he’d managed to get his investment account up from $10,000 (his life savings at the time) to $40,000. Richard was over the moon and felt like a real expert investor.

Then in March of 2000, all of a sudden, his $40,000 fell to $30,000 practically overnight. Though a significant loss, Richard decided to hold onto the investment and wait until it returned to $35,000. But instead, it went down to $20,000. Again, he said he’d get out when it gets back to $25,000. Finally, it went down to $10,000, and at that point, Richard panicked and got all his money out of the market.

• Integrate trailing stops.
• It’s hard to do the right thing in the markets.

• As a new investor, protect your capital first. This allows you to stay in the game, keep learning, and win over time.

Get your head out of the mass media. The opportunity isn’t there if everybody’s looking in the same place. Be willing to look off the beaten path.

Richard’s number one goal for the next 12 months is to make his business cash flow positive.

[spp-transcript]

• LinkedIn
• Twitter
• YouTube
• Blog
• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: David Perry was in the video game industry for over 30 years, making hits like The Matrix, Aladdin, The Terminator, and Earthworm Jim. He sold his last company to Sony PlayStation and the one before that to Atari. He’s now building a startup in e-Commerce called Carro.

STORY: One of David’s top former employees started a VR company and invited him to invest. Though David believed in this employee, experiencing motion sickness while trying out the VR games made him not invest in what became a multi-billion dollar company.

LEARNING: When you really believe in somebody, go ahead and support them. Bet on the person, not the idea.

David Perry was in the video game industry for over 30 years, making hits like The Matrix, Aladdin, The Terminator, and Earthworm Jim. He sold his last company to Sony PlayStation and the one before that to Atari. He’s now building a startup in e-Commerce called Carro. If you email hello@getcarro.com and mention My Worst Investment Ever podcast, you’ll get VIP personal support.

David firmly believed that someday, every game ever made would be available on every device everywhere in the world instantly. And so, if that will eventually exist, why not start building it now?

With that thought in mind, David began to build that technology and had some massive breakthroughs. He demonstrated that you could play a game from the cloud with the same feeling as playing with a console on your table. That caused people’s heads to pop off. Samsung wanted to work with David to power its video game strategy, and Sony bought the company.

David’s employees made significant amounts of money from the company’s success and eventual sale. One of the employees decided to leave and start his own company using the money he had just made from the exit to Sony. As a CEO, David was committed to working with PlayStation. So he was watching this former employee build his own company.

The employee contacted David and asked if he’d be interested in investing in his new company. David decided to check out the company. The guy demonstrated what he was working on, which was virtual reality. The company was called Oculus. David sat down and put on the VR headset. Then he started getting motion sickness because he was moving all over the place. He couldn’t wait to finish the demo.

David was initially very interested in investing in the company because he genuinely believed in his former employee. But after the motion sickness, he needed time to think about it. He researched and read some military papers on how the military had tried their hardest to stop motion sickness but had found no solution as it’s biological. David decided to pass on the opportunity to be a founding Oculus investor.

The company was a huge success and was bought for billions of dollars. David would have made hundreds of millions of dollars had he invested in the company.

• When you really believe in somebody, go ahead and support them.
• Bet on the person, not the idea.

• We get stuck into frames of reference, and sometimes we get beholden to those references, and we can’t think beyond them.

If there’s something wrong or something missing in an idea or business you want to invest in, ask yourself if there’s anything you can do to help. Can you see a way out of this? If yes, then maybe that would be the thing that unlocks you.

Whatever you want to learn, there is somebody on planet Earth that’s amazing at it and is willing to teach you. Your job is to find that person and do whatever you must to get in a room with them and learn.

David’s number one goal for the next 12 months is to grow his company and get it to a point where it’s crystal clear what they’re doing and why they’re doing it.

[spp-transcript]

• LinkedIn
• Twitter
• Blog
• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

• David Perry, David Perry on Game Design: A Brainstorming ToolBox
• Ken Robinson and Lou Aronica, Finding Your Element: How to Discover Your Talents and Passions and Transform Your Life.

BIO: Tom Wall holds a Ph.D. in Retirement Income Planning, with original research on Whole Life as a Fixed Income Alternative under the advisement of industry thought leaders: Wade Pfau, Michael Finke, and Stephen Parrish.

STORY: Tom got pulled into the Bitcoin frenzy in 2018 and made huge gains. He had also invested in an NFT performing really well and made 15X his investment. Tom took his investment from the NFT and invested the money in Bitcoin. Then Bitcoin’s value dropped, and Tom lost almost half of his investment.

LEARNING: If you make some money, sell, or at least take half off the table. Have a piece of your portfolio that is continually growing but also accessible.

Tom Wall holds a Ph.D. in Retirement Income Planning, with original research on Whole Life as a Fixed Income Alternative under the advisement of industry thought leaders: Wade Pfau, Michael Finke, and Stephen Parrish. His focus on academics and selling from a place of integrity comes from a 20-year career of positioning whole life insurance and competing against its alternatives.

Recently he published Permission to Spend: Maximize Your Retirement with the Best-Kept Secret in Personal Finance.

Starting in college as an award-winning advisor with Northwestern Mutual before moving his practice to MassMutual, he subsequently grew his career in prominent home office sales and marketing leadership roles.

Tom has been a well-known storyteller at nationwide perennial company conferences and firm meetings. Tom now coaches and consults with financial advisors, hosts the Whole Life Masterminds study group, and authors multiple original thought leadership pieces, books, and other content.

In 2017/18, Tom’s friends started texting him about this thing called Bitcoin. He had heard about it before but dismissed it because he couldn’t find it anywhere or buy it. But when his friends started talking about it, he got interested and decided to invest in it. At the time, Bitcoin was at $2,000. Tom invested $10,000, and in just a year, Bitcoin’s value was $20,000. Tom made some really good money.

Then the NFT craze started, and there was one in particular that Tom believed in, and he bought it. The NFT went up about 15 times his investment. Tom was pleased. Then he decided to move the NFT winnings to Bitcoin, but unfortunately, Bitcoin had started going down at the time. Tom lost over half the value of his gains.

• If you make some money, sell, or at least take half off the table.
• A bird in the hand is absolutely worth two in the bush.
• Have a piece of your portfolio that is continually growing but also accessible.

• If you make some gains, take 50% off the table, and keep the other 50%.

Tom’s number one goal for the next 12 months is to add value to as many people as possible and be the voice of reason in the insurance space.

[spp-transcript]

• LinkedIn
• Blog
• Website 

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Rick Warner is a personal development coach, mentor, and highly respected real estate broker based in California. Rick’s story is one of triumph over adversity.

STORY: Rick took his money from well-performing stocks and decided to time the market. After much waiting, he came across the First Republic Bank’s stock, whose share price had fallen from $300 to $30. He bought 700 shares at $29 each. The price kept falling. Rick bought 700 more shares at $13, hoping the price would turn around, but it didn’t. The bank was bought out, and the shares went to zero.

LEARNING: Do a lot of research before investing. Banks are very volatile, so you must be careful when investing in them.

Rick Warner is a personal development coach, mentor, and highly respected real estate broker based in California. Rick’s story is one of triumph over adversity. At 20 years old, he found himself homeless and addicted to drugs. But with the help of a supportive community, he was able to turn his life around. Now, over 30 years later, Rick remains committed to personal growth and helping others achieve success. He has developed the Navigator program, a groundbreaking approach to personal productivity and purposeful living.

Rick had made some pretty good investments in stocks about three years ago. Then he felt things would go sideways, so he took all his money off the table. Rick’s plan was to wait and time when the market was right to reinvest. He waited and waited, but the market kept going up and stayed up, so Rick couldn’t get in until recently with the banking crisis.

First Republic Bank’s stock, previously $300, had gone down to $30. He figured this was what he’d been waiting for. Rick bought 700 shares for $29 each, and by the end of that day, it had gone down to $21.

The stock price kept falling; at some point, it was $13. Rick figured this was a big well-known bank with a good reputation and had done lots of business, so the stock price would eventually turn around. With this in mind, he decided to double down and bought another 700 shares. Three weeks later, the share price was $3. JP Morgan later bought the bank, and the shares went to zero.

• Do a lot of research before investing.

• When investing in banks, you invest in a highly speculative asset.
• Banks are very volatile, so you must be careful when investing in them.
• If you invest in something and it starts to go down, and you never thought it would, there’s nothing wrong with getting out. You can always get in again at another point.

Avail yourself to the people that have been around before you and be willing to ask them for help instead of doing everything yourself. Learn from other people’s mistakes instead of waiting to make the mistakes yourself.

Rick recommends reading The Four Agreements, a simple guide on personal development. You can also look Rick up on his website if you want to just have a conversation or if you need mentorship.

Rick’s number one goal for the next 12 months is to make his real estate business location independent so he can spend more time in his coaching and mentoring program.

[spp-transcript]

• LinkedIn
• Facebook
• Instagram
• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Mohit Tater is a serial entrepreneur, investor, and consultant. He founded BlackBook Investments and quickly became a recognized expert investor in online businesses and digital assets.

STORY: Mohit got enticed by the numbers his favorite pizza shop was turning and decided to start his own shop. Since he and his partner had no experience in the F&B industry, they were to receive full support from the franchise owner. Unfortunately, the owner went into a coma before the shop opened. The partners tried all they could, but the shop eventually failed.

LEARNING: Don’t venture into an industry you don’t understand and chase high returns. You don’t know what you’re getting into until you are in it.

Mohit Tater is a serial entrepreneur, investor, and consultant. He founded BlackBook Investments and quickly became a recognized expert investor in online businesses and digital assets. Mohit has extensive experience in SEO, content marketing, social media marketing, and conversion rate optimization. He has worked closely with brands such as eBay, Groupon, Microsoft, Nokia, and many more on their digital marketing strategies. Today, Mohit lives his passion as an investor, growing online businesses for himself and his clients.

Mohit would visit a pizza place in his city every so often. One day he casually talked to the manager about how many pizzas they sell daily, what the operations are like, how much it costs to start a pizza shop like that one, etc. The numbers the manager shared with Mohit were very lucrative and enticing.

Mohit set up a meeting with the owner of the franchise. He seemed very positive, and the numbers looked good. The guy had the whole business plan mapped out for expansion. Mohit and his business partner decided to open a pizza shop with the manager’s support, who would hire the team for them and ensure that the operations ran smoothly. Mohit and his partner had no experience in this business. Still, they believed they’d learn eventually and hopefully turn around and make a profit.

The partners spent $100,000 setting up the shop, and just before it was about to open, the franchise owner got a stroke and went into a coma. This guy was the brains behind branding, marketing, operations, and everything, basically. Without him, Mohit and his partner were like sitting ducks. They had no option but to continue with the plan because they had spent so much money building it.

The team the franchise owner had hired came and tried to run the pizza shop as efficiently as possible. But they were not turning a profit. The partners were just putting more money every month into sustaining and still not breaking even. Both partners had no experience with the F&B industry, and even though they tried all they could, the shop eventually failed.

• Don’t venture into an industry you don’t understand and chase high returns because it’s not as easy as it looks from the outside.
• Unless you have good experience in an industry, don’t bother putting your money at stake. Learn about it first.
• You don’t know what you’re getting into until you are in it.
• You have to dedicate time to your business.

• Get into a business knowing that unexpected things are going to happen.
• You think you can control all the variables, but you can’t.
• Only buy a company you understand where you can add value to its core.

Try and stick to what you know and what’s already working for you.

Mohit recommends you visit his website, BlackBook Investments, and click on the investor questionnaire to see if you’re a good fit to invest in online businesses.

Mohit’s number one goal for the next 12 months is to be at a point where he’s not needed in his business and his team can still handle everything.

[spp-transcript]

• LinkedIn
• Twitter
• Instagram
• Website 

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: As the owner of Apollo Assets Co Ltd, Mr. Vorathep Srikuruwal is a prominent figure in the real estate industry of Thailand. He has established a track record and extensive experience as a visionary leader in this field.

STORY: Vorathep came across a bank property he thought would be a good investment. He bought it for half its value and even got the bank to give him a loan. His biggest mistake was never visiting the property in person before buying. If he had, he’d have seen its terrible state.

LEARNING: If you’re thinking of buying anything, whether cheap or expensive, first go there, and have a look. Just because it’s cheap doesn’t mean you have to buy it.

As the owner of Apollo Assets Co Ltd, Mr. Vorathep Srikuruwal is a prominent figure in the real estate industry of Thailand. He has established a track record and extensive experience as a visionary leader in this field.

His business acumen has enabled Apollo Assets Co Ltd to reach great heights, placing it among the leading players in the Thai real estate industry.

Having earned a reputation for excellence, innovation, and integrity, Vorathep continues to contribute to the growth and development of the Thai real estate market.

He is happy to offer free real estate consultancy, whether buying /selling/renting/leasing or prelim valuations of the assets in Bangkok and the rest of Thailand.

Vorathep started his real estate business in 2007 as a family business. About 10 years later, after building about seven projects, Vorathep saw an opportunity to buy two commercial shophouses in Chiang Mai, Thailand. The building was on the main road, just two minutes from one of the CBDs. The property belonged to a bank.

Vorathep did a lot of homework before investing in the property. He checked the location and everything nearby (using Google Maps). He also used his knowledge of Chiang Mai to evaluate the property. The market valuation for the shophouses was $400,000. The property was roughly 800 square meters in size. The four-story building had a rooftop that could be converted into a lovely boutique hotel, office, or restaurant.

The real estate mogul told the bank he’d be interested in getting the property for $200,000 because it was a non-performing asset. Three months later, the bank called and said he could have the property for $200,000. He just had to pay 1% of the value ($2,000), and the bank would provide him a loan for the property for another eight years. The deal seemed too good to be true. Vorathep did the math and saw that if he rented the property, he’d get about $4,000, pay $2,500 to the bank, and make a profit of $1,500 monthly. It was a good deal, so he accepted it.

Vorathep put a for rent sign on the building, but six months later, he had no tenants. This shocked him because the building was in a decent location with a bank, shops, hotels, and a university nearby. After two years of paying the bank loan out of pocket, Vorathep decided to do something because the building was still not bringing in any income. He visited the building for the first time. Yes, Vorathep didn’t do a property visit before paying for it. He had relied on the photos the bank had sent him and Google Maps.

The building was in a horrible state; no wonder nobody wanted to rent it. A year later, Vorathep flew to Chiang Mai after the COVID lockdowns. He went to the building next door and spoke with the owners, mother and son. He offered to sell the building to them. They were interested in buying it for $150,000, but Vorathep got them to pay $220,000. He didn’t make any profit from that sale.

• If you’re thinking of buying anything, whether it’s cheap or expensive, first go there, and have a look. Don’t judge the book by the cover.

• Just because it’s cheap doesn’t mean you have to buy it.
• Be very careful when purchasing bank properties.

Vorathep’s number one goal for the next 12 months is to take more care of himself and run the 21km half marathon.

[spp-transcript]

• LinkedIn
• Facebook
• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Phil Bak is the CEO of Armada ETFs, a REIT-specialty asset manager that delivers customized solutions to REIT investors through ETFs, SMAs, and proprietary AI and machine learning REIT valuation models.

STORY: Phil got into baseball cards when he was 14. Rookie Greg Jeffries became the hype one year and was poised to be the next big thing. Phil bought the hype, sold all his cards, and invested in Jeffries’ cards. He believed cards would be worth $40 to $50 a piece in just a few years. It never happened because Jeffries’ career didn’t pan out, and the entire baseball card bubble collapsed.

LEARNING: Be slow to jump onto bandwagons. Expect the unexpected, be prepared, and have a backup plan. Be diversified in as many different ways as possible.

Phil Bak is the CEO of Armada ETFs, a REIT-specialty asset manager that delivers customized solutions to REIT investors through ETFs, SMAs, and proprietary AI and machine learning REIT valuation models. Phil has previously served as the Founder/CEO of Exponential ETFs (acquired by Tidal Financial Group), Chief Investment Officer at Signal Advisors, and Managing Director at the New York Stock Exchange.

Phil is the author of two patents on innovative ETF structures and has led market structure enhancements that have become industry standard. Phil has been featured in top-tier media outlets such as the Wall Street Journal, Bloomberg, CNBC, Financial Times, and Reuters. Phil hosts The Phil Bak Podcast and writes regularly on Substack.

At 14, Phil got interested in baseball cards after accompanying his brother to card shows. He saved all the money he made from his summer jobs and bought Roberto Clemente cards, which were like a blue chip. With time he also bought other cards.

The following year, a young guy was coming up, Greg Jeffries, who was poised to be the next big thing. Phil bought the hype. He sold all his cards and decided to invest in just this one card. He got himself a bounty of 25-30 Greg Jeffries cards.

Phil believed this guy would be the next big superstar, and his cards would be worth $40 to $50 a piece in just a couple of years. It never happened because Jeffries’ career didn’t pan out, and the entire baseball card bubble collapsed. Phil still has a stack of Greg Jeffries rookie cards that are literally worthless somewhere in his closet.

• Be slow to jump onto bandwagons.
• Expect the unexpected, be prepared, and have a backup plan.
• Be diversified in as many different ways as possible.

• There are many risks around the corner that you only know about once you get some experience. So be very careful, mindful, and try to learn as much as possible, but don’t put all your money down.

The worst time to invest in anything is after a big run because there’s always an element of mean reversion and cyclicalities. Never chase the hype, be patient. If you’ve missed it, wait for the next opportunity. There’s always there’s another opportunity coming.

Phil recommends learning from untraditional channels such as podcasts (like My Worst Investment Ever podcast), books, blogs, and substacks. You’ll learn more and faster from such media.

Phil’s number one goal for the next 12 months is to finish the series A round of capital for his company and ensure he can execute his plan over the next three years.

[spp-transcript]

• LinkedIn
• Twitter
• Website 
• Blog
• Podcast

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Jack D. Schwager is a recognized industry expert on futures and hedge funds and the author of the iconic Market Wizards series, in which he interviewed about 70 trading legends of our time.

STORY: Jack stayed too long in a position where his short was the strongest and his long the weakest, even though he knew this wasn’t the way to invest.

LEARNING: Never stay in a position that violates something that you believe in. In every position, know where you’ll get out before you get in.

Jack D. Schwager is a recognized industry expert on futures and hedge funds and the author of the iconic Market Wizards series in which he interviewed about 70 trading legends of our time.

His most recent work in the series is Unknown Market Wizards, published in November 2020. Previous books in the series include Market Wizards (1989), The New Market Wizards (1992), Stock Market Wizards (2001), Hedge Fund Market Wizards (2012), and The Little Book of Market Wizards (2014). His other books include the revised edition of A Complete Guide to the Futures Markets (2017). Market Sense and Nonsense (2013), Getting Started in Technical Analysis (1999), and the three-volume Schwager on Futures series (1995-96).

In late 2008, the world was falling apart. Jack looked at certain things like the metals index, down about 80%. He thought China was still an emerging market growing rapidly and had every reason to continue growing. Jack believed that this economy would come back somewhat.

So, Jack decided to buy ETF calls on China and the metals as far out as he could, assuming that the longer the time, the more likely they were to come back. He bought them deep out of the money, so they were pretty cheap.

Several years later, Jack still had that position. Instead of just taking the profits, he hedged himself by selling the S&P Retail ETF (XRT) and the NASDAQ ETF. Jack put himself in a spread position where he was short NASDAQ and the retail index and long China.

One day, China dropped 2%, and the XRT rose 2%. So Jack’s long position went down 2%, and his short position went up 2%. So he got a 4% loss on position in a single day. Essentially, you want to be long the strongest and short the weakest. Jack’s position was precisely the opposite. Instead of getting out of the position, he stayed, hoping it would return in a bit, but it didn’t. Jack eventually got out but lost most of his profits.

• Ensure your long position is the strongest, and the short position is the weakest.
• Never stay in a position that violates something that you believe in.
• Always have a set maximum amount that you’ll risk on any investment to prevent you from losing too much on any investment.

• Sometimes you just have a good idea, but at the wrong time, and it’s ok to quit and come back when the timing is right.

In every position, know where you’ll get out before you get in.

Jack shares a list of his top 10 investing books:

• Reminiscences of a Stock Operator
• Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading
• Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
• Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the Casinos
• The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It
• More Money Than God: Hedge Funds and the Making of a New Elite
• Option Volatility and Pricing: Advanced Trading Strategies and Techniques
• When Genius Failed: The Rise and Fall of Long-Term Capital Management
• What I Learned Losing a Million Dollars
• The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

[spp-transcript]

• LinkedIn
• Twitter
• Website 
• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Sampark Sachdeva has 12 years of corporate experience across Asian Paints and other businesses.

STORY: Sampark let the security of his corporate job distract him from building a business out of his love for training. It wasn’t until COVID struck and he found himself without a job that he decided to work on the plan. The business turned out to be a huge success.

LEARNING: Nothing good comes easy. Don’t let job security restrict you from pursuing your entrepreneurial dreams.

Sampark Sachdeva has 12 years of corporate experience across Asian Paints and other businesses. He was awarded the best digital coach of 2021 at the India coaching awards. He was a TEDx speaker in 2020 and won the LinkedIn Spotlight Award in 2019, recognizing him as one of India’s top content creators. Paul Ryder and Oracle also awarded Sampark as a top marketing and sales professional in 2019.

Sampark has trained over 20,000 people across 125 sessions across 10 countries. He has over 125,000 followers across social media channels.

Sampark had an excellent corporate career. He was with Asian Paints, India’s largest paints company, for over five years. In 2015 he moved to Ola, the Indian Uber, and was there for three years. Then he moved to Oyo, the country’s largest hospitality brand, for another two years. Sampark won the Top 100 Marketing and Sales Professionals Award during this career journey. So yes, everything was going well on the corporate side.

On the passion side, Sampark had been writing on LinkedIn for close to six years. He’d posted over 2000 posts in 2019 and won the LinkedIn Spotlight Award. Everything seemed rosy, and Sampark felt this was the time to take off.

In 2020, Sampark moved into a new role in the same organization. But that’s when COVID struck. He was in the hospitality industry, leading corporate events. He had just been in that role for a few months when the lockdown occurred. In one day, everything stopped.

Sampark sat down with his family, and they looked at their savings. They could survive for a couple of years with what they had. Sampark decided to explore a plan he had put on the back burner. Sampark loved training, and after getting the content creator award, he consulted his mentors on how to make something out of his love for training.

They all advised him to work on the plan for the next three to four years and then look at how to do it long-term. But when the lockdown started, the three-year plan became an overnight plan. Sampark decided to give himself four months to execute the plan. If it didn’t work, he still had a corporate career to return to after the lockdown.

At the end of four months, Sampark did a review and realized the training business was going better than he expected. He gave himself another four months, and it was still going well. He continued doing it until April 2022, when an old boss offered him a job. Sampark turned down the job because his business was doing well. He had trained close to 80,000 people and had a lot of clients in the pipeline. Sampark’s only regret is having waited for so long to start his passion venture.

• As a corporate professional, you’re restricted by your own thoughts and the false sense of security.
• Running a business is a hustle because now you have to do everything alone.
• Networking is crucial. But remember, it’s not about transactional relationships; it’s about giving and genuinely investing in that relationship professionally.

• Nothing good comes easy.
• Always have a plan B.
• Recognize the role of luck in life. Sometimes the world accelerates your plans, and sometimes, it kicks you in the ass.

Always have confidence, be positive, and leave your comfort zone. Keep reinventing yourself, learning, and upskilling.

Sampark recommends two online courses on his website:

• Becoming a Champion of LinkedIn: teaches you how to use LinkedIn to build your personal brand and how to build a network on the platform.
• How to Be a Rockstar at Work: teaches you how to upscale your career and fast-track your profile even in a job scenario.

Sampark’s number one goal for the next 12 months is to go full throttle into corporate training across three verticals: personal branding and LinkedIn, sales and marketing, and employee capability building.

[spp-transcript]

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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

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In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 09: The Fed Model and the Money Illusion.

LEARNING: Just because there is a correlation doesn’t mean that there’s causation.

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 09: The Fed Model and the Money Illusion.

In this chapter, Larry illustrates why the Fed Model should not be used to determine whether the market is at fair value and that the E/P ratio is a much better predictor of future real returns.

The stock and bond markets are filled with wrongheaded data mining. David Leinweber of First Quadrant famously illustrated this point with what he called “stupid data miner tricks.”

Leinweber sifted through a United Nations CD-ROM and discovered the single best predictor of the S&P 500 Index had been butter production in Bangladesh. His example perfectly illustrates that a correlation’s mere existence doesn’t necessarily give it predictive value. Some logical reason for the correlation is required for it to have credibility. Without a logical reason, the correlation is just a mere illusion.

According to Larry, the “money illusion” has the potential to create investment mistakes. It relates to one of the most popular indicators used by investors to determine whether the market is under or overvalued—what is known as “the Fed Model.”

The Federal Reserve was using the Fed model to determine if the market was fairly valued and how attractive stocks were priced relative to bonds. Using the “logic” that bonds and stocks are competing instruments, the model uses the yield on the 10-year Treasury bond to calculate “fair value,” comparing that rate to the earnings-price, or E/P, ratio (the inverse of the popular price-to-earnings, or P/E, ratio).

Larry points out two major problems with the Fed Model. The first relates to how the model is used by many investors. Edward Yardeni, at the time a market strategist for Morgan, Grenfell & Co. speculated that the Federal Reserve used the model to compare the valuation of stocks relative to bonds as competing instruments.

The model says nothing about absolute expected returns. Thus, stocks, using the Fed Model, might be priced under fair value relative to bonds, and they can have either high or low expected returns. The expected return of stocks is not determined by their relative value to bonds.

Instead, the expected real return is determined by the current dividend yield plus the expected real growth in dividends. To get the estimated nominal return, estimated inflation must be added. This is a critical point that seems to be lost on many investors. This leaves a trail of disappointed investors who believe low interest rates justify a high valuation for stocks without the high valuation impacting expected returns. The reality is that when P/Es are high, expected returns are low, and vice versa, regardless of the level of interest rates.

The second problem with the Fed Model, leading to a false conclusion, is that it fails to consider that inflation impacts corporate earnings differently than it does the return on fixed-income instruments.

Over the long term, the nominal growth rate of corporate earnings has been in line with the nominal growth rate of the economy. Similarly, the real growth rate of corporate earnings has been in line with the real growth of the economy. Thus, in the long term, the real growth rate of earnings is not impacted by inflation.

On the other hand, the yield to maturity on a 10-year bond is a nominal return—to get the real return, you must subtract inflation. The error of comparing a number that isn’t impacted by inflation to one that is, leads to the money illusion.

Understanding how the money illusion is created will prevent you from believing an environment of low interest rates allows for either high valuations or high future stock returns. Instead, if the current level of prices is high (a high P/E ratio), that should lead you to conclude that future returns to equities are likely to be lower than has historically been the case and vice versa. This doesn’t mean investors should avoid equities because they are highly valued or increase their allocations because they have low valuations.

1. Kiplinger’s Personal Finance, February 1997.
2. Humphrey-Hawkins Report, Section 2: Economic and Financial Developments in 1997 Alan Greenspan, July 22, 1997.
3. William Bernstein, “The Efficient Frontier,” (Summer 2002).
4. Clifford S. Asness, “Fight the Fed Model: The Relationship Between Stock Market Yields, Bond Market Yields, and Future Returns,” (December 2002).

• Enrich Your Future 01: The Determinants of the Risk and Return of Stocks and Bonds
• Enrich Your Future 02: How Markets Set Prices
• Enrich Your Future 03: Persistence of Performance: Athletes Versus Investment Managers
• Enrich Your Future 04: Why Is Persistent Outperformance So Hard to Find?
• Enrich Your Future 05: Great Companies Do Not Make High-Return Investments
• Enrich Your Future 06: Market Efficiency and the Case of Pete Rose
• Enrich Your Future 07: The Value of Security Analysis
• Enrich Your Future 08: High Economic Growth Doesn’t Always Mean High Stock Market Return

Larry Swedroe was head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.

Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth...

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this seventh episode, they talk about mistake number 11: Do you let the price paid affect your decision to continue to hold an asset? And mistake number 12: Are you subject to the fallacy of the hot streak?

LEARNING: Look at everything you own from an economic perspective and decide whether to keep holding or selling. Avoid FOMO (fear of missing out) and stock picking; build a diversified portfolio.

In today’s episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this sixth episode, they talk about mistake number 9: Do you avoid admitting your investment mistakes? And mistake number 10: Do you pay attention to the experts?

Missed out on previous mistakes? Check them out:

• ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?
• ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?
• ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?
• ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?
• ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing Wisely
• ISMS 25: Larry Swedroe – Admit Your Mistakes and Don’t Listen to Fake Experts

According to Larry, people value things more when they own them. This is due to the endowment effect, which causes people to put extra value emotionally and make decisions based on this. This type of decision-making is utterly irrational from an economic perspective.

The endowment effect is a big mistake that investors make, especially when they get gifted stocks or other investment instruments from a parent, spouse, relative, friend, etc. They then hold on to this concentrated risk when diversification is the best investment method.

Whenever you receive an investment as a gift, look at it from an economic perspective and ask yourself if you had money equivalent to the value of that gift would you invest in it? If the answer is no, then sell the gifted investment. If it’s yes, then keep it.

Larry also mentions another reaction to the endowment effect, where people think things familiar to them are safer. So, for example, a US investor will overweight US stocks, a Japanese investor will overweight Japanese stocks, or a French investor will think French stocks are the highest-performing and safest investments.

Larry explains the fallacy of the hot streak as the habit of placing an overwhelming amount of value on what has happened recently. This common fallacy is closely related to recency bias.

According to Larry, we confuse skill with luck leading to the fallacy of a hot streak. If you find yourself amused by an investment’s recent success, first do statistical tests to see whether this was a random outcome above the expected average. For example, over a 20-year period, you would expect 2% of fund managers to outperform randomly. So if the actual number is 1%, we know fewer outperform than randomly expected. Therefore, we shouldn’t attach any value to the ones who did.

To deal with the fallacy of the hot streak, avoid FOMO and build a diversified portfolio. Also, avoid picking individual stocks that have far more to do with speculation than with investing.

Larry Swedroe is head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.

Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth Management.

[spp-transcript]

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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your...

BIO: Vishal Bhardwaj is a serial entrepreneur and founder of Predictions For Success, Engineer By Mistake, and Passionate Management Services.

STORY: Vishal gained immediate success when he started his company and had about 100,000 followers. He thought this indicated that people loved what he was doing, so he decided to sell a corporate gift for Diwali 15 days before the festival. He didn’t do any market research, so when he went to sell the product, no one would buy it as they had ordered their gifts months in advance.

LEARNING: Do proper research before you jump into anything. Don’t let emotions run your business for you. Timing is as important as pricing.

Vishal Bhardwaj is a serial entrepreneur and founder of Predictions For Success, Engineer By Mistake, and Passionate Management Services. He loves to inspire students and aspiring entrepreneurs and has been at TED Talks, TCS, Money Control, Bakstage, and others.

For any personal guidance on career and relationships, Vishal is reachable on WhatsApp.

Vishal started Predictions for Success in 2014 and got around 100,000 followers. This immediate success motivated him to leverage everything, and he thought that whatever he touched would turn into gold because people loved what he was doing. Vishal and his team thought selling something would be a good idea.

Diwali was just 15 days away, and Vishal suggested to his partner that they sell corporate gifts for the famous Indian festival. They started shopping for things even though they had no idea what the people would want. They thought having something in the range of $10 would be easy to crack. While at the market, Vishal suggested that rather than purchasing everything at a wholesale rate, they should buy something a little pricey but as a sample. So, if it didn’t get sold, they would only have a little inventory sitting idle. His partner was against the suggestion. He thought they should buy cheap and in bulk. Vishal insisted that they forget about profits and try to learn something.

They invested 100,000 rupees (about US$1,200) and purchased products in bulk. They did a professional photoshoot, and everything was exciting until it came time to sell the products. They talked to the companies to see if they were interested in purchasing the products, but the prices they quoted were less than even what the company had bought the products for. They couldn’t sell even a single product and had to give them out as gifts to their customers for the next three years. Vishal still has a couple of them lying around in his backyard.

• Do proper research before you jump into anything.
• Emotions can overwhelm you, but do not let them run your business for you.
• Having an audience and having a customer who will purchase are two very different stages.
• The timing of your launch is as important as the pricing of your product.

• Your audience isn’t necessarily there to buy. It could be there for the experience.
• Start slow, think carefully, test the market, and test the response before you act.

When you hear any idea, even a unicorn idea, wait seven days before acting on it. If you feel great about that idea after seven days, it’s good to go. If your emotions decrease daily, you either take more time to think about it or let go of the idea.

Vishal recommends reading The Bhagavad Gita to learn the world within you to quickly discover the world outside.

If you’re looking for any guidance regarding your personal or professional life or if you’re stuck and don’t know where to go, connect to Predictions for Success on WhatsApp, and Vishal and his team will help you tackle the problems you’re facing right now.

Vishal’s number one goal for the next 12 months is to read into the spirituality of one billion people.

[spp-transcript]

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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

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BIO: Harjeet Khanduja is an international speaker, author, poet, visionary, inventor, influencer, and HR Leader. He is an alumnus of IIT Roorkee and INSEAD. He is currently working with Reliance Jio. 

STORY: Harjeet regrets wasting so much of his life working hard instead of working smart. Though he succeeded in his career, he completely ignored his family and led an unbalanced life. 

LEARNING: Learn how to delegate so you can have time to focus on other things in your life. You must care for your family and inner self to be more productive. 

“When you harness everyone’s energy, then you can work in a broader environment and grow. When you’re happy, you can do more things in life, not just for your business.” 

Harjeet Khanduja 

Guest profile 

Harjeet Khanduja is an international speaker, author, poet, visionary, inventor, influencer, and HR Leader. He is an alumnus of IIT Roorkee and INSEAD. He is currently working with Reliance Jio.  

He is an SAP HCM consultant, Six Sigma Green Belt, and Assessor for Predictive Index. He has 3 published patents, and his book “Nothing About Business” has been a best-seller on Amazon. 

Harjeet has been conferred with the HR Leadership Award, Pride of Nation Award, HR Personality of the Year, Global Digital Ambassador, Global Learning Award, ET HR Influencer of 2022, and Top 200 Global Leadership Voices of 2022. Harjeet has been a LinkedIn Power Profile, TEDx speaker, Guest Faculty at IIM Ahmedabad, Board Member of the Federation of World Academics, Member of the CII HR IR committee, and Co-chair of Nasscom Diversity Committee. 

Worst investment ever 

The first investment mistake Harjeet ever made was opening a PPF account because his father asked him to. Harjeet kept investing in that account year after year without knowing why he was investing. He regrets never having control over that decision. 

Harjeet also regrets wasting so much of his life working hard instead of working smart. In every company Harjeet worked for, he’d work himself to the bone trying to prove his abilities. Even though he achieved massive success in every position he took up, his life outside work suffered. Harjeet barely had any time to spend with his family. After all the time and effort he put into his work, Harjeet soon realized his life was not balanced.  

In 2012, Harjeet started looking at life holistically rather than unidimensional. Now his life is better, and his wife is happier. 

Lessons learned 

• Your team can solve problems on their own. You don’t need to hold their hands constantly; delegate and only assist where necessary.  
• You must care for your family and inner self to be more productive. 

Andrew’s takeaways 

• Life is a balance of opposing forces, and we’re constantly making trade-offs. 

Actionable advice 

Learn to delegate and trust. It will take time for others to catch up to your quality or delivery standards. But if you don’t start delegating, you’ll never have time to focus on other important parts of your life. 

Parting words 

“It’s okay to fail. Just believe in yourself. Whatever you’ve got, nobody can take it from you.” 

Harjeet Khanduja 

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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

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• My Worst Investment Ever Podcast

BIO: Laurens Swinkels is an Associate Professor of Finance at Erasmus University in Rotterdam and Executive Director and Head of Quant Strategy at Robeco’s Sustainable Multi-Asset Strategies team.

STORY: Lauren bought a house in Rotterdam. Just five years later, he had to move to Norway. Laurens managed to sell the house in the Netherlands many years later at a loss.

LEARNING: Liquidity is very important even when investing long-term. Remove emotions from your decision-making.

Laurens Swinkels is an Associate Professor of Finance at Erasmus University in Rotterdam and Executive Director and Head of Quant Strategy at Robeco’s Sustainable Multi-Asset Strategies team. His areas of expertise include allocation research and empirical asset pricing. He teaches Finance courses and has published his academic work in peer-reviewed journals such as the Journal of Financial Economics. Laurens holds a Ph.D. in Finance and a Master’s in Econometrics from Tilburg University in the Netherlands.

When Laurens started his masters in Tilburg, Netherlands, he decided to move out of his parent’s home. He was torn between buying an apartment and renting one because the real estate prices were quite favorable for buyers then. He decided to rent since he would only be in school for a few years.

After completing his master’s, Laurens decided to do a Ph.D. and stayed another five years in Tilburg. He was still renting his apartment. After graduating, Laurens moved to Amsterdam, where the house prices were unimaginably high. Hoping that the prices would go down, he rented an apartment. But the prices just kept going up. Laurens had to commute daily from Amsterdam to Rotterdam. After getting tired of the commute, Laurens decided to buy a house in Rotterdam, where the prices were lower than in Amsterdam.

Laurens didn’t foresee that he would have to move to Norway five years after that decision. At this point, the house he’d bought was 25% underwater. The investment in this house made a large part of his wealth, so taking a 25% loss was tough for Laurens. He managed to sell the house only two years ago.

• The liquidity that allows you to sell and buy a house in another location whenever you want is very valuable.
• Even when you’re investing long-term, liquidity is still essential.
• Remove emotions from your decision-making.

• Buying a house is a trap because you may lack liquidity.
• Home buying comes with the risk of not realizing the final capital gain that you thought you would.

If you’re not yet ready to buy a home or don’t know where to buy, you can first get exposure to real estate through listed markets.

Laurens recommends his data page on the university website, where you can download datasets if you want to do number crunching when investing. You can also check out Google Scholar or SSRN, where people post their latest thoughts. You can set alerts and get notified when papers on topics you’re interested in are published. If you don’t have the time for that, there are several people, like Larry Swedroe, that have blogs that summarize the papers for you and make them easily digestible.

Lauren’s number one goal for the next 12 months is to discover things he doesn’t know yet so he can change his prior ideas on how financial markets work.

[spp-transcript]

• LinkedIn
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• Blog

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
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• YouTube
• My Worst Investment Ever Podcast

BIO: Spencer Jakab is the global editor of the Wall Street Journal’s financial and economic analysis column, Heard on the Street. Prior to becoming a financial journalist 20 years ago, he was a top-rated emerging market stock analyst.

STORY: Spencer took investment advice without doing due diligence and ended up losing his entire investment.

LEARNING: Don’t take investment tips from people; do your due diligence. Diversify your portfolio. Don’t invest more than you can lose.

Spencer Jakab is the global editor of the Wall Street Journal’s financial and economic analysis column, Heard on the Street. Prior to becoming a financial journalist 20 years ago, he was a top-rated emerging market stock analyst. He has written two books, the most recent being “The Revolution That Wasn’t,” about novice investors caught up in GameStop mania.

Spencer moved to Hungary in the early 90s because he was very excited about all the changes due to the fall of the Berlin Wall and the opening up of the Eastern European region. Spencer wanted to make money and also see history being made.

After writing to many investment banks looking, he got a couple of interviews with local accountants and banks. Spencer accepted a job as a country analyst in Hungary. He had no idea what he was doing.

The job was to meet fund managers who were wealthy, nicely dressed, and suave, talking about all these things they had done and how much money they’d made from various investments. He thought they were so clever and believed that if he followed their lead, he’d be rich too. At the time, Spencer had saved $5,000. He invested half the money in a Southeast Asia fund and the other half in a US bond fund. The market became bearish, and Spencer lost most of his investment.

Later, Spencer met a suave, sophisticated fund manager who convinced him to invest in a Canadian company. The company made permanent magnets. The company had a PE ratio of about nine, which is very low. Spencer looked the company up and read the annual report. He still couldn’t figure out what a permanent magnet was, but it sounded impressive and very high-tech. The company also had all these PhDs working for them. So Spencer decided to invest in it. He also told his good friend about it, who also invested.

Some time went by, and one day as Spencer read the newspaper, he came across a story of how the FBI had raided the offices of the magnet company. The company was run by Russian mobsters and was just a front. Obviously, the stock went to zero after the expose. Spencer and his friend lost all their investment.

• Don’t take investment tips from people; do your due diligence.
• Do your own research.
• Diversify your portfolio.
• Only invest what you can lose.
• If you want to be a stock picker, do it with a small amount of your money.
• Invest in diversified, low-cost funds, hold for the long term, and don’t try to time the market. You’ll do better than 85% of fund managers over any 10-year period.

• Only buy a stock recommended by a person after researching it.
• Focus on taking care of yourself, but be very careful about starting to promote something to other people because it can backfire on you.

Stop looking for the needle in the haystack; buy the whole haystack. This way, you’ll buy into a big diversified pool of investments and do okay even if there’s inflation.

Spencer recommends using robo-advisors because it’s a cheap way of monitoring your investment portfolio, especially if you’re starting out.

Spencer’s number one goal for the next 12 months is to make sense of the current economy, understand what’s going on, be nuanced, and not get caught in a head fake.

[spp-transcript]

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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

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• My Worst Investment Ever Podcast

BIO: Charles Rotblut, CFA, is a vice president and financial analyst at the American Association of Individual Investors (AAII).

STORY: Charles bought a Dotcom stock in 1998. A week later, the stock had tripled. His dad advised him to take the profits, but he insisted the stock would keep going up. Three days later, the stock lost almost all its value. Charles sold the stock and made very little profit.

LEARNING: Don’t confuse luck with skill. Utilize a rolling stop loss to manage risk. Always have a diversified portfolio.

Charles Rotblut, CFA, is a vice president and financial analyst at the American Association of Individual Investors (AAII). He is the editor of the AAII Journal, created both the PRISM Wealth-Building Process and VMQ Stocks, and authors the weekly AAII Investor Update email. His book, “Better Good than Lucky: How Savvy Investors Create Fortune With the Risk-Reward Ratio,” was published in November 2010. Charles holds the Chartered Financial Analyst (CFA) designation and has analyzed both publicly traded and privately held companies.

Charles bought a Dotcom stock in 1998, right before Thanksgiving. The stock took off, and he made triple-digit gains. On Thanksgiving day, Charles told his dad about the stock, and he advised him to take the profits. Charles insisted that the stock could run even higher. The following Monday, he got to work, logged into his computer just as the market opened, and saw that the stock had increased. On checking on the stock again a few hours later, it had lost almost all its value. All the profits had pretty much vanished.

Charles got out of the stock and made just a slight gain, but nothing near what he could have made had he listened to his dad.

• It’s easy to confuse skill with luck, so be conscious of when luck happens.
• If you don’t want to sell your stock, take some of your profits and hold a little.
• Put the gains you take in an index fund.

• Whenever you get to a point where a stock has gone up or down so much that you’re starting to question your situation, sell 50% of your position.
• Utilize a rolling stop loss to manage risk.
• Always have a diversified portfolio.

Charles recommends using a stock screen to find stocks with all the traits you seek that nobody else is discussing.

Charles’s number one goal for the next 12 months is to save more than last year. He also wants to get onto the TED Talk stage.

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• LinkedIn
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• YouTube
• Website
• Book

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
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• Twitter
• YouTube
• My Worst Investment Ever Podcast

• James O’Shaughnessy, What Works on Wall Street, Fourth Edition: The Classic Guide to the Best-Performing Investment Strategies of All Time
• John P. Reese and Todd O. Glassman, The Market Gurus: Stock Investing Strategies You Can Use From Wall Street’s Best

BIO: Arjun Murti has over 30 years of experience as an equity research analyst, senior advisor, and board member, with global expertise covering traditional oil & gas and new energy technologies.

STORY: Arjun made a call that oil prices would quintuple from $20 a barrel in the 90s to $105 in the 2000s and stay there for at least five years. The price averaged $100 a barrel from 2000 to 2014, entirely consistent with Arjun’s call. However, after the 2008 financial crisis, the return on capital in the energy sector started falling. Arjun made excuses and continued to ride the wave all the way down.

LEARNING: Let go of your ego and get out of the battle at some point. Frameworks need to grow, evolve and adjust to circumstances. Understand and inculcate reversion to the mean into your thinking.

Arjun Murti has over 30 years of experience as an equity research analyst, senior advisor, and board member, with global experience covering traditional oil & gas and new energy technologies.

The bulk of his Wall Street career was at Goldman Sachs, where he retired as a partner in 2014. He recently “un-retired” to join Veriten, an energy research, strategy, and investing firm. Arjun publishes Super-Spiked, a Substack blog focused on the messy energy transition era.

He is on the board of ConocoPhillips, a senior advisor at Warburg Pincus, and on the advisory boards for ClearPath and the Center on Global Energy Policy.

At the height of his career, Arjun made a call that oil was going to go from the $15 to $20 a barrel range it had been in from the mid-80s. He said the price would rise to between $50 to $105 in the 2000s and stay there for at least five years. And with that, the returns on capital and profitability in energy as a sector would do very well. Arjun called this the super spike.

In 2002, the market started becoming bullish, and oil went from the 20-dollar range everyone thought the sector would be at forever to ultimately as high as $147 in 2008. The price averaged $100 a barrel from 2000 to 2014, entirely consistent with the high end of the range of Arjun’s original call. He was pretty excited about the sector’s profitability and experienced an ego boost after being proven right for five years.

However, the returns on capital started rolling over, and Arjun made excuses for it. From 2006 to 2008, oil went from $65 to $100 a barrel, but returns on capital for the sector fell from 22% to 19%. 19% is still an excellent number, and that’s the excuse Arjun used to continue riding the call. The sector then got interrupted by the great financial crisis of 2008, which Arjun never viewed as an energy event. The industry rebounded dramatically off those 2008 and 2009 lows, but the returns on capital had now fallen to 16%. Arjun kept making excuses as the returns continued to fall and never got off. Making excuses for his framework the entire way down became his worst investment mistake ever.

• At some point, you’ve to get let go of your ego and get out of the battle.
• Frameworks need to grow, evolve and adjust to circumstances.

• Understand and inculcate reversion to the mean into your thinking.
• Understand what the average is. Ride the wave but remember the numbers will go down to the average and, in some cases, below.
• Research shows that high returns on invested capital tend to revert toward the mean. However, that’s not the case with cyclical industries like oil.

You can do all the data analysis in the world and project the future, but what’s probably most important is understanding the emotion and psychology of investing.

Arjun strongly advocates energy literacy and therefore recommends subscribing to his substack Super-Spiked, which is free. He also recommends reading The Prize: The Epic Quest for Oil, Money & Power to understand the history of oil, why we use it, and its critical importance. You can also check out books by Vaclav Smil, an actual scientist who provides authentic fundamental understandings of energy.

Arjun’s number one goal for the next 12 months is to speak up and engage more in pragmatic energy discussions.

[spp-transcript]

• LinkedIn
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• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
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• My Worst Investment Ever Podcast

• Jack Weatherford, Genghis Khan and the Making of the Modern World

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this sixth episode, they talk about mistake number 9: Do you avoid admitting your investment mistakes? And mistake number 10: Do you pay attention to the experts?

LEARNING: You’ll only learn from mistakes if you admit that you made them. Just because someone is famous and confident in what they’re saying doesn’t mean they’re experts who know what they’re saying.

In today’s episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this sixth episode, they talk about mistake number 9: Do you avoid admitting your investment mistakes? And mistake number 10: Do you pay attention to the experts?

Missed out on previous mistakes? Check them out:

• ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?
• ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?
• ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?
• ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?
• ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing Wisely

As human beings, we’re hardwired to avoid admitting mistakes. And, of course, you can’t correct a mistake unless you acknowledge that your behavior was a mistake in the first place. A typical investment mistake most people make is engaging in actively managed funds and stock picking, even though there’s hard evidence that a vast majority of active managers fail persistently to outperform over the long term.

According to Larry, when you’ve made an investment mistake and have a poorly performing asset, the right thing to do is count your losses and substitute the asset with a superior choice. However, many people don’t want to sell because they’ll hurt their ego. Selling means they have to admit that they were wrong in the first place in making that investment.

So for most people, ego and their inability to acknowledge that they’re wrong are the number one reason they’re stuck in bad investments. Most people, when directly confronted, even with proof that they’re wrong, don’t change their point of view. In fact, they tend to defend it more aggressively. They’ll selectively gather evidence or recall information and interpret it biasedly to reinforce their established beliefs.

According to Larry, you shouldn’t listen to experts. But here, he means experts forecasting what the stock market and the economy will do. You should instead listen to experts quoting scientific or empirical evidence in peer-reviewed journals.

When someone’s telling you exactly what’s going to happen, they’re doing it because they’re overconfident. There’s a good chance they don’t know what they’re saying. In Larry’s opinion, only one thing correlates with the ability to make forecasts; fame. The more famous someone is, the worse their predictions are, probably because they’re just overconfident in their skill sets. People fall for such ‘experts’ thinking they know what they’re talking about because they say things with confidence. Larry insists on ignoring such experts. To drive the point home, Larry quotes the authors of Mistakes Were Made (but Not By Me):

“When experts are wrong, the centerpiece of their professional identity is threatened. Therefore, the more self-confident and famous they are, the less likely they’ll admit mistakes. They Just come up with statements to justify the forecast and explain if only this has happened. If only the timing was different, I would have been right. It was some unfortunate event that occurred that wasn’t forecast. So, of course, that’s why you can’t make forecasts. We can’t predict the future with any persistence better than the market does.”

Larry Swedroe is head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.

Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth Management.

[spp-transcript]

• LinkedIn
• Twitter
• Website
• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence

BIO: Sir Steven Wilkinson is the founder and CEO of Good & Prosper and has been involved in business finance and investment for the best part of 30 years, having started working for Merrill Lynch Investment Bank in Munich, Germany, in 1987 at the age of 24.

STORY: Steven entered a successful partnership that saw them take a stock from 50 cents to 400 euros. They made so much money from their business, but the problem was Steve wasn’t ready for that kind of success. He had no system for dealing with the wealth he created and eventually lost all his money.

LEARNING: Being successful is 100% dependent on you. Working on yourself is the key to having whatever it is that you want to have.

Sir Steven Wilkinson is the founder and CEO of Good & Prosper and has been involved in business finance and investment for the best part of 30 years, having started working for Merrill Lynch Investment Bank in Munich, Germany, in 1987 at the tender age of 24.

Good & Prosper is an advisory and investment company through which Steven acts as a thinking partner for business leaders and owners, supporting them as a generalist business expert across the fields of finance, leadership, and culture.

Good & Prosper is also a knowledge platform teaching finance to entrepreneurs with a focus on Small & Medium sized businesses, primarily in the English-speaking world.

Steven founded the publishing business Pitchfork Press and publishes a weekly essay, “Pitchfork Papers,” via Substack to a rapidly growing and diverse international audience.

Steven started his investment business in 1998 and had an excellent first couple of years. This was because, as a value investor, he had no interest in any of the new economy stocks. Steven stuck with stocks in the public markets, mainly because that’s all he could afford. Steven had a couple of stocks that were mind-bogglingly great investments. And so his business did quite well, and capital increased substantially over the following years.

Steven met an American gentleman who invited him to be on the board of a company he was considering setting up. The gentleman was working for one of the more famous German companies. This publishing company profited enormously from the new economy boom. He’d been in charge of managing what was a promiscuously bought portfolio of new economy businesses.

The gentleman invited a senior law firm partner and a guy with deep restructuring experience to join his board. The gentleman set up the initial board meeting to get to know each other. The meeting was at the lawyer’s office. The gentleman never showed up, and the lawyer had to return to work. So Steven and the restructuring guy chatted and were fascinated by each other’s stories. They decided to stay in touch.

The restructuring guy had made much money with his previous partnership and wanted to see what he could do on a bigger stage. That’s how Steven got into a partnership with him. The guy was impressed by Steven’s capital markets intelligence and excellent networks. And Steve saw the guy as an absolutely focused money maker and restructuring genius, which he undoubtedly was.

The two new partners came up with the idea of buying a shell company, an empty stock-exchange-listed company. The thinking behind this idea was that they were coming into a time when they could buy assets cheaply. And if they could generate the sort of returns they thought they could return, the share price would reflect that reasonably quickly. Then they could determine through rights issues or shares issues how much money to take in and how much control to give up.

So they found a shell company that had been formed for a spa in a little village and bought 90% of it. The deal was that Steve would take 40% of the shares, be the chairman and help with strategy, investors, and networks. His partner would take 60% and do all the work. The company was phenomenally successful. They took the share price from 50 cents to 400 euros.

While this should have been Steve’s most successful investment, it turned out to be his worst because he was not ready for that kind of success and had no system for dealing with the wealth he had created. In 2007 everything blew up. Steve lost all his partnership and his money. He was also left with a wealth-destroying amount of debt.

• Being successful in business, being good at investing, and being a good owner is 100% dependent on you.
• You have to be ready, deserving of wealth, and be in a position of giving to receive.
• Working on yourself is the key to having whatever it is that you want to have.
• Whatever you experience results from your own self-reflection, self-development, and maturity.

[spp-transcript]

• LinkedIn
• Twitter
• Website
• Substack

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Shawn O’Malley is the chief editor and writer of the We Study Markets newsletter from The Investor’s Podcast Network, the world’s largest stock-investing podcast with over 110 million downloads.

STORY: Shawn wanted to hedge inflation during the COVID pandemic, so he invested in the Russian ETF at the end of 2021. The ETF performed well, and Shawn was happy. Then rumors of Russia invading Ukraine started. The invasion happened in February, and the Russian ETF stopped trading, taking Shawn’s investment to zero.

LEARNING: Understand how geopolitical events and domestic politics affect investments. You won’t be compensated for lack of knowledge.

Shawn O’Malley is the chief editor and writer of the We Study Markets newsletter from The Investor’s Podcast Network, which is the world’s largest stock-investing podcast with over 110 million downloads.

He writes for an audience of over 30,000 readers daily, breaking down the most important stories in financial markets with longer write-ups exploring financial history, the economics behind everyday life, and insights from legendary investors.

Shawn hopes to help keep people informed about current news while adding the perspective of a long-term investor.

In April 2020, Shawn was sent home from school because of the COVID lockdowns. He was a junior in college at the time. He spent a few weeks doing nothing productive but soon realized this would be an extended lockdown. Shawn decided to find valuable ways to manage his time. He started taking long walks while listening to the We Study Billionaires podcast, which interested him in value investing.

At the time, oil prices were negative. Shawn didn’t understand the futures market or know anything about oil. Still, it felt like an opportunity since he believed oil prices wouldn’t stay negative forever. Shawn bought into some oil and gas stocks and held them.

Over the next year or so, Shawn developed this sort of outlook that some of the inflationary pressures of the lockdown would eventually manifest. So he started thinking more about how to hedge inflation to have exposure to energy prices. Shawn naively started looking for the most undervalued energy stocks in Russia. At the end of 2021, he bought into the Russia ETF as a creative and cheap way to play this inflation and energy price spike he was trying to foresee.

Shawn held that investment for a year, and things were looking good. The inflation manifested, and the energy stocks started to rally. At this point, Shawn thought he was pretty clever. In January 2022, all these rumors about Russian troops gathering around Ukraine for an invasion started. Shawn believed it was just a conspiracy theory. He played down the risk and held down his investment. The attack happened in February, and the Russian ETF stopped trading, taking Shawn’s investment to zero.

• Understand how geopolitical events and domestic politics affect investments.

• It takes time to become aware that risks are everywhere, and your first job is to understand them.
• You won’t be compensated for lack of knowledge.
• When you build a portfolio of international stocks, you’re not investing in global stocks but in a currency. So you have to at least understand the currency impact.

You have to learn investment lessons for yourself. But, there are a lot of investment mistake stories from investing legends such as Warren Buffett. Read those archives, and you’ll learn a lot about investing mistakes, how to run or find great businesses, excellent management, compounding goodwill, and treating people well.

Shawn’s goal for the next 12 months is to hit 100,000 subscribers for the We Study Markets newsletter and make financial markets understandable to as many people as possible.

[spp-transcript]

• LinkedIn
• Twitter
• YouTube
• Podcast
• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast

• Jeremy J. Siegel (September 2022), Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies

BIO: Pavan Sukhdev’s remarkable journey from scientist to international banker to environmental economist has brought him to the forefront of the sustainability movement.

STORY: Pavan ignored his investment rules and invested in a bond, which caused him to lose almost his entire investment.

LEARNING: Don’t make exceptions; the rules are the essence. Set up concentration risk limits. Diversify.

Pavan Sukhdev’s remarkable journey from scientist to international banker to environmental economist has brought him to the forefront of the sustainability movement. As CEO and Founder of GIST Impact, he collaborates with corporations and investors, leveraging impact economics and technology to measure a business’s holistic value contribution to the world.

Pavan is a relatively disciplined investor who always tries to maintain his money’s principal value by investing it wisely. For this reason, Pavan follows a couple of personal investment rules.

First, wherever he invests, he either makes friends or has friends. Second, Pavan follows a strict logic when investing in financial assets—he only invests in sovereign bonds. Third, Pavan has set up a concentration risk limit of $100,000 for a single sovereign emerging market. He never invests more than $50,000 on a credit. Fourth, Pavan always reads about the company he wants to invest in to understand what it does and its credit rating. Fifth, Pavan typically invests in sectors where he would be above average in reading and knowledge about that company.

Once, a friend came along and asked Pavan if he knew of a particular company with a bond earning 8.75%. Pavan hadn’t heard about it. But he happened to know the family that owned it, and he was interested in it. Pavan decided to invest $100,000 instead of putting his maximum concentration of $50,000.

As part of his investment strategy, Pavan reads about companies. A news flash said that the company was involved in a contract in Malaysia. Pavan thought this was great, but that was that.

He never followed up on the news. It happens that the company lost the contract. Losing the contract was a big thing that caused the bond price to go down to $75 from $88. At this point, Pavan should have reduced his exposure by bringing the $100,000 down to $50,000, but he didn’t. He continued to sit on the losses and hung on, and the price kept dropping. Finally, at some point, when it was just too low for it to make any difference, the company stopped paying coupons.

• Don’t make exceptions; the rules are the essence.
• Set up concentration risk limits and reflect the volatility of that asset.
• Diversify
• Don’t sit on losses.

• Follow and stick to a stop-loss system.
• Don’t buy something just because you’ve sold something else.

Set your concentration risk limits, put your trading style in place, and diversify.

Pavan’s number one goal for the next 12 months is to get his company profitable because it’s nice to be right, but it’s better to be profitable.

[spp-transcript]

• Linkedin
• Website

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Threads
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Peter Saddington is a software developer, a multi-founder, an author, and a VC. He founded a $2.5M BTC mining fund, a $10M IoT fund, and a$50M Web3 fund in 2022.

STORY: Peter hired an engineer who had impeccable technical skills. Peter was so impressed by the guy that he decided to make him the CEO of his startup. Six months later, the guy fired Peter from his own company.

LEARNING: It takes more than technical skills to be a leader. A leader needs to be a person that can be led and can lead others.

Peter Saddington is a software developer, a multi-founder, an author, and a VC. He founded a $2.5M BTC mining fund, a $10M IoT fund, and a$50M Web3 fund in 2022. He published three books - Scrum, Agile, and PersonalBranding. He writes “The Agile VC” newsletter, which covers Inside Startups, Venture Capital, and life!

Over a decade ago, Peter built a great startup and bootstrapped it out of his garage. This was a passion project of his. At the time, the digital currencies were growing. Interestingly, there were all these silos of exchanges and no ability to create arbitrage opportunities between multiple exchanges. As an engineer, Peter thought this was an absolutely fantastic proposition of becoming a middleware solution provider so that traders and investors could trade across platforms and multiple exchanges and find opportunities for liquidity.

Peter started building it. He put together a team and bootstrapped it with his own money. Eventually, over many validations, his community and user groups said this was amazing and should be scaled. Peter raised $4.8 million for this venture. Everything was great, and it seemed like there was no possibility that this thing could ever go off the rails. His global community of cryptocurrency and digital currency enthusiasts grew and had almost 78% daily active users.

Peter had hired an engineer in whom he saw an amazing ability to take the company to great heights. Peter was so enamored by this engineer’s communication ability that he decided to mentor him. Peter was really impressed by his technical prowess. In his naivety, he believed this was the primary value that the engineer could bring to his company. Peter elevated the engineer to CEO. Big mistake! Six months later, the engineer fired Peter from his passion project.

• When promoting an employee, you must understand the individual deeper than just what they bring to the table.
• When choosing a leader, they need to be a person that can be led and can lead others.
• Spend enough time with people before you promote them to truly understand their depth, morality, ethics, and, most importantly, integrity.

• When hiring a prospective leader, analyze everything that person can bring to the table, not just the skills.
• Leaders need to be multifaceted and able to rise when things are tough.
• The key to asking questions is listening; the key to listening is taking notes.

Ask more questions. Reach for questions that avail emergent opportunities in emergent contexts and conversation. Be situationally aware enough to listen actively and ask pertinent and essential questions that give you context for informed decision-making.

Peter’s goal for the next 12 months is to launch a startup that intertwines his top passions; blockchain, cars, racing, and family.

[spp-transcript]

• LinkedIn
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• Instagram
• YouTube
• Podcast
• Blog
• Book

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Neville Medhora has been starting businesses and side projects since high school and has learned a bunch about what works and what doesn’t work. He is an advisor to numerous software companies and teaches copywriting at his business, CopywritingCourse.com.

STORY: Neville started day trading in college and would try to get inside scoops to find cheap stocks that would explode. None of the scoops he ever got worked. Neville only made 5% return on his investment after a year of trading.

LEARNING: 99% of the inside scoop is unreliable secondhand information. Do your due diligence. It’s important to know when to sell.

Neville Medhora has been starting businesses and side projects since high school and has learned a bunch about what works and what DOESN’T work. He is an advisor to numerous software companies and teaches copywriting at his business, CopywritingCourse.com.

You can find him at “Neville Medhora” across all socials.

Neville was fortunate to have a little extra cash in college because he had started several businesses before. He started day trading stocks, and his plan was to pick a stock when it was cheap and then sell it when the price went up.

Neville would try all sorts of things to find cheap stocks about to go up. He’d wake up in the morning to catch the bell ringing and start talking to people about stocks just to get the inside scoop, but none of his tactics worked.

After a year of all the stress of trying to beat the market, Neville made just 5% gains on his investments.

• It’s important to know when to sell.
• The market is crazy and erratic and doesn’t obey timelines.
• Buying a good business is better than trying to beat the stock market.

• 99% of the inside scoop is unreliable secondhand information.
• Always do your due diligence before you invest.

Don’t get caught up in buying something because it’s cheap. Instead, read the company statements and learn how to analyze a company.

Neville recommends following him on social media, where you’ll find much of the stuff he teaches. He also recommends joining his newsletter to get helpful marketing tips every Friday.

Neville’s goal for the next 12 months is to make sure that he is set up well to retire at 50.

[spp-transcript]

• LinkedIn
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• Facebook
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• Podcast
• Book

• LinkedIn
• Twitter
• YouTube
• Podcast

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Jack Farley is the host of the Forward Guidance podcast. He is interested in all things liquidity, macro, and central banking.

STORY: Jack bought a lot of put options on the markets and individual stocks, notably Tesla, in February 2020 when the market was bearish. When the market crashed in March 2020, Jack made so much money. But, soon, the market started going up, and his position dropped to zero.

LEARNING: Don’t view the market as a place to create wealth; view it as a place to grow it. Don’t confuse being lucky with being an intelligent investor.

Jack Farley is the host of the Forward Guidance podcast. He is interested in all things liquidity, macro, and central banking. Jack graduated from Brown University with a degree in Economics and has done nearly 500 long-form interviews on investing and macroeconomics.

Jack had gotten quite bearish on the market in January and February 2020. So he bought a lot of put options on the markets and individual stocks, notably Tesla. All individual stocks crashed throughout early March 2020. Jack made so much more money than he ever thought was possible.

He continued consuming this bearish macro content from CNBC, Bloomberg, and the Wall Street Journal. When the stock market rallied from March 23 to April 1, Jack was told it was just a bear market rally and believed it. But the market continued to grind higher, and Jack’s position kept falling until it reached zero.

• Know the difference between winning because you were smart and made the right decision and when you were lucky.
• It’s really tough to beat the market.
• The ultimate hack is to beat the stock market and then invest in the S&P 500 for the rest of your life.
• When you get a windfall, and you’re lucky enough to win the day, don’t assume it’s because you’re so smart because, most likely, you’re not.

• Set up your wealth creation engine. That’s either your business or your salary.
• Don’t view the market as a place to create wealth; view it as a place to grow it.

Don’t play in markets where you don’t know what you’re doing.

Jack recommends listening to his podcast for a deep-dive conversation on finance. The talks are associated with what’s going on now.

Jack’s goal for the next 12 months is to create kickass content for his podcast and grow the show.

[spp-transcript]

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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

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BIO: AcreTrader’s CEO, Carter Malloy, grew up in an Arkansas farming family and has had a lifelong passion for agriculture and investing. Before founding AcreTrader, he spent five years as part of the founding team of a successful global equity investment firm.

STORY: Carter was super impressed by a healthcare software company whose stock was really expensive, and the valuation was crazy high. Carter decided to short the company’s stock. However, he lost most of his money because the stock almost doubled on him.

LEARNING: Valuation is not a reason to invest. Don’t bet against really good management teams.

AcreTrader’s CEO, Carter Malloy, grew up in an Arkansas farming family and has had a lifelong passion for agriculture and investing. Before founding AcreTrader, he spent five years as part of the founding team of a successful global equity investment firm.

Before joining in 2013, Carter was a Managing Director with Stephens Inc., a large private investment bank, where he was an equity research analyst.

At AcreTrader, Carter has successfully raised over $60 million in Series B funding and grown from 20 employees to 120 employees across the company’s two business divisions, which include AcreTrader, the farmland investing platform, and Acres, a land research platform.

As an equity investor, Carter would generally chase okay businesses valued as great ones. One particular company, a healthcare software business, caught Carter’s attention. He had a thesis around the macro developments—both cyclical and secular headwinds—that this company faced. He realized there were these real pressures on that business that the rest of Wall Street and the investment world was seeing. The stock was really expensive, and the valuation was crazy high.

Carter started digging into the company. He met with the company CEO, and this guy was unbelievably impressive. Carter dug deeper into the company culture and the people who worked there, concluding that this was a well-run business. Carter decided to invest in the company. However, he lost most of the principal because the stock almost halved on him.

• Valuation is an essential part of your research. It can support an investment decision but is not a reason to invest.
• Don’t bet against excellent management teams because they can absolutely—and often do—determine the outcome.
• Valuation should inform your position size.

• Valuation will be a tool if you don’t have any other fundamental things driving your investment decision.

Don’t invest in single securities. Instead, invest in ETFs.

If you want to be a good investor, understand what CFAs read and then take the Kaplan Schweser CFA Level One course.

Carter’s goal for the next 12 months is to spend more time with his children.

[spp-transcript]

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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
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• My Worst Investment Ever Podcast

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fourth episode, they talk about mistake number 7: Do you confuse skill and luck? And mistake number 8: Do you avoid passive investing because you sense a loss of control?

LEARNING: When gauging a fund manager’s performance, consider risk-adjusted performance. If you’re a passive investor and use a systematic strategy, you’re 100% in control.

In today’s episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fifth series, they talk about mistake number seven: Do you confuse skill and luck? And mistake number eight: Do you avoid passive investing because you sense a loss of control?

Missed out on previous mistakes? Check them out:

• ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?
• ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?
• ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?
• ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?

According to Larry, investors don’t know statistics well enough to differentiate skill from luck. To understand if an outperformer is outperforming because of skill and not luck, look at risk-adjusted performance. So, for example, over the very long term, value stocks have outperformed growth stocks, and small stocks have outperformed large stocks. So somebody who outperforms simply because they owned lots of small and value stocks more than the market isn’t outperforming on a properly adjusted basis. Other factors than size and value, such as momentum, profitability, or quality, can also drive the return. Larry recommends Portfolio Visualizer, a tool that shows how much exposure an active fund has to those factors. It also reveals the alpha or the remaining performance that cannot be explained.

The second thing you need to consider is whether the fund’s assets are growing. If they’ve grown, the odds are pretty good that that outperformance will disappear. The other thing you can look at is the metrics of the stocks they’re holding. If they’re invested in hot stocks and their values have gone up, that’s a sign not to chase the outperformance.

If you want to outperform by picking managers, Larry advises choosing the largest pension plans because they hire great consultants. They also have the best databases and do thousands of interviews yearly, so you can be sure they’ve asked every question you can think of while doing their due diligence. But still, evidence shows their ability to predict future winners doesn’t exist.

In active investing, individuals perform stock selection and/or market timing. Passive investing doesn’t involve any of that. It defines its universe and then buys and holds all the securities that meet that definition.

With passive investing, the problem comes in when the markets are experiencing uncertainties like the Ukrainian war, the COVID-19 pandemic, etc. The investor wants to be in control but with an index fund, the markets are in control. So many people consider active management a way of giving them control. They’re either in control of buying individual stocks, choosing the fund manager, and when they go in and out of the market. The problem is all the evidence shows that control costs you money, and you’re more likely to make mistakes and end up underperforming.

Larry also advises investors to understand that when you’re passive and use a systematic strategy, you’re 100% in control. But you have to accept that you can only control what you can; you can’t control the unpredictable things that happen. Make sure your portfolio design doesn’t take more risks than you have the ability, willingness, and need to take. You should also be hyper-diversified to withstand the shocks that happen to every asset class.

Larry Swedroe is head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.

Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth Management.

[spp-transcript]

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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points

BIO: Gisela Hausmann graduated with a master’s degree in film & mass media from the University of Vienna. She’s one of a dying breed of adventurers – she digs in and researches topics of interest from the ground up, then tells things as she sees them.

STORY: Gisela joins the podcast again, discussing her new book Winning @ Amazon. Today she shares advice on how employees can allocate their creativity in a way that’s appreciated. She also talks about why employees need to start thinking outside the box and focus on problem-solving and innovation instead of feeling sorry for themselves and staying stuck where they’re not appreciated.

LEARNING: Encourage and appreciate your employees’ creativity.

Gisela Hausmann graduated with a master’s degree in film & mass media from the University of Vienna, the oldest university in the German-speaking world.

She is one of a dying breed of adventurers – she digs in and researches topics of interest from the ground up, then tells things as she sees them.

An author of two dozen books, her work has been featured in regional, national, and international publications, including GeekWire, Inc, Success (print magazine), Entrepreneur, and Bloomberg’s podcast ‘Decrypted.’ She is also the winner of the 2016 Sparky Award “Best Subject Line.”

Born to be an adventurer, she hiked in the Himalayas and the Gobi Desert, crossed Russia on the Trans-Siberian Railway twice, and meditated in the Dalai Lama’s private room at the Potala Palace in Lhasa, Tibet.

Her motto is: “Don’t wait. The time will never be just right.” – Napoleon Hill

Encourage employee creativity

Gisela Hausmann first appeared on the podcast in episode 539, where she narrated how Amazon implemented suggestions she’d made in her book Inside Amazon: My Story. Gisela is back with a new book Winning @ Amazon. Today she shares advice on how employees can allocate their creativity in a way that’s appreciated. She also talks about why employees need to start thinking outside the box and focus on problem-solving and innovation instead of feeling sorry for themselves and staying stuck where they’re not appreciated.

According to Gisela, companies consistently ignore the input from clever, hardworking, dedicated people and—seemingly—perceive them as “irrelevant little cogwheels in a big machine.” Senior management is often threatened by subordinates who seem more innovative than them, and it’s no wonder they ignore their creative suggestions. This has led to employees choosing to keep suggestions to themselves, and this is killing most organizations, especially the big ones.

Gisela advises organizations that want to encourage employee creativity to make a written plan. Define how employees who come up with ideas implemented in the company will be rewarded. Ensure that your rewards are something better than an in-house product. It should be something special that makes the employee feel appreciated. Gisela insists on the written plan because if you don’t encourage creativity in black and white, it won’t happen.

You create positive energy in your business by acknowledging that you need creative ideas from your people and encouraging them. When you create positive energy, everybody wants to stay with you, and they carry this energy into the rest of the world.

[spp-transcript]

• LinkedIn
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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
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• My Worst Investment Ever Podcast

BIO: Connor Steinbrook is the Founder of the EXP realty Wolfpack Revenue Share Organization, with more than 2,700 agents operating in all 50 states and 12 countries. The group closed almost 10,000 houses and 3.5 billion in sales in 2022.

STORY: Connor came across a house in a high-priced area that was being sold for dirt cheap. It caught his attention, and he decided to buy it. It turns out the person who sold the house to Connor had killed the homeowner and stolen his identity.

LEARNING: Always be careful when going into properties to meet strangers. Before you go to view a property, ask the right questions and do due diligence.

Connor Steinbrook is the Founder of the EXP realty Wolfpack Revenue Share Organization, which has more than 2,700 agents operating in all 50 states and 12 different countries. The group closed almost 10,000 houses and 3.5 billion in sales in 2022.

When Connor started in real estate, he got a regular appointment to check a property out. The property was an old house that looked like a single-family house but was built in a duplex-type way. The property was in a high price point area, and the owner asked for a very low amount that didn’t make sense. The owner was not there, and after waiting for a while, Connor decided to go home. After about 15 minutes on the highway, the owner called him, and since the numbers looked so good, he decided to go back.

Connor found the door open, and when he went in, he couldn’t believe his eyes. It was quite a rundown house. While doing a tour of the place, he had this strong intuition that there was something off about it. But he shook off the feeling and went ahead and bought the property.

About six weeks later, Connor got a phone call from a detective of a famous murder detective show in Dallas. The detective informed Connor that a resident had found a dead body at one of his properties, and he needed him for questioning.

It turns out the guy Connor had bought the rundown house from was not the actual owner. The guy had murdered the homeowner, buried him in the backyard, and stolen his identity to sell the house.

• Always be careful when going into properties to meet strangers.

• Things happen when you’re least prepared and least expecting it.

Before you go to view a property, ask the right questions and do due diligence. When you go for the viewing, take another person with you.

Connor recommends several books for self-education and development:

• Think and Grow Rich
• Outwitting the Devil: The Secrets to Freedom and Success
• As A Man Thinketh
• The Richest Man in Babylon

Connor’s number one goal for the next 12 months is to get his EXP organization to 10,000 agents. He also wants to develop properties in North Dallas as a long-term investment plan. Connor also wants to get his new YouTube channel to 10,000 subscribers this year.

• LinkedIn
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• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

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• My Worst Investment Ever Podcast

BIO: In 2013, Zachary Resnick began to make a living from playing poker cash games and investing in other poker players, providing a unique understanding of risk management that is largely shaped through leveraging volatility to outperform others in the high-risk, high-reward situations of poker.

STORY: Zach invested in two founders with a brilliant idea and overlooked the fact that they were not A+ founders. He ended up riding the company down by more than 80%.

LEARNING: Back people that completely blow you away. People are super important, especially at the earlier stage of the business that you invest in.

In 2013 Zachary Resnick began to make a living from playing cash games and investing in other poker players, providing a unique understanding of risk management that is largely shaped through leveraging volatility to outperform others in the high-risk, high-reward situations of poker.

In 2016 he made his first personal investment in Bitcoin and, by 2017, was focused on investing and trading crypto full-time.

In 2018 he founded Unbounded Capital, an early-stage venture capital firm focused on payment infrastructure.

He is also the founder of FlyFlat - a luxury concierge service that specializes in last-minute, heavily discounted business and first-class air travel.

Zach’s company invested in these two founders, who loved the company’s media content on the blockchain world. The founders were building a solution that Zach believed was A+. It would be a 100x improvement to existing solutions. There was one problem, though; the founders were not A+ founders. This became the first startup Zach’s company rode down by more than 80% since he started the investment firm.

• Back people that completely blow you away.
• People are super important, especially at the earlier stage of the business that you invest in.
• Know your investing style.

• When investing in a startup, you’ve got to trust the founders, believe in the idea, have a ready market and ensure the startup has the muscle to execute the vision.

If you’re in the startup investing business, especially in the early stage, meet with founders in-person before investing.

For frequent, flexible travelers who fly business class and want to save money, Zach recommends checking out Fly Flat.

To enhance deeper thinking, Zach recommends reading great books such as The Elephant in the Brain: Hidden Motives in Everyday Life and Thinking Fast and Slow.

Zach recommends reading his first e-book, How A Scalable Blockchain Will Win, to learn more about how scalable and efficient blockchains will transform the internet and how data and payments operate worldwide.

Zachary’s number one goal for the next 12 months is to have more spaciousness in his life so he can spend more quality time with his amazing partner. Zach is now focused on working smarter and a little less hard.

[spp-transcript]

• LinkedIn
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• Blog
• Podcast
• Book

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: After poor experiences with the financial industry early in his professional life, Chris Mamula educated himself in investing and tax planning.

STORY: Because Chris trusted his parents, he also blindly trusted their financial advisor. It was only after he stumbled upon better financial advice that Chris realized he’d wasted well over $100,000 in fees and another $100,000 in taxes.

LEARNING: Gain financial literacy and take responsibility for your financial situation. Don’t trust financial advisors blindly.

After poor experiences with the financial industry early in his professional life, Chris Mamula educated himself in investing and tax planning.

He now draws on his experiences to write and speak about wealth building, investing, financial planning, financial independence and early retirement (FIRE), and lifestyle design at the blog “Can I Retire Yet?”.

Chris is also the primary author of the book ChooseFI: Your Blueprint to Financial Independence.

In addition, he works one-on-one with those looking to improve their finances and use them to create a better lifestyle as an advice-only financial planner with Abundo Wealth.

Chris was a college graduate with a master’s degree starting to learn how to make and spend money. Like many people, he was overwhelmed and intimidated by the technical parts of finance, investing, and tax planning. The advice Chris would hear everywhere was; if you need help, seek a recommendation from someone you trust. So he went to his parents, whom he trusted more than anyone else. Chris’s parents were generally decent with their money as far as stretching a paycheck, managing a budget, and taking care of their children’s needs.

Chris didn’t realize that his parents used a financial advisor because they had no idea what they were doing. And because Chris trusted them so much, he started using the same advisor and blindly trusted everything he told him—no questions asked.

After a decade of this, Chris finally stumbled into some better investment advice and found out all the mistakes he had made. He realized that over a decade, he had wasted well over $100,000 in fees and another $100,000 in taxes. Because he’d started it so early in life, it could easily be a million-dollar mistake when you compound it over time.

• So many conflicts with financial advice exist, so you can’t blindly trust anyone.
• When looking for an advisor, ask as many questions as possible. What does this person know well? Is there a conflict between your interest and theirs? Are you getting the best advice?
• Gain financial literacy and take responsibility for your financial situation.

• Investing is actually quite simple, but financial professionals often make it complicated.
• Never invest in anything that somebody calls you about.
• A piece of advice could work for someone but not necessarily for you.
• You have the right to ask for further clarification if you don’t understand the fees you’re being charged.

Be widely diversified and focus on the things you can control. You can’t control what market returns you’ll get or the sequence they’ll come in. But you absolutely can manage your own personal finances. So build your savings, put more money into the market, and draw down at low rates.

Chris recommends reading his book ChooseFI: Your Blueprint to Financial Independence. The book has taken many different stories and distilled them down into common principles that you can use to create your own adventure and story.

He also recommends The Simple Path to Wealth: Your road map to financial independence and a rich, free life and any book by John Bogle to learn about tax efficiency, limiting your trading, locating your assets, being widely diversified, and more.

Chris’s number one goal for the next 12 months is not to have a goal. He simply wants to decompress, refine his life, and return to a normal lifestyle. Chris wants to enjoy life over the next year.

[spp-transcript]

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• LinkedIn
• Twitter
• Website
• Book

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
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• YouTube
• My Worst Investment Ever Podcast

BIO: Michael Howell is CEO of CrossBorder Capital, a London-based FCA-registered, independent research and investment company he founded in 1996.

STORY: Michael was once in a meeting with the governor of the Bank of Thailand, who told him they would cut interest rates the following week. Even though all possible data showed this would be a wrong move, Micahel believed him. The bank didn’t lower the rates; instead, it increased them.

LEARNING: Don’t listen to what people say, particularly central bankers; watch what they do. When participating in macro investing, understand where you are on the liquidity cycle and where investors are positioned.

Michael Howell is CEO of CrossBorder Capital, a London-based FCA-registered, independent research and investment company that he founded in 1996. The firm provides asset allocation and capital markets advice to institutional investors and manages US$1 billion of assets.

In the mid-1990s, when Michael was working at ING Barings, there was evidence of some economies beginning to overheat. Michael had a lot of discussions with central bankers, and one of those meetings in early 1995 was with the governor of the Bank of Thailand. Michael remembers the governor saying that the bank would cut interest rates. Michael assumed that the governor wanted to inform people, so it’s not a shock that interest rates will be cut.

In context, that was a crazy decision to make because Thailand was already overheating. The Chinese had previously overvalued the renminbi by about 30%, and the Japanese yen was beginning to strengthen significantly.

The governor wasn’t honest because the Bank of Thailand raised interest rates instead of cutting them. This taught Michael never to listen to what central bankers are saying. Instead, he now looks at the numbers and the underlying backdrop.

• When participating in macro investing, understand where you are on the liquidity cycle and where investors are positioned.
• Equity markets are best valued against inflation, not against bonds.
• From a global perspective, liquidity will likely be the primary driver of asset markets.
• Big currency appreciations destroy earnings, and currency devaluations boost earnings.
• PE multiples work very well at the individual stock level but certainly don’t work at the macro level.

• Don’t listen to what people say, particularly central bankers; watch what they do.
• PE multiples are not a great measure when looking at the overall macro picture.

Michael’s number one goal for the next 12 months is to get more people to understand that liquidity is the key thing going forward.

[spp-transcript]

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• Book

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
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• YouTube
• My Worst Investment Ever Podcast

• Benjamin Graham (September 2008) Security Analysis: Sixth Edition, Foreword by Warren Buffett (Security Analysis Prior Editions)

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 08: Be Careful What You Ask For.

LEARNING: High growth rates don’t always mean high stock returns.

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry’s new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 08: Be Careful What You Ask For.

In this chapter, Larry cautions people to be careful what they wish for in investing. He emphasizes the daunting challenge of active management, a path many choose in the belief that they can accurately forecast market trends.

However, as Larry points out, the reality is far from this ideal. The unpredictability of the market makes it almost impossible to predict with 100% accuracy, a fact that investors should be acutely aware of.

It’s important to note that high growth rates don’t always translate into high stock returns, underscoring the unpredictability of market outcomes. According to Larry, for today’s investors, the equivalent of the “Midas touch” (the king who turned everything he touched into gold) might be the ability to forecast economic growth rates.

If investors could forecast with 100% certainty which countries would have the highest growth rates, they could invest in them and avoid those with low growth rates. This would lead to abnormal profits—or, perhaps not.

Nobody can predict with that accuracy. Even if one could make such a prediction, they may still not make the profits they think they will. This is because, as Larry explains, experts have found that there has been a slightly negative correlation between country growth rates and stock returns.

A 2006 study on emerging markets by Jim Davis of Dimensional Fund Advisors found that the high-growth countries from 1990 to 2005 returned 16.4%, and the low-growth countries returned the same 16.4%.

Such evidence has led Larry to conclude that it doesn’t matter if you can even forecast which countries will have high growth rates; the market will make the same forecast and adjust stock prices accordingly.

Therefore, to beat the market, you must be able to forecast better than the market already expects, and to do so, you need to gather information at a cost. In other words, you can’t just be smarter than the market; you have to be smarter than the market enough to overcome all your expenses of gathering information and trading costs.

Larry emphasizes that emerging markets are very much like the rest of the world’s capital markets—they do an excellent job of reflecting economic growth prospects into stock prices. The only advantage an investor would have is the ability to forecast surprises in growth rates, which, by definition, are unpredictable.

• Enrich Your Future 01: The Determinants of the Risk and Return of Stocks and Bonds
• Enrich Your Future 02: How Markets Set Prices
• Enrich Your Future 03: Persistence of Performance: Athletes Versus Investment Managers
• Enrich Your Future 04: Why Is Persistent Outperformance So Hard to Find?
• Enrich Your Future 05: Great Companies Do Not Make High-Return Investments
• Enrich Your Future 06: Market Efficiency and the Case of Pete Rose
• Enrich Your Future 07: The Value of Security Analysis

Larry Swedroe was head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.

Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth Management.

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• LinkedIn
• Twitter
• Website
• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points

BIO: Brady Slack is the owner of High Country Finance, LLC, a full-service tax and accounting firm based in Utah in the US. His purpose is to be a resource that helps everyone experience wealth while paying the fewest taxes possible.

STORY: Brady came across a coaching group on Facebook that was good at marketing its coaching package. He was fascinated by the package and bought it for $50,000. While it was a good package, it wasn’t a good fit for him as it didn’t align with his business goals.

LEARNING: Vet the mentor, coach, or advisor before you engage with them. Pick a mentor or a coach who embodies what you want to be. Don’t decide out of desperation or pressure.

Brady Slack is the owner of High Country Finance, LLC, a full-service tax and accounting firm based in Utah in the US. His purpose is to be a resource that helps everyone experience wealth, all while paying the fewest taxes possible.

When Brady turned 23, he quit his job at an accounting firm and started a business. He didn’t have the expertise or the experience to create an accounting firm, but he decided to do it anyway. A close friend, a successful businessman, told Brady that the quickest way to learn and grow is to hire someone. So Brady started seeking out mentors, coaches, and development opportunities.

Brady connected with a group on social media that asked him to speak at their event. He felt this would be an excellent way to reach more people and boost his business. He later found out the group had an offer attached to the back end of the speaking engagement, including some coaching, marketing and advertising, and websites. This was an even better deal for Brady. This all came as a coaching package that cost over $50,000. Brady purchased it.

While the coaching program was great, Brady soon realized that it didn’t necessarily align with where he wanted to go with his business. It just wasn’t the right fit for him.

• If you need more financial resources to pay for an opportunity, wait until you have it.
• Vet the mentor, coach, or advisor before you engage with them.
• Before you pick a mentor or coach, define your goals, your intentions, and what you want your outcome to be.

• Pick a mentor or a coach who embodies what you want to be.
• You may get less value from a generalist, so go for a specialist in your interests.
• Avoid getting sucked into the flashy coaches on your Facebook feed because those guys are great at selling but not necessarily great at coaching.
• Don’t decide out of desperation or pressure.

Take time to define what you want out of your venture clearly, and then look for someone who has already done that and reach out to them to mentor or coach you.

Brady recommends getting as much information and education as possible from the numerous free online resources. Further, vet someone who can accelerate the growth within your venture and ask them to mentor you.

Brady’s number one goal for the next 12 months is to get his newly launched software to a point where it pays all its capital back and is profitable.

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• LinkedIn
• Twitter
• Instagram
• YouTube
• Website
• Podcast

• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Richard H. Lawrence, Jr., is the Founder and Executive Chairman of Overlook Investments Group, an independent fund management company established in Hong Kong in 1991.

STORY: Richard invested heavily in a successful Korean company that brought him great returns until the founder died. The son took over and brought the stock to its demise.

LEARNING: If it’s not working, get out. Invest in a company with no or minimal debt. Operating return is the purest way to measure profitability.

Richard H. Lawrence, Jr., is the Founder and Executive Chairman of Overlook Investments Group, an independent fund management company established in Hong Kong in 1991. Overlook invests US$6 billion in a concentrated portfolio of public equities throughout Asia, excluding Japan.

Richard and his wife, Dee, have founded several non-profit organizations; he’s a philanthropist who is devoted to climate change. He has two grown kids and lives in San Francisco, California.

In 1992, Richard discovered that stocks in Korea were incredibly cheap. He owned everything at 2-4x earnings. Richard owned a hair dye company and all kinds of oddball companies. Within that mix, there was one company that stood out. Korea, at the time, had massive debt. But this one company didn’t have any debt, so Richard was immediately attracted to it.

Richard purchased shares in the company initially in 1992. At the time, the company was the largest synthetic fiber producer in South Korea, making spandex. It was a formidable company going from strength to strength. It became among Richard’s most significant holdings, the strongest of this cohort of Korean companies he owned.

The company was founded by one of the greatest titans of the Asian textile industry. The founder was Korean and a larger-than-life figure in a manner unlike any other business leader in Korea in the lead-up to the Asian financial crisis when Korea went burst. He was a nonconformist in a culture that admired conformity. That was one of the reasons his company had no debt. He had the confidence and independence of someone who knew how to run a company for cash flow. Just as he disliked debt, he also disliked paying taxes. He was the most aggressive executive Richard had ever encountered in Asia or anywhere else. In one instance, he built a US$400 million facility, depreciated it over two and a half years, then revalued it and depreciated it a second time. By doing so, the founder minimized reported profits to minimize taxes and used cash savings to avoid debt. Richard liked this business model, so he invested heavily in it.

The company did very well in the start-up years until the founder died. His son took over, but he struggled to fit into his father’s giant shoes. Richard thought he could help him be successful and worked on it from 1997 to 2000 during and after the Asian financial crisis. Richard gave him all the advice he could, but he was ignored. By 2000, with no concrete action taken by management, and no upward movement in the sock, Richard’s patience wore thin. Then the new leader crossed a red line and blatantly undertook an unfair related party transaction that effectively bailed out an insurance company owned by the family with cash from the spandex company.

Richard, at that time, requested a reversal of the acquisition. He asked management to initiate paying cash dividends, execute a series of share splits, establish an IR department, and appoint additional directors that are at least partially independent. The largest internationally managed Korean fund cast the deciding vote against Richard ending the investment in a huge loss.

• Being an activist publicly doesn’t help.
• If it’s not working, get out.
• Invest in a company with no or minimal debt.
• Avoid the stock that’s the hype of the day.
• Operating return is the purest way to measure profitability and should be high. The higher it is, the better it is.

• An activist type of shareholder has its limits.
• There’s value in owning a diversified portfolio of stocks over a long period.

Go for companies with modest growth, don’t look for something off the charts. Build a portfolio of roughly 12 companies that can deliver a good operating return and rebalance it regularly.

Richard recommends reading a lot of investing books. You can start with Buffett’s letters and then go to John Train’s books as you grow your library.

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• LinkedIn
• Website
• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast

BIO: Vineer Bhansali is the CIO of LongTail Alpha. The firm was founded in 2015 to help provide risk mitigation strategies.

STORY: In early 1993, most investors held a significant long position on the Eurodollar futures contract, betting that interest rates would go down. Vineer decided to follow the herd. The Fed increased rates, and Vineer kept buying until he lost his investment.

LEARNING: Don’t follow the herd blindly. Success in the markets is all about timing. Have an investment framework within which you operate.

Vineer Bhansali is the CIO of LongTail Alpha. The firm was founded in 2015 to help provide risk mitigation strategies. Vineer was a partner at PIMCO and started their first hedge fund and also started and managed their quantitative investment portfolio teams from 2000-2015.

He has a Ph.D. in Theoretical Physics from Harvard University and has written six books on finance. He has also run over 60 ultramarathons. He is also an Airline Transport Pilot rated to fly jets and helicopters and has over 4,500 hours of flight time.

Vineer started at Citibank in late 1992, just after the 1987 big stock market crash. He was participating in a bull market created by an extremely easy central bank policy. At that time, probably the easiest trade to do was just to buy anything like fixed income or stocks, and it would go up.

Veneer was at some dinner in late 1993, and everybody in that room held a pretty significant long position on the Eurodollar futures contract, betting that interest rates would go down. That should have been a signal that something was amiss. But as a young trader, seeing everything was going up, Veneer also got long Eurodollar futures.

Then as a surprise, the Fed got a little worried in February of 1994 and raised interest rates by 25 basis points. The Treasury market started to fall, and Vineer thought it was a good time to buy, so he bought some bond futures contracts. The interest was raised again in March, and the market sank a little bit more. He kept buying more, hoping the rates would soon go down again. Eventually, his trades were blown over, and he lost his investment.

• Having an original idea is always good because you create value by being different.
• Don’t follow a herd blindly.
• Success in the markets is all about timing.
• Have an investment framework within which you operate.
• The markets are very demanding, and to survive, you need to take care of everything about yourself; your mind, your body, and your health.

• The market is a predator.
• Original ideas create value.
• Markets are a human construct, and you never know which way they can go.
• Don’t get too hooked on your creative idea because it may not be time right for it.
• Have an investment framework and follow it.

There’s a lot of stuff that’s on Vineer’s website that can help with risk management. He also recommends reading The Feeling of Risk: New Perspectives on Risk Perception. Veneer highly advises people at this stage of the game to abandon some of the preconceptions about how stock markets or bond markets work and just go back and do some honest, independent research on what risk management means for themselves as an individual.

Vineer’s number one goal for the next 12 months is to stay healthy. For his investors and portfolios, he wants to be very disciplined and positioned on the right side so he can deliver a stellar performance that matches the kind of strategies he has.

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• LinkedIn
• Twitter
• Website
• 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

• Valuation Master Class
• The Become a Better Investor Community
• How to Start Building Your Wealth Investing in the Stock Market
• Finance Made Ridiculously Simple
• FVMR Investing: Quantamental Investing Across the World
• Become a Great Presenter and Increase Your Influence
• Transform Your Business with Dr. Deming’s 14 Points
• Achieve Your Goals

• astotz.com
• LinkedIn
• Facebook
• Instagram
• Twitter
• YouTube
• My Worst Investment Ever Podcast