My Worst Investment Ever Podcast
Business:Investing
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.
“Don’t take investment tips from people because those who tell don’t know, and those who know, don’t tell.”Spencer Jakab
Guest profile
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.
Worst investment everSpencer 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.
Lessons learnedStop 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’s recommendationsSpencer recommends using robo-advisors because it’s a cheap way of monitoring your investment portfolio, especially if you’re starting out.
No.1 goal for the next 12 monthsSpencer’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.
Parting words“My motto in investing is to be cheap and lazy. That’s the formula for success.”Spencer Jakab
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Connect with Spencer Jakab
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Laurie Barkman – Quit Often Quit Fast
Mark Venables – Do Your Best to Secure Your Crypto
Tania Reif – You Can Be Right and Lose Money
Mark Neuman – Constrained Capital and ESG Orphans
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