If I Was Starting Off With $1 Million Dollars Today, Here's What I Would Do... | Guy Spier

Summary

In this insightful discussion, the speaker explores the concept of using money as a tool for personal growth and innovation rather than focusing on wealth itself. Addressing an audience’s curiosity about investing, the speaker shares their strategy of taking calculated risks with investments, especially in smaller companies with high growth potential. They emphasize the importance of working hard to build confidence in making bold decisions and the need to develop resilience in navigating the uncertainties of the market. The conversation blends personal anecdotes with investment strategies, offering valuable lessons on risk-taking and long-term financial growth.

Takeaways

• 😀 Money is seen as a vehicle for personal reinvention and innovation, not the central focus of the conversation.
• 😀 The guest emphasizes that questions about money are the least interesting, with a focus on self-development and creating a meaningful life.
• 😀 If starting with a million dollars, the individual would get a job to cover living expenses and preserve the capital for investment.
• 😀 The goal is to avoid drawing down the million dollars for living expenses, ensuring it is only used for investing and growing wealth.
• 😀 The approach to investing would be high-risk, with a goal of making multiple investments in small companies with a high return potential.
• 😀 The speaker would diversify the million-dollar investment across at least 10 to 20 'pots' to manage risk and maximize returns.
• 😀 Investing in higher-risk opportunities like small-cap stocks and sub-billion-dollar companies could yield returns of 7x or more in a shorter period.
• 😀 The speaker's past conservative investment approach led to missed opportunities, such as only putting $200,000 into an opportunity that could have turned into $7 million.
• 😀 To identify high-return investments, the individual would use tools like Value Line, Value Investors Club, Seeking Alpha, and other resources to research and find opportunities.
• 😀 Building a 'muscle' for risk-taking is crucial to success, and the speaker would work to strengthen this ability from a younger age to make bolder investments.
• 😀 The speaker acknowledges that they were too risk-averse in the past, and though it's okay to have been conservative, they would have aimed for a more aggressive, opportunistic approach to investing.
• 😀 The speaker reflects on the nature of risk and the importance of being willing to make decisions in uncertain environments, as opposed to waiting for perfect conditions.
• 😀 A philosophical perspective is shared, using the concept of God watching over investments to emphasize the importance of commitment and action in decision-making.

Q & A

Why does the speaker find money questions the least interesting?

The speaker views money as merely a vehicle for playing the game of life, focusing on innovation, self-reinvention, and pursuing a meaningful existence, rather than being driven by money itself.

What is the speaker's strategy for managing a million dollars?

The speaker suggests starting with a million dollars by getting a part-time job to cover living expenses, while investing the capital to grow. This ensures that the million dollars is preserved and not depleted for day-to-day needs.

What are the key considerations when investing with a million dollars, according to the speaker?

The speaker emphasizes taking higher risks, dividing the capital into multiple 'buckets,' and making investments that have a high probability of returning multiples of the original investment. Diversification is crucial to managing risks.

How does the speaker suggest balancing risk and reward when starting with a million dollars?

The speaker advocates for a more aggressive approach to risk-taking, such as investing in smaller companies with high growth potential. The key is to take calculated risks without risking financial stability, and to make consistent, strategic bets.

What role does the speaker believe age plays in the risk-taking process?

The speaker indicates that being under 30 would offer more room for higher-risk investments, as younger individuals have more time to recover from losses and can afford to take larger bets with a longer horizon for returns.

What is the speaker’s perspective on the importance of job security when investing?

The speaker stresses the importance of having a stable job to cover living expenses, which allows them to avoid drawing down from their investment capital. This strategy provides peace of mind and mitigates pressure on the investment returns.

What does the speaker mean by 'wrinkles' in investing?

The speaker refers to 'wrinkles' as special situations or opportunities in investments where there is a unique valuation, often with some risk or uncertainty involved, but with the potential for very high returns.

How does the speaker's past experience influence their current investment strategy?

The speaker acknowledges that they were once more risk-averse due to fears of losing money and disappointing investors. However, with experience, they now recognize the importance of taking more calculated risks and developing the 'muscle' to handle high-risk investments.

What is the significance of the idea that 'God is watching' in the context of investing?

This concept is used to highlight the psychological challenges of investing. It suggests that every decision is under scrutiny, with the belief that risks are heightened and mistakes are magnified. This mentality helps the speaker approach investments with more caution and introspection.

Why does the speaker mention Mish Pabrai and his approach to risk?

The speaker compares their own approach to investing with that of Mish Pabrai, who is less risk-averse due to his background and willingness to face high-risk situations. Mish’s experiences have strengthened his risk tolerance, something the speaker wishes to develop further.