The Only Investment That Can 1000x Your Money
Summary
TLDRThe video discusses the counterintuitive strategies of the best investors, emphasizing buying during market downturns and avoiding frothy markets. It highlights the importance of thorough research and mathematical analysis in investment decisions. The video identifies artificial intelligence (AI) as a major transformative trend, comparing its potential impact to that of the internet and mobile technology. It advocates for early-stage investments in AI through venture capital funds to maximize returns. The video concludes with a call to action for viewers to consider venture capital as a means to capitalize on the AI boom.
Takeaways
- đ Investors often regret missing market peaks and follow the crowd, which can lead to losses.
- đ€ The best investors act counterintuitively, buying when markets are down and selling at peaks.
- đĄ Psychological challenges make it hard for people to invest against the crowd.
- đą Investing is like evaluating a damaged ship: assess the true value and potential for recovery.
- đ Research and understanding industry trends are crucial for making informed investment decisions.
- đ Evaluate the company's unit economics and business model to ensure long-term viability.
- đ§ AI is a transformative technology, comparable to the internet and mobile revolutions.
- đ AI has significant growth potential, with low current penetration even in advanced countries.
- đą Venture capital offers high returns by investing in early-stage startups in emerging sectors like AI.
- đ The recent market correction in venture capital has created opportunities with more reasonable valuations and abundant talent.
- đ Successful investments require understanding macro and micro industry trends, and AI is a promising sector.
Q & A
What is the common mistake that amateur investors make according to the video?
-Amateur investors often invest when the market is at its peak, driven by fear of missing out, and then sell at the bottom, resulting in significant losses.
What strategy do the best investors use according to the video?
-The best investors buy when the market has dipped or is flatlining, going against the herd mentality and investing based on data and analysis rather than hype.
What analogy is used in the video to describe investing in undervalued markets?
-The video uses the analogy of a burning ship, suggesting that one should wait until the ship is just a smoking ruin, then evaluate if it is salvageable before investing.
What three steps should investors take when evaluating an investment according to the video?
-Investors should: 1) Avoid frothy markets and wait for prices to be reasonable. 2) Research the industry and market trends. 3) Do the math to ensure the investment is financially viable.
Why is artificial intelligence (AI) considered a transformative technology in the video?
-AI is considered transformative because it has the potential to significantly lower the cost of creation, similar to how the microchip and the internet revolutionized computing and distribution.
How does the video compare the current state of AI adoption?
-The video states that AI adoption is still low, even among early adopters of technology, with less than 50% usage in technologically advanced countries like the US.
What investment strategy does the video recommend for capitalizing on the AI boom?
-The video recommends investing early in the innovation cycle, particularly in early-stage startups and venture capital, rather than jumping on the bandwagon when it becomes popular.
Why does the video suggest investing through a venture capital fund?
-Investing through a venture capital fund is recommended because it reduces the risk of losses by diversifying investments across multiple companies and benefits from the expertise of fund managers.
What signs indicate that venture capital is regaining momentum according to the video?
-Indicators include a recent increase in deal value and successful IPOs of venture-backed companies, signaling that venture capital is returning to favor.
What final advice does the video give to investors regarding AI investments?
-The video advises investors to look beyond the public markets and focus on the venture capital industry, where the real value lies in early-stage AI investments.
Outlines
đ The Counterintuitive Strategy of Top Investors
The story begins with a familiar scenario of an investor reacting to market fluctuations and ultimately suffering losses. The best investors, however, employ a counterintuitive strategy by buying when the market dips and avoiding following the crowd. This strategy involves psychological challenges due to human nature's tendency to follow the herd. The video aims to explain this approach and identify current investment opportunities in an underappreciated sector.
đ The Evolution of Technology and AI's Potential
The second paragraph discusses major technological shifts, likening the impact of AI to that of the microchip, internet, and mobile phone. It highlights how generative AI can reduce the cost of creation to zero, transforming industries. The paragraph emphasizes the importance of understanding these shifts and positions AI as a revolutionary technology with the potential to create new industries, similar to past technological advances.
đ Venture Capital and the Future of AI Investment
The third paragraph focuses on the venture capital (VC) approach to investing in AI, stressing the importance of early-stage investments. It discusses the benefits of investing through VC funds to mitigate risks and maximize returns. The paragraph also highlights the role of experienced fund managers in selecting promising startups and provides an example of a successful investment in an AI company within the education sector.
đłïž Investing in Unloved Markets and the VC Recovery
The final paragraph wraps up the video by reiterating the strategy of investing in undervalued areas overlooked by the market. It points to the recent recovery in the VC market and the availability of talent due to layoffs in larger tech companies. The paragraph concludes with a focus on AI as a major investment theme and encourages viewers to consider VC as a means to capitalize on this trend.
Mindmap
Keywords
đĄInvestor
đĄMarket
đĄPsychology
đĄArtificial Intelligence (AI)
đĄVenture Capital
đĄMega Trends
đĄNASDAQ Composite Index
đĄHerd Behavior
đĄDue Diligence
đĄRisk Management
Highlights
Investors often panic buy during market peaks and sell during troughs, resulting in significant losses.
The best investment strategy is counterintuitive: buy when the market is down and avoid following the crowd.
It's psychologically challenging to buy during market downturns due to herd mentality and fear of going against the tide.
Use data-driven decision-making to evaluate investment opportunities, especially in distressed assets.
Research the market and industry trends to make informed investment decisions.
Calculate the potential profit by comparing the cost of investment with the estimated value after recovery.
Avoid frothy markets and wait until prices stabilize after initial hype has subsided.
Understand the broader macroeconomic trends that impact the industry you are investing in.
Artificial Intelligence (AI) is identified as a major, transformative trend similar to the internet and mobile technology.
Invest early in the innovation cycle, particularly in AI, to maximize returns.
Venture capital investments offer high returns but come with significant risks; diversifying across multiple startups can mitigate these risks.
Investing through a venture capital fund can provide better risk management and access to high-quality deal flow.
The current market correction has made venture capital investments more attractive due to lower valuations and abundant talent.
AI adoption is still in its early stages, providing a significant opportunity for early investors.
Successful exits of venture-backed companies signal a healthy environment for new venture investments.
Venture capital investment in AI promises substantial returns, as the technology is expected to disrupt numerous industries.
Transcripts
here's a story I'm sure you're all
familiar with you've got an investor he
hears about a market popping and he
thinks ah I missed the boat should have
invested and then a few days later he
hears about the market continuing to pop
and he thinks Cy I better get in there
all of my mates are getting in there I
need to get in there as well and then
the market collapses but the story we're
going to tell in this video is what the
best investors do what they do is
counterintuitive it goes against our
very base human instinct and nature and
even after this sounds crazy even after
you guys watch watching this video most
of you won't actually do this and at the
end of this video after sharing with you
what the best investors's game plan is
I'll apply that and I will share with
you the sector that I believe is
currently unloved under the radar and
right for investment as always folks
remember this is not Financial advice we
make these videos for entertainment and
educational purposes only as ever your
capital is at risk when you're investing
let's
begin take a look at this graph of the
NASDAQ composite index an index that is
heavily weighted towards tech stocks as
you can see this is a story of the last
few decades and you can see big spikes
up and then you can see Falls and then
you can see the spikes going up again
and I can pretty much guarantee you that
the amateure investors they invested
towards the peak and then they nursed
their losses all the way down the trough
and then sometimes they ended up selling
at the trough as well so they literally
booked a massive loss the trick of
course folks is to buy when it's flat
lining is to buy when the market has
dipped because then you're going to be
buying cheap and then eventually you'll
be able to sell at a high price now I
know this sounds really obvious and easy
to do but actually it's really
psychologically hard because you see as
human beings we are wired as heard
animals we like following the crowd we
like following momentum we don't want to
be Billy no mates the person who's going
against the tide but this strategy
demands exactly that let me put it
another way what we don't like is if we
see a ship burning and we see all of the
people the crews jumping off the edges
of the ship the rats are fleeing the
ship as well and we think aha that ship
is now undervalued let me invest in that
ship we don't do that and you know what
there's very good reasons for that as
well because most ships that are on fire
will ultimately just disintegrate and
become completely unsalvageable sink and
that's the end of that ibraim you're
speaking in riddles just tell me what
I'm supposed to do so what you should
actually do is wait until the ship is
just a smoking ruin and you can go up to
it on a dingy boat look around it and
figure out if it is salvageable or not
if it is investable or not and then in
the cold hard light of day you make an
investment decision based on data you
should also be well informed about the
market and the industry that you're
investing into so you should know about
what the demand and supply for ships is
like and what's going on in the shipping
industry right now you should also be
aware of the wider macro trends of the
supply the Imports and the exports
industry and where that is as a whole
because of of course that then affects
the shipping industry as well and then
the final thing is do the maths look at
how much is this ship actually worth in
the market if it was fully done up how
much will it cost me to actually do up
this ship and how much can I buy it for
right now and if you can see a bit of a
profit between how much you're going to
have to spend on the ship and then how
much you can sell it for then that's
game on so now taking the ship analogy
and applying it to the stock market or
investments in general firstly typically
try and avoid frothy markets wait until
the dust is sett told until everyone's
gone away all of the good and bad hype
has gone away and the price is much more
reasonable number two research the
industry and the market overall and
understand where the big trends are
going and then number three make sure
you actually do the maths is this
company might be in a great sector might
be a great opportunity but is this
company actually got the unit economics
and does its business model make sense
for the long term because if the math
doesn't add up then you can't invest so
folks we've now worked out what the best
invest
game plan is when it comes to the
psychology and timing of their
Investments now let's try and apply this
and figure out what investments we
should actually be making right
now in order for us to narrow down the
investment areas that we want to focus
on let's first take a step back and
identify the mega trends that we're
going to be riding to deliver our
investment ideas and I've done a video
on this previously here that you can
watch about the me Mega trends that
we're focused on for 2024 but in this
video I want to double click on just one
of those Mega Trends artificial
intelligence now we all know that
artificial intelligence is big but the
question is is it enormous is it big
like crypto is and was big or is it big
like the internet now in my humble
opinion I believe that artificial
intelligence is seismic and disruptive
and transformative in the same way that
the internet mobile technology and cloud
computing has been over the last two or
three decades Mark Andres is a very
celebrated venture capitalist he's got a
a fund called andreson Horowitz who
we've actually co-invested with on some
companies a number of times including
some AI companies actually he says this
just like the microchip brought the
marginal cost of compute to zero and the
internet brought the marginal cost of
distribution to zero generative AI
promises to bring the marginal cost of
creation to zero because you see every
so often you have big technology shifts
that completely upend the the way that
the world is it changes things so
dramatically that entire new Industries
are born remember the internet before
the internet people didn't go online the
internet gave birth to Google Amazon
emails weren't really a thing before the
internet came about how crazy is that
remember the mobile phone Revolution
where we could now actually carry a
mobile phone in our hands around with us
all the time people who are perhaps too
young for this would remember the Nokia
3310 he could barely do anything on that
phone but with phones in our hand we can
do all all sorts of things that's given
birth to companies like Airbnb Uber Lyft
door Dash venmo Mobile Banking and the
list goes on and on and remember the
cloud computing shift this is not one of
those that's obvious because if you're
not a business you won't be even aware
of this but the cloud computing shift
enabled companies like Netflix
Salesforce Spotify it enabled Microsoft
to switch to a subscription model it
enabled Dropbox Google Drive and twilio
amongst many others in absolutely the
same way artificial intelligence is
expected to completely transform entire
Industries because you can now replace
the creativity you can replace someone
doing a process with a computer that can
do it much more accurately and far
quicker that is a very very scary but
also incredibly promising
prospect it's a fair question but let's
have a look at this chart as we can see
folks AI is literally just starting it
has so much more room to grow into I
mean just take a look at this clip of
Sal Khan so we're curious about how good
it might be at tutoring someone in math
on Khan Academy so pleas side AC is
called the adjacent side he did a great
job identifying the signes at using the
sign formula wow I mean that is going to
replace teachers that is going to
fundamentally change how we think about
education how we think about where we go
to get education the role of a teacher
and the role of a a student why we get
educated in the first place these are
all now for the first time in centuries
open questions and folks this is the mic
drop moment of this video you know the
Mad thing about everything that we've
just been saying no one has clocked it
yet even among the early adopters of
Technologies people who are between the
ages of 18 and 29 we are way under 50%
in terms of usage of AI and this is just
talking about very technologically
advanced countries like America even
there the penetration is low many people
in surveyed have said they've not used
AI at all and are unsure whether they
have or not and in another survey AI
still lags behind as revolutionary
compared to mobile phones and the
internet so folks without doing very
much work at all we have identified
pretty solidly a few things AI is big
and it's going to become enormous AI
will disrupt everything and crucially
not many people know about it yet so now
the big question comes up how are we as
Savvy investors going to take ad
advantage of what we have just
learned okay folks there is still a lot
of potential in the public markets by
investing in companies that are at the
Forefront of this AI Race So companies
like Microsoft and Google and meta and
Facebook Nvidia Taiwan semiconductor
technology and others like that but as
this graph shows of the NASDAQ composite
index people have kind of clocked that
this is a thing and they are investing
in it and there's a bit of a bull market
going on around these AI compan
companies but you know what folks the
real returns when it comes to investing
in technology is going early in the
Innovation cycle by investing in early
stage startups venture capital is the
bit before the graph even starts it's so
much of a flatline it's not even there
it's the under the radar industry where
it really does matter about who you know
and what you hear on the grap Vine and
if you can track down those really
hidden rough diamonds it's the industry
where enormous successes are birthed and
also you can have some complete failures
as well now we've been investing in
Venture Capital through the curate VC
fund for several years now alhamdulillah
we've had a few exits successfully as
well and like many VCS who are in the
know we and they have been investing in
AI long before it became popular side
note folks you should definitely check
out our fund at curate do Capital it's
averaging 23% plus annualized returns
and it is to our knowledge the only Sher
compliant VC fund operating in all of
Europe and if you're a UK investor then
it come comes with some very sweet tax
incentives as well now back to the AI
Story We invested in a company a few
years ago that was very interesting in
the education space and now very
recently as of a few months ago Sam
ultman and open AI are investors in this
company because they saw the promise the
point I'm making is it's not about
jumping on the bandwagon now it's about
jumping in the bandwagon early now in
terms of the best way to invest in
Venture Capital it is in my humble
opinion through a fund rather than doing
individual ual startups and the reason
for that is because you will
significantly drisk the risk of Duds and
there will be many Duds in Venture
Capital you will significantly reduce
your risk of losses by spreading your
bets across 20 25 30 companies that a
typical fund would give you exposure to
and in Venture Capital investing with a
quality fund manager is actually really
value additive unlike in public equities
where it's actually common knowledge and
a bit of a joke that an expert fund
manager usually will underperform the
pass ETFs that you could have just
invested in for very very low fees but
in the Venture world that's not the case
because a fund manager in VC comes with
his black book and the ability to due
diligence deals at the very early stage
where there really isn't as much data
around so you really are relying on a
quality nose on a quality fund manager
ideally with track record I would
definitely recommend not diying it
unless you have access to really really
strong deal flow for example you're a
very senior person in the Google
innovation labs something and crowd Cube
doesn't count by the way folks because
anyone can get access to that stuff
there is a great deal of portfolio
mathematics around what I've just said
I'm not going to belabor the point here
but I'm going to point you to a
completely free Venture investing course
that we made with some of the leading
Lights of the Venture industry that you
can access completely free and easily at
ultimat startup course.com so folks the
bottom line is venture capital is an
industry where you can make crazy
returns anywhere ranging between 10x
sometimes up to a 1,000x on your
Investments no other industry offers
that but in order for you to get
exposure to that in a way that is
reliable and relatively safe I would
recommend that you think about doing it
through Venture
funds if you're asking this question
still where have you been for the rest
of this video the whole point of this
video is that we are going to invest in
unlove unfly slightly Backwater areas
that are being overlooked by the market
right now and by the newspapers and
journalists right now investors are not
journalists journalists buy into hype
and that is not where investors Focus we
create the hype but it takes about 2
years to get there and look the VC
Market went through a pretty brutal and
necessary correction over the last 18
months or so particularly at the later
stages we've always been at the early
stages and frankly it hasn't been too
crazy even at the peak in the early
stages but now the market has corrected
and the signs are now that this ship
that is now emerged a little bit damaged
a little bit burnt is actually pretty
decent and has a lot of to offer very
affordable prices so valuations are
pretty reasonable and talent is
plentiful because there's been some Mass
layoffs from the larger Tech Giants and
as a result there are a lot more
entrepreneurs and there's a lot more
cheap Talent available for startups to
snap up and take advantage of and the
public markets like we've mentioned are
booming particularly when it comes to
the tech sector and this is actually a
really important signal it's almost the
signal that indicates that venture
capital is now going to come back into
the Vogue because of course where do
Venture Capital backed companies exit to
the IPO and we've had some very
successful IPOs like Reddit which was a
VC back company kaspi.kz Astera which is
an AI company have done very very well
and so that gives a signal to all
venture capitalists that actually guys
we think we can get this exited at a
good multiple and make a profit so now
let's start investing in these companies
as well and if we actually look at the
data Q4 2023 saw an 11% quarter on
quarter increase in Deal value which is
indic ating that Venture Capital funds
are now steadily getting back into the
groove of deploying and making
Investments and in Europe in particular
we saw a 28% quarter and quarter
increase in Q3 2023 which is pointing
towards a European market that is also
now steadily
recovering so now let's wrap it all
together folks what we have learned in
this video first invest when other
people are too fearful to invest invest
after understanding properly the macro
and the micro of the industry and sector
that you are investing into and invest
based on the maths make sure it Stacks
up and right now my dear brothers and
sisters I believe that AI is a big Mega
theme that has a lot more juice to give
and of course AI is not a big secret we
can see it reflected in the public
markets and the newspapers but what I'm
saying is look at where the puck is
headed and look at where the real value
Lies when it comes to investing in Ai
and that in my humble opinion is the
Venture Capital industry that that's it
for today folks I hope you found that
helpful I'd love to hear your Venture
stories in the comments below make sure
that you check out the curate Venture
Capital Eis fund if you are into Sharia
compliant investing until next time
assalamu alaykum
[Music]
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