The Only Investment That Can 1000x Your Money

Summary

The 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

• 📈 Investors often regret missing market peaks and follow the crowd, which can lead to losses.
• 🤔 The best investors act counterintuitively, buying when markets are down and selling at peaks.
• 💡 Psychological challenges make it hard for people to invest against the crowd.
• 🚢 Investing is like evaluating a damaged ship: assess the true value and potential for recovery.
• 📊 Research and understanding industry trends are crucial for making informed investment decisions.
• 🔍 Evaluate the company's unit economics and business model to ensure long-term viability.
• 🧠 AI is a transformative technology, comparable to the internet and mobile revolutions.
• 🌐 AI has significant growth potential, with low current penetration even in advanced countries.
• 🏢 Venture capital offers high returns by investing in early-stage startups in emerging sectors like AI.
• 📉 The recent market correction in venture capital has created opportunities with more reasonable valuations and abundant talent.
• 🌟 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

00:00

📈 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.

05:00

🌐 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.

10:01

📊 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.

15:02

🛳️ 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.

Keywords

💡Investor

An investor is someone who allocates capital with the expectation of a financial return. In the video, the story begins with an investor who reacts emotionally to market trends, illustrating common pitfalls. The main message emphasizes how the best investors adopt counterintuitive strategies to succeed.

💡Market

The market refers to a system or environment where buyers and sellers engage in trade. The video discusses how amateur investors often react to market spikes and dips, leading to losses, whereas seasoned investors buy when the market is undervalued.

💡Psychology

Psychology in investing involves understanding human behavior and emotions that affect investment decisions. The video highlights how psychological factors, like fear of missing out (FOMO), can lead to poor investment choices, whereas successful investors manage their emotions and make data-driven decisions.

💡Artificial Intelligence (AI)

AI refers to the simulation of human intelligence processes by machines. The video emphasizes AI as a major investment trend with transformative potential, likening its impact to the internet and mobile technology revolutions. AI is presented as a key area for future investment opportunities.

💡Venture Capital

Venture capital is a type of private equity financing provided to startups and small businesses with high growth potential. The video advocates for investing in AI through venture capital, explaining that early-stage investments in innovative startups can yield significant returns.

💡Mega Trends

Mega trends are large, transformative global forces that impact business, economy, and society. The video identifies AI as a mega trend and suggests that understanding these trends is crucial for making informed investment decisions.

💡NASDAQ Composite Index

The NASDAQ Composite Index is a stock market index that includes almost all stocks listed on the NASDAQ stock exchange, heavily weighted towards tech stocks. The video uses the NASDAQ's historical performance to illustrate how amateur investors often buy at peaks and sell at troughs, while smart investors buy during dips.

💡Herd Behavior

Herd behavior refers to individuals acting collectively without centralized direction. In the context of the video, it explains why many investors follow market trends impulsively, often leading to suboptimal investment decisions. Successful investors, in contrast, act independently of the herd.

💡Due Diligence

Due diligence involves a thorough investigation and evaluation of a business or investment opportunity before making a decision. The video stresses the importance of due diligence in investment, advising viewers to research industries, market trends, and financial metrics to make informed decisions.

💡Risk Management

Risk management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings. The video implicitly discusses risk management by advising investors to wait until markets settle and to diversify their investments through venture capital funds to mitigate risks.

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]