Episode of My First Million with Sam Parr and Shaan Puri.
Transcript
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Kind: captions Language: en what happened you’ve lost five million dollars yeah which one you see you look at the list tell them which one you wanna do what happened you’ve lost five million dollars all right I didn’t exactly lose 750,000 that I’m gonna put into this which means that can’t be like your whole net worth which is like well this would that would have been 75771 50 grand at that time would have been more than my whole net worth and so I knew I didn’t have the the sort of bankroll to do it but that was an excuse I could have found a way I could have brought the check anyways I could have banked on myself making more in the future like I did and bottom line is I didn’t so I would have been the first check into this guy’s company and my sort of $25,000 check which I was very very close to writing would have become a five million dollar stake in this guy’s business by now wait what’s the name of the company say the name and how big is it now I’ll just tell you the name will bleep it out so it’s called and so he told me that they just crossed it you know the billion dollar valuation and and so I don’t know if they’re exactly at that onething a little over a little under but the point is they’re they’re doing well and and so yeah I was kicking myself because that would have been a big investment as happened to me this has happened to me now two different times where I could have I could have been one of the angel checks into a business I thought it was a good business I didn’t pull the trigger and those two would have combined to be worth you know ten million dollars plus by now well calm yeah so this company this studying abroad company there do they make a lot of revenue or is it just yeah reading it and even then like this was the reprieve ever knew at the time but I was doing the math and I was like wait like they had an LOI signed by a bunch of universities and I was like wait so if they just match the supply and demand like this things there make money do them enough conviction and it’s just a bleach insight no no it’s a full software tool that let that actually does the application for the student the universe money oh it’s a SAS company it’s a free SAS tool for the user and then it’s a lead gen on the other side when a kid gets accepted they get paid that way got it and they charge the university’s money yeah like thousands of dollars per student so okay so they don’t charge the money for the software no the software’s used by the actual student and customer so anyways it was a it’s a great business big mess on my part happy for the guy though he’s an awesome guy and I really I like this guy’s energy a lot kind of sometimes you meet people who got could just have good energy I don’t know how describe it he was one of those peoples and you know MGM so not again so basically I haven’t talked about this on the podcast but I during co vid I decided to mess around with option trading which you know famous last words and so I was literally this is how dumb I am right so so I don’t play in the finite by the public markets that much I just do very simple things I just buy companies I think are good for the next 10 years or i buy index funds I don’t do a whole I don’t do like day trading I don’t do their leverage buying or I don’t do shorts but I was like you know what I don’t see any way that MGM which is MGM Resorts I was like I don’t see any way that their business doesn’t go down with this coded thing and so I was thinking about it and it got cut by like 75 percent so the stock price dropped from I don’t know it was like 25 dropped from 30 down to like 12 and then I was like yeah I still think that this thing is gonna go down and so I’m literally on one tab I have like a Khan Academy video of like what the hell is a put and on the other hand I’ve got my Robin Hood account and I’m like just pushing buttons and so I pushed a bunch of buttons and I placed this trade which basically said okay I think MGM’s gonna go down and yeah about two thousand dollars worth of options and like let’s see what happens and it turns out MGM didn’t go down but I needed it once I understood my own trade which was like after I placed it cuz I was again just put your buttons when I was looking at the like confirmation I was like this is a horrible trade but I just basically said that this is gonna go down 40% in the next seven days did you lose - grab stupid bet so that’s my bad the two bad investment side of waters here on the other side other side I bet really big into Bitcoin and when it dropped to like 4500 recently and now it’s back up so that one made back money from for the buy shitty option trading in Spain I I completely stay away from stocks I only buy S&P 500 or Facebook stock and about two weeks ago when it was at the bottom I was like I was like well no when the whole market was real low like the lowest point maybe ten or two weeks ago I sold most everything and I was like I think I think it’s just gonna get worse and worse and worse because I’m and unemployment comes out and it’s the highest it’s ever been and/or the unemployment work claims and then the stock market goes up 20 percent like I just don’t understand how I know I don’t understand how this works at all because and then I applied for the loan for for Trump enacted and I’m like so you’re telling me we get free money that sounds great but you start thinking about it you’re like I’m gonna pay for this eventually like somehow I’m there’s no such thing as free we’re gonna pay for it eventually and so this money it’s just this whole situation it doesn’t make sense to me because the stock market should be going down yes this is a dead cat bounce or like sort of a false rally but forgetting forgetting the market right now because I don’t know [ __ ] about it and who also who cares it’s not that interesting it’s a speculators game though there’s a phrase I learned that I thought was pretty cool it’s called a king Xena contest you know to Kenzie and beauty contest is okay so have you ever heard of that sort of economists full names like Maynard John Maynard Keynes or whatever anyways he’s famous guy in the world of economics Keynesian economics and a Keynesian Brede beauty contest describes this phenomenon where let’s say there’s a know what you think the stock market should be is here’s an asset here’s a company you can buy some of their stock and you buy it if you think that the companies are can have become more valuable than it’s priced at today that’s what we think should be happening but what’s actually happening is this is a speculator market rights a speculation driven market and so you don’t in in a short time horizon you don’t you’re not betting that the company is going to improve and actually generate more revenue and whatnot you’re just betting that other people are gonna think this is more attractive but they’re also bidding that other people are gonna think you’re attractive suits kingsy beauty contest is where you’re not actually judging the beauty of it you are thinking what the other judges would think about this thing and they’re thinking about what the other jesters think about this thing and it becomes a sort of speculative loop and that’s my sort of Wikipedia page of the week that’s exactly how things working and it just annoys me so much you have so much more control over your life when you actually run the business right and there’s also a great phrase which is sort of in the short-term the stock market is a popular lady contest and in the long term it’s a weighing machine and I think that really describes it well right so like is this also for private companies as well and when you’re you’re raising a Series A in your hyped company it’s a popularity contest and what people like how did this valuation that doesn’t make any sense like yeah it makes sense if you if you understand that this is currently a popularity contest but over the long haul it does not remain a popularity contest it becomes a weighing machine and if you’re full of air and there’s nothing there like your value will go down and so for all those people who don’t understand those valuations that’s why it’s frustrating I’m just so I don’t I don’t do anything in that world because I just know I I don’t know anything about it and I don’t want to know like it makes me too angry [Music]