Ep20: Alexander Burstein – Beware of Stock Tips. Do Your Own Research
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Guest profile
Alexander Burstein works in the pharmaceutical industry, first doing a sales career in Merck KGA and Angelini, then a marketing career. And the last 18 years, he is in business development for Sanova, a company of the McKesson Group.
In his leisure time, he loves to do sports like jogging and hiking, and he is a passionate historian.
In this episode, Alexander shares his worst investment ever story losing 90% value of his biotech stock investment. Relying on stock news and tips only and not researching further about the investment.
“People in general tend to overvalue the positive information and to undervalue the information about risks.”
Alexander Burstein
Topics Covered:
00:46 – Alexander Burstein’s professional and investment background
02:30 – Sharing his worst stock investment story venturing in a rising star biotech company with Phase 3 Projects.
03:43 – From 2000 Euros to 200 Euros: Biotech Company’s stock price crashed after the Phase 3 Project results announcement
06:20 – Andrew’s takeaways from Alexander’s investment story
09:30 – Andrew’s strategy to minimize the risk to a stock with a binary outcome
09:53 – Alexander’s one actionable advice listeners can take to avoid suffering the same fate: Divide your risk by investing in several assets.
Main Takeaways
- Lesson 1: “I trusted news about news. I listened to people telling news about those [stock] shares. But I did not spend the time to really make my own investigations.”– Alexander Burstein
- Lesson 2: “If you had done a lot of research it’s quite possible you could not have come to the conclusion that they were going to fail Phase 3 of the trials. Why do I say that? Because there must have been other professionals and analysts looking at the company. And if they thought that there was a high probability or probability that this company was going to fail, they would have been giving out warnings or turning their recommendations negative.”– Andrew Stotz
- Lesson 3: “The number one error that most people make which is a failure to either do research or to only do a limited amount of research before investing.”– Andrew Stotz
- Lesson 4: “If a person a listener was so inclined to invest in this type of a company where there is a binary outcome, either it’s going to pass, or it’s going to fail. And as you said 7 out of 10 failed. The strategy to reduce the risk is to try to buy 10 of them, knowing that seven of them are going to fail, but the three that path is going to fly.”– Andrew Stotz
Connect with Alexander Burstein:
Andrew’s books
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr.Deming’s 14 Points
Andrew’s online programs
- Valuation Master Class
- Women Building Wealth
- The Build Your Wealth Membership Group
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points
Connect with Andrew Stotz:
About the show & host, Andrew Stotz
Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.
Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.