Ep325: Jess Larsen – You Should Never Speculate When Investing

Listen on

Apple | Google | Stitcher | Spotify | YouTube | Other

Guest profile

Jess Larsen started his finance career on a mergers and acquisitions team with Citi. Later he founded several businesses; the three companies he currently co-owns are Graystoke Investments, Graystoke Advisors, and Graystoke Media.

Jess was previously the Director of Special Operations and Intelligence Agencies practice for the management consulting firm the Arbinger Institute.

Ten years ago, he co-founded a charity called Child Rescue Association that combats child trafficking through prevention campaigns, aftercare support, and undercover rescue missions.

You can listen to him regularly on his podcast, Innovation & Leadership with Jess Larsen.


“Cash flow is king.”

Jess Larsen


Worst investment ever

When Jess was in his twenties, he left Southern California and went back home to Canada, where he started an energy-focused private equity fund. Then some friends got him and his small group of friends into a deal with a billionaire. They co-invested in a company with exclusive rights to bring renewable energy technology for small hydro from Europe. The company had big deals tied up with guaranteed investment contracts from the Ontario government.

Jess, his brother, and his partner did their due diligence, and everything was smelling like roses. The group decided to invest two and a half million dollars into the company.

Failing to have controls in place

One thing that Jess and the other investors failed to do was to verify what sort of a person the CEO was. They also did not have controls in place to determine how the CEO should use money from investors. They optimistically just assumed the guy would do what he said he would do.

Instead of using the money to install the first unit, which could make the business cash flow positive, he started 12 other projects just to claim he had a good portfolio going. He thought this would make his portfolio more attractive for fundraising. So while the CEO was chasing other projects, he ran the business out of money.

CEO manages to get more funding

Interestingly, somehow the CEO got a $50 billion public company to co-invest with the company. Jess tried to warn the new co-investors about how the CEO was running the company, but they chose to trust the CEO and invested $4 million. True to Jess’s prediction, the CEO squandered $4 million into useless projects that were not part of what he had promised his investors.

Lessons learned

Do not forget to think about the downside too

Do not get too excited about the upside that you forget to think and prepare for a downside. Think about a scenario where your investment goes sideways. What if you need to remove the CEO or minority shareholder? What is the process to follow? Factor in such essential details before you sign on the dotted line.

Cash flow is king

When you are cash flow positive, you have a runway to make mistakes, experiment, and still survive, and have another swing at entrepreneurship.

Do not let over-optimism make you forget about risk management

The over-optimism that turns somebody into an entrepreneur can sometimes be a hindrance in being an investor. It can make you relax and forget about managing your risk.

Andrew’s takeaways

There is no hack, shortcut, or secret to building trust; it builds over time

Do not just trust anyone right off the bat or after working with them for a short while. Always remember that trust is built over time.

Ensure there are controls within the company you are investing in

When investing in a company, ensure that controls within the business and on the money are strong. During your research process, find out if the accounts are in order and are updated regularly and on time.

Be careful about concentrating on growth at all costs

Growth for growth’s sake, and growth at all costs, often just end up in disaster. So when investing in a CEO, go for one who not only focuses on growth but on risk management too.

Actionable advice

Think of a higher return opportunity if you are looking for predictable ways to become financially independent.

No. 1 goal for the next 12 months

Jess’s number one goal for the next 12 months is to work closely with real estate brokers to get off-market real estate deals that meet the Howard Marks and Warren Buffett contrarian investment by buying current cash flow at a discount.

Parting words


“If you are willing to learn solid financial tools and techniques, you can improve a lot of other people’s lives.”

Jess Larsen


Read full transcript

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community we know that winning investing you must take risks but to win big, you've got to reduce it. This episode is sponsored by a Stotz Academy's online course how to start building your wealth investing in the stock market. I wrote this course for those who want to go from feeling frustrated, intimidated or overwhelmed by the stock market to becoming confident and in control of their financial future. Go to my worst investment ever.com slash deals to claim your discount now. Fellow risk takers This is your worst podcast host Andrew Stotz and I'm here with featured guests, Jess Larson. Jess, are you ready to rock?

Jess Larsen 00:45
You bet.

Andrew Stotz 00:47
All right, so I'm going to introduce you to the audience. Ladies and gentlemen. Jess started his career on the mergers and acquisitions team with Citi. Later, he founded several businesses. The three companies He currently co owns are greystoke investments, greystoke, advisors and greystoke Media. Jess was previously the director of special operations and intelligence agencies practice for the management consulting from the arvinder Institute. 10 years ago, he co founded a charity called child rescue association that combats child trafficking to prevention campaigns, aftercare support, and undercover rescue missions. You can listen to him regularly on his podcast, innovation and leadership with Jeff Larson. In fact, I was just listening to his interview with Marcus Sheridan, which I highly recommend. Just Can you take a minute and filling further tidbits about your life?

Jess Larsen 01:44
I don't know. I think I think you've had some good things. I I took the very traditional route to finance. I'm an art school dropout originally. But yeah, I don't know. Child rescue is the big hobby. We try to work on that. Other than that, I'm pretty addicted. back country snowboarder,

Andrew Stotz 02:03
huh? Yeah. And you're living in snowboarding country, I guess. And the child rescue stuff is interesting. I mean, I, I had a, there's a foundation here in Bangkok, called the child protection foundation. And I used to do work with them. And I also, you know, really, truthfully, those kids rehabilitated me during a time of pretty deep depression. But I used to go there and listening to the stories were just horrific, because, you know, there were kids that were abused by their family sexually abused, that were just thrown out by their families abandoned, you know, lost. And I always say, to my audience that, you know, when I was in some of my deepest, darkest depression, I went there to volunteer, and just give my time with the kids. And I remember this one kid, and they had the story of each of these kids, but they told me, you know, what was the background. And it was just, you know, it was just horrific what this kid had gone through, at the age of, you know, by the age of seven. And, and, you know, all he wanted to do was to get into a corner, and throw the ball with me, and laugh and smile and joke and you know, in all in Thai language, so it was kind of fun for me. But he really, that little kid just taught me a lesson like, you know, put things in perspective. And I challenge everybody listening right now. You know, we're in this pandemic era of government shutdowns, businesses shut down, there's so many things that are difficult right now. But sometimes I look back at that kid, and I just try to put things into perspective that number one, that, you know, things aren't as bad as they can, you know, they can be they could be much, much worse. And the second thing that I take away from that was simply that when you feel down, help someone else, it doesn't have to be a kid, it could be anybody. But there's no true way to get yourself out of painful emotional times than to help another person. So tell me more about how you even started in this child protection. You know, the child rescue stuff and all that.

Jess Larsen 04:09
Yeah, so child rescue Association, we, I mean, really, probably the thing that really keeps us committed to it year after year when it's hard and stuff is the winds. I mean, like, it's, it's a way more fun hobby than snowboarding. Like the winds are so big. And you know, unfortunately, it happened in my wife's family happened to my mother in law's a 12 year old in Santa Monica, California. She was the fourth generation have that happen, and she broke the cycle. So it didn't happen to my wife. And so, you know, feels pretty close to home for us, and we're just trying to be helpful in the ways that we can and it's, it's interesting, it's attracted some of the highest quality friends I have in my life. You know, people I didn't know that, that wanted to get involved because of the issue and it's, it's, you know, you talk about it being Bigger, you know, such a big benefit for you, as you're telling your story, I think, you know, we'd been running it for six years already and I went on, I went down to we do most of our stuff right now helping out in the US, but we're helping down in Central America and I, I got to go state and aftercare facility in Nicaragua. And I've got four kids. And there's one little girl they're about the same age and the same temperament as my one daughter. And you know, I would like, go to the park with her and her mom and some of the other people and, and you see, like, healthful life and how much like my own daughter she was. And it just like, it was like a knife to the heart, you know, right? Of just like, recommitting me the issue. And I think the other thing is just when we first started, we would tell people these horror stories and they'd be like, Oh, that's so terrible. Good luck with that. And then six months in, we accidentally started telling you the success stories, because we're gonna have this woman come to do like a law enforcement training and and train a bunch of youth for like our youth prevention campaign, about how America's Most Wanted caught her trafficker. And now she works against the issue, and this other woman who got out and in Arizona, and how she, like went, got her master's degree and actually helps run a program for other women. And people start seeing, like, That's amazing. How do I get involved. And it's funny, you know, nothing has been more successful than having people hear from a survivor. You know, not a victim, a survivor, right? or hear from an officer, police officer who actually works with it hands on, and hear the success stories of it's not all the horror story, right? Or watch one of the documentaries about it. And I don't know, when you realize, when you realize, like, what a great win, can come out of such a horrible thing. It's a, it's just what powerful, most rewarding thing I get to do outside my own family,

Andrew Stotz 06:58
you know, you know, you said something that I think, you know, I want to highlight, which is I made my highest quality friends, some of my highest quality friends through that. And I really want to highlight to everybody listening that it doesn't have to be of course, if you're if your thing is, you know, some other thing, taking care of older people, or whatever that is, but you know, it's a great lesson also to look outside of your work. And for me, I volunteered in the CFA society for Chartered Financial Analysts in Thailand. And I did it right from the start when we started that society. And when I became a Chartered Financial Analyst in 2001. And the fact is, like, I was surrounded by these really cool, smart people. And I built great relationships, that later served me in business, but also just served me in friendships. And we also, you know, what's interesting is you're coming together for a common cause. And that's different from, you know, your being in work, you're being paid to be together for a common cause, which is fine. But you know, when you're voluntarily coming together for a common cause, it really does, you know, bring, you know, people that you want to be with, but also, like people that are committed. And you know, later, I rose to be the president of CFA society in Thailand, and serve two terms representing the analysts and fund managers. And you know, that the financial people in Thailand, and it was an honor of a lifetime. And I basically, still, you know, see that as probably the biggest honor in my career, but also the best relationships that I've built. So I think it's a really good lesson, right there for everybody listening, like, get off your butt, and get out there and go volunteer somewhere, do something, because you can build great relationships and those relationships will help you possibly in your career, but also just in feeling more fulfilled in your life.

Great reminders.

Andrew Stotz 08:54
Great reminder. So now it's time to share your worst investment ever. And since no one ever goes into their worst investment thinking it will be tell us a bit about the circumstances leading up to it, then tell us your story.

Jess Larsen 09:07
Yeah, so I gotta tell you, I, I've been thinking about this question ever since Yes, can be on the show. And I have so many bad investments. It's like trying to choose Well, I'm afraid. So. I mean, most of my bad investments have to do with not following Warren Buffett's advice. And Ben Graham's advice and speculating. I mean, if we could pull down to one thing over the optimistic speculating, is what it be. But the one that I thought about is one of the worst is because it was so close to being good, that it's painful. So I'd left city and in Southern California and gone back home to Canada and started energy focused private equity fund. And we had some friends who had gotten us into a deal with a billionaire and our small group co invested with a $30 billion public company and we're doing a project and they said, Hey, by the way, you've got to check out this other thing we're doing said, Oh, what's that? And he's like, well, these guys got the rights to bring this renewable energy technology for small hydro over from Europe. And they've got the exclusive rights, and they've got these big deals tied up with guaranteed investment contracts with the Ontario government. And, and we're all gonna get rich, you know. So, you know, I was the CEO of our fund, and my brother and my other partner, we, we checked it out, and we were doing our due diligence and, like, everything smells like roses, right? And, and so we put in him not, you know, not not a giant investment, but in like two and a half million bucks. And, and what we didn't do was, you know, like ronald reagan trust, but verify, right? We didn't verify. We didn't have controls in place to have the CEO use the money on what he said he was gonna use the money on. And we just weren't tight enough on those kind of things. And we just, you know, optimistically just assumed the guy would do what he said he would do and right. And instead of using our cash to install the first unit, which could have the business cashflow positive, to, to, in order to go through the rest of the process to do these other contracts, and, and I want to say the one contract, the PPA was an $80 million PPA for 20 years. And the second one was $160 million PPA. So we stood to make some good money. I mean, this could have returned our whole fund, you know, we're just, we'd raised like, you know, not quite 30 million, you know, so that could have returned the whole fund just are kind of that right. And, in our optimism, we just, I don't know, we just didn't pursue controls, and I didn't buy a controlling interest, right, these kind of things. And the guy proceeded to, instead of finished one project, start 12 more, so that he could claim he had a good portfolio going, he thought I'd make more make it more attractive for fundraising. But in the meantime, proceeds to run the business out of money, and somehow gets a $50 billion public company to co invest with us. And I'm like, telling you guys, Hey, you got to watch out for my mistake. Like this is crazy, right? But between you and I now we have control, why don't we form a voting bloc, and will require him to actually use the cache and install, you know, install cash flowing assets, and this can be a viable thing. And I'll never understand this, like after I explained to them the whole process. They said, I think we're just going to trust him. Which he proceeded to do the same thing with that $4 million. Right. And, and ultimately, it goes out of business. And I think, you know, it's just so painful to have been so close. It wasn't one of my crazy speculations that I've done in the, you know, as a young kid, I, you know, I was lucky enough to make enough money to retire my early 20s and proceed to lose it all. And kind of pull myself up by the bootstraps and build this thing again, you know, and it wasn't it. Anyways. It wasn't it was so close. Yeah, that it was so close. It's so painful.

Andrew Stotz 13:16
Yeah. Interesting. So how would you describe the lessons that you learned from that, let's say, as you invest in businesses nowadays, what have you learned from them?

Jess Larsen 13:30
I think I've, I mean, that plus a couple of other bad investments is really what put me over the top of completely losing my interest in speculation. I mean, I was buying into a revenue plus company, right? Like, you know, Warren Buffett says, You can't value a company, like he's always talking about. Is it Ted Robinson, the great battery that he loved? Williams, and Williams, I'm sorry. And you know, he only takes pitches that are right in that box. Right. And, and Warren Buffett says, like buying pre revenue companies is like, swinging at a ball while it's still in the right. And this would have the potential to not be that bad, because there was contracts in place and this kind of stuff. Right. But you know, you're so there's all of the Warren Buffett lessons, but there's the other one of just this idea of, you know, this is a new guy, we don't have some long term relationship with him. He's been on his best behaviors trying to get millions of dollars out of us. Right. And we did not verify controls. We did not, we did not do a blow down scenario of what if this all goes sideways. We did not have anything prepared of we didn't have any kind of worst case scenario. What if we need to ask this guy in the company? What is that process of removing the CEO or minority shareholder? You know, we didn't. We didn't. We were so swooned by that what the upside would be, that we didn't get really honest about it. What the What if factors? And, and my big takeaway is, is ideally, that I won't do that, again, I'll either have control in every situation, that where we buy, or I'll have such deep experience with the individuals that I can trust. And that I won't over invest in situations where that's gonna ruin a portfolio or that's going to have such a substantial downside. No, there's probably more lessons there. I should probably process but

Andrew Stotz 15:36
Well, I think there was a lot, maybe I'll share a few things that I take away from that I was taking notes. And it reminded me of a few things, you know, the first is that we all Always remember that trust builds over time, there is no hack, or shortcut or Secret to Building trust. And so I think one of the lessons that I take away from that is the idea to always remember that don't you know, we're not going into, we're not going into this thinking that, you know, I trust this guy, you can't trust someone until you've worked with them for a while. And so that also can kind of dictate the way we invest at different levels of trust. The second thing is, you know, recently, we've been starting in my business, we've been just helping people kind of untangle accounting messes. And what we've seen is that there's a lot of cases where controls on the money and controls within the business are really weak. And I would say, this is a critical thing, if you're investing in something, you know, looking into what is the are the accounts on time? You know, are they on a regular basis? Can you drill down into any particular thing and ask them to provide more information on that? Do they have that, and then also asking about the process of disbursement of funds, you know, that type of thing. And so we've been kind of fixing that for a lot of companies. And it's been, it's been, you know, what we notice is that companies get tangled up. And they can untangle themselves. It's a Gordian knot for so many companies. And whereas we don't have any history, we just go in, okay, well, this is where we need to be. Now do this, do that, let's go, let's get this, let's get that. And then all of a sudden, everybody starts getting mad and disturbed and all that, and like, I don't care, I've been hired here to get the accounts, right, and to get things right. And that, you know, doesn't matter to me, all the things that happened in the past, so that I've learned, you know, really, I'm surprised at how many companies really do have a bit of a mess there. And then, you know, also it reminds me too, that, you know, growth for growth's sake, and growth at all costs, you know, oftentimes just ends up in disaster. And so when you have a CEO that you're investing in, and they're just growth, growth growth, it's even more critical that you have a good board or advisory group, because that board should be risk risk risk, I always say when a board and management is kind of very simple, management's responsible for growth board is responsible for risk, yes, it would be nice if the manager would be responsible for risk to which they try to, but you know, ultimately, if a manager only cares about risk, then you know, you're not gonna have the growth. So that's the last, the last little thing that I just want to say is that I, once a consultant with a company, I helped them sell some software that they wrote, that was really the key of what made them successful. And, and they had it in their hands. And it really made them one of the most productive companies in their sector in the world. And they sold the software to one of the software giants out there who bought it. And later, the software giant, you know, improved it a lot, but ended up they didn't, they didn't really want it. And so we knew there was an opportunity to buy it back. So we went back to the software giant said, Hey, could we buy this back, we realized we could probably buy it back for $1. So we went back to that client of ours, and we said, Look, here's an opportunity to buy this thing back. And there was a new guy in charge, who is kind of a MBA, very experienced guy. And he said, That's not our core business. We don't want it. And what I tried to explain to him was that, you know, this is the core of how you're creating a competitive advantage. And he walked away from it. And, and later, I think it really, really caused the productivity of the company to fall because eventually the software disappeared. And then they had to patch together ideas. The point that I'm making is that sometimes people get so excited about what's in front of them or what's far in the distance, that they miss the opportunity of just locking in that one, you know, getting the cash flowing from that one project. So those are some I mean, I actually got a lot out of that. So anything you'd add to that.

Jess Larsen 19:54
Yeah, absolutely. Cash Flow is king. You know, if you can you know like if you can become cashflow positive, you've got a runway to screw so many things up and still survive and have another swing at that. Right. And, you know, I think about, like some of the other mistakes there. And, you know, we were probably too excited by the big opportunities. And it's funny we we owned a billionaire that we owned the previous business I was talking about we, you know, I gotta do this thing, I felt like a rock star, we went on this like private plane and got to go have a board meeting on his $20 million yacht, and I just thought it was the coolest thing I've ever done, right. And on that boat, he was talking about this idea of like, hey, opportunities are like buses, there's gonna be another one in 10 minutes. And we just felt like, Oh, this is such a good deal. We can't possibly let it get away from us. Right, instead of having a little patience. And, you know, it's funny, as the whole beginning of this fund was out of a defunct previous investment, where we had a partnership, and we were smart enough not to hand over the money until they proved their accomplishments. And we, you know, it's just tiny, we was like 4 million bucks. And they couldn't even hit the first marker. And we never gave them the cash in the first place. Right, which is how we, that was our impetus to starting this whole thing. And I thought, like, as we were talking, I think, yeah, I totally could have done that. On this one. We could have said, Oh, yeah, you can have all this cash. And we'll dole it out, as you meet the mile markers that you say you're gonna meet, you know what I mean? And you'll get this much extra synergy cash flow positive. And like, I mean, like, I could have at least built in those safety valves note, we just wrote in one big check. And, you know, and hope to do what he said. Right? And those are a couple of other things that occurred to me.

Andrew Stotz 21:35
Yeah, I mean, what's interesting is like, why don't we do that sometimes, you know, it's because we're seduced by the opportunity was seduced by the person, possibly that there may be charismatic. And we're hesitant in some, sometimes people just don't know, to put those milestones in place. But other times, you know, it's the ones that we kick ourselves the most, we knew to put the milestones in place, but we didn't do it. And so really, for you, for the people that are listening to this, I think, you know, one of the lessons is that, you know, sometimes it feels uncomfortable to put the milestones in place, sometimes you don't know to put them in. But now, this is a great reminder, from Justin, really put those milestones in place, and don't be ashamed. And don't be afraid to say, look, I want to see this before I disperse this, and I want to see this before, there's nothing wrong with that, and don't let them overpower you. Don't let the excitement of the investment overpower you. And if the and you may say, oh, but Andrew, if I do that deal is gonna fall through, oh, then that's even better. Because if the deal is gonna fall through, because you're putting some simple milestones on it, then you don't want to be in it. So I really think that, you know, you've empowered me to really think about that, just so I appreciate that.

Jess Larsen 22:51
Yeah. Can I add one more? Yeah. I think, you know, the over optimism that turn somebody into an entrepreneur, right. Can can sometimes be a hindrance in being an investor and not being skeptical enough and not managing risk enough. Right. And, and, you know, optimists are often people, people, people, right. And, you know, the kind of steps that we tried to take in the end, why didn't I start those? Why didn't I start version of those steps the first time, he didn't do what he said, instead of giving them the benefit of the doubt, give him the benefit of the doubt again, and trying to be a good partner? Well, newsflash, he wasn't being a good partner. He wasn't, he wasn't doing what he said, when he said he was gonna do it. Why am I feeling so obligated here? Why am I not more? Why am I not worried more worried about the people who've been trusted their dollars to me than him about? Does this guy like me as much? And I don't think there's any, I think we can disagree without being disagreeable. Okay. But, you know, those social constraints and being likable and being a good partner, and all these things, you know, why didn't I get on that way faster? Maybe we could have, you know, maybe we could have had this conversation while there's still a couple million big bucks in the account, or a million and a half bucks in the accounts and during the mean,

Andrew Stotz 24:05
and well, it could be five or 10 years from now, you know, that guy sits down with you and go, thank God, you did that. Thank God, you put down the line because I would have gone out to 10 more projects, and I would have crashed the business just like my you know, our competitor did. Instead you focus me on really getting these cash flows and then expanding so yeah, you just, you never know. And I mean, I would go back to the beginning of the podcast every single time I say that in our community community, we know that to win an investing, you must take risk, but to win big, you've got to reduce it. So this is really a great reminder that this type of setting of milestones before particular dispersements asking people to deliver and if they didn't deliver fine, okay, why let's talk about that. Maybe we need to adjust the milestones. But you know, reducing risk is one of the best ways to get rich. Now you can't get rich only from reducing risk. But it surely surely can keep your money better than just going for the return.

Jess Larsen 25:07
You know, listen, I such an over optimist, I made enough money to retire two different times in my 20s lost it all both times. That's why third time we're gonna buy boring, reliable commercial real estate, right? But it goes. So back to Warren Buffett's top two rules. You know, rule number one, don't lose money. Rule number two, don't forget rule number one rule, man. Anyways, it is a great show you're doing a great service to people to talk about the parts that maybe aren't as always fun to talk about, but are deeply valuable, right? Yeah,

Andrew Stotz 25:36
that's what I enjoy about it so much. And what's great about the show is people like yourself are all bringing different stories. So there's different angles that we're thinking about, because there's so many ways that we can lose money. So now, next question, based on what you learn from this story, and what you continue to learn what one action would you recommend our listeners take to avoid suffering that same fate?

Jess Larsen 26:03
I know, all my sentences seem to start with Warren Buffett today. But you know, greatest investor in the history of the world. He talks about this idea of the highest performing investment anyone could make as an investment in themselves. And out of such deep pain of not being retired at 40 when I have enough money to different times in my 20s to be retired, right? I mean, I counted it up, I think I've read 6000 pages of Warren Buffett books, and taking courses and flown out to his annual shareholder meeting and I watch his watch every YouTube video I can find about him, right? And many of those books I've read five and six and seven times, you know, and I just think getting in meaningful repetitions, looking at opportunities. And you know, my wife's friend has been texting her about how much money she's made in Bitcoin lately. And guess what's, you know, Barclays is about to buy this much so and so heard. And that means that this is what's going to end with all this crazy fortune telling stuff. But he has just enough credibility to sucker someone you know what I mean? So I gotta say, like, read, reading Warren Buffett's and Howard Marks and Bruce flat from Brookfield, you know, Howard Marks from Oak tree. If you just if this year, you just you put down a thing and you consistently read and consistently watch their keynote speeches on YouTube. I gotta tell you think of a higher a higher return opportunity. If you're looking for predictable ways to become financially independent.

Andrew Stotz 27:36
You said something I haven't heard before. Maybe it's something that Buffett says or that you say, but if you said meaningful repetition?

Jess Larsen 27:45
Yeah, so there's some scientists who have basically proven the previous 400 years of brain science wrong about once you're an adult, this party ranges This is pretty ranges that it's kind of sad. And this idea of a changeable brain or moldable. Brain, they call plasticity, that, you know, kids can learn languages fast, but adults can't and this kind of thing, right. And research done over the last 30 years by getting a guy named Anders Ericsson, his book is called peak. It's the science of deliberate practice. And they showed that you know, the fastest way to become an expert at something is actually scientifically proven. And you know, I probably more entertaining book is the journalist Daniel Coyle, best selling author, his book, the talent code, and he just goes through, when you, when you learn enough about a skill, and you break it down into the puzzle pieces, and you focus on an individual puzzle piece, and you practice that puzzle piece outside your comfort zone, that stretching is something that the brain recognizes, in a similar way to when you're lifting weights, if I go to the gym, do the same workout I've always done, I'm probably gonna stay, my biceps are gonna stay the same size, they've always been, right, because the brain is already optimized the body for that. But if I'm doing something outside the comfort zone, and I do it enough times, the brain says, Wow, that was really hard. And we seem to keep doing that send some extra protein down there. So that'll get easier next time. Because we're gonna do apparently we're gonna do that, again. When we're practicing a new skill set outside the comfort zone, the brain says that was really hard, we need to wrap some extra myelin sheath around the neurons in the brain that process that action. So it's like the insulation around a copper wire for electronics. And you can have a thought, I mean, now they can measure this stuff, that electrical impulse, and a plain vanilla, you know, neural connection is two to three miles an hour. If you can do enough meaningful repetitions to stimulate the brain to get 50 wraps of myelin around it. That same impulse can move at 200 to 300 miles an hour. So this is why like the guy who wins the Guinness Book world records for playing 47 games of chess at the same time this was in Vegas, right? Ukrainian guy blindfolded. Okay, the reason he can do that, and Jeff struggled with one game of chess, is because if he's got 50 reps of nylund, his brain is literally thinking about this 100 times faster than mine. Right? So, you talked about your course, where you make people do 20 evaluations, yep. Right? learning by doing with a feedback mechanism. So learning by doing outside the comfort zone, with a feedback mechanism to know where you are off or on. And the best thing is to have a coach, right, yep. But you know, if you can, if you can read Warren Buffett, and Howard Marks and watch, watch YouTube videos of Bruce flat, the CEO of Brookfield, and you take all those lessons, and you consistently go look at new opportunities, and match it up against their criteria. And you do that over and over and over again, and you're trying to stretch yourself, you're trying not to just give yourself a pass, you're trying to look deeper. You can you can literally rewire your own brain. And the reason Warren Buffett is who he is, is, you know, scientifically, it's because he's put in he probably had some talent to start. And then he's put in the stretching meaningful repetitions. To an incredible degree.

Andrew Stotz 31:19
That's awesome. What was the book? What would you say is the best book for the listeners to read? To understand more about? Yeah.

Jess Larsen 31:28
There's, I think there's about 10 good ones in the genre, and there's some others. But I would start with Daniel coils, the talent code, because it's so entertaining. When you hear the story of like, why does this tennis? Why does this tennis court crappy tennis court in Russia have more women on the pro circuit than the entire United States put together? You know, why? How can this physics professor in Vancouver, teach a year's worth of physics in a month? You know, what are they What are they doing different? Like? The stories are just so engaging, that you learn by accident because you're so entertained and then go into like, honors Erickson's book peak, which is maybe a little deeper into the science and really digging in, you kind of have you already want it bad enough, that looked like that, which is still good. But it's easier to get through that book after you've after you've tasted

Andrew Stotz 32:20
the talent code. The talent code by Daniel Coyle, co YL e, greatness isn't born, it's grown just looking at it's got 4.7 out of five on Amazon, and almost 2000 ratings. So yeah, that's a pretty, pretty great recommendation. I'll put it in the show notes so listeners can get it. So last question. What's your number one goal for the next 12 months

Jess Larsen 32:45
is to work closely with real estate brokers to get off market real estate deals that meet the Bruce lat Howard Marks Warren Buffett contrarian investment buying current cash flow at a discount because we're looking for unpopular things.

Andrew Stotz 33:01
Mm hmm. Yep. Great. And also, for the listeners out there, I'll highlight that you're the second guest to say this. And this is it's not cash that is king. You said cash flow is king. And remember, it's cash flow, that creates your pile of cash. So it is cash flow, that is king, not cash. listeners, there you have it another story of loss to keep you winning. Remember to go to my worst investment ever.com slash deals to claim your discount on my how to start building your wealth investing in the stock market course. As we conclude, Jess, I want to thank you again for coming on the show. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Jess Larsen 33:52
No, I just I think that people should Pat themselves on the back to be spending the time doing something like this, you can improve a lot of other people's lives. If you're willing to take that ultimate responsibility to learn solid financial tools and techniques. You can influence your family you can influence people you care about. You can have the cash to help relieve unnecessary suffering in the world. And, and it's really tempting to just watch YouTube or Netflix instead. So just you know, my congratulations to them for taking that level of responsibility.

Andrew Stotz 34:26
Fantastic. And that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.


Connect with Jess Larsen

Andrew’s books

Andrew’s online programs

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.

Leave a Comment