Ep450: Daniel Chan – Don’t Sell What You Have to Diversify

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Quick take

BIO: Daniel Chan is a pre-IPO PayPal financial operations employee who became a magician, and now he’s pivoted to Zoom. He has performed over 390 virtual shows since last year.

STORY: As one of the first employees of PayPal, Daniel was granted about 10,000 stock options. When he left the company, he dumped his stocks for a more diversified portfolio. Daniel would have been worth close to $5 million if he had kept everything, but he bought many other things that didn’t earn him that much.

LEARNING: Invest in things that you buy and use regularly. Diversifying doesn’t mean selling what you have; it means putting additional money into something else.


“Learn how to read the income statement, understand profit and loss, debt-to-equity ratios, and P/E ratios.”

Daniel Chan


Guest profile

Daniel Chan is a pre-IPO PayPal financial operations employee who became a magician, and now he’s pivoted to Zoom. He has performed over 390 virtual shows since last year. What’s cool is that he has invested in most of the companies that have hired him.

Daniel’s clients are literally a who’s who from “A” to “Z.” He has performed for Apple and Airbnb all the way to Zillo. And Google has hired him over 40 times.

Worst investment ever

When Daniel was working at PayPal, he was granted about 10,000 stock options with a four-year vest and had to stay at least a year. He stayed for over a year. However, when he left, he pretty much dumped his stocks for a more diversified portfolio.

From Daniel’s calculation, he would have been worth close to $5 million if he had kept everything, but he bought many other things that didn’t earn him that much.

Lessons learned

  • Diversify, and when you’re sure about particular stocks, put in a little more into those.
  • Invest in things that you buy and use regularly.
  • Don’t put all your eggs in one basket.

Andrew’s takeaways

  • Diversifying doesn’t mean selling what you have; it means putting additional money into something else.
  • Just because you use a product and believe in the company’s stock doesn’t mean you should put all your money into it. Make sure you diversify.

Actionable advice

When looking for stocks to invest in, look at things around you that you’re familiar with. Then when you find a few companies that interest you look at the bottom line. Learn how to read the income statement, understand profit and loss, debt-to-equity ratios, and P/E ratios.

No. 1 goal for the next 12 months

Daniel’s number one goal for the next 12 months is to find investors for a magic dinner show and a club in Silicon Valley.


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 to win in investing you must take risk but to win big you've got to reduce it to join our community go to my worst investment ever.com and receive the risk reduction checklist I created from the lessons I've learned from all my guests and also get my weekly email to help you increase your investment return and in the community you will get a super special podcast listener discount on my six week valuation masterclass boot camp. The boot camp is for those who want to learn exactly how to value companies like a pro and advance their career in finance go to my worst investment ever.com to join the community for free. Fellow risk takers. This is your worst podcast host Andrew Stotz and I'm here with featured guest Daniel Chan. Daniel, are you ready to rock?

Daniel Chan 00:58
I am ready.

Andrew Stotz 01:00
Something tells me we are going to have some fun. Something tells me ladies and gentlemen. And let me tell you why. I want to introduce you to Daniel Chan. Daniel Chan is a pre IPO PayPal financial operations employee who became a magician. And now he's pivoted to zoom. He's performed over 390 virtual shows since last year. What's cool is that he has invested in most of the companies that have hired him. And ladies and gentlemen, the clients that he has, is literally a who's who, from A to Z. He has performed for Apple and Airbnb, all the way down to the amazing company, Zillow. And Google has hired him over 40 damn times. That's pretty impressive. Daniel, take a minute and fill in for their tidbits about your life.

Daniel Chan 01:57
Yeah, I have performed for billionaires in Sun Valley, Idaho at the Allen and company conference, which is a fame conference where Bill Gates and Warren Buffett ago. I have performed in Germany, Shanghai, Las Vegas, and even Japan four times. And over the last 20 years, I probably did 250 plus shows a year. And that's over 5000 shows over the last 20 plus years.

Andrew Stotz 02:23
And what you know, when we were talking from the beginning, before we turn on the recorder, I feel like you know you're a funny and a fun guy. What is his comedy go together with magic? Or are they very different things?

Daniel Chan 02:40
I love comedy. I used to do comedy magic before I had the real chops. But now I love doing this a little bit more serious branding, which is the Dan Chan the millionaires mentalist because I primarily specialize in mind reading Now, over zoom. So that is a different texture for every, you know, 100 magicians that are good. There's probably only one mind reader, and then does the mind reading. And that's like you, you take it to the next level, you're not doing your cups and balls or the other routines.

Andrew Stotz 03:16
Right. Interesting. And just out of curiosity, because I know that there's a lot of people listening, who have had to make a transition on the zoom. And they've done well, in some cases not so well in others. But magic just does not seem to be like something that you can transition to zoom yet. You've already done more than 390 virtual shows. Tell us.

Daniel Chan 03:40
Let's do. Let's do this for you real quick. Let's open up with a little bit of mind reading up, put your finger up like this, and touch the screen and we're gonna make a virtual connection physically touch the screen and think of a person place or thing that evokes a positive thought or emotion. perfectly. What is it that you're thinking of Andrew?

Andrew Stotz 04:04
I'm thinking of my mother,

Daniel Chan 04:07
your mother? What's your mother's name?

Andrew Stotz 04:09

Daniel Chan 04:10
Katherine with a K or c.

Andrew Stotz 04:12

Daniel Chan 04:13
It's interesting. My wife's name is Catherine as well. And I think of her often and it's, it's interesting that you said that because right here I had cats. Wow.

Andrew Stotz 04:34
So for the listeners out there, he's got my mother's name written down on a card.

Daniel Chan 04:40
And it was in the view, even before the trick of the effect occurred.

Andrew Stotz 04:46
Amazing. Amazing. So right there we can see part of the transition zoom is making sure that you're really bringing you know like connection by asking me to touch the screen by reaching out directly To me that type of thing, impressive.

Daniel Chan 05:03
Let's do one more. And then let's move on Andrew. In a moment, I'm going to ask you to think of this playing card or guess what it is. It's a one in 52 selection, but it is. I'll tell you, actually, not the ACE and not the Joker. Andrew, what card Do

Andrew Stotz 05:17
you think this is? nine of diamonds?

Daniel Chan 05:19
nine of diamonds. Interesting that you said nine of diamonds. Did you actually happen to see the markings here on this?

Andrew Stotz 05:27
I didn't see anything.

Daniel Chan 05:28
Let me bring it a little bit closer. Because if you look closely, you can see that there is a NINE and a diamond right there. That must mean that that is the nine of diamonds. Nah. You're good. My friend. Az

Andrew Stotz 05:45
good. Oh, no, I think someone else's good. So for the listeners out there, he in fact, the card that he had holding up that he had up because it wasn't actually the nine of diamonds, which is just amazing.

Daniel Chan 05:59
Yeah. And if you want to see what happened, you have to jump over over to Andrews a podcast YouTube channel so that you can see exactly what I did.

Andrew Stotz 06:09
So let's just wrap up this section by saying for the listeners out there who find this interesting, fascinating and maybe they want to hire you or they want to learn from you. Where should they go?

Daniel Chan 06:21
You can go to Dan Chen magic.com or millionaires mentalist, where I actually do all my magic in mind reading over zoom again. That's Millionaire's plural mentalist? Fantastic. Just Google my name.

Andrew Stotz 06:35
Yep. And I'll put all that in the show notes, ladies and gentlemen. So to get in touch with Dan, just go there. All right, well, 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. And then tell us your story.

Daniel Chan 06:53
Well, as I said, Before, I am up PayPal pre IPO, financial operations employee, I joined in 1999. Even before Elan Musk, believe it or not, technically, I joined but for him because he started x.com. And I actually started up Pay Pal proper. And those join together. And I was one of the first employees on University Avenue and the customer service. And they probably only had, you know, less than 20 people for sure, in customer service back then you really, really small office, and then we went into Embarcadero. But I was granted stock options. And I think it was something like 10,000 stock options with a four year vest. And you have to stay at least a year to wait for that cliff. And I stayed over a year. However, when I left, I pretty much dumped my stocks for a more diversified portfolio. And when I did the calculation, I would have been worth close to $5 million if I kept everything but I bought like Disney and a Honda and many other things. But my Disney stock at one point went up to 900% gains at the cost basis. So I actually made 900%. But I didn't buy all Disney I just bought like a handful of shares. And I sold them throughout the time. I think Disney would have done okay, but I just ended up buying a very conservative thing. And I should have bought like Google who was kept on hiring me. I was like, oh, how can they have so much money. Later in my career, I ended up buying one share of every company that hired me, and the ones that I really believed in. I bought more. Some guys like Google's thinking. Google is one of the best investments ever think about this. A little kid could click on an ad by accident and Google makes money. You can't do that with Tesla. I've been begging my wife for Tesla. For years, we still don't have a Tesla. And that's thinking about what the business models are like, you have to think dude, would I go there? Would I buy things from that? Like I would buy Costco I would shop on Amazon. But I missed out on Amazon and I should have bought in early because they've hired me so many times, but you miss them because you look at things that are fundamentals like p e ratios. And for the longest time or Amazon was, you know, not making money. And I think that was strategically intentional. Like because they wanted the tax write offs, I

Andrew Stotz 09:34
guess. You know, it's interesting that you mentioned about it because it made me think you know, one of the things about magic. That's fascinating. I in Bangkok, we have these guys that are on the street and they sell little magic tricks and stuff. Yep, there was this one that was this plastic box and the way it went together. It just was impossible for people to figure out and it was so simple. When you looked at it. I went home and I Use this magic trick Well, my nieces and everywhere I went. And you know what I realized? When I looked at that I thought the thing to myself that, you know, we don't look very deeply into things. And, you know, part of it is also like related to socks, we just look at the surface. Oh, yeah. Okay, that's that, but we don't oftentimes stop and go, Wait a minute, why is this company making so much money? Or why is it hiring me so many times? And how do I take advantage of that? And I just kind of, you know, see some parallel there, you know, between what you do well is you do magic well, but when it came to looking into some of these stocks and saying, I'm gonna really go in on this, you know, it's a harder thing to go deeper.

Daniel Chan 10:44
Well, I see so many companies and I read the headlines, and that's why I was so successful. In fact, I caught bs on Serrano's before anyone else caught it. I was telling. I was telling everyone that was around me, this is toxic. This something doesn't add up, because I've read so much. And I've just been around the space so much. I just, I just felt it was wrong. And I was calling it out. So I you know, it's just something that you have, over time, the experience, just like when Neil and some of the other Evie stocks, I was like, hey, they're gonna perform well, just because the headlines are pushing this forward. And people tend to follow celebrities and follow what's trending. And it's a good thing to have some bubbles, but realize that these bubbles can pop and I rode Neo all the way up. And as things went out, I slowly diversified. So I got to participate in airbnbs IPO. CNBC featured me for that. And those might be in the show notes as well. Yeah, I got 200 shares at the IPO price. And in order not to repeat that same mistake. I just sewed a 20%. And then I kept last 80%. So I made I made over double. And I'm going to realize my capital gains, I really don't need the money, but I just don't want to sell all of it. And I don't want to you know, it was a happy balance.

Andrew Stotz 12:18
Yep, yep. And you know, you've been successful. You've built up wealth by owning different stocks, you've made some mistakes that may ask you what lessons have you learned from this experience?

Daniel Chan 12:31
Yeah, I'm Dave diversify. And then if you're sure in certain things, you need to put down a little bit more chips down. So I've put a lot of things down on other side bets, like fun things that I feel will do well, like, you know, sprinkler systems that will map out the floor plan. Raise is automated lawn mowers, things like that things that you think have full potential that you really believe in companies that I would start myself, I put in a little bit of money in those but, you know, invest in things that you buy and use regularly. That's one of the safer things and then also not to put all your eggs in one basket. Because you know, the Enron's of this world. You know, it might look great on some things, but there's always some, there's there can always be someone playing a trick behind the scenes. So diversifying really will help you lessen the impact of that. It'll also kill some of your gains as well. But that is a that will at least let you sleep well.

Andrew Stotz 13:38
Yeah, we have to admit that some bad CEOs are actually masters at magic, making money disappear. So we have to accept that Well, let me share two things that I take away from your story. The first thing that I wanted to talk about was the PayPal situation, when you talked about diversifying, you know, in deciding you didn't want to have too much exposure, one of the lessons that I think the audience can learn from that is sometimes diversifying doesn't mean selling what you have, it means putting additional money into something else. So let's just imagine that you have only PayPal as an example and you're exposed heavily to it. But you like the story and all that, okay, so every bit of money cash that you make on a monthly basis, then put that into something else. So try to build up now one option in that case, could have been to put it in a, let's say, an index fund that owns every stock in the world. And you just say, Look, I've got one really risky bet in this one, and I got this index fund. And so I'm unbalanced them or start to add, you know, other individual stocks. But the point that I would make is that sometimes when we get into managing it, we get scared and we think the opposite only option is to just reduce so that's the first thing about it. The second thing is that when You know, you're giving, I think, really good advice, which is to consider investing in the things that you know. But you're also giving another piece of advice that I think is also kind of unique in your situation, because you've tried to kind of buy the shares of the different companies that you've worked with. So you actually are putting your money into the things that you think are interesting. But you are also diversifying that. So I think the lesson for everybody out there is that when you basically decide like, the mistake that some people make is to say, I love Amazon, and I'm an Amazon Prime member, I have a one of my former guests or potential guests, actually, he shared the fact that he missed amazon prime, though we use it all the time. But that doesn't mean you have to put all your money. So diversify. Yep. So that's what I would take away from what you've said those two things, anything that you would add to that?

Daniel Chan 15:52
No, that I think that summarizes it very well.

Andrew Stotz 15:55
So based upon what you learn from this story, and what you continue to learn in your life, what action would you recommend our listeners take to avoid suffering the same fate?

Daniel Chan 16:07
Yeah, just analyze what makes you uniquely you, you probably have some insights from your direct area, like I live in Silicon Valley. So I know all these companies, like when Yahoo was hot, they hired me like half a dozen times, Apple half a dozen times, I would just study them and read more about their headlines and what I was truly interested in. And which was investing. Like I would have said, I love Apple products. I love the premium. A lot of people say I don't want to pay the extra for Apple, I'm like, Hell, I don't care if they're, that's my company, I don't mind feeding that. And I buy Google ads, I buy Google AdWords, I really love that I can when someone hit skip ad, I still make I don't have to pay. When you skip an ad, you don't pay for it. But there's a lot of people forget to skip the ads, and you pay for those brand impressions. But Google outperforms every other platform, in terms of when you're buying a YouTube ad to build brand awareness. So looking around you and being aware, like whenever I look up, I see these Cisco routers or these things that you see, I'm like, oh, they're everywhere. Oh, government spying? Where do I go? Like when I log in? At? I used to be a Coast Guard reservists, I would see that we log in and it's Oracle login. Oh, wow. Or class government contract those, those are great. So just look at everything. And then look at the bottom line, learn how to read the three financial statements. You know, understand the income statement, understand, you know, profit loss, and then also understand debt to equity ratios, and a P e ratios. Those are some of the basics. You're always going to learn more, but ask yourself, what makes it tick? You know, I think a lot of a lot of things are a little bit hyped with things like a larger things like Virgin Galactic, I have one, one or two shares of that. But I think it's more like a celebrity buy. It's kind of like they're losing money. They're their metrics are totally off the wall, but just bought one share, just to say and when now I talked to a reporter I can say I own some of it if it goes up. Yeah, you know, one of the best ways to make money is by, you know, hiring the magician, maybe.

Andrew Stotz 18:24
Oh, he's holding up $1 folding it up and snapped his fingers. And what is coming out? That is a $100. Bill. So he just turned $1 into 100. Ladies and gentlemen, I want to hang around you Dan. That's a great a great way to wrap that up. Now let me ask you, what's your number one goal for the next 12 weeks? Sorry, next 12 months? Well, weeks? Why did I say that?

Daniel Chan 19:01
I'm all over the place. I just talked to a producer at NBC, we're talking about unscripted reality. Those are like some of my whole brand goals. I'm also trying to find investors for a magic dinner show and a club in Silicon Valley. I've already hit everything that I've already wanted to do. And I still can coast 20 more years doing these corporate events, these epic parties where they have, you know, 400 pound tigers in their backyard, like how many people throw parties at those. But when you are, you know, when you've done such amazing things. You just want to go a little bit further. So I have a lot of goals that I'm putting out there and feelers, but if an opportunity opens up, I'm just going to pursue that one goal. You know, like if AGT opens up for my son, my son performs with me at the age of five. He was juggling three balls. By the age of eight he was juggling five balls by the age of 10. He was picking pockets and juggling three flaming torches By the age of 12, he already had two national television appearances, one for kids say the darndest things. And he also performed for Penn and Teller on axis daily. So my son is getting into the business, he's taking over the family segment, as I hopefully transition more fully to zoom. And I think that the zoom platform is super exciting because now I have a national reach. And that's why I'm, you know, doing this tour circuit on these podcasts is not a lot of people realize that zoom. Magic really works. And it's very powerful.

Andrew Stotz 20:35
That's exciting. And that's exciting to learn about your son's success to sounds like that could be part of your retirement plan, son, make a lot of money and take care of your dad. And for the listeners out there who want to learn about the three different financial statements, the income statement, the balance sheet, and the cash flow statement. I actually have a course for that it's called finance made ridiculously simple. And if you become a member at my worst investment ever.com you'll get a 25% discount on that course. So my last question for you what Daniel is your number one goal for the next 12 months.

Daniel Chan 21:18
I don't really plan that far out. I have a couple of small goals and I sit some low hanging fruit. I want to start at a restaurant that I just went back to California. I have a hobby of going into these Michelin rated fine dining establishments. So that's one of my I'm gonna at least go in for a couple of days and Stosh at California. So that's my one goal.

Andrew Stotz 21:40
Got it. And you know you're getting old when you repeat the same question over and over. Alright listeners there you have it. Another story of loss to keep you winning. My number one goal for the next 12 months is to help you my listener reduce risk and increase return in your life. To achieve this I've created our community at my worst investment ever.com join up and get that special discount on finance made ridiculously simple and also on my six week valuation masterclass boot camp so we can identify the companies where the CEOs are magicians because we don't want magicians running companies. We want them making magic. As we conclude, Daniel, I want to thank you again for coming on the show. And on behalf of East Arts 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?

Daniel Chan 22:33
Thank you for giving me this opportunity to be on your podcast. Andrew.

Andrew Stotz 22:38
It's great to have you. 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. Literally your worst podcast hose Andrew Stotz saying. I'll see you on the upside.


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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.

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