Ep506: Pankaj Jathar – Always Learn and Be Skeptical

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 an investing, you must take risk but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. To reduce risk in your life, go to my worst investment ever.com today and take the risk reduction assessment I've created from a lessons I've learned from more than 470 guests. It's time you start building wealth the easy way by reducing risk. Fellow risk takers this is your worst podcast host Andrew Stotz from a Stotz Academy and I'm here with featured guests, pecans done jump to tar. Pecan, are you ready to join our mission? Yes, Andrew. I'm excited to get you on because you have such a varied background. And let me introduce you to the audience. Pankaj is the CEO of prion a company established in 2014, which enables small and medium sized businesses to grow in E commerce. He has 10 plus years of ecommerce experience, starting with Amazon in 2011. Being part of the India launch team and working in multiple roles, he has a deep understanding of the E commerce value chain, he might be a white collar worker on weekdays. But he enjoys writing his blogs on weekends. And that blog is stalking beans, which he has been writing now for more than a year pencast. Please take a minute, and tell us more about the value that you bring to the world.

Pankaj Jathar 01:44
Thanks. Thanks, Andrew, thanks for the lovely introduction as well. And it's a pleasure to be here talking to you. In terms of value, I bring allistic to the personal finance part of it right from the workplace, there's plenty I do and that it's a different sphere of me, we're on the personal finance area, which is where I write the blog, and I speak to a lot of people about the value is trying to simplify things, right. So this is my experience has been that this is an area where most of us are self taught, right? There is no real formal education that happens. Many of us have done engineering MBA, but we never learned personal finance, how to take care of ourselves and our money. Right. And my kind of mission, which is also why right stacking beings is to simplify this make it easy to understand and as easy to implement, right. So it should be simple enough for someone to not have any resistance to investing effort in their own personal finance growth, making their money work for them. And I want to show people how easy it is and how they can do it for themselves. Without really needing a PhD in finance, right, you should be able to just go out, invest your money and make your money work for you, and build your goals and achieve them on the personal finance. Right. So the value says, you know, simplifying the very basics of personal finance, that's kind of what I wanted to.

Andrew Stotz 03:11
That's exciting. When you think about it, I was just thinking about, like, a good analogy is farming, you know, if you get the right seeds, the right soil, the right weather, and the right timing. Those are kind of core principles. And if you get those things, right, you probably have a pretty good crop. You could optimize, you know, with advanced technology and all that. But sometimes advanced technology can go wrong. What if you can't get access to this particular year? What if you can't get this? What if this doesn't work? What happens about this? What if the price goes up by five times for that particular advanced technology that you want to use? So those advanced technologies have a promise of some sort of lift in your yield when your crop, but not always guaranteed, but those Cornerstone principles of, you know, the right seed, the right soil, the right, you know, climate and the right time that you're putting stuff into the ground. Those are the core things. And I think about that when I think about your mission of simplifying.

Pankaj Jathar 04:19
I agree with you, right? Just like to take that analogy a little further. It takes time for a seed to become a crop and it takes time for it to get to a stage where you can reap the benefits of what you've done. Right? You cannot expect to put in twice as much money or and expect it to grow twice as fast. It's not going to happen. It will take its time. And it's the same with personal finance. Get Rich, slow is such an unpopular concept that most people don't want to do it. And that's the one that works for sure. So yeah, so I want to push people to get rich, slow, and make it happen.

Andrew Stotz 04:57
You know, it reminds me of a study I read many years ago that the typical Apple grown in the west today has, like 30 70% 80% less nutrients in it. And like 50 years ago? And why is that? Because they're trying to accelerate the growth. So they're trying to grow it faster. And using chemicals and other things to try to accelerate that growth. Nothing comes without compromise. You know, I think if there's one thing, you know, coming from Western kind of medicine, Western thinking, they often think that you can do things without that they don't think about the balance of life, and that you could do something and it won't affect another part of life. But I think what I've learned from being in Asia, most of my life now, is that we understand here in Asia, that there's always a counter balancing impact of the different things. So if you think you're going to be fancy, and you're going to grow your money faster, you're going to be exposing yourself to more risk.

Pankaj Jathar 06:08
Absolutely, absolutely. Right.

Andrew Stotz 06:11
So, all right, well, I'm excited to learn a little bit about your story. So now it's time to share your worst investment ever. And since no one 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.

Pankaj Jathar 06:26
Thanks, Andrew. So well, the circumstance, this was about 1012 years ago, I was working in a consulting organization back then. And we were across multiple time zones. So typically, I had the first few hours of the day to myself, and I used to be at home. So I started watching CNBC, TV, the stock tickers and conversations around stocks, which got me a little interested. But I had not yet started learning about either personal finance or about investment enough, right. And so I kind of believed the experts and the pundits on screen, thinking they really knew what they're talking about. And their advice was to be taken 100%. So one of these shows, they did a profile of a company, which they recommended that it's hit growth, the straps, and it's doing fantastically well, etc. And then recommended it as an investment for the short and medium term, right. And being the naive, new newbie that I was, I went and put a fair amount of money into that stock. And predictably about a month after it tanked. And it stayed there for a long, long time. Right. So and I was initially surprised to see that. And just to make it worse, again, which comes with experience, when you're a new investor, it's much harder to take the loss. Right? So what's a notional loss versus a Realized loss. So from notional to move it to realize is much harder when you're a new investor. Today, if this were to happen, I would just walk away immediately, the moment I saw things starting to go down, like, but back then I held on thinking, hey, no, these experts were right. And it has to go up eventually. And finally, after a good year or so I find I exited at about 75%. Loss of capital. Right. So but lessons learned from there. It was an interesting experience. But yeah, not not too expensive. And retrospect. But yeah, that was that.

Andrew Stotz 08:40
It was probably a pretty reasonably high amount of money for you at that time. I guess.

Pankaj Jathar 08:46
It was. It's not that it didn't touch?

Andrew Stotz 08:49
And did your wife or your family members know about it? Or did you keep it to yourself?

Pankaj Jathar 08:57
Oh, no, my wife had an idea. What's happening. So right now, the new people informed on these

Andrew Stotz 09:07
because sometimes that's a conversation that's not easy to have. It wasn't there can be some I told you so's but let let Why don't you summarize? What lessons did you learn?

Pankaj Jathar 09:20
Sure. I actually made some notes on that. So the first and the most obvious one is don't listen to experts on TV. Right? One, they are probably experts in their field. But don't listen to them blanket, right don't believe everything they say they need not be experts in every sphere. And what I've also learned since then, is not all journalists do their homework. Not all of them do the level of deep dive that you would expect. Someone who's writing a story or telling a story to do it and therefore, don't don't kind of believe every word of what these experts say Right. And they're kind of paid to generate interest, right? They're paid to generate talking points, news, etc, then they're not, you will never hear index investing being discussed on CNBC TV show. It's not interesting, right? It's the same thing as get rich, slow. No, no, it's not I catching it, no one buys it. Right. So that was one big one. The second one, of course, is do your own research, right? So listen to everyone. But before you put your hard earned money on the line, do your research. Right. So within that, I mean, firstly, understand what personal finance is all about and what you want to achieve out of it. And secondly, understand what equity investing is about, right? And begin it out. If you don't have either the skill or the time to do an in depth analysis on a particular company on a stock to understand the nuances, then just don't go and invest in it right by the index. I will quote John Bogle is one of my favorite writers in this space. Don't look for the needle in the haystack, just go buy the haystack. It's as simple as that buy the index, the top 100 companies in the country are yours. Everything will work out with that. Right? And of course, a couple more lessons. Third one question all advisors, right. So make sure you question your financial advisor, question everybody try and understand their motives, right? Is that person really on your side? Or is there something else happening here? For example, your bank relationship manager, he has a target to meet, right? He might give you advice on investment, but question that and understand do your own maths on that, and see whether it holds up to scrutiny? Is it? Is it going to give the same returns as a comparable investment anywhere else? And definitely don't believe the insurance advisor. Right? So that guy's not not on your side? And yeah, finally, I'd say and this one is important. Don't Don't confuse your circles of influence. Right. So for example, don't ask your mom for stock picking advice. At the same time, don't ask your financial advisor for cooking tips, right? Those two circles are different and know which circle has what expertise and go to the right circle to extract that expertise. But don't confuse those two things, and just extract the right expertise to the right circle. So those are my four lessons, which I thought made sense.

Andrew Stotz 12:32
I love that one about you know, don't. Don't ask your advisor for recipes for cooking, ask your mom or go to Episode 232 of this podcasts. And as run via Vaughn, Veer, and bra and Onvia Brar is an amazing cook. And I watch his stuff all the time on YouTube and other places. He's got millions of followers and he knows his recipes and his cooking. And that is a great example of the idea of, you know, spears. So now, let me I just wrote down a lot of stuff here. You know, one of the things I wrote down and said, you know, if there's one thing that the media has proven to us over the last two years is that they sell fear, to sell advertising. Yeah. And if anybody is not clear on that by now, then you got no hope of holding on to your money, or possibly even your health. Now, it's very clear that the media is not on your side, they are trying to generate income from you. That's the first thing. Second thing is I wrote down, you have to be your own financial adviser. Yeah. And, you know, what you're showing people is that it's not as complicated as it seems with index funds and things like that. I have a saying that I always say, which is never buy something from somebody who calls you. Because anybody who's introducing something to you, is basically selling it. Yeah. And that brings me to the next thing, and that is to ask the question, how are you paid. And once you start to realize that everybody's being paid, you know, behind the scenes, they're all got bosses that are kicking their ass is to get more revenue out of you, not out of your performance, but out of your pocket. And once you realize that, and and you know, I mean, every industry has to make money, every person has to make money. You can't operate a financial industry without people paying fees on stuff. But you have a right and you have an obligation to investigate and ask and if you're not satisfied with the answer that you get, you have a right to ask again and again and two You are satisfied. And the other thing I wrote down I mean, I really a lot of things came up for me. Number one is if you're I did an academic paper when I was doing my PhD called 10. Stocks are enough in Asia. And what I showed is that if you're going to own individual stocks, you want to own about 10, less than 10, and you're exposed to a lot of individual stock risk, more than 10. And your portfolio starts to behave like an ETF of the market, you might as well just own that. And so I have, basically, and so in this case, when you people always come and say, What's your favorite stock, and I say, Well, my favorite stock is 10 stocks. So for the listeners out there that say, No, I don't want to buy an ETF, I want to do my own stock picking, build a portfolio with 10. And if you don't have 10, stocks, then take your 100 $100,000 and divided each into $10,000, and then buy that first start with 10,000 and then save the 10,000 each of those others for nine others. And that takes me to my final thing, which I take away is unrealized losses are real. And that sounds a little bit strange, because we say it's not real until you actually sell it like. But my point is, is that ultimately, every single day we mark our portfolios to market, if you're into a position into something that you don't like, or you don't think you should be in, or you don't think that that's the best thing to be in for the next year or so, then there's nothing wrong with selling out that position, and moving that money into something else that you think is a better place to be rather than get caught a lot of different things I take away from your and it's clear that, you know, I this is a good example of a good story that you've brought out a lot of things to make us all think Is there anything else you would add?

Pankaj Jathar 16:48
Oh, so not directly from this. But an interesting related aside, earlier this year, one of the CNBC TV presenters was prosecuted for front running his viewers, right. So he would go buy a stock, recommend it on the show, and then dump it. And that just goes to tell you that you have to be really skeptical about the advice you receive, especially from media, right? You never know what's happening behind, like you mentioned. So

Andrew Stotz 17:18
that's a great lesson. And also in the world of finance, we'd like to look up to people that are talking so sophisticated, you think my god they know. But just because they're just because they're knowledgeable doesn't mean that they're not that they're ethical. And it doesn't mean that that doesn't mean anything you look at so many professionals to get it wrong. Getting investing is brought, you know, very difficult. So based upon what you learn from this story, and what you continue to learn, what action would you recommend our listeners take to avoid suffering the same fate?

Pankaj Jathar 17:48
Oh, I mean, to me, that's very clear, right? It's educate yourself, there is just no two ways about it. You have to educate yourself, right. And even if you're going to pay someone else to manage your money for you, you still need to educate yourself, you need to know to be able to ask the right questions. And you need to know to understand the answer when you get wrong, right. So you need to learn and understand some of the basics around personal finance around investing around equity, that we're able to differentiate those things, and then know enough to ask the right questions and understand the answers you get. Right. And don't don't take any advice at face value. Don't take explanations at face value, just ask a couple of more questions. And you will get to know what's happening below. Right. And for that you need to educate yourself, there is no shortcut that you will need to read, listen, see, whichever media works for you put in the effort, get to know a little more. And that will hold you in good stead also.

Andrew Stotz 18:48
So what's a resource that you'd recommend for our listeners?

Pankaj Jathar 18:52
Oh, well, the most obvious one is my blog. I would love to have people visit the blog, read some of the articles I've put there. I've also got a section on books and media that I recommend, which they can look at. But also specifically, there are five books I would kind of put up right now and say that guys, you should read these five books to get a good or a fair grounding on some of the basics around personal finance. If you're okay, I could help out the first one, of course, is the psychology of money by Morgan Housel. I think that's a must read. It's not only a must read, it's a must read every year. Like you should just go through it every year. And refresh yourselves. It's a brilliant is just a short book. It won't take you very long to read. So well worth reading. The next one is The Simple Path to Wealth by JL JL Collins. That's, it's a book he's written to his daughter, who's a teenager and explains things very simply. Right and it's a great, great place to start your journey on personal finance. The next one is The Little Book of baby Investing by James Mencia. Again, it's an all time classic in this space, definitely worth reading. Richest Man in Babylon by George Classen. Again, a fantastic book to get a good grounding in the space of personal finance. And then you should read at least one of Nassim Taleb books. It could be Fooled By Randomness or the Black Swan, any of them, it's a great way to understand some of the random things that go around something like the COVID. Right? So it just it plays to understand how events happen in the world.

Andrew Stotz 20:38
What a great list, I highly endorse that list. In fact, one of those books is right. James Monty's book, little book of behavioral investing. And also, ladies and gentlemen, you can go to Episode 255. And listen to Morgan Housel. Talk about his book. And he came on the show in September of 2020, just at the time he was releasing the book. So he talked a little bit about it. So I'd highly recommend that. And I think your list is a great, great list. So now, last question, what's your number one goal for the next 12 months?

Pankaj Jathar 21:18
Oh, well. So at work, we have very specific numeric goals, right. So we know what we need to do. By the end of the year, we break it down by quarter, and then by Month, and then by weeks, so you know exactly what you want to do. So I've tried to mirror something like that for myself on the personal finance front as well. So my goal clearly is to try and get to my fire equity number by the end of this year. So if the pretty markets behave the same way they did the last 12 months, then I'm pretty confident by this time next year, I should have hit the goal, which basically puts my kind of portfolio and finance on autopilot, right

Andrew Stotz 22:00
after the audience would fire means. Oh, yeah.

Pankaj Jathar 22:03
Financial independence, retire early. Right? Not very early in my case. But still, it's the number or the point at which you can choose whether you want to work or not. Right. Your finances have kind of taken care of. And from here on, it's a real choice. I will obviously still continue doing what I'm doing on the white collars front. Right. That's something I love to do. I love my job. I love doing that stuff. But it's great to know that it's a choice, and it's not a requirement. And so that's that's the number I'm looking to hit by this time next year. If things go well, in the equity markets, if they don't, then it might take a little longer. That's fine, right? As long as there is no big meltdown. If there is a meltdown, I have some money set aside to buy some more. So let's see how it goes.

Andrew Stotz 22:54
Let's see. Let's see. All right, well, listeners, there you have it another story of laws to keep you winning. If you haven't yet taken the risk reduction assessment, I challenge you to go to my worst investment ever.com Right now, and start building wealth, the easy way by reducing risk. As we conclude pakad I want to thank you again for joining our mission. 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?

Pankaj Jathar 23:30
I would like them to take away two words, right? So the two words are learn and be skeptical. Learn educate yourselves and be skeptical about advice or anything that you read or see. Do your own research which will come once you learn.

Andrew Stotz 23:49
Well, I would say that advice again, kind of going back to what we've lived through in the last 18 months or so. From a medical and a health perspective. It's a great challenge to learn and be skeptical. So not only about our wealth, but also about our health. So great advice and that's a wrap on another great story to help us create, grow and protect our wealth. Remember, ladies and gentlemen, this podcast is about one guest. One story. One mission to help 1 million people reduce risk in their lives fellow risk takers. This is your worst podcast hos Andrew Stotz saying. I'll see you on the other side.