Ep55: Nicolas Rabener – Diversification: An Easy Way to Reduce Your Investing Risk

Nicolas Rabener is the founder of FactorResearch, which provides quantitative solutions for factor investing. Previously he created Jackdaw Capital; an award-winning quantitative investment manager focused on equity market neutral strategies. Before that, Nicolas worked at Government of Singapore Investment Corporation (GIC) in London focused on real estate investments across the capital structure. He started his career working in investment banking at Citigroup in London and New York. Nicolas holds a Master of Finance from HHL Leipzig Graduate School of Management, is a CAIA charter holder and enjoys endurance sports like 100km Ultramarathon, Mont Blanc, and Mount Kilimanjaro.

Listen as Nicolas will uncover the worst investment experience in his real estate venture.  Learn why it is important to avoid complexity in your investments.

 

I would urge most people to dramatically reduce your portfolios from a complexity perspective, especially on the retail side.

Nicolas Rabener

Topics Covered:

00:41 – Andrew introduces our guest with his educational and working experiences

02:27 – Nicolas reveals what made him become an investor

04:32 – Telling how he evolved in his job investing in real estate stocks

06:28 – How persistence in doing marathons relates to investing

08:32 – Sharing his first investment loss in his career when overseeing the real estate fund of Jackdaw Capital involving two companies managing prisons on behalf of US government

16:48 – Andrew mentions his takeaways from this story

18:32 – Nicolas gives a piece of actionable advice to our listeners

20:44 – Andrew wraps up the show and emphasizes three important things: create, grow and protect your wealth

 

Main Takeaways:

Lesson 1: “Sometimes logic isn’t what happens in the stock market. Sometimes people overreact, or they may not think fully and completely that only 10% would potentially be at risk.”– Andrew Stotz

Lesson 2: “Expect the unexpected, because, from a real estate perspective, this is an asset-backed business. So, I guess the learning curve is that no matter how defensive in what you can expect, sometimes you do get punched in the face.”– Nicolas Rabener

Lesson 3: “Avoid the complexity because complexity on the investment side is often the enemy.”– Nicolas Rabener

Lesson 4: “We generally create wealth from a business. If you go into the stock market thinking you’re going to create your wealth; you’re probably going to lose.  However, the stock market is good for growing your wealth. In protecting your wealth, for investors out there, some of the academic research I did showed that in Asia you need about ten stocks to diversify away.”– Andrew Stotz

 

Resources

 

Connect with Nicolas Rabener:

 

Connect with Andrew Stotz:

About the author, Andrew

Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company that provides institutional and high net worth investors with ready-to-invest stock portfolios that aim to beat the benchmark through superior stock selection.

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