Ep554: Leonard Kim – Avoid Investing in Pink Sheets Stocks

Andrew Stotz 00:01
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. 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 created from the lessons I've learned from more than 500 guests. Fellow risk takers this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guest, Leonard Kim. Leonard, are you ready to join the mission?

Leonard Kim 00:41
Yeah, I'm ready. Let's do it.

Andrew Stotz 00:43
I am excited to have you on and we just had kind of a fun discussion. Let me introduce you to the audience. Leonard Kim, is the worst investor you'll ever meet. He's made countless mistakes like investing into stocks on the Pink Sheets, OTC Bulletin Board, and companies that are bound for bankruptcy like movie pass, he's bought preferred shares from public companies that have gone bust and invested in private companies that have failed. On the contrary, though, he's an extraordinary marketer, who has won countless awards been recognized as a top marketer by Forbes, brand, 24, Madcon, and many more. He's also an internationally recognized TED Talk, TEDx talk, and he's the author of the book, ditch the act. It's a book on personal branding and humanizing your company with McGraw Hill business. My goodness, Leonard, take a minute, and tell us about the value that you bring to this wonderful world.

Leonard Kim 01:49
So when we look at marketing nowadays, there's a lot of companies out there that have like a pretty big brand that a lot of people can't relate to, or they've already gotten to know over time. For example, when you think IBM, what do you think they do? Maybe make a computer? When you think Cisco, you're like, Whoa, did he feel like you have to like, think and wonder exactly what company every company does. And even with a newer company, like let's just say, XYZ brand, you build something brand new, like there's no affinity towards that. So a lot of people have a disconnect when it comes to going out there and connecting with people in various fields. For example, if you look at what Cisco Systems does, nowadays, they do a lot of IoT, and a lot of things in the technological world that's advancing society. Also, at the same time, they do those phones that are in the office, and they have a wide plethora of services that they offer, because they have 10s of 1000s of employees all across the world. But you can't all put them under one brand umbrella, or else people don't get it. So an example for that is for four years, I worked at the academic medical center over at the University of Southern California. And it's a similarly structured environment, you got 5000 people working there, 650 doctors, and we have this brand called Keck Medicine at the University of Southern California. But what does that really say? When you look at a business, you have various service lines, like for the hospital, for example, you have orthopedics? Yeah. Oh, or the Learn College, D, you have spine, you have urology, you have heart, you have all these different things and different components. And there's a specialist in each and every single area. The same thing transfers for a business like Cisco, or maybe a finance firm or anything else out there. Because we all have different verticals that underlay each of the different lines of companies that we work in. Or if we're brand new companies, no one even knows what we do. So what we do is, with influence tree, we take the personal brands, or the people who work within the company, and put them at the forefront so you get the halo effect of everyone else. So an example of that one of the physician or one of the surgeons who works over USC, he is the guy who McDreamy was based off of Grey's Anatomy. Now he knows a lot of celebrities, he's got this rural renowned background. So by having someone like him in the institution, and brings USC to a higher level. Now, at the same time, let's say I'm an assistant professor, it's my first day on the job, I'm going out there and I'm entering into the world, maybe, right, I enter into the world, no one knows who I am. But at the same time, I'm leveraging the brand of USC to leverage myself because Dr. DE NADA and Dr. Gill and all these other people have leveraged up the reputation of the brand overall. So I get to carry in that reputation but also at the same time by adding me to the forefront of the business and putting my picture out there a little bit of a bio in my expertise. I'm able to go out there and speak directly to the consumer. So more people get to understand that they can come see me at their institution to so that and why and promotes the service line for the business. It promotes the brand and also promotes the person. So what we're doing is we're taking that personal connection from each and every single person within the organization and putting them out there. And some people are like, should we build a market everyone? If you think about it, like for Pokemon, for example, there's some Pokemon that are a little sketch like Snorlax, for example, he's a big round ball who just sleeps all day. But how many people love Snorlax. It's kind of crazy, like you would think, Oh, this lazy guy who does nothing, we don't want to build their personal brand, because it might not Halo, what the personal with the brand of the company. But the truth is, you take every single type of person, and you put them at the forefront, and you have a wide plethora that gives character and flavor to your brand.

Andrew Stotz 05:43
Interesting. And, you know, you're talking about a business where specialty is all what it's about when it comes to medical, but also with Pokeyman, as an example, is not so much about the personality, you know, or specialty, it's just the personality or the uniqueness of those people. And I just wonder if you think about a typical small mid size business, is this a good strategy for them, I mean, at USC, as an example, or at, you know, at the medical center, or at a big organization, it kind of makes sense, because you've got these geniuses and you've got these really great specialists that you can profile. But should a listener who has a small, medium sized business, be putting themselves in their personality out in the forefront, along with other people maybe that are on their team or not.

Leonard Kim 06:32
So before answering that question from the revenue standpoint, by going out with this personal branding strategy, we went from $900 million a year to over a billion dollars a year and four years, our website traffic increased from 90,000 page views a month to 450,000 a month. And I like to use CAC as an example, because we had a five year old brand. Keck medicine was at the front of USC, if you look at every single other donor who donates to USC, it's USC, blank, USC, blank USC blank, I don't know what CAC did to go and finagle their way to go in front of that. But we had to start with a brand new brand, which kind of goes into the territory of the small to medium sized business that you're talking about. You have a smaller brand that not a lot of people know of UCLA is number one in the area, everyone knows who UCLA is, but then we're like, how do we go out there and differentiate ourselves. So we were the small player in the field, much like a small or medium sized business, so to go out there and differentiate ourselves and make a market share for us. So if we didn't go with that route, then we would probably still stay that 900 million, what's it for academic medical center that big is not a lot of money, it's like the same as the equivalent, maybe the equivalent of like a five to $10 million business staying the same. Now, if you were in the five to $10 million business, if you were to go out there and do the personal branding effort, put your people at the forefront, you can go up to 13 million, 15 million, 20 million, maybe even 25 million within those four year period. So it gives you the chance to go and really accelerate the growth with your company. And that skills back into each of the smaller companies. Even if you're a one person organization, to go out there and put all your effort into your corporate brand. It's extremely hard because now you have to figure out how am I going to get people to resonate with my logo, I have to stick within a box to go and only talk about the specific things that relate to my business. But if you go and operate as a person, instead, by operating as a person, you can talk about autopilot the rest of your life. And when people come back to seeing what you do, they read your bio. And when they read your bio, they get to know like and trust you. And if your bio is good enough, they fall in love with you as well. And at that moment, they get to see what you do for a living. And they get to decide if they want to work with you follow you on social media, invite you to speak somewhere, go and offer you a book deal, go and invite you to a place where you can talk to 100 people who could potentially become your clients. And it could turn into a lot of different things. So going out there and building a personal brand definitely works on the small scale as well. And it's a lot more easier to maneuver when you don't have all the chain of command and the red tape that comes with a big organization. But as a small scale, you have the ability to go and maneuver pretty quickly.

Andrew Stotz 09:14
Okay, that's great, great advice. And for the listeners out there, you know, focus on personality and focus on the individuals because ultimately the story of people is what is attractive. Now, let me just ask you before we get into the main question, what's the best way for people to to contact you to get your resources to um, you know, to get more of what you do?

Leonard Kim 09:40
Sure. So my website is leathered kim.com. You can also find this Deac on Amazon or any book selling service. And my company is called Influence tree and it talks about the services that are offered there.

Andrew Stotz 09:54
Fantastic. We'll have links to all that in the show notes, ladies and gentlemen. So feel free to go there and click Got it and go to it. All right, well, 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.

Leonard Kim 10:13
So okay, let's start at the very beginning, when I first started going out there and investing, like I saw all this hype around penny stocks. So I thought a penny stock was really something that was under $1. Right, something with the sense behind it. Nowadays, I know a penny stock is considered any stock that something $5 which came with education, but at the time, I thought a penny stock was under $1. So it was things that traded that like 30 cents, 50 cents, 70 cents, things like that. And one of the first investment I ever made was into a penny stock. I don't remember exactly which one it was. But I put like a few grand into it. And something interesting happened with that it did. It was actually on the OTC BB, which is the OTC Bulletin Board, which is a place where a lot of companies that aren't fit for the NASDAQ list their socks, they're not really great companies are struggling, they're not doing that, well, they might be doing shady things to those like a lot of things like that. And one of the companies decided to go out there and do a reverse split. So at first I was like, Wow, this stocks gonna go from like 50 cents to seven bucks, that means it's going to become more valuable, it could get listed into another exchange. And I can make a ton of money. I'm not sure if you've ever been in reverse split before. But what happens immediately after the stock hits $7, or whatever it is, goes right back down to exactly where it was. So it goes back down to like 50 cents. So you're like, wow, I lost all my money in doing so. And it's like how can someone even predict something like that could happen. Another situation for me is there was this company, and they had a stock that was listed on the OTC BB, and it was trading like around like maybe somewhere like 2550 75 cents somewhere in that range. And they were selling preferred shares. So they had these certificates. They were like, these are Series B preferred shares, which means you get voting rights, you get this, you get that and you get a certificate that really emphasizes how much your stock is worth. And you get you actually have ownership in the company. Wow, that sounds pretty attractive. It comes with a one year hold where you can't go and sell those certificate. I'm like, Wouldn't it be cool to actually own this certificate of a company that would be pretty cool. It's not like just trading a stock or like your E trade account, or anything like that. So I got like six grand, I bought a ton of these shares for 50 cents each, which were the preferred preferred share price. But then the thing is, when you convert the preferred share back to the common share, it's a one to one transfer, right. And after a year, that stock was at a sub Penny level trading at like, Penny or last. And even today, it's still around that point. So if I wanted to go out there and sell that preferred stock now, I don't even think I could buy something off the dollar. I mean, I might be able to but I might not be able to and it's a pretty frustrating situation to be in. Now you

Andrew Stotz 13:25
got a beautiful share certificate. Exactly.

Leonard Kim 13:28
But what am I gonna do with that? Guys? I don't know if I want to go out there and advertise that. I guess I have here. Then another time, like one of my friends. And maybe 2011 2012 I was only making $16.24 An hour working at American Honda watch isn't really that much money when you live in Los Angeles, he lives here. And like, one of my friends convinced me to give him like 250 either a month or 250 every two weeks, something like that out of my paycheck. So I did it. And they transferred it every single every single time to him for about a year. So that comes out to maybe like six grand three grand somewhere in that range. And like he used it to go out there and trade options. And he's like, Hey, I'm making all this money. I'm making all this money. Then about like six, seven, maybe about nine months in, he started getting a little bit obsessed with the stock market and over trading, which a lot of people do when they get too confident and they start losing money and they start losing more. He ended up blowing his entire portfolio and I have never received that money back because it became a total loss. If anyone out there says they're going to go out there and manage your money. I mean, think twice because if they're not licensed if they're not with an actual institution, if they're your friends, chances are that money is Probably going to vanish. Now, I like to say this little kitty is my worst investment because I bought this in bam. See it has this cute little smile. Okay? I like to say it's my worst investment because I got it and bam, it was $350. Then I went on to I looked up the artist and I tracked who was down, I found that they were only selling it for $169. But I mean, in reality, like, what do you compare this cat losing half my money the other days with the cat.

Andrew Stotz 15:34
So how would you summarize the lessons that you learn from these experiences?

Leonard Kim 15:39
One thing is avoid stocks that are on the Pink Sheets and the OTC BB, if you're going to go out there and invest in stocks, trade stocks that are on the NASDAQ, that NYS e ETFs, or things with a credible background that's been time tested, that has years and years and years of historical data that you can go through. So you can make sure you avoid those big mistakes. And don't invest into stocks that are sub Penny levels. If you are going to do penny stocks, look at penny stocks that are on the NASDAQ, as opposed to the OTC and BBB or the Pink Sheets, avoid those completely, because you could just get scammed really hard out of them. I've never used leverage, or what they call it a 10x your account and trade with that. But that sounds like a really bad idea too. Because if you go the wrong way, you end up losing more than what you invested, which could lead to dire consequences. And also at the same time, if a buddy says hey, invest with me in something, don't invest with them, do it yourself. And me personally, I have a 403 beer, whatever that's done pretty well. So that's one thing that has kind of worked out in my life. Another thing is, look at maybe like commodities and so forth. And like things like oil, the SMP and more stable type investments, because like, overall, the stock market 70% of it moves in the same direction. So if you try to diversify in the stock market, you don't really get true diversification. Because most 70% Follow the s&p.

Andrew Stotz 17:24
Great. Wow, that's a lot of stories and a lot of lessons, maybe I'll just share some of my takeaways. You know, the first two stories that you talked about were the penny stock and the preferred share. And I think the underlying a lesson from those from my perspective, you know, you've talked about avoid OTC and kind of avoid startup situations, you know, in particularly in that OTC space, and avoid penny stocks unless they have some credibility, like being on the NASDAQ or something like that. And with this, I would just highlight that ultimately, when we're investing in business, the only thing that matters is the underlying business. In other words, can this company grow its revenue significantly, and grow its profits even more significantly, because if they're making $10 million right now, and they're making a million dollars in profit, hopefully, as they scale up, it's going to scale up with the profits rising slightly faster than the revenue. And that doesn't matter whether you're investing in a small company or a large company, if that company can Drive strong growth in the bottom line, then that is the ultimate thing that runs and drives the share price. So my first takeaway is really to focus on the underlying fundamentals of a company, it doesn't matter what the share price is, whether it's $1, or whether it's $50,000. You know, like, look at Berkshire Hathaway as an example, Warren Buffett's company is an extremely expensive, or you could say high, high number four that you're paying for each share. But the underlying business is fantastic. So that's the first thing. And also, you know, try not to be seduced, I think the preferred share one is a good example of kind of, it's easy to be seduced all I'm going to be a VIP. I'm going to be a preferred shareholder. Look, I have rights over the common shareholders. It doesn't matter if the underlying business is not driving profit growth. And the last takeaway from my side is, you said, avoid investing with friends? Yeah, generally, the answer to that is avoid investing in friends. I totally agree with that. And I've lost a lot of money over the years in doing that, and I know, it's sexy, and it's seductive, and you want to help your friend and their idea is interesting, but chances are very high, they're going to fail. So if you want to invest with a friend, the best way to do it is to get 10 friends together to pull that money together and make it a more formal thing and then put in a tiny amount to help out that friend. And the last thing I would to say is that ever it's just like, Leonard, it's like, every young person comes to me at some point and says, I'm trading options. I'm trading Forex, I'm trading, blah, blah, blah. And 95% of the time they lose all of their money. In fact, an older couple of a friend of mine that have very little money, and they're in absolutely in retirement phase, got hooked and said, We're going to trade Forex, because some guy on the internet told us we can make a lot of money. And I told him, if you're trading Forex, you are betting against the banks and the central banks. What competitive advantage do you possibly have in that space? And of course, in their case, they had none. So this is some of the takeaways that I get from your stories. Is there anything that you would add to that?

Leonard Kim 20:46
Oh, sure. So for the Forex, I tried paper, trading Forex for a month, and I blew my accounts, I'm like, Okay, I'm never got to get into Forex. Luckily, I had the opportunity to go out there and pay for trade beforehand. Now, nowadays, you can get a lot more education with paper, trade, paper trading, there's a lot more tools out there that allow you to do it before you go do anything with live money, which is always recommended.

Andrew Stotz 21:11
So let's put that down as a lesson, then. Another lesson is pay per trade first, before you put real money there.

Leonard Kim 21:17
Yeah. And on top of that, I think I forgot to mention movie pass. So movie pass became extremely popular a few years ago, and it was listed on the stock exchange. And there, there was a time where it went down to like 50 cents, and like all the creditors, and everyone was talking about how it was destined for failure, and I'm like, wow, movie pass, it's only $50. And you can watch as many movies as you want, there is no way that this could ever fail in my head, even though all the creditors are saying the exact different thing. So sometimes, even if you see a stock on a reputable exchange, like the NASDAQ or something, if the creditors are all saying something, then you should kind of be aware because that turned into a sub penny stock. And I basically lost my entire investment with that. On the contrary, like Gamestop and AMC were kind of heading that same direction. But they did end up finding a way out. So case by case.

Andrew Stotz 22:19
So let me ask you what, based upon what you've learned from these stories, and what you've continued to learn in your life, what one action would you recommend our listeners take to avoid suffering the same fate?

Leonard Kim 22:30
I would say make a more conservative investment profile. And like let's say you have a goal to go out there and make $6 million by retirement or something like that. I mean, recommendations are usually around like one or two. But then if you really think about if you're spending like 100, grand and more a year, then you really can't do that. So if you really want to have that much, then figure out how to earn more money to go out there and invest with and try to look at the calculated returns at around five to 10% a year, as opposed to trying to go and get the 50 percents or the 100% or the 10 being yours. What's your well possible not plausible?

Andrew Stotz 23:20
Yep. Fantastic. Now, let me ask you what is a resource, either that you've created or that you've used, that you'd recommend for our listeners?

Leonard Kim 23:30
Oh, I mean, when it comes to marketing, a great resource I have is my book, this was the surprising power of real you for greater success. Because, like, for example, back in 2011, to 2014, I was there anything about $16.24 an hour, which comes out to about 30 to $33,000 a year. And before that, I was earning a lot less. But by going out there and building up my personal brand, I was able to add a multiplier to my income to go and grow that exponentially. So if you're struggling with your business, if you're struggling with your job, if you're looking for ways to go out there and make more income by going out there and building your personal brand, you can make more income that you could go and use towards investing.

Andrew Stotz 24:13
Fantastic. And last question, what is your number one goal for the next 12 months? And I think we're gonna have an interesting answer here.

Leonard Kim 24:21
So I don't actually have goals and when I think back to like, when I was like, 2122 23, you know, early 20s Like I had like these wild outrageous cause like I'm gonna be a millionaire next year. I'm gonna go get a jaguar. What's the top of the line x day, I'm gonna go get this and that. I'm gonna get a Porsche Panamera. And like, none of those things actually ever happened. And when I think about it, the reason that doesn't happen is because you're hearing live the goals over here. And then a few months go by and you move up this far or a year goes by and you move it like this far, and then the goal is over here. So what happens is It ends up become extremely debilitating to your subconscious because you're like, I'm never gonna get up there, it's gonna be impossible, because it's like, how are you even supposed to get there? When I kind of took the monetary situation out of it the goals and the other objectives that I wanted to go out there and achieve, I kind of flipped my mentality for like building my personal brand I did it with writing some people do it was video, but I don't know, I like writing more because it's a you could do it anywhere you can do it on the bus, you can do it at home, you could do it in the bathroom, it doesn't matter. For video, you can't really do that in the bathroom, it's gonna be a little questionable. Like, for writing, like, I went out there. And I was like, you know, I'm just going to write whatever I feel like every day. And because people were reacting positively to my content after a month, a month and a half of writing. But like my first month, I only got like 102 views. But then that turned into like 2 million reads by six months. But like the second was like people started like engaging with it and stuff. Like it was fun. It was fun interacting and sharing stories and everything. So I changed it from I'm just gonna keep doing this for fun, and like, slowly reposition my branding every now and every six months. And it was kind of interesting, because like after, like maybe a year writing someone's like, LP 250 to go write this for me. I'm like, Oh, 250 That's great. And someone's like, Oh, I'll pay you 500 And someone's like, I'll pay you 1000 And someone's like, I'll pay you $5,000 I'm like, I'll take five. And now like, I'm charging like six figures a year for services. And I'm like, Oh, cool. And then like, it's kind of crazy, where like, all those things that were unachievable for me in the past, after going out there and taking those goals away, and not focusing on what I wanted. Like, when my ex wife asked me, What's your dream car? I'm like, I don't know, Jaguar F pace, which is, you know, like a $50,000 vehicle. And then she's like, My, aren't you? Yeah. At that time, I already had enough money to get it. So like, Mike and I also kind of kept everything pretty conservative at the time I drove a 20 year old XJ 300 and things like that. 97 And before that, and 94 Infiniti Q 45. So I kind of kept like, things pretty conservative in my life. And I didn't go after my financial interests, not really goals until my ex wife asked me why via

Andrew Stotz 27:37
so drop the goals or drop the focus on money and focus on the value that you could create. And before you know it, the money comes it sounds like yeah, basically. Yep. Fantastic. Well, listeners, there you have it another story of laws to keep you winning. If you haven't yet taken that 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, Leonard, I want to thank you again for joining our mission and on behalf of a start so 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 our audience?

Leonard Kim 28:18
Yeah, I'm in the alumni of the worst investment ever.

Andrew Stotz 28:24
It's a distinguished, it's a distinguished title. Anyways, what would you leave us with for your parting words?

Leonard Kim 28:32
Oh, I'd say for my parting words, like, especially in the boring industries with a lot of regulations. There's ways to go out and read markets really differentiate yourself. All you have to do is really figure out how to do it. And if you need advice or help with anything, feel free to reach out to me and we can brainstorm some stuff.

Andrew Stotz 28:50
Fantastic. Well, that's a wrap on another great story to help us create, grow and protect our wealth, fellow risk takers. Today we expanded our mission to help 1 million people reduce risk in their lives. This is your word. We're as podcast host, Andrew Stotz, saying I'll see you on the upside.