Ep643: Maxwell Nee – Never Get Too Attached to an Investment

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 risks 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 join me go to my worst investment ever.com and sign up for the free weekly become a better investor newsletter, where I share how to reduce risk and create grow and protect your wealth. Fellow risk takers this is your worst podcast host Andrew Stotz from A Stotz Academy, and I'm here with featured guest Maxwell Nee. Maxwell, are you ready to join the mission?

Maxwell Nee 00:40
Yes, absolutely. I have to say enjoy. I love that intro. You know, that thing you said about your worst loss to keep you winning that? That's incredible.

Andrew Stotz 00:51
Yeah, it's funny because a friend of mine, Bevan who helped me a lot in the beginning of this, he and I reworked that about 50 times to try to come up with, you know, it's great stories of loss to keep you winning. So I appreciate ya. Let me introduce you to the audience. Maxwell Nee is the managing partner of OENO Wine & Whisky Investment. He's a multi-award winning entrepreneur who earns his investors a recession-proof and market-beating return with wine and whiskey alternative investments. Maxwell, we'll take a minute and tell us about the unique value that you're bringing to this wonderful world.

Maxwell Nee 01:28
Yeah, well, well, let me start with a story. Right. So why wine and whisky Investment, you know, a foray that really stands out for me is I was in Chicago, I was in Chicago, went to his fancy bars for holiday, Australia, and I'm, you know, not from the US visiting an old friend who, you know, very close to, and we go to a bar that has dancing and all that sort of thing. They sit at the bar, and I say to us, you know, you need to spend at least $75 to sit here. I said, okay, cool. You know, we've got $150 You know, table tab, plenty of room to move, you know, can't go wrong, right? And it's a lot of money, right? And in Australia, that's like $110 So it's plus tips a lot of money. So anyway, I sit there and I say to myself, I want to order an old fashion. So an old fashion is like a usually a bourbon or whiskey drink. I like to have a whiskey. If you know anything about whiskey, you probably know McAllen. So McAllen is a bit like the, you know, the apple of whiskey. And he said, Look, you can choose between the Macallan 12, and MacAllan 18. And the Macallan 12 is it's been aged in the barrel 12 years. MacAllan? 18 is a same liquid, just age 18 years, right? Six years difference. And I said you know what I'm gonna holiday. Screw it. Let's do an 18. I don't usually older than 18. So we're having this drink. And it's delicious. Like how good my friends. It's fantastic. And then I asked the boss and I said, so how much again? Was this drink? didn't even ask. Right? And he didn't tell me. And then he said to me. He said to me 125. And I said, No, no, not how much have you spent so far? How much is this drink here? Like this MacAllan? 18 old fashion? He said 125. I said no, no, not the bottle. How much is this drink? And he said 125 My friends sitting next to me just laughing. You know, sort of like spitting my face as he's laughing? And I said, Wow. Okay, cool. Well, you know, committed now. How much is the Macallan 12 odd fashion. He's like 25. And I thought, wow, you know, six years difference equals of 500x difference in the investment of this asset? Right. And that's started to open my mind to how this market moves and the fundamentals behind this market. Right? Because I'm the end consumer, paying 5x more for the assets. So, so ultimately, you know, the way I help people invest in wine or whiskey is to get on the seller side of that of me, where the poor guy and the borrower Chicago, paying for that drink and allow people to ride the appreciation wave of how these assets age.

Andrew Stotz 04:14
And how is it structured? Are they investing in a vehicle? Are they investing in a particular barrel? Are they investing in a frack, you know, fraction or something like that? How does that work?

Maxwell Nee 04:24
Yeah, so we have two options, right? We have people can invest in their own private portfolio, whether they want to hold bottles or cast in their own name or have to choose it, you know, buy in at the right time buying young buying a wholesale price, and then help them to exit it. And we also have an investment fund in the US in Delaware, where we're basically it's a bit like a typical, I think it's called a mutual fund in the US, where instead of shares or whatever, it's it's wine and whiskey as the hard assets

Andrew Stotz 05:01
And so you're buying, what is the person getting, when they buy into that they're getting a fraction of that they're getting a bottle, they're getting a cask they're getting what are they?

Maxwell Nee 05:12
Yeah, in the private portfolio, they get the actual ownership of the bottle. So you could actually take them out of the storage and Insurance insurance and actually drink them if you wanted to. In the investment fund, yeah, you own your own, for example, allocated shares of the fund, and the final return would have returns, you know, whatever it is. Last year for our clients, we did 15.87%, which is, which is not bad, it's great. And that was in the time of on the back of COVID, and all that sort of thing. So you earn your percentage of that and then be paid out at the end?

Andrew Stotz 05:47
And how are you calculating that return? Is it like your estimate of the value of that of how much the value is appreciating? Or how do you understand that return?

Maxwell Nee 05:58
Yeah, so it's both an art and a science. The science part is that there is an index, there's actually an index for wine that actually tracks wine a bit like the stock market, exactly like the stock market. And then there's extra steps as well, you know, because we all these assets are hard assets, they're insured, just like if you were to buy a house or house investment, that to be insured, you need to be independently valued. So that's where the art side comes into it. So you actually have value as I come in and assess the assets, determine a value, and then we go to market with them and see if we can even beat that value once we go to market.

Andrew Stotz 06:33
Right? And what is the simplest or easiest way? For someone? Let's say someone's listening, and they think, Oh, I'd like to allocate a little bit to that. What's the simplest way? What's the minimum amount, that type of thing for them to do that?

Maxwell Nee 06:47
Yeah, so what I would say is, if you wanted to join the investment fund, the minimum is about $250,000. US dollars, anything less, I recommend the private portfolio. Either way, I can share with you guys some links to put in the show notes here. But if nothing else, if you add me on LinkedIn, my email, my personal email, Maxwell knee is all over LinkedIn. And I'm pretty active on there got about 20,000 connections. So send me a connection. And I pretty much respond to everyone. Yeah.

Andrew Stotz 07:20
And just one last question about that. And I'll have all that in the show notes. And I know plenty of my listeners are looking for alternative investments. So it's definitely worth checking it out. I think. And, you know, what you've already talked about is that the return was a strong positive return in a negative market year, not only for the market, but also for bonds. So if you want to look at the value of this as an alternative investment, giving a uncorrelated return well, it, you know, did it last year, and that's pretty impressive. One of the questions I have is, how much how, from a size perspective, how difficult is it to get big, you know, if real big institutional money comes? Is this a niche that really can only absorb? I don't know, let's just say $50 million, as opposed to No, it's multi billions, or is it? You know, what, what is the size of the market? Like?

Maxwell Nee 08:15
Yeah, great question. Really great question. So the total wine or whiskey market is, last time I checked, it's at least 400 billion. So it's, you know, it's like a pretty decent economy. The ones that we invest in is the top 1%. So we're looking at about four to 5 billion as the top 1% We choose the top 1% Because they sit in their own league, you know, but like the luxury economy, you know, Ferrari doesn't need to worry about contraction like turbo and Honda need to so yeah, four to 5 billion. Okay.

Andrew Stotz 08:51
Well, I want you to keep in the back of your mind the answer to the question, I'm going to ask you later, which is, you know, what is your number one goal for the next 12 months? Because I'd love to hear about it. But why don't we go into the big question of the day and 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 and then tell us your story.

Maxwell Nee 09:15
Yeah, cray. I love this question. I love the whole concept of this podcast. So I was 21. I was in Brisbane, Australia, and we were going through so the city that I lived in was its property investment. The city that I lived in was in the middle of transitioning between everyone living in houses, people starting to live in apartments. And so there was all these big apartments coming up, you know, apartments being built everywhere. Massive, which created a massive oversupply is the council which is approving them and then the banks were just funding them so there was just a massive oversupply so I bought an apartment in Australia off the Plans off the plan means that like, the apartment was worth about 450,000 Australian dollars, and you have to pay 10% deposit, but it's not built yet. So it'll be built in, you know, 36 months, you know, three years or whatever. And then you pay the rest when you settle, right. And, you know, I was in love with this thing, because I walked into the showroom. And, you know, I was definitely sold, I walked into the showroom. And it was like, you know, I used to watch the show suits, you know, the legal show with the guy in New York, and the apartment, the showroom looked like his apartment. And I was, like, in love with that lifestyle like that, you know, young professional living in New York City, like, all that sort of stuff. So I was sold on the lifestyle and didn't even really care about their profit of the price. Which like most things are, you know, your soul and the emotion. And then the logic comes after. So I put the deposit down and didn't have the money for the deposit. So I borrowed to borrow the deposit, borrowed, I borrowed that money for the deposit, paid it back. So I was like, about three years to pay this back, and then save some money extra, right? So plenty of time. And, and you know, as you're committed to something, you're already committed to an investment, what I've learned is that you only find reasons to fall more in love with it. So it becomes harder and harder to walk away. Even if it looks bad. You know what I mean? Like, it's like all those guys that invest in confirmation bias. Yeah, exactly. Well, those guys invest in those big scams, I was watching the Bernie Madoff series on Netflix, and you know, what I can really feel was once people were in for a billion dollars, they didn't want to hear any more bad news, right? Because you're already in for a billion dollars. So this felt like a billion dollars to me. And at that point, you know, I spent three months picking furniture, you know, so really falling in love with this thing. Furniture, forks, you know, cups, like glass, crystal, whiskey tumblers like all this stuff, right. And then didn't do any due diligence on the stupid thing. And, and then I saw an article that was first sign of bad news, because I got three years to, you know, to settle this investment. The first sign of bad news was about halfway through, I saw an article saying that the developer, because the place was so city centric, it was in a very noisy policy, sort of in a bit of like the nightlife part of the city. So the developer was, I don't, I don't think the right term is sued, but he was, like, legally obligated, according to the local council to invest $10 million in, you know, like, triple glazed glass, so that they're, you know, the people living there didn't have to hear like, the night clubbing and all that sort of stuff. So that's not a good sign. Because you know, that, that means the developer is going to take that 10 million bucks out of somewhere else, and all of our apartments get smaller, with triple glazed glass, and just, and that sort of stuff started to unfold, which I totally didn't think about, you know, my first investment and, you know, they look at the metrics didn't know anything, or the developer and people were saying, stuff to me before I even signed or, you know, you sure and but, you know, I was the train, I already left the station, right? Confirmation bias. And I said, then the place comes home for the places settle. And, you know, I've spent another fortune on furniture, but this place hasn't been settled yet, because I kept seeing, I kept seeing what's a call sales, you know, like, King furniture living 50% off that, oh, wow, you know, I must go grab it now, because I need it anyway. So, and then what happened was, and this document, just settle is a legally binding document, you know, it's called an unconditional contract. So no matter what happens, like, you know, they could effectively bankrupt me, which they did threaten, because I didn't want to settle. So then I work at the bank at the time I go to get the loan, the value goes in to value of that property. And he's like, look, I can only I can only value this at, like, 80 88% of what I signed up for, and I've got to settle for what I signed for. So I'm 12% You know, my, my property, my expected value has already lost 4%. And I thought, wow, it's already lost 4% And then I started forecasting, how long would it take for me to get back to parity? You know, take for me at least another cycle, you know, seven, eight years, they're back to parity. And then I'm not really ahead because of inflation, you know, so I thought, wow, it's gonna take me like, it's just, it's just, I'm really starting so far behind the finish line. It's such a losing position. How's that going to work? So then I go to settle. And then I decide sort of right the last minute, I get the loan approved, and everything had to put in more money than what I, you know, really wanted to well, that sort of stuff. But I worked at the bank at the time, so I could get a good rate and a good deal and all that sort of stuff. And I decided last minute, like, you know, what, I'm gonna walk away, even if I lose a deposit of $45,000 I'm gonna walk away. Because it doesn't make sense. You know, it just, it just doesn't make any sense. And, and I was, you know, 21 or by this time, I was 24. You know, young and, you know, little irresponsible. Yeah. Well, if they would have bankrupt me, they could bankrupt me. Right, it's a deposit. 24 45,000 Right. Right, putting 1000 to walk away from two years. Yeah, it was. It didn't feel like at the time, because that was money from three years ago. No. But yeah, no, it was and I always did it. But then I thought, now it just doesn't make sense. You know, I'm, I'm, I'm cutting off my, you know, cutting off a finger rather than cutting off by arm. Right, in terms of like the commitment, you know,

Andrew Stotz 16:16
in by leaving the deposit, does that relieve you of any legal obligation? Or they're still tried it? Oh,

Maxwell Nee 16:21
no, no, no. So they took, they still tried to extract it, you know. So I ended up having to go back to the agent who was a friend of mine who felt bad about situation, she's like, Oh, my God, you know, I had no idea like, this was meant to be a fantastic project, the market was meant, you know, this wasn't meant to be oversold, and over promised and whatever. And then, she helped me to find a replacement buyer, of which they only signed the deal, because I signed over the deposits of it. So I managed, I like, by the skin of my teeth, I managed to avoid, like the legal pressing of the law firm. You know, which started in bankruptcy and whatever, and then said, you know, assign my deposit over to the new buyer. And, you know, they've got the assets today.

Andrew Stotz 17:10
Right? And how would you describe what you learned from this?

Maxwell Nee 17:14
Yes. Describe, I learned that see, I'm you know, I'm an extrovert, very, like passionate, you know, fiery, probably telling the way I'm speaking, you know, emotionally charged, in like a, you know, like, a passionate way. So, I learned that, you know, it doesn't hurt to it never, it might feel like at the time, because it feels like it's urgent or whatever. But, but it never hurts to, to just, like, chill out. And, and, and think about something. And it also never hurts to. To look at other options, you know, and it's almost, it's almost a red flag, if you're that patch something so okay. So that's what I really learned, I learned that when you attach something, that's a red flag, that doesn't mean like the stars have aligned and you and, you know, the universe is giving you like this, once a lifetime shot or whatever. If there's any attachment at all, you've got to just double check yourself

Andrew Stotz 18:32
excellent learnings and an interesting story, maybe I'll share a few things that I took away. It's interesting, you know, to go back, I loved your story about Chicago and how you started your business. And that was interesting. Also, you know, going through the story, and it's an important one for the listeners out there about how property works, you know, Off Plan, you see something you think that's interesting. I remember I saw a condo on the street next to mine. And every time I walked to the park, I saw them building this condo, and the street that was condo was on connected to the park. So I thought this is a really, you know, good location. And it looks interesting. So I did the same thing. I bought something off plan. And you know, they watched them as they built that thing. And they stayed on track and all that. But by the time it got done, and I was going to move in, I realized, you know, first of all, it was half the size of the one that I lived in at the time that I was renting. So I was kind of hesitant to move into it. And then I just found that I didn't really it wasn't my thing. And then I rented it for a while. And then I realized I'm not a landlord, and then I sold it. And in the end, I got you know, probably 1% Return on average over the years. And so it kind of brought me back to that story. What one of my takeaways from what you're talking about, first of all, is confirmation bias. And that is the idea of looking for things that confirm your decision. And I think That's what happens to all of us. And so you have to really be aware, I think the best way to look at that is kind of like, you can call it the white Toyota syndrome. As soon as you buy a white Toyota, you realize the world is full of white Toyotas everywhere you look, you see one, you've obviously made a smart decision. But if I think about it, my biggest takeaway is that property can be a trap. And it's not an easy liquid thing to get in and out of like the stock market, or let's say, an index. And so when you go into, it's really important to do that research that you talked about, and you talked about slowing down. My notes that I just took was slow down, do your research, especially if you're attached. And I think my final takeaway is that, and I think this is critical for the listeners and the viewers is, it's okay, to walk away.

Maxwell Nee 20:57
Yeah, just add one thing. Yeah, yeah, I'll just add one thing. So probably an even bigger point is, you know, if you're not an expert, your first time doing something, get a mentor, get a coach, or like, just just pay for it, just pay for an expert, if you can find one, you know, I actually had a best friend who was an expert in the field who worked for a competitor. And I didn't even think to talk to him, you know, so I didn't have the awareness to, like, I didn't have the awareness of I don't know what I'm doing. You know, but if you could just have that awareness, Hey, you don't know what you're doing. And there's no harm in that, because I've just never done it before. You know, it's, you know, the first time you learn to drive a car, you don't just jump into the car, hope for the best. Like, you ends up in a car crash, you get someone to teach you. And that's because you're aware that you've never done it before. And you're sitting there with like the steering wheel, and you don't know what to do. Right? So like every one, especially in investing, like I think so many, you know, wounds or potholes could be avoided, if people could just put their hand up more and like, seek an expert, you know, and maybe the expert doesn't work out, maybe you need like two or three. But that's far, far better off than what I did, which is just, you know, cowboy weighing in to something I completely didn't know about where the stakes are really high. Yeah,

Andrew Stotz 22:16
and that the seeing Pennywise pound foolish is an interesting one. Like, if you have to pay for the experiment even be better, it may force you to think about, I really got to listen to this, you know, to what this guy is saying. So let me ask you, let me ask you the last question, and that is, what is your number one goal for the next 12 months?

Maxwell Nee 22:38
Yes, my number one goal for the next 12 months is a bit probably a bit similar to yours. It's basically to just educate as many people as possible, you know, how much more is out there in the world of investment, you know, obviously, I've got a particular area of expertise with wine and whiskey. Because the way I see it is this, you know that the average person is usually seven to eight out of 10 educated on property, because everyone knows about it, it's been in the news for 1000 years, and all that sort of stuff. And you know, the average person is probably like zero out of 10 in terms of wine or whiskey investment. So I just want to bring that up to like a seven. And then you know, the world will build them make their own educated decisions on what's the best thing for them based on so basically empower people in the investment journey.

Andrew Stotz 23:28
Fantastic. Well, listeners, there you have it another story of loss to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. If you have not yet joined that mission, just go to my worst investment ever.com right now and join my free weekly become a better investor newsletter to reduce risk in your life. As we conclude, Maxwell, I want to thank you again for joining our mission and on behalf of a starts 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?

Maxwell Nee 24:01
No, I'll just say that guys, you know, Andrew has got this podcast down pat. So subscribe, get in there. I really love this concept.

Andrew Stotz 24:12
Appreciate it. And that's a wrap on another great story to help us create, grow and protect your well fellow risk takers. Let's celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your words podcast host Andrew Stotz saying, I'll see you on the upside.