Ep733: Vikram Mansharamani – Liquidity Will Not Always Be There

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. Thank you for joining that mission today. Fellow risk takers this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guests. Dr. Vikram manzara. Mani money. Vikram, are you ready to join the mission? I am. I am excited to get you on and we just had some fun talk just before this. So I think we're gonna have a lot of fun but let me introduce you to the audience. Vikram is a global trend watcher, who shows people how to anticipate the future, manage risk, and spot opportunities. He is the author of Think for yourself. Restoring common sense in an age of experts and artificial intelligence, and boom bust ology spotting financial bubbles before they burst. He's a frequent commentator on issues driving disruption in the global business environment. rhythms, ideas and writings have also appeared in Bloomberg, fortune, Forbes, The New York Times, and many other publications. LinkedIn twice listed him as their number one top voice for money, finance, and global economics and worth has profiled him as one of the 100 most powerful people in global finance, millions of readers have enjoyed his unique multi lens approach to connecting seemingly irrelevant dots. They're gonna take a moment and tell us about the unique value that you are bringing to this wonderful world.

Vikram Mansharamani 02:01
Well, first of all, Andrew, I think I should hire you, as my publicist, given that wonderful introduction. So thank you. Yeah, I'm honored. I'm honored to be part of your show here. So what's my unique proposition? I think it's pretty simple. And it's structural. I don't think I have a unique edge. But what I do is have a unique perspective. I am a global generalist. And by that, I mean, I connect dots, I cross silos. And I'm not wedded to any particular investment or other intellectual discipline. So people often say, Hey, you're an economist, I said, No, I'm not, you know, because I, geopolitics. Oh, so you're like a geo economic kind of person? No, I'm not. I'm also a behavioral decision making guy. Oh, so you're a behavioral finance and then global. Okay, now you're starting to describe multiple lenses. And so I like to think of myself as a big picture guy, who's able to look at the context as much as the specifics and help you make sense of it all. So that if anything, is my unique perspective, is being able to take complex interconnected silo crossing phenomenon and make it intelligible.

Andrew Stotz 03:15
You know, I have a lot of students in my different courses, in a lot of what they focus on is learning a skill, learning a focused area, whether that's accounting or finance, or marketing. They get very narrow in their focus. And they build a skill that gets them a job and may make them a lot of money are a good amount of money. But I'm curious for young person that says, this is interesting. Maybe you could just talk a little bit about how a young person could build that the skills that you have that are this global generalist because people say, you know, if you go to general, you know, you don't add any value. Well, as a young person, maybe that's the case, but maybe you could just give some idea on that for the young folks listening.

Vikram Mansharamani 04:02
Yeah, so there's different ways to quote unquote, skin the cat. One way is, of course, to do what I did, which is I think, anomalous, honestly. And I was able to never put myself in a box. And I was able to avoid the boxes, even though the boxes and being narrow and focused and deep, is really how young people get ahead, right? Find your domain, develop your niche, develop some expertise, and you will rise and that is a proven methodology. And so I'm not going to suggest that's wrong. What I'm going to suggest is there's different ways to become a generalist. One way is, as you know, frankly, General Electric pioneered which was okay, you're an expert in finance, and maybe you've done something narrow and deep for five years might be time to change. General Electric would take a someone who did deep structured finance and insurance, maybe within GE Capital, and they say, Okay, now you're gonna go to power equipment. Marketing in Latin America, and they take them over there. And they do that. And they say, Okay, now you're good there. Now we're going to put you in aircraft engine, manufacturing operations, and then over. And so just when they became really capable, they move on. And that's what really develops, I think this generalist skill set, which I think is so valuable. So that's one way sort of this, this tour of duty logic, if you will. The other way is what I did, which I think is anomalous, which is, you know, frankly, you just resist the boxes in all walks of life. So I did spend time on Wall Street, but I was a generalist in the m&a group of an investment bank. And then when I went to private equity firm, I was a generalist, making sure that I could cross silos of industries and geographies. And then, you know, I went off grad school, and I've had a career in the investment world, but I've always been a generalist.

Andrew Stotz 05:52
So that's, it's interesting, because Yeah, everybody's always trying to put you in a box. So resisting that is, is the challenge are,

Vikram Mansharamani 05:59
ya know, it's hard. It's hard to do. And further, I will tell you, it's counterproductive if income generation in the short term is your objective, as it listen, if you're, I believe in the long run generalists, those who are able to connect dots and make sense of the world crossing silos using multiple perspectives will in fact do better in the long run. In the short run, the quicker value added way to get ahead is to be narrow and deep. Now, I think real general leadership management rising in the ranks, that where judgment is involved, we're navigating uncertainty is in fact the task that you are charged with. It's probably better to be a generalist. Although I'm biased, so you know, take it with a grain of salt.

Andrew Stotz 06:47
Exactly. Well, we're all biased. Ultimately. I just, you know, I'm curious, since we've got you here, before we get into the story. I teach a valuation masterclass. And in that I have a bootcamp six week program for young people to learn how to value companies and build a real skill in valuing companies. One of the hardest things that I tried to convey to them most important things, let's say, but I think it's hard for young people is to think for themselves, the idea of making independent judgments not rushing to a conclusion doing your research first. And one of the things that I give them life lessons as myself as an as a sell side analyst for 20 years, and I had a research, one of my lessons is believe nothing believe no one demand evidence, and that that comes across many different people have said that in different ways. That's the way I say it. But I'm just curious, you know, why would you write a book called Think for yourself? And why is it like, why is it necessary in these days to write such a book?

Vikram Mansharamani 07:51
Yeah, so part of it is, I believe that people are finding themselves deep and narrow in silos. And the result was that they blindly outsourced their thinking to experts, or frankly, you could also say, algorithms or technologies, maybe as artificial intelligence, but quote, unquote, experts. And they would say, I don't need to think I'll just do what I'm told. And I found that really disturbing on many levels. I mean, it was a loss of autonomy, it was a loss of individuality, and ultimately, a loss of that creative destruction capacity, if you will, to innovate by thinking for yourself. And so I thought this was Major. This had major implications at a global economic perspective, number one, number two, at the individual level, this was really impacting a lot of aspects of one's life, whether it was blindly listening to what a doctor said, not getting second opinions, you know, et cetera, I felt it was absolutely important to spread the message that actually, we all have value in our own thinking that actually, every expert is limited, biased and incomplete in their perspective. And the only person that will fully understand the decision context, your ultimate objectives, etc, is you. And so if you, yourself, that becomes possible. Now, I know we're probably constrained on time, but I'll give you a quick tidbit as to the origins of the book, Andrew, which might be fun. So I wrote my first book about financial bubbles. And I was giving speeches around the world. And a couple years after I was doing that very actively an older gentleman called me and this fellow I think he must have been in his 90s he called me said, Vikram, I want to thank you, I heard your speech and wherever, and it really helped my wife and I navigate a cancer diagnosis. I said, Sir, I'm sorry, I think you've got the wrong person. Like I was reading about financial bubbles. I was talking about financial. He said, No, you aren't. And I was like, Okay, why is that He said, Because what you taught in your talk was to use multiple perspectives. That's obligating uncertainty. And so we decided to forego treatment, we thought for ourselves using data that we were able to find using multiple perspectives around health, our desire for quality of life, not just quantity of life, but quality of life. And so, by the way, it worked out and my wife's in remission, and it's all great. And I was like, wow. And that's what inspired what eventually became the book, Think for yourself.

Andrew Stotz 10:33
That's exciting. And I think, you know, we the world has been put to a test, you know, over the last few years to think for themselves. I remember when the whole COVID Mess came out. I was in Bangkok, you know, with my mother, and, you know, she's older, and I need to think about her health and my health and, you know, and there, there was no chance of a vaccine reaching Thailand anytime, you know, before other markets. So I had to look for alternatives and think about, okay, what is the call, you know, what, what is the problem? And I, I just started doing research as an analyst just trying to find information. And I started to find that, you know, in fact, it is, you know, if people are getting seriously sick, chances are, they're older. Okay, so I knew there's some risks, definitely heightened risk for my mom. But the second thing that I saw was that the majority of people that were dying, we saw it in Italy, right off the bat, when it came out of China, were also people that had comorbidities, and I knew that my mom and myself didn't have any comorbidities, then I saw different, you know, therapeutics and other things that were coming up, that I started looking at the research, and being in Thailand, you can pretty much get anything. And so I stocked up on, you know, different, you know, stuff that was out there. And, you know, vitamin D as an example, but and then after that, basically, I had to, I had to manage things. And then the reason why I mentioned that is because I'm about to interview someone tomorrow. And, you know, in their book, they talked about how the financial profession is not very scrupulous, you know, it's unscrupulous. They're not very, you know, people are trying to rip you off. And all that, which I wouldn't argue that there are bad people. But is it any more? You No, bad than, let's say, medical industry. I'm so tired of the medical industry taking care of my mom, and I just saw that you get trapped, like, medical professionals have created an absolute hornet's nest. And if you get sick, and you get sucked into that Hornet's Nest, particularly in America, is chances are there's nobody any more looking out for your specific interests. And, I just started realizing like, you know, I thought I'm going to push back for when anybody tells me now oh, well, financial people are unethical. I'm gonna say, Let's push back on that. I'm just curious, you know, what are your thoughts there?

Vikram Mansharamani 13:06
Yeah, look, I mean, when it comes to medicine, I'll tell you very simply, during the COVID pandemic, I went through a similar thought process to you, Andrew, and what I concluded was, it's actually counterproductive to give full autonomy of decision making to a public health expert, public health expert is literally focused on population level analysis, they have consideration for me and my, I'm healthy, I'm in shape, I feel pretty good. No comorbidity, you know, vitamin D will supplement I'll make sure I'm healthy, I'll take care of my sort of system as best I can. That doesn't, I'm at a lower risk of death than perhaps the averages are. Right. And so I think it's really important to understand that the benefits of certain sort of expert prescribed policies were skipped. Were sort of suspect. Same time, the costs of some of those expert prescribed policies were very real. So I'd ask you, what was the cost of a missed mammogram? I mean, I don't know. But I know it's not zero. I know it's not zero. What was the cost of people missing dental appointments? Again, I don't know. But it's not zero, missing cardiograms missing whatever, missing general health checkups, because there was this panel. So there was a cost we didn't factor in. And there were benefits that were overestimated. Now that I can say pretty clearly. Now how it applies to you as an individual. Now, that's for you to decide. I'm just a public health person, by definition, will not appreciate the nuances of an individual. So why would we outsource all our thinking to someone who doesn't think about us? Yeah, it's so

Andrew Stotz 14:59
fascinating, because there's another aspect to is that, you know, my mother, you know, people may say, Well, you should get this vaccine because your mother, you know, and want to get sick or something like that. But also, isn't that also a personal choice in the sense that my mom is not interested in living to be 90 or 95? She's interested in enjoying the time, you know that now. And therefore, there's a personal family choice there, that yet it's steamrolled by a bureaucrat that, as you're saying, is thinking about, you know, population level?

Vikram Mansharamani 15:39
Well, it's also like, like I said, with the inspiration for the book, there's a very big distinction between quantity of life and quality of life. And the operating assumption, by the way, we can make this analogy with the financial community too, right? I mean, in the medical community can talk about everyone seeks to optimize maximize quantity of life, well, some people may care about quality, rather than quantity, I'd rather live to 90 healthy than 95, with machines connected to me in some sort of way. That's sort of a choice I can make, you can make, we can all make different choices. But likewise, actually, in the investment community, there was always this objective to maximize returns. Well, the alternative is some goals based investing framework where you sort of say, Look, I just want to increase the probability that I have $250,000, available for my son's education when he is of college. And what I want you to do is 15 years from sell a call option for returns at 250,000 or above, I'm happy to give it up, I want to increase the probability that it would, but the expert might say we're gonna maximize returns, well, I don't really need to maximize, I want to just satisfies I got a goal. And so again, there's different there's an analogy to be made across many domains here, which is you and only you should own the decision. And the phrase I use in my book, which is we need to keep experts on tap, not on top.

Andrew Stotz 17:11
Yes, there's one other causes that hasn't been would never be considered by the American bureaucrats. And that is, the 75 million people or so that have been estimated to have been pushed back into poverty. And the, you know, 50 million or so those people in India and emerging markets and you know, in the US, and those people will never get back, it will be very, very difficult for a family that's gotten themselves out of poverty than been pushed back in to get themselves back out, particularly when they lost their, you know, it's easy in America to shut things down. But, you know, governments around the world can't pay for things. So you have, you know, a lost year of education in America, but also Nigeria, you know, people suffered, you know, tremendously in Africa, when things were shut down, and it's not like, you go back to your village village and watch a zoom when the university is not open. And, you know, there's just so many effects that, you know, these bureaucrats don't think about, and that's the reason why free markets and free ideas and free decisions, end up optimizing, you know, better than any government, you know, person can.

Vikram Mansharamani 18:20
That's you're preaching to the choir. Yes. Okay. What's fascinating is, you know, the phrase I've used in the past is two weeks to flatten the curve. Two years that flatten the middle class.

Andrew Stotz 18:35
Yes, exactly. One last thing I wanted to mention, you know, given that we'll probably have the same age that we can remember this, you remember, when the Texas Instruments calculators started coming out? You know, I don't know, it was 70s or so. And people were terrified that people would stop being able to think and calculate, and I think about my father, he used to do long division, and even up until the end of his life, he would like to just write out and do long division and work things out in his head and all that. And, you know, they were right, in the sense that the calculator basically has stopped most people from doing those types of calculations, whether that's good or bad, you know, there's an argument there, but I think the point that you made a little bit about AI really concerns me, because I've been using AI now, you know, every day and you know, trying to use it, I just see that. There's a lot of general knowledge, general stuff that, you know, isn't necessarily right. But you know, it's close and, and then and I can see that it can be relied upon. And basically my first prediction after using it now for let's say, three or four months is that it's going to cause an extreme dumbing down of the population over the next five to 10 years. That's my prediction. But what are your thoughts?

Vikram Mansharamani 19:57
Yeah, look at my sense is that it's forcing more people to stop thinking, and that should in fact, dumb down the population if the if that muscle of sort of thinking is not utilized, right, it'll be less capable. I mean, look as a simple example, we could think of algorithms and how it's created polarization, right? I mean, because the algorithms for social media etc feed you what you are most likely to agree with creating a distorted worldview for everyone who's in these portals, to think that the world represents something similar to what they believe. And by the way, someone who doesn't believe that way feels everyone in the world believes what they believe. And so we've gotten to this way of thinking. And so that's algorithms, which is one step removed from experts. And the next step is really artificial intelligence where it tries to do the thinking for you. And then it gives you what you should be thinking. And so the blind outsourcing to, as I say, experts, or artificial intelligence or algorithms, whatever you want to call it, I think is counterproductive to human thinking. And I'd like to see more thinking not less.

Andrew Stotz 21:09
And the thing I always tell my students in the valuation masterclass boot camp is that Cui bono, who benefits you if you can understand the incentives? As Charlie Munger says, you can you know, you can predict the behavior? So who benefits from the dumbing down of the population?

Vikram Mansharamani 21:28
Yeah, that's a tough one. Well, I

Andrew Stotz 21:30
figured I'd ask you, given all your experience in politics,

Vikram Mansharamani 21:33
yeah, I will tell you and your look, my sense is that by nature provides almost greater power to authoritarian sort of dictators, Masters controllers, it's a heck of a lot easier to control a population if you have the tools, through social media, etc, to manage their perception. I mean, one of the things I've talked about in some of my public speaking is, okay, we're getting artificial intelligence, we're gonna get deep fakes, and deep fakes are going to be customized to your particular views. So what happens if a politician can send a video message to you, based on what they know from all your clicking and data gathering that they've done on you that they know you feel this way about a particular issue? And there's a video from them looks like them addressing you customize with the view you want to hear? What if they could do that on mass to millions of people customized to their individual views? Do we really ever have the hope of a democracy at that point? Or is there no chance, then? Is it really the power falls to those who control the systems? is artificial intelligence, yet another tool for mass population control? I don't know the answers to these questions. But what I can tell you is, it seems crystal clear to me that deep fake technology is a threat to independent thinking. Because our brains are habituated, we, as humans are habituated to when I see you, Andrew, and I say, That's Andrew, I got him, I see his face, his mouth is moving. I know who he is. And by the way, this is what I expect them to say. That's great. I get it. Now, what happens if it looks like you sounds like you and says something that doesn't quite seem expected from you? What does my brain do? Do I believe it? Do I not? Like, I'm inclined to believe because I'm a sensory processor. Right? It looks like you sounds like you. Okay, so it's kind of probabilistically. You? Yeah. But what if it says something slightly different? Do we have a chance, I mean, literally, the human cognition mechanism is at risk.

Andrew Stotz 23:45
And I would argue, one of the things that I looked at from the, you know, was interesting when the Democrat Party kind of left the left the worker, and I grew up in Cleveland. And so it was, you know, the Democrat Party representing the auto workers in the steel mills and all of that stuff. But there was a point where the Democrat Party basically abandoned the workers. And now I think I realize why they've gone to the social media and media companies, as allies, because in this age of potential discontent, division, and, and all that, it seems like you have to control the narrative, to be able to achieve what you want to achieve. And when a country is facing the risk of civil war and all that, you know, and people are dissatisfied. By controlling the narrative, you can get them going around like a dog chasing their tail, and not realizing, you know, what's going on at the top. That's just my, you know, judgment on that one.

Vikram Mansharamani 24:49
No, look, I think that controlling the narrative is, in fact, the new game of elite governance. And that can be true in China as much as Washington DC. I mean, I don't think it's a geography Your country specific dynamic, it's in this world where people can get information and they're drowning in it, the narrative becomes the reality. And so insofar as you can control the narrative, you control the reality that people experience on that, by itself exerts enormous, enormous, enormous, enormous power. For those.

Andrew Stotz 25:23
Oh, I think I had a great teacher at long beach city college when I was young. And he always came in in a three piece suit. And he was teaching business law. And he asked the question to the students that always you know, was such an eye opener. And when he said, a typical criminal comes up. And, you know, a thug basically says, give me your money with a gun or whatever, or a white collar criminal, takes your money, which one is more, you know, guilty or which one is worse. And he said, The White Collar one is worse, because both of them are taking your money, but the white collar criminal is deceiving you in the process. So there's a deception involved, not unlike the, you know, very direct. So the reason why I mentioned that is because you mentioned China, and what I would say, having gone to China many times and studied my PhD there is that the one thing you can say about China controlling the narrative is the minute you walk in the country, it's clear, it's the difference between China and America, you go into American thing, this is the land of the free and the home of the brave. And you don't realize that behind the scenes, they're controlling, and surveilling so much stuff that you realize which one is more trustworthy here? I would rather know the one that's going to club me up front, then, you know, be careful about the one that's not telling me what's happening behind the scenes.

Vikram Mansharamani 26:48
There's merit to that argument, for sure. Well,

Andrew Stotz 26:51
now, after all that discussion, there's so much other stuff I'd love to talk to you about. Particularly, you know, all your thoughts about politics. But alas, we don't have all that much time. And I know you've got some important stuff to do after this. So now it's time to show you the worst investment ever. And since no one goes into their worst investment thinking it will be. Tell us a bit about your circumstances leading up to and then tell us your story.

Vikram Mansharamani 27:15
Sure, so I will tell you about this, this was a fun little private investment I made in commercial real estate. So this was not a day job thing. This was Vikram is smart, he gets it. And so I invested in a small commercial condo in Southern Maine. And I did all the analysis that one needs to do demographics, improving, increasing commute ability to Boston and sort of that greater area. This was a obviously, increasingly valuable asset. There were very few sort of commercial condos, people were going to be working up there, I had use value for it. Right. I at the time was working on my PhD, I said I will utilize it, I will rent it from ourselves, even initially, and there'll be so many tenants whether it's a law firm or an accounting, the demand will be inordinate for what we have here. Well, sure enough, it didn't work out that way. And so what ended up happening and something that I really taught me the lesson of liquidity, and the ability to hold because this tale has both not only a tragic or disappointing ending for me as an investor, where I probably lost 50% of my money on this thing. But it's probably worth 5x what I paid for it today. Right? So it's not only that I was unable to see the value that my thesis was right. I think at the end of the day that all of that happened accelerated by COVID, which I did not know, this was probably an investment I made, I don't know call it 2010 ish, eight ish. And, you know, what I thought was real value at the time. And actually was 2000s 2008 We bought it Yeah. I thought that was real value. And then and there was, but at a certain point in time, because it was a commercial condo condo fees, other ongoing carrying expenses. I sort of lost faith. And honestly, I didn't see an upside in 2015 16. We were sort of like, Alright, there's no liquidity. There's no one that cared for this. No one wanted it. And another tenant and then sort of building said, Well, I'll give you 50 cents on the dollar. And I saw no market I tried. I got caught with an illiquid asset, even though this is right. I sort of said fine, here it is. It's yours. And so I got out of the 50% loss probably went my way. First investments ever.

Andrew Stotz 30:02
So how would you summarize the lessons that you learned?

Vikram Mansharamani 30:05
You know, the lesson that I learned was that liquidity is not a constant, something that you think is liquid May, at certain points in time become highly illiquid. And it may have nothing to do with markets, right? Markets were completely fine and not for commercial real estate in a particular sector in a particular geography. And so well, that wasn't what I expected. I always thought there'd be a price someone would get me out, okay, it's I could cashflow this, I could DCF this, I could come up with every analysis under the sun to tell you this was worth double what I ended up selling it for. But there was not a buyer who saw the world the way I did. Yeah, that was, I entered a market far more illiquid than I expected. My thesis and this is the torturous part. I mean, really enjoy this is what merits me laying on a couch to talk to you about kind of thing the psychologists, the torture is, it is worth multiples of what I sold it for today. Because then maybe that was the pandemic, maybe it was the lower interest rates, maybe it was the shift of geography and people working more remotely and greater demand for sort of office space in suburbs, rather than in urban areas, and, you know, etc, maybe it was the potential of alternative uses. But it's worth a lot more than I ended up selling for. So less than I took from it. Don't expect liquidity will always be there. Second lesson, don't expect you have the duration for holding that you think you do. Flexibility is worth something right? Like I thought, Oh, I'm gonna hold this forever, except when you're staring at that abyss. My own psychology kicked in, I was like, let me just take the hit now. It's a $50. What if it goes to 25 cents on the dollar, like, so I've written a book, I'm not exactly your sort of novice thing. I've written about them. And yet, here I was. And in retrospect, I didn't know it at the time, I fell victim to that greed, fear sort of overwhelming nature, there's no market, this is going to zero, let me get out when I can.

Andrew Stotz 32:07
So let me share a few things I take away, it reminds me of John Maynard Keynes is you know, the market can stay irrational longer than you can stay liquid. And I think that part of that liquidity aspect is it changes over time for you personally, it changes over time for an asset. And if you go into something thinking that, you know, liquidity is not a big issue, but if something happens in your life, liquidity could become an issue. So that's the first thing is that, you know, that liquidity that liquidity needs and the liquidity of the assets plus your need for liquidity change over time, the second, the second part is that, you know, in order to invest successfully, you have to have a thesis, you have to have, like, I think this is going to work for these different reasons. And the, your thesis, you know, first you have to have a thesis, then you have to be able to invest in that thesis. And then the third thing is that, you've got to be able to stay in that thesis. And the fourth thing is, of course, that thesis needs to be right for you to be successful. And there's so many, you know, different aspects there. But the idea is, it's hard to stay in a thesis when it's going against you. And I think for everybody listening and viewing, you know, that's you, you're gonna make decisions about things, and it's going to be wrong sometimes. And you're gonna have to make a decision. I think it's one of the hardest decisions that you have to make an investing when your thesis is my thesis right or wrong. And occasionally, you're gonna pull out of a thesis that actually was right. And that's just the way it goes. And I think the last thing that I take away is that investing in illiquid assets, such as property is a trap. Be very, very careful because you can get trapped in it, because you can't get out of it that easily. And so only go into that if you've got that money that just doesn't need to be touched. Now, we're not talking about okay, buying a house to live in and stuff. We're talking about a property type investment. Those are some of my takeaways, anything you would add? Yeah, yeah.

Vikram Mansharamani 34:09
No, it's interesting, because part of the other thing was I confounded the investment very early, with part consumption. Remember, I told you I use it, I was using it. So part of it was a consumption mixed with an investment that I thought was an investment. So I diluted myself temporarily, with what I thought was obvious demand for rental. Right? If it was me, there was no market testing. So, you know, at the end of the day, there's that. And then the other lesson I've taken and I've since written a fair amount about this is actually if you're too early on your thesis, I don't know that you call it early. I think he should just call it wrong. Point timing matters in the investment world. You know, the prints of entry and exit are in fact, the only thing that matters on determining returns, I can say, Hey, I got involved in something that went up 50x. Well, it happened to go down minus 50% First, and that's when I sold it. Well, okay, well, it's great that it went up 50x. But I didn't participate. So in exit prints matter, and so like it or not, you know, thesis if if the timings off, then you're wrong.

Andrew Stotz 35:28
Yeah. And the idea of mixing an investment in us, I was thinking to myself, well, Vikram, I got a problem. And that is I have really good friends. Every idea I bring out, they're like, oh, yeah, that's great. I'll buy that. And I'll do that. And all of a sudden, I get this positive impulse back from the market. But it's really coming from my fans that may or may not be representative of the insulin, I ended up like, family, friends, or myself, I really liked this thing. And then I start to make a judgment that there's a wider market for it. And I think that that, also something to whenever you're doing something like an investment or a startup or something like that, to make sure you go way beyond your own personal use, and your own family and friends to say, is there really something out there with them? That's right.

Vikram Mansharamani 36:18
I mean, you're you get the beat, the feedback one gets from one's own network is by definition biased. Right? I'll give you a related example. I do a lot of public speaking. And so the people who come up and give me feedback at the end of my speech Are always the people that wow, that was great. Thank you. That was really thought provoking. I really appreciate you coming Vikram to spend your time with us. Tell us about the world. As you see. This is fabulous, Vikram, it's great. The people who don't think I was great, they don't come talk to me, they were only on the feedback I receive, I will have a biased and distorted worldview. So I don't, I conscientiously did. Thank you. That's nice. I appreciate it. Thank you for your feedback. But then I wait for, like, get the survey response from a conference organizer, which is objective and crossing, and then I feel and feel good about it. Because Oh, okay. Actually, there's a broad cross section of people who didn't talk to me, who felt similarly. Okay, great. Now I feel good. It sort of withhold judgment until you have more objective data?

Andrew Stotz 37:19
Yep. Well, as I mentioned before, I'm on a mission to help a million people reduce risk in their lives. And one of the part of that mission is, is the next question, I want you to think about a young person who's just about to make the same mistake. And let's think about what you learned from this story, what you've continued to learn, what one action would you recommend our listeners take to avoid suffering the same fate?

Vikram Mansharamani 37:42
Yeah, I would tell him to maintain optionality when you're younger, right? Because you can think you got the greatest investment in front end, you get into it, and it's an illiquid investment, and you get stuck in it. And then if things go down, you lose option value of buying something else at a lower price. And so I do think maintaining some optionality, you know, in investment parlance, dry powder, you know, some liquidity, whatever the phrase is that you choose to use, having some degree of optionality at all times is useful. You don't you cannot predict when the opportunity set will be super attractive, it may seem attractive today, it may get more attractive tomorrow. And so as long as one has the optionality available, or the liquidity available, or the ability to redeploy or invest more, than you're going to be fine, because over time, I do believe these investments work out. It's just getting caught at the wrong time, and the wrong illiquid investment that could really hurt you.

Andrew Stotz 38:42
Great, great advice. And I know, in my case, I was making a lot of money as a young analyst, but I had set up a factory with my best friend here in Thailand. And that factory needed money and it needed at times, you know, if we, if I didn't have the funding available, we would lose control of the business. And so I was trained, you know, at a young age to be focused on the optionality having cash. And so people were kind of surprised that I'm not as aggressive as they thought, but I'm like, Look, I'm super aggressive by having this startup. Therefore, the rest of my money, I've got to be much more careful. But we've survived 28 years, and we both ended up holding 40% of the business. So we own 80% of it. And we managed to make it to that point, so that the business is strong, and the cash flows are so that optionality really is great, great advice. Let me ask you out of all the different things, you know, between LinkedIn between your books between your website and all that what would you say is the best resource or the best place for someone to start? who's listening to this and hasn't hasn't heard your message?

Vikram Mansharamani 39:52
Yeah, so it's, it's actually a really interesting question. You know, so recently, I realized launched my weekly newsletter. So, back in 2014, I had a weekly newsletter for years I wrote it, it was really popular. Again, millions of people were reading it, and I got burnt out. So I just stopped it. But I just relaunched it here, and it's on substack. So if you go to mon Shiromani, my last name, Don substack.com. It's a newsletter. It's free. I mean, there's, there's a paid version, but the free is gives you everything. And so that's probably the best place. And Link has a lot of the historical archives on me. And so, you know, but you know, the books are great tools, you know, I can choose, but I would say if someone wants to get up to speed on my current views, my current thinking and by the way, it has the complete archive of all my writings, hundreds and hundreds of articles and thoughts on different topics, all on my substack Mantra money.substack.com.

Andrew Stotz 40:49
Fantastic. And I'm gonna have that in the show notes so everybody can get access. And I know, I'm going to be paying particular attention as we go into 2024. And this, you know, what can be a really interesting election season for presidential election? I think you're gonna have a lot of different interesting views on that.

Vikram Mansharamani 41:07
Yes, yeah. No, I think that's interesting. And as you know, Andrew, like you, I put out a set of predictions every January, my predictions are five year rolling predictions. So I look forward five years, I find it hard to do annual predictions. And so I've been doing them since 2015. And so people can go back and look at my predictions for 2015. And say, is this guy right or wrong? And, you know, I will tell you accuracy has never been my objective, more thought provoking. Ideas are what I'm trying to get at, because unveiling your own personal thinking assumptions. If I can help you do that, then it's useful. Now, if I'm accurate, great. But if I'm not, I unveil your assumptions and get you to think deeper about your topics. That's also a win in my

Andrew Stotz 41:48
book. That's the ultimate challenge of an analyst is to make it public what your opinion is, and make it clear. So I know you've done it, I've read through all of yours, on your website. And for the listeners and viewers out there, make sure you do the same. All right, last question, what is your number one goal for the next 12 months,

Vikram Mansharamani 42:06
for the next 12 months. So this is a very personal goal. But it is my objective to write up another book, particularly about the lessons of being a generalist in a land of specialists. And really to share that for a I had an audience of one that I was that I'm writing it for, and that's, frankly, my children, right? Because to understand, hey, look, there's different ways to live life and your father did it in a certain way. And so, you know, if it has some value for others, beyond my own family, then great. And you know, maybe a second audience of my parents, so they know what I did, and how grateful I am for the lessons they taught me. So yeah, a very personal goal. But in the next 12 months, it's my hope to get another book out. Well, don't

Andrew Stotz 42:53
miss the teachings of Dr. W. Edwards, Deming, a teacher of mine when I was 24 years old, and I have the Deming Institute podcasts, and I'm a host of but his systems thinking and thinking at a more general level helped me to really understand the idea of, you know, sometimes you have to sub optimize one part of a system to get the optimum output. I don't have to tell you that. But you know, I just that type of thinking is so needed. Yes, no,

Vikram Mansharamani 43:21
Andrew, you're right. And so the class I taught at Harvard for last five years was a systems thinking class. And there are chapters and think for yourself about systems thinking applied to social problems and challenges. And this next book, as I'm drafting it currently, is effectively Systems Thinking applied to one's individual life.

Andrew Stotz 43:40
Beautiful, beautiful, 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. As we conclude, Vikram, 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?

Vikram Mansharamani 44:06
No, I will just say, at the end of the day, the world is filled with specialists and there could be a lot of value in being a generalist so look broad, as much as you take the time to look deep.

Andrew Stotz 44:19
And that's a wrap on another great story to help us create, grow and protect our 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 blinds. This is your worst podcast hose Andrew Stotz saying, I'll see you on the upside.