Background: Lex Sokolin
- Futurist and entrepreneur
- Global fintech co-head at ConsenSys
- Former CEO of NestEgg Wealth, a roboadvisor
- Held investment management roles at Barclays, Lehman Brothers and Deutsche Bank
- Regular contributor to The Wall Street Journal, The Economist, Bloomberg and Reuters
- JD/MBA and a BA in economics and law
Lex’s worst investment ever
- Won university stock-picking contest
- Joined analyst program at Lehman Brothers as fresh graduate in 2006
- Staff 401K matched in company stocks
- Gordon-Gekko type manager invoked team spirit, told staff to invest in Lehman’s stock
- No breaks for Lehman’s in US bailouts
- Company stock and Lex’s 401K go to zero
- Overconcentration in any position exposes investors to great idiosyncratic risk
- Diversification in portfolio construction is answer
- People are not reliable sources of information
- Benefits of diversification
- “Diversification is the seat belt and blending in some sort of other instruments, such as bonds for example, is the airbag”
- It’s hard to rely on humans for great info
- It’s also hard to rely on machines, or charts or data, to give you correct information
- Figure out your goals – Why are you investing?
- What are you trying to get out of it?
- How will you behave when different scenarios play out in your investment’s performance?
- What kind of investor are you?
- Do you want to delegate that to someone who will make you feel secure?
- Or do you want to do it yourself?
My Worst Investment Ever six main categories of mistakes:
- Failed to do their own research
- Failed to properly assess and manage risk
- Were driven by emotion or flawed thinking
- Misplaced trust
- Failed to monitor their investment
- Invested in a start-up company
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