BIO: Terri Spath is the founder and CIO of Zuma Wealth LLC and has earned top performance marks stewarding billions of dollars at large investment shops through the booms and busts of the past quarter-century.
STORY: At the height of the Dotcom boom, Terri bought—on behalf of clients—some terrific companies because she knew how to value, assess, and analyze them. But she kept holding onto the companies when the market tanked instead of selling.
LEARNING: Know when to buy and when to sell. Don’t get too attached to your favorite stocks.
“If you have great self-discipline, you can figure out how to make money in your sleep.”
Terri Spath
Guest profile
Terri Spath is the founder and CIO of Zuma Wealth LLC and has earned top performance marks stewarding billions of dollars at large investment shops through the booms and busts of the past quarter-century.
A renowned expert, Terri is a regular CNBC and Bloomberg TV guest and a sought-after industry speaker. She was named a “Top 10 Inspiring Women of 2022” and shortlisted by the Women in Asset Management awards. She has earned the CFA charter, the CFP® certification, an MBA from Columbia University, and an AB from the University of Michigan.
Terri started investing when her father introduced her to the concept of compound interest when she learned she could make money in her sleep.
Worst investment ever
When Terri came out of Columbia Business School, she got hired by a big company on the West Coast. She had already started investing, as she had learned a lot when studying for her CFA. The philosophy of Columbia Business School is very much in line with Benjamin Graham and Warren Buffett. The philosophy is that value investing relies on picking good companies that have great moats around them and strong management, and you can buy them at a dirt-cheap price. Terri came out of Colombia, well-trained in that arena, and when she started working for the big company, she started putting those ideas to work.
At the time, more and more technology and internet companies were coming out. Terri was assigned to the industry and covered all the stocks under that umbrella. She was buying conservatively, following what she had learned at Columbia about buying stuff cheap. Terri didn’t get trapped in the excitement of the new companies. She followed the philosophy she had learned.
Terri bought some terrific companies on behalf of clients because she knew how to value, assess, and analyze them. Terri believed she had made good purchases.
The frenzy and excitement in internet retail and technology companies pulled the market up. Then some of those companies started to collapse. This ripple effect killed the technology stocks, the NASDAQ, and the broader markets.
When everything started going down, Terri decided to hang onto those stocks. She didn’t acknowledge it was time to sell. Terri’s biggest mistake was holding onto what she thought were great companies in terrible markets.
Lessons learned
- Pay attention to the broader markets too.
- Have the discipline to evaluate when to buy and when to fold to avoid losing your profits.
- Don’t get too attached to your favorite stocks; always know when to get out.
- Make sure that you understand the risk.
- Most investors tend to be better at one side of the trade than the other, but balancing both sides will bring you more success.
- Have a sell strategy and apply it regularly.
Andrew’s takeaways
- Employ stop losses to help you sell when the investment is not working.
- Don’t fight the flow of funds.
Actionable advice
Consistency, consistency, consistency. Have a consistent sell discipline and stick to it. This will protect your downside and prevent you from losing unnecessarily.
Terri’s recommendations
Terri has tons of information on her Zuma Wealth website on ensuring you participate in the upside of the market without losing too much.
No.1 goal for the next 12 months
Terri’s number one goal for the next 12 months is to motivate and educate people on how to invest properly.
Parting words
“Don’t be afraid of losing money. Stay disciplined and keep listening to this podcast so you don’t have to make the same mistakes.”
Terri Spath
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