We lost $1,000,000+ (Here’s What We Learned)

This has been a horrible year for investors across our stocks, crypto, and venture investments. Our portfolio dipped by over one million dollars. Now, given the situation, we can offer a unique hands-on perspective on what it's like to lose more money than most people will ever make in their entire lives and still be emotionally sane and healthy. This is a good one. Here are 15 lessons we learned after losing one million dollars plus.

Welcome to alux.com, the place where future billionaires come to get inspired.

Lesson number one: You are your most valuable asset. Your worth boils down to how much value you're able to produce toward the marketplace. Nobody can take away what you know. What you make of yourself in this life rests in your hands. The only finality is when you decide you're completely done. As long as you're still playing the game, you have the ability to climb back or overcome temporary setbacks. Your mind got you into position to make this kind of money. Inside that brain of yours rests ideas for 10 to 100 times whatever you've made so far because now you're not starting from scratch; you're starting from experience.

Lesson number two: If the fundamentals haven't changed, keep going. In some cases, you might have a windowed point of view. Sure, it might seem cloudy outside, but if you peek the other way, you'll realize the clouds will go away eventually. This is the case for us with crypto. We still believe in the underlying promise of Bitcoin, and since nothing about the fundamentals of the promise have changed, we still believe in a more distributed store of value. It makes sense for us to keep with our bet.

So what do we do? We dollar cost average. It's the same with some of the stocks we're invested in. If you believed in Tesla's mission at 300 a share, you should love the opportunity to buy in at 175 dollars a share. Most people think of this as doubling down on your investment. We like to take more of a strategic approach by buying the dips. We're minimizing the risk of the investment as a whole. If your wallet allows, dips are when the most money is made before the market recovers.

Number three: Cash flow is king. Some people are rich because the market is doing well, but in order to be wealthy, you need cash flow—predictable revenue or income hitting your bank account consistently, no matter what the market does. If all your net worth is tied into a single type of investment, your fortune fluctuates with the market. If, on the other hand, you're able to consistently earn or generate income despite market conditions, you'll be able to take full advantage of opportunities. You sleep better when you know money will hit your account no matter what.

This is why we've been able to ride any kind of storm. Our real estate—not only is a great store of value that's appreciated by over 20 percent while our other investments are down, but the tenants pay rent every single month, so we're not worried about our lifestyle. It's the same with strong, profitable businesses in which we're invested in; the list of recurring clients gives us predictability.

Number four: Adjust your time horizon. Remember that life is long. You're in this game for the next decades. If one investment goes down the drain, well, that's one of the risks you assumed. You chose to be in this game, and well, this is the cost of participation. Sometimes it'll work out in your favor; sometimes it won't. What we've learned is to consistently zoom out and see if your life is closing in on your dream life as a whole. If yes, you must be doing something right. Okay, so keep going.

Lesson number five: Diversify your investments creatively. A big lesson comes from having some money outside of your bread and butter in investments that traditionally have done well for rich people. They love hedging their bets or minimizing risk by betting on multiple scenarios. You might have your real estate as a solid investment, some stocks or index funds for a little market growth, but you've got an appetite for risk, and the S&P 500 is down 20 percent this year, so you throw some money into crypto knowing well it's a high-risk, high-reward kind of deal.

If the kid in the Bahamas moves customer funds into a different venture, the entire market collapses, and now your heart's sore. Where do rich people turn to in situations like these? Well, it's usually in exotic investments like jewelry, collectibles, and fine art. While the S&P 500 is down 17.5 percent year-to-date, while crypto is down 80 percent year-to-date, you'll be shocked to learn that fine art of all things is up an average 26 at auction.

We know it's a surprise, but UBS says it's hitting record levels of import and export. Even in 2022's bloodbath, experts say demand remains extremely resilient. Goldman Sachs says fine art can protect your purchasing power in conditions like these and data shows it's outperformed the S&P for the last 26 years by 131 percent. This is really exciting for those looking to recoup their historic losses. But how do you invest in art yourself without spending millions?

With Masterworks. We've talked about Masterworks since 2021, and since that time our subscribers have seen themselves seven paintings with two sales just since our last video. Those two sales handed back 13.9 and 17.8 percent net returns—yep, over 13 and 17 percent net even in 2022. Remember, Masterworks deals in over half a billion dollars of physical art from legends like Picasso and Banksy—not NFTs. We've also linked to Masterworks' SEC offerings circulars in the description, and they can also be found at sec.gov.

As a result of their standout performance, Masterworks is constantly releasing more art on their platform to meet demand, and there's a wait list to join their 600,000 other members. But you can skip it just by clicking the link in the description.

Number six: Don't fall for the hype. A good portion of our million dollar loss comes as a consequence of the FTX fiasco. Look, we genuinely believe that FTX would win the exchange games in the US and would be a long-term player internationally, especially since we rode the wave coming up. Some of the smartest people in the financial world lost a ton of money: Sequoia Capital, SoftBank, Paradigm—these are seriously smart money. So, of course, we believed the hype.

Lucky for us, we didn't have many funds still on the exchange, but we were holders of FTT, which as you know by now, well, the chart speaks for itself. For the folks only listening right now, the price dropped from 25 to one dollar. So yeah, that's that. The big lesson we learned here is that even things that position themselves in the spotlight are liable to implode.

Number seven: Make sure your baseline is taken care of. Here's something that puts things into perspective. If you lose one million dollars and you're still rich, you're going to be fine. As long as your family is taken care of, the bills are paid, there's food on the table, and well, the internet is still up, you can always rebuild. Here's how we think about our investments.

We've got three buckets. Bucket one: cash flow business. This is Alux, a digital marketing agency, as well as other businesses where we're large investors. Now, these businesses generate income consistently because they create products, goods, and services that people love. While a portion of this income is reinvested to grow the cash flow business, most of it gets invested into buckets two and three.

Bucket number two: generational wealth. This is our store of value bucket. We like real estate, so we made it a priority that a good portion of our yearly income should go into real estate. If everything else goes away, we'll still have our properties and rental income. The first million we ever made went into real estate just to make sure the family will never be poor again.

With strong cash flowing businesses and a solid chunk of real estate on the side, we've still got some investable income—that's what bucket number three is for. These are the moon shots—high risk, high reward. Crypto is here, NFTs are here, venture capital deals, etc. Statistically, out of every ten investments, six of these investments will go to zero; three will maybe survive, and maybe you'll make your money back. One of them will 100x and return enough to cover for the rest and then some. As long as you understand the three buckets rule, your baseline will always be taken care of, and you'll be able to take the kind of risks you want without the worry that you'll ever go broke.

Number eight: Always take profits and keep them on standby. We know you want to ride it all the way to the moon, but here's a golden rule in life: nobody ever went broke taking profits. As your ventures perform well, make sure to take some of the wins and put them aside, and deploy them at exact points like this one when the market is flooded with opportunity.

As entrepreneurs and investors, we never want to see our money get burned into nothing by inflation, but here's what you don't see. Instead of losing 10 percent per year from inflation, you jumped in too early and lost 80 percent in bad plays. It's okay to hold on to money when inflation is at 10 percent per year if it means you'll have the opportunity to buy at a 50 or more discount. We learned the importance of this from Charlie Munger and Warren Buffett. People laughed at Berkshire for underperforming the S&P 500 for the past ten years. Well, how? These two old investors were simply sitting on the sidelines waiting. Berkshire is sitting on 149 billion dollars of cash on hand right now. Everyone wishes they had this kind of money to play with these days.

Number nine: Sometimes it's the timing; sometimes it's human nature. You never know what's going on in someone's life, especially when it comes to founders and businesses that you've invested in. For us, things gradually changed in one of the projects we were invested in. Although we encourage pivots in a company's future, as an investor, you may not want to be along for the ride in that new direction, especially if you no longer see the vision or a way to be paid back in the future.

Tensions slowly rise; the founders begin to not answer your phone calls or provide answers, and you're left holding the bag after hundreds of thousands of dollars lost due to both poor management and poor market conditions. You're left trying to collect the scraps of your investment. The lesson we learned from this deal is that one should pay more attention to the red flags that pop up along the way and be a lot more objective in our approach. What they've done to someone else is just a matter of time until they do to you. If they talk about others behind their back with you, be sure they'll talk about you behind your back with someone else.

In our case, there was a window in which we could have traded in our shares and walked away, but because we skewed toward the human element, we decided to back the founder. Never expect others to behave the same way you would toward them. For them, you're an opportunity to climb.

Number ten: You lacked focus. Every time things go sideways in your life, it's because you're distracted. Something happened that made you take your eyes off the prize. It's usually either shiny things or emotional things. Ask yourself, is it a new revenue stream, or is it just a distraction? Whenever you try doing too much, the core of what got you to where you are suffers because you neglect it. You think you're actually building around it, but a garden needs constant attention if you want it to flourish.

In our case, it was something emotional. The CEO became a father, and as you can imagine, almost all the attention went toward the newborn. Lucky for us, the entire company was set up to allow for this kind of situation without taking too much of a hit. Even the new projects kept developing behind closed doors. Whenever we feel like our focus is slipping, the go-to resource for everyone in the company is our very own Alux app. Ten minutes in the morning while drinking your coffee or tea, and you're ready to slay dragons. The Alux app has literally become a performance-enhancing app. It's hands down the best investment anyone can make in their lives.

With the roadmap coming in 2023, people signing up today will see results across the board in their lives. Go to alux.com/app right now and download it. Give yourself the gift of growth, and we'll help you to live a fulfilling life. To do that, we need to get you rich first. The numbers are slowly coming in, but people using the app have already seen a real increase in income and earnings, so don't miss out. Alux.com/app.

Number eleven: If your other four pillars are strong, financial fluctuations won't bother you. We developed our internal philosophy for life. Some of you have learned about the five pillars we use to measure a successful life in the Goal Mastery course. Here's the truth: if you're happy, healthy, and at peace in your home with your loving family, you realize just how blessed you are, even with temporary setbacks. If you zoom out on your life, you're still winning. Money becomes just another variable in your life, and it's no longer the only thing holding you afloat. People focus too much on a single path, and it's usually too late when they realize they missed the opportunity to develop themselves holistically.

Number twelve: As long as you learn from it, you're still in the game and growing. They say every loss you encounter is a learning opportunity, and look, although cliche sayings like this one usually rub us the wrong way, in this case, we took the time, processed what happened, compartmentalized it, and moved on. The worst thing you can do is allow it to consume you. Life is too good to allow anyone or anything to live rent-free in your mind.

Hey, sometimes you bite the bullet—screw it! Okay, move on. The only thing you can do right now is grow from it. Here's how we look at it: we just spent one million dollars on our education. These are the kinds of lessons we deeply embody and learn when you're the one paying the price. Yes, we did learn a lot. Shifting perspective like this allows you to keep moving forward while others would simply call it quits.

Number thirteen: Some tasks may seem impossible or optionless until you find a missing link. You'll face a lot of no's in your life. You'll face outcomes you didn't expect or plan for. Things might seem like a dead end until you assess the situation and start listening at all the options you still have available. Then you go through them one by one and see if any of those keys open the door. If there's a chance, you should always roll the dice, especially since at the bottom, there isn't much left to lose.

As for impossible situations, we've learned firsthand to look for missing links. What's impossible to you is a phone call away from someone else. Even more so, you might be someone else's missing link, and your relationship might be mutually productive. Have you ever wondered what it would take to build a school on the other side of the planet in a country you'd never been to, with a language you don't speak, and still get it done in time for the holidays? Well, this Christmas, you guys are in for a real treat.

Number fourteen: Generalists can only take you so far. At some point, you need experts. Here's a really valuable realization we had this year: almost every business follows this four-stage model. Stage one: you are the business; you do everything. Stage two: you bring in a generalist, someone like you, and you both do everything. Stage three: you bring in some experts that help you on specific targets. Now, these experts usually need your attention to get started. At this stage, your business is run by the generalist you've been training.

Stage four: the business matures; you slice it up, and now experts run your business. The generalist can no longer deliver. Stage three is the most dangerous stage of them all because you don't yet know how to tell the true experts from the pretenders, so you'll burn through hard-earned money. No matter how hard we try to push the generalist, there is a limit to their ability to see the big picture and have a true positive impact over revenue. In the process of training them and allowing them to evolve, they started losing us money.

It didn't take long for us to grab the wheel and put the car back on the road. We're happy to announce that Alux is slowly entering stage four as a business, so growth in 2023 should be exponential.

Number fifteen: Pat yourself on the back for getting to a point in life where you can afford to lose one million dollars. We know this video isn't for everyone, but amongst you, there will be a few— a few special ones who will become incredibly wealthy and, at one point, maybe go through something similar to this. Most people don't realize that the more you climb, the more extraordinary your problems can become, but having these types of problems is actually an achievement.

If you really think about it, you've come a long way. At this stage, you're strong enough to push through no matter what life throws at you. On a serious note, what do you think would be going through your head if you were to lose one million dollars of your hard-earned money? Let us know in the comments.

And since you're still watching what's already a long Sunday motivational video, of course, there's a secret bonus reserved just for you: nobody can take away what you leave behind.

Okay, here's where things get really interesting. As you are watching this video, the CEO of Alux, with a part of the Alux team, are having a private dinner with ten Aluxors such as yourselves in the city of Kampala, Uganda. Yesterday, we just opened up the Alux International School— an actual physical school on land that we purchased earlier this year. We made it our mission to measure success based on the impact this community can have in the real world, so we wanted to build an actual school.

We looked at our analytics, and we have a large community of Aluxors in Uganda, so we made it our mission that before the end of the year, we'll have built a school there for children who don't have access to education. We started off with the idea of building just a small school, but the project grew to a point where now we're building a full educational campus. We are here to document the process, so you can expect a full video by Christmas.

Most of the money we've made from the Alux app this year went towards real impact. If Alux went away tomorrow—which we've got no intention of doing, by the way— the work we do in countries where people are quickly discovering Alux will live on forever. You guys made this school possible by subscribing to the Alux app. You created value where there was once only jungle. By sharing our videos, more people are learning from the expensive lessons that we've paid to learn from.

We are happy to say that Alux is no longer a company; Alux is slowly but surely becoming a movement. We represent those who believe they can actually change their future, no matter where they started. We're proud to be walking this path alongside you guys. Although we've never met, we're connected. We're on the same journey, so let's walk together.

We want you involved with the next one. If you're a true Aluxer and a part of the Alux movement, write the word "movement" in the comments. Let's see how many of you feel the same way we do. Thanks for spending some time with us today, Aluxer. We're so glad you did. If you found value in today's video, please give us a like, hit that bell icon to never miss an upload, and hey, don't forget to subscribe.