How to get rich with stocks (without math, charts or models)

you really only need one great trade to be a top one percent investor the most inherently ground truth thing of investing the most important thing the thing that matters more than anything else is i don't look valuation don't look pe all i look about is there is new information i've been reading tiktok comments that's where i get most of my alpha from yeah buffett or mu and who are like reading the moody's manual cover to cover just company financials and you're like i scroll the tiktok comments that year i made like thirty million in one year and it was a wild ride you will try to beat the market you'll trade with leverage you're moving in and out of positions you're not a buy and hold forever kind of guy just before the pandemic i had made the worst trade of my life i lost a third of my portfolio on a single trade okay so let's break it down this is where the biggest mistake i was i feel like i could rule world i know i could be what i want to all in it like a days you break all the rules of investing you know all what i normally hear is you should just index don't try to beat the markets don't take any leverage you know and so you do the exact opposite right you will try to beat the market you'll trade with leverage you're moving in and out of positions you're not a buy and hold forever kind of guy according to the internet you've done pretty well so i've seen some different numbers that have been float around can you set the record rate what is the actual story yeah i i i started with twenty thousand in two thousand and seven to try this new methodology which is the way i was investing when i was way way younger that worked for me i i call it social ar investing today but what it essentially is is observational investing you're you're looking for any change that's happening in the world whether it's you know change in consumer behavior change in culture change in technology change in the weather politics anything that has the potential to be meaningfully impactful to one or more publicly traded companies in either are positive or negative way so if you can surface that change early and connect the dots back to a company that would benefit or be harmed by that change that's essentially the entire methodology it doesn't really incorporate much fundamental analysis it definitely doesn't incorporate any technical analysis in in in its purest form you really don't even need to know what the stock is trading at when you open up a position or what it's trading at when you exit so like ideally you'd be completely blind to stock price completely blind to everything other than the extent to which other investors were aware of that one thing that you surface that you feel would ultimately be impactful to that company and you know you enter your position at the point of information as cemetery right when when when you know that thing and very few others do and you exit the position at the point of information parody when other investors start to learn about that thing that you uncovered first and it's it sounds so simple and it really is what there are nuances to it and like everything else to do it to be great at it it takes time and a and and a little effort and some regiment processes that you have to go through like is the information that you found actually meaningful is it a needle mover for that sector or for that company you know is the information you found really off radar or do institutional and retail investors are they're already accounting for it and are there any other things that are happening at that moment of time or within the window of that trade that are equal to more important than that piece of information that you're trading right right so there there is a process there of course yes so and and i wanna go through a bunch of examples of it so you take this idea of observational investing of arbitrage information without being you know a guy who grew up on you know you weren't working on wall street you didn't have an mba you didn't have the what what would be like you know some twenty year twenty years of experience doing this the story is you take twenty grand you start doing this type of investing and you run it up it's just it it works pretty well for you it's successful i know the exact numbers but i've seen something like you sixty million seventy million eighty million is how you've grown that portfolio starting at twenty thousand is that right by the way because that mean that sounds in some sense too good to be true yeah it it it certainly is does sound too good to be true it it is accurate it's i don't know the exact number seventy or eighty million dollars of returns from the twenty k but i've been audited over the past seventeen years i'll be re audited at the end of this year and i'll fall somewhere around seventy five percent annual wise returns total portfolio over the seventeen or i think it might be eighteen year period now since two thousand and seven hey let's take a quick break because the team in hubspot has put together something pretty cool you know in this episode chris is talking about the way he knows how to make money identifying these trends scouting the tech dot comments making these big leverage bets that's great for him it is amazing some people will like that i personally don't know how to make money that way wouldn't do it but i've talked before about the way that i know how to make money about a build of money making skill about how to leverage your time and energy and the team at hubspot actually went through the video where i explained all that and turn it into a free downloadable cheat sheet on my four rules of how to make money now this is not you know give a quick advice it's just core principles foundational principles about building wealth things that i wish i knew when i was you know just getting started and so if you wanna download it it's in the description below it's totally free can go get it thanks to the folks at helps hubspot for doing the research making this document and make it available to all you guys alright back to the episode okay so let's break it down so you you said i started doing this as a kid you got i felt i went to this type of investing i was doing as a kid i ever i i had read your book laughing at wall street and you talk about like basically kind of like starting with like you know garage sailing and yeah very simple stuff when you were kids noticing things talking to your brother talking to your dad hey could this mean this and and taking you know getting learning lessons with a very small bank you know hundred bucks type of deal so could you just take us like early days what was the what where did you kinda have this sort of aha moment that this style of investing can work yeah you know i was an entrepreneurial kid i was really interested in making money before that was a cool thing to do you know the the new generation now all these all these kids or traders they're trading and it's all it's like every kid now is like i was back in the you know eighties and by the way that makes sense now because if you're a kid you're on youtube you're on tiktok you'll you'll see things but why why did you have that itch what what made you wanna to to get on that house what who did you see i don't i don't know what made me sole laser focus on grinding at age twelve but but i will but the way that i was going about it was not investing it was arbitrage and garage sale in the states sale merchandise i would take you know buses around the city on thursday in friday mornings and saturday mornings before i could drive sometimes i take three or four buses before school to the one estate sale that i had seen in the paper the night before that based on my analyses i thought was most likely to have mis price merchandise and and the thesis there is that most of these estate sales at the time were run by older women who really had a great knack for pricing silver and pricing other you know types of things that they knew about and cared about but they were really really bad at identifying value in mail oriented items like whether it was old trains old watches any anything that has to be met ebay right so you can't just go look up every item quickly and know the know the current like live market price for it yeah i've these pre ebay exactly so i i would show up at five thirty six in the morning and the goal is if you pick the right sale and you're first in line and you know exactly what you're looking for you know you got a good shot at buying something that is mis priced and i i would i did that for years i just happened to go to the same seven eleven every morning and get a bottle of snap a lemon flavored iced tea which is like the hot company at the time as the hot drink at the time yes snap used to be huge yeah and in one morning i went to the seven eleven and they had like one quarter of the door space dedicated to snap all they had brought in a couple other brands of ice tea i don't even recall what it was maybe it was arizona iced tea and a couple others the clerk told me that that's the way it was going to be from that point forward due to this new competition coming in and sure enough i talked to my older brother i assured the observation with him he was a stock broker i asked it can i make money off of this this has gotta be bad for snap right i mean it's such a hot company sure enough a few weeks later they had announced earnings he taught me how to short snap with put options i did it through his account i was too young they have a brokerage account i think i gave him three hundred dollars which is most of the money i had at the time from garage selling and he tripled the money in the course of about a month because snap all for the first time in its history had reported you know bad earnings due to inventory building up due to retailers like seven eleven giving them less door space so it was just something that i had noticed as a kid and you have to ask yourself like that's crazy because you know professionals on wall street they could've have easily have seen the same thing that i saw but they were so distracted by so many other things macroeconomic noise government their jobs just herd mentality that they didn't see something very simple that was right in front of their face so now if i did that as a you know young teenager that really means something now of course i didn't realize what i did at the time how special it was because you would never believe that you as a kid are better than you know all wall street so i i got really into stocks and investing after that but i did it in the conventional sense i read all the books and i mean all the books technical trading fundamental and i just tried every type of investing method and of course basically nothing worked so i was just like everybody else but you later on in my life when i was in my twenties and i had a job and i wasn't making as much money as i wanted to make or i felt that i needed to make to have the life that i wanted i got back into investing and that was really most aggressively in two thousand seven and i said you know why don't i try this kind observational approach that i did a little bit of as a kid and i i recall that one approach and at the time it was similar what i did as a kid was reflective of what peter lynch was doing though peter lynch you know utilize observational investing as just part of his methodology he also did a lot of fundamental analysis he'll look let let's break it down so there's major schools of thought around investing right number one passive investing you know don't try to beat the market just be in the ide index or even worse mutual fund and you know you go as the american economy goes alright that's one school thought then there's oh i i think i could do better than indexing and there's technical analysis which is you know some cross between i don't know horoscope and and you know fantasy football or something and so there's a lot of people who believe that they can rec see patterns and and and and you know signs and math in the chart and that that the charts will tell you the technical analysis will tell you where the where the price is going and so there's a lot of people who try to do that i've never met anyone smart who's good at that but it's possible that that is some people or the people will do that really so so okay so there's there's technical trading there's fundamental analysis the sort of buffett style of investing where you're trying to understand the intrinsic value of the business trying to understand the you know the durability and the quantity of the cash flows and you're trying to use that to just trying to understand what the business is worth relative to what the market's pricing a lot of people try to do that that's sort of seeing is like kinda gold standard what you do is this other school of thought so you know here comes door number three and door number three you kind of described it a second ago but i would my short summary of that is you're looking for significant behavioral change so the way that either consumers or businesses are changing in some way whether that's covid is gonna make it where people are not traveling or it's teenagers are now doing this thing you gave this example of women who were changing their bra preference from wired push up bras and victoria's secret is on top you started noticing a lot of people talking about the word bra and now they're wearing bra and here you know there's two guys talking about bras there's that women are wearing bras without a wire or a no bra movement and hey that's probably gonna affect the number one bra player victoria's secret who's not even carrying bra at the time so you're looking for some behavioral change somewhere let let's not let's not restrict to behavioral change let's say any change it could be a hail storm okay that impacts a positively impacts a publicly traded roofing company it could be in anything that's happening in the world that is change oriented that is not well well discovered or known by by the investor correct so not sort of consensus not quote unquote priced in and so let's go through a couple of examples so what are your favorite examples of these that you found in your life take me through a couple of your greatest hits yeah i mean there's like there's maybe north of eighty eighty to ninety i now over the past eighteen years you know there been a handful it didn't work out we could talk about those two but for the most part almost every one of them has worked out i know that's really hard to believe i know it's like it's exceptionally difficult to believe the the one i just mentioned that popped in my head is actually one of my my favorites i i would track every spring i would simply go and track the number of people that were searching for the words a roof damage or roof repair it's a it's a free data source anyone could you know leverage google trends and what's fascinating about this is when there is a hail storm people will immediately start googling roof repair the day after that the hail storm hits now the at the time there was a publicly traded company called beacon roofing and then one the largest roofing companies in north america and if the hail season was particularly damaging that would meaningfully impact their bottom line as a roofing company so what's fascinating about that is that the wall street generally would utilize insurance sector reports that would report on the damage from the health season as a data point to analyze beacon and roofing you know prior to earnings but those reports take a very long time they're really delayed they're delayed by like i don't know five six weeks after that the the actual hail storms happen so i had discovered this real time data source that would tell me in real time the volume of people searching for roof repair because even if you knew there was a terrible hail storm and you seen it on the news if that hail storm just happened to be over a super populated area as opposed to two miles down the road that isn't populated that's what makes the difference and the only nobody really knows how many people are impacted by hale how many roofs are until they get reflected in the insurance reports or a great measure of that that's maybe slightly less precise but a way more real time is that the volume of people that are searching for roof or repair now what's so great about platform like google trends is you have you know fifteen years of historical data so you can look at every single spring and you could see where the peaks are in the search volumes so there was one hail season in particular that the peaks were nearly triple anything i had ever seen before years fast so i i went in on a very large a very lever call long position on beacon roofing and yeah i mean that would be considered like a greatest hit my my understanding is you the same thing you did in the garage sales where you said look most of these garage and the estate sales were run by older women they knew the price of jewelry really well you're not gonna get too much of a deal there but they may not know what their kinda husband or their son's baseball card collection is worth specifically this one nineteen ninety six tops rookie card kobe bryant you know whatever so you you find the value there my understanding is you you applied the same principle to wall street you said well most of the guys who are on wall street got people who work in finance are guys white guys live in new york who are of a certain age and then you started saying well instead of i'll use the garage sale principle again if they know a lot about certain types of things where are their blind spots is that right is that how you how you thought about it so that that's how you identify like the lowest hanging fruit or the highest probability of finding the most opportunity especially early on i would say the vast majority of my big wins or around you know changes in consumer behavior and culture that were primarily female oriented or youth oriented or to some demographic that was an older white northeastern you know geographically located in investors so you know it it it could be something like i talk a lot about the the moment that jeff star who was a beauty influencer you know made a single video about this drugstore cosmetics product made by elf cosmetics that was just as good as a sixty dollar product it was called the elf primer putt that that was an old trade now but that was back when was trading at like seven dollars a share before it blew up to a hundred and seventy dollars a share right but but just deep seeing a single youtube video and then realizing that while it has ten million views and this is a company that nobody cares about and all of a sudden the most influential you know content creator in the world for beauty is saying that it's just as good as one of the best products in the world i i went down to i think it was cvs or actually i think it was walgreens by my apartment and just stood there all day and and and watched moms coming in with their kids and buying out all the elf products because all of a sudden instantaneously this drugstore brand that was just like at a price point of like eight bucks for any piece of makeup rate became a cool brand because this one individual said it was and and so that was a game changing moment that i witnessed via watching a youtube video and i actually called one of the analyst on wall street who was covering elf cosmetics because part of my methodology is not just to discover things early but you have to assess to degree to which other investors might already be aware of that information in order to gain conviction that you that you truly found some information as in the market so i called this analyst i said no what do you what do you think about the jeff star video on on elf you know as that impacted the way that you're analyzing elf this quarter and the analyst said who's jeffrey star and and and that at that moment i knew everything i needed to know about that trade right and and listen it makes sense these guys are not watching you know youtube videos of beauty influencers right but that's all that i do i i spend people don't believe me but i spend on average three to four hours a night late night basically reading through these days last six seven years tiktok comments right so like that's where i get most of my alpha from recently is people because because that's just happens to be the place where people express themselves most freely across the largest number of topics and that'll get you laughed out of the room it with with you know quote serious investors right like you know you have you have buffett or mu and these guys who are like reading the moody's manual you know a cover to cover just company financials and that's where they're looking for an opportunity and you're like i scrolled the tiktok comments and that's why i'm compounding seventy five percent a year first oh okay so here's what you have to determine as an investor because we we can't all be you know warren about it right so like like who do you wanna compete with i always say it's really not important for you to be smart but it's important for you to figure out how to be smart in a totally different way than others so do you want to go and compete with the top mathematicians in the world as a as a technical trader do you want to compete with just drove and drove of you know wharton and harvard grads who are doing financial analysis can you do that analysis a little bit better than them yeah maybe maybe you can maybe you're that type of a person and but let's be honest most of us i'll i'll even say ninety nine percent of us probably don't fit into one of those two camps so how could the rest of us get an edge on wall street how could the ninety nine percent figure out a way to outperform others in the market like what could we do that others aren't doing and you have to think differently so you have to look for edge in a place where your competition in your competition being conventional institutional and retail investors are not willing to go and you know the one thing about institutional of wall street is the like correlated data they they like certainty they like proof in in in historic correlations so the data that i am trading is conversational data because wall street primarily uses transactional data so they'll use credit card receipts that they spend millions of dollars for and then they s synthesized all this transaction data so that they can kind of figure out what's happening at that company before earnings so a lot of times when we see stocks move a week or two before earnings and we're like who's doing that like how do they know right like it it's transactional data wall street has been utilizing it for fifteen years more so today than they ever have so like how do we gain an edge on a hedge fund that's spending millions to tens of millions of dollars and has fleets of people analyzing credit card receipts well what do you do before you buy something you talk about buying it so you there's a billion people out there that are talking about their interest and what they want and what they did and what they plan to do tomorrow every single day if they see a video about a particular you know piece of apparel you'll have thirty thousand women commenting whether they plan to also buy that piece of apparel that they just saw me go on right and and so what you could actually measure the depth of interest in in infinite number of things even before that's pro through sales right and and so it in my opinion it's a superior way to to discover alpha a change in the world although it's imperfect because you have to do a lot of your own interpretation of what you're reading and what that actually means because it's speech and and and it's a lot of times the speech is nuanced and the way that we speak about things is constantly evolving so you know if you're just a regular person that spends a lot of time in the real world and and it on social media believe it or not you're probably well qualified to make that assessment today's episode is brought to you by hubspot did you know that most businesses only use twenty percent of their data that's like reading a book but then tearing out four fifth of the pages point is you miss a lot unless you're using hubspot the customer platform that gives you access to the data you need to grow your business the insights that are trapped in emails call logs transcripts all that unstructured your data makes all the difference because when you know more you grow more and so if you wanna read the whole book instead of just reading part of it visit hubspot dot com there's a great story i don't know if you know the story of the trending tab on twitter it's actually kind of it's it's a interesting story so that the guy i met the guy who who did it he's he's running a company his name is ab so my friend ab was basically at the time had a you know a group of basically data nerds machine learning and data nerds and they were trying to figure out they're trying to do something very meaningful for the world they're like we would love to be able to do sentiment analysis so try to figure out how people feel about things so do they feel positive about something or negative about something and so he's like oh twitter is this huge source of text traffic so let me just try to use twitter to understand sentiment about things and he was trying to do it and it wasn't really working very well and one day he's on a train and he's working on something and he just sees that like his program he's writing is not spitting out sentiment analysis about things but he's just spitting out like city names and he's like why are there like the city names so the or sorry country names why are these country names just popping up out of the the why is it being surfaced as signal and what he realized was that the olympics was going on at the and they are basically like you know the the opening parade was happening and each country that was you know being shown was getting mentioned a lot and what he realized was that like oh if i just paid attention to the delta so like if nobody's ever talking about you know whatever zimbabwe and suddenly it's not that a lot of people are talking about it but way more than usual are talking about it that's gotta mean something and so he created a standalone product that was basically just tell you what are people talking about in a abnormal way on twitter and then twitter ended up buying that and making it the trending product which was actually like really really important for twitter to succeed because they were able to differentiate from facebook and others by being about like real time what's going on in the world how do you figure out what's interesting and new and fresh that's going on in the world well you needed something like that that was reading all the social signals it sounds like you were kinda manually doing a similar thing when you're like oh i noticed a lot of people are i heard talking about the example of slime hey this slime trend is getting really big well how you make slime right if everyone everyone's doing if all the kids are doing slime well how do you make slime you need elmer glue and then you go and you figure out that wow people haven't really priced in that elmer elmer is about to have like you know a huge quarter or a huge huge earnings call so me and my business partner we actually created a platform called ticker tags in the mid two thousand teens with twitter and we had access to the twitter d hose which is a ten percent randomized sample of every tweet in real time and we hand curated about one point five million word combinations that represented how people were speaking about every product brand basically anything that was connected to any publicly traded company or meaningful to any publicly traded company in anyway we had organized into a tax taxonomy so every company had like you know three hundred to a thousand combinations of words like what would be an example what do what do you mean by that so like if i'm nike what do i care so okay so you just mentioned slime so which is one of my big trades new brands makes elmer gl alright so elmer glue would be a tag for new brands diy slime which is a product that utilizes white elmer glue when your kids to playing with slime that would be a tag because to the extent that diy slime gets more popular that's something that someone who's invested in new brands might want to know so we were actually monitoring in real time but frequency of mentions of those one point five million words and and benchmarking them against historical norms including seasonality and so since it was organized in a taxonomy when there was any type of anomaly and speech patterns happening across twitter that were impacting a subject matter that we had curated to be impactful potentially impactful to a publicly traded company our system would flag that so that that's a platform that we developed and sold to hedge funds and sell side banks and so what that was was basically me taking my methodology of what i had done manually and institutional it for wall street and at the time people express their opinions on twitter about everything that they were doing in life the way that people currently no longer do on twitter but do on you know play in places like tiktok now you know twitter is mostly news oriented or finance or tech oriented right political oriented but people are not generally talking about the movie that they watch last night on twitter right right but they're doing that another yeah plot but but we sold that company to jeff bank years later was that like a successful company you know obviously you know it's not that it was unsuccessful but i guess you know it's all relative so for example you know you're selling the data hedge funds are they really receptive to this do they believe what you believe were they're willing to pay and that's the coolest part of the story i spent years flying to new york nearly weekly training the top sell side banks and the the the i would say you know probably five or six of the top ten hedge funds in the world on how to interpret of this observational conversational data and how to attempt to correlate it and they just had very little interest that they had interest in the results but they couldn't figure out how to build teams around it because hedge funds generally have individuals that are like mathematicians right that that that were that they were hiring from the west coast to develop you know algorithms for for for trading like quan traders and then they have very traditional fundamental analyst who are basically finance heads that would you know would crunch numbers and kinda do fundamental analysis they didn't really have you know twenty something year old females on staff who are really savvy interpreting you know conversational data know come coming off it and like yes this is a trend this is not a trend this is meaningful it's not meaningful so it was a whole you know wall street they they do things kind of in the same way that they've always done things right and it's really difficult for them to stick their neck out and say hey you know we believe this thing matters when there's no historical correlation between the speech pattern of that subject matter and the stock price or the earnings of that company because like i said speech patterns evolve and that thing that they're talking about could be a new thing that was never meaningful before at that company sure so that is unfortunate for wall street but it's fortunate for retail investors right because we we now know i guess i'm telling you right now that this is still a dataset that they're scared of this is still a methodology that they have a hard time wrapping their head around because they can't really document did agree to which it it's it's meaningful for a thesis if if you were to have someone come out and say hey i i i'm been reading tiktok comments and i i believe real i i believe that this new show at the sphere in vegas wizard of oz people are super hyped on it and i like read a hundred and eighty comments of people flying in from europe next month to see it and i think this just might be the like the one thing that spear has done right and it's gonna be a game changing moment for the company finding product market fit sounds oddly specific is that actually a trade trader you're in right now or no yeah it was what yes so so that was so sphere the wizard of oz sphere was actually one of my largest wins of two thousand and twenty five and it came from reading comments of wizard of oz the first forty eight hours that it was out and sent essentially making a a monstrous being lever here up a hundred and fourteen percent this year well there was a lever options trade so it was a lot more than that a lot of what i do when i have high conviction around a particular thesis that has a especially when they have a very defined window of time when i believe others will will start to acknowledge that that that ground truth in the case of spear it was people counting seats sales of seats so you're actually able to go in and see how many seats are available for a show that's a week and a half or two weeks out and that's exactly what happened so over the course of a few weeks other and it was cool because it was like retail analyst it wasn't even like wall street but the other people that were trading spear were like hey like we're seeing a there's a lot of seat we never seen seats sell out like this before for a show so what i had interpreted from early user could early reviews ultimately came out in seat sales that other retail investors started trading and then wall street eventually picked up on it when the company came out and said that they're adding new shows right because they're selling out all their shows they're increasing their you know profit guidance and yeah you would the stock is you know more than doubled here over the last few months exclusively almost because of wizard of oz do you remember with so the show's called my first million do you remember when you made your first million and you know what what got you there and how did it feel yeah i i i i won hundred percent due i was working at a company called ever rewards in dallas texas with one of my best friends patrick it was like not far past when i started this in two thousand and seven with the twenty thousand dollars that i had grown to a few hundred thousand dollars and i said this is just absolutely crazy i said i think i'm going to i think i'm gonna hit a million dollars here like within the next i don't know next year or so and it was a few months later i hit a million dollars and i'll never for forget walking into his cubicle and saying i did it i cannot delete my account just hit a million dollars it absolutely melted my mind if that happened and you know i wrote my book i don't know two years three years later laughing at wall street because there was this tracking service called cove sylvester at the time and cove sylvester was like the first portfolio tracking service i think to had forty thousand accounts in it including mine and it would monitor you know how well you're doing month to month total portfolio and it would rank you publicly and it there was a while a moment in time when i was the number one ranked investor on cove which is just absolutely wild and it was during that three year period and that's when i i i think i was on a few different business shows like fox business talking about it and then i got a book deal to write that book laughing of wall street and then when i wrote laughing at wall street it was twenty thousand to two million dollars it was a hundred times your money in three years and at the time there was a small piece of me that thought you know is am i just like part of the long tail statistical anomaly right you flip a coin flip a coin a hundred times somebody if you get enough people to do it somebody will land on heads you know like times and they'll you'll think they're they're a genius or no no a hundred percent i doubted myself more and then i had a really defined methodology and i knew the narrative behind every one of my trades it was very sensible right like it wasn't like this mystery where i came up with some random formula and i was just trading stocks on its own and maybe the formula just happened to get lucky i felt strongly that the nature of observational investing about simply uncovering some piece of meaningful information that others weren't aware of intuitively just makes sense right like it's not like this mystical thing that you're like well that doesn't make any sense of course it makes sense you're just uncovering important information a little bit quicker than other people and you're connecting dots a little bit quicker than other people so in my head i knew the methodology at its core was really valuable but i still didn't believe that three years was enough so my head was like if i get to five years and keep this track record up that would be insane i got the five and i was like okay let's see if i can push it to ten and then i got to ten years and now here i am i'm at eight and like i i think i'm going on eighteen years of average seventy you know mid seventies total portfolio returns and i truly believe i can hit twenty so like twenty is what happened the new number of my head i wanna go over twenty years and all i have to do at this point is not messed up right but but at the same time it's very hard generating you know returns that are that high hey quick message here because you know that feeling when you send a wire and it actually works no friction well i've used mercury for years now and let me tell you it just works and that's why use it for not one not two but eight of my companies from credit cards to invoices i have everything in one place there's no gen dashboard i've never told please please visit a local bank branch none of that tom fu and a few months ago i landed a big client the first thing i did i sent them a clean branded invoice boom deal close cash in the door that's the kind of banking experience i want and that's why i use mercury so if you're running a startup and you want making that feels like it's built in this century well go to mercury dot com and get started in minutes mercury is a financial technology company not a bank bank the services are provided through choice financial group call them man a and evolve bank trust members fdic so let me ask you a couple mechanical questions do you take profits every year do you reinvest everything what what what are you actually doing with that's a sort of annual yeah because you know you compounded that rate for a long of time number is actually much bigger than seventy million that you yeah it's almost a billion dollars so it it so what's inter this is where the biggest mistake i ever made was that i'm now resolving for the most part so just about i've been half of my life is trading public equities through you know observational investing social or conversational data everything we're talking about the other half of my life has been an entrepreneur and you know i've had some success as an entrepreneur and like a lot of entrepreneurs that have success you start investing in other entrepreneur so i've been an early stage venture investor for twenty years i'm actually invested in a hundred and sixty early stage companies and my performance investing in early stage companies is pretty much average it you know i'm on sync with just about any other average vc i i wanna say maybe ten eleven twelve percent annual returns so i have pulled out almost all of my gains every single year for the past eighteen years and have taken that money and invested it in the private market and that has been really unfortunate for obvious reasons it's unfortunate because the opportunity cost of my capital is so high but i never even believed in myself that much on the public side that i could continue to do that so i was never like oh well i'm just gonna keep doing seventy some odd percent average returns that never really seemed feasible it i i felt like i needed to make my home runs in the early stage vc world and i finally came to terms a few years ago with the fact that that was a really bad decision and it's taken me about four years to pull myself out of early stage because when you're when you're in an early stage investor and that big of an early stage investor i mean i was taking hundreds of meetings with founders annually and it takes a long time to unwind yourself from that ecosystem yeah so i sure who was maybe peter lynch had like a don't don't cut your flowers to water your weeds right like he basically he he's talking about with with stop individual stocks right don't sell your winners to diversify it back into like losers but you know in a way what you were doing was at at a at an overall level if you were performing at seventy percent in one asset one strategy and ten or eleven percent in the other but you were taking the profits out you know that's a that's a water that's a water your weeds sort of scenario yeah and and by the way not i i love peter lynch maybe more than any other investor but you know i i don't believe in any preset rule of investing like that like my methodology is very clean you know i i i you you invest when you discover something and other people haven't discovered yet that will be meaningful to a trade and you exit as soon as other people have figured that out and that's it that that's literally the only thing and and if that stock goes up a hundred x or two hundred x you don't sell it because it's up two hundred x you know you you sell it when other people find out the information that you're trading so one of my most controversial trades like a over a year ago was you know pal and i i went all in unbelievably lever in pal at thirty dollars a share and i was very public about it you know i have a youtube channel dumb money live and we did a multitude of episodes on pal and this really strong thesis that we felt there was this kind twelve month window where the whole world was going to discover these things about pal that were really misunderstood and i had never gotten so much heat a lot of it from pal investors going you're an idiot we've been in this thing since six bucks you're gonna do this at thirty dollars a share like what are you talking about i'm like well i i'm not trading the information you were trading at six dollars have i'm pretty sort of two line reason you were so bullish on pal at that stage well because pete because people didn't even understand what they did right they didn't understand the the where they would actually sit in the stratosphere of the ai wave that was coming as a beneficiary of it and pal was just starting to scrape the surface of this new product that they had with clients and there was it was unstoppable right like like there was just going we knew there be this twelve month window when everything that pal had been working on for years they finally had the case studies done with their first set of clients and now they were just gonna start to steam role and and add add to clients so so they were just scratching the surface of their tam and the market didn't realize that so what was interesting about volunteers is that they were so valued at the time based on fundamentals that people were like there's no way you could be going in lever on pal at thirty dollars a share with its valuation already so out of whack and my response to that was the valuation is irrelevant to me i know i don't look at valuation i don't look at pe i don't look at anything like that all i look about is there is new information that's about to come online for volunteer that will bring in a whole new group of investors and once people see this information however they're valuing pal today based on the information that exist this is new information that will be settled into the stock price and that that's exactly what happened and pal want from you know thirty to hundred and sixty right or whatever it went to so hundred and eighty question you say you know i win really big into this so i made a huge bet on this what is that and you're taking leverage which could cut both ways right it's obviously leverage will increase your gains but it'll quickly sync your your portfolio if done incorrectly how much are you actually let's say you have you i think you said something like seventy million dollar portfolio let's say you have seventy million dollars and you get a lot of conviction about something what are you actually betting at a high conviction bet at this stage are you is it are you putting one percent ten percent thirty percent what are you putting out there and then you're lever up and then how do you manage that risk of that going south yeah and by the way just to be transparent it's seventy million ish of returns right of of of gains over that time and you know those gains were taken and put into other things like private companies right so okay i'm not managing that's not my public so seventy let's say that's gains you gotta pay taxes a lot of your stuff sounds like it might be short term because you're detroit almost exclusively and then you're reinvest that into your addiction in startups so that's that there's a lot of it's going that way but but percentage wise percentage wise when you have a hike what i i call just a high conviction idea i'm usually investing between five and ten percent of my entire liquid portfolio into that idea via options so if you're wrong you just lose five to ten percent of the portfolio and in a good example of where i did that and was you know wrong like i think two or three maybe three weeks in a row maybe four weeks in a row and i lost like thirty forty percent of my portfolio was during covid during the pandemic when i was kinda tracking the virus coming out of china i was you know using google translate on a lot of medical reports coming out of china to assess how big of a deal that virus was and it they became very clear to me that it was going to be a global pandemic and you know global only do one thing to financial markets right so i i was essentially taking i think ten percent of my portfolio and putting it into puts in the s p casino stocks vegas casino stocks and airlines every week and the market wasn't moving down like the the market just wasn't accepting covid for what it was and i got to a point where i like thirty to forty percent of my portfolio was gone and i did it again the week after and that week after was the first week the market cracked and it went down two percent and then the next week is we're it it really hit and that that was one of the biggest trades of my life and over the court i think that year was of like a three hundred and seventy percent annual return total portfolio something like that and it was partially because i had shorted the pandemic early on even though it was a little too early in takeoff and then two days after it bottomed i had a selection of i think fourteen or fifteen companies that should have never gone down at all they should have only gone up as soon as we realize it was going to be a global pandemic and and everybody would be stuck living in their house for you know working in their house for a year so you know companies ranging from you would packard where everybody would wanna go buy printers for their house to peloton because you can't go to the gym you gotta work out of your house now shopify because you know you're shopping online amazon obviously you know campers world because one of the things you can do you could still go camping boat stocks you know i bought a company out of canada that nobody even had ever traded before that owned sc bicycles because you know sc had a run of the biggest bicycle sales in the history of the company i think that that company went up eight x eight or nine x over the course of nine months so you know i had these fourteen fifteen companies so was like these companies should be doubling right now instead they were all down like thirty forty fifty percent just because at the whole market traded down so i always knew that i was gonna go lever long in these fifteen companies but i didn't wanna do it until the market became less erratic in the irrational so once the market's finally started to you know normalize and come back up i took all the gains from shorting the travel stocks and the market at large and just put them into lever positions in these fifteen companies which is obviously the trade of a lifetime so so that was a dollar amount at the biggest dollar gains you've ever had i i i know by the way i i don't watch enough of your content to know how much you talk like do like do you disclose like how much you make on these do you say like i got ten million active portfolio like what do you actually say i don't know i know what we're open and transparent i think that year i made thirty million in the market so that was like thirty million in one year and it it was it was a wild ride didn't it i think the most interesting part of that narrative was just before the pandemic i had made the worst trade of my life and it was actually a trade that was psychologically damaged like i lost a third of my portfolio on a single trade just months before the pandemic started and the the probably the thing i'm most proud of myself of is i was so down and out about that trade that i still found a way when i when i you know had come out with all that conviction on covid to actually still go all in on my thesis on covid even though my account was so brutally damaged at the point that if i got another one wrong i mean so it was like i could have gotten that would really have wiped me out and i mean i wiped me up but it it would have been an unbelievable unbelievable damaging imp for me to have two monster trades in a row go wrong the one that went wrong months earlier was a company qs r the own burger king popeyes and tim horton and i was so convicted that the company would have the best earnings quarter in its entire history because two of the three companies they owned both had anomalies on the positive side burger king had the impossible who which was unlike anything the company had ever done before in terms of sales traction and popeyes had the crispy chicken sandwich which is during the the the this is the chicken wars if you play yeah yeah i at the time and that chick crispy chicken sandwich that popeyes had it would literally sell out in like two hours every day it popeyes no one had ever talked about popeyes ever in the history of the company until is crispy chicken sandwich and i was monitoring both of those trends and i was like they're they're both going to report the best quarter in the history of their quarters at burger king and popeyes eyes and then you have this third piece which was unfortunately the biggest piece of the company tim hortons and tim hortons is just you know there there a canadian coffee and doughnut shop okay and the company had basically been around forever it had not been doing awesome but it was kinda flat lining day would have to have had a really bad quarter to screw up my trade and it was just happened to be a really difficult company for me to to extract information on through the methods that i used because it was canadian and people just didn't talk about it that much right there was nothing happening there so it was like i saw zero reason why they should have this anomaly of a bad quarter which is exactly what happened they just happened to have like randomly one of the worst quarters ever which statistically the chance of that happening were solo and it crushed my trade i i lost all my money on that trade and it was like a third a full third of my portfolio and the wildest piece about that and this is where there's a lot of self reflection because i take a lot of pride in in going in deep and doing really intense comprehensive due diligence where sometimes if i if i have a high conviction trade i will put you know sixty plus hours of due diligence into the trade where i like the joke that i'll uncover every piece of contextualize information on the company globally through every social media anyone who's speaking about any of their products i will visit i will sometimes travel if they they're a retailer and visit stores and talk to store owners and clerk but because there were three things i was having to deal with burger king popeyes and then tim horton i just assumed tim hortons how bad they're gonna be well they had the tim hortons annual meeting a few weeks before earnings in florida that i didn't realize they had this meeting but if i did realize that and i had done my homework i would have been at that in orlando for that annual meeting not because i would've have got gotten in but i would hung out at the bar and i would've talked to all the franchise e owners because from what i understand there was a revolt at that at that meeting by franchise owners because the company was doing so many things wrong their sales were just getting slaughter due to recent decisions that corporate was pushing on the franchise e owners and it would they were very public about it at that meeting it was really harsh and if i was just in in the building right at the bar i would've been well aware of that so going back i learned that you know you really have to be comprehensive in your research if you're gonna take a lever bed on a thesis that you have and you you can't you can't be lazy what are the bets you're looking at now because a lot of these examples are from blue had past seventeen years where are you now on the ai side you know two of my favorite ai picks you know right now one is bloom energy you know the energy trade is a big one and it's one that's really really really misunderstood i think by most investors so bloom energy is a company that just has a really different approach to powering data centers right they're not using big gas turbines you know they have a technology that they've worked on for you know twenty years that is actual you know dc technology or instead of comb combustion gas it's actually a chemical change that creates the energy and they have a really quick timeline to energy for a data center so if you have a data center and you could actually get energy through bloom and get your data center up and running six to twelve months quicker then getting on a waitlist list for gas turbines and going through all the various approvals that's that's a really big deal and that's why bloom energy as i think they're up like five or six x right over the past eight or nine months as people are starting to realize this but there's still a lot of controversy around the company so again it's somewhat unproven they only have a couple big hyper scaler deals and you know one's with oracle i think there'll be others that will be announced in the near future but it's a new technology so people are still somewhat skeptical of it and then you have you know news events that that happened like this last week where now we're building data centers you know in in space right you know now that you know spacex is yep preparing to ipo all of a sudden we have this narrative pop out of nowhere where oh didn't everybody realize that we're just gonna be doing you know compute data centers in space now like that's all that's like right on the horizon like couple years two three years yeah we're just doing data centers in space like the this is the noise in the market right now right so like oh we're doing data centers in space and do we don't even need any now and here like oh if you're powering those with solar you know why would we wanna value an energy company you know here in the us if you're just gonna do them in space with solar so the market is so add that it's changing week to week month to month based on whatever the hype story is that will you know either positively or negatively impact companies in the space but for me i i think i think bloom energy is definitely one of my favorite ai plays right now because they will be the company that will enable data centers to get up and running i think meaningfully quicker over the next three to five years and i think that's a company that's just going to see its earnings double basically year over year for the next three to four years and i think they're still very much misunderstood they're actually gonna be the topic of my next dumb money life of this but i'm gonna go in deep on bloom energy we we spent like a couple months doing some doing deep analysis on do you publish all your like do you publish your portfolio somewhere do you publish a trade somewhere we don't i won't ever publish trades i i sometimes speak about trades on a really high level the last thing we ever want is other investors trying to mirror our trades because that's much not what we do right we don't think it's a healthy behavior i always tell investors to steal my ideas and run with them so take the idea then poke holes in the idea do all of your own research right and then come back to me and tell me where i was wrong but ultimately then go off and make your own trade based on your own you know risk reward because we all have different degrees of risk tolerance and we should all have a different take on an idea so i love sharing ideas i don't really share trades i'll be honest with you because this is not my world of expertise i'm a founder first and my investing is very sort of simple you know i basically own a couple of you know owns some indexes and i own stocks that i understand i've owned them for a long time you know tech companies basically because i've grew up in the tech industries ever since college and then i my investing outside of that is private angel investing again tech and lastly would be you know my own private equity where it's businesses that like individual businesses that i can own and and i could affect with with things that i know how to do operationally or promotional with the podcast and so you're interesting to me because on one hand i i think well first of all you're interesting because the story is great like i turned twenty thousand dollars into you know i've made seventy million in gains or something like that's an incredible story i think it's interesting because your approach like just the way you describe observational investing actually lines up with a little of lot of the great investors do and say which is that they don't sort of spreadsheet themselves is that they try to understand like surface out the signal from the noise what is the actual important thing i need to know about this company that i can believe before it is obvious true and proven and you know the market sort of responds certainty and if you can handle uncertainty you could do quite well at the same time you know sometimes you say things like you know ninety nine percent of the other ninety nine percent of us can go do this and we have sort of this i think i've heard you say you know the game is rigged wall street is rigged but it's rigged in our favor and you know that part i think seems untrue like if if what you've done is true it's in many ways because you have a a a very unique skill set and upbringing in background no no that's the that's i i me just sort of explain that is important i think i the last thing i would want is people to listen to this and be like oh okay cool i can just go and trade lever up off of observations and i too we'll turn twenty thousand dollars to seventy million dollars there's a reason that's not common that's not a common result there's a reason you get a book deal there's reason people follow you because it's not a common result everybody everybody does i think one of the reasons that's uncommon it's not because it can't work that's not what i mean a lot of it is interpret right so interpret interpreting the signal trying to figure out what is actually important is it already priced in what does this mean who does who benefits from that the second order effects of that that's not like you know something incredibly you know simple that the that everybody is going do so there's a big difference between anybody can yes everybody can is different and so like i've view it very similar to to start where you know an entrepreneur can come on here and they'll say look it's not rocket science i'm not any smarter than you guys i just did this this this and this and it's true that that was in the capacity for anybody to do but definitely everybody won't and and definitely everybody should not try because they don't have you know either the nature of the disposition the the risk tolerance to be able to go do it so i just think you're interesting because you're this sort of like puzzle normally if i hear a story like this is too good to be true it violates a lot of this sort of like fundamental wisdom that people have about investing where you wanna buy you know buy a share in a great company and hold it for a long time i know things that i have sort of accepted from you know a a certain school of thought around this so i think you're very interesting because you violate some of those and i think that that works and it works for you and i think it's very cool but i hesitate i hesitate because i think that this is not something that a lot of people could or should do so so i couldn't disagree more i did i agree with some of what you're saying in terms of yes i mean over a long period of time you know doing you know generating almost a hundred million dollars from a you know twenty thousand dollars or yeah that it's that's not easy to do obviously but i will say this i think i think the biggest issue is simply bucket money and having risk capital so i think the the the number one issue preventing someone from doing this is thinking that they have this one bucket of capital for their life savings for their future kids college for their retirement and they think about that money all as one and this is something that's a little foreign the concept of being a regular person and observing something and sent connecting the dots and saying you know what i'm gonna put a lever bet on that because i just found you know i just discovered this you're not going to do that unless you have your money properly bucket and the one thing i teach people is you have to have risk cap at all i don't care if it's fifty dollars or fifty million dollars you don't you shouldn't be waiting until you're part of the you know ultra wealth class to to to to think that you have risk capital to take risk with you need to have risk capital starting with day one so everybody should have a big money account i talk about this in laughing at wall street everyone should have a big money account and the big money account is the account that that yes you get wealthy quickly with and you do that by taking big swings on things that you really believe in and the only way that you're going to psychologically do that is if you fund that big account with money that is not being stolen from other areas of your life so i i call it you know there's this whole concept of like frugal gallery or trade offs where okay maybe you mow your own lawn maybe you make your own coffee maybe you clip coupons like people don't wanna clip coupons to save a dollar but if you think about every dollar in your life as as potentially being a hundred dollars a hundred x which is a hundred percent feasible over a long period of time if you invest aggressively with leverage and get a few wins then you'll clip a dollar coupon because that dollar coupon is clipping a hundred dollar coupon okay you're gonna make your own coffee because instead of saving five dollars you're saving five hundred dollars a day right so all of sudden you discover all of this money you newfound money in your life by making little trade offs in things all over your life the differences every time you make one of those trade offs and you save five dollars for making your own coffee you take that five dollars and you put it into your bucket yeah account bucket right by the way this is not financial advice right it's just like this is how i did i'm just saying like i hope i'm inspiring people because i just understand something i graduated in the bottom twenty five percent of my high school class the bottom twenty today the way colleges is i could not even i had i would not have gotten into any university in the united states okay pretty much today in two thousand twenty five with with my grids this is why i love doing the podcast because you can get people who make their money in all different ways we just had john morgan who's like the guy on the billboards personal injury law and he's a guy you know he's the biggest personal injury lure in the world two billion dollars a year and then he started you he started his career working at disney world as pluto like he would be in the costume and then he started because of that formative experience so he took the money from the law firm and started building little like attractions like fares and and and places you go buy tickets like the the museum of crime in history things like that and he's made a killing doing that so you if that guy comes on tells about how you make money that way the other guy says hey how you do it this way so i what i love about the podcast is i get to hear these people who come on with completely different blueprints and playbook that they won hundred percent believe in and i get to listen and i get to decide i get decide for myself does that sound like something that's interesting or would suit me and i hope the listener does the same because i don't agree with a lot of what you said but i found it all very interesting and you know there's some things you said if like i'll i'll be all i'll be totally honest if you saw if you have like a paid course somewhere i would be like i can't run this episode because i feel like this guy is selling this dream to people that hey yeah you just got it just go go get in into tiktok comments find an observation lever up baby make a trade one trade will change your life and it's like that is a scary principle i think that is a idea to a lot of people by why it's very interesting to me to hear it to talk about it why is it why is it important to you that people really that the average person who's listening they believe this and they go take action on this because you know like i said it's not that you're running a fund right so you're not solicit listening investors you're not selling a course like i'll teach you how to do this trust me it works you're not doing any of those things which is usually why people really kinda pound the table and say you could do this just believe just go for it my my overriding purpose is to inspire every human on earth to enter the investing class right because i think it's the only way we'll ever solve the wealth gap so like there's no way to solve the income gap the income gap is an exceptionally difficult problem to solve the wealth gap is a problem that's sol by bridging more humans into the investor class and so everything that i do on x everything that i do on youtube every podcast that i do has a single mission to inspire other people to start investing on their own and by all means if that means just throwing money in the s and p in an etf awesome but there's no reason to stop there right like i i i i know i know that people love the concept of actually hope and having an opportunity to do something truly great in their life because so many people when it comes to income are stuck their job is not going anywhere okay like and by the way i am not a proponent of people quitting their jobs and becoming entrepreneurs and taking all this massive personal risk to start businesses i think there are very few people that are capable of doing that and i think that this road roadmap is way more achievable for people start making trade offs come up with a big money account do it through making trade offs in your life in frugal gal learn how to use leverage learn how to take big risk with other people's money because i call them other people's money because it's all comes through trade offs in things that you believe in because you can do this and by the way there is nothing cooler than when you're just a regular person and you you just make a grand slam in the market right and you you thirty extra money all of a sudden you have financial independence in life so i don't know many things that are more important because it just it helps solve so many other issues and so many humans are just depressed because they look at their life and they're like this is my job these are my expenses this is inflation holy crap i'm screwed i will never be the person i wanna be for me or my family and i wanna to inspire people that it doesn't have to be that way and you also don't need to be taking big risk with your retirement money of that stuff that's why i'm like i'm very clear if you're gonna do this do it with money that's bucket right for for risk you know this isn't just about investing the same methodology of being able to identify change in the world and tailwind and trends should apply to career it should also you know like for it should apply to entrepreneurs as well right because like i'm an entrepreneur like i'm about to start another business and that business is directly tied to the analysis that i'm doing discovering change in the world right so like you know we're about to embark on this journey of of abundance and that's not gonna be like we just hit the age of abundance in five years and we're not working like no the age of abundance is gonna like slowly happen it's already happening it's gonna it's gonna like happen over the course of decades and it's just it's just lots of tailwind ones and trends it's like people will be working a little less people will have a little more free time people will have more flexibility to dive into the things that they care about right wealth signaling will i think become even bigger in the future than it is today i there's just so many changes that are massive that are happening in the world that if you're an entrepreneur trying to figure out like where do i spend my time or if you're just someone that is figuring out where's your next career path or where if you're a young person and where's my career like you need to be doing more analysis on where the opportunity is because these are some of the biggest decisions of your life it's not just about trading a stock yeah especially is silicon valley you see this all time type people will take a job and it's like you realize you're investing all of your life force you're you're you know you're creative energy and you're getting these stock options but you never thought about this like an investor like you're just happy you got the job versus should be looking at the job market the way an investor looks at these companies and even if you're not investing capital you're investing your time right so that that applies you know totally there you you said you're launching a new business what is it it is related to the jet industry private jet industry which i believe will be one of numerous beneficiaries of us kind of entering into this age of abundance with people having you know more it in fact i'll i'll just quickly state that if you want a glimpse into the future you need to simply look back into our past from the pandemic because that one year of the pandemic when we actually had an abnormal amount of time as humans we had never experienced anything like that throughout our lifetime when we had excess time to actually do what we wanted to do and we also just happened to have excess money because of this wild stimulus that happened during the pandemic so if you want an example of what the age of abundance is gonna look like in terms of the winners and the losers just look back to that one period of time what did we do when we had more time and more money we dug into our hobbies we dug into our interest we you know we we we we kind of did things that now that we're back to this world right like we do a little bit less of but if we truly get you know the industry of intelligence and automation and robotics to help us do the vast majority of work the repetitive work at least that we do today i think the entire world has an opportunity to become more creative spend more time with their families with their friends doing things that are meaningful travel certainly i think it is something that we can all count on in the future as becoming a larger industry not a smaller industry i am ultra long on the private jet sector even though myself i carry too much guilt to fly private on first so i got you'll never see me on a private jet but i i i i'm very bullish on the sector that's amazing chris thanks for coming on man i appreciate you and people can go find you you got show dumb money live it's on youtube that's why where i watch it at least when i when i tune in so thanks for coming on and by the way the only place i am personally is x so at chris camilla at fedex x but dumb money dot tv has all the socials so thanks for having me on i i appreciate it very cool well that's it that's the pod i feel like i could rule the world i know i could be what i want to put at all in it like a day's off on a goal travel never looking back alright everyone if you're listening to m you probably want to make more money well i wanna tell you about a podcast you might wanna check out it's called the sales evangelist and it's hosted by donald kelly each week donald interviews the world's best sales experts who share their strategies to six seed in sales they share actionable insights and stories that will encourage challenge and motivate you to hustle your way to the top if you're someone looking to raise your income level check out the sales of evangelist you can find it wherever you get your podcasts