Chris Camillo on his Investment Strategy & Dumb Money | Opto Sessions | Episode 28

welcome to opto sessions where we interview the brightest minds from the stock market uncovering their secrets to success if you're looking for ideas tips and techniques from the world's best you're in the right place welcome back for another episode of opto sessions today i'm talking to chris camillo founder of dumb money and an investor that's turned 20 000 into over 30 million and counting having led and founded a series of successful tech and software companies in 2018 chris and his two friends dave hansen and jordan mclean gave up the day job to invest their own money full time not only have they already recorded extraordinary success chris and co have pioneered a unique investment strategy or what they call social arbitrage chris hasn't stopped there dumb money have chronicled every high and low on their eponymous youtube channel now a mainstay among individual investors and of course their 52 000 subscribers chris gives us a real insight into his strategy but not only that he identifies the advantages enjoyed by those managing their own investment portfolios up against the financial might of institutional money managers a breath of fresh air so without further ado enjoy the episode hello and welcome chris great to have you on the podcast how's your week been so far has it been busy it's it's been great it's been busy like every week this year pretty much uh you know with the pandemic and market volatility um it's been pretty nonstop for me yeah great yeah similar on our side as well and so i wanted to start by addressing something that i think will be at the top of anyone's agenda that's in your youtube channel dumb money and that's the fact that you've turned 20 000 into 10 million in fact i believe that's the subject of one of your most watched videos on the channel so people should definitely check that out but a lot of what i want to talk to you about today is digging into how exactly you did this and i watched your talk at the bazinga trading summit last year you described how it'd be difficult or even impossible to explain that strategy in just eight minutes uh now today we've got a little bit longer than that so we'll go into it in more detail shortly but to start i wondered if you could give us a top line about how the strategy works and crucially perhaps what makes it different yeah um so i i call this strategy and this has evolved over the years but i i guess i i have i've coined uh a name for it now and it's it's called social arb investing there was a point in time when i called it information arb investing that was pre pre the social world right you know maybe 12 13 years ago but now that we have facebook instagram tick tock twitter and the whole world communicates online um it's evolved into what i call social art uh you know strategy and it's actually really simple it's not it's not fundamental investing so it's not about you know looking at company financials or identifying companies that are misvalued based on revenue or you know price to earnings ratios it's not looking at management teams it's not looking at company health it's certainly not technical investing um not looking at price or history of price movement for the equity or any other variables like that the methodology relies exclusively on one's ability to detect change quicker than others so what you're really looking to do is to identify some sort of change that's happening in the world that could relate to a change in consumer behavior it could relate to a change in culture i really quite honestly a change in anything a change in and maybe a maybe it's a product trend or a government regulation and then you're attempting to connect that change to investable opportunities in the market right so either companies or sectors or the market as a whole that would likely be impacted by that change once others are able to either identify it like you have or fully appreciate what you've seen in terms of that change so i like to think of it as investing when there's an imbalance of information and that's when you enter a trade and then exiting the trade at the point of you know information equilibrium right uh when everyone kind of appreciates that information at the same level so that that's really what social arb investing is is about and more often than not these days i'm identifying that change through social channels uh by seeing an acceleration or observing an acceleration in conversation around a particular topic that would be abnormal based on the normal conversation level conversation about that topic right so it could be something as simple as identifying that a product is selling out in the market or that you know people are you know really adopting connected fitness that's that's probably a topic i imagine we'll get into more later on when we talk about some of my favorite trades right now uh but any sort of change that that's impacting companies it's all about identifying it early if that makes sense yeah no that makes complete sense yeah that's it that seems key and actually i guess to me it's you know strategy might be too limiting a word to put on it it's almost an investment philosophy i suppose um and uh actually there's there's a lot i want to dig into but first and crucially i suppose for anyone that isn't aware of your work i'm keen to understand what's influenced your career thus far and how you've made it to where you are today so as far as i'm aware your career has been predominantly um up until this point at least in the tech or software space having worked for companies like shopzilla and ecarlist before co-founding ticker tags in 2013. so i imagine that's giving you um a great insight into product development and business strategy and even what to look for in the business uh the businesses you're investing in i mean is that fair as that proves sort of relatively formative in in terms of how you invest now yeah i i kind of my professional career since 1998 has been working at early stage companies starting with a company called carsdirect.com uh backdoor in the dot com boom to a company called biz rate which today is called yes shopzilla i don't know how many they might have changed their name since then i actually then spent 10 years helping build a company called e e-rewards market research which is you know acquired research now and it's called something different now but it's the world's largest research company research panel company i then actually helped a couple of my friends start a company called e-car list that we grew and sold to a publicly traded uh firm called dior track which is now part of cox automotive uh and then i became um you know through this process right of working at early stage companies every time you get a little bit bigger chunk of the company and eventually just kind of start your own and then you start your own and sell that uh then you start investing in other people's companies and that's kind of how it all starts and before you know it i'm now invested in you know 60 different early stage companies that are all private and a lot of them i'm an advisor uh consultant and you know some of them i'm even an operating partner of and we've been fortunate to take a few of them uh and sell them to publicly traded companies so we have a few big wins uh my most recent one was ticker tags that was a company that touches social arm investing it was really taking social investing and bringing it to wall street uh so we created a tech platform that essentially allowed hedge funds quant funds and investment banks uh like bank of america and jeffries to actually measure the frequency of mentions of word combinations across twitter so they could actually identify these anomalies in conversational data early so it was really a way of institutionalizing the methodology and we ended up selling that company to jeffries but yes i think being intimately involved in business uh from an early stage even at the enterprise level enables you to to understand i would say the marginal drivers of acceleration or the marginal drivers of success uh for a company or sector so so those worlds really do merge yeah interesting and i did have a question down here about how much uh kind of your experience at ticker tags and what you created there has influenced your current strategy i mean they seem to almost completely align so essentially you know it is what you're doing now very much representative of the experience and the product you created at tick attacks yes so so what i'm doing now you know ticker tags was really just a tool for for my methodology right and it was a tool that could have been used by you know just retail traders uh or institutions but you know due to the high cost of purchasing data from twitter and then managing hundreds of millions of tweets in real time and being able to graph them and extract insight from them the price point of using that tool was really unreachable for retail investors so it was geared towards institutions i wouldn't necessarily necessarily say the tool itself for creating ticker tags and selling that company has changed the methodology because it really just was a tool but what it taught me you know having spent four and a half years of my life working you know really closely uh with some of the best hedge funds and quant funds in the world as well as some of the best sell side analysts in the world and really educating wall street um about conversational data and how to interpret conversational data what it taught me was that because i had never worked on the institutional side of wall street right and i always thought behind the curtain there were things that they knew that me as a retail trader really i was at i was at a huge disadvantage i think a lot of retail traders feel that way um i ultimately realized that there was nothing going on on the other side of the curtain i had no disrespect because probably some of the smartest people i've ever met in my life uh were you know on wall street that i met over this four and a half year period and some of them are still very close friends and and a few of them are actually amazing at what they do but most of them are not very good at what they do and it's really not because they're not smart uh it's just it's an institutional problem because of the way wall street works and it's really hard for individuals that work at that institutional level to really do things differently from the way they've been done for decades and it's really hard for them to gain a true information edge or social edge even using tool sets like ticker tag so you know the one takeaway was that the retail investor is not at a disadvantage and in many ways because of the flexibility a retail investor has they have an advantage over institutional traders in wall street and that's kind of what i took away from that experience yeah well i i'm sure i've mentioned to you before but a lot of the people listening in will be retail investors so that'll be uh comforting uh information and news for them as well as they try and solve gain alpha and seek their edge uh as they're investing in trading and actually that's probably a nice juncture to to return to your strategy and kind of work out and listen to about what you do on your side of the fence so firstly starting with the theory before tackling how and what shape that takes in practice is it all about detecting early change as you said and what i mean by that i suppose is it is it crucial to know and understand something before the rest of the market yes i mean that's everything right so it is absolutely everything you know my life i probably spend somewhere between you know 30 and 60 hours a week trying to surface investable opportunities by looking for change right so i spent a tremendous amount of time on twitter uh and there's various you know i would for lack of a better words various keywords that i'm constantly checking to try to identify you know change in consumer behavior uh changing culture change in product demand across various categories changes in weather right i mean literally any sort of change sometimes it's a matter of identifying the change months early sometimes it's identifying a change weeks or days early and occasionally it can be identifying something in a matter of minutes minutes earlier than the market so that's really where everything starts and without it uh you really can't be a great social investor i've heard you sum up the uh investment process by which you work in in three key questions so first you ask yourself whether the thing or the change you've spotted has the potential to majorly impact the company positively or negatively can you give us an example of that to make it more real for the people listening um sure so this is an example i i love actually uh it's one of my favorite trades uh a few years ago there was a trend that was happening it was happening globally with kids and kids all out of nowhere started to make slime and when i made my slime is actual slime right so it became a big crafting trend for kids and moms to do with kids to where they would create all kinds of different colored slime and different textured slime just to kind of play with at home and it's something that i picked up on really early on and that was just simply a change in in behavior in what kids like to do like and it lasted the trend lasted for like over a year um it just happens to be that one of the primary ingredients to for diy slime right do-it-yourself slime is is white glue and the world's largest manufacturer of white glue is elmer's glue um so uh you know i was able to surface that trend very early and i connected the dots to elmer's glue and then when i started researching elmer's glue i realized that they were selling out right globally so it became next to impossible to buy elmer's glue well elmer's glue is a subsidiary of newell brands which is a publicly traded company maybe better known they used to be called rubbermaid although elmer's glue is a really small part of that company the company itself is a slow growth company so even if elmer's glue was only one or two percent i think they were like one or two percent of the total company in terms of revenue their revenue increasing by 50 which is exactly what happened at elmer's glue was able to have an outsized impact on the overall company and really moved the needle for earnings for multiple quarters in a row and what was amazing is that newell brand stock price i think went up 17 or 18 over the course of a couple quarters it was a trade that i had you know uh initiated it was a lever trade and i think i ended up making i don't know maybe close to 200 on my investment over a very short period of time but that's that's a really interesting example where the whole world could have seen this right there were tens of millions if not hundreds of millions of families globally where there were kids making this slime how many were able to you know make the connection between that and an ingredient of slime and the company uh that was investible uh based on that trend yeah interesting actually i think that feeds into my next question i mean so as i understand it the second step of this process is essentially recognizing whether the rest of the market already knows about the thing or the change you've noticed so how do you get a sense of whether the market has already picked up on this that's a really important piece the process and it just might be one of the hardest parts of this social arb strategy so what you want to look for is in this case of you know identifying you know the diy slime trend you want to try to detect does anyone else know about this that's in the investable market for renewal brands right do analysts know about it do the funds investing in it know about it do retail traders know about it so you want to try to search all of the news all of the analyst reports that you can you know identify online you obviously want to go read the quarterly earnings reports the most recent quarterly earnings reports for the company that's something that i recommend every investor do and you know through that process obviously go on twitter as well go on stop twits right uh see what retail investors are saying go on sites like seeking alpha and read amateur uh analyst reports there is anybody talking about this whether on the retail or institutional side or even on the company side so what i was able to do at one point during the trade was identify that even the company acknowledged this they actually acknowledged it in their quarterly report by saying they were seeing an uptick uh in in sales of elmer's glue due to this trend and at the time the trend was pretty early so i was able to actually monitor the trend and see that it had grown substantially quarter over quarter uh so if it was able if it was on management's radar in the prior quarter when the trend was barely a thing uh it made intuitive sense that that trend as that trend got exponentially larger it was really going to become a big part of the story in the next quarter yet no analysts were talking about it no retail traders were talking about it i really wasn't able to find anywhere uh where people were really discussing this actively as being a big thing that was happening and that you know you should invest in new old brands because of this trend so i felt that there was still a pretty large information imbalance and and trying to really make that determination as a social orb trader is just something that you develop a gut instinct to over time you know if you kind of see it mentioned in web boards and on twitter and on stock twits and it's also being discussed in analyst reports and you know what it's probably too late uh if it's not being discussed at all you probably have a good opportunity uh to arb that social information and if if it's being discussed a little bit you just have to make a determination for yourself yeah interesting and i guess like once you've done all that homework you're you're confident that you've noticed this information imbalance as you just said there and based on the period that you think it will take for the market to learn about that information um an investor or trader should ask themselves i guess is this third key question whether there is something else that could happen in that trade window that's more significant than what they've discovered and i've heard you give some good examples of this as well i wonder whether you could give us one of those just again to make that sort of real for for the listeners yes so you know again the concept is investing at an information imbalance and then you know exiting at information parity but you have to one make sure that not only is this information going to move the needle for the company but that also there's not something else happening at the company that is more important uh than the information that you're trading so you know if if you know that there's going to be a judgment on a major lawsuit or major government regulation over the course of the period of time when you think your information is going to be disseminated to the market uh and that government regulation or that class action lawsuit or anything else right if there's if there's another product launch during that quarter and the whole world is looking to the success or failure of that product launch to determine whether or not that company should be valued higher or lower than where it is today certainly that might be more important than some piece of information that you're trading on that company right so you just have to really make that determination um and and it's really on an investment by investment basis and there have been times in the past where i i've made trades uh and i was correct in the information i was trading uh but something else maybe something else you weren't even aware of uh such as a large fund that had been looking for uh an opportunity to exit a 10 position in the company or maybe they were one of the largest shareholders in the company they're looking to exit during your trade window and and that could really come to haunt you right so sometimes you're able to identify when there's something that's going on that's more important than the information you're trading sometimes you can't identify it uh and that's just part of the risk profile of any trade but it's something that as an investor you need to be aware of right it's not just the information you're trading what else is happening at the company that could trump uh the information you're you're trading yeah completely and and to get a sense of what this looks like in practice and if we start with your position sizes i mean how much of your portfolio are you risking on on any one trade yeah i like to think of trades as being either low medium or high conviction uh in on a low conviction trade i might be you know if i'm just investing equity i might be investing a couple percent of my portfolio uh on a high conviction trade i might be investing anywhere between 20 of my portfolio and 30 of my portfolio in an individual equity on a high conviction trade and you know there have been times in the past where i know this seems insane when i was much younger that i invested 100 of my portfolio in a single investment i remember investing 100 of my portfolio in a company that everyone probably knows nintendo back when they first uh released the nintendo wii i don't know maybe it was 2006 2007 uh i was able to identify that the wii was a real game changer uh you know being at the e3 conference back then when it was first released and kind of seeing the way people interacted with that gaming set it was kind of the first gaming set that was had truly brought gaming outside of the box right to where you could really play sports in your living room and do all kinds of fun things and it was a real game changer uh i don't think the market appreciated it because they were so focused on the one of the initial first gen consoles for sony uh playstation and xbox and you know and no one thought that this little weak powered nintendo wii system which was not nearly as as advanced as the playstation or xbox could compete just because they had this you know system that allowed you to hold controls in your hands and they could see you waving your arm when you're playing fake tennis right so uh sometimes if i have high conviction i'll i'll really invest quite a bit of my portfolio yeah and i i guess we talked about that sort of extensive uh homework you're doing on these companies to give you that high conviction i just wondered whether there was any sort of consistent metrics and i know you're not obviously a fundamental investor but whether there's anything that maybe is a bit of a smoking gun you know if you see that stat or that metric that gives you the inclination that maybe something's going on here and it's worthy of further further investigation or whether whether there's any sort of actionable uh insight there that we can pass on to the listeners no i only look at three things really the you know the the degree to which uh you know that information will you know move the needle for that company um and then also uh whether anything else is happening in that company it could be more important than the information you're trading of course and then kind of what the trade window is for when you believe that information will be disseminated to the public whether it's a quarterly earnings call or some other you know point at which you think that information will be surfaced to the market at large i i don't look at any fundamental information at all i don't look at pricing uh i try my best not to let that uh cloud uh the pure nature of the social art uh strategy yeah yeah that's interesting and i guess following that then it seems to me at least um that the less sort of quantitative the less sort of metric driven your approach the harder it might be then to systemize it and you know replicate it and replicate that process at scale what's your take on that yeah i mean people always say and that was the big issue with wall street embracing the methodology right they they wanted something that could be replicated at scale they wanted to be able to uh extend the methodology to hundreds of trades a year right and i just don't see this as being something that you could successfully extrapolate to hundreds of trades a year dozens of trades a year potentially um for most individual investors i think the concept of making one great social arb investment a year is plenty right because it's hard um for me yes i'm historically i i think over the 15-year window that i turned you know tens of thousands into tens of millions it actually it's way more than 10 million now it's well north of 30 million um over the past 15 years i generally have made anywhere between two and maybe at the very very high end six high conviction trades a year but usually two or three right so in some years just one uh so why do people feel that they need to have a strategy that can be extrapolated over hundreds of trades a year especially if you're a retail trader i just it's not necessary for me and certainly i've been able to turn tens of thousands to tens of millions i have every intention of turning those tens of millions into hundreds of millions if not more over the course of the next decade or two um so i just don't think it's necessary right to be able to institutionalize the methodology it is something that it takes a lot of manual observation and a lot of manual interpretation and there is a lot of interpretation i you know i could be looking at the same trade that you are in the same way but have a very different interpretation as to the degree to which this information will impact this company uh the degree to which this information is important the degree to which other people have you know looked at this information or not right how saturated is the information right uh what how much is it how to what degree has it been disseminated already to the market uh and what else is happening that could happen that could you know conflict with this trade uh you know we could disagree on all three of those things even though we're looking at the same information right and that's okay um that's just part of it yeah completely and actually i guess listening to this has kind of made me realize that another i guess really important element of the process and and part of the philosophy to use a grander term is essentially to be truly unconstrained to borrow a an institutional term you're not just non-asset class specific for example but you you know it seems that you take that step further by investing in private companies too for example i mean is this something you'd encourage other retail or self-directed investors to do you know i encourage everyone to engage in the investment community i think it's extraordinarily important especially for this next generation uh who's really you know there are a lot of things the next generation is looking to achieve and unfortunately i think a lot of those things they feel handcuffed that i could they can only achieve them through political beings and i think people underestimate the power of their pocketbook um when it comes to the types of in companies or sectors they invest in you know you want an ev future you can invest in eevee companies and what to the degree that your investment works out or not is really determined on how the degree to which your generation embraces ev but if you feel like you're going to embrace eve and electronic vehicles then invest in that sector and the investment in and within itself as we've seen with tesla sometimes can change the world right and could actually change that company's likelihood of being successful right and accelerate the ev movement so a lot of the reason you know really one of the only reasons why i started you know our youtube channel our dumb money and we have a two youtube channel stun money and dumb money live as well as our discord group is to democratize investing for the masses i mean i don't sell anything right like i don't sell programs and you know i don't sell training i just trade for myself that's how i make my money i think it's really really important uh for people to get involved with investing and it not only allows you the ability to be financially independent quicker in life and regardless of what your career is or how well your career goes but it also gives you the ability to really kind of you know mold what the future looks like uh by controlling where your money goes yeah completely actually and uh is that democratization and the dissemination of information that you are putting out via your two youtube channels that really to me anyway gives it real uh authenticity and i've got a couple of questions on dumb money uh explicitly uh or specifically in a couple of minutes we hope you're enjoying the episode for interviews like this every thursday subscribe wherever you get your podcast and while you're there make sure you give us a star rating and leave guest suggestions along with any other feedback in the review section now back to the show so i just wanted to finish this section on your strategy with with two questions really and hopefully they're fairly simple um but the first is what do you think your best or to use a different word favorite trade is thus far okay so my favorite trade was this year um and i have so many favorite traits by the way but my favorite trade uh was probably this year peloton well why i've made more money off it than any other trade i've ever made uh it's a trade that i've now made probably close to four million dollars on uh just this year alone and i love the trade i love trades where the rest of the market just doesn't see it i love spotting things when the rest of the market is just you know really behind they have the same information as you but they refuse to believe it and the peloton trade started back in march when obviously we're in the middle of a pandemic and the market didn't realize that peloton had stopped advertising and the impact that would have on their financials and their profitability you know they were selling peloton so many of them and i know peloton is you know company that's pretty new to europe right it's really big here in the us they recently started selling them you know i think in germany and and i think germany and the uk uh but peloton was selling so many bites they didn't have to advertise and the knock against hello time was always they have to spend so much money on advertising they'll maybe never be profitable so uh that was something that i caught on to very early and it worked out really quite well for me because the market just didn't believe that an exercise bike company would ever grow to be as prominent as peloton has grown to be and it still continues to be quite honestly one of my favorite trades and it's a company i still own quite a lot of stock in okay yeah great i was going to ask whether you've still got a position in pellissippi yeah that's that's really interesting and so uh if we if we flip it then uh what's what's the worst trade or again if i rephrase slightly the one that particularly stings yeah um so there was i had a hedge fund for a very short window of time like 90 days uh right around the same time i was starting ticker tags i had to close the hedge fund because my ticker tags clients did not want me uh trading on my own data they thought i would front run the data before they could see it right but uh my first you know i had this huge track record uh it took me a year to launch the fund i had you know 24 limited partners and i was really really excited to get my first trade under my belt and after you know 10 years of ridiculously ridiculous returns i think averaging 70 or 80 annualized returns in the market i finally launched this fund my first trade is a toy company called jack specific and i was trading a toy called snow glow elsa from the movie frozen and it was probably one of the best-selling toys in two decades of the toy industry and jack specific this tiny little toy company manufacturer of the toy uh the day of earnings when the information got disseminated and they had the best quarter in the company's history the stock was trading up 35 percent free market i was levered in the trade i was set to make you know close to 150 percent maybe two hundred percent return on my investment i was really proud of myself because i worked really hard on the trade uh the market opened and the stock immediately went from being up thirty percent to being even and within a matter of minutes before i could even start to exit the trade uh it was down five percent 10 15 20 before you know it the stock was down 25 uh i didn't realize what had happened until i think about six or seven weeks later uh when i was able to see sec documents showing that this is example i talked about earlier kind of hinted at earlier uh the largest institutional owner in the of the stock the fund that owned more of the stock than anyone else in the world you know was selling into the strength and as you know i would have never known this but they were looking for an opportunity to exit their position and with all that strength that day going into that great earnings they decide to dump their entire 11 10 or 11 ownership in the company in that single day uh something i could have never known but it still haunts me and it was really quite embarrassing uh a way to start off that fund yeah so yeah not the best way to start i could definitely imagine why that one stings but it shows that you just no matter how hard you work uh no matter how much information you have and no matter how high your conviction is in the information you're trading you never ever ever there's no such thing as a sure thing even the information you're trading could be a sure thing but there's always other elements that you will never be able to see that have potential to come in and adversely impact your trade and that's something as an investor you need to always be aware of yeah for sure yeah well really solid advice for anyone listening in i'm sure um and i i mentioned it earlier but i i want to end the interview by talking about dumb money uh i've just got a couple of questions about uh that youtube channel that business uh you found it in 2018 i believe along with your friends dave hansen and jordan mclean uh for any of our listeners that are yet to tune in what's what's it all about yes so we do uh this is all brand new to us too we now it used to be we were usually doing startups right we were taking a camera around showing you all the startups we were meeting with so it was kind of like a live version of shark tank but there was no stage because when you invest in startup companies you're not sitting on a stage where people are coming up pitching their ideas you're out there in the real world meeting people driving around taking you know taking meetings hearing rumors about founders doing great things and sometimes you're you'll be hanging out with a founder for months and months before you pull the trigger on that investment so we kind of showed you the real guts of what it's like to be an early stage investor and we took you on that journey with us i loved it it was so much fun and that was our you know youtube.com forward slash dumb money that was our channel and when the pandemic hit we were no longer able to do that stuff because we're stuck in our house for the last eight months so we launched dumb money live which is youtube.com forward slash dumb money live and that was a channel all about us trading stocks uh and we do both now even the old dumb money channel is really more about stock trading than early stage investing because we haven't gotten back out there yet to the to you know the startup world because we're still stuck in our homes uh but dumb money live is really us just doing what we do every day which is talking to each other about the things that we're seeing uh the opportunities in social art investing you know the changes that we're seeing happening in the world and how we're connecting that change to investable opportunities it's so much fun we we tape it twice a week we're usually on for an hour to and it's just you know to us talking uh and you really get to see inside the mindset of a social armed investor and we really share just about all of our medium and high convictions some of you know our low conviction trades we share them with our community in real time we're not we're not advisors right we're not financial advisors we don't give financial advice we just kind of let you look into our window of how we see the world how we surface investments how we vet those investments um and then we kind of let you watch as those investments unfold either positively or negatively and listen this has been an insane year for us right so you know my portfolio has grown just this year from you know 7 million to well over 20 million and if you were watching dumb money live you've gotten to experience that growth in real time starting with when we shorted the stock market back in march because we saw this pandemic uh surfacing and you know the rest of the market was clueless to it for the most part because of all the noise right and and we saw through the noise we you know had a thesis of how it would impact the global economic world and financial markets and we put a tremendous amount of money uh risk uh shorting the market lever in a levered way and it worked out quite well for us and at the same time i was seeing all of these other stocks that quite honestly should do well in a pandemic like amazon and peloton and shopify and there were dozens and dozens of companies i said wait a second why aren't they down 30 40 um these company these companies will do nothing but benefit from this situation um and sure enough i went along in all these companies in a levered way and a few weeks later the market started to realize that these companies were not going to be harmed they were going to do just fine and so if you ask me hey how did you tripled your portfolio size this year that's how i did it right and just thinking about things like okay how are consumers behaving well you know guess what everyone's really embracing the outdoors this summer they're going camping right uh they're going canoeing they're riding they're buying all-terrain vehicles they're buying boats they're buying jet skis right i mean this was pretty evident but the market didn't see it until it actually already happened in the summer so you know all these stocks that are involved with the great outdoors and we did an episode called the great outdoors where we literally did nothing but talk about all the companies that were going to benefit from that trend and sure enough they were some of the biggest winners this summer so that's what we do we built this amazing community we have a discord channel uh dumbmoney.com forward slash discord where our community does what we do now we have i don't know three four five thousand people uh who are social armed investors and quite honestly i'm getting some of my best trades now from the community uh so like we really have built this collaborative space where this whole notion of being a social arb investor is a thing um and it's really kind of one big family quite honestly and i love it because you know anybody can do what we do and we are truly democratizing uh this concept of just being able to detect change early and connect that change to investable opportunities we share it through our youtube channel we collaborate on discord and you know we don't know where it's going uh but we're having a lot of fun with it i think our community is as well yeah i mean it definitely comes across that way it really is a fascinating watch and i definitely recommend our our listeners tune in i mean for me the the lifestyle focus and even in the pandemic that just idea that you're giving every second good or bad uh to the viewer is something that makes it i guess really authentic and it really comes across well so i'm sure a lot of our listeners will tune in um so if i can just finish we we typically ask i think all of our all of our guests so far quick fire questions so there's five of them and the idea is that you can answer in as little as one sentence or even one word so the first of those is what in your opinion is the top mistake investors make getting caught up in market noise watching financial news and letting that noise impact your investments and worst part of all is you know letting the noise and letting other investors quote professional institutional research analysts and investors you know change your mind about something that you were excited about right believe in yourself believe in your own research they don't really know a lot more than you do and more often than not they know less than you do so don't let them don't let them uh you know cloud your mind as an investor yeah completely okay so second question what's your favorite stock at the moment well you know i think i mentioned this earlier i really do love these the peloton and the reason why i love it is you know it i think it can i think it sounds a little cheesy but i think it can be the apple of connected fitness it can be the lululemon of connected fitness i believe connected fitness if you move forward 10 20 30 years i think we think about fitness the same way we think about having big tvs in our house it's just something that everybody does i'm not saying that gyms are going away forever but i think gyms are getting smaller in time because i think you don't need to go to a gym to be feel connected uh and i think fitness is a category that just keeps growing and peloton is definitely the market incumbent and the leader i think they have a bright future ahead of them and i'm really excited about the future of peloton it's one of those stocks i think i'm going to be it for a very long time yeah i completely agree um okay so question three and this is a tough one what is the most memorable moment from your career today you know i love it when i get things right that are not a small stock or a medium stud you know a mid-sized stock but when i get things right that are maybe some of the biggest most covered stocks in the world and the entire world missed it and got it wrong right uh i would say there's two of those situations one is with apple uh very very early on when the iphone first came out and all the world's analysts you know i wrote a book called laughing at wall street and i dedicated a whole chapter of that book laughing at wall street to apple and this trade uh because every analyst in the world pretty much said they don't have a keyboard it'll never work apple's not a phone company they don't know what they're doing they really missed what it was like to hold an iphone in your hand for the first time uh you know wall street was so disconnected from culture so disconnected from humanity that they didn't understand the impact that that single device was going to have on our culture and our world over the coming decade and that was an investment i'm really proud of i had another one in a company called netflix also one of the most covered companies in the world you know a few years ago in a quarter when all wall street said they were going to miss earnings uh you know i came out you know when i was at ticker tags we put out a report that essentially said no we think they might have one of the best earnings quarters ever because of a show called stranger things and you know we were able to look at social data and identify that there had never been a show in the history of netflix that had driven as much social conversation as the show of stranger things and the one thing that we knew about netflix was when people talk about a show that results in people subscribing to netflix and sure enough the stock was up 20 on earnings that day wall street was completely shocked uh and we were the only data shop in the world that had come out that quarter uh and really with a strong conviction call on netflix so i like it when we get it right and everybody else gets it wrong it makes me realize that we're really on to something uh with social arm uh you know a strategy yeah i completely get why those are potentially the most satisfying trades um so question four and the penultimate question a top tip for your younger self yeah go bigger go even bigger on my highest conviction trades you know i think even warren buffett said that you know he really only had 10 trades throughout his 45 50-year career that made the vast majority of his money for him i'm in the same boat just a handful of my biggest trades contributed to most of my gains over the past 15 years and if i can do it all again even though i went pretty big on those trades i would go even bigger um you know you never know you might only get one or two or three big big trades when you're right and everyone else just doesn't see it and when that happens i go bigger but it is important that i go bigger with money than i'm willing to risk and it's really important to separate what i call risk money from the money that pays for your kids college education right or the money that you need to pay your bills so while i say yes go big uh it's important to bucket your money out i'm not a financial advisor but i i bucket my money differently uh for trading but of the money i have for trading uh and taking risk with when i see something i really like and i'm high conviction i need to go in big on it and lever myself yeah okay that's great and um final question then uh and it's something on opto uh we're really into we're all about speaking to the people and the companies that are out performing the majority outperforming the wider market so in your opinion and i guess if you could sum it up in in one word or if you could highlight one thing what is your biggest source of alpha do you think my biggest source of alpha would be people conversations just observing the world's conversations it's the one area that i focus on most i use data sources like google trends and i love it um but google's trends is a hard data source meaning it's black and white and there's not a tremendous amount of interpretation with social conversations there are a lot of ways to interpret the data and that's what i love because you know everyone could be looking at the same data as me but i can gain an edge on everyone else because i feel like i'm the best interpreting that data and identifying where there's an anomaly or where there's a true change in the way people are speaking about a subject matter or about a brand or about a company's products um and that's where i find the most alpha okay great yeah well thank you very much chris uh i'll i'll let you go you've already been really generous with your time uh but just thanks so much for coming on the podcast and hopefully we can speak again soon absolutely it was it was a lot of fun thanks for listening everyone just a quick note before we sign off if you're looking for an easily digestible daily update on the markets this might be of interest to you opto updates is our short newsletter sent every day during a trading week giving you a bulleted list of the top seven stories from the global stock markets we've done the hard work for you highlighting relevant opportunities and trends and in addition we'll also keep you notified of any new podcasts stock reports or events from the opto world if you're interested sign up using the link in the show notes until next time you

Channel: Opto CMC

Views: 4,753

Rating: 4.9298244 out of 5

Keywords: stocks, stock market, shares, invest, investor, investing, investment, learn, education, strategy, investment strategy, finance, business, podcast, finance podcast, business podcast

Id: ynlhvIsIIDU

Length: 53min 17sec (3197 seconds)

Published: Tue Oct 20 2020