MARKET MONDAYS Feat. Bonawyn Eison 11/23/2020

yeah there we go now we've been back you know i i be putting on me so youtube can't get a free ad off but shout out to them what's going on there greetings and salutations good people let's get it going another glorious edition of market mondays we're gonna let everybody get in here happy holidays in advance to everybody let's do it let's do it let's do it shout out to all the earners worldwide we love you guys that's a big thing yeah this is going to be a good one we got a lot to talk about in the market too for like every every monday something crazy happens that's a fact we got some alumni here what's going on who's that greg mullins what up i see you all right what's going on shout out to g.a the rap is that nga too yeah yeah don't let that go unnoticed shout out to everybody shout out to all the earners man shout out to everybody on instagram too as i speak um we just hit 400 thousand followers oh we got it so um we steamrolling towards a half a million so shout out to everybody on instagram and they know that's been our our go-to uh marketing uh arm has been instagram since day one so appreciate all the love that we got that we continue to get that we have received on instagram shout out to ian i know you had a hundred thousand i believe today yeah here you go right yeah what's up brother good evening how you guys doing are we great bro you know what man let me give them all yeah what's up yeah congrats on 100 man all right perfect thank you thank you thank you uh you guys get all the questions michigan in the house what up i saw 4 000. so 4 100 that's not a bad rate of return what's the roi what's the roi on that yeah we're gonna let everybody pile in yup how you doing man how's it going i'm great how are you can't complain man live and blessed big big yeah shout out to everybody that came out um to dickman and uh just shows love and uh shout out to everybody that was part of that that was that was an amazing thing man we got we were able to give back to a community that goes unnoticed man and uh it was a beautiful thing shout out to the people that just came that wanted to help and people just showed up they didn't even want the turkey they just heard that that we was up there uh we had our brother trap with us they just wanted to show love um to a community like i said that goes unnoticed and a lot of times underserved and so anytime we get a chance to do something like that man we're definitely going to step up to the place so shout out to everybody on dickman we're showing love everybody that came out we had some volunteers some earners that came out um so that was dope yeah people came from all over the tri-state um to show love um so that was a that was an amazing event man with 400 turkeys um 200 gift cards a tv um disneyland trip uh ipad uh it was extremely humbling situation uh so shout out to everybody that was there shout out to all earnings shout out to everybody that came to support shout out to our whole entire crew shout out to jamal shout out to mg the mortgage guy shout out to wall street trapper shout out to everybody and um shout out to all everybody man shout out to corey from joe button podcast came through chopped it up uh yeah man yeah yeah for sure so it's all it's all love man so i love uptown for sure man so i'm looking forward to this episode this is a monumental event we're gonna have um the re-up uh bonowin came on a few a few weeks ago and everybody just loved him and um so we had to run it back and we're gonna bring him on momentarily but first we're just gonna give you a rundown of what we got going on for earn your leisure um this week so we have um our brother wall street trapper the reup speaking of the rio we got his episode coming out on tomorrow yeah tomorrow tomorrow wall street trappist episode's coming out and um i don't even think he announced it yet but we announced it that we're doing a uh homing away first time ever so everybody knows he has his uh his situation trapped in tuesday so we're gonna release our podcast at five o'clock eastern standard time and then 8 30 eastern standard time we're gonna be live on his on his show trapping tuesday so we're doing a home and away um for him that's gonna be fun yeah yeah yeah that's cool i'm gonna get the kitchenware ready i'm gonna have my plastic cups ready we're gonna be ready that's a fact before we dive people saying that we're lagging so if you guys can tether in they're saying that we're lagging like crazy so so i want to make sure it's monumental as possible and the devil don't get us tonight webcam us now hold on one sec let me not tonight satan i'm going to make you the host and then i'm going to log back in perfect all right and i promise i will end zone please thank you i appreciate that not tonight you'll see we're shot in a whole nother move tonight you got it yeah i got it you got the controls yeah perfect yeah but thank you guys so much um we'll make sure that uh we have an amazing episode i can't wait for brother bonowin to come on how are you guys let me know for choppy now and i want to make sure that we're fine yeah cryptocurrency is on fire we'll touch on it real quick uh we talked about it three weeks ago with adoption of paypal um and square a year prior kryptos taking off if we break 20 000 we'll get to 50. so um no i don't love in the zoom it just ends up happening on accident out of pure excitement so um i love y'all red panda fan what up sniper family what up and we're coming back we good okay yeah we're good now we back put it put a thumbs up clear if we good let us know how we how we look yes yeah make us the co-host all right we good i got controls back we good all right they can't yeah they always trying something bro they always trying something man shout out to everybody that's rocking what happens we got to make sure we're right we can't be looking for fugazi out here all right all right yeah you know wi-fi it's part of the game it's a live show somebody said i don't know yes that's what dash says shout out to dean man [Laughter] too yeah that's what that's what business is about ladies and gentlemen it's about solving problems always problem it's like sports you put together a game plan and then everything goes completely left as soon as you start the game so you know it's about just figuring it out on the fly and keeping your composure so we back hopefully we don't have any more issues for the rest of the show so ian we're about to get this going brother um but yeah once again i just wanted to let everybody know that um wall street trapper will be on earn your leisure podcast tomorrow and we're coming on trapping tuesday tomorrow at 8 30 and then he's also open enrollment for us for uil university is wednesday at eight o'clock eastern standard time and since he's doing the podcast we thought that we know people gonna have a bunch of questions so he's gonna be doing the open enrollment for us too at eight o'clock so you're gonna see us with him all week shout out to trap man good dude that's my brother right there big trap yeah big trap i like that and uh ewl university you know since we're in the um holiday season you know y'all know uil university i don't think people don't even know what that is a lot of people it's not yeah it's not it's not we leave the investment stuff to to the experts in wall street trapper i mean we have investment classes but it's it's an actual university where you learn everything like one of the classes that we had was how to start a marijuana business for two thousand dollars that's a big one how to invest in ghana um but the next thing that we're going to do is about to blow it that's what's really going to take us to the next level so we're going to start a trade program and um the first class is the hvac class stuff like that is very practical not only from a from a skill set perspective but also from entrepreneurs like there's millions of entrepreneurs there's a lot of entrepreneurs that make millions of dollars that's plumbers that has hvac companies things of that nature so the eylu trade division is going to take us to a whole different level only i don't really think we have any competition in the education space only like i said i say phoenix university but only because people know who they are yeah that's it most people don't have never even went to that site so ui universities i see why we got it right now man we got every class every week book club movie club and everything man so being that is black friday week we got a flash sale 24 hours 24 hours only 50 off um i'll put the link in here just enter code eyl 50 at checkout and um yeah we're gonna do a 24 hour flash sale and uh it's only like a couple hundred dollars like if you can't it's like it's a book it ain't yeah it's a book it's a book you're gonna you're gonna get uh a plethora of information and webinars and career paths that you can choose from for the price of a book realistically that's a fact man um before we go to our esteemed guest ian i want to give you a chance to speak to the people um thank you guys uh red panda family i love you how are you stock club tesla on fire oh baby um kudos to my family and friends and if you want us to uh do something special for you guys for black friday and make stock club available for only 400 a month and maybe you should put 400 in chat and then maybe so um but that's i love you guys tonight is going to be amazing um thank you guys for the for the support and the love and thank you for pushing me to um a hundred thousand i appreciate that so much i really do dream team what up uh that's what's up man so let's let's get let's get my guy on yeah we got do disclaimer really quickly so first and foremost do your own research just a message from the good folks at uio do your own research our content is intended to be used it must be used for informational purposes only it is very important that you do your own analysis before making any investment based on your own personal circumstances you should take independent financial advice from a professional in connection with or independently research and verify any information that you find on our show and wish to rely upon whether for the purpose of making an investment decision or otherwise please do your research please do your homework please don't lose your shirts please let's bring on let's bring on the good brother and actually do the research please we've been dropping gems all year but do the research all right yeah there you go i see the mic i've seen the voice clear the camera's been cleared what's going my guy what's going on brother beautiful people how's everybody doing what's up bro can you hear me pretty clearly we're good we're good great how are you i can hear you now yeah yeah we got you know yeah okay perfect yeah we can hear you yeah it's just like i think it's a little glitchy this is his second time um fresh off a cnbc appearance today fresh off the cnbc apparent right [Music] zoom is crazy tonight man the witch doctor came sprinkled magic all over this place that's crazy bottom one can you can you can you go out and come back slightly lagging mikey let me know yeah he locked down he locked up yeah and [Music] yet yes sir oh baby stock club member xander needs miles morales for christmas got you guys in march and april it's doing great it's it's going to drop can you hear me still don't chase it if you're not in already don't chase um it will slide back but it's running well i can't hear you no i'm telling you the ethernet is it's not on my end of a delay you can't hear me i can hear you yeah okay yes all right bonniman how are you brother uh shall we real time right now okay technology can't let yeah we're yeah perfect perfect okay um i think you and i are real time right now so that's at least working uh well i appreciate you being here let's see how much of a delay we have and then we'll go until they come back in yeah well i mean we'll make it happen you know um maybe we have to get a court reporter get in here and type up a transcript or something man we may we may need it tonight but i appreciate you um you want to dive right in uh yeah unless you want to wait for the guys but um yeah man like no need to uh no need to thank me like i said um i'm here to be of service uh love what you guys are doing and uh if i can be i can be a resource i think it's important that people have this information and get it from an unbiased source with no agenda i heard the disclaimer i'm going to throw on my own so i'm definitely not serving in an advisory capacity these views are my own not of cnbc not of xp investments my company or any other affiliate um i'm just here to give you guys the real the way i see it but i would always encourage everybody to do to do their own research and i'm going to try to you know i'm here a little bit earlier today hopefully i can get into the weeds a little bit and give you guys some some some more in-depth type of analysis on uh maybe what you should be looking at how to look at it and and really you know try to equip you with the tools needed to kind of make your own um decisions which is which is really what this is about right um i like i'll let you kind of leave this ian but i did want to kind of kick off by saying like there's no uh cookie-cutter way to do this um i mean i know for you personally and i know myself like a lot of this stuff um you know is it's trial and error you know you learn uh from your victories and your defeats and so i would i would caution anyone from just following anything that you read or consume via digital media or whatever else blindly right from anyone myself included i don't care if it comes from ray dalio you should pick up the book or the article or kind of tear through the company's balance sheet um yourself because and ian hats off to you so when you have mentors that can lead you in the right direction the information that they're giving you is technical it's a how to do this there is no replication for how to think about doing this so i hopefully i can come here and give you not only the technical know-how in terms of how to execute x y and z but the critical thinking that goes behind being able to execute x y and z so just want to say that really looking forward to it um we can kick it off can y'all um are we back yes you're back all right whoo we're back this one we gotta breathe in brother okay it's gonna be okay yeah they know i have high levels of anxiety hey he got the arthur hand balled up right now absolutely zone today's gonna be the last day um but but if i can dive in so it's been fun um um by the way i'm seeing a lot of misinformation on social um can you walk us through the proper way that a professional would structure a portfolio so people aren't getting caught up in the hype of what is being posted online and on social media today uh absolutely man that's a great question um and kind of ties into what i was saying earlier i thought about coming on here and i know some people are seeing some of the questions like yo so what stock is this x y and z i'm like i really want to listen i i'm here to serve i'll this won't be my first time my first time with my last time all gets all the questions but um in terms of how to structure portfolio or in terms of how i i would structure a portfolio you have to have like a core holding right um and i think that depending on whether or not the first question is you need to ask yourself what's your risk tolerance i know that sounds kind of cliche but it is it's super important right like are you trying to maintain wealth or are you trying trying to create wealth so maintenance is really about just making sure it's really about protecting your downside so your volatility of returns the amount of risk that you want to take should be significantly lower than if you're actually trying to generate and create wealth so a lot of the stuff that i see is like okay let's have this all option portfolio or what stock should i buy excuse me or how long should i hold x y and z for me it's always easier for me to make small alterations when i have a poor position that i like so to give you an example uh 70 stocks 30 bonds right that's something super vanilla or 60 stocks 40 bonds or or an index uh fund that does that because now when you're i'm not suggesting that you actually trade different bonds because that that's that becomes much more complicated if you have an institutional backer or institutional firm that will deploy this capital for you sure stocks and bonds and any kind of uh balance that that works for you for someone who's like kind of just getting started i would look at either like a vanguard index fund or an sby etf um and that will give you general exposure and we'll get more into etfs later but personally in some of my investments i'm like 80 20. um i'm relatively young i'm 37 years old um and i'm not risk averse and um i've had to kind of like get this out of the mud right so i'm fine with the risk um but yeah if if you're asking me like kind of what i have for someone like my 401k allocations or different tranches of investing and we can get into that later but just a core position i think if you have 60 to 70 anywhere between sixty and eighty percent stock anywhere between uh twenty to forty percent bonds and if you wanna sprinkle in or like a bond index like agg what gives you that um you want to sprinkle in commodities or something like that that's fine too but i think the the basics are stocks and bonds and that's because when you look at a company you have debt and you have equity either you are a financer of a company or you're an equity holder of a company and i think that breaks it down in like its most um like breaks it down and it's like real core essence and essentially make yourself like you would a bank a bank either lends money or a bank takes a position in something and personally i try to replicate that but what about the people who say well that's great let me ask you a question um i mean 78 stock isn't safe i mean it's you know the long-term returns are seven to ten percent but it's not safe look at look at what the market has done from february to march look what the market has done from march to now i i don't think that's that's safe look at what the market did in q4 of 2018 so safe is like a a relative word if you're trying to um and i'm probably going to regret this if you're trying to make trap like returns i mean this isn't that's not what this is right this isn't quick flip this isn't make 50 into 150 overnight um you know i'm not going to get it i can't get up here and get conscious and and suggest that to anyone um if you want an increased amount of risk you can still take that core portfolio and have that be your core and then you slice off small pieces and take much higher risk much higher beta if you want to get get into some of the technical terms much higher r squared of volatility types of investment but the key is having a core position because if you don't have a base you'll just you don't know where you're going you don't know where you need to tweak and you're just not involved in the market generally speaking so obama and real quick you said that you know the basis would be stocks and bonds right so i'm thinking and a lot of our audience is like they're into options i know ian always suggests like yo take 500 jump shots when you're trading when do you think it would be a good time or is there a good time or a certain amount of trades that somebody should do or be involved in before they get into the options play okay no that's that's that's a good question um let me can i take us just a quick step back before i move forward um if you all don't mind so when i say 70 30 right what i'm trying to do is is give you something that's what we call an investable or replicable portfolio like clearly i i'm i'm a proponent of owning real estate i'm a proponent of holding of holding operating companies i'm a proponent of all of that but i want to be able i want to make sure that i'm by giving you guys information that's actionable for me to go say hey you should buy this type of company or a private company i mean you have to be an accredited accredited investor to to invest in private so yeah i i definitely think that should be part of your portfolio but right now we're assuming i'm i'm assuming that we're trying to make money and that you don't have a quarter million dollars of disposable income that you can invest and not care one to be an accredited investor i believe you have to have like a million dollars of liquid assets or make quarter million dollars a year and that that's that's super high risk i do think that there is room for that in a portfolio and i'm purely talking about publicly traded securities so i just wanted to clarify that in terms of options trading listen i love options options have been good to me that's that's my bread and butter um but man like ian great question man some of the stuff that i'm seeing is like literally having a portfolio of options i i mentioned this last last episode or the last episode i was on right options give you leverage to and control up that's very different than ownership right um options are all about timing amongst other things volatility inputs i'll dive into all that stuff but you're betting that something is going to happen by a certain period of time that is very dangerous to have all of your investable capital in a portfolio of options because i think of a portfolio as a going concern if you listen to uh vogel dalio um i mean the the the oracle of omaha graham all of the greats right all of them right what they'll tell you is that time value of money is the the thing that's working behind you it's like the core tentative finance so you need compounding over time and so what you need are securities that can that can be a linchpin of your investment portfolio out 10 20 30 50 100 years and then you tweak around that so at what point should you have an options portfolio personally i would for me never i'm never gonna have a portfolio of just options at what point should you trade options um as as soon as you're comfortable and understand the risks associated with those options i don't want you to shy away from them i wouldn't suggest i would never suggest that anyone not use all the tools available to them in their toolkit i just want to be very clear about investing trading core holdings versus trading positions starting positions investing is about holding for the long term or about holding for a certain target return on investment or irr or whatever other way you want to judge your return is that does that answer your question um thoroughly enough is it if i can play with you let me ask you a question would you do 50 percent you know now yes yeah no quiet and uh zoom lag is scary um okay so the question that i heard was um i i didn't i didn't hear troy or i i heard you say something about okay so what percent devil's advocate what percentage would you allocate to options versus uh stocks your options typically are probably break it down in terms of like return on investment or percentage return right so if you're going to own an option you're going to pay i don't know a dollar or two dollars for it versus paying 50 or 100 for a stock right so you're two dollars um you know that's going to be about five percent of you know of of that 50 that you would allocate you can make a similar return on a much lower portion of capital expended right so i would say okay well if you're expecting to make uh uh 20 or five percent would be 20x which you're making on your core portfolio then you should only i would allocate a fifth to that particular options trade right it's all about like balancing the ratio in terms of expected returns if i expect to make 10x on an option then i'm only going to really probably do it right um if you are playing something that's like longer dated or you don't expect to make the same type of returns i think you can invest a bit more but options decay right like stock isn't going to zero unless the thing goes bankrupt like you're gonna you're gonna recoup something and bankruptcies happen options if they don't finish in the money quite literally decayed to zero so so i want to ask a question that everyone is is going to ask later and if i can get 10x in a year why only put one fifth in when i'm only going to get 10 to 20 long term i'm playing devil's advocate because i'm going to get a thousand people to ask me this question if you're i'm saying if you can get 10x invest a 10th you have then so okay because people want to do half and half yeah i can't tell people what to do right i i want to be very cautious about saying do this don't do that we're all adults here and ultimately your risk tolerance will determine how you're willing you know how you're willing to kind of deploy capital what i'm saying is looking at the returns is half probably not even half of the equation particularly when you're a professional investor and a a retail person can still be a professional investor if this is what you say you do if this is a hobby and you kind of want to just put a little money in the game go for it right because it's all about the learning experience and your enjoyment if you're saying this is what i do you go to raise capital or you're talking to your client and you talk about returns any astute investor the next question out of their mouth is going to say what's your volatility of returns how much risk do you take to get those returns and so i i really want to touch on um you know volatility in your portfolio variance you have things like standard deviation r squared sharp ratios all of these things measure and these are like i would suggest you look these terms up these are measures of return as they pertain to risk taken to achieve that return so if you go back to like your most basic like capital asset pricing model right you move up risk you should move up in return but if i can take um one unit of risk and get one unit of return and you're taking two units of risk to get that same return you're not doing something i would sell would i would sell whatever it is to you and buy whatever i'm getting all day and so i i think the the next part of that is so for for options people talk about okay i can make 10x you can make 10x or a certain factor of risk what i would say is you can find something safer deploy capital there and just scale because you can grow the amount of capital that you're allocating there or your notional exposure is what we call it but if you keep your risk low all you need to do is scale that same that same exposure it's what banks do it's what sovereign entities do it's i mean it's it's the basic of the banking system it's like if you go to the bank you put in deposits they lend nine times on that that's super safe yeah excuse me a super safe business model they just scale it and you i mean i'll be the bank you show me a bank that doesn't print money right they don't exist because if they don't make money they go out of business um so sorry i again i i wanted to dive in a bit deeper i know that answer varied a bit but it's not cut and dry like 50 unless you're in options that are as safe as whatever else your op whatever other alternative asset you'd be investing in i just don't think you can say this return versus this return and and therefore i should structure my portfolio this way it's like it's the whole reason you have stocks versus bonds like why would i even bother suggesting that you allocate any money towards bonds which is the largest market right treasuries like the largest asset why bother even investing in that stuff if it's all about return that's a great point so what's a good safety range for volatility in your portfolio so if you're looking like your alter also index or anything similar like what's the safe range that you want to be in um overall portfolio i mean you know i wouldn't i mean a pullback or a correction in equities is considered ten percent [Music] i'm fine with that from an index standpoint okay when it comes to trading single stocks man much more much more of a tolerance in individual companies um 20 30 uh but again this is me now um and then i want to take it a step further if i'm looking at a growth company 25 50 that's just that's what you're signing up for if i'm talking about like a more cyclical a utility company something that's like not gonna grow um i'm going to probably cut that down by by two-thirds right so you know my thirty percent okay i'll take about ten percent there my sixty percent okay i'm gonna take about twenty percent there um you know it's it's really about to ask us and then when it comes to bonds uh much lower much lower volatility of returns really typically what this stuff is measured on is like standard deviation so you're going to go back and you're going to say okay how much has this moved from the life of this investment and that's my average move and then how many how many multiples of that average am i willing to take so anything within a standard deviation i'm fine with right that's that's your standard normal distribution you should expect things to move there when i start to see what we call two three four sigma moves or four standard deviations you shouldn't be holding on to things that long and then you know there's a term called six sigma event which is like your black swan things that really shouldn't happen um things that are happening now oddly right now yes so you know uh i'm really trying to give you kind of a all seasons type of investment strategy but truthfully it's gonna you're gonna really what i would do is i'd pick an index because if you're looking at investing right you always have some type of benchmark and that's why i wouldn't go back to saying listen you gotta have a core you gotta have something to compare to you gotta be tethered to something or you just float so you look at your benchmark and you say okay that thing has a standard deviation of i don't know five all right now how many more standard deviations am i willing to take if what i'm trying to replicate is tethered to that and that would answer i think that that not only answers the question directly that gives you the tool to determine what it is that you're benchmarking that particular uh investment too and then determine how much risk you're willing to bear around that and how much should you be willing to draw down let's say if you do okay so you have long term you have bonds what about options futures and any exotic derivatives if you're like structure and let's say you have left for options features and anything exotic okay so um in terms of the exotic stuff um you know that you'll need like an is that a trade at least what we define as exotics which are like bespoke option investments that are tailored to you yeah you're gonna have to have an is uh with a bank to be able to do that and have to be a high net worth individual or as an institution you're gonna have to have what you call an is that so um i'm gonna just like take that off the table because i just don't think it's okay very relevant um i think that if you are if you're young and risk-loving and you have like a stable source of income i think you should go for it intelligently that doesn't mean just go buying a strip of options right but the same the same portfolio that you have at 25 or 35 is not the same portfolio that you should have at 55 or 65 so i want to make sure i answer these questions in a way that apply to everyone but that i don't give like a blanket statement that is damaging right it's back to your first question like these one size fits answers are often given by people that don't have the information to give you a more specific answer um yeah so in terms of options and futures right it's about opportunity cost so if you're saying okay right now what i own is i own spy i own uh i own the agg um and then i've sprinkled in a little bit of apple and amazon and zoom or whatever else right i would say okay so you have a core position you clearly are have a risk appetite because you're investing in growth companies that have revenues oftentimes that are like much farther in the future and that's why these companies are sensitive to inflation because you're discounting their cash flows over certain periods of time um i would say if you if you truly understand options and you're willing to trade them then i would say sure like sure take five ten fifteen maybe twenty percent the thing if you're trading options properly you don't need that much that that that's the really the point i'm trying to make like you don't you you don't you don't need much like you can literally make 20 like the issue is that people aren't willing to take doubles and singles and triples right it's like all or nothing home runs like so if you're investing a dollar in options and you make 30 cents you're like ah it's 30 cents it's nothing i'm like you just made 30 show me a fund that returns 30 year on year and i'm saying if you can do that routinely just scale your position that's a great point um rashad wanted me to ask you what are your thoughts on like ibb and the farmer sector going into the next uh four years since trump is uh seemingly like he's going to concede here pretty soon i mean i'm not going to speculate on what trump's going to do but it um that way that's a good question timely question uh as for ibb so i've mentioned it a couple times um really i have been unwilling to take stock specific risk on vaccine uh companies right you've seen pfizer beyonce came out with a vaccine which and this stuff is kind of funny to me right came out i think the fxc rate was like 90 then modernity came out and they had 94 and a half percent then pfizer was like oh we didn't finish our trial it's actually 95 and astrazeneca came out today and was like okay well we have one if we give the proper dosing which is two doses i think it was 65 or 70 but we actually gave a half a dose and then followed up by another dose and that one's 80 or close to 90 percent so it's like and what you've seen is on the news those particular stocks run up then the next entrant comes out and that stock sells off and the new stock pops and it's kind of been somewhat of a of a domino effect um so that's why i suggested ibb because it's like a biotech etf that gives you the thematic exposure right here i don't have a strong view so my view on on cobit and a vaccine is not the same as me having a view on this particular company this is an isolated event an isolated pandemic there's a solution here there's going to be a truncated timeline in terms of when you're going to be able to derive revenue and profitability from this particular event so i i find it challenging for me to try to extrapolate like a whole business use case off of this one event and that's why i liked ibb um i think there was actually um on cnbc stainless blood there's a i think it was a analyst from jefferies who came out made some really good points in terms of okay so it's one thing now to to have the clinical trials and have this it's a completely different uh there's completely different structural and administrative logistical issues challenges in terms of manufacturing and distributing the vaccine and that's where the challenge really is going to be ibb if i remember correctly it was been training trading in like this 130 to 145 type of range i i think that range kind of holds i don't really i don't really see a ton of upside in that from here so um i think i think it'll be challenge and those individual components now given um you've told us how to structure a portfolio why do you think it's hard for people to stick to a plan even though you're professional and you do this for a living why do you think people still try and deviate and can you explain that if you continue to tinker and try and accelerate your plan that you can end up breaking something that does work yeah um it's human nature it's fomo right it's like there's always and um you know what i i it's it's political in nature it's media coverage like you always get bombarded and blitzed with like the new hot thing no one talks about like the slow and steady race um slow and steady kind of grind to where you've gotten um man i just i think it's fomo really i think people um want instant gratification and that's just not what this game really is about i mean you can make it um but for every winner there's probably two or three losers and uh the game at least the way i played it and the way it's worked for me the game isn't about just celebrating winners it's about cutting those losses before they become cancerous and ruin your portfolio and so yeah that and that's equally as important if not more important um is being disciplined in a way that allows you to remove things from your life generally speaking you know what you you guys are always on here talking about like i love how you give like holistic advice right removing things from your life before they grow um and just fester and create irreparable damage right um i'm speaking about investments here but i think that like just generally applicable across the board um i i really hope that kind of answers your question i just think it's like it's a lack of discipline i think that what you're you're kind of bombarded by social media especially now and even traditional media that's always talking about the next hot thing you got to be in this you got to be in that you got to be in this things take time good things take a lot of time don't be afraid to kind of like slow cook your stew keep it to yourself and keep things kind of moving onward and upwards so um yeah profitability is boring being wealthy is boring owning assets is boring it's not flashy it's it's the antithesis of that like not being a consumer is boring like so um like for me and i know for for you guys like it's like you kind of nerd out on this stuff right like i genuinely am like i i want to know about this company oh someone's wearing that who makes that and so when you when you kind of shift your mindset to that like fine go buy some nikes and then spin the 250 that you spent on some j's go buy 250 worth of nike stuff if you're going to go buy the louie bag not not my thing but if you do buy the same amount of lbmh hell you're helping to drive their revenues and so you know i think it's it's getting into that that that ownership um that ownership mindset um troy wants to know what are the catalysts that will make an etf optionable and then rashad wants to know what do you think the prospect of marijuana over the next four or five years um i know you talked about mj before but do you think that it's gonna be viable within the next four to ten years and kind of go on a cataclysmic run maybe here in the next half decade or so so um yeah mj i've mentioned uh one of the guys on the show actually owns an etf cnbs um i i just because i'm going to mention it so i want to make sure that it's full disclosure there um which is definitely more to then i sat down and had a chance to talk with him um he's much more of a excuse of a sitting expert on that topic than i am in terms of the the actual nitty gritty uh financial details of each one of those companies right and he and his etf cnbs which i'm also an owner of uh i own mj is a bit more tailored to us domestic bro right and so if you look at right now it's really like a legal situation right political situation is do you believe over the long term that the state legislation will be robust and then lead to federal legislation and i would liken it to prohibition right like fine you've got bud or miller and all these other um in bev and and all these other companies but like i personally don't want to be um on the front lines trying to pick individual companies like in mass right like thematically i definitely believe i do i believe i think it's the next hot thing like so you know um what you have is medical youth you have recreational use you have a government that needs an increased tax base um kind of have all the makings for thematically why i think this has long-term staying power the issue is that uh you can't really invest as an institution you can't really bank as a marijuana company right so like the the money has yet to really be injected into our financial system in a way that allows there to be um institutional investment on a large scale you're seeing it with bitcoin now bitcoin's been here before the difference is that institutions can allocate capital right so we're all talking about what should i buy what should i sell what should i trade for the largest asset managers a lot of them are like allocating towards something it's not about buying it and then selling out of it it's like we're going to keep of course portion of our holdings in this asset and once marijuana the marijuana industry kind of is accepted and adopted in that type of way i think it's i personally think you have massive upside what i don't want is i don't want exposure to the individual fraud cases which undoubtedly will come i don't want the one-off exposure to poor management or robberies or raids or non-compliance or any of that so that's why i like playing it through a dramatic way and that's why i suggest an etf there or i have played an etf okay and from a strategy point what do you um from a strategy point what do you wish that you knew from the very beginning that would have made your career and getting gains a lot easier oh man um boom that nobody knows that nobody knows that you that you have as much information ability and know-how at your own fingertips as anybody else that's going to get up and talk their head off about it that's not to say that there's no experts but like don't victimize yourself in terms of your ability to do this right don't sell yourself short and like for me that was and i'm not saying that's the most important lesson that was the most important lesson for me because i'm the type of person that's kind of a perfectionist and i'm like i need to read this i need to read that i got to make sure i do this i got to check this i got to check that but what happens if this happens and if i had just um if i had just gotten started earlier and been willing to take the risk earlier understanding my temperament right like i'm not the type i don't i don't skydive i don't bungee jump i i'm like too many life risks already as it is right so knowing my personality type i'm gonna do the due diligence and what i and i think very early on in my career i was so awestruck by the whole ethos of wall street all these are the best and the brightest and and the truth of the matter is and this is the reason why i'm here because we belong we belong here we deserve to be here um and and that would that would have been that would have been super powerful for me early on um to really recognize so last time you hear you gave us the calculation with the vix of how to determine the true range and the internet went crazy do you have any other calculations or formulas like that that you can give us so you can enter that again i think i have a couple for you um so yeah i want to make sure i go back over this right so you want to so this is like options 101 right and what i was talking about was the fix and so the fix is an implied volatility index so anytime you have an implied volatility it's normalized so take that divided by roughly 16 really divided by the square root of 252 and that will give you the implied move on an annualized basis the implied daily move on an annualized basis taking that a step further i would say and this is for all my options traders out there look at the spread and the ratio of implied versus realized volatility pardon say that one more time so i would like i think it would be very helpful something that i look at take a look at the implied volatility and if all your trading all the option trading montages will have it'll be like iv that just tells you what the implied actually i'm gonna i'm gonna i'm gonna i'm gonna sit on this i'm gonna spend some time here that will tell you what the implied volatility is the other half of that is what the realized volatility is implied isn't as is a is an assumption an input into a model that kicks out what you have what you take as your options price the realized volatility is how much that stock actually realizes and so if you continue to purchase implied volatility but the stock doesn't realize that you might think you're winning but guys on the other side are also winning it it doesn't necessarily have to be a zero game so like i said i'm gonna you can tell me to shut up but i'm gonna spend a little bit of time here because i think this is as powerful as that okay so for most people retail investors when you're buying a call or a plate you're buying a call because you think a stock is going to go up you're buying a put because you think a stock is going to go down and vice versa by by selling or writing those particular options so what i'm saying is for me the way that i grew up trading and this is on the institutional side you will look at the dollar price and i'm like i don't care what that is you need directional exposure for you to win i don't care whether the stock goes up down left right or anything in between i'm betting because what i'm doing is i'm stripping out all of that and i'm trading volatility so when you when you look at your your td ameritrade or e-trade or now i gotta say i'm all uh scottrade schwab uh in um interactive broker robinhood all of them none of them are better than any of the other ones when you see your implied volatility there what that is telling you is you take your price your ford stock price dividend assumptions interest rates blah blah blah all of this stuff right and what you can do is you can strip out excuse me you can strip out the implied volatility and that's the most powerful piece that's the most powerful input in terms of your option price and so you may say hey apple's a great stock i'm gonna buy calls whether it's at the money calls in the money calls upside calls you're like i want exposure to apple stocks the options only cost me five bucks the stock trades at 400 bucks this is a good trade and i go okay that that five dollars that you just paid that actually is a 160 volt it's going to use a nice round number implying that the stock is going to move 10 a day from now until that expiration what i'm going to do is i'm going to sell you that call i'm going to go buy the stock and i'm going to delta hedge and i don't care if it goes up or down as long as it doesn't go up or down it's rate of change that i'm trading as long as it doesn't go up or down by the 10 percent that you just paid for it i win and that's what you're that's what you're creating no no go ahead go ahead um and so i i just and that's why like the volatility that you're paying for these options is so critical and and you asked about it earlier but i'm getting into it now and i knew i'd get a chance to kind of to get to this is the nitty-gritty of options trading so and this is why i was i was hesitant to give you a cut and dry answer in terms of how much my portfolio should be in stock and bonds or whatever how much my portfolio should be in options because it depends on what implied volatility you're paying if you're paying an implied volatility that's go back and look historically so let me add another thing so look at the implied volatility of a stock and look at the historical implied volatility the same way that you look at a stock stock chart and look at the the range of the stock and i would say uh stock price is one thing what you should probably look at is like the price to earnings ratio or price to earnings to growth but some ratio right that tethers you to something that gives you a base and i'm going to keep coming back to that word base so go back and and see okay this has had this implied volatility over the life cycle of this company or over whatever time period you think is applicable and then look and see what it's what it is right now if you're buying that stuff on the highs then one that the the amount that the stock has to move for you to finish in the money is much higher you're probably better off just buying the stock if you're if you're using options to take a directional view that's the first part right so options look at your implied volatility look at the realized volatility and then look at where i mean for me like i'm looking at more statistics look at what percentile those particular things are in so if if i'm seeing something that's in like the top you know decile right like the top ten percent of implied volatility i probably don't want to buy that the exact opposite in the bottom ten percent most of the time it's going to be moving around like the median or the mean but when you start to see and then you and then if you it will also you can do this in an excel spreadsheet but uh average or mean median you can do uh standard deviation stdeb you can do variants excel will do all this for you and if i'm if i'm you know if i'm buying something in the top quartile or the top decile i'm no no thank you i'll just buy the stock if that's if i'm playing it for a directional point of view and the exact opposite if things are in like very low um quartiles or percentiles the other thing is so another thing for options is if you're long the stock and you notice that the implied volatility is super high something that i like doing is selling calls even though you love the stock it's not about the fact that oh i i have to buy calls because i want this stock the the implied volatility is too high for that call which is going to drive the higher the implied volatility and you guys tell me if i'm getting too far in the weeds no you're good go ahead you have your delta right your delta is your pr it's many things hedge ratio for one but it's your probability of finishing in the money and that takes me to the next question so how do i pick to be in the money at the money out of the money all right look at the delta of that thing 50 delta means coin flip 50 that is going to be in the money 50 that it's not going to be in the money and the lower the delta the lower the probability of the lower the probability of those things finishing in the money now i think and i think this is the vix moment the the higher the implied volatility derives your delta back towards 50. so the more expensive the option will drive your delta back towards 50. those are the times where i'm not playing options that are close to the money because the implied volatility is so high but the out of the money option it means that that delta can change so much higher and get driven to 50 so a 20 delta if i'm gonna play options and i'm gonna and it's gonna be a lot a lot of implied volatility i'm probably gonna play something out of the money because it will at least pull my delta closer to 50 as long as that implied volatility stays high excuse me personally i kind of went off no no that's great and everybody on youtube is loving it too um i got a follow-up from troy so obviously there's no way to time a trade but uh would you give after quadruple which in which you give the time to settle or what you invest when the chain opens sorry i missed that last part well would you invest as soon as the chain is open or would you give it time to settle post quad witchy sorry can you can you start the question from the beginning i i apologize no so during quadruple witching is it best when the chain is settled or should you invest as soon as it opens um so your your quadruple witching is gonna be when you have like your futures on all your options like index stocks and everything like expiring so i i'm a little confused by the question because like those things are gone if you're talking about like rope like rolling them you're going to have to roll before that witching period or x3 or expiration is is what i call it so and and that's really the risk there with options it's like okay it has a time period the witching period that you're referring to is when all this stuff rolls off for futures you're going to need to roll out of whatever you're long into the next contract yeah and you know if you're taking like esa or spooze it's like hmuc right your your march june sept december the issue though is like a lot of that stuff is institutionally driven so if you're waiting right to before that stuff expires you're in trouble you're like always gonna pay some premium to roll up and out like you are because these people need these futures positions to hedge they have to put them on and the amount of nostril that's being traded is is going to push it against you and it's not going to be because oh this futures contract should be higher it's purely supply and demand uh for options um when i'm writing options i'm cool to let them expire when i'm buying options i very rarely let them okay and from a hedging perspective so let's say if if vix is at 24 we divide by 16 that puts us at 1.5 so if you were looking to place a stop what percentage of that range would you place your stop if you know that you're gonna have a range of maybe one one and a half or two percent for the day so that's like okay so that's going to be an implied range um so things can move less or more than that just to be very clear crystal ball it's a um so okay so if the if the vic to say the vix is 24 um for that particular day for that day um one and a half to 2x that okay and of course everyone traditionally says to invest in bonds and gold to hedge but depending on what the timing of it may not have worked what is the best way you think that people should be hedging their portfolio like is should you add certain commodities a certain percentage of gold because everything is running high the bond market was high in august gold is still running almost it feels like an index uh what do you think is the best way to hedge truly in this market for like all seasons type strategy for people all seasons yeah let's let's let's talk about that a little bit um so my i'm going to answer your question with the question what are you trying to hedge because like i'm and i'm not trying to be like speeches are difficult like i just want to make sure like i really want to take this time to make sure that like the audience is like like understands because you hear like these buzzwords thrown out so gold is typically like a store of wealth and so it's considered kind of an all all scenario hedge right it's a commodity so it's an inflation hedge it is considered a store of wealth so it's a hedge against people running for running for banks or sell-offs and other risk assets but gold is still a commodity which means that it's like bought and sold just as a store of wealth meaning like it doesn't really have a use case and so and i think that's kind of getting exposed now and kind of why you're seeing bitcoin and some of these all the other alternative assets kind of come to play um one one important thing to keep in mind is that like commodities generally speaking internationally are listed in dollars and that's the real reason that these things that it's considered a hedge and the way that it is right if you have like massive inflationary pressure you typically want to want more exposure to commodities but it's not because the commodities are it's it's more like a technical situation right food is nominated in dollars for oil sorry not gas denominated in dollars gold palladium platinum everything else nominated in dollars so if it takes more of the dollars to buy whatever it is it's it's like a tactical or or technical type of um sorry not technical a mechanical type of hedge okay i think people's biggest fear is okay well what if i invest in tech tan indexes and i don't have exposure to anything else and it bottoms out and let's say we have a 50 correction i should have been hedged with gold bonds and of course you know the news cycle okay okay okay got it got it got it so so maybe like 20 to 25 percent drawdown is what got you guys okay thank you sorry i i didn't understand very well the first time so um yeah so the bonds typically and i say typically only because you we saw bonds get absolutely destroyed that's that's a rare event but bonds typically have like a much narrower now when i'm talking about bonds i'm talking about treasuries and i'm talking about high grade corporates if you're playing in high yield that's more like equity return so like i want to be very clear when i say vomit excuse me those are typically going to have much narrower bands of volatility so even when the stock market crashes off in even in the same company and i think this might answer your question so when you look at the capital structure of a company or how a company funds itself right it has bonds or debt loans however you want to classify those and then it has equity and that's pretty much all of sources of cash for a company now if a company crashes crazy but still has enough money to service its debt that debt can still continue to to earn whatever interest rate that it was scheduled to earn even though the equity is getting destroyed in a bankruptcy situation what's typically going to happen is that all of the equity holders are going to be wiped out if it's a chapter 11 or kind of a reorder you're going to restructure the debt you're going to allow yourself to pay back your your bond holders over maybe different terms different period of time different interest rate so forth and so on and that's going to come at the expense of equity holding so i think that's why bonds are thought of as a hedge um the general market i think i've explained to you why gold is considered a hedge um but i also think volatility should be a hedge if you're going to spend a ton of money buying calls you should consider buying some puts as well and do that when fall is at low ranges now it's insurance right like but that's the ultimate hedge is insurance and you have insurance with anything typically you don't need it you pay this premium it sucks but like you go on about your day but if you do that in like in in love in ranges where you're paying small premiums you have the ultimate hedge um so the best hedge would be if you're buying like an index is a put on that index but buy it out of the money like i'm not i don't think you should continue okay so i so i bought this for a hundred now i'm gonna get the hundred strike put like no buy like a 90 strike put or you're if you're really worried about a 50 selloff buy the put that's down 30 you'll pay close to nothing for it and you you don't have to worry about it um what we call correlation or proxy hedging because there's times where stocks go down and bonds go down and you're seeing it out stocks up gold up credit uh so you know these are these are proxy hedges but it's never perfect the best heads would be insurance on what you own um and i just think you know if you're buying it for low volatility out of the money you're typically going to pay a very small percentage for the event that you're really trying to protect against and that event is something that cripples your capital base to a level where you can't really come back from 10 15 20 that's that's what you're signing up for that's that's a standard issue in terms of equity performance but you know you shouldn't allow your portfolio to get down 35 40 45 no uh stops would be another um another form of insurance which i would always suggest trading with the stock and what percentage do you think would be a safe allocation for those who are going to ask should it be 20 25 what would be your credit point options or stop for stocks no no so sorry i'm sorry stop stop oh stops okay okay got you um the the the options i would say okay if you have uh 100 units invested how much does it cost you to protect 100 units that's the amount that you should that you should put it or okay if i if i have 100 units and i'm and i'm willing to lose 20 units how much does it cost you to recoup 80 units and and again i i i wish there was just like this uniform answer but the answer yeah like that's um that's kind of what i'm talking like it doesn't it doesn't work that way right like you got to put in either you put in the time or someone like ian puts in the time and then kind of schools you to the game but it's it's a zero-sum game so fine you don't have 13 years 15 years 20 years to kind of replicate the amount of time that that has been spent learning lessons in the game fine but you've got to make that up with sweat equity and and rigorous study and dedication and like that's just kind of kind of what it is um generally speaking uh i pick my stops based on previous technical levels this is when i'm just training my my portfolio i have like my like core holdings i've only like gone to cash in that situation on a bulk of that like like once and i don't want to misspeak but i can think of like one time and it's recent in march i mean i'm not gonna get into that i got that i understand [Laughter] but um yes i but but with that said i always keep a certain amount of money in the market okay even in periods like more okay because for that particular bucket is 40 years 30 years and given where we are in a macro cycle what do you think of stacks and the current ipo market people ask me i'm just asking the questions that people want to know no no no um sorry my response wasn't like that's a dumb question i was just like it's just shocking the proliferation of these things listen i think uh i think i think specs have some good aspects to them in terms of like they allow you to uh to get um allow you to kind of get like revenue projection right which is like some type of visibility i i'm always hesitant to like be so old school and buck against like new innovation so i think the market is ripe for what really what i think it is the market is telling you it wants growth and the reason why it wants growth because growth has outperformed for the last i don't know decade plus additionally i and i realize that there's been a rotation into value as with interest rates so low the rate at which you're discounting future revenues is extremely low which makes those very attractive as for the specs um i want to make sure i answer the question uh very very um directly i think there's like a 20 rip in terms of like management fee which is like that's high and uh i i think you have like a two year period to identify like what you're targeted so you're kind of essentially saying okay xyz investor here's money go find something to deploy capital that is that is deserving of this investment i mean it's just um i think it's a bit frothy i think the ipo market is a bit is a bit frothy and i think the stock market is a bit frothy but i think it's a function of where we are in terms of like uh our fiscal situation um interest rates are so low people want growth the market has kind of continued to trend higher passive passive investments have done extremely well and i mentioned this last time if you're if you're a asset manager or money manager you have to put money to work like you just you just have to um but it does feel a little topish i'm a skeptic but that's how i am by nature so um it i think the spec market is either matched or overtaken the ipo market i was reading something earlier today the stock market this year has done more in terms of notional deploy than like the last five to ten years of specs that's crazy definitely a sign of the times um on the institutional side so what publications or sources are you using to gather some of your data to get an edge that us as retail investors don't have and how can we maybe get our hands on some of that literature um so um you know i read i read research reports some of that stuff is like our in-house stuff so we have economists we have strategists you know i read that i mean i don't i don't know everything and i like to hear smart people's opinions um you know i'm on bloomberg all day and so there's a lot of information there um you know like in terms of basic stuff like daily reading like the journal barons financial times i don't read all of those every day but i read at least one or two of those every day for me bloomberg kind of gives me access to a lot of wsj articles barons i absolutely love um i think uh harvard business review the economist and like and research reports and strategy reports and your experience um how does partisanship affect the market and then or do you think it'll have a big effect on how things are are going to play out the next four or five years great question super timely as well same with um same with rashad's question about ibb so there's like this misnomer that republicans are better for the market and if you go back there's done there's been many studies done like there is no definitive statistical correlation between any party and the market there is higher convicted or higher statistically significant data correlated to economic performance as defined by rate of employment gdp output things of that nature but i want to be very clear like the market and the economy are not the same yeah they are not and if this year didn't teach you anything else that is that is abundantly clear um there is a bit more around that but what there is um again great question and i and i'm hammering this point home um and i'm sorry to like say this ad nauseam but like it's super critical where there is a correlation between returns is long-term investing those are just the facts um so yeah there isn't okay to follow up what are maybe like i'm like jordan republicans buy sneakers democrats buy sneakers it's cool i don't care but are there any like four or five economic kpis that you're looking at there will be a catalyst oh surely you can push the market up uh employment rate um defaults uh gdp output and um uh ford forward looking price to earn okay can you say those one more time because i'm sure some people missed them sorry gdp so gdp employment rate or unemployment rate however you want to however you want to look at that defaults so that's on the credit side that's huge and forward-looking price turn okay and my final question for you what is one final piece of advice that you want to give everyone here to make them a better investor so we can have returns like you [Laughter] um one piece of advice don't listen to advice go into more detail on that um so there's a book i'll probably post at some point reminiscences of a stock operator um and it's a sheisty game it's it's a cool game right and this dude has had made and lost a ton of money many times over and he got trapped into a situation where someone suggested that he buy a product first to his wife and then him while they were shorting and i say that now particularly because this brings you back to the first question you asked right the the information age and oh sorry the last two questions actually the first question and the question you just asked me the information is no longer at a premium like yes i'm to have analysts that are producing information that you don't have packages but information is not at a premium anymore right before it's like okay i actually have information that other people don't have what's at a premium is filtration of that information because you're you're you're on social media or whatever and people like oh you should buy this oh you should sell this or my auntie sister's cousin did this or i turned this into this or no you shouldn't flip you should be uh um you should be a middleman or you i forget what the tournament um uh no you shouldn't take traditional lending you should take hard money lending no you shouldn't buy traditional assets you should only buy growth companies or i happen to buy apple um and you know it's they said i should diversify this only stock that i had and i'll ask questions like oh okay but like what other decisions have you made so you what have you done with that apple money right like do do you own your home we can go into other tangents because like as i said you know i'm i'm an investor across asset classes but my answer question again is simply stop taking advice or at the very least be super critical in your thinking about who you're taking advice from and if the person who's giving you advice hasn't done it and doesn't not just hasn't done it because you hear people i've been doing this for 20 years yeah man things change yeah so don't take advice from people that don't do it or haven't done it and temper the advice that you take from people that used to do it but no longer do it because the game has changed yeah yeah i put my last final question for sure are there any when you're trading are there any technical indicators that you're looking at or are you going from more of a fundamental standpoint to make your decision if you're going to buy or sell a particular asset trading trading you got to look at technicals i i definitely think so um i mean fundamental analysis will give you like an understanding of the company and will make it so that when maybe something breaks down with the technicals you're not like you don't have that oh snap moment you know what i mean um but trading is about like momentum and where things have been and volumes um but general generally uh if i'm looking at like some fundamental stuff because what you have now is like a cross-pollination between so people talk about quantitative research quantitative analysis like it's like a cross-pollination between like very technical analysis and then the statistical analysis of the actual balance sheet are fundamental so for example people were asking me about the cruise lines earlier or the airline and i see these stocks that pop back i'll tell you i don't understand why those companies have so much debt on their balance sheet now like if if if you were saying okay these were operating at a hundred percent competition probably not 100 capacity but like 90 capacity it's down to 50. now these companies have like another i don't know i think american has like 50 billion dollars of debt or something like that yeah it's got to pay that debt before the equity holders see a penny and it's not going to happen at 50 capacity or 30 percent capacity or wherever we are right now moreover companies are in the business of making money and like i'm going to cut myself short i don't want to get super long-winded but i think that part of the work from home situation is here to stay if i can and you hear this term called operational leverage essentially expanding margins by cutting costs i'm like dumbing it down but like i want to use the word sorry um in a way and i i just don't want to like i don't want to know i come here and i really try to give you guys like detailed information so um i i think that part of the work from home is here to stay right because you know for for a lot of people the revenue producing units of a company prob may need to be in-house but the the support the support roles like the processing the back office the middle office logistics that administration you don't need to rent i mean office space in san francisco or new york on park avenue if those things can be done from the comfort of someone's home so i i think part of that is kind of here to stay and i think that is going to kind of change uh the way everything is done the technicals and i'll bring this up the technicals keep me from getting so out of whack one way or another um that uh that i that i kind of miss a trend and that's why the technicals are important even if i'm looking at the fundamentals of a company it's really hard particularly for like new companies or growth companies the the previous performance doesn't tell me anything so it doesn't it doesn't like it doesn't reconcile with why i'm buying into it because you know i'm looking at a company that i think has a thematic reason let's take zoom for example when is who made money but what you've seen is like a pull forward and what you can say is okay i have all this user engagement and so i'll be able to offer this service or that service and you can extrapolate that forward and that's why i need the technicals even though i can say all right well the company only did you know 500 million dollars in revenue two years ago i need to see a growth rate so that i think it can get to x by the next five years or so so um technical entertainers i would say 250-day moving average 200-day 50-day um price to earnings it's not really a technical thing but i'm definitely looking at price to earnings i'm looking at implied volatility i'm looking at real realize and what p e ratio do you like uh for what type of company i mean if you're looking at like the fangs i mean these things are like 60 or something like that right um so for a growth stock you're gonna pay a much higher pe um for like a value company some of these you know uh like 16 but it's like it's like what i do is i look at what historical price to earnings has been and try to buy things that aren't necessarily on their highs that's part of it the issue right now is that everything is trading close to their statistical highs yeah from price to earnings and that's where the technicals come in all right my last question cause i want to get beat up by rashad and troy what's your favorite technical indicator that most retail traders do not know about i have to ask because i'm gonna die if i don't know favorite technical indicator that most because my friends are working positive they're like okay great go ahead i i think i gave it to you in terms of the vix man like that that will tell you what one should expect in terms of price movement okay i mean i'm not gonna just sit here and make stuff up man there's i appreciate that yeah no i mean yeah do i have do i have things in my models that i'm like okay well okay so oh fine i'll i'll try to drop something different thank you i will look at i will take a basket of etf let's take like xle xlk xli i'm sorry xo k is tech it slides industrials likes to use utilities xls financials that's okay is tech xob is um healthcare uh what else do we have um xle uh xlp that'll be your staples xly will be your discretionary um so fine so i'll take a basket right and i'll look at maybe the s p as well and i'll say all right so for one for any index or etf what you're going to have is a rebalancing so bad companies or companies that don't meet a certain threshold get taken out so like you naturally get rid of like idiosyncratic risk right so so a bankruptcy for example isn't going to shock that for further the same way oh and i'll use market cap i don't like price waiting so the dow i don't do it i don't like it as much uh and and honestly that's a big reason why institutional investors look at the s p versus that uh like and i don't like volume weighted indexes either because what happens is an event happens and a particular stock trades a ton and then it becomes a disproportionate waiting for that index so i'll take like a basket let's just take those ets for example i'll compare them to spy and i'll say okay what's the average move what's the average implied volatility okay what's the average uh what's the average realized volatility and then i'll say i'll take that over that basket and then i'll say okay what what is moving much more than that to the right or to the left and then i'll get like an indicator that something looks too high or something looks too cheap that gives me an indicator to go do some digging into something but that's like a quick quantitative screen um one that like that i that i built right so um and it's like something that's like that you can replicate take a basket of indexes so stop it doesn't work for stocks because you have idiosyncratic risk take something that is routinely rebalanced so that you remove tail risk media synchronic risk all right take that compare that versus a benchmark you can use smp you can use the dow jones i gave you why i don't particularly like the neurons yeah you can use hues you can use whatever and then what you do is take the mean and median and this and then you're also going to need your standard deviation of those things i look at the implied volatilities there because again this is this is uh option treaty and i'll say okay the implied the the implied versus realized ratio typically is here for these names when i see something that's like and then and you have your standard deviation so you know things typically are 67 between a standard deviation higher or lower than your knee so if i see something that's like two standard deviations or two and a half standard deviations high it screens it for me two two and a half standard deviations low screens it for me and then that lets me go okay this is something that i should actually take a look at what's going on here and why i think that's a particular indicator probably most retail investors don't have so you could build yourself in an excel spreadsheet and it will at least give you a a shovel to start by doing something so you're using a screener to tell you when it's outside of the deviation oh my god okay thank you um that will work for that will work for any mean reverting asset because stock price does not mean reverting oh maybe sorry i should have mentioned your fixed moment volatility is mean reverting okay tell everyone what that means it means that when you you you can expect things to snap back to that to the averages because i mean in terms of like the the long-winded explanation like a stock price can continue to go up right it's not like you can say stock over the last 100 years was 50 if it gets 100 it's going back to 50. no but volatility assuming a company doesn't get like bought out or or um or go bankrupt volatility being that it is a statistically derived formulaic uh uh tool it is mean reverting like bi mathematical definition so when you see things gap high or gap low um and let me take a step back and like do and and put it in like kind of like lay terms so a company comes out uh revenues just first start and uh it's probably more it's probably more volatile and then the company becomes more mature you understand the revenues a bit more you understand the cost structure a bit more people understand what it is and you'll see like the stock trades in a range or it moves up kind of lockstep now again it's the rate of change of volatility how fast something is changing is mean refer not where it's going that's me reverting i want to be very very very very clear but that's that's that's um i think that's powerful information for all the option traders out there right like you when you see things move away from the mean or the median they should be similar unless you have some tail risk but a standard normal distribution your mean equals your median and i think it's 66.7 percent of observations fall within a standard deviation below or above that mean when you see moves that are multiple of that standard deviation i tend to fade though and you can express those views directionally if you so choose so when i see a stop when i see an index and i see uh the implied volatility at let's call it 32 right so 2 roughly and i see a move of 4 [Music] i'm probably not going to just go buy that stock but i'm probably going to go sell some puts there because it's now gapped the the implied volatility has jumped i know over longer periods of time that the stock doesn't do that and i'm going to say okay that's fine i'm going to look at a technical level i'm going to say here's support i'm willing to sell a foot here and in addition to that i'm going to use this foot strike with this implied volatility because i know over longer periods of time that it does not continue to move at this rate continuously i i appreciate that i hope everyone sorry i felt like you're a little disappointed you're like come on no no no no no no no but even on the equities i want people to catch you're essentially saying that since it doesn't revert it's going to attend to the upside and then of course volatility is going to mean revert and slide back in that's very insightful and helpful on its own for people to stop trying to short quality companies because look at all the people that have been short and tesla since 310 or 250 and they've been getting torn apart so but i can keep you here all night i want to be respectful of your time and also uh my brothers at eyl and we can start to because we had some technical difficulties um the devil was trying to play some tricks on us but you know i mean i love chatting with you we can be on here to midnight but i don't want to ruin our friendship and my friendship will shut down troy either so we'll table it for another day um man i greatly appreciate you um and you've helped me a lot even tonight so i want to thank you again for being amazing always being a you know a gracious guest and you know you family so whenever you come i want you to just have the floor and i appreciate it man it's a pleasure guys thanks for letting me uh come back and to the uh the viewer and the audience man thank you guys for like sticking with me and showing me love um it's important that we get this information um i'm not right about everything but uh i don't have i'm not i'm not selling anything like we deserve to have this information shouldn't be locked up in the safe a lot of other people have this passed down by their fathers or uncles or grandfathers or mentors um and it's just important that like we get it and i hope that my hope is that there's another young up-and-coming sister or brother that i can sit down and go so yo young buck tell me how they tell me how it's moving now um but it's important that this information that that people aren't intimidated by the market aren't intimidated by investments um yeah it's investing is timeless man it's been around since forever no i'll take you i appreciate you taking it for everyone also listening it's not often that you're gonna get a chance to sit down and listen to a brother who's on this side of the investment table so everyone say thank you in the comments to him because if you try to get someone like him to give you a console and break that down it's going to cost you a pretty penny so and thank you for being willing being on the institutional side to actually share some information that will give us on the retail side an edge as well so thank you absolutely my pleasure i appreciate it thank you further shot i'm sorry i promise you i've been playing this resume we're going to have to do it like a part three how is you can hear us we're good yeah we can't hear you yeah man that i mean he said he wanted his oprah movement yeah man and look i said man that was super impressive we appreciate you for that but that was good we're gonna call him king bo from that one final win the king shout out to you eyal contra eyl university market monday's contributor man another amazing another amazing performance fire emojis please right here emoji the fireman because for those who trade options too i know he blessed you with something but equities traders and future traders even on the future side it helped me i'm like okay great if i know we're gonna move up two percent like having a one point five percent target at one point two percent target that helped a hell of a lot from when you shared this whole thank you like you got i gotta go i got some notes man i got notes real for real me too appreciate appreciate that man thank you thank you both of you guys for holding down the show uh and the spectators today but it was it was good to watch so i appreciate it [Music] just like the one game when the bench player like get 20. you're gonna put up 80 next week man you still kobe come on let me get your chitch off no i appreciate you bro nah i'm not so good so all right um yeah uh any any last words yeah man it is uh thanksgiving week so we want to make sure that everybody stays safe but um also people get to reach out and uh you know help people if they can and spend time with your family your loved ones on a super important and we want to thank every one of you everybody that's watching right now thank you um you have made this year a spectacular one for us here at uil so we want to give thanks to you because without you you know believing in us and um spreading the word and telling a friend to tell a friend it wouldn't be possible so we are indebted to you so thank you for that yeah for sure don't forget tomorrow we got a wall street traffic big trap uh uil 110 crazy 110 episodes that quickly and and we're gonna be on trapping tuesdays as well um and then he's coming back on wednesday so it's a full week of is all investing this whole week um hopefully you could just learn something and apply it and then um yes we are running that 50 percent off ewl university 24 hour flash sale i'll put it in here if you guys are interested the code is ew50 and once again thank both of you guys for holding it down so you know zoom definitely hate it that's part of that like i said that's part of business there's always problems and any type of business that you run is always a problem so it's about just you know managing uh the problems and um like they say on broadway the show must go on it's gotta go man shout out to we got big snow in the back shout out to jeezy um you know that that epic battle and i pushed we'll try we got trap music up there that's his favorite album so i'll put it up there for him this has to be like what steve kerr felt like when he hit that shot with mj throwing the ball yes i love y'all man i appreciate you all so much hey yo oh real quick shout out to eyl legend it was his birthday today man shout out to none other than my god my god disney killer nacho bangers today's his birthday man shout out to him happy birthday he's a legend happy birthday all right guys all right y'all be good have a good turkey day and um enjoy yourselves enjoy your family but be safe most importantly peace thank you brother

Channel: Earn Your Leisure

Views: 51,351

Rating: 4.9607654 out of 5

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Id: J0S_EkycZss

Length: 106min 45sec (6405 seconds)

Published: Mon Nov 23 2020