4. Stocks and Sharing (Teach the Teacher Edition)

Alex interviews Trader Stewie @TraderStewie about the stock market and very quickly decides to become the She-Wolf of Wall Street!

Transcript

Hello Hello and welcome to this very special episode of laugh it off with Alex. When approaching the problems left on my voicemail, I always lead with kindness first, draw on my own experience second, and I always ask myself ‘is this advice, the advice that I would give to a real friend’. However, there are some topics that I'm just not an expert in. In these episodes, I'm here to learn, and I'm going to bring you all along with me. These are topics that I have no knowledge about I'm a complete newbie. So I'm gonna find an expert in that field, learn a bit more about that topic, and then the expert and I can team up and give some advice together. 

The format of these episodes will be a little bit different but I think it works, let me know. 

Let's dive in. Was it just me, or did it seem like everyone all of a sudden was talking about the stock market and GameStop was all over the media, and I wanted to know more, this is what prompted my first teach the teacher episode. This week's expert is Trader Stewie, he is a real OG in the stocks game, he has a huge following and for good reason he knows his shitake. He is the Phil Jackson of stocks coaching his following to success over and over again. So I really needed to pay attention. I think this guy can make me rich, like, buy all the groceries at m&s rich, so if you have any interest in getting involved in the stock market, make sure you check him out. 

All right, hop on strap in, here's my super fun and educational interview with Trader Stewie:

Trader Stewie in the house!!! Hi!

 Hello Alex, Hello everyone,
 
 Thank you so much for agreeing to do this. How are you doing?
 
 I am doing great. I'm doing wonderful, thank you.
 
 So, just in case someone listening doesn't know who you are. Who are you and how are you an expert in the stock market?
 
 Okay, well, my name is Traders Stewie, that's my Alias Name on Twitter. I've been on Twitter since 2009. So, like, 11/12 years now. I've built quite a decent following on Twitter, I think it's up to about 250/260,000 fellow traders who follow me on Twitter. I studied finance in college, I just turned 45 last month. And I never deviated from that field. That's all I knew this and soccer is all I know I don't know and then cooking of course - I love to cook as many people who follow me on Twitter know.  I've been doing finance for now for over 25 years now so that's all I really know.
 
 So it sounds like we can definitely trust you then?
 
 Yeah I hope so. I really hope so you know I've tried I've always tried to steer people in the right direction the right way I tried to be honest with the ball, as far as expectations, you know some people they go into market you know expecting to be to. I want to get rich you know I want to make money I want to be. I want to be wealthy after a few months, you know, who doesn't. Yeah, exactly, but you know my you know I just want to tell people you know, even with the stock market you have to approach it in a way where you want to get rich slowly and build your knowledge. And over time, over time, if you stick to it. My business is called Art of trading on my websites called Art of trading dotnet. There is a big art factor to it, just like any field, you become an artist over time, the more you practice you make mistakes you practice you do it again. Then you start to notice you know certain patterns certain themes that repeat, and then you learn to try to minimise the mistakes that you've made in the past, and you try to press on the gas on the successes on the stuff that works, you start to see big changes.
 
 Okay, great. When, when I close my eyes and I try to visualise the stock market. My mind goes blank.
 What should I see?

You know when I when I hear a question like that, obviously, it tells me that somebody who's a complete newbie, complete rookie, you know they probably heard of the uncle who lost all his savings in the stock market, or that grandpa's sister lost it all because she heard a stock pic from her best friend from bingo class or whatever you know…… so the stock market is, it can be as risky, or as boring and unrisky as you want it to be. You can either treat it like a casino, and you can say you know roll the dice, all on black, here we go and see what happens. Or you can develop a more methodical, a more strategic intelligent strategy to manage your funds. I think the stock market in my opinion, is the most powerful way to grow your assets, over time, you know, there will be bumps in the road, of course, just like, just like any other investment, all investment has risk.
 
 So, I mean, you kind of already sniffed me out that as a complete beginner, right. So, what is the stock market?
 
 Okay, well the stock market, the best way to look at it is, it's like a giant supply and demand exchange basically. So you have a company's they issue stock prices like Nike issued stock, whether you buy one share, or whether you buy 100 million shares. You are technically now a part owner in Nike, and that's what happens when a company goes public, it means that the public can buy stocks in it. Okay, so you are the rightful owner of a stock of a company. I always tell people if you're a beginner, you know, try to avoid the riskier stocks try to avoid ‘Oh, my you know my buddy gave me a stock pic’. I heard from a friend that, you know….I always tell people to always stick with, with the most well known companies. Companies that you already know you've heard of, you know, Nike, Intel, Microsoft, you know stick with Amazon, stick with the ones that you already know, they're proven winners are household names everyone knows what who they are, what they are, what they do. And over time, I think you'll do well and the more, the more you are in the business, the more likely you are to succeed. 

Okay, got it. 

However, what I recommend is if you're going to be a trader you know, it's just it's it can be the best job you've ever had in your entire life, or it can be the worst job you ever had and you want to get on what you want nothing to do with it ever again. So what I recommend is you just do your research, read as much as you can. But you know don't just go in blindly jump in and say oh I got this I'm gonna kick some butt, you know I read a one article and I think I'm gonna buy this stock..it takes it takes a lot more research, a lot more discipline than that. You might get lucky, you might get lucky and a lot of people do you know where you buy one stock kind of doubles or triples and also You're a genius, and then the next stock you buy is down 50% and you hate yourself and you're like I'm never gonna test the stock market ever again. You really really have to take it seriously just like any job just like any any job you go in, you're not gonna just walk in and be an expert. You're trying to buy something that other people are trying to buy as well. Do you know more than them. Do they know more than you do? There is a lot that goes into it.
 
 Are women are allowed to trade stocks and or should they?
 
 I think honestly I've always told our Art of Trading members that I always believe that women make better traders than men. Because, for the simple reason that women tend to be more risk averse. And this is, keep in mind this is a business where it's about 90% male dominated. So I you know we do see females will come into, who come into the field, but what I've noticed is that men tend to be a lot more reckless, they tend to be a lot more spontaneous, a lot more, you know, ‘how much money can I make?’ for example, but women they think, ‘how much money am I going to lose’ or potentially lose if I take this investment or if I take this recommendation. Okay, the traders who will make it over the long term, are the ones who think as far as risk first, reward Second.
 
 All right, so if I'm hearing you correctly, you're basically saying that you need me to join the stock market?
 
 Yeah, I think you should I think you should I think you should I think your, your listeners should and I think I think everybody at some point needs to at least consider having investments in the stock market there's no doubt about it. Don't get me wrong, people they're scared of the stock market because they're thinking, well I don't have you know 100 grand, I don't have $50,000/£50,000 pounds, you know, to put into the market but you don't need that. You don't need that much money, it's better to make a mistake, your mistakes early with little money, then make the mistakes later with big money, so true.
 
 I've got another simple question, what is a hedge fund?
 
 Okay. In general, like most of them, they tend to be more geared toward high net worth individuals. Most of them require large amounts of money as initial investment, whereas a mutual fund you can start with $100, with a hedge fund you can walk in with $100 and say hey, I want to start a hedge fund account, it's not going to happen, you know, with a hedge fund, you have to have at least 100 grand, sometimes even $1 million as just a minimum initial investment. They're usually a bit more sophisticated strategies you know they tend to short, short stocks. Short stocks means where you where you can make money as the stock price goes down, you know most people they buy a stock at $10, hoping they can sell it at 20 shorting a stock. If you short a stock at 20, and it drops in value, you actually make money as the stock drops.
 
 So I can gamble against a stock?
 
 Yeah well…yeah I don't like the word gamble, because that word kind of scares me when somebody will use that. That tells me that you've already started planning that the market is or is like a casino, and it's not a casino it's not. I told you it can be as risky, or as un-risky and boring as you want it to be. So, you know

So I can bet against a stock?

 well yeah you can make an investment you can…. you know what, honestly the word you want to use is fine, I don't care what you want to use whatever you want to use what you're still learning you're still learning. You're still learning the words. The short position that they're in, when they're short a stock, if the stock goes up, you'll you'd lose money so shorting is definitely a more complicated strategy made more for advanced traders portfolio managers who have more experience some hedge funds do utilise quite aggressive strategies, which can be controversial, you know, if there are too aggressive or they're too wild wild west with their investment. Eventually, you're going to get screwed. Eventually, and on a whether it's, whether it's Joe Schmo down the street, or whether the billion dollar hedge fund on Wall Street, if your risk is not calculated properly. Eventually you know you you're gonna get hurt you know.
 
 What is GameStop? Why was everyone talking about it? Can you talk me through what was going on?
 
 Now with video games all going online, people don't need to go to a to a retail store to go buy you know, video games anymore. Now everything can be downloaded online.
 
 So it was a retail store for video game consoles? Ok
 
 Yes, for video game consoles, video games. I don't play video games but nowadays people just download them, the stock price was falling as a result. One of the big hedge funds on Wall Street, a few of them actually, because a lot of them they tend to copy strategies, so that they almost have like a gang mentality where they all pile on a stock. So when you're shorting a stock when they're all going in billions of dollars worth of worth of these Wall Street, big shot money managers, when they go in and just start positions in the stock where they're shorting it, so they're suppressing the stock, lower, they're actually pushing it lower, because there's so many, so much billions of dollars of money betting against the stock to go down. 

So eventually what happened was these genius little geniuses over at Reddit… So imagine like a bunch of like little mini stewies or, you know, a bunch of stewies whatever all online, and they come up with a plan to say hey you know the stock GameStop, it's it's being aggressively short like ridiculous amount of short positions in it. One thing one thing is important is,it might be too technical, but when you're shorting a stock, and then the stock starts to go up I told you, you start to lose money. But then as the stock keeps rising, you know, you're gonna have to close the short positions because you don't want to sit you don't wanna you don't want to sit on a short position that's losing because technically the losses can be infinite. You know if you buy if you buy a stock at 10, and it goes, it goes down to zero. You just lost 100% of your money. But if you short a stock at 10, and it goes to 100. That's a 1,000% increase. So you technically and theoretically, can be down, 1,000%, if you are short.

Wow. 

The Reddit forum you,a know forum of traders and you did have like 1000s of traders, you know, someone or a few of them came up with a plan, say hey we're gonna all gonna buy this stock at the same time. And literally, it was literally like that so just like just like, just like a forest fire. All it takes is one match to light to light up the entire forest, it was one idea, and they all started buying energy start to make it into like it was a millennial mentality the against the establishment, Wall Street the big money, you know, against us the little guy. And literally, it became a movement like that and then you have a guys like Elon Musk you know the Tesla billionaire founder, he was out there on Twitter, he was talking he was touting it, he was encouraging it, and then now everybody on the news talking about it now they want to start to invest in you want to I want to buy GameStop I want to buy GameStop I want to get in on this I want to I want to.
 
 Yeah, It's all I heard about! 

Like I was telling my followers on Twitter. What I said was, there's nothing wrong with buying the stock, however you have to understand, when you have a stock that goes from $9 to up to over 400 in like a week or two, talks cannot keep climbing like that forever. So you have to look at it as a musical chairs game, you know when the music stops, because who knows when the music gonna stop. I mean obviously the stock now collapsed it's back down below 80, it went to as high as 400 almost 500 I think at one point, imagine what a $1,000 investment would have made you however, the only people who made money, pretty much on that stock are the ones who came in early, the ones in the red in the in the Reddit forum.
 
 Okay, so should I should I be listening to what the people on Reddit are saying?
 
 I mean I'll be honest with you, I would say it's a firm, no. Unless you're one of the, one of the insider guys they're one of people who are actually making these decisions. So, you know what they are doing is it's technically not illegal, it really isn't. You don't have to follow the advice, it's all public information. You know what they are trying to do is they're trying to force their followers to buy stocks in stock and stocks that are heavily shorted by hedge funds, so they can force hedge funds to cover their shorts and then drive the stock price ridiculously higher, there's nothing wrong with that. However, like I said, you don't want to be the last rookie walking in as the party is ending.
 
 I don't want to be that person. 

Yeah, you don't want to be that guy who shows up to the party when everyone else is going home cops are there and the party's over and everyone's gone home you don't.
 
 Okay. Is there crime in stocks? I know you said that the whole GameStop thing you know technically it's legal… so is there crime in stocks?

 Stocks. I mean, you know, just like any business, just like any business you are gonna have bad apples, you are gonna have people who are trying to, especially you know we're talking about the stock market, you're gonna have crime, you know crime happen in every field. It's human nature.
 
 Shout out to crime!
 
 It's a very tough very very regulated field.
 
 So, how do I how do I go about getting involved in this crime.
 
 Honestly, it's not even worth it. 
 
 Can I actually buy one penny stocks like in Wolf of Wall Street?
 
 There are definitely penny stocks you know but like I tell people you know penny stocks they're trading at a penny for a reason, you will not see Microsoft trading at a penny or Amazon or Google these stocks are there they're trading at that price for reason, because nobody wants them. 

Awww

Obviously some people do invest in them, sometimes you can get lucky just like winning a lottery. You know you can buy a stock at a penny and then a year later it's $10 and you're $1,000 just became a million dollars can happen, it can happen.
 
 So you've been trading stocks for a while. 

Yeah. 

Have you have you met NASDAQ and what's he like?
 
 Well NASDAQ is not a somebody you meet… NASDAQ is a, it's a stock exchange where they mostly technology companies are trading on electronic Stock Exchange. It's basically what most technology companies are traded for example like Intel, like Google, Microsoft, and Netflix, all trade on the NASDAQ, so it's a it's basically an electronic Stock Exchange it's not somebody that you meet.
 
 All right, what's the biggest mistake, you can make in stocks and have you made it?
 
 I probably have made every mistake that you can think of, honestly, you make mistakes all the time in this business, some mistakes are more costly than others. I think the biggest mistake, somebody can make in my opinion, is if you're being too, too greedy, you're being too aggressive, where you're where you're taking on such large positions that all it takes is one bad trade to really like cripple you you know. So what I recommend is you know you buy instead of buying like one stock and putting all your accounts in one stock. Maybe you buy like 10 stock buy like a few, so you're this way, in a way, you're diversified, and you're not just relying on one stock, to make it or break it,
 
 Don't put all your eggs in one basket.
 
 Exactly. I couldn't have said it any better myself.
 
 Okay. And if you could be any stock, what stock would you be and why?
 
 I don’t think anybody ever asked that question before. Oh man, if I could be any stock whatsoever. I want to say, I want to say Amazon, just because it's the company that first of all it's a big awesome company I use and we use it all the time. And I think between me and my wife we probably generate about 25% of Amazon revenue. So I think that would be the stock that I would be
 
 Okay nice. All right, I am sure that I'm speaking for everyone at home also, when I say ‘damn I just learned a lot’. Thank you Stewie, I mean, you pretty quickly figured out that I was coming into this interview, blind, shall we say maybe more than blind headless, I pretty much knew nothing about the stock market. And now I feel like maybe I'm ready to run it, watch out stock market because I'm going to do it. I'm going to educate myself, I'm going to take the time as you said, I'm not going to play crazy Risky Business I'm gonna play it safe play it small. And hopefully be successful in the stock market so thank you thank you very much. 

It is now time Stewie for us to listen to this week's problem voicemail, and we'll see if we can give them some good advice. So, let's play it.
 
 ‘Hi Alex, I've been wanting to get into trading stocks but my wife says it's too risky. I believe that I'm responsible and educated enough not to do anything too risky and dangerous. However, I also currently don't really know anything about it but I want to learn. I currently work in health care and see this as an investment add some more money to my nest egg, what should my next steps, be and how can I go about reassuring my wife.’
 
 Okay, so I think I'm going to hand this one straight over to you Stewie, go for it.
 
 Okay, so what I recommend to your caller is, I think that like I said earlier, everybody should have some sort of money in the stock market, you know, the wife maybe might have reservations. She might be right about some concerns, maybe, you know, but what I recommend is you bring your wife in to the decision making process, so rather rather than just you making the decision, you know, tell her ‘Hey honey, you know, today we're gonna buy, and we're thinking about buying Amazon you know Amazon was down, 20%. And I'm thinking, this could be a good opportunity to pick it up and buy it’. Who hasn't heard of Amazon? Who hasn't used Amazon. So, it's 20% discount. You know why not, why not take $1,000 and buy it, you know. So I think if you talk to the wife, and involve her more in the decision making process, since your is your rookie she doesn't trust you. She's a rookie. But you've all heard of Amazon, you know, try not to try to like I said, try to buy stocks that you all know that you all heard of, you know, they're not gonna buy anything new. You know you're not gonna buy ABC z biotech industry, you know, you know you want to buy stocks that you know, in the beginning, until you start to build up experience in the field in the business you know you want to gain your confidence slowly, and I think it's so that's the way I would do it too personally.
 
 So he really is like a beginner beginner, what should be the first steps?
 
 Well the first thing. The first thing you have to do is a you have to open an account. In the beginning, and a lot of people now they're doing going with robin hood, you know it's free it’s free to open so you don't need a lot of money to open an account. There's no commissions, so you're not paying any money for the transactions, you're literally just buying
 
 This online right?
 
 All online, you can do on your cell phone, on your smartphone. You know, you don't need some, some crazy, you know platform.. it can be on the cell phone it can take literally seconds it takes seconds to buy and sell stock. You know which is which is nice that's understand the appeal of it's not like buying a house where you It takes like a month or a year sometimes to buy or sell a house, and as an investment you know stocks, it can happen in seconds, you know, within seconds you can be an owner in in Microsoft you can be an owner in Amazon and whatever. And I think everybody should need to have some kind of investment I really think, if you have money laying around and you have, if you're working and you already have a job, and you're you have money that's sitting, you know, while it's sitting in a bank account collecting less than 1% interest, why not put that money to work, let it work for you.
 
 That sounds like great advice. I think yeah like the only thing I would add in terms of reassuring the wife. Number one, play her this episode of the podcast so that you can both learn, real quick, the basics, and definitely spend some time educating yourself and show her, maybe even teach her too, and also just reassure her that you're always going to be upfront and honest, or before you know move anything or sell anything. And if that doesn't work just get really good at it and diamonds speak louder than words.
 
 There you go, I like that.
 
 All right, well let us know how you get on. I really want to know how this goes. And good luck in the stock market. 

That just leaves me to thank our guest traders Stewie thank you so much for doing this.
 
 My pleasure. I was fine I had a great time Thank you Alex, and thank you for so much for inviting me it was a blast. And, you know, I hope your followers, learn something new today and if you guys have any questions I'm available on Twitter, just shoot me a tweet @traderstewie and the website is artoftrading.net
 
 Alright, check it out guys and thank you so much Trader Stewie I'm actually really really grateful and I have learned a lot today.
 
 Yay. Awesome.
 
 Thank you.
 
 Okay, thank you, Alex. 

Now, I've always loved being rated highly, but now I'm in need more than ever. This is my call to action guys, please please on iTunes rate five stars and leave us a pleasant review for your chance to win 100 pound Amazon voucher. Just make sure you include your email or social media handles so we can contact the winner, the nicest review wins. Thank you. 

Well, what have we learned today, a lot. I've learned that watching The Wolf of Wall Street does not make me qualified to trade stocks, we learned that the stock market really is accessible to anyone, which I think is very cool. And we've learned that traders do he probably thinks they have gambling issues.

Why not get involved in the show, contact us at laugh off pod on Twitter and Instagram. You can also leave us a voicemail. And please recommend us to a friend. Thank you so much for joining and learning with me today. Let's speak soon, love, Alex.