Clay Trader Podcast
STR 227: An Old School Stock Broker Turned Trader
Pick up the phone and start dialing for dollars! My guest this week made a living doing this exact same thing as a licensed stock broker. I always enjoy talking with those from the old school way of doing things because it brings such great perspective into today’s online world of making money. Community member, Matt, walks us through his early days in the market as a broker to where he is now, learning how to take full control of his money and grow it through actively trading. While Matt is still in his learning stage, he displays some great mindsets and mentalities that demonstrate what it takes if you are going to give yourself any kind of legitimate chance at success in the markets. We venture down quite a few rabbit holes so there is something for everyone in this week’s episode. Sit back and enjoy the ride (and scribble down some notes as you see fit).
Clay: Hey before we get into today’s episode, I want to first address a question that I get quite a bit and that is, “Clay what broker, or what platform is your favorite? Who do you recommend?” Now before I can answer this I need to offer up a little bit more context. I am referring to an investing standpoint. Hey, Clay I want to save for retirement. I want to do long-term investing, not. I repeat not. Hey, Clay I want to be some short term day trading scalper that buys and sells within three minutes. That’s not what I’m talking about. We are talking investing. From an investment standpoint the platform broker I recommend is M1 finance. They are awesome and they have all sorts of great attributes and features. First one totally no fees, no commissions $0. Well Clay I know about another broker out there that has $0. Well here’s the thing that separates M1 from Robin Hood and I’ll just say the name is Robin Hood does not offer tax friendly accounts.
If you want your money to grow tax free like you should, assuming you are wanting to save for retirement, save for the long-term then you need a tax friendly account. Robin Hood just does not offer that at this time. M1 finance does. No commissions, tax friendly accounts then finally partial shares. If you want to buy a share of Amazon for example which costs over $1000 you can still get a share of Amazon with $10. That is another very, very powerful thing is you do not have to have an entire $1000 in order to get a share of Amazon. You can do partial share. You can have a half a share of Microsoft, a quarter of a share of Amazon, three fourths of a share of Facebook and so on and so forth. That allows you to get involved no matter how much money you’re using. Especially if you’re starting off with smaller amounts, it’s hard to go wrong with no fees, tax friendly accounts and the ability to buy partial shares.
I have a review video of them, so you can see behind the scenes because I do have an account with them. Just go to claytrader.com/amazonmary and then the number 1. Very simple M1 claytrader.com/M1. There’s also a link there because they’re running a promotion in the month of July where if you sign up using the link that I give at that link then you get $20 and for full transparency and disclosure I also get $20. If that bothers you that I may get $20 then I guess you just don’t get the $20 either. I just want to be like I said fully transparent on that. Again this link can be found, so you can get that $20 at claytrader.com/amazonmary and then the number 1. If you are looking to save, if you’re looking to invest for your future, invest for retirement you can do all that with M1 finance. I’d encourage you to go check it out. Again claytrader.com/amazonmary and then the number 1. Let’s get to the episode. This is the Stock Trading Reality Podcast episode 227.
Announcer: This is the Stock Trading Reality Podcast where you get to see the realistic side of a trader’s journey. Get inspired and stay motivated by every day normal people who are currently on their journey to trading success. This is your host. Even after a decade of trading, he’s still learning for the price of $3100, Clay Trader.
Clay: Sometimes you just can’t make this stuff up. I have these fun facts listed out and I just go by them fact by fact by fact by fact. Here this one talks about even if … Even after I’ve traded for over a decade there’s still stuff for me to learn and our guest, that’s one of the things he points out. Is you just got to go out there and do stuff and mistakes happen. I tell a little story about when I had … One of my first jobs and I’ll just leave it at that. Like you said the poetic beauty here is you would think that I made this stuff up. I promise, really this is just how the fun facts fell into order but there’s always going to be mistakes. There’s always going to be little things you got to learn. For this mistake it costs me $3100 which was not very pleasant. I guess from an educational standpoint, I don’t know from a marketing standpoint I don’t know if that necessarily is making people like, “Wow I want to learn from that person.”
From a strictly educational perspective it was gold because I happened to be one of the days where I was making a live trade video that I posted on YouTube. I have no problem admitting. I did not want to post the video but you know what? If I hit that record button, then I’m going to post whatever happens. In this case I got myself in a situation where it was really goofy but at the end of the day I got to look in the mirror. It was my fault because it was preventable had I done what I’ve learned now to do every single time. It’s a lesson where, just like I said it was totally my fault but it was goofy but it was preventable. That’s what I learned is a little extra step even though even if it’s a little glance that takes a half a second. In this case I didn’t do it and it was all captured on video. If you go to YouTube in the live trade or really just the site and if you run a search for $3100 the video will pop up because that’s all there.
Learning is never quite over, granted that … Like I said, this one is really goofy but I guess on the bright side it happened early on in the month. Then by the end of the month I was still able to wipe with the loss away and close with a green month. That was good. Still learning always happens. To tie this back into today’s interview and discussion you can’t make mistakes like I did and unless you just get out there and do something. That’s the point is sometimes you just got to go. We talk about that. The evil S word which I’d done videos on now in the past. But point being the discussion today was really, really good. We are talking with Matt, who’s only been around for a couple of months but Matt has quite the experience. I don’t want to offer up too many spoilers. He actually got into the markets as a broker.
A series seven licensed broker and he was out there and hustling for over a decade. I guess I can’t say he was the first broker we’ve ever had but we haven’t had many people that had actually had the license to be an actual stock broker. He offers a lot of great wisdom. The way he describes some things. I admit I was weeping and it was just a beautiful, beautiful thing. I’ve already used the term once and I use it during the discussion but there’s some great poetry in this. Like I said there was one thing he says when it comes to chasing the price and how you don’t want to chase a price which is very, very important. That’s just one little rabbit hole we go down that was just absolutely a beautiful thing. Without further ado let’s get to our discussion with Matt. Matt welcome back for round number 2.
Matt: Hi Clay.
Clay: We had a little technical issues but luckily the issues only showed up within a minute and a half into the interview. This first part full disclosure is not really … It’s a little scripted because I’m pretending like this never happened. After that, after the 92nd mark then it’ll just be totally unscripted. I bring all that up because if you’re newer to the show my goal, the philosophy here is like Matt and I were just sitting at a coffee shop. You’re sitting next to us or a fly on the wall and you’re just going to listen in to us talk trading. I know very little about Matt. I know a couple of broad strokes type things such as he’s relatively new to the community. Besides that I’m excited to get to know him better. I guess a creepy way you get to like just be a fly on the wall or sit next to us and not say anything and listen in. That’s okay. We’re okay with the eavesdropping. That is part of the show.
Matt where did all this start for you? Where did you hear about the markets and what things happened or what have you that got you to the point where you’re like, I’m interested enough to want to get more hands on with all this?
Matt: My entrance into the markets began 25 years ago when I got out of college and I became a financial advisor. It was my first job out of school. I had a series seven license, a series 63 state licensed as well as insurance. I did that for … I was in that industry for almost 15 years.
Clay: Say all those licenses again.
Matt: Your general securities licenses is your series seven.
Clay: That’s the one from all the movies. That’s like those all … The series seven is the one they always get. I thought I heard that one right.
Matt: Then I think it’s been 25 years but I think the series 63 is your state licensing and then I had insurance on top of that.
Clay: Now what made you want to go and … Was this like a passion from you as a kid? 25 years ago and then before that but what actually happened that led you to those … We’ll go with the series seven just because that’s like I said the Hollywood type stockbroker one. You got to get your series seven. Ever seen the movie Boiler Room?
Clay: I’m pretty sure that’s the one that they always say you got to first pass your series seven or whatever. Anyways what made you interested, how did he even know about this series seven? What got you to that point where you wanted to get those different licenses?
Matt: I graduated from college and really didn’t have a clue as to what I wanted to do. Most people that graduate from college with that little knowledge, without knowing where they’re going they end up in sales. Someone pointed me towards a large brokerage firm that had a college graduate program at the time. I was like, “What do I have to lose?” I applied and interviewed and they said you’re hired. That’s really how I got started in it.
Clay: That’s awesome. I don’t know I’ll just … Fascinating comment. You know when you graduate and you don’t really know what you want to do you go into sales. I’d never heard that but maybe that’s totally true. What did you graduate with degree wise?
Matt: I have a bachelor’s degree in psychology.
Clay: I would’ve guessed that. All right. Let’s just public … You can’t play any Jedi mind tricks on me. I’m always scared to talk about the psychology majors because I don’t know I feel like you can just puppet master my mind if you really want to. Maybe you’ve already been doing it this whole time.
Matt: I already am yes.
Clay: I can feel. That’s not a fly on my shoulder. That’s the string that you’ve attached to it.
Clay: There we go. All right. Well I would say that that does make sense if actually … Kind of off topic but me and my brother-in-law we were having a discussion once and his argument is you know what a great, at least minor that all people should get as a part of their degree is a minor in psychology at least because I feel like it’s got a lot of practical applications. In your case sales and all of that. I sometimes wish I should go back and get a minor in psychology because it seemed like that’s actually one of those really practical ones that can help you out. It’s ace card up your sleeve. I guess okay. You go and you college internship or college program. You apply, you get in. Is this like are you sitting in some basement calling up people selling them or trying to get them to buy penny stocks? This is the next big thing. I’m totally defaulting to the Hollywood of how this works. Is this like little grandma, listen grandma there is this goat herding company over in Nigeria that’s going to go big. It’s at double five right now.
This thing is going up to five bucks next. What’d you do with your series seven? I guess that’s probably the best way to put it.
Matt: Well I started with the company and I was with them for probably five six months before I actually took the series seven exam. In that five to six month period I was basically an assistant to a more senior broker. Then once I became licensed I could go out and sell for that broker. What ended up happening is that I was supposed to be in that program for a year. Right about the time that I got my license they decided they were going to end the program. I could stay in it for up to a year if I wanted to or I could go into just being on my own and being a broker. That’s what I chose to do. At the age of 22, I had my series seven license and out the door I went and on my way to sell people stocks, bonds, mutual funds. All that good stuff.
Clay: Now maybe this is a terrible question but you said you wanted to become your own broker. How exactly does that work? Because in this day and age or at least I think become your own broker means what? You go and hire somebody to set up a website so you can become an online broker. If you have your series seven can you just start calling people and getting them to buy stock or do you have to work with the firm or can you as somebody with their series seven could you literally start your own firm based around just yourself?
Matt: I guess I could have but I worked for a large corporation that paid me my menial salary as a assistant. They paid for my exam for me to study for the exam all the materials. I certainly wasn’t going to open up a shop and start trading through Schwab or some other discount broker as an independent advisor. I barely knew what I was doing at that age anyway. I certainly wouldn’t have known enough to be a truly independent broker.
Clay: You didn’t actually go out there and start your own thing because I must have misunderstood what you meant by that comment. I thought you said you went out there and you started a broker. You as yourself were technically a broker since you had your license.
Matt: I just started my own book of business, gain clients, build my own business through the company I was working for.
Clay: There we go. You’re still under the umbrella but that’s good but you wanted to build your own business within the umbrella of a bigger company. That makes sense then. How did that go for you?
Matt: It went fine. I did not ever achieve the levels of success that some people do in that industry but I did it for over 12 years. That was straight commission jobs so I certainly achieved certain levels of success.
Clay: How do you get clients? Does the bigger umbrella, the firm you’re working for, do they have leads for you or do you have to generate your own leads all on your own?
Matt: You go out and you make it happen.
Clay: Was this cold calling? Was this knocking on doors? Define make it happen? How did you make it happen?
Matt: All of that, cold calling, knocking on doors, whatever it took.
Clay: You got any good stories? You have to have at least one good story from all this stuff.
Matt: I don’t know that I could pick one. What are you looking for Clay?
Clay: I don’t know. This is people want entertainment. People probably screaming in your face. I don’t know. Something that’s just … It sounds like you have something to choose. The crazier the better. Maybe something where you’re like, “Is this actually occurring right now?” One of those that may be even caught you off guard.
Matt: The biggest thing that caught me off guard, I remember I was 22, I was single. I had a customer come out of the closet to me one day and express interest in having a romantic relationship with me. This individual had probably close to a million dollars with me. That’s not something I was interested in. It was a very awkward and bizarre feeling. I had to get on the phone with HR and legal and make sure that we were dotting all the I’s and crossing all the T’s from that point forward. He really never came back to me again and made any other suggestions but he did the one time and I’m not sure how he thought I would go that way but I just don’t know. There’s your one story, that’s the most bizarre. I had other days where it’s great success where I sold everybody and their mother and I made 4 or $5000 in commission in one day and those. That was probably the most bizarre thing that happened to me during my career there.
Clay: I want to say that’s just not even a true story. I would say mission accomplished. You gave a story that caught me off guard like, all right well that that is definitely one that I didn’t see coming. Story approved on my end.
Matt: There you go.
Clay: You said this was all 25 years ago so what year was all this occurring? Not necessarily that story but just you out there doing what you had to do to build up your book.
Matt: This was mid 90s. Mid 90s to … I left the industry. I left that job in 2006 so right when the big bull market took over I remember people saying the Dow never hit 4000. The Dow will never hit 5000 and look where we are today. That gives you some perspective right there.
Clay: That’s pretty crazy. In the 90s was there a such thing as online trading? Maybe very, very early stages but I’m assuming that because that was all if I remember it had to have been dial up internet and stuff like that. If people wanted to place a trade, I assume back then they were calling you to place a trade. They weren’t hopping on the internet to enter in an order or anything like that.
Matt: I don’t remember online trading. There were discount brokers so you could call a Schwab or a Scott trade or any place else and transact business for a fraction of what I would charge. Not in a very early stages of my career I don’t remember there being online trading.
Clay: Come on. That was only like 30 years ago. What’s up with-
Matt: I know.
Clay: Well you go through all that and I guess the next question would be how long or I don’t really know. Do you still do that or I’ll just let you pick up your journey. You have all these licenses that’s what put you into the market. Where did things go from there?
Matt: I became very burned out on the industry and I left. I really turned my back on the market for a long period of time. I’m no longer licensed. It’s not valid or anything like that. No, I have nothing to do with that industry from an employment point of view anymore. Then fast forward to-
Clay: Well before you fast forward not to cut you off but you got burned out. My guess would be burned out from people always calling you. I don’t want to say nagging you but what’s going on or is the burnout just from the grind of always having to add to your book but what actually burned you out?
Matt: A lot of things the grind as you just mentioned but it became a desk job. All I did was sit in a room with a phone and a computer and call. It was the same old thing and pressure to sell more stuff. Back then fee based advisory was not as popular as it is today. The brokerage firm I worked for, the only way you made money is if you transacted something. There was always self-induced pressure because, “Hey I got to eat.” There was always pressure to get somebody to buy this or sell that or both and it just got really old.
Clay: I got it. Because really at that point you’re especially an entrepreneur because sure you’re working “for a company”. When it’s all commission-based like you said you got to eat you got to keep the lights on and I can see. Sitting in a room with just a computer and a phone and I can see. How long did it … You said that was age 22. When did you “get burned out” then and decide to just step away from the market?
Matt: About 35 when I was 35.
Clay: I thought this was going to be 25 or so. You grinded for over a decade then.
Clay: Good for you. That’s a lot of phone calls and-
Matt: A lot of dialing and smiling. Yes.
Clay: I like that dial and smiling. All right well before I rudely cut you off, you made the comment fast forwarding. Pick it back up from wherever that fast forward point was going to take us.
Matt: In between there and then and now I’ve done other things, moved on to different areas of sales and I’m still in a sales position today. My life has completely changed. I’m married, I’ve got three kids. This year more than previous years I’ve started to really look at my investments again more closely, follow the stock market more closely. I’d always invested through my company’s 401k plan. Just throw money into a mutual fund. I know that I’m not going to have to worry about it for 20 years. Pick a good growth fund and go with it. That basically was my mantra up until about this year. There’s two ways you can make money in this world. You can earn it or you can inherit it. Unfortunately we had some people die in our family between my wife and myself and it’s not like we became the Gates family or something like that but there’s some money there. We’ve got three kids. I make certainly a good income by anybody’s standards but kids are expensive.
My wife was staying at home and still wanted to stay at home. I was looking at ways to maybe get a little bit more out of the money that we had so that she would not have to go back to work. It depends on, we’ll find out. If there’s the worst thing or the best thing that happened to me we’ll know that in 5 or 10 years but had some success and suddenly I think I’m Mr. Market Predictor and I’m buying a CTU and here I am.
Clay: Well I’m not going to let you skim past that.
Matt: I know you’re not.
Clay: You thought you were a market predictor and all that good stuff. Well first off I will definitely commend you and pat you on the back that you inherited some money and instead of going out there and being like “Hey, we’re going on vacations and car shopping and we’re going to pick up a vacation property and we’re going to just spend, spend, spend, spend.” You had the forethought to think, all right how can I make this money work best for us? I’m fully behind … My wife also stays at home with the kids which is a job I could never do. I love my kids but a stay at home mom. All you stay at home parents out there. Like I said I will gladly wave the white flag and say as much as I love my kids, that is something I could never do. I’m fully behind that if that’s what your wife has a passion for. Awesome. Mainly. Good job not to be like all right spend, spend, spend.
Matt: That’s not our mantra. If you knew my wife you would know that that was never an option.
Clay: It sounds like your wife should start a podcast than about listen. Spend, spend, spend is not a good mantra because that doesn’t lead to anywhere besides … Anyways we won’t go down the personal finance raffle any deeper but. All right well you decide that you wanted to say I wanted to build you up a little bit, because I feel like there’s a train wreck here in our midst that’s coming our way. You were like, all right we need to grow the money and then what happened? You said it sounds like maybe some fool’s gold or something happened that made you think that you had all this figured out. I guess how did those early periods ago?
Matt: Well at about February this year, I couldn’t tell you the exact date but February this year I bought some pot stocks and I bought canopy gross CGC and somewhere in the low 20s. Like the day after, it just went on a run and suddenly I’m doubling my money and I’m going wow. I’m buying Canopy. I bought a Charlotte’s Web and I bought Aurora Cannabis. Then I got into a different service as far as for day trading and swing trading ideas and had some success there. I’m going this stuff is pretty easy. My wife doesn’t need to make $100,000 a year. I can work my full time job and generate 20 plus percent the rate of return on my money and also take 20 to $30,000 a year out in income. We’re good. We’re solid and well it has not worked out that way. I’ve had a rude awakening since then.
Clay: This rude awakening I would assume you … Probably you sell some of those pot stocks; the Canadian ones go down in price. You’re saying, hey, look this is another buying opportunity. You bought back in and then did the price not go back up or what things happened that made you have that realization that okay maybe this isn’t quite as … I don’t know if you ever thought it was easy, easy but when you realize that it wasn’t working out like you thought it actually would, was one of those you bought a dip and the thing just kept on dipping and dipping and dipping.
Matt: No I’m a firm believer in the long-term viability of these marijuana stocks so I hold those. I bought some other stocks on a whim without knowing what the hell I was doing. The things that I’ve learned from CTU it’s like God that’s exactly what I did wrong then. Unwilling to get out of stuff, buying stuff very impulsively, buying stocks I had no idea what they would do or why they would move the way they would. It slapped me in the face.
Clay: Were you using charts for any of these decisions or I mean you said you were buying at a whim so what was … I guess what was generating the whim? Was it a chart? Was it you were looking at news releases but what was the force behind this “whim”?
Matt: The whim would be this other service that I had that would … They provided day trading and swing trading options … Opportunities, not options the investment but just opportunities ideas. I’m sorry. I’ve done I’ve done fairly well with the swing trades but I would try some of the day trades and it just didn’t work out. I didn’t get in fast enough. I didn’t get out fast enough. It just did not go well. Then a bad choice would go worse when I would stubbornly refuse to sell and cut my losses because I had this blind faith that it would come back and had no reason to believe that. I’ve only learned those things from your program through learning how to look at charts and candlesticks and all of that.
Clay: Now the service that sent you the day trading alerts, [inaudible 00:30:23] did the ever tell you, “Hey, get out at this point.” Or was it always, hey, this is some sort of alert, and then they just left it up to you, but how do that actually function? Were you just letting the price they gave you to get out at go buy, or did they leave the whole risk management thing up to you?
Matt: They would leave the risk management up to me. They would give price targets on day trades. They wouldn’t say, “Mask it out now.” They wouldn’t say, “Buy this stock at $8 and your target for the day is 8.75.” Or whatever they thought it was. They would do the same thing on swing trades. Really that service is not bad. That’s not one of those scam services. I’ve gotten involved with that too. I just didn’t know what I was doing and I had no business playing in those pools. It was just a bad choice on my part.
Clay: Yeah. I was going to say, because part of the inner circle which is part of what I offer at claytrader.com. There are alerts and such. As this service did, the risk management is still up to you. Like Matt just said, it’s not really the fault of their service if I don’t know what I’m doing in regards to risk management. There’s an extent. Now if these people are saying and Matt alluded to some of the scamier services out there then, there’s definitely some very gray territory in those situations. You always have to be careful. If only trainer was easy as sign up for something and getting text alerts, and then when you’re all out on the golf course and I use this analogy all the time, but how nice would that be. You’re out on the golf course, or you’re sitting at the beach. You get a text alert, do this, do this, do this.
You check two hours later, sell. I just made … Doesn’t that sound too good to be true to listeners? I feel like you’re just saying out there about if it sounds too good to be true, you know the rest of it. There is that also part, well, where you can never throw a blanket statement that all alert services are bad, because and I love the candidness and the honesty. A service can be fine, but if you still don’t know what you’re doing, then you’re still going to have problems with it. That sound like that service was sending out low float stocks or anything like that, I would assume. The people load up first and then they’re dumping at anybody else. It sounds like it was probably high volume stocks and none of that low float type stuff.
Matt: None of the super low float stuff. It was not and is not. I still subscribe to that service. It’s not a pump and dump scam. Their picks are legit, in that they have the best of intentions behind them. It doesn’t always work out, that’s not their fault necessarily. I have faulted them since I’ve learned a lot. I have faulted them on some of their recommendations and so therefore I just don’t participate. It’s not a scam or a pump and dump situation. I think for what you pay and what you get out of it I think it’s a good service.
Clay: Right. Then I would assume you’re a little asterisk by that is assuming you know what you’re doing as a trader. Because it sounds like no, you’re even recognized some things where, no, I disagree with that, which is good. That shows me now that you’re thinking for yourself, which is the exact opposite of what a blind sheep would be. That’s definitely trending in the right direction in terms of psychology and being able to think for yourself to the point where you’re like, “No, I’m going to have to say that I don’t agree with that choice.” You said you’re still subscribed, so it sounds like, while, you don’t participate with them. Do you still actively monitor their alerts and almost use that within your education crosscheck what you’re learning about with what they’re advising to do?
Matt: The only thing I participate in them and what I’ve really limited myself to as far as “trading” point of view is the swing traits. My education in this world has not progressed to the point where I feel like I can pick my own stocks or screen my own opportunities. They will, I don’t know, probably a handful a week. They will issue, okay, here’s a swing trade opportunity. I take a look at it and if it’s something that I want to do or something that I feel is within my wheelhouse, something I’m comfortable with, then I might take an action on that. I’m not participating in their day trading services or anything like that.
Clay: I feel like day trading those services are really hard to keep with. Because, like you already said earlier, either you’re too slow getting in or you do get in, but then you’re too slow getting out. Depending on the stock especially if it’s, not even necessarily a low flow, but they have news for the day and usually there is no volume, but all of a sudden there’s volume then you risk the big old game of musical chairs. The whole day trading thing. I don’t know in my mind that always, it sounds good in theory, but … Well, in all actuality it’s impossible for it to work out because if it actually did work then everybody would … They would become famous and everybody would do it. Then because everybody’s doing it, it just … It wouldn’t work because well, everybody’s doing it. Everybody is trying to sell the same price and therefore it’s circular logic. With swing trading, you could … I can see how that stuff can be much, much, much less of a game of musical chairs.
Day trading that can get pretty sketchy. All right, well you had mentioned that how long … You were buying on a whim and you were just … You didn’t really know what you were doing, but how long did it actually take you to realize, you know what, I don’t think I actually understand what’s going on. From the time schedule, it looks like you realize that pretty quickly.
Matt: The downside of this other service that we’ve been talking about is they really don’t teach you anything. That was frustrating for me. I wanted to have some base level of knowledge as to, you’re saying we should buy this? Well, why is that? What is it about that that looks attractive? There were some high level videos on there, but it really didn’t get detailed enough to teach you anything. I was searching for something that would really teach me how to do this. Reality I had the dream also that I would be able to quit my job and be a full-time day trader. I don’t think that’s going to happen anytime soon. Reality has really checked me as of late.
Clay: It’s great, and I think that is … What you have right now is the ideal situation. Sounds like you have a good job and you have income coming in. It’s not like you just flat out quit everything and it’s not like the gas man is knocking on your door saying, hey, you owe money or anything like that. I would definitely say that you’re going about it all the right way. I’m trying to think about how do I want to structure the question. Because you made the comment of, well I want to know the why. I want to know what were you looking at? What led you to that decision where’s this seems like a lot of people are just like, “I don’t want to do any of that. That takes effort. That takes thinking power.” I realize that maybe this is an impossible question to answer, but what … Where do you think that mentality comes from?
Because I see it all the time in the customer service world or people, do offer buy alerts? Are you going to tell me when to buy, when to sell? Well, we’ll know? I can teach you how to think for … No I just want buy and sell alerts. Some people are totally anti wait, you’re just not going to tell me what to do, then I’m not interested. You were clearly interested and you wanted to know more so that you could become … So you would learn actually. Does that question make sense? Where exactly does that come from? Is that like just the way you were raised or I don’t know, but that’s something that … There’s things to learn from there because that’s actually the mentality you need to have. You need to be able to even be focused on self-sufficiency.
Matt: It is a tough question to answer. A big part of that for me was the realization that the money that we have been left, I don’t … I’m not a multimillionaire, don’t get me wrong, but this is substantial amount of money. I am impulsive by nature. I am impatient by nature. I wasn’t going to piss this money away. I really, from a responsibility point of view, I really needed to know what I was doing.
Clay: That’s interesting because you’re impulsive and sometimes you’re impatient, which would make me think that you’re just going to fly through that money. It sounds like you’re self … Well, not sounds like, you are clearly self-aware enough to know that you are inpatient and to know that you are impulsive therefore, that’s what sparked the whole, I need to be responsible here with all of this, which is I guess the learning lesson here is this is why you’ve got to be self-aware as a trader. I guess not even really as a trader, but it’s handy to have in life to, to be self-aware. Because, and I’m not preaching to the choir here because I’m sure there’s plenty of things that I need to work on and I’m not quite as self-aware as I need to be. That’s a great lesson for listeners that be self-aware. There’s no problem in being impulsive.
There’s no problem being impatient. There’s no problem and insert blank of emotional characteristic that you have wired into your brain. There’s nothing wrong with that. The wrong part becomes you not acknowledging that that’s just the way you are, because at least if you acknowledge it, then you can provide a solution to it. In this case which Matt’s solution was, well, all right I know that’s how I am, but I need to be responsible. I would say that was a great answer to the question because it just sent me down a rabbit hole that I would argue is very practical as far as psychology and trading is going. Well done on the self-awareness and not wanting to dribble away the money as it very well could. You realize all that thinking I want to learn. How did you actually stumble across I guess the Clay Trader world, if you will? Because, I guess I’ll leave … I don’t want to give away anything, but I guess it doesn’t really matter now that I think about it. You’ve been around for about a couple of months now?
Matt: Yeah, that’s all is a couple of months, and I had been searching for that next level of education. I came very close to pulling the trigger on some very expensive options, some of the get rich quick options. Thankfully I did not do that. I had a business trip. I’m in St. Louis, Missouri and I drove from St. Louis to Louisville, Kentucky. That’s about a five and a half hour drive each way and I was listening to podcasts in the car. I stumbled across your podcast and listened to multiple episodes and really liked what I heard. Went to your website and there was none of the … You’re going to be a multimillionaire the end of next week type crap. It was straight forward. Your services are not cheap, but they’re not ungodly expensive and it was educational. At least that’s how I read it through the website and that’s what it turned out to be.
I immediately pulled the trigger while I was staying at that hotel and I really couldn’t even start your program. That’s one of this … That’s impulsive there as well. It turned out certainly for my benefit I think.
Clay: It’s funny you bring up that’s impulsive, but that’s just always goes to show that really I think everything in life is a two edge sword. I think that’s the right term. Two edge ax. There’s always pros and cons. Because one of the things I can’t stand, in fact I guess by the time this goes public, it’ll be an older video. As of the recording of this video, I literally just released a video called the S word, and how this S word is a nasty, nasty cuss word. You got to get it out of your vocabulary as soon as possible, the S word being soon. I’ll do that soon. I’ll do that next week. I’ll do that tomorrow. Then nothing ever happens. I do remember, and what I … Matt I feel like we talked before [inaudible 00:44:24] right?
Matt: We never spoke.
Clay: Did you-
Clay: Did we email or talked at the live chat or something?
Matt: No. No. No.
Clay: No? Well I feel like, I don’t know what it was.
Matt: We’ve exchanged some emails since, and chatted since, but no. [inaudible 00:44:40] never spoke or anything before communicated.
Clay: I must have you confused with someone else, but I don’t know. Something about you I just always, I saw you with. He was an easy sale. I don’t mean that like you’re stupid. I just mean like, he’s somebody that’s like, I recognize the value. Let’s go now. Not soon. No, now. You could look at that as impulsive. Like I said, in some cases you got to be impulsive. You got to just, if you recognize something you got to go for it. That’s definitely kind of your mentality. I did not know though that you got it when you still were at the hotel and couldn’t even start it. Like you said, if you’re ready to go then go. I will take impulsive over somebody that’s always, and then I’m not talking about my courses or anything in trading, but something that’s soon, soon. I’m going to do it soon. I can’t stand that.
Matt: It can never … Death by paralysis it can never make decision. I’ve known people like that. They make far less mistakes than I do in this world maybe. They also sit in the sidelines and they never take any action.
Clay: Exactly, they make far less. Here we go. I think I’ve told this story before, but I don’t know. Matt’s got me all fired up on this soon topic. Along with the mistakes thing. Quick context, one of my first jobs, I was a bat boy for the Toledo Mud Hens. If you’re not familiar with that, they’re a baseball organization for the Detroit Tigers, major league baseball. Meaning if you … They’re AAA, meaning the next level up from the Toledo Mud Hens is the Detroit Tigers so the big leagues. That was my first job bat boy, and we’re taking batting practice. Part of the job of a bat boy was before the game you have to go get the balls that was taking batting practice. Me and my buddy are out there and we’re sitting with somebody that was down from the major leagues because he had been injured actually Louis Polonia. If you want to look him up, I think he won the world series with the Yankees. We said, “Hey man, have you ever dropped a fly ball before? ‘
He looked at us and he said, “Do you know who’s never dropped a fly ball?” We were like, who? He said the guy that never plays. That just was like my boom, holy crap, that’s so true. If you don’t do anything, if it’s always soon, soon, soon you’re not going to make any mistakes, but you’re also standing in the same exact spot. Like Matt said, you’re standing on the sidelines. Get out there. Do something. I’ll never forget that. It’s like everybody drops some fly balls, but that’s just part of the game. That’s part of life, but the people that soon, soon, next week I’ll do it tomorrow or I got insert excuses here and then I’ll do it. Sometimes you got to just take action. I blame you, Matt, for, I don’t know how you sent me on this rabbit hole of just me flipping out [inaudible 00:47:34].
Matt: It’s my Jedi mind trick.
Clay: I can’t stand.
Matt: This is psychology.
Clay: That’s right. You’re just Matt is pressing all my buttons. That’s always, and as I stumble over my words, that just summarizes the voices in your head. Because in trading you got to recognize something and go for it. For us impulsive people, you also have to all right. I don’t want to be too impulsive. Welcome to the tricky world of trading where you got to really balance out those emotions to bring clarity and confidence to yourself as a trader. Because you need impulse, but you don’t want too much impulse, so you got to just walk that fine line and that’s what I know you’re learning right now. It sounds like, and I’m not trying to turn this into a sales pitch, but I know you’re taking stuff serious. As Matt said, he’s emailed me and we’ve talked several times. When there’s he pops stuff up, sometimes be like, Matt, slow down, just a little slower buddy. I’m ambitious too. I can never fault somebody for being ambitious.
Again, it circles back to the … It’s a two edge sword. It’s like you got to be ambitious for this market stuff, but just slow down. Let me put it this way. I will take somebody like Matt any day of the week that I have to tell to slow down rather than, dude, you’ve been around for like three months right now. That’s still where you’re at. You still don’t understand that. I get it. Everybody learns at a certain pace. If I see somebody that’s been around for three months and they’re still where they are, I got to question. I don’t know if you’re that much of a go getter or not. What exactly is going on here? Matt is like the exact opposite of that, which I’ll take, I would much rather be telling somebody to slow down, slow down. It sounds like bringing things to present day now as I look at the time. We still got some time left, but I don’t want it to all of a sudden be an hour that we’re still going.
Unless you want to, I don’t want to rush you through anything. If there’s any other points you want to make about your journey up until this point. As of right now, it sounds like you’re just straight up in study mode and you’re going through the programs and courses. Where do things stand currently?
Matt: I still trade. I’ve really tried to ring myself in and I’m doing the swing trading with the stops. I feel pretty safe with that. You’re going to take a lump here and there. I’ve learned enough through chart analysis, pattern analysis that, I can feel comfortable with that. Because it’s in a right trend, it’s trending up. It’s above the averages. It’s had good volume and price action lately and all of that good stuff. I feel pretty good about that. I’m trying to keep my patients in play and work that muscle as much as I can and go through the classes. It’s not a reflection on you at all. You do a great job of trying to make it fun and interesting, but it’s dry. My nature does not sit well and watch videos and study and all of that. I have ADD as well. That is hard for me too, but I’m grinding it out. I’m trying to find my way and find what this will be for me one day. I don’t know what that is right now.
Clay: Let me ask you this because I feel like there’s got to be at least one person out there listening that is like, I’m with Matt. I don’t have the most patience and maybe they also have ADD or whatever. You’ve made the comment you’re working the muscle for patients. Are you Jedi-mind-tricking yourself? Basically what I’m asking, what have you learned to do or what are you experimenting with or what have you found success that has allowed you to stay as patient as possible given the framework that you said you’re working with about not being a patient person at all.
Matt: I don’t allow myself to enter any trades. If somebody gives me a trade idea today, I think about it overnight. I don’t enter any trades on the day when I get a trade idea. Just slow down and think about it and just because Clay or whoever said this looks good. Great, it might. If it turns into an amazing investment in the next 24 hours, then, well, I missed out. I’ll have to wait for the next one. Just take a breath and really think about it before, I tell myself this. Think about it before you enter that trade.
Clay: I like that a lot. Just wait 24 hours, as somebody that is impulsive, that makes a whole lot of sense. Just make sure it’s not an impulse buy or whatever. You stole my thunder. I was thinking, well, what happens if that policy causes you to miss out on an opportunity that would have worked out very nicely. It sounds like your policy is just, well, there’s always going to be new opportunity. It’s not the end of the world if I just miss out on one. Is that pretty much a fair understanding of how you deal with those situations where … Because I’m sure that voice has shown up before where it’s like, Matt. If you would’ve just broken your policy of waiting 24 hours, it would … You just deal with a voice by hitting it with the, well shovel pretty much?
Matt: It sounds good in practice. Believe me, it’s hard. I get pissed off when I miss stuff. I get upset when I don’t sell and I should have, when I sell too early and stock goes up. The mental game is hard. It’s a big hill to climb. I give myself that advice now because I don’t have the knowledge to act quickly and do so knowledgeably, if that’s the right word. Six months from now I may be a day trader and just be doing everything right and setting the world on fire. Right now with swing trading. Swing trade that goes up 10% between now and tomorrow morning, well, pretty good chance it’s going to correct and consolidate and come back to something again. Just keep watching the stock and wait for your chance to get a better value to get back in or move on to something else. There’s plenty of swing trades out there. They’re a dime a dozen.
Clay: For listeners out there, I want you to scroll back, rewind, I don’t know, like 20 seconds and listen to what he just said again. That is how you don’t chase. Chasing will get you slaughtered. What just Matt just said is a beautiful summary of the psychology and a thought process of how you have to walk yourself through something. Because and I still struggle with it to this day. Not to pat myself on the back, but I’m very good at recognizing the chasing voice because the chasing voice shows up quite a bit. In Matt’s scenario, this thing is boom and it’s up 10% but wait. It’s likely to correct and it’s likely to potentially pull back to certain areas. All of these areas he is I’m assuming identifying with the [inaudible 00:55:45] chart. Let me just chill out. I don’t want to chase. Let’s see what happens. Then he says the final point and if it doesn’t, well I’ll move on because there’s plenty more opportunities out there.
I’m not even trying to be funny or dramatic. Go back and re listen, to about 20 seconds of what he just described. That is the thought process that helps people not chase. Yeah, it’s one thing for him to say it, but to implement it, well, that’s where the knowledge and you got to have the tools in place like he’s learning about with the charts to be able to implement that mindset. That whole mindset and thought process that he walked us through, I’m tearing up over here. If Matt and I were in person, I’d probably be just weeping into his bosom right now because that’s just … That was poetry. It was pure poetry and I love it. That was some good stuff. That was a great description, Matt, of how you don’t chase. I also like, but it’s not easy either. You will be like, man. It won’t be … You’ll want to chase and you’ll want to just get in.
Like you said, don’t listen to those voices because they’re evil and they will get you in trouble. It sounds like Matt, your goal is to become a day trader, but right now you realize that you needed to just stay with swing trading. Is that an accurate assumption on my part?
Matt: Yeah. I’d like to be, but how realistic is that? I’m not asking you to answer these questions, but how realistic is that? You have a spouse. Actually she did go back to work, but part-time, you need benefits. My kids are coming up on the expensive years, the college years. I don’t know how realistic that is. I don’t know that I’ll ever get there, but if I can do swing trading alone and increase my annual rate of return from 10 to 15% to 20 to 30%, because I’ve learned this knowledge. I’m retiring earlier. I’m leaving more to my kids or I’m able to help my kids out more later on in life. Those are my personal goals. That’s where my mind is now. Stop thinking about, oh boy, I’m going to become a multimillionaire in three years. Come on, if you can do this investment business and make 25, 30% per year on your money that’s great.
Clay: That’s insane. No, absolutely. When you stop and really break it down, and I’m just making these numbers up so $100,000, 20% on that, which is insane like hedge fund managers would push their mother over a cliff if they could get 20% per year. 20% on $100,000, that’s $20,000 a year. Then you break $20,000 divided by 12, its right around we’ll call it about $1,600 a month. $1,600 a month with $100,000, that’s very, very realistic. When he’s saying 25, 30%, that’s actually quite possible. Nothing is guaranteed, of course, but it’s not like he’s sitting here saying, “I got to make 1000 bucks a day.” Or anything of that nature. To circle back to my question, are any of your goals, not necessarily to become a full-time day trader, but, and I don’t know if this is even possible with a full-time job.
Just actually day trading again, even if it’s for like an hour of a day. Not full-time, but just bringing about some supplemental income from day trading. Is that any part of your goal or is that just not even possible given your current work schedule?
Matt: No, I could definitely do that with my work. Right now I don’t have that knowledge and I’ve tried the day trading thing with poor knowledge and it has not worked out well. It’s going to take some further education and comfort on my part to really look at that day trading and consider that as an option. I may get there, I may never not. It’s going to be the end of this year or before I can really think that I like to give this day trading a better try, an hour a day as you say. We’ll see.
Clay: I like, and I don’t really have any mathematical stats on this, but what I found is people that, and I don’t want to say you’re doubting yourself, I would just say you’re being very realistic. I may never figure out this day trading stuff. Those are the people that through my experience have the best chance at figuring it out because they’re being very humble about it. The people that scare me are like, I’m going to do this day trading stuff. I’m going to figure it out. I’m going to be doing X, Y and Z by next month. You’re like, well, I like the ambition, I like the confidence in yourself, but as it’s been an underlying theme, there’s lots of two edged swords out there. Confidence works that way too, because you don’t want to let your confidence steer you into the land of rainbows and unicorns and little leprechauns where it’s just not realistic. I like how Matt is saying I may never get there. That shows me that he’s being super, super realistic and understanding that it’s going to take time. There’s no need to rush.
I’m just going to take it one step at a time, one day at a time, and we’ll see what happens with it. Because the people that think that they’re going to get it very, very quickly. That doesn’t mean they can’t get it because you need to have confidence, but you got to be careful. Don’t let that confidence send you into some sort of world where it’s, you’re almost setting yourself up for failure before you even begin. Because, well, geez, I thought I was going to get this in three weeks and it’s been three and a half weeks and I’m right where I started. Well, you never really set an accurate baseline to begin with. A great talking point right there.
Well, looking up at the time, I guess, do you have any, I know you have goals, but are you looking to … Because right now you’re not doing day trading because you realize you don’t have enough knowledge and you don’t feel comfortable doing day trading, which is very wise. Is there some sort of benchmark or is there some sort of … I want to say goal, but is there … Let me ask you this way. How will you know, or how do you think you’ll know when you’re ready to actually give the day trading stuff a try?
Matt: I think some kind of a light bulb is going to have to go off. Because right now I watch the tape and I’m about halfway through level two training in CTU. I’ve watched the tape and I still don’t get it. I could see the candlestick patterns and I don’t see how you can make more than three cents on a $25 stock from one minute to the next. For me personally, if that’s … I know that’s not true, but if that were it, I’m not going to mess with it. It’s not worth the stress to me. Until I can get that knowledge base and know, that $25 stock is going to turn the corner and go to $27 here today. Until I can knowledgeably stay that with some degree of certainty, I just, I’m out of it. When will that happen? I couldn’t tell you. Three kids I’m busy. Doing the CTU stuff, I probably spend about three hours a week doing it and I just don’t know how long will it take to get through and build that knowledge base. I just couldn’t tell you.
Clay: No, that makes a lot of sense. When you have … If any listener is like three hours a week, that’s it, I do three hours a day. Let me know your personal situation. Are you working a full-time job with three kids, probably not, so I don’t want to hear you thinking that because you do three hours a day. I could probably make an argument that three hours a day, how much are you actually retaining? Maybe you’re retaining it all, but listen, everybody is different. That’s the whole idea of this show is we all have different journeys. We’re all at different spots. There is no right or wrong, well, I mean there’s broad strokes of right or wrong ways to do what … But a lot of these situations where they just … It is, what it is. Like I said, going back to that whole self-aware thing, where do you think all this self-awareness came from? Just the mistakes you’ve made along the way that have helped point out this self-awareness, or is this just like a Jedi thing that you have just part of you?
You seem to be very self-aware of yourself in situation and where you want to go and keeping stuff in line with reality. Any idea where all this ability comes from?
Matt: I think it’s a product of age, maturity which no one would have given me that label 20 years ago but, and school of hard knocks. You make enough mistakes. It’s not that I’m any smarter than I was 25 years ago. I’m just running out of stupid stuff to do.
Clay: That’s a great quote.
Matt: I really think that, and making mistakes is part of life. If you’re not making mistakes, you’re playing it too safe. One of the mistakes that I’ve made also is getting burned with a mistake and then using that as reason not to try again. That’s what I’ve refused to do with this journey that I’m on now. Yes, I’ve made some stupid decisions and it’s burned made to some degree. The worst thing I could do now is just say, well, I’m done and throw all my money into an index mutual fund and say I’m just never going to mess with that again. I’ve made the mistakes. I know what those mistakes are and I can learn from that and be better going forward.
Clay: That was a great answer. Once again if you were here I’d probably be just weeping into your warm embrace because that was-
Matt: That’s not exactly encouraging for me, Clay.
Clay: You’ve had worse though from the story you shared. I have a lot of wiggle room here in terms of how awkward I can make this, so I’m not really that worried about the awkward factor because I know you can take it. Well, in all seriousness, before I forget, before we move in to the fun questions. You get the time machine and you get to take that time machine back to when all this started and you’re able to give yourself one bit of advice. What would that bit of advice be?
Matt: Stop. Buy CTU and don’t do anything until you get certain way through that. Really would.
Clay: Get educated. There we go. Because now people are going to be like, that was all scripted. Clay told him. I assure you Matt got a microphone out of this. I’ll leave it at that. Did we ship you a microphone?
Matt: You did. Yes.
Clay: There we go. That’s-
Matt: There was the deposit required though.
Clay: Exactly. Well, I appreciate that. I’m glad you’re finding value in it and you’re definitely working hard. Like you said, I would rather have ambitious people that I need to tell to slow down a little bit rather than the people that are way off in the dust and who knows what they’re doing. It’s been definitely a pleasure to have you be part of the community. Really, and before I forget again, thank you very much you volunteer to be here. For all of you people out there that are like, shit, Matt’s been around for two months and he’s already on the podcast.
Matt: Who was the school teacher? Karla was that her name?
Clay: Karla. Yeah.
Matt: I listened to that podcast and I was like, I can do that too and she was awesome. If she’s out there, hit me up Karla. She inspired me to volunteer, rise my hand and do it.
Clay: That’s awesome. Thank you Karla and that’s the whole thing here. I don’t care if you’ve been a member for, I feel like Karla was, I don’t know, a week, two weeks or two months like Matt, or you’ve been around for two years. Everybody is welcome here. You don’t have to be perfect. You just got to be able to share your journey. This has been some great stuff here. Being all seriousness, thank you very much, that makes my life much easier when it comes to trying to find guests. I would much rather have people volunteer than me have to try to use Jedi-mind-tricks to get people to come on the show and share their journey. I do appreciate that. Now for the fun questions, what is your favorite movie?
Matt: I know they’re coming because I’ve listened to all of these, but I don’t really have a favorite movie. You give me something with some combination of sex, drugs and violence in it and I’m all in, so there you go.
Clay: Some rock and roll may be a little bit.
Matt: Maybe a little bit of that, yes.
Clay: There we go. All right, fair enough. That’s your genre right there. What about food now? St. Louis is known for their barbecue too. Food wise, I guess I don’t want to stereotype you into thinking that people from St. Louis or Missouri are all about barbecue. What’s your favorite food?
Matt: Again, tough to pick one. I’m a foodie. My family is a foodie. We like ethnic food for whenever we can different eating experiences. I also love a great steak. If I had to pick one, I guess it’d be steak.
Clay: That’s just pure America right there. You can’t go wrong with a steak. Hobbies and stuff outside of the markets and all that. What do you like to do for fun?
Matt: I have three kids, so there you go. We travel. That’s our family thing is we love to travel.
Clay: Where’s the best place you’ve traveled as a family?
Matt: We just went to New York City for a vacation a couple of weeks ago, but we’re going to Asia next summer. That’s our big family vacation for next year.
Clay: Awesome. Awesome. That’s a very cool, very … I’m I allowed to ask where in Asia or are you just not sure yet?
Matt: No, that’s no problem. Seoul, Korea. My wife who was born in the United States but her heritage is Korean. We are going back to Korea.
Clay: Very cool. I’ve heard it’s really nice over there and that sometimes our media maybe blows things out of proportion in some ways, but we won’t go down that rabbit hole. I’ve heard that that part of the world is … I think my sister has been to Thailand before one of those. Anyway, she loved it over there. That’s the point. Awesome, well, and then final question, three words and these three words need to be what you would associate with what it takes to be successful or what a successful trader would have. What would those three words be?
Matt: Patience, persistence and fortitude.
Clay: I like that fortitude. All good ones, but fortitude, I don’t know if we’ve heard that or not.
Matt: [crosstalk 01:11:22] on the fiber before you start down this path.
Clay: That’s right. I like that a lot. Well, great answers. Like I said, you had me weeping over here a couple of times with your poetry, so that was great stuff. I appreciate, again thank you for just volunteering even though you were still relatively new only a couple months. That’s awesome. We’ll definitely have to have you back. You didn’t read the fine print of the microphone thing, in the fine print it says, now you have to come back whenever we want you to because we know you have a mic. Sad to be you that you didn’t read the fine print, but that’s-
Matt: Any time, any time.
Clay: I appreciate that and it’ll be interesting and fun to watch how this journey continues to unfold for you, so Matt, thank you again for taking time out of your day to be here.
Matt: My pleasure, thank you Clay.
Clay: Now for your listeners out there, before you all go final few things. First off, if you’re listening on iTunes or any of the other podcast players, then be sure to subscribe first off and then, especially on iTunes, if you could leave us a rating, that would be really, really helpful. It helps us out quite a bit, especially on iTunes. In advance I thank you for that. Then if you’re listing at claytrader.com, often some sort of spot in the bottom right hand corner, there’s a little chat box right there. If you want to reach out to us with questions, comments, suggestions, or whatever, then yeah, that will be directed. Well, first it’s a bot, but then if you want to just tell the little bot that you want to talk to a human you can do that. We love people when they reach out to us and we are there for that.
It’s great to always hear people that say, “Hey, I was listening to the podcast.” And then they go on with whether that be a comment, suggestion constructive criticism, whatever. I’m all for people being constructively criticizing. That’s how you grow and get better. Feel free to do that. Either way I hope you enjoyed the episode. I know I did this with some great stuff and I got to go do a little bit more crying. Thank you again to Matt. Thank you again to all of you as listeners, and we will see you all back next week.
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