You can find a wealth of stock trading advice on Youtube. Much of it is from highly credible sources and current/former professional traders. Some of it is inspiring. Some of it is garbage. A lot of it is helpful in some way. One thread for the best content, however, is that the material is quite long form. I happened to find this video, for example, called “10 Secrets to Achieve Financial Success,” which I feel conveys incredibly helpful information.
Of course, you can feel free to watch all 2 hours (!) of this video yourself. However, I find that sometimes taking the material given and analyzing it through a different lens can help distill key messages. So I invite you today to consider taking in the information offered by Anton Kreil, who reminds me an awful lot of the late Christopher Hitchens. He offers some fantastic advice, which I will convey to you now!
Overall, this is intended to be a critical analysis of the messages that Mr Kreil conveys in this video, which is cut more like a movie taking a few days of a highly successful, wealthy trader and interspersing it with an interview that conveys the financial advice that he doles out. As you will see, it is targeted mainly toward young people who have not begun a career, or perhaps even schooling. But I feel we can all learn a lot from this advice, no matter what stage of life we are in!
Secret #1 – Respect money, while being indifferent towards it
In this first part, we are taught the importance of understanding the basics of money, as well as the respect for what it does for society. It goes further than what you’re able to buy with money. In fact, it is an essential tool to take societies out of the simplistic bartering system and allow us to manage the problem called the “Coincidence of wants.”
Coincidence of wants: when two people have goods or services that they would like to trade with one another
Money gives us an incredible tool to level out the coincidence of wants, by creating a system that allows us to gauge the value of highly different wants, including wants that may not be easily measurable such as skill. Money, then, acts as a lubricant for economy.
Although we are often taught that money is the root of all evil, and that having more money will create problems for you, this is ultimately not true. Indeed, the love of money can lead you astray. Mr Kreil discusses the dichotomy between “positive” greed and “negative” greed. Positive greed is the desire to further your life and improve the lives of people around you, be they your family, your community, your country, etc.
Positive greed is taking the idea of wealth building away from the idea of flashy sports cars and being able to abuse people. Negative greed, on the other hand, arises from a will to make money for personal gain, despite the damage that the acquisition of the money will do to other people. Unfortunately, both can and do exist, but it means that money itself isn’t necessarily the problem in the equation.
So we need to have respect for the function of money. At the same time, we have to remove our inclination to be emotional about our money. For example, if you received a relatively large sum of money for no work, you would view that money positively, and as something that you can use to buy goods and services.
But it’s important to remember that the money doesn’t care about you, no matter how large it gets. And the more you care about money, the more of an imbalance of power that the money has over your life. Ultimately, we need to consider and be aware of what money is, but we shouldn’t romanticize or worship it.
Now, for me this is a lot of “duh”-level stuff. We all know what money is for. We all know that money doesn’t care about us. But it’s one thing to know it, and another thing to act on it. When you grow indifferent to your money, you’re able to make calmer, more logical decisions about how it’s going to be spent.
Imagine all those people you’ve seen on message boards and comments sections raving about the money they’ve lost, or selling the dream of how much money you can make if you just follow them. Their ability to do this stems from our emotional attachment to money, and we have to work to disengage ourselves from it.
Secret #2 & 3- Define assets and liabilities properly, and build your own future
This is a general misconception overall that a lot of people have about their assets. It’s stated by Robert Kiyosaki more explicitly and more…let’s extremely, that there is a difference between good debt and bad debt. Bad debts are those you take on in order to gain liabilities.
That would include your house. That would include your car. For many people, that also includes student loans. Essentially, these debts are taken on to purchase things that are a drag on your ability to create wealth and cash flow. For example, if you take out a mortgage to buy a house, it should not be viewed particularly as an investment, since that house is going to do very little besides take money out of your pocket.
And that’s just the asset. The house must be maintained, and you must foot the bill for any repairs or disasters that befall your “asset.” The debt that you took on is likely to cost you a lot more in the long run, as well, since the amortization schedule that you agree to can end up doubling the price you pay for the house or the car.
In essence, any debt is a liability, and it is wise to work, first and foremost, toward eliminating your debt. Then, you can focus on building your assets. Many money gurus or people offering you advice will say that these assets generally need to be things you run like a business. That could mean buying real estate with the intention of renting it out and creating an income stream, or it could mean starting a legitimate business where you sell your products.
But it’s important to remember that other assets can be used to make you money, with less time commitment. On this site, we discuss equities…in particular those relating to cancer companies. In that sense, many of my readers are attempting to build some level of their wealth by trading stocks, which itself can be a way to build your assets, if you do it correctly.
The video recommends that you abolish every bit of debt, and prevent yourself from taking on these personal liabilities. You should save your money for 10 or 15 years to buy your house in cash, for example. I think it’s a matter of your priorities. If you’re a young, single person new to your career, this could be viable. However, for those who get married and/or start families, your priorities may begin to shift around.
Does that mean you should give up on building wealth? Of course not. It just means you might not be flying intercontinentally first class and live in a penthouse in Singapore. Personally, I feel that’s ok to give up, as it’s just not really a lifestyle for me. However, this lesson is still valuable. Too often we are content to sit on our debt and continue holding onto liabilities.
Ultimately, debt undercuts your freedom, and freedom is the most valuable asset you can possibly own. On that, I can right aboard!
This segues into another point about the importance of building your own “infrastructure” for a comfortable retirement. Once we get a job, it’s all too easy to start taking on a bunch of liabilities. You can go to buy a modest house, and if your credit history is good enough, you’ll be allowed to take on way more debt than you can reasonably pay off sooner than, say, 10 years.
The best thing you can do for yourself is to start as early as possible with building up your means and future standard of living. The pension system that was built decades ago is not something that younger people are going to be able to rely on. I’ve heard many argue that, for people in my generation, we won’t be able to rely on social security in America, due to mismanagement of the trust fund.
In essence, the only reasonable way forward is to build your own future by building an asset base that can provide you with cash flow that supports your lifestyle without needing to work. It sounds simple, but most people don’t take even the elementary steps you need to make it happen.
Another piece of advice is to stop outsourcing the development of your personal pension fund and to learn how to invest properly on your own. On this, I can agree in part. Too often, we’re very passive about just throwing money into a 401k or an IRA, and assuming that will take care of the future. This is often 1) Not enough money, and 2) Not enough control over what you’re getting.
However, I don’t think it’s reasonable to take this point and throw away all the potential resources you have. Most of us will never learn to invest in a way that protects all of our money while realizing gains. So there is value in building a big part of your retirement with traditional, recommended professionals.
At the same time, is that 5% that your company matches on your 401k enough to get you through in retirement? Most likely not. We need to learn to control spending and continue to save so we can have a component of our fund be something that we control and direct.
Secret #4 – Travel, get perspective, get your dream life
If you have eliminated your debts and begun to build an infrastructure that can pay for your cost of living, then you will gain the freedom and time to travel. When you can direct your own schedule totally, you are totally free, and, as stated before, that freedom is your most valuable asset. Mr Kreil recommends that traveling gives you the perspective to truly appreciate that.
And he doesn’t mean a two-week vacation in the Bahamas. He means dropping everything and living on the road for a year, or uprooting and moving to another country for an extended period of time.
Frankly, I don’t find this advice that appealing. Certainly, if you’re of a mind to travel and experience things in this way, then it suits you, but for someone like me, I’d rather be home. Perhaps it’s a more European mindset, but I have personally found that I don’t feel very free when I’m in other places besides my home. I feel obligated to adhere to customs, to get out and do things. But I’m a homebody. So I don’t feel too strongly that this is the right advice for everyone.
However, it is great advice for a certain group of people, and if the idea inspires you, then you should take it seriously! The advice is prescient in the sense that the more experiences you have, the greater your clarity in terms of what you’re ultimately working toward. Traveling can be transformative for many people, particularly those who are young and without much direction in their lives yet.
Secret #5 – Risk is subjective and multidimensional
People tend to view risk in a dichotomous way. Essentially, when you take on risk, the more you take on, the higher the reward. The more risk you take, the more you stand to lose.
But risk isn’t really an absolute quantity that you can easily calculate. It is, in fact, very subjective. For example, if you have a decent-paying job today that covers your extant liabilities, then you would take on great risk by just giving that up and “pursuing your dream” with no safety net. However, if you lined up another job before quitting, one that pays you significantly more, then the potential risk is decreased by a lot.
That one is obvious, but it’s important to keep in mind that we are tricked all the time into believing the wrong thing about risk in our lives. You might love your job and get compensated handsomely for it. Therefore, you feel no risk in just staying the course.
But you might get laid off, or the company could go under. So there is always downside there. Mr Kreil discusses the risk in different terms, as well, stating that if you happen to lose a job paying x amount of money, then your total downside for the “investment” of time and energy you put into your career is finite, but that if you undertake wealth building, then your potential upside is infinite. So risk, in this sense, must be considered alongside the possible reward.
What’s more, the person holding the job with a salary of x will anchor any other opportunities to that salary figure. If you are earning $30,000 a year as an associate in your field, and someone else offers you a higher status job, what salary would you be satisfied with? For many, a bump to $40,000 annually would be a major gain, only to find that a peer in their field started at a different company for $60,000, or that their buddy started a business and is making substantially more.
The lesson there is that when you anchor your money concerns to a specific value, you make yourself unable to evaluate risk as clearly. This is a great idea for traders, as well, as they too often get hung up on different anchors like “support” and “resistance,” preventing them from seeing what’s coming up next because they’re so fixated on a specific number, like their purchase price or some kind of technical value.
Secret #6 – Seek out alternate education
A big issue with traditional education is that it does not teach you how to be financially astute. We don’t learn a thing about cash flow, debt management, investing, or just about anything relating to money in primary and secondary school. What’s more, the infrastructure that set up the educational system has a vested interest in making sure that we are pliable and open to the ideas of taking on debts instead of assets.
In short, the system wants people to get a job and buy things. This makes other people money. It is not set up for our personal success, if asset building and long-term financial freedom is the ultimate goal.
It’s good advice, and I don’t see it as a scathing indictment of the system we’re brought into. It’s just clear that the education we receive is not up to the task of teaching us how to free ourselves from these bonds. That may come from the advice of parents who do not want you to suffer, who just want you to get a good job and be happy.
But the conflicts of interest can’t really be ignored if you want financial success. This is particularly true in my generation, many of whom feel they were sold a bill of goods about education that the system could not cash. They didn’t realize the importance of selecting the right kind of education to get a “good” job. Even for those of us who went into an in-demand field, we are encouraged to take on more debt and continue living month to month.
This underscores the importance of seeking out alternative education and advice from people who have succeeded at being what we want to be. If you continue relying on your peers and role models who do not know how to be successful at the level you want to be, then you’ll continue to be guided poorly as they default to the same system that put them in financial bondage.
Secret #7 and 8- Value your time properly, and ditch your smart phone
The more debt and other liabilities you end up taking on, the more you need to swap your time for money. Since that money is basically going all toward your liabilities, you end up swapping your time for…nothing. In this sense, valuing our time is a critical component of building financial freedom.
A lot of successful people give this same advice: value your time. It’s difficult, however, for us mere mortals to understand what this truly means. We all place some value on our time, but in many cases we don’t feel that visceral unease of having our time wasted. And we don’t operate in our lives in such a way that we ascribe value to our time.
One of the big ways that we undermine the value of our time is with mindless technology. Mr Kreil indicates that he doesn’t own a smart phone, and he sets aside a certain amount of time in the day to go through and address his most pressing email and other communications. This is a bit extreme to someone like me, who has become comfortable with a world where smart phones are ubiquitous.
However, it’s a good lesson for all of us and whatever hobbies/distractions we have. Every moment you spend watching television is a moment that is not creating value for your life. Every video game you play is another drag on your time.
Is it worth it? That’s up to you. I don’t think becoming a crazy monk and abolishing all technology and entertainment from your life is what these guys mean when they say to value your time. Dan Lok put it in an interesting way. To paraphrase, if he decides he wants to watch a movie, then he prioritizes it, because he loves his family and wants to spend time with them. At the same time, he knows that it is costing him thousands of dollars in potential earnings he could gain if he worked.
That level of appreciation for your time would go a long way toward singling out the things you really want to do from the things you’re doing just because you kind of bored. It’s the purposeful approach, as opposed to the anti-technological zealotry, that I take as valuable from this point. Most likely, we’re all dependent on some kind of technology, and we could do very well to be mindful of what it’s costing us.
Secret #9 – Do not consume mainstream media
I personally do not like the term “mainstream media” due to the now-political connections with the phrase. But here it is necessary. Being a purveyor of wider news media is not a good path forward for becoming a better investor. Financial news is reactive in nature, and therefore it can’t really help you in predicting where the markets will head.
At best, it’s a toothless recap. At worst, it can drag you toward following the herd. This is antithetical to success in investing. Therefore, it is probably best to limit our exposure to the financial news at large, and focus on just the material that really helps us get better at predicting the future.
In cancer investing, we have some interesting mechanisms to accomplish this. By knowing enough about the market dynamics and the path to approval, we can predict potential binary events well ahead of when the market may end up reacting. So information about cancer medicine is valuable. However, the yahoo headlines stating that the dollar will fall because Kim Jong Un ate salsa on his burrito in Singapore are not really serving the purpose of making you a better investor.
This extends to the larger world of general news, as well. Hysteria about liberals or Donald Trump or whatever your outrage-du-jour is will not often serve you in any way except to distract you from your goals. It’s important to be informed, certainly. But we must also remember the one and only goal of corporate news media: get your eyes. Lock your eyes onto ads or a subscription. Make money. The more sensational the news, the more powerful a weapon it can be.
And that distraction can happen to any of us, but young people are particularly susceptible to the siren song of constant exposure to the daily disasters. We have to put ourselves on paths that will serve our end goals, not undermine them.
Secret #10 – Choose role models that suit your objectives
Here, Mr Kreil delves into another societal problem: a lack of good role models. He doesn’t necessarily mean a lack of role models in the moral sense. Rather, we have a problem of celebrity in the world today, where the media at large deifies celebrities, whose major qualification is that they are celebrities. This makes them commodities for a wider agenda of, again, getting your attention and achieving good ratings, paper sales, and subscriptions.
Young people in particular tend to put celebrities on a pedestal and make them, by default, role models. The problem is that most celebrities do not deserve to be models, and the rare ones who are good role models are still disposable, able to be replaced at any time. This does not serve the objective of learning how to conduct one’s self to build freedom.
In short, celebrities need to be treated as what they are: entertainers who are being paid to entertain you. If you want a role model, you need to find someone tangible, who you can talk to, and who can help you identify steps that will help you achieve your own success.
So as you can see there is a lot to be gleaned from this feature film-length interview with this highly successful stock trader. Certainly, some of the lessons are a bit out of my taste. Others are beyond my comprehension. I still struggle to value my time appropriately, and I often waste it frivolously, essentially ascribing no value to it.
But there’s a lot more detail you can pick up, and I specifically avoided using some of the illustrative examples that were in the video so that you might be encouraged to watch it yourself. To me, however, there is a lot to be learned through critique and analysis of what successful people say. What you choose to do with this information is up to you!
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