- I'm a fan of mixed martial arts
and when I watch a fighter on like a 10 fight winning streak
and you were in Vegas watching Conor McGregor
beat Jose Aldo, so you know what I'm talkin' about.
- [Tim] Yeah! - I always watch 'em
when they have their first loss and I see
how are they gonna come back?
I saw Conor when he got choked out by Nate Diaz
- Yeah - How does he come back?
'Cause a lot of times that's hard.
You took a big loss, half a million dollars.
- [Tim] Yeah - A few years into
your trading career.
What happened to you emotionally?
And what happened next?
- Um, I mean I drank a lot,
it was splashed all over the newspapers
I mean New York Post said like
parties over for hedge fund king,
I was never a king, I had a few million dollars
but for the press they wanted to make it big.
- And before this you had been flashin' the Lamborghini
and all the good stuff?
- Well, I wasn't flashing, but I was trying to show
my hedge fund, like my hedge fund was like top rated.
I ended up losing like a third of my hedge fund
which in the grand scheme of things was the best thing
that ever happened to me but at the time
when you lose a third in one year,
it's like you blow up.
And then, to make matters worse, not only did I lose
a third, investors weren't like asking for their money back
like I was still up over four years because of the previous
three years but I closed it down and I got into teaching.
And so, people are like what are you--
You're leaving the hedge fund world
which is a very legitimate, big world
and you're getting into like this snake oil world
of teaching, like have you lost your mind?
Have you lost all of your money?
Obviously that's the only reason that you'd do this.
But what I saw is that that big loss taught me the rules
that I now teach, 'cause it's the best thing ever.
'Cause before that loss, I didn't have my risk management.
I might've been winning a lot,
but I was due for a big loss, right?
Like I didn't know how to cut loses quickly,
I didn't know the risks of illiquid stocks.
It completed my education
and because of that it made me a better teacher,
it made me a better trader,
and I got into teaching Roiders had the headline
Failed Hedge fund Manager Tries Again on the Internet.
And I talked to her for like four hours,
I explained everything, I was like no, this was an illiquid
stock I ignored my trading rules, I didn't know
how important they were.
She was like yeah, yeah, I get it.
And I was like she really gets it!
Then she wrote this article and I was like
she didn't get it!
Yeah, but it was good 'cause it really knocked me down
publicly, it crushed my ego which was fantastic!
If you have a big ego, the market will humble you.
And the market humbled me, the press humbled me,
and it put me into this perfect position,
I went back to 12,000 dollars not because that was all
the money I had left, because I wanted to repeat my feat.
- [Brian] That's your bar mitzvah money.
- Right around that time, like when you fall down,
what do you do?
You go back to your roots.
So, I still had like 400,000 dollars to my name
but I was like no, I'm gonna go back to 12,000
just trading with this, I didn't know if I'd be successful
I was like okay, now I know my rules a little better
let me do this, at the same time there's a small
start up called Covestor, that had started and it could
basically verify your trades.
So I uploaded my broker information to them
and they ranked all these traders and I became the
number one ranked trader out of 60,000.
I grew my 12,000 to roughly a quarter of a million dollars
over two years and they tracked every trade to make sure
that I was telling the truth and I showed it
in video lessons and blog posts and again,
250,000 over two years is not the big money,
but when you start with just 12,000,
it's very good. - Yeah, and the transparency
that's something brand new to the internet.
Like in the history of stock trading, you know,
there's never been transparency out there.
So this is interesting, and that you chose to do it.
I mean for everybody to see every trade it's like
seeing you naked, right? - 100%!
And that's the gift and the curse because again,
I was all kinds of messed up in the head after that loss
like picture winning every single time,
thinking you're the best trader in the world,
and then getting knocked down like big time.
Then I was on a reality show while this was happening
so I was drunk in every episode,
literally but it as entertaining which helped, you know?
- How long were you drinking for
and how did you get out of that?
- I was drunk pretty much every day or every few days,
it was like a good few months.
But you know, I got out of it because I wanted to
prove myself like I got tired of feeling sorry for myself
and I was like how do I get back on this?
And the loss wasn't because of one of the rules that
I made a lot of money on,
I had inadvertently broken my rules which I didn't know.
I didn't know like the importance of
liquidity versus illiquidity, right?
And so then I was like oh my God,
this is such a great lesson!
So, it was basically like market tuition
and if you can lose half a million,
I mean it's an expensive lesson,
but if you get taught that, and I did get taught that,
and then the press while it was bad,
it reinforced that lesson so I never forget that 500,000
dollars, right? - Yeah
- I've had some losses like after that,
never 500--
Never even close to that because I always remember
how bad that was.
So I encourage people like if you have that loss,
like yeah it sucks but it's part of your education,
you're an incomplete trader,
you're an incomplete human and not just about money
but if you get knocked down in any field that you do, right?
Like anything that you're really pumped about
and somehow you misjudged it or mistimed something
and you get knocked down really hard,
that is great for you.
- Yeah, it's like life.
And again, back to a Conor McGregor analogy,
when he got choked out by Nate, his cardio killed him
at the end, he just had nothing left.
- Yeah - The next fight he came
back with a lot stronger and a better game plan
and less aggressive.
- It forces you to see what you really have
like it's the challenge, like you might have a big loss
or a defeat and just give up and then it's just
a slippery slope because you're feeling bad
and you know, you feel crappy about the whole thing
but for me, I took it as a challenge and it re-energized me
I felt like my blood was boiling when people,
first of all people were saying like I lost money
short selling penny stocks, that being said,
you can't short sell penny stocks,
brokers that don't have shares to short,
they just say no, short selling penny stocks is illegal
and I'm like, no it's not illegal, you can do it,
your broker is lying to you!
So, it made my blood boil, so I had a mission,
it wasn't just about the money,
I wanted to get good information out there.
And I wanted to differentiate, how did I make so much money
trading liquid stocks versus losing a lot of money
on an illiquid position?
So when you asked about liquidity,
it was kinda funny because that was like my biggest lesson
that I could share with the world.
Now, none of my students ever get involved in an illiquid
position 'cause they know my story
'cause I talk about it non-stop.
(light music)