- You can trade anything,
you can buy our subs or even trade homes.
Maybe first, we talk about this concept of liquidity
really quick, and then I want to hear about your story.
So liquidity is a word that gets thrown around a lot
in trading circles.
Let me try to define it and then maybe you can define it,
but, you know, for me, I traded two
of the most liquid instruments when I was on Wall Street.
One was the bond future on Chicago Board of Trade.
It was a massive fixed income future that was just easy
to get in and out in size, it constantly had
a lot of volume trading, that probably Deutsche Mark Dollar
at the time, was another big one, and maybe like S&P 500.
And then, there was always a price.
There was always size where you could get in and get out.
You could put on big positions, it didn't gap et cetera.
Am I right with that definition?
- Yeah, and I'm on the opposite side of the spectrum.
You're dead on.
I'm trading the most illiquid stuff,
this is why Wall Street and everyone says
stay away from penny stocks, there's no liquidity.
Liquidity is basically,
like how easy can you get in and out?
This is my $500,000 loss,
I didn't understand liquidity earlier on in my career.
I was batting a thousand, I was winning every time,
I was like, "Let's go bigger, let's go bigger."
And I eventually got into this illiquid penny stocks debt.
No matter what I could do, I couldn't get out of it
'cause there wasn't enough trading volume.
So, you're trading the most liquid stuff.
Every single trader in the world can trade it.
You can get in and out.
All your money times like a million,
if you're trading like the S&P futures
or some of this stuff.
With penny stocks, somedays I don't even trade
because there's no hot play, in play right now.
Sometimes, I need a hot stock.
I need a few million shares traded.
So, I can take 5,000 shares, 10,000 share positions.
I never wanna be more than 1% of the daily volume,
that's what liquidity is.
How much is being traded?
Housing is very illiquid right?
It's good when housing is good,
but when housing crashes,
you can't just dump a $500,000 house very easily,
there's no liquidity.
- Yes, say you had a five bedroom house in Las Vegas,
in 07/08, and you're like, "Oh, it's worth $250,000."
And then it's like, "Okay, go try to sell it right now."
- There's no liquidity.
- 'cause nobody wants to buy it.
And I thought, somebody would buy it for 50 or 100,000,
or maybe nobody would.
- Correct. - So guess what?
Right now, maybe it's worth nothing,
'cause you can't sell it. - Correct.
- That's hard for people to understand.
- I mean that's, it's supply and demand.
So everything is based on an auction, right?
So, if there's, let's say there's a painting,
forget about stocks or housing.
Let's say there's a painting.
And you don't know if the painting is good or bad,
you just know that this painting for whatever reason
let's say it's controversial, it's been written up like
everyone's judging this painting.
Because of the all the press, now theoretically,
it's worth more.
If you look at Banksy's, you know Banksy?
- Yeah, yeah, of course.
- Have you seen his stunt
where the painting got shredded.
And someone had just bought it.
And right when it got bought, it's shredded.
And now, if you look at the articles.
That painting that has been shredded,
even in the shredded state, it's worth a lot
because of all the press.
Your like, "Oh, that's the shredded painting."
- And the YouTube video as well, yeah.
- So it became an instant classic.
It became performance art.
So, if you actually look at,
there's a great book called "The Hit Makers"
which everybody should read.
And it's the history of what creates a hit?
If you look at a lot of the top painters, right?
Like Monet, like all these impressionists
that are in the museums.
Are they better painters than other painters at the time?
No, they were actually embroiled in a whole,
was a whole present, debacle where it is messed up
that there's one rich guy died, it's a long story,
there's one rich guy died
and he left his entire collection to the museum.
And the museum didn't want the collection
'cause there was all these unknown artists.
And it became a big court battle
written about by the press for several years.
When they finally accepted these painters
into the museum, the painters had gotten very famous.
So now the paintings are better.
And if you actually look at the technical skills
of many of the most famous painters,
they're not better than some of the worthless paintings.
- There's the going viral of the times.
- Exactly.
So if something goes viral, it's all perceptions reality.
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