Hi, I wanted to share an experience I had recently after a tough trading session. I decided to watch Soul, the Pixar movie that many people have recommended. There's a powerful scene in the movie that depicts "the zone," a space between the physical and spiritual world where artists, musicians, and athletes go when they're fully immersed in their craft. In that scene, there’s an allegorical figure, covered in dust, repeatedly muttering, "one more trade." At first, I couldn’t believe it was about trading, but it turns out it was. The movie portrays the dark side of "the zone," showing how becoming too consumed with something, like trading, can turn it into something unhealthy and even dangerous. This scene really hit home, and I believe it could spark a valuable discussion in one of your podcast episodes. I highly recommend checking out Soul if you haven't already. Thank you for the amazing work you do on this podcast!
I think the big takeaway of the episode is to put your money to work, create a monthly plan and follow it, and to keep your accounts separate so you don't get tempted to bend the rules you just created. Also, I cannot emphasize enough how important it to do live within your means and pay down debt. If you think 8% compounding interest a year feels great over 10 years, imagine having 24% credit card debt working against you instead.
During March 2020, the S&P had a 35% drawdown and it recovered in just 5 months. If you bought every month on the way down and back up, you'd probably have broken even - but now you have all that cash parked for when the market really rips higher. That's how you do it, just keep adding and letting it compound over time. To me, investing is taking one resource (time) and converting it to another (money); money is just an abstraction of time that is easily traded. This is why you want to make good choices and have your money work for you, because then it has a multiplicative effect, which can afford you more choices and opportunity because it lets you turn that money back into someone else's time. Some notes/ideas I had watching this: - I would be curious to see how inflation vs oil price vs population growth looked over the last 50 years. Due to how money is created in the US via loans being paid back, population dynamics and demand seem to drive things here - Likewise, I wonder how markets would look if crypto was not a thing. Risky assets seem to absorb excess liquidity in a system, so if the prices of assets are going up, then it implies there is "too much" money going around, if that makes sense. - It's interesting that you can buy proxies of real assets (gold, equities) on the blockchain; specifically that it does not pay a dividend. I wonder if there is some arbitrage opportunities between different platforms (side note: 24/7 options on the blockchain are very intriguing, can't wait for that to happen one day) - Regarding sector rotation, you can also look at pairs trading (and it can be a form of investing since 130/30 portfolios are a thing). For example, you can go short or long on a single company, while taking the opposite position on its sector etf. Say, short TSLA but long XLK - you'd be better than the company under/overperforms and benefit from the difference between it and the index. You can also do this with say, QQQ and IWM, comparing a tech-heavy index vs a small-cap index, which both offer different risk profiles in a trending market.
It’s really heartbreaking to see how inflation and recession impact low-income families. The cost of living keeps rising, and many struggle just to meet basic needs, let alone save or invest. It’s a reminder of the importance of finding ways to create financial opportunities. You've helped me a lot sir Brian! Imagine i invested $50,000 and received $190,500 after 14 days
