Why You Can Beat Wall Street's Best

This week on Talking Wealth, Filip Tortevksi and Pedro Banales reveal why everyday investors can have a surprising edge over the biggest funds on Wall Street. They break down 10 of the biggest wrong calls from some of the world’s best-known investors, proving even the experts get it wrong. Discover what you can learn from their mistakes to become a better investor.

• 0:01Speaker 00

  This podcast is brought to you by Wealth Within, a global leader in stock market education. For more information on our courses, head over to wealthwithin.com.au. Please note that the information in this podcast should not be considered personal financial advice. Enjoy.

• 0:20Speaker 01

  Welcome to the Talking About Podcast. I'm with Phil and Pedro and I want to start today off by asking a question. Now, what if I told you Michael Berry, who's a famous investor, told his investors to sell before a massive bull market? What if I told you George Soros lost 700 million betting against a bubble he was actually right about? What about Stanley Drunken Miller lost $3 billion after FOMOing into technology stocks? And Warren Buffett didn't buy Apple until nine years after the iPhone came out. These aren't amateurs. They are considered some of the greatest investors who ever lived. Yet, when you actually go back through their records, something really interesting happens. It's

• 1:02Speaker 01

  not just one bad prediction. Some of these investors have repeatedly predicted recessions that never arrived, sold stocks before enormous rallies, bought companies before they collapsed, or spent years betting against a market that just keeps rising. And I think this is something really encouraging for ordinary traders, well, ones that think that they are ordinary. Because maybe these guys that we hold on a pedestal don't have some magical ability that you or I don't have. Maybe successful investing was never about predicting the future in the first place. So today, we're going to be asking, a billionaire investor's

• 1:43Speaker 01

  really better than you? And could a disciplined retail trader actually have advantages that Wall Street doesn't? So I'm going to, straight away, go into a question, mate, to bring you in, Pedro. How are you, mate?

• 1:56Speaker 02

  Yeah, doing well, doing well.

• 1:59Speaker 01

  Awesome. Now, I want to ask, do you think people give someone like Buffett or Berry too much credibility, simply because they got something spectacularly right in the past?

• 2:09Speaker 02

  Absolutely. All the time. You know, you hear it all the time, where it's with the big short, with Michael Bory, or with Warren Buffett buying when there's blood in the streets, as he says, you know, buy with value. And then, you know, it really puts people in a place where they're at a disadvantage. And what I mean, people, I mean retail traders, because that's really who we're talking about here. We're not talking about major funds. And I think if you're looking for the type of value that Warren Buffett is looking for, then you're going to be looking for a while. You're going to have a whole different strategy to him. If you're looking for that big short opportunity

• 2:50Speaker 02

  that Michael Bory, you know, pointed out once, and actually made a lot of money through that one trade, well, then, you know, you're going to be waiting a long time as well. So it's an old adage that a broken clock is right at least once a day. And that's really what's happening here. You know, of course, people would look for answers elsewhere.

• 3:16Speaker 01

  I think it goes back to even deeper into the question of, there's this belief that people like these brilliant investors or professionals, they know something I don't. I mean, how many times have you seen this, you know, a trader, a retail trader who's unsuccessful, trying new indicators, new tools, and going far out, you know, this isn't working, that's not working. And then you see a professional like Michael Berry on TV, or Warren Buffett with these amazing returns, or whoever. And you come to the conclusion of, oh, well, he must know something I don't. He's got all this money, he's got

• 3:57Speaker 01

  inside information. And it's natural to think that way, because if someone's successful and you're not, you've got to go, well, what does he know that I don't? Or why is he successful and I'm not? But the reality is, as we go through this podcast, you'll see that these people, in terms of getting stock picks right, are no more successful than you or I. In fact, some of them are way worse. We have students, you know, that, and just go and check out our testimonials, that these guys are 70, 80% right, trading if not more.

• 4:35Speaker 02

  Yep.

• 4:35Speaker 01

  And, you know, I've had experiences like that for many years. And so, when you look at some of these numbers, these high-end guys are sometimes only right 40% of the time. But it goes back to the question of, what is, how important is it actually being right? Is the goal trying to be right? And you pose that on someone, and they go, what are you talking about? Of course, if I'm right, then that means I'm going to make money. I've got the stock direction right. But is it really about that? Because, at the end of the day, there is probabilities involved in this. You're not going to be right 100% of the time. But what if, when you're right, you're thinking in terms of

• 5:19Speaker 01

  making a lot more money than you're wrong? That changes the whole dynamic. You don't care about being right so much. And so maybe that's where these legends became legends, not because they were right.

• 5:32Speaker 02

  Yeah, yeah, it goes back to that probability theory. And I think that it's ingrained within us, going through school, you know, marking things as right or wrong, or when you're at your workplace, and you either do your job right, or you do it wrong. With trading, it's a whole different game. It's really a probabilities game. And you could be wrong 60% of the time, and you would still be profitable. So it's, I totally agree, it's not about being wrong, it's about how you structure everything around it, and how you're able to deal with those, with those being wrong, those times of being wrong. Because what I'm seeing, and you know, throughout the show, and the traders that we talk to,

• 6:13Speaker 02

  a lot of the time when people are wrong, they freeze. They freeze in the headlights, or they don't want to lose the money, and suddenly they're down 50, 60%. They don't, they can't admit that they actually are wrong. So, and that's what would happen with these guys as well. They can come out and say something, then you take that as solid, and then you go out and you base your investment decisions. In the meantime, they've just uncovered, oh, no, I was actually wrong. Now they're changing their strategy. And then now suddenly you've based your strategy, or whatever, your decisions on what they've said.

• 6:49Speaker 03

  Hey, podcasters. You're here for a reason, to become a more confident and profitable trader. And you can achieve this because it's all about having the right knowledge. We have a course that will suit you and improve the profits you take from the market. Curious to learn more? Head over to Wealth Within and check out our trading courses.

• 7:12Speaker 01

  Well, yeah. And we're going to break through, you know, 10 legends to show you how human they really are. I hope if anything, this just shows you that you've got such an amazing opportunity to do amazing things in the stock market. It's, you shouldn't look up to these people like they're gods, because they're not, you'll see now clearly, that they're as human as you and I, and they make some mistakes. So this is going to be, is going to be pretty cool. Probably a bit of a therapy session for some people listening to say, hang on, you know what, I'm not that bad. If these legends are making, managing billions of dollars are making the same mistakes I'm making, why can't I be as, why can't I do better? Why can't I be as good as them? So I'll get into the first one, the most

• 7:56Speaker 01

  well-known, Mr. Michael Berry, you know, his reputation, the big short. Berry spotted the US housing subprime disasters, movies made about it. He made a massive call. And one trade, basically, he became a king, you know, shorter than everything, what happened, the market crashed, and he made a lot of money for his investors. But, so now, because of one trade, every time he says sell, it's literally in the news. I mean, I don't know about you, man, I see it so many times. As soon as he second sell, as soon as he says sell, it's front page of 9amsn and news.com and all the stuff that we follow. And I want

• 8:36Speaker 01

  to give you some times he said sell, and he was wrong recently. Some pretty serious times. January 2023, he tweets in his usual fashion to sell. Not long after, he tweets again, saying, I was wrong to say sell. The US equities from 2023 following went for a massive bull run. Now, Tesla, Berry took a large bearish option against Tesla in 202021, very wrong. He also bet against Kathy Wood's Ark Innovation ETF, got that wrong. Scion, which was his fund, they put against both indices, the S and P 500 and

• 9:21Speaker 01

  the NASDAQ in 2023, meaning he was betting on it to crash. So.

• 9:26Speaker 01

  The question, did, did Burry become famous because he consistently, was consistently good at predicting crashes? Or because he arguably made the greatest crash prediction of his generation?

• 9:39Speaker 01

  And the answer is the second. Every single crash prediction he's made following the GFC he has got wrong. And yet you look at his fun scion performance, he's making money. So it shows you that these people are human. And it's, you can still be profitable by being wrong. And this is where money management comes in. You know, it's, it's, the problem isn't listening to Burry. The, the problem's allowing someone else's conviction to replace your own process. And this is the biggest thing retail traders need to get, get, get their head around. And I'm going to say you and I, I'm not going to say retail traders anymore because it's us.

• 10:20Speaker 01

  You need to get your head around, uh, get your head out of this thinking that someone told you to sell, or someone told you to buy at a party, or my mate's mate knows the guy that knows the guy.

• 10:31Speaker 01

  How you can take away all the element of question marks is your process. Forget about following anyone else. I mean, we, we often say, you know, if you're someone who's constantly looking at the news, following a, a, a, somebody, looking for the next hot tool or indicator that's going to save you. It doesn't exist. The people that come through us, it's very common that you won't hear them at a party talking about stocks. In fact, I'll constantly get, get asked, oh, what do you think about that? What do you think about this? I get asked all the time and I never have an answer because I know if I change my mind tomorrow, right? You're not going to be able to, I'm not going to be able to relay it to you.

• 11:15Speaker 01

  And that's going to be bad for you. But more importantly, I, and I don't mean to be rude, but I don't give a shit about your opinion. Because I have my own process. I don't care about Michael Burry's opinion. I don't care about Warren Buffett's opinion. I have a process that I have backtested, that I have thoroughly, rigorously stresstested. And that is all I need. I'm the one pushing the button and buying and selling. Why do I need all this extra information destroying my mental clarity? And it's one of the biggest things I see. When people come to us before they walk away, it's like, damn, I just was looking at so many things. I didn't know it could be this simple.

• 12:00Speaker 02

  Hmm, hmm, yeah, for sure. Yeah, that does cloud your, your judgment. And I've, I've heard students say, say that when they actually shut out all that news, uh, they actually perform a lot better. Uh, and I think a good example with Michael Burry was that, um, he actually started predicting the top of the markets. He started uncovering all this in two thousand and five. So for three years, basically, um, you know, that outlines this in the movie as well. Because he had his investors calling, what are you doing? You know, that was like when the market was soaring and they're saying, mate, you're, you're making us miss out on the best part of the, the, the run and blah, blah, blah. And he was like, no, I'm seeing cracks here, you know?

• 12:43Speaker 02

  And he, he did all the research and, you know, the, the, the housing market continued to grow. You know, two thousand and six, two thousand and seven, and it was only two thousand and eight that the bubble burst. So if you would have been following his advice, I mean, and he's, he's managing a lot of money. That's, that takes a lot of time to move. You and I can move out of the market, you know, uh, uh, on, on the click of a dime. If we see the market turning, we're out. So we can actually afford to be in the market throughout that two thousand and five, all the way up to that two thousand and eight period. We wouldn't have had to have listened to him. We could have capitalized off that and then just got out on a simple trend line or whatever our, our strategy is.

• 13:25Speaker 02

  And that's the type of, um, you know, thing that we're talking about here, you guys, is that when you listen to all that, he, he had, he was right. But when, when is that going to happen? And that's that whole broken clock thing. So yes, there's a market crash coming, there's a market crash. The, the, the main question is that when?

• 13:44Speaker 01

  Yeah, but that's the most important thing. If you, if you're able to work out and trade with the when first, you're able to ride ups and down moves. And crashes don't scare you. Booms don't excite you any more than just your following direction. You become numb. If it's going to go up longer or down longer, who cares? You're going to be riding that. That's the most important thing by thinking about when to get in. And so if, if this resonates with you or it's something that you, you, um, you're listening and you're saying, well, I, I'm not really thinking of it in that way. I, I really suggest, you know, um, there's answers for you and I'm not trying to do a sales spin. You don't have to come to us. I, I really don't care.

• 14:26Speaker 01

  But if, go out and, and, and, and learn how to do it properly. And, but you have to learn how to do it properly. And there's not too many places that do it properly. And so it's, it's so important.

• 14:40Speaker 02

  I've heard of, of people going to chat G P T and asking for, for trading advice. And that doesn't turn out very good.

• 14:47Speaker 01

  Well, yeah, I mean, anyway, let's, let's get on to the next one. Ray Dalio, which is, you know, the founder of Bridgewater. He's basically one of, you know, everybody knows Ray Dalio, right? He's in the social media now. He's one of history's most famous macro investors. So what do I mean by macro? It means people who say they understand how the market works, basically. He literally teaches people how the economic machine works. He's put the whole economy into a machine of moving parts like a Swiss watch. And he believes he's connected all the pieces to know how an economy works. Perfectly, if you will, uh, you know, or, or what's coming and why, why something's happening.

• 15:30Speaker 01

  So if anybody should know what's going to be coming economically, it's Ray Dalio. Now, I'm going to give you some of his most recent, or some of his calls that, that have happened over the last couple of years. So in two thousand and eighteen, Dalio put a very, very high probability on the U S recession before the two thousand and twenty election. So there was no normal cyclical recession in two thousand and eighteen or two thousand and nineteen. Covid eventually happened, which caused one in two thousand and twenty, but that was not what he was saying. Completely unrelated to his economic machine, how it worked. He's also famous for saying or arguing cash is trash.

• 16:12Speaker 01

  So he continued arguing against cash as inflation accelerated. Then interest rates surged and cash suddenly started paying attractive yields. Eventually, after that happened, he said, I no longer think cash is trash. Now, this is someone who supposedly tells people about how the economy works. He's worked out all the pieces. Next, we've got to talk about his performance. So Bridgewater, they had this pure alpha portfolio, which experienced a long period where returns were massively lagging U S equities. I think it was like three percent his returns. Now, I know he's supposed to be diversified all weather.

• 16:56Speaker 01

  Still, I don't think if you're an investor, you're happy with three percent unless you're an ultra high net worth and you're not in the market. And then what are you even doing in the market for three percent? Go and put your money in the bank account. Why take the risk at all?

• 17:11Speaker 02

  Plus you're paying the fees to manage that.

• 17:13Speaker 01

  So, so now ask yourself, if the world's greatest macro organization can't consistently turn macro forecasts into superior returns, why does a retail investor think they need to predict G D P inflation and interest rates to trade successfully?

• 17:31Speaker 02

  Hmm, yeah.

• 17:33Speaker 01

  You don't need to, you don't need to predict the Australian economy. You don't even have to predict where rates are going to go in twelve months. You let the market do it and follow. That's, and I'm not going to talk about it, what we do anymore again, because I don't want this to sound like a sales thing, but, but, but follow the market, mate.

• 17:54Speaker 02

  Yeah. It's so much easier. Let the big boys, um, do all the research. And then when they choose what to buy, you're going to see that on the chart. You're going to see the volume go up. You're going to see other types of patterns that, that we can identify. You're going to see that play out on the chart. And all you've got to do is press the buy button when certain things happen and then press the sell button when certain other things happen. It's, it's that basic. And, and you know, you don't, you don't need to be an economist. And, and it's probably better that you're not, because then you're going to get overwhelmed.

• 18:28Speaker 01

  Yeah, yeah, awesome. All right. Next is Stanley Drunken Miller. Now this guy, we've got to give him credit. He's a really good hedge fund manager. He performs, he, you know, he does his thing.

• 18:40Speaker 01

  They call him one of the greatest macro traders ever. He's worked with Soros. He's got an amazing long-term record. But even somebody of his reputation, believe it or not, guys, fell into a FOMO, fear of missing out trade, emotions got involved. So I just wanted to highlight how a legend, one of the best, can still fall susceptible to things that everyday traders like you and I do. So if you feel you, you know, have made these mistakes in the past, it's okay. The best do it and still do it. And I'll tell you what happened in, during the dot com boom, Drunken Miller, uh, recognized that technology was becoming crazy. He stayed away. Then obviously he watched everyone else cashing in on it. Eventually he couldn't take it anymore.

• 19:25Speaker 01

  So he reportedly put roughly six billion dollars into tech stocks right at the peak of two thousand. And six weeks later, three billion was gone.

• 19:37Speaker 02

  Wow.

• 19:39Speaker 01

  And after he admitted, he knew better. So.

• 19:47Speaker 01

  Is this, does this sound like a billionaire genius? Or exactly what happens to a retail trader who watches a stock go up for six months and finally can't take it anymore? Like, you know, it's, he's not, he's human. And, um, you know, other examples where he made a recession prediction. So just to show that, you know, these guys get it wrong too. Made a recession prediction in September, 2022. He said he'd be stunned if the U S didn't have a recession in 2023. In 2023, he continued warning of a hard landing. There was no U S recession. Nvidia, he said the exact opposite. He correctly recognized A I, bought Nvidia. The stock went up. He thought the valuation had gone too far.

• 20:28Speaker 01

  He sold it and he later said it's a big, it was a big mistake. So, you know, the, the takeaway here is one of the world's greatest traders managed to buy something too late because of FOMO. And decades later, sell something too early because it looked expensive. So just shows you, he's human. And, and this is why trading rules matter so much and why the chart matters so, so much. Because the, the goal is to let your profits run and cut your losses short. Right? How do you let that happen? You can only let that happen by following price. How do you follow price? By looking at a chart. How do you know when to buy and sell?

• 21:11Speaker 01

  By having rules for understanding what price is doing. Knowing the right timeframe to watch price on. Um, because even oh seven, the G F C.

• 21:25Speaker 01

  It's so easy to see and catch the turn when the G F C starts by looking at a chart.

• 21:31Speaker 02

  Yep.

• 21:32Speaker 01

  1989, same thing. Every crash, the only one that was tricky was COVID because that happened so quick.

• 21:39Speaker 02

  Oh, yeah. Yeah. Yep. And even then, if you've got your stop losses in place for, for your stocks, that should, uh, take care of that. Um, and then you just get back in where it's an opportune time. But, um, yeah, again, this, uh, Draken Miller, he's, uh, he's great and he's, uh, no doubt that he's very profitable over time. And that he's, um, you know, he's made a lot of money for himself and, and investors. But again, if, if he's putting out stuff on the news or, I, I think also sometimes, uh, when you put stuff out in media, they, they require you to, to say certain things. They want a, a, a comment out of you or, you know, all of these people.

• 22:18Speaker 01

  I know that very well.

• 22:20Speaker 02

  You know that very well. So you, you have to kind of say something, uh, what you're thinking at the time. Yeah. And controversial and you're saying what you're thinking at the time. But, uh, it may not be necessarily the, the strategy that you're, you're implementing, uh, for your own investors. If you're running a fund and, and things like that. So I would not be taking what these guys are saying. I would be taking it with a grain of salt, basically.

• 22:44Speaker 01

  Hmm. Now it's a good point and it's true. Like sometimes you need to be, or say something a bit more exaggerated than your actual thoughts to, to get, um, exposure. Uh, and it's not always exactly what you're thinking. So, yeah, you're right. I, I, I totally, I've experienced that, you know, plenty of times, but, um.

• 23:05Speaker 02

  Hmm, hmm.

• 23:05Speaker 01

  All right. So we get to Warren Buffett, the man, the, the best in the business now.

• 23:11Speaker 02

  They, they, what do they call the, uh, the prophet of Omaha or no?

• 23:15Speaker 01

  The oracle, the oracle.

• 23:17Speaker 02

  The oracle, that's right.

• 23:18Speaker 01

  Oracle of Omaha. Well, the oracle, um.

• 23:23Speaker 01

  You know, I guess the question was, did Buffett, was it more that these guys were good risk managers? Uh, and just kept staying in the game, surviving long enough to get the returns? Or was it that they knew what was coming next? Now, if you ask that question to Buffett, does, was his success based on he knew what was coming next? Um, I think it's fair without taking away how great he's, he was and how long he was successful. I think the answer is no. So Apple, the, the iPhone comes in oh seven. Berkshire begins buying Apple in 2016, nine years later. At that time, Apple was already one of the world's largest companies.

• 24:04Speaker 01

  When Berkshire initially bought into Apple at that time, um, it came through and, you know, its investment operation rather than Buffett, discovering Apple before everyone did. Uh, and then Buffett dramatically increased their position. Apple became one of the, the greatest investments ever. So what does this teach us? It tells us Buffett, like, it's not that Buffett was stupid for being late, but Buffett was incredibly late and still made an extraordinary amount of money. So you don't need to buy the absolute bottom. That's another thing we always talk about when we're teaching people. It's, it's trying to buy the absolute bottom or sell the absolute top is a sure way to get hurt in the market.

• 24:46Speaker 01

  Because there's plenty of opportunity riding trends. And, um, you know, some of, some of his other stuff that in terms of Buffett, IBM, he built a huge position, eventually changes you and exited airlines. He criticized airlines for decades, changed his mind and bought them. Um, TSMC, he built a multi-billion dollar stake and quickly reversed it mostly due to the geopolitical. Google, he acknowledged that he missed, uh, buying Google despite Geico being a Google advertiser. Amazon, another massive business that Buffett admitted Berkshire missed. Um, Dexter Shoes, Buffett himself has described this as one of his worst mistakes

• 25:31Speaker 01

  because Berkshire paid, using Berkshire shares that later became enormously valuable. Uh, and then Apple again, um, there's a, there's a, and, and don't quote me on this exactly, but there's a Morgan Stanley calculation where over 2004 to 2023, uh, this Morgan Stanley research estimated roughly that Berkshire did 542% in terms of return. The S and P did 537%. But if you take away Apple, Berkshire only did 442. So wasn't performed less than, than the, the index. So how, how good was he without Apple? Um, and that's the thing, you know, um.

• 26:17Speaker 01

  It, it, it's, don't judge a trading strategy on the one trade. Like so many times you'll see a portfolio or trading strategy where the guy says they're good and he's probably got 10 trades, nine of them are losers and there's one exorbitant winner.

• 26:34Speaker 01

  And, and you look at that on the numbers and the percentage return, you go, it's not bad. Me personally, if I saw someone with half the return of that, but he had done a hundred trades and 90 of them were right. That's a far more impressive return and performance. Because, because this guy has a repeatable edge in the market as opposed to the guy that's taken 10 hits and one home run and nine losers. He doesn't have edge.

• 27:06Speaker 02

  Yep. Yep.

• 27:07Speaker 01

  Or it's, you know, um, so I think it's, you know, it, it's important that,

• 27:17Speaker 01

  you know, traders can learn from this, um.

• 27:21Speaker 01

  Really, really thinking about what it is and how, how, what's important when you're trading and doing things. But, um.

• 27:28Speaker 02

  Absolutely. And, and you know, we, we, we keep talking about traders and traders and we need to establish as well that, um, Warren Buffett is an investor at heart. So that's something that a lot of traders shouldn't take his strategy to their strategy because he's very much long-term and he's, he wants to, he's thinking about buying the actual company. Like as if you go to a shop or, or you go and buy a property, you're buying the bricks and mortar. He analyzes all of that. He loves to own those companies. A trader doesn't care what is underneath that, that price chart that you're looking at.

• 28:08Speaker 02

  You're just looking to make an arbitrage, um, trade by buying low and selling high. Um, so yeah, Warren Buffett is, is not somebody that I would follow as, from a trading perspective.

• 28:22Speaker 01

  But here's a question. What if he actually did use his knowledge? And what if he actually did use technicals to get out?

• 28:29Speaker 02

  Hmm.

• 28:31Speaker 01

  If, how much better could he have? If he incorporated technicals to get, to get out, to, to get really strong entry and exit points.

• 28:40Speaker 02

  For sure.

• 28:41Speaker 01

  Like, how much better could that return have been?

• 28:43Speaker 02

  Yep. A lot. I mean, we would have seen something like Renaissance, like we saw with a technical trader. If, if he was a mix of Renaissance where with his style. Um, yeah, but that's, it's an important distinction that definitely people should think about it. Because I don't think it's, it's something that many people think they think, oh, you know, the stock market, Warren Buffett. But you're not going to go in as a retail trader and have that same style.

• 29:09Speaker 03

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• 29:38Speaker 01

  All right, let's move on. We'll get to Bill Ackman. I know we don't have time, but we're running out of time. But Ackman, he's an excellent example because he's made a few big mistakes. And this guy's, you know, come back from the dead with what he's done. But Herbalife approximately bought one billion bearish position. He argued Herbalife was worth zero. Eventually, he exited, the company went up. Another stock, Valiant, this was a bigger disaster. Ackman became one of Valiant's most vocal supporters, kept defending it as the business deteriorated. The estimated loss on this trade, and this is the thing that really hurt him, was around $4 billion.

• 30:20Speaker 01

  Netflix in early 22, Netflix falls, Ackman sees opportunity, he buys about one billion. And this is another point of just buying

• 30:28Speaker 01

  low. It's one thing to say buy low, sell high, but it can be misinterpreted. The stocks can go way lower and you can end up in a situation like Valiant, because all these, Bill Ackman, I know, tries to find, buy cheap. But yeah, you've got to really think about, you know, buying at the right time, not just buying low and cheap.

• 30:49Speaker 02

  For sure. And, you know, thinking about that Herbalife, how he shorted it, eventually he was right, because Herbalife, I don't think it even exists anymore. Or if it does, it's, you know, a very small company.

• 31:01Speaker 01

  But his timing was wrong.

• 31:02Speaker 02

  But his timing was wrong. And that's another thing, you know, you could be following him blindly. He's coming out saying it's, he's shorting Herbalife and it's gone through the last bullish run and suddenly you're wiped out.

• 31:15Speaker 01

  Yeah, I hope this, you know, this podcast just opens the eyes of how important timing is. It's something we place the most importance on.

• 31:23Speaker 02

  Yeah.

• 31:24Speaker 01

  You know, when we're trading, when we're teaching, it is crucial to not ending up in these situations where you could be right on your thesis, but never get to see it out because you've gone in too early. And whilst the market's moving against you. And so Netflix was another one. He bought a billion. Three months later, he sells at a loss of 400 million, which is almost a 50% stop loss, which is crazy. Again, where's your risk, risk of money management? But anyway, let's not go there. Then again, he buys it back in 2026.

• 31:58Speaker 01

  So if an investor like this, you know, with perishings, they're hedging with those kinds of analysts, information and resources can change their mind this dramatically, why are retail traders embarrassed about being wrong?

• 32:14Speaker 02

  Yeah, exactly.

• 32:16Speaker 01

  Being, being wrong isn't the problem. Refusing to admit you're wrong is the problem. This is, being wrong is part of the business. You're going to be wrong. Get good at being wrong and cutting a losing trade.

• 32:31Speaker 02

  Yep. Imagine if scientists were scared to be wrong. Would there be any discoveries?

• 32:38Speaker 01

  No, no. And people who say, oh, especially people with, you know, if there's an ego attached or there's this desire to be right, it will destroy your psychology as a trader.

• 32:49Speaker 02

  Hmm.

• 32:50Speaker 01

  Get used to it, man. You're going to be wrong. Cut them. Let the winners run. Be profitable.

• 32:57Speaker 02

  Yep.

• 32:59Speaker 01

  Accept losing is part of the game.

• 33:01Speaker 02

  Yep, exactly. You're uncovering what doesn't work and that's already good data as it is. And that's basically what trading is, your wins and losses, it's just data in your overall system. So treat it as that.

• 33:15Speaker 01

  Yeah. I want to get into two more guys, because these guys, especially this one, Jeremy Grantham, is another older guy. And this is what is a perma bear, one of the greatest bubble historians. Look him up. He's got a massive reputation. And he has identified previous bubbles in the past. Now, the problem is Jeremy Grantham issued, and he was on that diary of a CEO recently.

• 33:39Speaker 02

  Ah, right. Ah, yes, I did see an old fella in that saying something about a crash. Is that him?

• 33:45Speaker 01

  And he, and he got him. The guy from diary says, well, hang on a second. I mean, he brought up exactly what I'm going to bring up. He, so Grantham issued repeated warnings about US stocks for much of the post-GFC bull market. He warned in about 2010 that a major decline was going to happen. 2010, stocks kept rising. In 2022, he calls the US market the fourth super bubble of the previous 100 years. Now, 2022 was bad, the Nasdaq fell. But he subsequently warned that the recovery was essentially another stage before the final act of the super bubble. Now, the US markets are where they are now.

• 34:27Speaker 01

  And so if someone tells me the market is in a bubble, but can't tell me whether the bubble is going to burst next month or in five years from now, what do I actually do with the information?

• 34:37Speaker 02

  Yeah, exactly.

• 34:39Speaker 01

  And what, like, really, what do you do? Analysis isn't a trading signal. And, and that's the problem with these perma bears. They're so locked into being bears. I even know, I even know people that are running funds right now that have this mindset that are perma bears. And I think to myself, mate, the clients are the ones that are suffering. Your job is not to guess. Your job is to, to make money from what the market presents. Your clients are missing out because you have this view, the market's not going higher, and you've just completely destroyed their retirement savings because of your locked,

• 35:24Speaker 01

  fixed view on the market, which like this Jeremy Grantham was wrong. And I remember that diary of the CEO goes to him, well, mate, what do you have to say for yourself? Like, you, your clients have missed out on a lot of upside. He's like, yeah, that's okay. But it all, when it comes back, it all even itself out. And it's like, yeah, but what, 20 years of missed opportunity?

• 35:43Speaker 02

  Yeah.

• 35:43Speaker 01

  That's okay for you? What? Because you get your management fee, it's okay, yeah?

• 35:47Speaker 02

  Exactly.

• 35:48Speaker 01

  That's why it's okay for you. It's not okay for the guy that's invested with you.

• 35:52Speaker 02

  Yeah, the guy that's about to retire and, you know, he's just missed out on 10 years of growth and he's basically ended up with nothing now.

• 36:01Speaker 01

  Yeah.

• 36:01Speaker 02

  Good.

• 36:02Speaker 01

  No.

• 36:03Speaker 02

  Yeah. It's, there's a few perma bears out there. When you, you know, when you say perma bears, it, you're probably, you know, you're saying permanent bears. It's people that just keep singing out loud. And I think an honorable mention should be, even though I respect the guy and I read his book, Robert Kiyosaki, I think that his book was great. But lately, I don't know, in the last, say, five years, he's been very bearish and speaking very negative about a lot of things. So it begs the question, well, what are you investing in then? You know, what, what, what are you positive in? And he's pumping Bitcoin. Yeah, he was pumping Bitcoin for a while and then, then he wasn't. So it's like, you

• 36:48Speaker 02

  can't follow these people. You really can't.

• 36:53Speaker 01

  And then the last one, Peter Lynch, we'll just, we'll finish off on him. Because Lynch, who is he? He's one of the greatest fund managers ever, Magellan, if you know Magellan.

• 37:04Speaker 02

  Yep.

• 37:05Speaker 01

  They've delivered good returns, but he openly admits he's missed some incredible companies. So Apple, he understood the product. He had firsthand exposure to the iPod. Still, he didn't buy the stock properly. Later, he said, how dumb was I? Nvidia, he acknowledged that he missed Nvidia as well. And yet, Peter Lynch is still Peter Lynch, which means you can miss incredible trades and still be an incredible investor. So this is really important psychologically, because I know, you know, a lot of people beat themselves up and say, oh, I missed that. I sold that too soon. I got it wrong. I'm bad at this because of that. But the best investors do the same thing. It's not a perfect science. So if you're beating

• 37:48Speaker 01

  yourself up over it, it's, it's, you know, it's not the way to go about it because they also make mistakes. I think if you fall into that trap and you realise, I'm leaving profit on the table, I'm cutting things too soon, and you're not learning from that, you're not finding ways to adjust so it doesn't happen again. And that's the beautiful thing about having knowledge and a skill set and being able to read a chart. You can actually take a lesson, sit down like a scientist, work out what went wrong, work out how you can make that never happen again, and tighten your strategy.

• 38:28Speaker 01

  But just know that even the best make, make these mistakes. So I think, yeah, we'll just, let's leave it on that and say, you know, what's really important is, before you enter a trade is not what you think about the economy or even the best guy that, that teaches us about an economic machine doesn't totally understand it or gets it wrong. It's, you should really think about, why am I buying it? Where am I buying it? What's my risk? What's my opportunity? Where do I get out if I'm wrong? How do I stay in long enough to catch the most, the meaningful part of the trend? And how do I repeat that again

• 39:11Speaker 01

  in a process? Because if I don't have a process to repeat that again, you might as well just go to the casino, to be honest.

• 39:17Speaker 02

  Yeah, yeah, for sure. You don't want to be a, a one-hit wonder. That's, you know.

• 39:23Speaker 01

  It's not sustainable. You can't.

• 39:24Speaker 02

  It's not sustainable. And a lot of people were during COVID and actually a lot of people that came to us as students, which is great that they did. I'm so happy. And it's actually one of our best students have been from that. They, they bought during that, you know, they, obviously they identified that the market was sold off too heavily. They said, hmm, something doesn't seem right here, right? So they bought at that bottom. They made a lot of money through COVID. But then the 2021 peak hit and they weren't able to hold on to that money. So then of course they thought, well, they got a taste of the market. They said, oof, you know, I actually can make money in the market, but I wasn't able to hold it. I'm going to need to know what I'm doing, which, you know, hats off to them

• 40:08Speaker 02

  because that's exactly what, what you should be thinking. So they, they, they actually went from one-hit wonders, being able to make money just of one event that may not come for a very long time, to now learning how to trade. And now they're, they're making money out of the, the natural volatility of stocks. And that's really what you need to be doing is being able to, to play in any market. And that's how you're going to have success as a trader.

• 40:35Speaker 01

  Yep, exactly. Awesome. All right, mate. Well, thank you very much for joining. This was, hopefully it just shows you that, hey, everybody's human. Everybody's got a shot at it and all the best. Yeah.

• 40:47Speaker 02

  Yep, even the gods bleed, right?

• 40:50Speaker 01

  That's right. Well said. All right. Well, thank you guys for tuning in on this one. I hope you got some good stuff out of it. Please, if you could give us a five-star review, it really helps us continue our channel and get our message out. Thank you for your support. Thank you for tuning in. We'll catch you on the next one. Bye for now.

• 41:07Speaker 00

  This podcast is brought to you by Wealth Within, a global leader in stock market education. For more information on our courses, head over to wealthwithin.com.au. Please note that the information in this podcast should not be considered personal financial advice.