S2E48 Simon Ree The 5 big myths of Wall St

S2E48 – Simon Ree – The 5 big myths of Wall St

Simon Ree

The 5 big myths of Wall St. My next guest has a #1 best-selling book, The Tao Of Trading, and he is the founder of a platform that teaches you how to generate ongoing revenue through options trading. He has three decades of experience in the financial markets including senior positions at Goldman Sachs and Citi Bank. In this episode, we dive into the 5 big myths of Wall St, how he generates 5% per month with options trading, and where this bear market is going from here. Please welcome Simon Ree.

Payback Time Podcast

Payback Time is a podcast for investors. The goal of this podcast is to help make investing approachable and easy to understand. We will interview beginner and experienced investors and ask them to share stories on how they got started, what challenges they faced, what mistakes they made, and what strategy works for them today. The overall objective is to provide you with a roadmap that helps you become a better investor.

Preview Video

Full Episode

Key Timecodes

  • (01:01) – Background history

  • (04:16) – Understanding his platform

  • (05:49) – Deeper into his strategies

  • (06:50) – What is his spread strategy

  • (08:07) – How does he apply this strategy in this volatile market of today

  • (09:08) – What kind of returns does he get with that approach?

  • (10:21) – A parallel with TYKR strategy

  • (11:59) – What are the five big myths of Wall Street?

  • (16:49) – Education is the key to getting started into that approaches

  • (18:42) – How long is the training program that he recommends?

  • (19:39) – How can beginners safely start trading?

  • (20:40) – What is the amount of money to start?

  • (22:35) – The warning signs and how to control emotions and risks on that approach

  • (23:38) – A bit about Compounding interest

  • (26:46) – The challenges of the next five years

  • (29:53) – What are the impacts of unemployment and recession on that market?

  • (36:09) – The worst business or investment advice he ever received

  • (36:40) – The best business or investment advice he ever received

  • (38:16) – Guest contacts


[00:00:03.390] – Intro
Payback Time is a podcast about building businesses’ wealth and financial freedom. We try to uncover the challenges our guests faced, the mistakes they made, and the steps they took to achieve their goals. The overall objective is to provide you with a roadmap that leads to your own success. John Tepper is your host. Are you ready? It’s payback time.
[00:00:33.260] – Sean
My next guest has a number one bestselling book, the Tao of Trading, and he is the founder of a platform that teaches you how to generate ongoing revenue through options trading. He has three decades of experience in the financial markets, including senior positions at Goldman Sachs and Citibank. In this episode, we dive into the five big myths of Wall Street, how he generates 5% per month with options trading and where the spare market is going from here. Please welcome Simon Ree. Simon, welcome to the show.
[00:01:02.650] – Simon
Hey Sean, great to be here.
[00:01:04.000] – Sean
Yes, thanks for joining me. So why don’t you tell us a little bit about your background?
[00:01:07.780] – Simon
Sure. So I guess I’ve been fascinated by financial markets since I was a teenager in high school. My second last year of high school was 1987, which was obviously an eventful year for the markets. We had the stock market crash and I had an economics teacher that year. He had written a book on the stock market, was very passionate about it. And I really just, I guess, fed off his enthusiasm and his passion and I’ve been hooked really ever since then. So after high school I went to university, studied economics and finance and my first job outside of Uni was working as a futures broker. So we were doing all of the trading places kind of stuff, pork bellies and orange juice. But ultimately the big revenue earner was wheat hedging for wheat farmers. I was living in Australia at the time by the accent. And as lucrative as that was, it didn’t really set me on fire the way looking at Microsoft or big corporate companies did, I find a lot more dynamic. So I left that after a few months, worked for a few years as a credit analyst in a corporate bank and then sort of got my break in the mid 90s working for Goldman dealing in equities and sort of what I’ve done ever since.
[00:02:28.770] – Simon
And I kind of built my business within Goldman around options. I developed a certain expertise around derivatives with my futures background and in 2003 I moved to Sydney. 2005 I was asked to head up Bound and head up the markets desk for Goldman in Australasia. And in that role we were responsible for pricing and trading all of the over the counter equity derivatives transactions, fixed income, credit and foreign exchange as well. One thing led to another, we had the global financial crisis. And then in 2010 I got headhunted by Citibank in Singapore and I came up to Singapore, which is where I’m currently based, worked for citibank for about six and a half years. And in that role, I was working very closely with a number of family offices of billionaires located throughout Australia and Asia. And I guess I got to a point in my life in my mid 40s where maybe we call it a midlife crisis, but I thought, what am I doing? What’s my marginal contribution to society? And I didn’t really like the answers I was coming up with. So, you know, really ultimately what I was doing right was I was spending better part of my days and weeks and months and years helping people who are already incredibly wealthy stay that way or become even wealthier.
[00:03:53.560] – Simon
And I thought, look, I’ve developed a really good skill set here in the industry. What I’d like to do is put this skill set to use for people who could really benefit from it. So I left the corporate world behind, founded an online education company teaching people what I know about markets and about trading. Wrote a book, and I guess the rest is history. That’s why I’m here.
[00:04:16.170] – Sean
Love your backstory. Thanks for breaking that down. Let’s dive right into your platform a little bit. I want to learn about the book a little bit as well. And then I’ve got a bunch of questions here, organized, ready to go for you. But yeah, what is this platform? Is it like a membership platform where you gain access to education? How does it work?
[00:04:34.330] – Simon
Yeah, that’s right. So I’ve got a couple of different memberships. So I’ve got an online on demand learning platform where people can learn all about how to trade from a technical perspective. So I don’t deal in fundamentals at all. I mean, we look at things like market internals and so forth, but it’s very technical based, chart based, and I take people through the real basics of what is a candlestick chart, what is support, and resistance to going through some of the indicators that we use. And I’m an options trader. I think options are not only the best way to grow your wealth quickly, but they’re also the best and easiest way to manage your risk. So I teach take people right the way through. What is an option, how do you trade an option? What does delta mean, what does theta mean? And I do it all in a very simple and engaging and accessible manner. There’s no complex math. I really try and reduce the amount of terminology and jargon that’s used and where I do have to use it and make sure it’s thoroughly explained. And really what I do in the online courses is give everybody what they need to go through the work and become a trader, become a successful trader.
[00:05:49.120] – Sean
Got it. In our community, we focus more on investing. So with ticker, for example, we do look at the fundamentals that is long term focus. But with trading, especially options, I found it can be really high risk. You got to be careful with the strategy you use. However, I am a fan of covered calls. That is a safe strategy. I know there are other options, strategies like it, but let’s dive in a little further to what kind of strategies do you like most?
[00:06:17.140] – Simon
So my favorite strategies are options spreads, whether they’re debit spreads or credit spreads. And the reason I like spreads is if you enter a spread, one of the biggest problems in dealing with options, which is time decay. An option has got an expiration date, and if the prices aren’t moving in your favor, the option decays in value. If you trade a spread, you can mitigate that time decay component or even get it working to your advantage. So I’m a big fan of spreads. They’re also a great way to manage risk.
[00:06:50.440] – Sean
Can you walk us through with a real life example just so the audience can kind of understand what the spread strategy is?
[00:06:58.160] – Simon
Yeah, sure. So if you look at a debit spread, for example, let’s say the S Amp P is trading at where are we? $360. For example, you might buy a spread expiring in a month’s time, 21 October, so slightly less than a month. You might buy a call option with a strike price of $360. So that’s roughly at the money. And you might sell a call option with a strike price of $365. All right. So that spread, we would say, is $5 wide, so that the most that spread can be worth at expiration is $5. But if we can buy that spread today for $2, that’s an attractive risk reward. If you’re buying something for $2 that could potentially be worth more than double in less than a month is a nice return. And of course, what we really emphasize, though, is identifying those high probability moments in time to enter in an options trade. We’re not just doing them every day of the week. We’re really waiting for very special moments in time where the probability is in our favor.
[00:08:07.240] – Sean
Got you. And how do you do that? Let’s say, and this is a good segue to the market how do you do that in a volatile market like today?
[00:08:16.160] – Simon
Well, there are, I guess, broadly, two types of trading strategies that I employ and that I teach trend following strategies and also countertrend strategies. Now, trend following, I mean, trend following works well in any market. I’m a trend follower at heart, and I think trend following is the easiest, safest, most intuitive way of trading. But in a market like we’ve seen in 2022, where it’s volatile and you see very sharp turns and that they happened very quickly, adding countertrend trading can be a real benefit. Countertrend is where you’re going against the shortterm trend. There are some very specific filters we look for to again identify high probability moments in time where that trend is likely to reverse.
[00:09:07.050] – Sean
Got you. Okay, and with this strategy, I want to get an idea. What kind of returns are we talking about in a portfolio over the duration of a year? I know you can’t guarantee anything, but.
[00:09:20.590] – Simon
What I suggest to my members is I think an Achievable target is 5% per month. And if you compound your returns monthly, you know you’re getting up towards 80% per annum. Yes, now that sounds I don’t like talking about returns, especially people haven’t traded options because you throw numbers like that out there to people, and usually I get one of two reactions. Either that’s impossible, how could you be beating the best hedge funds in the world? Other people say, oh, that’s boring. I’m not interested in trading, and unless they can turn my $2,000 into a million dollars in six months. So I find that people often fall in one of those two camps. Incidentally, the top decile hedge fund manager in 2022, the top decile average return for that top 10% is two 3% this year. So hedge funds are not exactly shooting the lights out.
[00:10:21.100] – Sean
No, they’re not. And I like how you frame that up. Some people can react like 80%, like with ticker, for example. With investing, we try to aim for between 15 and 50% per year just buying solid companies, and then you keep buying them, especially, like time, like now when the market is down. What’s interesting about the strategy is and very much inspired by Phil Town and then Warren Buffett, Charlie Munger, when the market is doing well, you’ll do well as well. But when the market is really going south after a cracks, that’s when you do make those returns that you said 80% that you probably noticed here on video. I did not flinch at that. I’m like, okay, yeah, because our audience and then myself seen returns that have been that and higher well into one given year, well over 100%. You just got to buy when the market is going down. COVID in March of 2020 was a great example. The market went down about 30%. So I’m sure your strategy, you can do pretty well there. But 5% a month? I’m looking at them like, well, to do that consistently, that’d be a feat.
[00:11:28.950] – Sean
So worth exploring, maybe. But I also have seen the world of options and seen the risks. And investing to me, is just easier to sleep at night. You can say that. That’s my thought at least.
[00:11:44.140] – Simon
I think you’re right. It’s certainly easier. If you want to trade options, there’s additional effort involved, both in the education piece and also from an ongoing basis. There is more effort involved.
[00:11:58.310] – Sean
Right on. Well, let’s dive into some of your questions here. Thanks for sharing some of the details here and options. And I think people, if they’re interested in checking out your strategies, they could go to your site, which will help you promote at the end of the episode. But why don’t you talk about. One of the questions here is the five big myths of Wall Street. I love to hear this.
[00:12:18.340] – Simon
Yeah, sure. So that’s chapter two of my book, which I’ve got here. I’ll just give that a quick plug, but yeah, I think Wall Street it’s been promoting myths to investors at large, really for as long as Wall Street has existed as a business. And the reason is Wall Street wants to earn fees on managing people’s money. That’s a large part of how they make money. They’ve really got no interest in people empowering themselves to look after their own finances and manage their own wealth. One of the biggest myths of Wall Street is this idea that 10% per annum is a fantastic return. If you talk to most Wall Street firms, they’ll tell you that how could you expect to return any more than that? This is a fantastic return. And look, 10% per annum. It’s better than sticking your money under the mattress. Ultimately, that is approximately the long term average annual return of the S Amp P 500. They’re over a market cycle. It’s a return that they can probably get for you without even getting out of bed. But if they can convince you that that is a great return, it’s something that they can do with very little effort, very scalable, but still charge much fees for doing so.
[00:13:34.050] – Simon
That’s one of the big ones. Another big myth is this idea that finance is hard and investing is difficult and it really isn’t that hard. Wall street has concocted this enormous lexicon deliberately to make people feel like outsiders, to make people feel as though they’ve got inferior information. Investing isn’t particularly difficult at all. It just requires some effort. Like I said earlier, you do need some education, but it’s not anywhere near as difficult as Wall Street would like you to believe. There’s also this idea that investing is the only sensible way to go and trading is like gambling. And I mean that’s not true at all. People often assume that you’re an investor if you’re in it for the long term and you’re a trader if you’re in it for the short term. My view on that is maybe unconventional, but I don’t think it’s a function of time at all. It’s a function of purpose. If you buy an asset with the idea that you’ll be able to sell that asset at a higher price in the future, as far as I’m concerned, you are a trader. So by my definition, the vast majority of investors are in fact traders.
[00:14:46.600] – Simon
The only people who really, I think, are genuine investors are those who really understand the business. They want to be involved in that business for the long term and they want to participate in the cash flow and the profits that that business spins off over the long term. If you’re checking quarterly earnings reports, you’re a traitor. If you’re worried about what the Fed is going to say next week. As far as I’m concerned, you’re a trader. Which brings me to another myth that buy and hold is the only sensible strategy. You look at the year like 2022. I think that’s a banner year that really kind of puts the last nail in that coffin. This is a year where every stock market sector is in the red. Now, bonds, of course, are in the red. And the problem is, people tend to treat diversification as a free lunch when it comes to risk management of their investment capital. And there’s no such thing as a free lunch. The only way to really manage your risk properly, I believe, is doing it actively by hedging. The thing is, with diversification, it will tend to fail you right when you most need it.
[00:15:51.670] – Simon
We saw it in 2000, we saw it in 2008, and we’re seeing it this year. When the proverbial hits the fan, everything starts to move together. Correlations converge towards one and there’s kind of no way to hide. And then one of my favorite myths that Wall Street likes to promote is that higher risk equals higher returns. And we got to sit down and think about what is risk. Risk is permanent loss of capital, it’s losing money. So what Wall Street is trying to get you to swallow is this idea that if you want to increase your chances of winning, you’ve got to first increase your chances of losing. How does this make any sense at all?
[00:16:32.470] – Sean
[00:16:33.860] – Simon
The way to high returns is by managing your risk very, very carefully.
[00:16:38.510] – Sean
Right. Interesting to hear that from somebody who is into trading, because I will say we are very focused on investing to call ourselves investors. Now, with traders, I just want to deep dive this before jumping on some of their questions. We do get people who they are looking for their job replacement strategy. They’re sick of their job. They were sick of grinding the nine to five and they’re like, well, I want to trade stocks. I’m just going to do that and I’m just going to dive in. And I’m assuming your strategy, your response to that, I would love to hear. If somebody’s motivated to do that, what would you suggest?
[00:17:20.160] – Simon
I would say get educated and build up practice and build up the skill set sooner rather than later. Because if you want to quit your job next week and start slinging stocks, chances are you’ll be looking for a new job pretty soon. All right? Trading is a skill that needs to be developed. It’s not get rich and quit. And this is something people don’t want to hear. Now, the returns you can make can be fantastic, but you’re only going to make those returns once you’ve acquired the skill set. And it’s people, they’re very keen to buy the latest indicator or buy the latest course. And this is a little bit like the amateur golfer buying a new set of golf clubs. Now, trading setups and indicators and those things, they are necessary in the same way that a set of golf clubs is necessary for a professional golfer. But buying an amazing set of golf clubs isn’t going to make you an amazing golfer. You’ve got to put the hours in, you’ve got to groove the swing. And it’s the same with trading. You’ve got to put the hours in. It takes practice, it’s experiential.
[00:18:25.240] – Simon
And the only way you get good at it is through practice. But with practice and with the right techniques, you can make really impressive returns and you can absolutely make a living from it and replace your job. But just don’t expect that to happen in a very short space of time.
[00:18:42.560] – Sean
What kind of timeline do you set with your expectations? Do you sit with your audience?
[00:18:48.180] – Simon
Yeah, it’s a little bit how long is a piece of string? I mean, my core sort of online learning program is a about 20 hours worth of material spread out over 60 videos. Some people do that in an entire weekend. Other people will take about six weeks to do it. So it really depends on how much time people have and just how committed they are. But I always say you’ve got to get your 1st 100 trades under your belt. That is like your apprenticeship. Once you’ve done 100 trades, you’ve kind of got an idea of what sort of mistakes you’re making, what’s working for you, what isn’t, what needs tuning up. And really after that first hundred trades is when you can start, I think setting some returns objectives. Within that first hundred, you’re literally learning how to swim.
[00:19:39.040] – Sean
Thank you for that benchmark. We love the numbers. Like, it’s something we can aim for there. And the six week benchmark as well is tangible. Now with the 100 trades, let’s say, do you recommend somebody does that live or actually paper trade?
[00:19:54.520] – Simon
I think paper trading has got some value in terms of learning the setups, learning your broker’s platform, just learning how to place and monitor place trades and monitor positions. But as soon as you’re comfortable with that, I suggest starting with real money. But starting small. Don’t start with money that is going to compromise your lifestyle in any way if it were lost. And that’s not because you’re likely to lose the money. I mean, if you follow our risk management guidelines, you should really avoid any kind of disaster like that. But by trading with a small amount of money, you greatly reduce the emotional burden of trading and that is what really is going to be the undoing of an aspiring trader.
[00:20:39.630] – Sean
Right. In your training, do you talk about like, what percentage of somebody’s income they should start with? Are we talking like a really small amount? Like maybe 5%?
[00:20:50.510] – Simon
Yeah, I think 5% of the good net worth is probably a good starting point. And then obviously each trade that you take would be only a fraction of that as well. So it’s a sort of amount of money that if it did go up in smoke, it wouldn’t affect your ability to put food on the table or pay your mortgage or anything like that. And again, it’s not because that money is going to go anywhere or you’re likely to lose it. If you follow our methods, you’re very unlikely to lose it. It’s just what I always say to people is when you’re trading, you’ve got to maintain an even keel emotionally. If your emotions stray beyond mild contentment to mild disappointment, you’re trading too big. And it takes time to get used to the rushes of emotion that you will feel. It’s very normal when you’re new to trading. You put some trades on and everything suddenly starts moving in your favor. You start getting excited and thinking, wow, I’m really good at this. I’ve also got a no high fives rule. If ever you feel like high fiveing yourself on how good you are at trading, just go flat, just close all your positions and chill out for 24 hours.
[00:22:03.410] – Simon
The opposite can happen. Everything can start moving against you as well, and that could become very frightening. And if you start feeling frightened, you can make all sorts of bad decisions. Trading, you trying to trade you out of a hole over trading. Putting in more and more and more effort is not one of those things that tends to work in trading. You really need to kind of be in a flow state. And if it feels like you’re efforting your way out of a bad position again, just go flat, chill out for 24, 48 hours, and re approach it without the emotional baggage.
[00:22:35.740] – Sean
That’s the warning, and this is good for the audience to know, is those horror stories I’ve seen with people that you phrased it brilliantly, which is trade yourself out of a hole. Like, I’ve heard people say, oh gosh, I’m five grand in time to double down. I got to get out. And then all of a sudden they’re ten grand, and ten grand turns into 20. And I’ve heard people like, the cost of a home gone in less than a day, right? And it’s stuff like that. That was enough in my experience. And I’m like, no, I have pretty good emotional control. But I also have a lot of interest outside of sitting at a computer. I have a lot of hobbies and I’m like, I love when money is working for me. I just don’t want to work for it at a computer looking at charts. And the risks on top of that were enough to be like, yeah, I’m good, but yeah, thanks for your thoughts there. Again, I know we circled back to your actual training and information. It might be interesting to look at. But let me continue here. I’ve got another fun question for you, which is what are the 8th and 9th wonders of the world and how to capitalize on them?
[00:23:47.740] – Simon
So the 8th one of the world is I didn’t come up with this, this is Albert Einstein, but he said compound interest is the 8th wonder of the world. And I guess back when interest rates were up around 78%, it probably did seem a bit like magic. But right now, with interest rates where they are, you stick your money in a bank account and you might double your money once every five generations. It’s not very exciting. So what do we do in this environment? Well, compounding can still work like magic and the trick is regular compounding. And again, it just gets back to that goal of 5% per month. And the idea is you start with just to make the math easy, let’s say you start with $10,000 and you make 5%. Well, at the end of month one, you’ve got ten and a half $1,000. So then all of a sudden you’re making all of your risk decisions based on an account size of $10,500, not $10,000. And what you do each month is you reset based on the net liquidating value, the NLV of your portfolio, and start taking ever so slightly incrementally bigger positions.
[00:24:58.960] – Simon
You’re not taking a bigger risk because the risk you take as a percentage of your portfolio is the same. It’s just that you’re marking your portfolio value every month. And when you do that, compounding really can work like magic. The 9th wonder of the world is I did make that one up. And that’s trend following, right? And the reason I love trend following is because you are literally putting the wind at your back. It is like pointing your downstream and just paddling with the flow of the river. Trends, when you know how to identify them, they’re easy to identify and they’re easy to exploit. And the other great thing with trends is if your position isn’t working, you tend to know very quickly as well. So, yeah, many of the world’s greatest traders are trend followers. People like Paul Cheetah Jones, Bruce Kovner et sequoia. These are sort of luminaries in the trading and hedge fund world and they’ve all made billions of dollars thanks to trend following.
[00:26:00.630] – Sean
Right? Let’s take a quick commercial break. Hey, this is Sean. I just want to say thanks a lot for checking out this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for checking out this one. Could you do me a quick favor? If you haven’t done so already, could you give us a five star rating on either Spotify, Apple, Podcasts, Google or any other platform you use to listen to podcasts? What this will do is help us rank higher in the podcast search engines, you could say. So that would be much appreciated. Also, if there are any questions you want me to ask the guests for a specific topic you want me to address, please go to our Ticker Facebook group. You can leave a comment there and I’d love to hear what you have to say. All right, back to the show leading up to this bear market, and some would argue it’s a recession as well. Either way, it’s a major downturn we face. One thing I’d love to hear your thoughts on, how will the next five years be different than the previous five years?
[00:27:04.570] – Sean
I feel like this moment in time is, like definitive turning point.
[00:27:10.090] – Simon
I think you’re right. And in a nutshell, we’ve entered a new regime of higher economic volatility. So inflation has been front page headline news for, well, really the whole year, right? First it was transitory, and then well, it wasn’t transitory, but it was all supply lines, and then it was all Putin’s fault, Putin price hike. And we’re still sitting here with high inflation. German inflation figures came out today. I think it was 10.9%. It’s a global problem, and if the 70s or any guide, it’s not a problem that’s going to go away quickly. There have been people all year trying to catch the peak in inflation. Inflation is peaking. I think the problem is people take a very simplistic approach. They look at the oil price and they think, well, if the oil price is falling, then inflation is going to fall. But there’s obviously a lot more to inflation than just the oil price. Right now. What the Fed is doing is they’re trying to crush inflation as quickly as possible, but they’ve got a very blunt tool interest rates and quantitative tightening. What the Fed is trying to do is just destroy demand as quickly as possible to try and rein in inflation.
[00:28:29.160] – Simon
And they’ve been very upfront in telling us that if a recession is the price that we’ve got to pay, then so be it. And the legacy of a Fed governor is going to be measured not by whether we presided over a recession, but whether he presided over a prolonged period of very high inflation. So I think the big difference is high economic volatility. Yeah, inflation will peak at some point. It’s not going to go up forever, but that doesn’t necessarily mean very much. We really could be in for five to ten years of stagflation, I think, which is stagflation is a combination of a stagnant economy and high inflation. And we’ve got, obviously, a Federal Reserve that no longer has the markets back. And that is a big difference as well. You talked about recession a second ago. The US economy had two consecutive quarters of declining GDP growth, and ever since Julius Shiskin gave us the definition in 1974, that has been the accepted rule of thumb that defines a recession. And there’s been a lot of gaslighting recently about it’s not really a recession, because we’re still at full employment, but technically it’s a recession.
[00:29:43.740] – Sean
[00:29:44.250] – Simon
And for a. Lot of people out there. I know it feels like a recession, and it looks like it’s far from over.
[00:29:52.990] – Sean
Going back to your state flatten comments, I know that I could be wrong on this, but isn’t high unemployment also a factor in that as well?
[00:30:03.220] – Simon
Well, it normally is. And this is what’s been really screwing with people’s heads this cycle. We’ve had declining GDP, we’ve got high inflation, but we’ve also still got full employment. The unemployment rate is three and a half percent. I think it’s just a feature of this cycle. Every cycle is slightly different. History doesn’t repeat, but it does rhyme. And in history rhyming, there are always slight differences. And that’s one thing that the Fed has said is a real concern. Unemployment is too low, labor markets are too tight, and what we’re seeing now is a wage price spiral.
[00:30:40.610] – Sean
Yes, very true. I was talking to somebody, I was on another podcast earlier this week, and we’re talking about how this recession or downturn the market really relates to, in my opinion, very similar to the early eighty s the global recession, I think it was called, and in that case there was high unemployment. In this case we have lower unemployment. Here is a question for you on that. Do you think because of the lower unemployment we can get out of this a little faster, or do you think that really doesn’t matter?
[00:31:17.660] – Simon
Well, the Fed have told us that unemployment is too low. All right, there’s this thing called the Nero, the non acceleratingting inflation rate of unemployment. I know it sounds like a mouthful, but they reckon the narrow is somewhere around five and a half percent. All right, so it looks as though they want to get the unemployment rate from three and a half to call it 5%, which doesn’t sound overly dramatic, but it still means millions of people are going to lose their jobs. Sadly, yeah, but that’s the only way the Fed can see to reign inflation, by reducing demand for goods and services.
[00:31:54.640] – Sean
Right. And I do agree with your comments that this is not going to sustain forever. We will get out of this. I know the homework I did, and you’ve been in this industry longer than I have, but I looked at the last 19 bear markets and the average length is about nine months. Now, we’re over that right now, but like that great global recession, if you will. A global recession in the early eighties, that was about two years. I was looking at give or take, and then I think.com Bus, that was about two years just over. Right. The Great Recession, that was a little shorter based on my homework there. But still, it’s like, okay, so let’s say we set expectations and say we’re going to be in this two years. No big deal. We can survive that, survived it before, we can get out of this again.
[00:32:46.810] – Simon
Yeah, I agree. And I’m certainly not here to preach gloom and doom or fighting anybody, but at the same token, we need to be realistic as well. And warned his score around, as they say.
[00:33:00.790] – Sean
Right, well, this has been great. I want to transition to the Rapid Fire Round here in a moment. But was there a question that I did not ask and should have asked?
[00:33:11.890] – Simon
No, I think you’ve asked some great questions. All right. The main things I love talking about.
[00:33:19.840] – Sean
And I do like touching on, especially the market at the moment, especially, you work for Goldman Sachs large company, and you have a lot of great experience in this industry, especially around commodities, and you’re closer to the trends than I am. I’m more of a long term value investor. I love looking at businesses. I really get into the forums, the margin of safety, then you get the meaning, mode and management, I love that kind of stuff. So your strategy is a little different, but I do respect it. So it’s really good to hear your perspective, especially when you put a lens over how the market is right now. So thank you for that insight.
[00:33:58.870] – Simon
My pleasure.
[00:33:59.860] – Sean
All right, let’s dive into the rapid fire round. This is the part of the episode where we get to find out who Simon really is. If you can, try to answer each question in 15 seconds or less. Are you ready?
[00:34:11.380] – Simon
Let’s go.
[00:34:12.270] – Sean
All right, what is your favorite podcast?
[00:34:14.810] – Simon
My favorite podcast? I’m going to say the Joe Rogan experience. Martial arts have been a part of my life for a long time. I’m a geekindo instructor and yes, I think he gets a great bunch of guests on that tend to appeal to me.
[00:34:30.810] – Sean
Nice. The thing I like about Joe, I don’t listen to his podcast a lot, but I do catch clips on YouTube is he is a good listener. Like, I like when he asks the question, he just sits there and lets them talk. And there’s some guests and there’s other podcasts, they like to get their word in midsentence and then it can deviate from the point and next thing you know, you’re on a different topic. So he’s good a listener. What is a recent book you read and would recommend?
[00:35:01.540] – Simon
It’s a book that I’ve reread recently, actually, and that’s Trading in the Zone by Mark Douglas. And to me, this is the one book that I’ve probably given away as a gift more often than any other book other than perhaps my own. But Mark Douglas, he talks about in Trading in the Zone trading Psychology, how to really conquer the mental game of trading. And to me, it is just the gift that keeps on giving. And I recently downloaded the Audible version of it as well. And some are having the book read to you. You kind of glean different insights as well. So that would be the one. Sure.
[00:35:39.310] – Sean
Good recommendation. All right, what’s your favorite movie?
[00:35:43.240] – Simon
I’m going to say Pulp Fiction.
[00:35:45.160] – Sean
[00:35:45.870] – Simon
All right. Yeah.
[00:35:47.360] – Sean
Tarantino classic.
[00:35:48.960] – Simon
Yeah. I’ve never seen a movie like that before it came along and it just had elements of action and humor and just what the hell is going on? The way it brought back John Travolta’s career, there were many things I loved about the movie.
[00:36:05.050] – Sean
Yeah. Love your quick analysis there. You’re spot on. All right, let’s transition to some business related questions. What is the worst business or investment advice you’ve ever received?
[00:36:20.740] – Simon
Probably the worst advice and it was very well intentioned, was go to uni, get a degree, work hard, and just get a good job and just work hard in your job and just stay there and you work hard, your company look after you. I love it.
[00:36:41.210] – Sean
All right, let’s flip that equation. What is the best business or investment advice you have received?
[00:36:48.860] – Simon
Believe in yourself. Make it happen.
[00:36:52.390] – Sean
Good one.
[00:36:53.010] – Simon
And, you know, it’s something that I probably struggled with as a young man. Just lack of self belief, lack of selfconfidence in many regards. And it’s just yes. I think just having that encouragement to back yourself is something that perhaps I was missing early on and that I wished I’d had more of when I was younger.
[00:37:14.510] – Sean
I appreciate that. And last question here is the time machine question. If you could go back in time to give your younger self advice, what age would you visit and what would you say?
[00:37:24.710] – Simon
I go back to probably my 18 year old self, and I would say take more risk. Don’t be such a pussy. Get out there and take more risk. I think that one of the other things I love about trading is it teaches people to identify risks worth taking and also how to manage them. And I think that that’s a skill that is invaluable in life as well. And I think when you’re young, that is the time to try stuff, because if you screw it up, you’re young enough to reinvent yourself and do it all over those windows of opportunity. Get smaller and smaller and smaller as we get older. So, yeah, that would be the advice I give to my 18 year old self. Take more risk.
[00:38:12.430] – Sean
Sure. I love it. I love your response. That’s brilliant. Well, this has been great. Simon, what I want to do now is have you tell us where can you find your book and then tell us the name of your website.
[00:38:24.000] – Simon
Sure. So my book is on Amazon, and it’s called The Dow of Trading. That’s spelled taoftrading. And my online education company is the same name. It’s the Dow of Trading. And what I’ve done, I’ve got a special offer for your audience. If they head over to www dot dow of trading so that’s Taoftrading.com payback, they’ll be able to download the first chapter of my book for free and get involved with some of the educational programs at a pretty hefty discount. Nice.
[00:39:00.370] – Sean
We’ll make sure we do promote that on our site and then that will be syndicated through social media as well. So excellent. Simon, thank you so much for your time. Love your background of your context here on options trading and the market.
[00:39:14.680] – Simon
That’s been a real pleasure, Sean. Thanks for having me.
[00:39:17.050] – Sean
All right, we’ll see ya.
[00:39:18.310] – Simon
[00:39:24.790] – Sean
Hey, I just want to say thanks for checking out this podcast. I know your time is valuable and there’s a lot of other podcasts out there you could be listening to. So thanks for taking the time to listen to my guest story. If you did enjoy this podcast episode, could you head over to itunes and leave a five star review? That would be much appreciated. Thank you. And last but not least on this podcast, some episodes we do talk about stocks. And please keep in mind, this podcast is for entertainment purposes only. So if you did hear any buy or sell recommendations, please don’t make those decisions based solely on what you hear. Right. Thanks a lot.
[00:40:01.020] – Simon
See ya.