Ep. 231 - Lessons from Day Trading Debacles

  📍 📍 Good day! This is Gabriel Shahin, Certified Financial Planner, and your host of More Knowledge, More Wealth, here on every weekend, talking about all important topics of personal finance. My job is to go over the knowledge you need to increase your wealth. Now, to the listener, you can always reach out to myself, or any one of my colleagues here at Falkland Wild Planet, and Our phone number is 855 963 2526.

That's 855 96Falcon, like the bird, where we can help answer those questions that you have and really to help relate the show to your specific situation. And we've got a knowledge center as well, which is right there on our website, falconwalkplanning. com. That's falconwp. com as well. And it can actually even redirect you to YouTube where you can get a bunch of videos that I help answer questions that you have.

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Now folks. Lots going on. Always lots going on. And you know, the fed said they were going to raise rates, uh, five, six times this year, about a quarter percent. Now they're saying it's going to be instead of one and a half percent, potentially half of that to 75 basis points, which is almost 2. 75. So always something going on.

And so it's funny, like I've been a little bit more active at Twitter. And so we're Falcon while planning. So my handles, uh, Falcon of finance for those who care. Um, so I always have some interesting comments, uh, online, but one thing that was interesting and I just thought I'd like point fun at some of these people because it was just so ridiculous some of these things that are out there.

And then I want to share with you a specific situation of my cousin. This is an engineer. This is a very smart cousin. Someone consider him very successful. I want to share with you an interaction that is just mind blowing of a conversation that I had with this person and I thought it was so good. I'm actually even going to do.

A social media post on this because it was so good because I just sent it. I was actually telling a colleague of mine, Hey, this is a conversation that I had with my cousin. They're like, dude, you need to do a bit on that. This is classic. This is perfect. The response you gave was so amazing. You need to talk about this on the show.

So I will. Be doing that. But before we get there, it's just interesting where you hear these people, these people that like are smart, right? Supposedly. And it's funny when you start seeing some of these advice and people that have these hundreds and thousands of viewers. Oh, excuse me, these followers, millions of viewers, but hundreds of thousands of followers.

And some of the advice that is out there, like this one is from GBG underscore bucks. And it's this one is crazy. Okay. Like this one says a quarter a day for a year, we'll get you 9, 125 a quarter. All I kept thinking is, isn't a dollar a day. 365. So how will a quarter a day for a whole year get you over 9, 000 when if you did a dollar four times that a day, it'd get you 365.

You get what I'm saying? So it's just interesting. Like people believe this stuff. It's insane. And there's like a picture of this, of course, with a. Uh, like those old water jugs full of quarters. Like absolutely insane. Uh, quite frankly, pure stupidity. And this thing had like a multiple likes. And all of a sudden I had to say something on the lines of like, hello, McFly.

If you had a dollar a day, you'd only have 365 bucks. What's wrong with you? Here's another one that is freaking fantastic. Somebody goes, you know, what would you rather have a million dollars or 50 a month for the rest of your life? I would take 50 a month for the rest of your life. Because that's what you call passive income.

There were so like, matter of fact, like, yep, look at me creating passive income. The irony, the stupidity, the just the ridiculous of that whole situation is that's 600

a year. That is a 0. 06 percent return on your money. Like we're talking 0006 in decimal form. Holy Jesus! Like, my goodness, like how can this person who made that comment so confidently say that they would rather take 50 a month. How about this, I'll do that deal. I hope this person wins the lottery. I'll even, I'll Up you a notch.

I'll give you 500 a month, right? So I mean the idea that's a point six percent return on your money. One percent is ten thousand dollars a year That's eight hundred and thirty three dollars a month I mean you got these people that have like thousands and thousands tens of thousands hundreds of thousands of views Hey, call me jealous all you want.

I can care less The point is is you have idiots that have these followers who? For no reason at all, pure stupidity, if you were dumb enough to take fifty dollars a month for the rest of your life instead of a million bucks, you, quite frankly, the only way I can say it, the most professional way, is you are an idiot.

It's as simple as that, because if you were to take 600 a year, 50 a month, you would have to live for 1, 666 years. Yes, ma'am, sir, you are an idiot. And this is what we're dealing with. This is where people are getting an audience on social media, just going over the dumbest possible things and getting likes and being shared.

And somebody like me, you know, I'm going to start doing, I'm going to start doing Commenting on this. I'm actually even want videos of people. Like maybe I could even do it here one day and I'll do talk to my production team and we'll get somebody that's talking and I'll comment on their talking.

Somebody who's licensed, somebody who's, uh, uh, uh, uh, what's the word I'm looking with accolades, somebody with experience, somebody that is a CFP has his MBA is very respected in the industry and knows what the hell they're talking about. And I will grade the people and say, This person is a grade a idiot.

By the way, folks, if you're just joining, you're listening to Gabriel Shane, certified financial planner, and your host of more knowledge, more wealth, that's on every weekend talking about all important topics of personal finance, including the idiots that we're seeing on social media, giving advice. Like you even got some prominent people giving advice.

I mean, I recently saw somebody that was giving advice saying, if you don't have, uh, at least 20 percent to put down and 25 percent of your income. Is it has to be less than 25 percent of your income net income to put down on a, uh, or you can't have a mortgage. You can't afford it. You know, they were giving advice saying, no, you have to have, you cannot be more than 25 percent of your net income.

Well, like on a 300, 000 house making 200, 000 a year, you won't be able to afford a house. Like sometimes some of the advice of reputed people are just stupid. What worked. For them, three, five, 10 years ago. It doesn't mean it's going to work in three, five, 10 years from now. Advice has to change. That's what financial planning is folks.

It's a living, breathing mechanism, organism situation. You get a financial plan. You put one together, even if you pay for it, it's dormant. The second you leave, you can't just delegate financial planning out and think, uh, into a product that could solve it right then and there, and you're set for life. A good financial plan is teaching you how to do a financial plan and understanding the variables that are required.

This is what a true financial plan is. Because plan is great until you get punched in the face, until you get disabled, until you get divorced, until you die, or something unfortunate happens. Heck, it could be positive! You win the lottery! Well, situations change, but knowing and understanding how financial plan works is crucial, right?

You don't wait, you're, so you're saying you're going to pay for a financial plan that's essentially paying for somebody to feed you? No, no, no, you're paying for a financial plan for somebody to teach you how to fish. That's a great financial plan when you understand how it works, how it thinks and how it breathes.

And most importantly, you can hold yourself accountable to execute on it. That. is a financial plan. Folks, if you need help with that, if that's something you want to know how to do, when to do, how to execute, that's what we do. And that's why we have offices all over. We can help. It doesn't matter where you are across the country.

Our phone number is 855 963 2526. That's 855 96 Falcon like the bird. Any topic that you want to answer the questions that you have to help make sure you're on the right direction. Because here's the thing, we offer that free financial assessment for that reason. It's one to two meetings, one to two hours of our time, folks at no cost.

Now here's the thing. I get messages all the time. I get calls all the time. It's kind of overwhelming. This is why we have a staff of over 50 people that can help. People want to talk to me, right? I'm the president of the company, the founder, so on and so forth. I get it. I would want to talk to me too. Two comments I'll make to that.

Number one, You know, when you want to talk to a lawyer at a big law firm, you want to talk to a partner or a lawyer, especially if it's something as simple as putting together a will. Partners are going to charge you 2, 000 an hour. Why a paralegal might charge you 200 an hour, right? So just commenting there, I'm not saying anything outside of that.

I say that because I still like my job. I still love helping people. And for that reason, I still get engaged. I can't help the world. I realized that I was had like a deep depression state, not quite depressed, but bear with me where I was realizing, man, I can no longer help any everybody. I'm getting emails here and I can't respond to them.

I see them. I mean, I technically can go in there and click into it and respond. Might only take me five minutes, but there's 500 of them. So I literally have to pick and choose. I have to have people to help. But, luckily I come from a big family. And what is big families good for? Bothering people. Oh boy, did I just say that?

Jokes aside. You know, they're for your family, right? They want to reach out. They want advice and you're happy to help them. You want them successful, right? Because if they're not successful, then you got to take care of them. Yet again, jokes aside, truth to every joke, by the way, I'm going to go over with you a conversation that I had via text message with one of my cousins.

Now with my cousins, I could talk. However, I want to my cousin because he's my cousin. I can't talk to you. However, I want, because if so, you'll get upset and fire us potentially. And you want to be explained. You're paying for the service, right? So I have to explain to you how it. Is if it was my family member, I'll just do this.

Shut up. And you'll thank me in 10 years from now. That's literally a saying I say to my family quite often. So when we come back, I'm going to go over with you the conversations I had with my cousin. It was so good. I had coworkers here saying, go ahead and talk about it on social media. And more importantly, I want you to discuss this on the show folks.

We'll be right back after a few 📍 words.

📍 Welcome back folks. This is Gabriel Shane certified financial planner and your host of more knowledge, more wealth here on every weekend talking about all important topics of personal finance. My job is to go over the knowledge you need to increase your wealth. And I thought, let's have some fun. So yes, I bashed a bunch of Twitter people and people on social media with hundreds of thousands of views that you can argue I'm envious of, but you know what?

Not envious. You know what I'm saying? Like why, why, why should they have hundreds of thousands of views? Cause they're on it every day and they talk about things that they kind of know you ever hear they know enough to be dangerous. These people are dangerous. You know why they're dangerous? Because they're giving you advice.

You ever go to a cocktail party and somebody says, Ooh, you should buy ABC stock, Tesla at 400 a share. And all of a sudden you see him that next year and Hey, Tesla's at 200. We lost 50%. Oh, I don't know about you, but I sold it at three 50. Oh, you didn't do a stop loss. It's like, really? Like, really? Now you're making fun of me that I kept telling on to it?

I bought the stupid thing because of you. That's the point. They only talk about their winners. They don't talk about their losers. They tell you when to buy, but maybe not to sell. Maybe they'll tell you when to sell, but not when to buy. And they go on social media and they start preaching. Like they know everything.

Don't you love those type of people, by the way? Yet again. I want to talk to you. My cousin, let's just call him to secure his identity because he is a professional and he is somebody that is highly respected in his company. He does very, very well, but we're going to call this person. Now, the person listens to the show.

He's going to know very quickly. I'm talking about them. I'm going to call this person, Ronnie. Okay, we're just going to call him Ronnie. Okay, so I'm going to read this. Conversation and you're going to get my advice all via text here. Okay, so let's let's rock and roll So this happened last year. Hey cousin.

I hope you're doing well I've recently been day trading about an hour each morning and seem to getting more comfortable with it Just trying to gain confidence and grow my account. Do you day trade and do you have any pointers or suggestions? To help do you like my tone with this? It's like I don't know if it's condescending.

I don't know if it's just Annoying but yeah I thought, add some spice to it. So now my response. Hello, cousin. All is great. I say, uh, I hope I pray. That's what it was. I wrote pay by the way, I was trying to figure out, I pay you in the family are well, I meant to say, I pray you in the family are well, my recommendation is take day trading serious, be diligent, analyze, and really focus on making good money.

Only invest in what you're comfortable losing. Once you realize it's impossible, buy the Vanguard Total Stock Market Index and compound growth, do what it's, and let compound growth do what it's supposed to do. His response, LOL, impossible. Thank you, Gabriel. I wrote back, smiley face. I'm serious though.

Here's the response. Thanks again, Gabriel. I did listen to you and have started to feel, uh, vest, uh, uh, invest, probably invest some money in the Vanguard Total Stock Market Index. It's slow moving, but I get it. The day trading is mainly to help grow my account. Oh, I'm so happy he said that because I thought it, you know, he wanted to like lose money.

That's why I thought he wanted, but you know, he clarified he, he actually wanted to grow his account, but it's been very rough as I get started. Last month was my first positive month for the year. Remember this was last May in the past. I would try and give up short, uh, give up shortly after because I was unrealistic about the potential results.

Now I set a goal to make steady profit and get out and not to overtrade. Anyway, I appreciate your advice. Take care cousin. Uh, he sends me a message the very next day. This is May 2nd. So I've had a Vanguard Total Stock Market for a while now. And by the way, that's not a recommendation. I'm just commenting here.

Um, and it doesn't seem to be going anywhere. Why are you so die hard on that one? Okay. Well, why not yet? Again, this is not a recommendation. for you or really anybody. This is a comment to my cousin. The S& P 500 is the largest 500 S& P 500 stuff company. VTI, for example, the Vanguard Total Stock Market Index.

Well, that goes, yeah, sure. 77 percent large cap. It also has 18 percent mid cap, 5 percent small cap. So you have a little bit more diversification, but it's still all U. S., which isn't that great, assuming 100 percent of your money's in this. I know his is not. Why? Because it's in a 401k. But now it's my time to shine.

Okay. Keep them on. This is at 757 a. m. on May 2nd of 23. Because no one has ever been able to beat the index, no stock picker or market timer that, uh, uh, and that one that has tilts on, uh, uh, mid caps and small caps as well. Uh, whoo, man, this is okay. So you could tell I was texting this. Let me start over because no one has ever been able to beat the index.

No stock picker or market timer. Uh, and that one has tilt on mid cap and small cap. Like I said, it's not just the S& P 500, which, which over time outperforms large cap indexes, such as the S& P 500. I kept going. This is where it gets good. If you truly want to, uh, say a day trade yet again, I wrote day instead of, uh, say instead of day.

If you truly want a day trade, you could be successful, but you just can't. You have to understand technical analysis and momentum mock these stochastics, Bollinger bands, and so on. Then you have to have the balls to short when everyone else is long. And it's not just selling high and buying low. No one knows when those highs or lows are momentum.

Everything and frankly speaking with experience, you need minimum of 10 to 15 years of living, breathing, trading the markets to understand how day trading truly works. So in short, VTI will outperform everything. The amount of time you'd waste in your day trading. Is just not worth the premium return that markets already yield not even factoring opportunity costs of work productivity and anger after your quote unquote bad trades So be happy with 10 plus compound returns if you're 45 today and have 250 000 in your 401k That's amazing max it out at 23 000 a year over the next 20 years with a 10 return.

You'll have over 103 million dollars assuming no employer match. That's 120, 000 of annual income. Add 40, 000 of social security for you, 20, 000 for your spouse, that's 180, 000 a month of retirement income. Plus, kids are off the payroll, God willing, and potentially no house mortgage anymore too. Saves you more money.

Life is simple. Enjoy. And I gave them a link to this show now. And then I wrote again, cause I couldn't stop. I was on a spiel. The market hasn't done anything really since 2020, not especially if you invested in growth slash tech, because remember, this was during the market drops. So, the response is like, hey, I have my 401k.

He talked about a bunch of Vanguard stuff. He has this fund for 2040. He says it's down about 36 percent from its high. He gave me this random stock, which I didn't acknowledge. He sent me a text. Now, this is May 3rd. He said, did you rig the market today so that I would lose? LOL. I responded, LOL, never. I said he commented on the stock.

He said, I said, be careful. No free rides and shortcuts. 10%. By the way, I can't guarantee the markets are going to do 10%. This is a comment based on historical returns. The market does 10 percent returns. So anyway, he just said, I know, I know. October 17th came, said, happy birthday, said, thank you. Have a blessed family.

Now, February 7th. All right. So we haven't had this conversation. We're almost at a year. We'll call it nine months. He's saying, I'm starting to regret not putting more money in BTI. You were 100 percent right. Now what? I let him stew on this for a day, by the way. I thought it would be a good idea. Now, by the way, folks, if you're just joining me, you're listening to Gabriel Shane, certified financial planner, your host to more knowledge, more wealth here on every weekend.

And I'm talking about all important topics of personal finance. And this is a normal conversation that we have for people. Somebody said they realized that I was right. And he's saying, now what? I tried day trading, lost a bunch of money. Now what do I do? I said, you're blessed. Blessed you learned at 45 versus 65.

P. S. I'm always right.

So I don't have to explain to you the rest of the conversation, right? That was about a 5 6 minute conversation right there. And yes, you know why I'm right? Because this is my profession. This is what I do. I've seen this movie before. I only get in arguments I know I could win. It's as simple as that. My life is not that complicated.

And either is investing. There is no shortcut. You have a lot of people with meme stocks trying to go be happy, trying to be, uh, get their 40, 50 percent returns. You got people buying super microchip NVIDIA happy with 100 percent returns in 3 4 month period, less than that even. And, but my point is, is they think that's a sustainable way to invest.

Great, you did it, you doubled. Your 10, 000 is now 20, 000. Now what? Are you going to hold that forever? Are you expecting that 20, 000 to go to 200, 000, the 200, 000 to go to 2 million? It may not just be sustainable. So you have to take a look at what is something over all market cycles, market periods, 10, 20, 30 year periods that will be able to achieve your long term goal.

If your short term goal is to make a lot of money in a short period of time, well, first off, who isn't, whose goal is that not? But if your goal is over a long period of time to help you retire, that's where you just have to look for an investment strategy philosophy. So you know where I stand on that. I believe to say passive, nobody can outperform the index.

So if you can't outperform, nobody can beat them. Nobody can stock pick. Nobody can time markets. Can't beat them and join them. That's what I say. Now, I just gave a simple example, Vanguard total stock market index. That's a bad investment. If that's all your money's in that bucket. Why? Because that's all us.

There's also international and so on. So you got to be smart about this. You want to stay globally diversified. This is why we're offering a free financial assessment where we can give you one to two meetings, one to two hours of our time at no cost to help relate the show to your specific situation to make sure that you don't take the losses in the market where you think you lost your lesson and go only invest in real estate or gold or paintings or whatever.

Uh, other things that are out there that you think is adequate. It's all about diversification and probably because you didn't do well doing day trading is because you're buying stupid things. Either you're listening to a stupid advisor or you were investing and listening to stupid threads on Reddit or reading stupid articles because keep in mind when those articles come out, it's dated.

It's old because you could tell somebody to buy Enron today, but then a fraud comes out tomorrow. I didn't know the books were fake or false. I didn't know they were criminal. Uh, the fraud, financial fraud going on. So it's all based on information you learned today or have today. Well, if that comes out in print a week ago and now it's hitting the press this week, you read it a week later, that's two weeks stale.

God knows what happened in that two week period. You have to be able to have a partner where you could clear ideas that you have, clear strategies you're looking to implement, clear stocks that you're looking to buy. More importantly, build a core strategy that can help with your full financial goals.

Folks, give us a call. We would love to help. We're offering a free financial assessment. Our phone number is 855 963 2526. That's 855 96 Falcon. Like the bird or visit our website at falconwealthplanning. com. That's falconwp. com for short, where we can help any topics that you have by either going through our knowledge center on our website.

Or in fact, just giving us a call or setting up an appointment. Like I said, offer one to two meetings, one to two hours at no cost folks. That was a fast, fast show. I want to thank you for tuning in with me this weekend. You could always reach out to myself or any one of my colleagues here at Falcon Wealth Planning.

Our phone number is 855 963 2526. That's 855 96 Falcon. Like the bird or visit our website at falconwealthplanning. com. That's falconwp. com. For sure, where you can get this episode, any one of our previous episodes as well. I heart radio podcast or through Spotify and we got that knowledge center. Keep talking about it.

You got to check it out. Almost a million views. It's been very popular. We would love to help folks have a fantastic weekend. Have a great week and God bless.