From Blowing Up 3 Times To Managing A 200 Million Hedge Fund Jim Roppel

TITLE: jLioqyVlRkE CHANNEL: Unknown DATE: ---TRANSCRIPT--- I took that six figures, mid6 figure lump of cash and uh tripled it into the top in 2000. You know, you start running two $300 million and you got a lot of people depending on you. That’s a lot of added pressure. This is Jim Role, a hedge fund manager that trades over $200 million. He learned directly from a market wizard. But before all of that, he blew up his account three times.

I have made every single mistake that is makeable in the stock market. My wife is like, Jim, look at our tax returns. She’s like, “Go to law school.” I don’t know what she said. She said, “Stop doing what you’re doing. Price will hurt you, but size will kill you.” How long did it take you to actually go and get profitability, I would say, and really make meaningful progress in your account? Yeah, I think it took about 5 years. When you have life-changing money, and whether that is from bicycle to automobile or your one-bedroom house to a 5-bedroom house, whatever, you have to take it. Broadcom had the chip was a first stock. I made a million bucks in one trade. That probably doubled my war chest. This is how you handle a real TML. And the answer is earning season is like the minefield that can give you the golden fruit. You can get obliterated or you can find gold. Is there a conversation you had with Bill or something he said to you you remember every single day? Well, there’s dozens, but one that kind of stung. Hey everyone, welcome back to another episode. As always, we bring top traders, US investing champions, and market wizards here onto the show to share their journeys, their strategies, the mistakes they made throughout their careers and key learnings that they want to pass on to you guys to save you time, save you money, and improve your performance. We’ve been lucky enough to hear back from many viewers over the past few years about how much of a positive impact this podcast has had on their trading journeys, and we’re incredibly grateful for all the support. If you’re looking for a free, quick, and easy way to give back to us and show us some goodwill, please double check that you’re subscribed down below. And if you aren’t, go ahead and click that button. And with that said, thanks again for your support and sit back, relax, and enjoy. All right, welcome back everybody to the Trailine podcast. I’m your host, Richard Mglin. Uh, this episode is brought to you by DV Charts. Check out the link in the description for a special offer and also check out the new DPU AAI. Uh joining us today on the podcast is Jim Roel, a hedge fund manager and growth stock trading legend. Uh there he is right over there. Um this is so cool because this is one of the first in-person ones I’m doing and you were one of the very first guests I’ve ever interviewed. Um and you know I’ve learned a ton from you. Earnings gaps, finding leaders, and today we’re going to dive even deeper into your strategy. And crucially, I’m going to pick your brain, get all the secrets for how you find and manage life-changing trades, taking you from first class to private jet. Private jet, come on. So, if that was on your bingo card, your gym bingo card, there you go. But first, for for folks who don’t know you, um Jim, maybe this is the first time they’re seeing a podcast with you. Um how did you first kind of get started in this business? Now, of course, you’re managing capital, but how did you first get introduced to trading? Okay, you won’t believe this, but my grandfather was a Russian immigrant and they he worked in the I Chicago and he worked in the Ballet pinball machine uh stamping factory stamping deck boards and uh he got ballet stock options. This is like 50 years ago more. And uh we would watch Ballet stock when I’d go to my grandpa’s house on Sunday. And then my dad because of the ballet watched the market and then my dad inherited a little bit of money from his father-in-law and he bought Janentech. This is we’re going back 50 years ago. Uh and he he was dabbling in the markets. I go to college and my roommate’s father was a stock broker and then uh who ended up becoming my best friend in college uh inherited a lot of Paramount stock from his grandfather. So we watched Paramount and then my uh because I was slow learner. I was a four and a half year grad. I I graduated in December of 87 right after the crash. And I mean leading into the crash, like we were I was buying uh put options because the market looked bad. I didn’t know anything at all. I I thought it looked bad, but we were buying Chrysler put options and put options on Paramount to my friends. My family was just kind of always around me. And I remember taking like $300 out of my checking account in college, putting it into an AG Edwards brokerage account and buying like one call option at a time. And then I graduated in December 87 and I went on my very first interview to a penny stock operation and they hired me on the spot. Of course, they’d hire anybody who had a heartbeat and I cold called my way into uh a job at uh Nor Oh, no. Then my dad’s broker hired me at uh David A. Noise, a local boutique firm in Chicago, and I worked there until I got recruited. Uh, I went to work for Northern Trust in Lake Forest, Illinois, whereas all the big bucks people are, which funded, you know, I and uh, dude, I was a cold called stockjackey and then Morgan recruited me and uh, they paid me a forward sum of money in 99 and I took that six figures, mid6 figure lump of cash and uh, tripled it into the top in 2000. And uh I was so funny. I think I had like 13 climax runs in my account. And uh before St. Patrick I I went to complete cash in 2000 right around St. Patrick’s Day because I remember my wife’s like you’ve been working like crazy forever and uh let’s let’s take the kids and go to Arizona. So we just bolted off to Arizona. That’s how I know the timing of it. How’s that? That’s you good. That’s perfect. That’s perfect. And for anybody who knows you, you know, your style is cans slim. You’ve learned a ton from O’Neal, that methodology. I I want to ask what was the first time uh you know, what was the first time you got exposed to cans slim that that way of trading and also your first time like seeing Bill and obviously you guys became closer later on, but I’d love to hear kind of how it got started for you and and how that kind of style appealed to you. Okay. So, you understand I had no help, no guidance back in the day. Like you were a cold call dude. like you just pick the stock like you had nobody teaching you about how to select stock or portfolio management and I stumbled on to the paper at a 7-Eleven and I started I was at the top of a copier box. I would take the lid off and I’d cut all the mini charts out and I’d tape them in there and I found that the same stocks over and over I would line you know they keep going. I’m like oh my god this and then I found there was a book and then I read the book and then I What version was that? What what color copy? Oh, you’ve got it right here. Hard cover, bro. old school. I mean, this thing is a dyno. I look at how young Bill looks on the cover. Yep. But Oops. You’re good. You’re good. And uh I started to So, there’s a paper depot in my little town that I live in and I would drive there at midnight to get the next day’s paper and I would read it in the parking lot till 1:00 in the morning. So, I’d already read the paper before he went to bed and then I’d go to bed at 1:00 in the office, you know, at 8:00 before the open. And uh, you know, I was a loser back then. I would like get a money magazine and read an article. Uh I was doing what my dad did which was big in biotech and uh there was a big biotech cycle right when I got started so it worked great and I didn’t understand that cycles didn’t go on in perpetuity and so they all blew up and uh uh I read the book and I started to cut my losses and was that a turning point for massive gargantuan because everybody picks some good ones but everybody picks some bad ones and if you don’t take care of that you can’t make any progress. It was a defining moment because I just didn’t draw down uh from a cash position and then I started to use better selection criteria and it just was like a miracle. I mean I went from a complete loser to I started to make better mistakes, right? And uh that was the genesis of it all. They all I literally owe everything to Canlim and specifically to Bill who like he really paid attention to me even when I was just like a guy going to his little classes you know which were game changers and I I started to go I think I went to my first class with Bill in like 94ish I can’t really remember but uh I went to see him at two to three times a year every single year you know for like 20 30 years. So I I went to I paid to go see Bill 60 80 90 times. Um and then I became an institutional customer when I opened my first hedge fund in 2004. And part of the deal was I had to have uh four or five calls a year with Bill and he would call me. Well, before that I would uh have bad trades and I’d talk to him. He’d be like, “Okay, uh print a chart and mark it up why you bought it, where you sold it.” And and I’d FedEx it to him. He would mark them all up and I have these. They’re to me like gold and he would send them and we’d have a call and say, “This is where you screwed it up, kid.” Um, and I even have specifically handwritten notes on Shakeout Plus 3 with Apple Computer that I sold in after hours on a gap down that it turned around and went to Mars. You know, I just off the tangent. I have made every single mistake that is makeable in the stock market from every single went from not cutting losses to over margining, overconentrating, over speculating, overtrading. I I’ve made them all. Richard was asking me, you know what, you called me some superlative. I’m like, I don’t deserve it. I make all the mistakes like everybody else. But when you make a lot of them and you stick with it, you learn. And you learn. I said to him, I still make mistakes, but I think because I’ve learned so many of them, I correct them faster. I can recognize that, you know what, I’m over my skis. I’m too big or I I whatever I’ve done, I correct them quicker. I don’t tolerate losses at all if at possible. Yeah. Obviously, you just said cutting losses was a key defining moment for you. Were there any similarly, you know, gamechanging realizations you had? Maybe it was from attending uh a seminar with Bill or just something you developed on your own. You know, a mistake that you fixed that you’re like, “Okay, I’m seeing the market completely different now because I’m recognizing this is something I do every single time.” Uh and if I just don’t do that, then my results can be, you know, much much improved. I think I had no money management. Like I I sometimes would end up with my whole account or half the whole account on margin and back then it was triple leverage, right? I I’d end up way too big. And my next door neighbor was a SIBO or a Chicago uh stock exchange specialist. And he said I told him one time I had like 25,000 shares of Seable Systems. This was this was so long ago. He goes, “Jim,” he goes he goes, “I don’t know how much money you have.” He goes, “But that sounds like a monster position.” He goes, “Price will hurt you, but size will kill you.” And then later in the master’s class, they kind of had a breakout session where it was, you know, you buy four stocks and whatever. And I learned a lot better how to allocate. And uh also by talking to Bill, Bill would say, “Well, why is that fiber optic stock better than this one?” Because there’s there’s eight of them in the sector. And then I started to recognize that there was more than a group move that the leader in the group move is going to do is going to double the performance of the second best, right? Uh, and then I think Charles Harris, I was talking to him and he goes, I said, ‘What’s the number one indicator? He goes, relative strength is absolutely the leading indicator. Uh, and that’s again an oversimplification, but that when I started to write the role report, I I I um select the stocks by RS like the first and my performance has even improved in the last three four years because I because I write down and I give the ideas like that, right? Um, I also learned, you know, when you don’t make any money and you think the stock market is the way to get rich, when you start to realize what the power is of a stock that that literally doubles or triples, you go from I want to learn and I I’m not sure to wow, this really really works. Like, you know, they say fake it until you make it. Well, when you start I believed in Bill because I didn’t really know if I believed in myself. But when you start to get some success as little traction, you start to get confidence. And that is an absolute game because now you know this method works. And in that time where you’re kind of building that confidence for yourself, um were you profitable yet? And and how long did it take for you to go from, you know, bigger losses, you’re cutting losses, but maybe still things aren’t quite working. How long did it take uh take you to actually go and get profitability, I would say, and really make meaningful progress in your account? I think it took about five years. Yep. Because I didn’t find Bill in the book in the paper for a couple years and then it took year a couple years of screwing up. Yep. And I’ll never forget my wife is like, “Jim, look at our tax returns. you’ve got to. She’s like, “Go to law school. Go to be a” She said, “Stop.” I don’t know what she said. She said, “Stop doing what you’re doing.” And she’s like, “Look at our tax returns. We are not making pro.” And I took that as a throw down. Like that’s Don’t ever tell me no because I just like triple down to effort there. John Boy plug. It’s all in here. Yeah. Yeah. And I that’s perfect because I was about to ask you, you know, what are some books that uh maybe you didn’t have then because you know John John wrote that a little bit later of course, but what are some books that really made a difference for you or now you would kind of recommend to you know friend or you know someone close to you who’s like how do I learn how to trade? You know these this is the curriculum the the the reading list that you would subscribe you know assign them to to read. The number one book to see if this is even for you or if you want to understand the concept is Darvis’s book, How I Made Two Million because it’s you can read it in a day. You can read in two days and it’s a story. It’s kind of entertaining to read. It’s not a textbook. And it really gives you about 50% of what’s in the Bible. Yep. But then after you knock that down and you now you commit like this now you realize, hey, this method agrees with my personality. Yep. The Mac Daddy is reminiscences because now when I read this book, uh I’ll never forget I was waiting for my wife to come pick me up on like our third date. I was sitting on a and uh I was like, “Wow, this is way I just didn’t have enough experience in the markets like to like when he would talk about trends and how a stock should act. I didn’t have enough money. I had not enough experience.” But in this book, I’ve probably read this book 10 times. If you read it and then you read it again a year later and you’ve been trading that for that year, you’re going to go, “Wow, you’re going to understand it better.” Reminiscences is a detailed book of market tactics. Mhm. That you would only understand after you’ve been in it and in the market. And then now when I read it again, I should read it. I should probably read it soon. I’ll remember, wow, that’s so true. You never This is a never- ending process. I’m better. I’m better right now than I was three years ago, right? And I’m certainly better than I was 40 years ago. Like, to be brutally honest, I blew up my account to zero three times. You know, I I I didn’t I didn’t learn like Pavlop’s dog, you know? I I touch that burner over and over again. Uh but I don’t I can draw down from highs because I’m such a bull, but I don’t draw down from cost. I just don’t. And that’s if you draw down from highs, that’s not fun, but you’re not you’re in the game, right? It’s when you draw down from cost is when you get into trouble, right? And and speaking of, you know, mistakes, draw downs, all that. Um, and speaking of Darvis, I was lucky enough that was the first book I ever read on the market cuz Dr. Wish’s class, that was the first one. He’s like, “Read this one.” And to echo what you said, it’s a story. You can read it in a night. And he makes every mistake. you know, he you he shows his progression, you know, going too much into fundamentals, not pairing that with technicals, you know, every mistake you can make, he shows in historians, it’s a super fun read. So, if you read that Yeah. is yourself. It’s emotion when you’re not watching when you’re traveling the world. Yep. And you’re getting telegrams. You’re not watching the jiggles and the wiggles. And then when he went close closer to New York, his he had a huge setback. Who else did that? Livermore. Livermore. Yep. He went to New York and he came unhinged. Yep. uh we are our worst uh enemy. It look everybody has access to all these books. Okay, this is one of my prides. I I had a a good year a couple years ago and John Boy says you should reward yourself. So this is uh tape reading by uh how to how to trade in stocks. This is an original copy and I have to go big shout out to my man John Boy. Yep. But uh what was I saying about emotions? Oh, these books have all the rules. They’re right here. There’s no secrets. There’s a few, but if you just read these four books, five books, Yep. that you don’t need to read any other books. Maybe one on psychology, but they’re all there. And most people can’t make money because it’s them. Yep. They think it’s like it’s the pivot point or the chart or the whatever. That’s not it. It’s it’s up here. It’s like golf. Yep. the the the the interest between here and here is is the is the big struggle. That’s where you it’s emotion. Emotion is what breaks down possible great traders. Yep. And you talked about confidence and like how you weren’t confident in yourself yet, but you were confident in Bill and his bills. And then you proved it to yourself with your own trading and over time that’s how it goes. There’s a lot of imposttor syndrome. Yeah. Yeah. Up front. But after say 10 years or something through several bear and bull phases you’re like it can’t be a fluke. But initially the first couple you know and then you give money back you’re like you’re not sure. But after maybe 10 years you can if you have consistency which I didn’t initially you could start say well there’s more to it. It’s not a fluke. Yep. And just to point out the last book market wizards. Tell me about that one. Okay. They’re they’re all phenomenal but like I mean I have articles going back. This is a article with Richard Dhouse. I mean I have I have model I have cases of model books. Uh O’Neal model books. Uh when you go to 20 30 40 60 80 O’Neal presentations. You have all these model books. And uh I just have all this material from I should start posting on Twitter. When I post that on Twitter, the likes go through the roof. Nobody gives a crap about what I say, but when they see those old articles, they love that stuff. Yeah. and we might have to fill a few of those and show them to to folks. That would that be cool. Um, for for people who aren’t super familiar, how would you describe your personal style? Now, obviously, it’s can slim position trading. How do you describe your objectives in the market? What you’re trying to do in maybe just a few sentences if you if you can keep it to to that uh that short of the answer. Well, I’m certainly not the person I used to be. I’m 61. I started when I was

21. Well, no. In college, I started in, you know, like 85. But, uh, I I was a highly leveraged, frenetic overtrader. I have settled down a great deal. Like, I think I probably enter maybe 25 stocks a year. Um, that can vary, but I don’t take the risks I used to. I just don’t. I I would say to anybody, you don’t have to run sprints. you’re going to fall way harder if you just joged along. You probably would live longer. I I didn’t My mom would like, Jim, this pressure is breaking you down. I was a kid and I said, “Oh, this it’s nothing.” And as I age, I recognize this is real pressure. And when you start running other people’s money and it starts to get big,

you know, you start running two $300 million, that’s and you got a lot of people depending on you and you know that you’re going to get calls. That’s a lot of added pressure. So my point is how did I change? I think the evolution of a trader is less trading. Mhm. Uh and longer duration and uh taxes matter a great deal when they you know 20% short-term or long-term versus short-term is really big. And the formula, you know, the four to six beat and raise quarters takes you past the the cycle time position size, you know, experience and a $5 million account. It I know like the the big boy category in the US investing champions is a million dollars. You can buy a million dollars worth about any stock just by hitting enter. Now you want to go buy 20, 30, $40 million worth of stock. Now you are really procluded into highly liquid names and through that you learn about liquidity. Yep. Most people have no idea how critical liquidity is because if you don’t have institutions you don’t have liquidity. Yep. And they need liquidity. They have got to have it. Now when you get liquidity now you’re in stocks that are going to be well generally held good uh a good base of shareholders. So when somebody goes to blow out 100,000 or sorry big a million there’s there’s buyers there. Now you go to now there’s a couple little stocks we talked about like AAOI and Fastly. You go to sell 500,000 shares of that you’re going you’re going to realize wow liquidity really matters. But nobody if you have a $5 million account you’re buying 2,000 shares or three. That doesn’t factor. So, to bring you back to the original question, which is um how do you how would you describe your trading style in in in two sentences? Give me two sentences there. I’m an intermediate term trend trader in I’d like to say high high growth stocks, but in the current market we’re in at this minute, it’s been a split tape. And energy stocks, commodity stocks may down the road have big earnings, but they don’t initially. We’re in a different type of tape, which has not suit me that well. I’m a I love the tech. Yep. And uh so I’m an intermediate term trend trader. Yep. Based in and like I missed SanDisk. I didn’t miss it. I it didn’t have earnings initially and I I boed at it and we talked about that today. I I really really am pretty rigorous in all the criteria that you know I remember 30 20 30 years ago Bill put up a chart at eBay and he went through every variable and say there’s 30 on a data graph. It had 29. Yep. And every time you sacrifice one variable, your probability of success goes down. And I also, you know, he said, “What did I learn? Tripledigit sales and earnings are just, it’s part of the magic elixir.” Yep. Which is sky-high liquidity with sky-high earnings. Now, you find if you find the highest earnings growth stock with commensurate volume, every institution is gonna gonna be there. The big guys, they have to be Janice 30. They’re putting 500, you know, they’re putting a billion,2 billion dollars in each stock. So, they’ve got to have max liquidity. So, they go down, they they get the liquidity scale and they go, “What’s got the highest earnings until they get to a zone?” And that that’s where they went in on, right? No, that’s perfect. And uh and you kept it to at least 10 senses. So, that’s that’s pretty that’s pretty good, Jim. Dude, I didn’t take it into like a segue into like a camera stuff. No, it’s Hey, everyone. Just want to jump in here real quick and let you know that this episode is brought to you by DFW, which is the platform I use every single day to find new trading ideas, monitor existing positions, identify new leading themes, and analyze the markets. 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Best yet, we just launched the DFW AI terminal, which brings all your research into DV with easytouse preset prompts or your own custom ones. You can even identify gap catalyst with just a right click. We set up an exclusive offer of one free month for all Trader Line podcast listeners. So, to activate your trial today, check out the link down below in the description or visit dv.com/mpodcast. That’s dv.com/mpodcast. And with that, let’s get back to the interview. Perfect. That’s perfect. Um, I want to talk finding these stocks, finding these market leaders. Yeah. Um, and you know, Bill called them model book stocks. You know, we can call them whatever we want, right? Um, but what for you is the criteria? What are you, you know, you just talked triple digit earnings or sales. That’s definitely a part of it. Um, but for you, what is the type of stock that you’re looking for that you want to buy and hold for ideally months, you know, ideally years, right? Um, so what is a market leader? How would you define it? So, it used to be a lot easier to find them because we’d have chart books and I’d go through every page and I could see when stocks like would be turning up. Like they didn’t have the IRS yet, but I could see the group was maturing. So, now you screen and you screen for super high RS. Well, they’ve already they only come into light later when you’re screening. Uh, but I’m looking for stocks really really dude. It’s a perfect can slim template. I have in Wanda one’s called 2020 one’s called 4040 pre-tax after tax roe sales growth earnings growth earnings beat earnings estimates up to down volume group strength skyhigh all above 20 not RS RS I want in the 90 high 90s a 12-month RS or different whatever’s you know like yeah webster programmed Wanda for Bill so whatever’s in Wanda is what works for me okay I don’t me monkey monkey around if Bill wanted a yearly or shorter term, he it’d be in there. I think it’s a weighted RS to to shorter time frames, I believe. So, and RS like it it’s terrible on the way down. It’s misleading completely. On the way up, it’s legit, but on the top it can stay very high and be 50% off the high. Yeah. Um, so run the 2020 screen. If you find a stock that has 20% of across all variables, you’re in there’s probably like five in the whole market and that’s all you need to care about. When I would talk to Bill, he he had three stocks he wanted to talk about. That was it. Nothing else mattered. He was invariably the names we would talk about were tripledigit sales and earnings. Uh he would sacrifice RS a little bit where I I don’t as much now. Am I off track? You’re good. You’re good. This is gold. Uh, promise. Okay. Um, I’m looking for new highs. I want no overhead. I want pristine. I want the one elite leader. And again, a lot of times I’m going to get into a stock where if I wasn’t in it years before, I probably don’t know the fundamentals. Uh, I was another guy who helped me out a lot was Lee Freestone. when you called the paper 30 years ago and you had a they’d send you to Lee and I got close with Lee and he I had lunch with him one day and I’m like what’d you do? He’s like I just bought a couple hundred thund shares of double click. I’m like what do they do? He’s like I’m really not sure. I’ll figure it out tonight. And so I find myself buying stocks a lot on price action. Yep. Uh that gets your attention. That’s how you find them. Yeah. Up my probably my best screen which I was trying to run today is up on volume. Right. And then I sort it by minimum uh liquidity of 100 million a day. I I’ll take it down to 50. Yep. Sometimes. But uh I’m looking for big big standout price action pre-tape pre pre uh in the morning. I’ll wake up and pop on CNBC. The best interviews, by the way, are in the morning after the open. There’s nobody worth listening to really on there. But I want to see that tape. If something’s gapping in the pre-market, whether it’s a new drug or a clinical trial or earnings, I’m going right to that and I want to know exactly what’s going on there. Outside of that, CNBC is worth nearly nothing to me. Yep. Okay. So, that’s that’s what a market leader is for you. Obviously, you know, uh Bill’s studies is the average, you know, run can be 18 months. Um, and they can they can double, triple, hopefully a whole lot more than that. you know, Cisco, you know, there’s amazing stories going back in history. And you mentioned what some institutional funds that you’re you’re tracking, the the Janus30 and and all this. What is going on behind the scenes that creates a a monster move like that? Like what is going on with the funds? What are what are they where are they adding? Where are they selling? All this stuff. Bring us behind the reason why these market leaders can make these huge moves. Well, there’s different types of leaders. There are leaders that lead for 30 60 days. Like I thought quantum stocks were just junk. Yep. And you can tell by the quality of the margins generally if it’s going to have durability. I’m looking for stocks that are going to go for over a year. Yep. Um institutions they’re most of these like Fidelity. They’re really the big dog. They’re trying to buy a stock for five years. Yep. Um, so you know when you the best thing you can see is when the quarterly filing comes out that one of the funds took a position because then you know that that analyst in the Fidelity complex is going to go see each fund manager and they’re going to go what’s your favorite and they’re generally going to build across different funds and they’re going to build it for you know a long time months. Uh that is but you know I’ll tell you something else. You said I’m going backwards a little bit. And what did I learn? When you build a 15 20% position and you try to hold it for six beat and raise quarters, you’re now opening yourself up into four to five pullbacks per year to the 50-day and below, which is often 30% off the high, right? Which is incredibly What you learn when you try to do that is sitting through that pullback, especially the first one. Well, sitting through a whole new base is very, very, very, very difficult if you’re not trimming or hedging. It gets to almost be impossible, especially when you’re on margin. And the thing is, your baby is going to be the hot group and you think, well, I have an auto stock, I have a Tesla, and I have a software stock, and I have a semi. They’re different. Well, they’re not. They’re all growth stocks. And when growth goes, when one growth leader misses, that one might go down 20% that day, but all your others are going down five. Yep. And if you’re on margin, you’re looking at a monster down day. Yep. So, as you evolve, you kind of learn when things get really extended, you have to trim it or hedge it. And I I got mixed answers from Bill on this because initially I asked him a million years ago, he said, “Oh, no, I hold it.” And later he’s like, “You you have to trim it.” So, Bill adapted a lot. Yep. Is there anything I want to ask you this has your definition of a market leader, have you adapted that at all in the last 5 years, 10 years given the new ones that have, you know, happened in the recent market cycles. I I really think I reach for higher liquid um liquidity names like larger market caps like Alab and A when I for and even to a lesser extent be I think the sweet spot for market cap is the dead low of mid you’re out of small cap like ju just into midcap like the yeah$12 billion market cap that trades that’s liquid that’s if you can catch a small midcap that gets to small big cap Fire up the jet, baby. I mean, that’s the ones below that recent IPOs are generally junk. They’re lower quality. They don’t have earnings. They’ll never have earn. Most stocks that come public with no earnings never have earnings. Most stocks that come public undercut syndicate bid or first day close within a year, like 90 plus%. The odds are terrible. Now there’s what’s funny is the really high quality IPOs I’ve caught them because they meet all the other criteria, right? Um I just segueed into something I don’t what did you ask me? No, I forgot. You got uh No, this this is what it Oh, what it was. Um have have you changed the criteria you look for? It sounds like quality. Higher quality. Higher quality. What liquidity are you looking for? U obviously you run a very large fund so your requirements might be different than a a smaller trader but what are you looking for in terms of liquidity and also that quality factor that you’re looking it just has to trade a billion dollars worth average daily now if I catch them really really early it might have just evolved out of three four 500 million and the volume explosion the volume it has a personality change in volume uh I I’m just looking for higher quality I don’t when you start to at retail has lower margins by the nature of the industry. But when you get into 20 30% pre-tax margins and return on equity, you’re now dealing with a quality name, especially when you have a market cap that is in the 12 10 billion to 15 billion zone. Mhm. Now, occasionally you’ll get a monster grower at 30 billion. You’ll get it there. Um, and I’m look, I’m not afraid of Nvidia. Yep. It’s liquid. So, so liquid, dude. We bought some stock today. I bought a block of stock and it just like I don’t think it moved, but we didn’t even look. It didn’t even move a penny as far as I know. Yep. And Tesla was like that, too, when it was moving. It’s just the most liquid thing in the world. And institutions love that, right? Because they’re they’re confident in their ability to get in and get out if if they need to. And that’s huge. You look Tesla is even to this day an institutional darling. Now, the earnings aren’t there. Yep. And we can talk about that later. But I I you know here here’s what I learned. I am raging bullish on the future. I think we are about to enter the best markets we the world’s ever seen because the innovation is better than the world’s ever seen. It it just goes to you know stand prove that we see that. But Tesla the market doesn’t believe it right now. Y it just I mean now it I’m wrong. I don’t own it uh in the fund, but over 500 wild horses couldn’t keep me from owning that thing. Uh that would be the market signaling that I now now the market believes what I believe. We we need to believe together, right? Your your thesis, whatever you think about the company, the price action has to match. Otherwise, you’re not interested. If the technicals don’t match what I believe to be the fundamentals, it’s a no-go zone, right? Just I absolutely look you said what else am I looking for? If a stock is going to go from 50 to 500, it absolutely positively has to make a new high all the way. So when I talked about that lid of the paper copier box thing, those names, they just stacked up on top of each other all the way. Yep. It can’t go from 50 to 500 without making a new high. So the the new high list is the gold bar list. Now, you throw in liquidity with a 99 comp and you’re looking at one of the elite leaders and it, God forbid, it has tripledigit sales and earnings. Yep. You might be looking at the best stock of the year, right? And let’s say a name pops up on your up on volume and it’s at its crazy price action. It’s an IPO in the last three, five years that’s setting up for a potential looks like on the chart like a big weekly move. What are you doing? um to dive deeper into the story and to build conviction. What would you be what what could you see in the story, the CEO, you know, what’s going on that would say, “Okay, I really need to focus on this name.” I love it when I get a CEO who I was with in decades past where he went to a new company. The CEO has had success with other companies. Yeah. So, I have great leadership. That really, really matters. Uh Frank Langon, he’s like, “The first thing I do, well, first of all, he s he holds stocks for 40 years and 50 years.” He goes, “I get intimate with these guys. I I know everything they’re thinking.” Uh, but dude, I’m so basic. I literally just go on the web and I look for interviews with the CEO. I get inst I get a lot of institutional research. Um, IBD, dude, you just search for anything. They have they cover most of the leaders. Um, there’s so much on the web right now. It used to be like people be like, “Well, I can’t succeed. I can’t get an education. I can’t afford an education.” There’s more info on the web than you can get at any Ivy League school. Yep. And by the way, finance degrees, CFA, you do not do not need that. One of the biggest traders in Chicago worked for a major bank. He literally used a newspaper uh graph with a ruler and a pencil. That was it. And he traded grains, S&Ps, euros. Don’t get confused. You have to understand the fundamentals, but you don’t have to be able to crawl and break down that balance sheet. That’s a ridiculous waste of time. Yep. One question I did had and and did have and this is a call back to kind of what you said at the very beginning is when you notice a theme like um MU and SNDK together like semiconductor hardware, how do you find which one is D leader? Which one? Obviously, you might build a position in both with that, which I’m sure you do, but how do you know which one to prioritize? Which one takes more of your capital? Um, how do you judge that potential and compare two very similar stocks, maybe both technically and even in their story? How do you find which one makes the most sense? The leader is usually going to be the one that breaks out first. And if it’s not, the leader often will ellipse the performance of the others fairly quickly. Now, the conundrum occurs when the stock that’s not performing as well as the number one price performer has the better ROE and margins. And then you’ve got to understand what product differential is it that usurps them or makes them better than the next one. And the problem is a lot of these technology companies are over my head. like I I I can’t break down a multiplexer and I don’t understand the formulas and I I actually have some partners in my fund who are like literal rocket scientists and they’re trying to explain this to me. I’m like just stop. I it’s I don’t I have no clue. I I have a basic clue. What I do at that point is I try to go what’s the total addressable market? Like how big could this be? What percentage is tapped and what percentage do they have? Right? And I try to use a little artist matrix of the combination of all of them. Is it is it perform per performance RS with the variable the technical variables the fundamental variables right and you like SanDisk was clearly the leader but it didn’t have the fundamentals on the table when it came out and that’s so aggravating to me. Um but here’s the thing I pretty much missed SanDisk. Eve caught it in what probably her biggest trade ever. uh she works from she runs my small fund. Um you don’t have to because the golden goose of capitalism is just going to keep throwing these fast ball golden flaming fireballs of virtue at us. It’s never going to stop. Actually, you know what I wanted to do was I wanted to search for a capitalism barometer like around the world to see like someone’s uh I think somebody asked me when is capitalism going to stop? Well, I think it’s going to stop never as long as socialism doesn’t suffocate it. But I wish there was a world barometer that said the world is creeping socialism or or or creeping capitalism. I’d love to know that. Come on, send that into me. Let’s talk. And you you hit another of the uh Jim Ropel bingo card, the golden goose of capitalism already. So, you’re you’re doing well. You’re on pace. Um okay, let’s take it a step further. Say you’ve identified a potential leader. It’s it’s looking good on the chart. um and looking set up to go. Um what is the technical setup that you would prefer that you would say, “Okay, I need to put shares on here. It’s already on your radar. You’ve looked into the story a little bit. Maybe just the price action is superior. What is your go-to setup to trade these?” Okay, ideally, we’re possibly going to get one right now. If this market rolls over, because of some conditions I’m seeing, I think this could turn into a little deeper where we might get cup and handles. So you’re, you know, when you get a a mini bear, the rubber band gets stretched. Okay? The deeper the bear or the downtrend, the more that gets stretched. And when that thing comes back, that energy gets released. So generally, I want to be screening for these top variables. So I know the names. And when it’s running up the right side of the cup and we’re maybe ending a bear or the bear is now gone sideways, stop going down. the AD rating on the index will be going up while the market’s still going sideways. I want to buy immediately after a bare market. There’s no better chance than that. And I don’t think we’re going to have a bare market, but we could have a meaningful pullback, right? Which would So I want to buy off the big the biggest pullback is when I want to get involved. Yep. And uh then so cups and handles are going to People get so cranky when we’re in bare markets and it sucks. Yep. No fun. But you’re like, well, I know exactly what comes along next. I mean, Lion of Wall Street is one of my favorite books by Drifus. A lot of these books, I start reading them and I have to put them down because I get so excited when you get a bare market, when you start reading a book, you now know. Well, when you have history, you know what’s coming, right? So when the cup is forming and then the handle forms and it just gets super tight and it has the trip like a that was in the ropel report every week for three four months or two or three months before it came out. It just it had everything and it was handling handling handling and then it just raged out. So you want all the variables and you want a bare market and generally you’re you you just don’t get flat bases out of out of bears. Yep. You get cups. So, I love how you just said, you know, I asked what is your favorite technical setup and for you the market is almost the perfect setup because you need that bare market to set everything up again, stretch that band, and then from that comes the strongest moves that so basically corrections create these amazing opportunities and we just have to be patient, wait for the market to set up how we need to. Um, and that creates that great opportunity. It compresses energy. Yep. And then when the when the basketball under Now here’s the thing. Basketballs underwater will often the name that you’re you’re all over. Yep. It’ll pop up before the follow-through day, right? Like uh oh my god, I can’t remember the name. I’m getting so old. that like if you get a name that has tripledigit sales and earnings and the market’s been bottoming but hasn’t followed through yet and it hops out and then the market follows through two or three days later, you know, this is risky and it’s way aggressive and you’re probably down a little bit for the year. So you you’re probably going to miss it and pass on it because you’re like, well, the market’s down or it’s not we haven’t had a follow through day yet or MMT’s market timing and Dr. Wish’s thing isn’t green and point and figure isn’t gone positive yet. uh you might be reluctant, but that basketball underwater is it’s going to be the one second best chart is uh absolutely a hight flag. Yep. Now, I’ve only learned that in the last like three, four years. Like I I got in some of them before, but I consider them to be overly risky, but the reality is they’re doing they’re they’re acting that way because they’re so elite, right? And we’ve talked a lot about earnings gaps and like huge gaps on volume. That’s another one, right, that I want to talk to you about. So, yeah, tell me about that. What that tells you uh and and how you trade that as well. So, I can’t believe I didn’t come up with that because I would say I honestly really don’t know if my net worth has been made in eight or 10 or 12 stocks, but if I’ve been doing it for 40 years and I caught one monster every two or three years, you can come up with a number. Um, half my names I got on earnings gaps and some of them I wasn’t even watching before the gap because the gap was created by a surprise, right? In other words, earnings were crummy or not accelerating at that hyper growth rate and then they threw one down and up comes this, you know, geyser of volume and price. And so that’s where the pre-market comes in. I’m like, why is that thing up? Earning season is like the minefield that can give you the golden fruit. I mean, uh because there’s you can get obliterated or you can find gold. So, in pre-market, if it’s a liquid name and uh it has like say some crazy beat, I’m going to go in premarket and I’m immediately going to buy at least 10% before I even know what the heck’s going on. That’s calling out your portfolio or or the whole account. The whole account. And uh so then I’ll kind of look into what’s going on and in the first 30 minutes I wait because these often get faded. This year in leaders and markets gaps ups and down have been faded almost in this we’re in this box in the index. So gap ups get faded down and gaps down get faded up. Last week we had four high closes after down openings. Leading gap stocks up will often give it all up in the first 30 45 minutes. Now after that if it’s holding I’m coming right in and I’m going to take that up to you know say I want say I want $20 million worth of stock. I’m going to get that up to 8 10 million right in the first third of the morning noon higher buy more. I might buy a stock. I literally buy stocks like eight times in a day. Now, if it closes at the dead top tick, I’m going to just cap it off. Let me back up. This is not in a market that’s uh sideways or down. I’m not probing here. We’re in a bull trend. You know, accumulation distribution on all three indexes is is B to A. Market just follow through, right? And O, oh my god, that second best time, the first week or two after a follow-through, they just all start popping out. It’s rare that you’re going to get a monster 13 weeks after a follow-through day. Then you’re kind of going, I missed this name. Is it going to flag or do a five, seven weeks a flat base? Um, double bottoms. I remember Nokia back in, you know, when they had the little tiny phone. You were three years old probably. I don’t remember those. Um, it had the most beautiful double bottom with a handle on the right side. Mhm. You know, if you’ve read the book Blink by Malcolm Gladwell, I can just look at a chart and go, I just start to salivate. You know, I’m like, I I I don’t even have to look at the earnings or I I refine this. I’m like, I know something clearly really good is happening here. Yep. You know, another big thing is like the wall of blue. Yep. There’s fresh walls of blue and there’s stale walls of blue. When you have a cup and handle and a bare market and then you get a wall of blue, like Bill would say, five weeks in a row up is a buy. Well, I just called it a wall of blue. Um, that is like by do at the time that was my biggest trade ever. It had this gargantuan wall of blue after this really bad bare market and I just piled into that thing be because of that. Yep. RIM. Same thing. rim and um Palunteer off the bottom just had that monster earnings gap and then on the weekly just look at the volume you know maybe even bring that up for just to show folks um just walls of blue huge volume coming in um and it was it all started with the earnings gap this this entire move that’s happened started with the earnings gap right well first of all let me back up through this period in here and all through over here this stock did not qualify it did not have the earnings it Not it just and it failed in through here. I I can’t really see it. Uh let me change this. This thing shook people out repetitively. It just and then right here this was the game changer. Yep. That volume spike and then it cupped and then it it shook out again. it it changed character and this it became alive and the the earnings came in and now like if hypothetically and I’m not calling for this by any stretch. If we get a a 20% or greater pullback, Palunteer is like a stock that like I have kind of war chest money for the family that I save for bare markets. I think Palanteer is a um I ask my other hedge fund buddies I go please give me a list of five or 10 names that are bulletproof that are super qual I think this fits and I would endeavor into buying this into a climax waterfall over a period of weeks or a month or two which is completely the opposite of can slim right but in bare markets I have because my personal accounts I can’t really trade I don’t want to get conflict my hedge funds. So, I saved that money for horrible bare markets where I know I’m not going to do anything. Y and I ended up, you know, I bought I mean I I’ve bought some of the big best stocks in history, you know, when Minutuchin came in on Christmas Eve and he said he at Christmas Eve he goes we’re going to uh open the floodgates of money and the market just had a monster. I I went and piled in all the cash I’ve been saving for five years. Yep. Um g getting back to earnings gaps and Oh boy. Um, SanDisk, I think you’ve talked about that trade before. Um, talk to me what happened with Sand the the original SanDisk. You know, it’s had this resurgence, but talk to me about how you found that stock and how you bought it as well. Um, with that with that gap up on on huge volume. Okay. So, the gap up, I think the biggest earnings beat I ever saw in my life was Amgen. They earned 32 cents against a penny and SanDisk’s volume was up 3,200% on the day. And it it it was up like again this is so long ago here my son was a baby and we had the camera that’s how I figured this out and so my son is 28 so it was 28 years ago y and it explodes out and it’s up like 20% or more and the volume’s running wild and I just I didn’t even I just bought it and I was a retail broker back then and I just bought it AC every single account I bought it across the board and uh I then realized the earnings were like monstrous and the volume’s going crazy and my wife calls I go, “What are you doing?” We just had a a really young infant and she goes, “You know that camera we got for the christristening?” I guess she said, “Well, it’s digital and the camera only holds five pictures. You have to buy this thing called a memory stick. It’s made by SanDisk.” She says this coinc. And I kind of hung up the phone and I just went and I just mobbed the thing. Yep. And it ran up and it goes dead tight for I think like three or four or five days. Yep. It didn’t give up a point and it broke out to the highs and I just in one trade I doubled the whole thing like across the board and it just exploded and it went on for I can’t really remember how long it went on for but it got super extended and this was before I trimmed extended. Mhm. Uh and I god you know if this thing breaks the 50-day I’m going to I go first I this was one of the first times I go it’s just so extended I’m going to let a little bit go and I go at at some point it’s going to come down to the 50. Well, it was 5 days later. It was below the 50. Wow. And it it didn’t, if this was the 50-day, it didn’t glance it nicely. It went like that and I just threw it overboard. Just all of it. Did it recover or is that was that? It was toast. Yeah. You know, sometimes when you make a kind of another rule, when you have life-changing money and whether that is from bicycle to automobile or your one-bedroom house to a five-bedroom house, whatever, you have to take it. And for me that was a big one for it was well first of all half of it was in my wife’s IRA no taxes I had a ton of it and I didn’t care because and I’ll tell you how you learn this when you have life-changing money and you don’t take it and it disappears like that’s you know that that’ll teach you and I and I I continue to do that like last year I’m embarrassed to tell you how much I was up at one point last year I ended up I think uh I think before fees I was up like 30 or 40% I can’t really remember but at one point in the here. I was I was encroaching on some big numbers. Uh and I last year was a abrupt rollover and it you ever a great game to play is gin rummy because it’s a game where you try to get as many cars as you can match them up as quick and then discard them before the other guy goes out. Well, when the market goes out on you and you’re loaded with inventory, that is no bueno, man. And then you then you’re like, “Ah, you know that Bill has the turkey game where the the turkey go there’s three turkeys in.” Yep. Like, do I wait just another day and see what happens? And then you lose another four or five percent. Yep. I I had that last year cuz like you said, uh when the growth names break down, there’s it doesn’t matter really what theme it’s in, what’s group, they’re all correlated. They’re all they’re going to they’re going to be falling all together. Like that’s what happens. All tech goes. Yep. One followup question on earnings gaps now. how you trade them. You said by the first, you know, third of the day you want to keep adding. Are you using any intraday charts for that or you’re just kind of adding? And how are you managing risk on that? Where is your stop if it if it turns around on you? Okay, first of all, I don’t care if it’s up 15% or 40%. And here’s another thing, now this is where art comes in. I try to get my whole position on before it’s up 2%. But when it’s gaps open 15 and it’s up 25 45 minutes later, it’s hard to get your stock while it’s not up two and a half% yet. And you want to spread it out over time because these things fade a lot. I would say half of them fade. So it’s a battle between getting your whole position on and getting too big and then it rolls over on you. So you you want to spread your buys out over time but yet get it. So you you have to give it up. Y and that’s where judgment comes in in experience. There’s no rule. Uh the rule is losing money though. So say you build it up and all a sudden it you you can’t take a 10% pullback in equity. So you’ve you got you have to be proactive. And I’ll tell you this, when you have a stock that gaps like that, if it closes in the bottom quarter, they own that is um it’s like a follow-through day that undercuts the the the low of the followrough, right? Or the high expectation. Yeah. It’s it’s the odds go way way way down. And you want to take that position way way down. And I don’t want to hear about the one in 10 years that closes at the dead low and then goes on to be great. It happens. It happens a couple times a year. Yep. But mostly that’s a a really bad signal. And what’s going on behind the scenes of earnings gap? Like what creates it and what creates the trend after the gap? Because it’s okay. So it’s new information. The market’s adjusting. Analysts are raising guidance. They’re the market has got a gap higher because it’s discounting this new it’s it’s it’s factoring this new info. That’s why you know another integral variable into a TML is beaten rays. And beaten rays I call it the cockroach theory. Like you take your daughter to college and you you look in this killer condo when a cockroach comes out. Well, it’s not one. Okay. Where there’s one on the floor, there’s 10 under the counter. Yep. Uh they just they repeat they serial beaters is I think what Eve would be be if a company is going to beat earnings by 100%. It’s unlikely that it was just a one-time occurrence. Like the product’s only good for a quarter. You’re going to have multiple beat and race quarters. And analysts are notorious for like I want to keep my job. So they they think it’s going to earn 40 cents, but they say it’s going to earn 35 and then it earns 50. Now they got a raise to, you know, and then the the guidance is 60. You know, like a stock, this is going again back to 1994. It was Ascend Communications. And I bought it and I looked forward, estimates were hypothetically, they were a dollar. Well, fast forward two years later, they’re in five. Like analysts are so far behind the curve so frequently. Analysts, I would say that 95% of Wall Street analysts, and I’m talking about the big dogs, don’t know the term true market leader. They’ve never studied a true market leader. They don’t know what they’re capable of. They don’t understand how massively these tidal wave tsunamis of earnings can beat. You know, when you say to a analyst who covers chemicals or flower pots or whatever, you know that a TML is going to routinely go up 500 to a,000%. They just they they look at you like you have four heads. Yep. Well, they’ve never had one. They don’t understand that. And they’re they’re just trying to make their 400,000 bucks a year and not get fired. And sorry to come back to the question. Um what’s so the the the stock completely blows out expectations. The company raises guidance. Um the analysts um the people working at hedge funds they have to completely redo their valuation. So basically the funds are forced to buy and they can’t just buy once. They have to keep buying and build their position. Is that I don’t know if they’re forced to buy but they’re like okay first of all I’m a I’m a I’m kind of like a midcap I’m a small midcap hedge fund manager. if I’m going in. Well, again, I concentrate huge. These other guys, they’re putting two 3% of the whole account max in anything, but they’re still buying as much or more than me. So, they’re just throwing the book at it. They’re like, well, they know cockroach theory. They’re, you know, the the fund managers are totally different than the analysts. Okay. If the analysts were great, they’d be running a hedge fund. So, the fund managers like, “Yeah, they beat I know they’re going to beat three more times. Let’s take this thing up from 3% to four.” Yep. And so, you know, if they’re long, you know, 200,000, they got to buy 50,000 more, right? And and that’s a small position for these big funds. Y, you know, these guys, they often own a million shares of a $50 stock or or more. And so that buying creates the trend that that we can ride. Yeah. And they’re and the whales, the real whales, they’re going to buy it five days in a row. Mhm. And and then there’s going to a lot of times, this is something a smaller guy who buys a,000 lot can’t do. I’ll be in for 100,000 or 200,000 and I can see that my orders holding it or moving it. I’ll I’ll I’ll pull it and if it pulls back, I know I’m the only I’m kind I’ll you know, I want monsters. I want to be I want that thing to really be going up. I want other whales. I want whale I’m a guppy. I want whales in there. So, if I back off, it keeps going up. Now, I know there’s at least at least one or two other monsters in there. Are there any other tells that you look for that says, “Okay, there’s somebody really also trying to accumulate stock at this point.” Yeah, they just the monsters do not back off and if they close open crummy, they close great. They just they’re telling you, you said, Jim, how do you know what’s has the better product, the stock just acts really firm. It It closes firm even on a big red day, right? Like that’s that’s it. It’s even better. Yep. Okay. as I call that a leader defining day when the index is down 2% or more like you have a slaughterhouse day I’m running I want to know immediately all the stocks at green even if it’s by 25 cents what is going on either they the whales didn’t sell it or they were actually buying what other people were dumping that leader defining days are strong signals especially early everything early in a move is a signal yeah so going back to the SNDK trade it sound You positioned day one, but then it just went it basically did flagged out and tightened up again and it was a super short flag. Yeah. So, do you is that something you still do today? You add more as it breaks out of a kind of a a range right after the flag. Usually, by the time it’s if I catch it on the initial breakout, by the time it gets to a flag, I have a full position. So now, if I’m not in a position where it’s gotten so big and it could be detrimental to my fund, I might have to actually sell some. But if if I I’m going to totally own this. The monster stocks I’ve had in the last two and three years, I was underpositioned in and they still made my year. So if I am underpositioned and it has a three, four, five, 10 days tight, I’m going to add 5%. Gotcha. I’m not I believe two and 3 weeks tight or any little digestion is an ad. Taking a full position on a short digestion is absurdly high risk. I would say half of these two and three weeks type fail and I don’t want to give up my stock either. So I want that cost down so low that if that two weeks tight fails I can just keep that bulk. Yep. I want to you know Bill said get all your money in there. But it’s been hard and that’s a perfect example. You don’t you get 20% in a stock that beaten raises, you’re going to change your life on that one stock. Now, you catch one of those every three years for somebody who’s your age, dude, you’re going to you are I cannot wait to see what happens to you. You are going to be knowing what you know at your age. When you’re my age, you you the world is yours. It just depends on how hard you want to work at it. I’ll I’ll try I’ll work I’ll work as hard as I can, man. Um, and right now we’re in an interesting market environment. Obviously, it’s it’s it’s been choppy. Today was really interesting. Today, just for everybody watching in the future, is March March 9th. We had a huge rally after oil pulled back well off highs, VIX collapsing. But bring up VRT the chart because this is a recent gap up. Obviously, this isn’t the first gap it’s had. Um, but we were talk we were looking at this into the close and you were saying, you know, this is, you know, a recent gap up that then formed a consolidation. Is this kind of what you were talking about that if this was a better market market environment, this would be something that you’re looking to buy as it keeps breaking it out of that short consolidation. Explain to me how this stock was 1% off alltime highs and the market’s down four to 6%. Right. And it has 99 comp. It has 43% estimates. I said 20% across the board, pre-tax, after tax, return on equity, uh 99 comp, it RS97, and look at this wall. Look at this bar, right? I’m just going to go straight out. Volume totally matters. This stock was nobody. The whales did not sell it and they came in big. Look at this. I call it a skyscraper of blue volume accumulation. Yep. Uh if you So, this brings the debate in. Was the market bad enough that we needed a follow-through day? If you still had inventory, you didn’t need to buy anything today. But this absolutely could have been should if you had no exposure, this would be actionable. Now, if you had if you were over your skis already, and that’s another problem if you’re long a lot of stock and you’re and then the market moves through, you’re like, well, I can’t add. I’m already super long. I don’t want to increase exposure. So, that forces you to weed the garden. Am I going to blow this out to bring in a new leader? And that’s so having stale big exposure can keep you from it can help it makes you miss new leaders. So we’ve talked about entering on a gap right now for a cup and handle breakout or or a you know a flat base breakout if you’re trading that. Um how is it different that you enter um with with that type of setup versus a gapper? What are you looking for to say okay it’s it’s at the pivot. What do you want to see to enter? Are you watching the daily, the intraday? Bring me into kind of your mind there. Okay, so Bill was super strong on weeklies. I learned on dailies. Mhm. To identify the exact pivot, I use the daily and if it’s a cup and handle, I’m probably aware of it before and I’m salivating at the possibilities. And then the temptation is buy it in the handle before it comes out. So, occasionally when I just get overwhelmed, I might buy a tiny little one or 2% of equity position on a on a earnings gap, I’m probably not aware. So, I’m going to pay whatever, but with a cup and handle, I want to be I want to be the dude breaking it out, right? So, I want to be the, you know, 10 20 cents over the pivot. You know, if it’s a $100 stock, maybe 50 cents over, I want to just call the trader and say, “I don’t care. just take not held by 100,000 or whatever, right? And I I I want to see that thing just go to Mars. Like I want to be the fuel and I want the whales under me. And so I’m willing I’m not willing to chase a lot over a handle. I’m willing to chase a a huge amount on a gap up. Gotcha. And let’s say the breakout, you know, it had all the qualities you’re looking for, but instead of closing at highs, ideally, you know, following through the next few days, which is the ideal, it reverses on you. How are you managing risk on that? You know, taking care of that side of the equation. So, if it fails, you know, you’re protecting the majority of your capital. I’ll scale out a little bit. uh as the if it reverses I you know again I’m gonna open up to a bigger loss than I normally a half a one% of equity if I’m up for the year is about what I’m willing to lose on any given trade but when you’re in these gap ups that can just be absurdly violent you you kind of almost open yourself up to you certainly open yourself up for the possibility because they can roll over faster than you think but a lot of people say I’ll set the stop at the bottom of the gap well if it’s up another 10% you can’t do that, right? You just have to look, this is an art largely based on rules, based in rules. And it’s not always going to work. But I will tell you that when I started cutting my losses, when I read Bill’s book, I started to go, well, I keep cutting all my losses. Eventually, I’m going to tangle up into a monster. Yep. And I did. If you keep buying monster gaps and you get stopped out of some of them, they don’t work, they roll over, or you screw it up like out of not negligence, but inexperience, you mishandle it, keep after it. Like we were talking today, we were four or five months into a Darvis box and half the people left the market already. Are you kidding me? You’re going to get kicked around. The rules are not going to they’re going to fail you. Uh you just have to stick after it. I mean, if you want to get serious rich and you come from a middle class or low-income family, you need to compound. Like, you’re not getting an inheritance. Okay, you saved up 5, 10, 20 grand. You want to be worth 300, 400 million bucks. You’re going to have to compound that for 40 years. So, you’re going to see bare markets that are going to last from 9 months to year and a half. You’re going to see pullbacks that are going to last for two, three, four months that are going to be 30%. You’re going to make a thousand mistakes. You’re going to screw it up. You’re gonna have to dust yourself off and get back on the horse. And so, how do I handle the gap? I I might have to take a little bit bigger risk. I might screw it up. I might not get enough. I I might like a reason I didn’t have 20% is it just it it just exploded. Y um the rules are no guarantee. They’re not locks. They’re guidelines. They’re guard rails. They they’re really more to keep you from blowing up. And if you do follow them, I promise you, you are going to catch many monsters. No, no, that’s that’s perfect. Um, and on a more typical breakout from a cup and handle, you’ve got your kind of laddered stops 357. Is that correct? So, that’s how you’re protecting yourself on a cup and handle. Super rigorous on

Yep. on a massive gap up. I mean, dude, you can if it gaps up 10% or 15 and you fill five 10% of your position or equity, you can blink and it’s going to be up five more percent. And if it’s in the mid if it’s if it’s 30 minutes into trading now, you got to choke and, you know, swallow hard and buy up another 5%. Now, your cost is too high. And then it just keeps going, right? Now all of a sudden it’s uh hour and a half before close and it’s mid-range. You would need to make some decisions. Yep. And you’ve mentioned position sizing quite a bit uh so far. So just to bring it all together for folks, um what is your target size? Let’s say in a good good market, in a good opportunity, what is the target size you’re looking for as a percentage of your portfolio? What’s their max size you’re you’re willing to do? And in your earlier years, your cowboy years, what what were you doing back then? Okay. I mean, I was just off the rails. I mean, my my office manager would be like, “We got to bring you back on the reservation, son.” I mean, I would take, you know, but I didn’t have any money. I had like 20, 30, 40, 50. I don’t even I I had no money. Yep. I I would take it out 3x I’d have 50 grand out, 150,000, and I’d have three stocks. It was like suicide. like the fact here’s what I until I went to Bill’s uh uh level five or master class. I didn’t even recognize what he wanted for parameters. Mhm. And I go, how did I not blow up? It’s cuz I had 357 or I I know it was set back then it was just 7%. And I was really really rigorous about that. I I am absurdly disciplined in one area of my life and the rest of my life it’s just chaos. But it’s what kept me alive. Most people, most hedge funds, I think the number is like 70% of all hedge funds blow up in 5 years in most in three. The fact that I had such loose uh position sizing and I made it is amazing. Now now I have found unscientifically that 18% total exposure is about the max I can really deal with. If something is crazy liquid in one name just in one name I can take it up to 20 20 22 but if that thing doubles it’s 40% of my account right and then I got to go through an earnings period like when Nvidia first came out the first you know this is 101 15 years ago uh it grew to half my account like a me and every earnings report for a year or two I had to trim off. Now the question is begged it begs the question well what if you would have held it the whole way? Well, I would have never gotten there because now the whole 80 90% of the whole account would have been in it and any miss, it would have been obliterated. So, I actually made more money by keeping that position, trimming it after before every report. Having a stock that’s going to triple and having a size will kill you. You can’t tolerate. I even with my cast iron stomach and ability to take risks that most people can’t, you can’t I can’t do it. And you if you do do it, you are going to sell the low. And you bring me exactly to the next question I want to ask you, Jim, which is about handling a monster stock and like getting the most out of a trade because like you said, if if you can’t hold a stock and it fivex 5xes without you, doesn’t matter. Does does you no good. So, what are your what are the principles, the cell rules that you’ve internalized to to try to hold what could be a monster stock so you can get the most out of that trade? Okay. Can Slim screening for stocks, all the things we’ve talked about up to this point is the basics. This is how you handle a real TML, a bucking bronco with size is the that is the game. That’s the the apex. That’s the self-actualization. And the answer is if you’re not trimming or hedging you and you’re and you have size, you’re not going to make it. It’s how it’s experience. It’s knowing yourself like you have to say look if this thing pulls all the way back to the

50. Can I deal? And you everyone says they can until it starts to happen. Y

and another thing is if you think about it in hey I could have bought a summer home with the first pullback and I lost it. You’re not you can’t you cannot I say you have to have a disrespect for the money because if you’re counting it, you’re done. You you need if you’re counting it, you need to trim it. If you’re above the 50-day by an amount that you couldn’t take the draw down at least down to the 50-day, you have to trim because you’ll never make it down. You know, you you’ll you will puke the low. Now, the the my evolution was I would sell 15%. That’s nowhere near enough. You I need to initially I would trimmed now I hedge. Uh, I think you need I need to trim or hedge at least 50% at a at a extension that is equal to or getting close to the recent level of extension before the pull it back. But I think it’s even more than that. Like in some cases I’m actually overhedged because I just am so confident it’s going to pull back. Like one thing you can count on is a pullback. You cannot count on for higher prices. So, there’s a little bit to imp unpack there. First things first, extension. Um, a lot of people watching this are going to be like, how do you define that? And I’m sure there’s art to it. Are you looking just visually how stretched it is from moving averages compared to prior trends? Are you looking for a hard percentage or ADR from that? How do you personally define extension? Okay, it’s time, duration, and percentage from the last level of extension post its breakout because the personality is very different before the breakout versus after. Before the breakout, the market might not let it go 5% over. After the breakout, it might go 35 or 45 or 50, right? So, in the initial leg up, I look at time because I don’t know what where it I just eyeball it. Um, and I start building into it. I don’t just go, “Oh, the last level of extension was 30%. At 30% I’m going to hedge off 80% of the at 25% I might sell uh or hedge 15% of it.” And every 3 4% higher, I’ll more more. When it gets to like all of a sudden last extension was 30, it’s at 35% over. Well, I’ll I’ll take my max extension six I’m sorry, my max hedge say 75%. because you never know if it’s going to climax. You never know if it’s going to get bought out. Now, again, in my whole in 40 years, I think I’ve had three buyouts. So, you can’t count on that. But, you don’t ever want to let go of all of it just in case. Uh, that’s perfect. Time. Yeah. And duration didn’t really factor a lot for me until like the last six months. I just went on level of extension, but now I’ve had a lot of levels of extension get reached and I’m like, well, it’s only two weeks out the base. It’s it’s likely to run for seven, eight weeks, which makes it an art. There’s no rule. You don’t know. You have to read Andy Duke’s book uh thinking in bets because in the market you’re playing hold them. There’s all these variables like the the the the flop is down. It’s you don’t see those cards and you don’t see any of the opponent’s cards. So you don’t know what earnings are going to be. You don’t know if the Fed is going to cut rates, if there’s going to be a war. There’s so many unknown variables. So you you’re it’s an art. You have to work into it. And I would say that experience I mean 40 years can give you a little more insight. Y and let’s say you’re holding what you think is a monster. It’s extended now. uh it’s it’s uh x percentage above is it the 50-day moving average that everyone watches. Um how do you structure your hedges? Let’s say you want to hedge let’s say 50 50% of your position. How do you structure that strike price duration? Let’s get let’s get specifics here. So I would ideally like to sell the call at the 50-day, but often that’s so far below that the spread between the bid ask is gargantuan. So I sell what I can. First of all, I’m using a a a market maker. Yep. So, I have a little bit of an advantage. They’ll introduce capital and they’ll fill me right between where most people have to pay the offer of the bid. Um, I will sell five 10 points in the money. Now, this is what happens when the when it rolls over. It gets to your strike and you’re like, you cannot freeze. You have to buy that back and then sell more lower because if you don’t, you’re w you’re naked. You’re w you’re naked. you’re naked long. So, you’ve got to be quick because they move really, really fast. And so, you put it on as a single leg. When you roll it down, you spread it. You unwind the high strike and you s at the same time. Uh you’ll get a better fill that way. And then, uh is that what I’m doing? Yeah, I I think that’s perfect. I mean, look, yeah, this is an art. Yep. All right. there there are rules but then there’s interpretation of the rules and there’s implementation and then there’s imperfection and then there’s the unknowns. So you’re with all these variables that are working against you, my hedging, I’m often in the name and it rallies 10 15 points in my face and I’ve got a delta neutral hedge on it. So all I made was the time invol uh time involved depreciation. I didn’t lose any money. The stock went up, the option went up. I didn’t lose anything, but I like in uh be after it had its first monster rollover. I was in and out of it like you know I was getting all dude the thing average daily it’s like 12% it’s huge it’s like it’s almost eight 8 to 12% in a day. Yep. Um look all I can say is you implement to the best of your ability consistently for 40 years. You’re going to have a lot of failures and you’re going to catch a couple golden geese. You only need golden geese are rare and when you catch them, it’s a lifecher. Yep. And if you catch only one every 3 years. Yep. You catch a golden goo, you catch a a monster TML every 3 years with 18% of your account in it. What more do you need? I mean, there’s you may want more, but you certainly don’t need it. Yep. So that covers the hedging aspect of it. What are the other very key cell rules that you use to manage a position and we can talk a climax run also just kind of rolling over and breaking below MA. So so talk us through your cell rules. I am so basic dude climax run but I don’t get a lot of them. That’s just pretty automatic and and the big mistake there is you have not been in them before so you don’t understand like I I initially like 20 years ago I’d sell too much too fast. Yeah. So now when it gets climactic ick, I start to let a little go. But I% of your position each day or a little bit more than that. What would you say? If it’s some tiny little thin stock, I’m going to Well, I’m not in that, but so I have a small cap fund and occasionally we’ve been in that. I would advocate like tillray. Do you remember that? Yep. I I would be out of half of it on the first leg, you know, day up and right because when that thing rolls over, it’s going to implode. Yeah. like a SanDisk. If I had to do it over again, I would sell 15% five, six times. Now, again, um there was a SAS name, a consulting name in Chicago stock. It was a It doesn’t really matter. It opened up 35 points after a climax run. And I was a big big big holder in it. And I let a little go and it was up 30 points and it’s now up 15. And I blow another 15 out. And by the time that 15 or that 15% got sold, it was even. And I just called the trader. I go, I go sell everything you can. Yep. It closed down 30 points. Wow. Um, everybody knows the name of the stock. Uh, but now you get a liquid name, like a real liquid name, you can take your time. You can sell over six days. Yep. uh like a Qualcomm back in the day. If Nvidia ever blows off, you’re going to have plenty of time with that. Yeah. Okay. So, talk about then selling if it just kind of rolls over uh market. No, no, but what what are your sell rules? Well, yes, it’s a market order or whatever. Oh, you’re in trouble. Yeah. Yeah. Okay. If it if if you get a gap multiple three, four, five days in a row gapping and then it goes negative on the day, it’s I mean you you you sell it doesn’t matter if you knock it down5 or $10. Like you literally there’s going to be an air pocket. Yep. Uh you get a gap up and then a reversal down. Yep. The odds of it making a higher high in the next week or month are like 10%. like SMCI did it, but it was such a marginal new high and it was a crummy setup into it. Uh you’re doing yourself look, you’ve already hit a climax run just okay so let let’s say a more not a climactic run um but the stock just starts breaking down. What will get you to sell um a stock that maybe you’re up 40% 50% at that point? You think it’s still a true market leader, but obviously you need to listen to price action. We buy based on technicals and fundamentals. We sell based on general market conditions are going to have a lot to say. Gotcha. Is are the are other leaders have a few other leaders climaxed or climactic? Where are we? How far from the past follow-through day? You know, how far from last bare market? You know, I’m not going to flip my lose my mind three months after a major bare market. Yep. Okay. Now, three years into a bull run and things are shaky and uh we’ve had a couple climate shows. I’m probably going to sell a stock that, you know, I’m it depends. Am I in protect the portfolio? Like, do you manage by P&L or by rules? P&L is an emotional cell. So, a lot of times you’re going to have stocks like a be which are just all over the place. Mhm. And so, in that case, you have to have a position that’s small enough that you can say, I’m strictly going by rules because if I just looked at the P&L, the volatility is going to get me out. Like people say sometimes, well, how’d you hold that stock? 8week hold rule. It was all over the place and I I gave back an absurd amount waiting and then it got its act together and took off. So the 8week hold rule is really really good. But and define that for us just for people to if it’s up 20% in less than eight weeks, you have to hold it for eight weeks or from the breakout or buy point. Yeah. Is that right? Or is it within two? I don’t know. Look, these rules are malible. I mean, they are and they aren’t. There there’s there’s no 357 is a zero defect policy. Like, there’s just no side. I’m just not going to ever violate that. If a stock’s down 5% but it’s dead on the 50 and the volume is dead quiet, I’m gonna give it a minute. I take a little insurance policy and see what happens. I might let less go than normal, right? Um, another thing is how close to one year long-term capital gains am I? Do I want to blow it out or do I want to hedge it? Do I is the market imploding? Am I taking on water? Am I too big? Am I on margin? Is everything melting? Or is everything chilling? I just have one problem stock, right? I just blow that thing out. I don’t blow much out. I I’m a holder, man. I’m a I’ve grown from a frenetic trader where my mailbox here’s old am. They used to send me a confirmation in the mail for every trade. The mailbox would be like the the guy have a duffel bag of mail for me. Um I’m not like that anymore. I trade as little I want to be forced to trade. I want to be like a stock’s moving so aggressively and the volume’s so enormous that I I have to get in or I have to get out. If it’s ambivalent action, I’ll wait. I’ll wait for a Friday close. I’ll I I just don’t tr The less you trade, the less likely you are. The more you sit, Livermore, the big money’s in the sitting. It It absolutely is. You’re going to get rich taking five point gains on a thousand lot and live your life on a razor’s edge. I’m I’m over that. I’m just over it. I I I have no interest in a 5% gain. I just I don’t I’d rather take a 5% loss. It doesn’t matter to me, right? I’m looking for I’m looking for I I used to say arrogantly, I’m a big game hunter. You know, I’m a six beat and race quarter guy. And I I am, but I’m more subtle about it. I just I don’t that hyperaggressive trading is over for me. Paying fun tax bills. I still pay short-term gains on over over half my stocks at least. But you said, “When do you sell it?” When it’s just rolling over. Well, how close to one year am I? If I’m uh two months away, hedge. Yep. If it’s, you know, if I’m 10 months away, blow it out. And another thing is like right now, I just dumped a huge position in Russell a couple days ago because there’s a pivot just right above it. If this writes itself, which I don’t know, if it does, I can get right back in. Right. Is there a a a clear concise pivot higher? Be is a mess. It looks like a scrambled egg. Where do you where do you get in on this thing if it go Let’s just say the market bottoms, right? Well, you’re I’m interviewing you. What are you going to do? Be makes an all-time new high Thursday. Oh, I’ve already got stopped a few times on PE. So, um yeah, I I would I would put it on because it’s just showing its strength. So as much as I can uh while managing risk uh ideally it pushes higher higher low tightens on the moving averages pulls back and then goes and then lower high. Is that what you’re looking for or what are you looking for? I just think it’s a mess and I Well, it needs to tighten. That’s that’s what I need to see. We both want to see it tighten up. But I’ll tell you this, why do I hedge so much when things get crummy? Because when the market turns up, I’m long the leader with a low low cost basis and I can just take my hedge off. Now again, it could it could uh fade could fade the breakout and I got to throw the hedge back on again, but I’m preserving I’m seasoning that that that time. Um there’s so many variables on everything. Y the factors y but just to put some rule that maybe for the beginners out there um I know the 50 SMA is your guard rail. So, how how would a stock need to act around the 50 SMA that says, “Okay, I need to hedge or I need to sell some for you.” I’m going to be hedged way before it gets down there. Y Now, when it gets down there, this begs a different question. Yep. Does it How many stocks get supported on the 21day? Not many. So, I’m not going to cover it at the 21day. It gets down to the 50-day. Is it going to stop at the 50-day or is it going to undercut? So, where do you unhedge? Do you unhudge half of it? Part of it? The answer is how does it come down? Is it come down on waterfall volume or is it slowly subtly come down like a feather at at like 3:00 or you know 1:30 on a clock face? I might not sell any of it. Mhm. Even if it if it breaks the 50 by 2% and it closes 2% below on a Friday and then the next week it closes 2% below on a Friday and all a sudden I start to see a tight line forming both. I’m going to start getting really bullish. Right now, if this thing comes, say it’s a it it comes down to the 50 like at 4:30 on a clock face and volume’s just overwhelming, I I’m I I’m going to I’ll probably blow it out. I’m probably not going to hedge it, right? That would signal to me that the whole move might be over. Gotcha. Um, and you touch on this because it’s such a crucial part, but um, how does the general market and the macro environment, how is your process influenced by that in terms of how aggressive you’re going to be uh, and all that? And what do you use to judge the market? I think you want to talk a little bit about the VIX that that might be interesting to bring up, but yeah, take me back general market. Obviously, the M and can slim. How important is it for you? You can’t make money in a sideways market. Okay. Nine stocks out of 10 are going to go the way of the trend of the market. So that’s why everyone’s been getting chopped up. You’ve been buying breakouts, the next day it rolls over. I never until last couple years understood the importance of the alignment of the MAS, not for support, but for a bullish alignment. 21 above the 50 above the 200 and early where they’re fanning. That they were they were they were compressed like they are. Yeah. See, we’re set up right now. There’s a lot of fear out there and the MAS are all compressed and if we somehow get an upside breakout uh and the line the MA start to fan like this. Yep. I I’m going to try to get as long as I possibly can. I mean again I don’t do that anymore. So So you know it’s funny. I say I’m not a cowboy anymore and then I find myself like on March. Yep. So what’s your question? How how the the market just how important is it for huge? It’s huge. And how do you tell if you’re in a good market? How many liquid quality 99 comp leaders have broken out recently? Mhm. How are how are the MAS? How far apart are the MAS from each other? Are they in bullish alignment? Right? Is the accumulation distribution on the indexes at least C plus or better? Can you Dude, number one, can you make money? Have you made money on the last five stocks or you’ve been stopped out? You get stopped out on three, four, five in a row, position size has to come down. And you didn’t ask me this. I’ll just tell you anybody can make most anyone can make money in a bull market. But knowing when to back off the accelerator or actually hit the brakes, most people will make money in a bull. And here’s how I know. Because they all come to me after they make money and lose it and they go, “Here, you run it.” I get that. That’s where my customers come from because they don’t want to deal with it anymore because they they’ve learned it’s easy to make bull money in a bull market. It’s really really hard to give up the adrenaline rush, the feeling of success, the admiration from your wife and your friends at a cocktail party that you just bought a Lamborghini. You know, you you you’re like, “Oh, I can’t let this stop. I got to keep it up, man.” And it after having a long long successful career, you are still completely susceptible to stupid obvious mistakes. It never ever ever goes away. It you never uh human frailty is in your DNA. You cannot cure it. Okay? You can spend time on the couch and learn what your de defects are, but then controlling them. Like like Charles Harris, he’s like, knowing what you did is not enough. You need to know why. You and if you don’t know that, get on the couch because if you don’t know why, you will boom and bust for the rest of your life. Yep. And that’s where Brett Steamberger comes in. Like you, if you don’t have access, you need to know the market is the greatest psychologist there is. There’s no better if you can interpret the feedback the market gives you. You can lie to your shrink. You can lie to yourself about the losses, but they’re there. The market is going to, if you’re greedy, if you’re fearful, if you’re impulsive, whatever it is, the market will expose you. And it will expose you very, very quickly. And then when you ratchet up the pressure with size and margin, it’s going to teach you quicker. Yep. What are some ways for you personally that have helped you dive into, you know, your actions, the training psychology aspect of it and understanding yourself better so that you can hopefully realize in the moment when you’re letting yourself get carried away, how how do you help build that awareness? I started going to a shrink in07 and I went very frequently. Now I go maintenance like once a month. Uh when you just have an unbelievable look streaks streaks are real. Baseball hitters, three-point shooters, stock traders. Yep. When you just can do no wrong, you are in the flow. You’re paying the ball. Yeah. Trim. let something go. I emailed Kramer 30 years ago, like in the 2000 blowoff. That’s 24 years ago. And he just sent me one word back, trim some. And uh when you’re just feeling invincible, it’s a like the first time you think that’s going to go on forever. Yeah. When you give it back, you’re like, “Okay, I learned.” But you you’re going to do this repetitively. Yep. when you just feel invincible. It’s it’s just recognizable now. I’m 40 years in the business. Uh when you’re just so hot, when oh when you like I said, I’m so basic. I’m great at selling into climaxes. I’m great at selling breaking the 50. It’s the in between part that you asked me about before. Y that’s where you really have to make some decisions and you have to know why uh you know why the heck are you 200% long to begin with? Okay, what are you trying to prove? Like what’s are you trying to get rich immediately? The market’s going to teach you. Yep. There’s I I guess there’s a time for 200% long. You know, when I was trying to build my war chest, I was 200% long a lot. And I I did take five points out of thousand lots until I got a little critical mass. Mhm. And then slowly over time I just that just kind of went away. Um I don’t think I’ll ever be 200% long again in my life. I I’m way past that. Yeah. Uh Ross Haber, who who of course I work with, he he says he’s optimizing now for aggravationfree trading, you know, like the the names that just trend. and he says now how the markets have maybe sped up a little bit being 120% long feels like how 200% long used to feel. So um yeah that that that’s just something why do you want to get rich because you want a great life well a great life is not glued to a computer. Okay you don’t want to be sweating. You don’t have heart issues. You want to live what if you just comp what if you just compounded out at 18% a year. You’d be hall of fame money manager. Hall of Fame. When you have smaller amounts of money, you can do much better than 18% a year and still live a life and have a life. It’s it’s like is getting rich worth a crummy life. Yep. So you got again, I lived a life of zero balance for 20 years or more and I didn’t understand what the heck that was and I I thought I loved it. I now look at it more like I want I I would I’m still going to go for the 100% year when we come out of a bear, right? But if if I have a 20 or 30% year this year, I’m going to be pleased. Uh I had 80% year, 100% year uh ‘05, I don’t know whether you’re talking about before after fees and then I had uh look, if I just compound at 30%. I’m doing it to like um one of my friends uh he just had a birthday. I’m having to draw a complete blank. He’s Mr. Zen. Robert uh Ferman. He’s an evolved version of me. Sup. We’re not comparing. I know who you are. You’re the big deal. He’s the man. He is totally the man. I go to lunch with him. I hang out with play golf with him. Y you know, he enjoys his grandkids. He has compounded for 40, 50 years. Yep. You think he cares about a 300% year? Yeah. Oh, he’d love that. You think he would trade time with his grandkids and playing golf and No. So quality of life. I probably gave up a lot of years of my life. I have high blood pressure now. So today, should I say it? Yeah. We’re blocking Nvidia, big block of stock, and we’re trying to figure out what to do. He’s in my office, and I go, I got to take my blood pressure. And it was so low. It was the lowest reading I’ve had in a month. I couldn’t possibly believe it. But that’s what I want to be that I want to build a portfolio that I don’t have to have it on the counter while I’m in the shower to man. I’m going to be able to walk away from it for an hour, play a hole of golf, play two holes, check in. It’s about a great life. That’s what we’re trying to do here. Getting rich is about having a great life to buy you the opportunity to have a great life. Do you So you talked about that 20 years of imbalance basically. Do you total imbalance? Do you think you need some imbalance at the start to kind of test yourself, you know, push the boundaries a little bit so you know how much you can take or, you know, what would you kind of say say to that? I would say if you have a job, you stay in that job until you have four years income to trade all on your own. Once you have that, you’re probably going to feel a ton of pressure. I think the pressure of trying to earn enough money and not have an income is enough. You don’t need to lever up and you’ll get there. Like again run get an HP12C and put in whatever you have and compound it for 30 40 years at 15%. Take out taxes. You don’t need to sprint because when you sprint you’re going to fall hard. Yep. Uh ask Ferman. Okay. I had no balance in my life. I would sleep four hours a night. I would look at currencies in the middle of the night. I would look at foreign markets. I had positions that were so big I would dream about the tape for decades. Yep. Now, when the bare markets came, it was all cool because I didn’t have anything to worry about. I wasn’t in the market. But when the market was on, I’d have to take ambient on Sunday night to get at least one good night’s sleep and then I would go on four or five hours a night for the rest of the week. And I just I’m over that. I’m done. I’m finished with that. I I it’s the it’s the evolution of a trader. And do do you have to have the imbalance early? Do you think Michael Jordan had any semblance of balance in his life? He’s dragging Rodman out of his place at, you know, three in the morning to go to the burrow center to shoot hoops. I mean, yep. You want to operate at the very, very highest level. You’re not going to be a great hockey player and slingshot player or whatever. You know, uh, it’s one thing, but I guess if I had to do it over again, I would dial it back a little. Jim, I wanted to hear your take on AI both as a disruptive theme, as something that could create many market leaders like we’ve talked about um and what sub themes within that you’re focused on uh but also uh and we can we can take this as the next question, but how AI might impact trading and how we operate as growth stock traders and all that, but but first things first, talk to me about the AI theme, what you’re focused on in terms of how it and create these great opportunities that we discussed. Well, right now we have the plumbing, we have the facilitators, the hardware, the pick and shovels, right? The like the, you know, we had search engines for a very long time before Google came out and we haven’t seen any IPO of any monster uh dedicated singly focused AI name. So, we are absurdly early in this run and like this market. Are you bullish, Jim? Is that Are you telling me you’re bullish? Well, I’m not just bullish. I’m a 40-year trader and I’ve never seen an innovation like AI. There’s nothing like it. There’s nothing I’ve ever seen. I I understand the possibilities for robots. I understand the possibilities for biotechnology because of AI. I I mean, there’s the innovation we’re seeing is like the steam engine with electricity at the exact same time. the implications for well first of all the market right now is not trying to uh find any winners they’re trying to find the losers the market is poking like a a mouse pokes at a wall trying to find dropping the the water is trying to find that crack so we’ve got the trucking stocks have been obliterated sass stocks been obliterated who knows what’s next um so right now that’s the mode the market is in but there’s no chance these guys are not going to monetize. And when they do, there’s going to first of all, there will be more losers than winners. Okay, in crypto, I know just one second. This is good. I suspect that every crypto outside of the top 100 market cap is going to go to zero. And it might be as much as the top 50 might be the only ones that survive. AI is going to obliterate old any company that has a boardroom of with mahogany like this desk and they have three piece suits and they’re smoking cigars. These dudes are roadkill. Um the possibilities for what these winners are going to do. Like you were in the kitchen today and I said, “God, if I you’re 20 28 28 and I’m 61. If I look at every winner that Golden Goose brought us from my age 28 to my age 61, we’re going to see that over again with turbocharger. And uh so the what do I think about AI? I think it’s going to you know Elon Musk says it’s going to be create such massive abundance that money won’t matter that you’ll have to find a hobby. Now I can’t envision that. I can’t get my arms around that. But just when I use AI in the most crude way like I said you know please I query it on uh the 50day how many times did it touch this? And I I have Josh Dar8. Thank you. And some other really smart guys helping me out. What this does in three seconds is beyond. Like it’s so I mean the implications for this, dude. I’m telling you what everybody knows. It’s unbelievable. And but the old dudes are like, “Well, it hallucinates. It It’s not dependable.” Well, it’s just getting This is as bad as it’s ever going to be. Like Jim Schmidt says, it’s not they’re spending too much. It’s that they haven’t spent enough. Now, that begs another issue, and that’s the data center debt problem. Mhm. So, there’s there’s a lot of factors going on. Is there is it going to be contained to Blue Owl and Jeff and a couple others or are we going to get contagion? Right. So, right now the market the three major variables are AI destruction, Iraq and like these there’s one other and I forgot it but the markets oh and fairing out losers. That’s what the market’s dealing with right now. It’s not looking for opportunities at this minute, but they there’s no chance that these guys are going to not come public and not throw down triple digit sales and earnings. Some of them are going to do it. They’ll be five. Yep. No, that that’s perfect. And like you’re focused on, you know, we’ve talked about be, which is like AI energy, the that enables the grid to support this stuff uh in that transition phase. What what other sub themes within AI are you personally focused on and and like digging for opportunities? Okay, I’m digging in one place. Yep. The new high list. Yep. I don’t have to know because it’s it has to show up there. I don’t I don’t know. Yep. But it will bubble to the surface. Yep. Um like right now I think fastly edge computing is breaking the workload down and making decongesting. Uh like be is just like it’s the ultimate solution. It’s behind the meter. The only issue with be well first of all it’s green. It’s so simple. they can scale that thing up in 3 months or something. I’m just concerned about their capacity. Yeah. Like I’ve been in stocks before that had a product that was so absurdly hot they ran the factories 24 hours a day and they just couldn’t meet demand. They were sold out three years forward. I I don’t know if be is there right and that’s why this volatility is in there. But other areas of AI again I am not a technologist. I I’m I’m a dyslexic C student bro. Yep. uh this is above my pay grade but like you said Jim I can code I can tell create trading software the implications are off the rails right the new high list is going to show me like right now it was memory stocks and fiber optics uh we’ll see but names that you were dormant Western Digital was a slug when that started popping I’m like who cares I didn’t even believe my own my system. Yep. We’re going to see more of that. There’ll be some old world old world leaders. Wait, you know what I think? How about this? If you and I have a company with a thousand employees and AI allows us to fire 100 of them, well, our margins went from 12 to 15%. What if every company in the S&P’s margins goes from 12 to 15%? What’s that worth in growth in S&P? 30 30 50%. Okay. Okay. Now, what if these companies are going to grow faster earnings? The average earnings growth of 5, six, 7% is going to go to 10 on top of a PE expansion, on top of a margin expansion. Where can the S&P go on top of the greatest level of innovation across all the industries we’ve ever seen, right? That that that’s what I think. Uh we’ll see. We’ll see. We’ll see. We will see the new high list. Yep. And let’s say I’m wrong. I’m I have massive cash right now. Okay. Until we have green signals, it’s chill time. Yep. I could be completely wrong and it will not change my net worth. I might lose a little bit like percents, but what if I’m right? Yep. See, here’s the thing. If you don’t believe in the big picture, if you don’t shoot for the stars, well, you’re never going to catch these monsters. If you’re a valuation guy, you’re going to miss all these monsters. They’re never going to be cheap. Optimists prevail. Optimists win. Chicago floor traders were invariably fading the crowd. There was a lot of pessimists on the floor and they got what they thought was wealthy. They retired early and they’re broke. Now, I have some friends who kept their money, but most of these guys, they’re broke. They’re pessimists. If you believe, you have to believe. You have to take the leap of faith. Like in uh uh Indiana Jones, you got to take the leap of faith. Yep. Those are the guys who believe that a stock can go up 50 times. If you’re like selling everything up 10% because well I don’t believe it. It’s it’s going to fail. It’s going to fade. Pessimists no place for you in the You know what’s worse than pessimists? Fear. Fear is the great killer of of a big success because you’ll never stick around. Perfect. And the the second half of my question, do you think he’ll will have an impact on how we trade? like how how will it impact price action? You know, it seems like things news gets interpreted even faster these these days than ever before. You know, a tweet goes out, the markets react instantly. Um do you think it will impact that more? And then also um kind of the not quite related, but the 24/7 markets that probably will come. How would you how do you think that will impact what we do uh as as Can Slim Foundation traders? So, do you remember when N Gingri Gingrich asked Bill Clinton if he was still relevant because Gingrich had the contract with America? Well, I want to be relevant, man. AI is not wiping me out. Like, in the end, human psychology drives price. And again, if I just watch the new high list, it’s inescapable that a stock can go from 50 to 300 without making new high. So, wait, am I gonna be obsolescence or obsolete? I suppose anything’s possible, but I I just believe again another thing is if a company earns a dollar this year and they’re going to earn $15 in three years and the Fed is neutral or easing, that stock it almost has to go higher. Mhm. So, if long as those variables don’t change, I think it’s more human nature. I don’t think AI can destroy human uh nature, fear and greed. Uh on the other side, 24-hour trading, I was opening my crypto fund and somebody who’s around my circle goes, “You can’t do it. It’s 24 hours a day.” I’m like, “Get out of here. I I open the fund and I’ve done just fine. You have to change your Well, first of all, initially the liquidity is going to remain. There is 24-hour trading right now. You have Thinker Swim. You have some tokenized securities. You have like and you I can trade in after hours where I just call my broker, right? or I do it digit electronically but there’s no even after monster earnings reports good and bad the liquidity dries up two three hours later so the main liquidity will be in the regular trading hours as time evol uh we evolve you’ll if there is liquid there just won’t be the liquidity that there would be if you clustered it into one space right uh but if we do get markets that have no one’s going to release critical news in thin markets So, but if they do, you’ll have to change your style to longer term. I mean, no company’s going to report earnings at 3 in the morning. Yep. There’s not. Uh, but it is a challenge, but look, there’s currency traders. Currency afraid 24 hours a day. We’ll adapt. Perfect. Um, and Jim, I now want to get to some fun stuff. Okay, let’s do it. So to start with um you talked about those eight 10 trades that you know net net have been responsible for your war chess you know the the big moves um what are some of those trades and I’d love to go through a few of them the chart uh you know hear the story behind it um you know how it got on your radar why it appealed to you um so yeah what are what are the key ones that come to mind that you’d love to talk about it’s it’s not fair because I I’m romantically attached attached to Broadcom. Yep. Uh back in 1999. Do you want Do you want to bring the chart out other way? I I can’t. Oh, yeah. You can’t go that far. But I could I could just show you. Is this is your book? Yep. So, see this one, two, three. Y if you were This was like a base I saw in Broadcom and it went over this high and I bought a third. It went over this high and I bought a third. It went over that high and I bought a third and the stock went to freaking Mars. They invented uh they had a chip for well okay at the time everybody was on dialup and how old you were five I’ve seen dialup so don’t worry okay so if you wanted to download ESPN it could take 30 to 60 seconds to load the page and then comes high speed and there was DSL cable modem and satellite and Broadcom had the chip for all three and I recognized that like 5% of the 2% of the population had high speeded and I’m like well I had it I had uh whatever the thing was called and I’m like oh my god everyone’s going to I mean the total adjustable market is everybody right and these are the guys who have the chip for all three and they had that beautiful base it was a totally atypical base by the way and I just bought those three lots and it just exploded and it had a 35 or I can’t really remember this is 24 years ago but it had like a 25 or 30% pullback because a lockup came off and it never broke the 50 so I didn’t sell it but my draw down was $400,000 and that was a lot of money to me. Still was a lot of money to me. Um, and it came out of there and it just took off and then it climax ran and I blew the whole thing out and it was a first stock I made a million bucks in one trade. So that just is like the that was like that probably doubled my war chest. Um, I’ll never forget it and I still watch the symbol. Then SDLI in early 2000 had almost the exact same pattern. And uh I now I got stopped out the first time and I remember I was so pissed. I was playing golf uh with my wife and I I I ended up walking off the golf course cuz I was so distraught. But it regained its composure and I bought it all back and uh off it went. And I had another stock at the time called JDS Unif. and JDS Unifase acquired SDLI and they both blew off together. It was a bonanza. It was an I think some people know this. I did a thing with Rushia called War Stories. So, I’m pretty sure it was SDLI and I had 3,000 shares and I look I wake up in bed and I look at the tape and I go, “Oh my god, it’s down a hundred points. I’m down 300,000 bucks.” And I just take the covers and I pull them over my head and I go I’m gonna So about five minutes later I pull the covers up and I was wrong. It was up a hundred points. Yeah. And it was the blowoff. It was the buyout and then it so the uh it was a share acquisition was a cash deal and then unif blew off too. There hasn’t been a lot of moves like that. Like um SanDisk has been that kind of percentage type move. Uh I missed a ton and there’s a lot in between there, but I can go over what I did just recently, right? Yeah, let’s do it. Okay, so um we’ll go back to 20 uh 25 with a stock where it took off so darn fast that I Oh my god, it’s right here. It’s all the way back here. And God, is that possible? It was just a perfect tight base. This is way better. Yep. So, and it had this huge run and then it made this base and it I mean, dude, it went from nine to 45s, up 450%. And the it had tripledigit sales and earnings. I barely understood what they did. And it just explodes out of here. And I just threw I tried to throw the book at it, but it moved so fast. I knew it the price was 45. This splits adjusts when I go to the other uh or wait maybe I bought Dude, I might have bought it right here. Yeah, that’s the base that you were talking about. Okay. Yeah, this was a much nicer base. You had the shake out and then it just it dude it came out of here so fast that I only think I got a 12% position on and then it just exploded. Absolutely. You said, “How do you know it’s the leader?” I don’t even know if they had competition, but look at the closes. It closed at the high and look at this run. It has what 10 15 weeks and it closed down one and it closed at the dead high that week. That’s how you know you have a monster. This right here looks very much like some gaps I had in BYU and rim. Now it gets up in here and I thought this was a climax. As a matter of fact, I think I I can’t remember if I sold it into this one or into this one. I think this one. Right. God, I’m so I’m so bad. I probably sold it right here and then I was fighting this. I didn’t like this digestion at all and I was stunned that it made a higher high. Uh but if you Let me see if I can get the earnings. So, look at these numbers. Triple digit sales, triple digit. Well, the the earnings are triple digit. Where? How come I’m not That’s 24. So, the it really comes on with sales and earnings are exploding. The margins were great. 50% profit margins, 35% 135% return on equity. Estimates were triple digit at the time. I think management had more than 5%. Up to down volume was like 2.0. It was in a you know like an elite group in the top 10 or 20. Uh after tax margins are 66%. Insane. I mean when you see numbers like that, do you really need to understand what they do? like to find out there’s something amazing going on there. So, I I ended up blown it all out into the highs and I I may have hedged once or twice into there. As a matter of fact, I’m pretty sure I might have hedged right in here. Mhm. And I covered them and and uh in here because and just let it go earnings and it gapped up. So, you hedged before earnings or Oh, definitely. I definitely Now, now in that case, I bought a bare put spread because I want that upside. Uh so I don’t even know what is it uh price is 80 to 410. Um now again some of the hedges might have diluted some of that but I caught the bulk of that move and then and this is a stock that obviously was already in a longer uptrend. It had already you know almost 5xed off the lows. Yes. So you’re you’re buying high but aiming to sell higher basically. I I have to tell you you had three weeks tight in here. This base when you just go bar by bar Yep. It was so much better than it looks right here. Like I was all through these weeks in here. I was every week was in the Robo Report. Um when you see something like that with this kind of these kind of numbers, again, I I’m a little stunned that these numbers are they had to be up in here. Mhm. Um because I probably wouldn’t I probably would have bought this even with the bad sales, but the base was so mouthwatering. It’s like you just see it and you know the action. Look at that shakeout bar, that shakeout week and then just rip the highs and then tight. I don’t know if that’s a like a two weeks tight right at the highs before it actually took off. But the the shakeout bar that week um huge. And GV Gv set up the same base at the same time right here that looked it’s amazing. It’s like the exact same pattern and it ripped as well. So they just keep coming. Y like and it’s never going to stop because the human desire for to get a piece of the pie to innovate. Humans want to climb. So they’re going to get in their laboratories and coach and try to improve life and the products are going to keep coming. The you go back as far as the stock market’s been open and you see bases like this, they just over and over. You know, there’s only so many that have the triple digit sales and earnings and we’re in this minute right now where I talked about where the commodity stocks don’t have that. But like if you catch one of these every three years with 18% of your account. Now again, I didn’t have the full 18. I didn’t get the whole thing on. So let’s look at uh I was big on ALAB back then. Yep. And I was like it’s an earnings or AET. I had AET. I had ALAB and AET. This was last year. I’ll do AET first. I mean I thought this was one of the most impressive stocks in a very I mean look at these pre-tax after tax margins return on equity. It was 99 comp and the stability stability separates the flash in the pans like the I really just detest these quantum stocks. They just they’re what let’s symbol on one of these things. Uh there’s uh IO NQ. Well, Oaklo, you know, there’s Oh, not Oak. Oh, yeah. I N Q. So this thing, these stocks are mostly like 50, 60, 70% off the highs. They have no earnings. With no earnings and 50% off the highs, how far away do you think Quantum is? Like there’s the analysts don’t think they’re going to earn money as far as you can see. So anyway, look, there’s no there are no numbers here. Mhm. So you go back to uh AET and even though the stock has been stumbling back in here, this just trended beautifully and it had I know 20% is not triple digits, but you look Cisco went to Pluto with a decade of 20%. When you have fat fat margins like this and again so this is just a super high quality name and I I I’m so bad with my memory. I I don’t know if I bought it here or here or I probably bought it a bunch of times and I and this was tariff mageddon. Yep. And I blew the whole position out in one block because I just felt the the violence with which I think I sat through this break. I really do. But when the when it broke this way, I just vomited the whole position up. No regard for taxes. Just let it rip. And in spite of the fact that, you know, I I don’t like I don’t think Kramer has the greatest stock acumen, but he did have this saying. He goes, “That stock was an incredible horse.” He goes, “But it’s just a horse.” Almost every single stock that I have been in or through history that’s been a monster, eventually was usurped by a new technology, and it went to zero. Almost all of them. So even though I might go it’s a 99 cop 99 IRS powerhouse with everything it’s just a horse and in technology life cycles are much shorter than it is with energy drinks like Hansen has been unbelievable. Yep. Nvidia is an anomaly of anomalies and Tesla three climax runs like I thought the first one was over that the fact that it has come around. You asked about management, dude. He’s George Eastman. Okay. He’s Thomas Edison. I’m not fighting against this guy. Y uh So, how about Credto or we looked at C R D O? Now, Credo had I think management owned some massive amount of this thing. My memory is just getting worse and worse. And management still owns 9%. But look at these numbers. Tripledigit monster. And I just I showed this in the report every single week. Um I must have bought it right here. And you know, pre-tax margins, return on equity, you know, I said 20% across the board. Estimates 366. Now, here’s another thing. They’re supposed to grow earnings by 366% this year. Well, it looks like hard cables being replaced by fiber. So, I don’t care if it has 42% estimates for next year. The relative strength, if you looked at a short-term RS, it would be well 20. Yep. So, it’s over. And I say the 50-day or this is in the 10 week is the guardrail. Whether the index is below it or you’re, you know, your brainchild gem of gems is dude, I bought it right here. I had to have bought it right there. Yep. Um, now this is See, I thought this was super erratic. It’s wider and loose for sure than the the prior move. So, I I was in it right here. Yep. And I saw that reversal and I thought cava, you know, cava I did really well in. Yep. Um, it just had this when you see a a a earnings rejection like this. And what scared me recently with Nvidia is when you have great news and the price doesn’t go up, that’s not good. And Nvidia has now done that through six reports. So, you know, look at these numbers. 1,200%. Yep. Uh we show Cabba real quick just to to show this this move in the reversal if if it’s recent enough. Yeah. Amazing IPO move into a climax. Insane. Now, I don’t know if I bought it right here or right here or right here. I bought it all three. I can’t remember. But I was so stubborn with this. Absolutely did not sell a share. And um I ended up getting out of some of this bad break in my hedge fund. I dumped at all. I might not I might have hedged it right here, but I I definitely got out at this point. Now it’s definitely making lower highs. I mean, dude, if you just stayed in stocks that were 99 comp, 99 RS above the 50, you’re shooting at the elite elite names. And I’ll tell you, a lot of people, O’Neal has internal PMs. Almost every one of them who left failed because Bill put the stocks on what was called the Nesmi, the new stock market ideas. They weren’t allowed to buy the names off that list. So, they’re shooting in the target region of arm and Bill set the exposure. So he would say, “Oh, everybody’s got to you have to raise exposure today 25%.” Or you have to reduce 50. So you’ve got the master of masters telling you, “This is your list to buy on and here’s what your exposure is.” The key is the accelerator after you’ve had the the the brakes and the accelerator after the runs ended. Y and he was great at it. Almost everyone who left him failed. Now, there’s been a few who’ve done really really well, and I love talking to you guys. You know who you are. But most of them failed. So, uh I don’t know what I’m talking about. We talked about Cava. Yeah. Yeah. You were gonna bring up um another stock. Was it I forget which one. B. Yeah, maybe BE. Let’s do that. Okay. I didn’t buy it there. I bought it I bought it over 40. I thought this was your pivot. So, I loaded up. I had at one point I had 300,000 shares of this thing. And uh I had hedged it a few times through here. And then when this occurred, I was in a hedging. I’ve been hedging like crazy through here. When it got over 120, uh when it got over 120 right here, I hedged all through this. When it cracked above 120, I took it off. And then I’ve been forced in and out of hedges all the way through here. uh this big down move on last Thursday or Friday. I came into the market and sold calls against my whole position at about 1:30 Chicago time and I think the market maker took it without a hedge on the other side and the market started to roll over and that guy who took my calls drove this thing down that hard. Um so you we can blame you for that? Yeah, call the SEC. Totally legit trade. The other guys didn’t cover his didn’t hedge himself. Anyway, the personality is very much so changed in here. This is just as wide and loose as a goose. Mhm. Uh, and I’m leaning into this fundamental story, but look at these numbers. Yep. You know, they lost 10 cents in 23. They’re expected to earn $140. I think they’re going to earn substantially more. Uh, now the margins are coming around, but the after tax is 29%. That’s a flaw. You know, I can overlook one flaw, but I can’t overlook too many. But and then let’s go. So, sales are sideways to they’re they’re above 20, but they’re erratic. Um, the beat was 45% even though it was only up five%. I just look at the reaction. Next quarter, they’re expected to have a 30 33% beat or I’m sorry, growth. So, you know, how many stocks do you need to buy at 40 that go to 1547? And I’m still in this thing. Uh I think you show me a better solution for energy. Like the world is being scoured. Every little rock is being turned over for energy. And I’ve had, you know, I probably catch something that goes up 100 to two or 300% every two or three years. And I usually have a couple augmenters that are going to go up 40 50% during the year and if the whole package, you know, turns out good, but they’re just never going to stop. They’ve never stopped since the day I opened up the first IBD and I saw the full page chart of like Mid-Atlantic Medical, right? And then it was Microouch Systems and then it was Micron Technology. And I mean there’s just every year you go through the paper, IBD has the top 100 stocks of every year and almost every stock on it is up 100% or better. That’s 100 pitches. Yep. To have a 100% gainer. And the top 10 are usually like 300 400%. Like it it just doesn’t stop. Yep. So I’m a bull. I’m a total bull, man. Yep. We getting pizza soon. Oh, we got a little a little bit more from you, Jim. So, I wanted to talk about O’Neal because obviously he’s had such a huge impact on probably everybody who’s who watches the podcast and of course you um talk to me about how um you built that relationship and got closer with him and maybe some of the key lessons that you learned early on from from him that made the difference. I want to draw a parallel about how to get there. There’s this guy named Josh Darwin and he kept calling me and saying,“Hey, what’s going on?” And one day, so I used to have I have all these porcelain skulls. They’re Mexican skulls. And he goes, “I have a gift for you.” I’m like, “Well, you don’t have to do that. That’s very neat.” He goes, “No, I’m coming to Chicago. I’m going to give it to you.” Comes into my office with a porcelain skull full of tequila, high-grade tequila. I’m like, “I love this kid.” Now I’m he’s So, he got in my circle and he brings things of value to me. I say, “Hey, I need this. So, you need to get a mentor now. How do you get next to Stan Ducken Miller? I I I am no Stan Ducken Miller. I’m just a dude. I if I I’d polish his shoes, Bill. I I didn’t know he liked me, but one day he drags me out of the audience and hands me the microphone and goes, “Tell him what you did.” And so from then on, I I I was not a customer. I just would I called Lee Freestone. Then I started to talk to Bill a little bit and I would always talk to him at every but I I sat in the first row. Now, you see somebody in the first row 20 times over five years, you go, “Well, this kid cares, right? This kid drives to the paper depot every single night to get the next day’s paper.” So, he paid attention to me and I got to talk to him a little bit on the phone. And then when I became an institutional customer, he had to call me and he had to be nice to me. And uh I just I didn’t bother him. I learned not to ask stupid questions because he had no patience for like if you didn’t know your like you know Webster would go if you brought him a stock that had no institutional sponsorship I think you I don’t want to overstate this but like be prepared for 30-minute ass chewing like so you stop doing stupid things like you touching a hot burner. Yep. And uh having at Bill write down personal notes on stocks that I screwed up and then he would call me on follow-through days. He said, “What’d you buy?” And uh I wrote this in the report last week. I said, “Well, I didn’t buy anything.” He’s like, like if I was an employee, I think the ass chewing was on its way. But he just was disappointed. He’s like, “Well, you have to buy something.” And uh knowing that he always was in not a leader, the leader, the single best leader, and it was generally a liquid name. Um, dude, one time I went to see him when he was campaigning for Dole. He Robert Dole and I he he went to Stone Farm in Iowa. So, we flew to Iowa, Cubby Bears and I. And I’m in the airport and Bill’s sitting in the terminal with security. And I start walking up and this guy’s like, “You can’t talk. Stay away from that man.” And Bill’s like, “Come here.” And I sat down next to him. We waited for a plane and I took notes by hand for two hours. Wow. I did it on an iPad. and he just, you know, I think when you talk to somebody who has a lot of knowledge and you give them information and you work really hard, Bill wanted to help people. Yeah. I learned everything from Bill, every single thing. But I I read all the books. I came up with legit questions. Um, it’s so funny. Like at the end of Bill’s speaking, there’d be like 10 people around the podium or 20 and they’re the same questions I get on the role report. They’re the exact same questions. Ask me more. I’ll try to answer better. What do you think he understood about finding and managing model book stocks, market leaders that most people never never get to? What What do you think was his edge in in finding and managing those? Bill was buying the best merchandise. People most people will buy anything that resembles a cup and handle and they don’t even know it’s flawed. They don’t understand that CLS had slightly lower ROE or pre-tax than the other guys. Like people don’t put the time in to really really discern what the magic elixir name is. What’s the best liquidity with earnings? What’s the product like? You know, and Bill also had a team of analysts. He’d go, “Hey, go figure out what these guys are doing and come and tell me what’s up.” But what I found is if you don’t do your own research, you don’t understand it well enough. But Bill was in the best merchandise. I I’m repeating myself, but he knew what the liquid leader was. He knew when to back off. He was also, now I’m mocking or maligning frenetic traders. Bill traded a lot. Bill would added so much if you look at his charts too. He’s adding little pivots, you know, all those points. So I had another edge when I I had a soft dollar account. So I I ran all lots of trades to them. So I asked for Bill’s trader. So I always knew what I didn’t he wasn’t supposed to tell me what was Bill was doing, but I knew what Bill was. One time I’m buying Crocs and I hear him kind of like squabbbling in the back and I go, “What’s up?” He’s like, “Bill’s right here. He’s buying Crocs, too.” And you blew him off the box, you know, cuz I they had to film my orders first. So I I had a lot of insight, not just talking to him, but I had frequently knew exactly what he was buying or selling at the minute. And I found that he probed, let’s just assume he was a very wealthy man. He’d buy 500 shares and he’d buy another 500 and he’d buy 500 more. And like he probed things a lot more than I do. Yeah. I’m a lot more of like a Leaf Free. I learned a lot from Leaf Freestone where I tried I’m a I’m a position sitter. uh where Bill was more active around the name like Eve Eve diagnosed my BYU trade. Do you know this? I I didn’t even know I made 30 million bucks on it. I didn’t know that for one and then she put on a chart where I bought it and sold it. I’m like, “Oh my god, I traded around this thing like I didn’t realize I was doing that.” Um but I’ve slowed way down. I’m a lot more Bob Ferman. I’m a lot more Lee Freestone. And there’s implementation. There’s nuances. that I’ve adapted to my personality and my level of pressure that I’m going to deal with, but I do find that I slip into the cowboy in the heated up markets. Uh, dude, I think Bill’s ability to back off quickly. Um, and another thing is he levered up. He was a heavy heavy margin user, but he didn’t have to report to partners. He he was solo operations. So, if he drew down, which he probably didn’t that much, it didn’t matter. It was his money. Um, but that unique ability to get really really big really quick like the they have a market school thing that Webster and Charles did. I think Bill was more aggressive than that. And he he Bill just persisted as a cowboy. Yep. into his later eight years. But then I had dinner with him one time and he’s like, I took every profit this year up 20% because that’s all the market was given. So he knew when to dial it up and and that’s the that’s the Achilles heel of so many. I said it before, most people will do well in a bowl and the beer comes and they keep accelerator down to the floor and Bill’s been gone forever. And that that’s another thing I never I did know what Bill was in, but I didn’t want to know because I wouldn’t sometimes talk to Bill for two or three months. Yeah. And he’d say, well, he was big on targets and we’d be in the same stock and I he’d go, “My target is this with the PE expansion and that’s 200 points higher.” And we’d hang up the phone and it’ have a bad week three weeks later and he’d be on. I’d be like, “Well, Bill said 300 points higher.” You know, it’s it’s of it’s actually it’s detrimental to know that somebody that you really look up to. You’re that’s in your head, right? That’s why being on that’s why I have no TV in my office. I don’t want to know. Like you ran out of the room for a minute. I go, “Something happened. Get in here.” You like You go, “What happened?” I go, “I don’t know. I don’t have a tool. I don’t have a uh” So knowing somebody that you really look up to what they think is detrimental. knowing it for yourself. And that’s the problem because people want a tip sheet. They want people. So, I heard somebody say one time, somebody will research buying a $200 microwave more than they will invest their million-dollar pension or their IRA. What is up with that? People don’t want to do the work. And straight up, I’ll just tell you this. I was a retail broker for a long, long time. 20 years maybe. brokers would leave and I’d get their book of business and the customers lost money, most of them. And I think the same is true for people who are trying to do individual stocks now because they won’t put the work in. They don’t know what they own. They think they’re in a proper base and it’s not proper. Or they’ll buy something that looks pretty good, but they don’t know it’s not the leader. Now, again, I will sometimes buy second best because I missed first, right? But I’m aiming to get that money into best when it does some type of digestion. Looking back at the past five or so years, what do you think what stocks you think Bill would have been? You know, uh, you know, I’ve heard stories about him 200% long in one name at one time. You know, obviously he has to get to that point, but what do you think which stocks do you think he would have killed over the past five years? Nvidia for sure. Uh, at different times. I think uh Credo uh Anat the names I’ve looked at you know that I mean I think be might have been too volatile for him like it’s too volatile for me I I would I don’t know if I’d be in that name if I knew what I was getting into uh man you’re killing me now dude like oh VRT uh Lily oh Lily I can’t imagine he wouldn’t have been in there um some of the semicond like maybe a clack. I I think man, you’re really killing me right now because I should know this. I I’d have to go through the list. May are we going to do a little more taping tomorrow? Yeah. Listen, I’ll try to come up with some names. Cool. And do you ever ask yourself that question? You know, what would Bill all the time? What would Bill do? Yeah. So, I used to be like, I’m gonna call Bill and I go, h I just I know what he’ll say. I mean, you you just know what he’s going to say. Y um but I don’t think people I don’t think people refine the process down. Um what would Bill do is a great answer for because you won’t do if you understood Bill’s temper and what he expected from you when you pitched him an idea. You wouldn’t buy half the stocks you buy if you had to buy if you had to run them by Bill. People invest in people buy all kinds of stuff all the time. They just want to be in the market. They want the action. They’re there for the wrong reasons. Um, you know, I think a great another like what would Bill do? Would you buy the stock if you had to pitch it to Bill? If you could only make four initial trades in a year, only four. Well, you wouldn’t buy unless it was immediately after followrough day. You wouldn’t buy unless it was an absolutely perfect perfect name. You only get four. If you think about it, I mean, that’s kind of almost a reasonable standard. Yeah. You can’t I’m only going to allow myself to enter 10 names a year and I’m going to get stopped out of six or seven and three of them I’m going to clean up on, right? Like, did I really need to buy that stock with a 2% return on equity that the base is a little flawed? Like, no. People want to be active. They want action. and they think it’s a casino. One question I want to ask you is, and I’m not sure if one will immediately come to mind, so uh yeah, feel free to take a take a moment. Um is there a conversation you had with Bill um or something he said to you that you remember every single day? Or you might find uh you might think that traders watching this, God, it it changed something for you, made you think about the market in a completely different way. any any I know it’s probably hard to distill it down to one conversation as well, but yeah, anything come to mind about the most impactful conversation that you had with him? Well, there’s dozens, but one that kind of stung was at the Ronald Reagan Library afterwards we’re talking and I said, you know, I think I said I’m up 300% this year, and he goes, “Well, we all put our pants on one leg at a time.” He was extremely humble. Yeah. like humility. I know when I’m out at a restaurant or a bar and someone goes, “Hey, um starts telling me how their stock market, they’re great.” And I just look at him and I’m like, “This guy’s either he’s lying to me or he’s about to lose all his money.” I think part of the reason Bill kept his money is he was really really humble and he was doing it for the right reasons. He was doing it I altruistically to help society, right? to defeat communism, to champion free markets, and to teach people how to change their lives. Y he wasn’t trying to impress chicks or buy Ferraris or make it rain with $100 bills like Floyd Mayweather. Yep. I think having the being grounded. So when he said to me, “Yeah, well, we all put our leg our pants on one leg at a time,” he kind of knocked me down a little bit. Yeah. Yeah. Because dude, how long ago was that? Um so, dude, there was so many things. the triple digit sales and earnings, the the liquidity, the the sele selectivity. I would suggest most people that are listening to this have bought over half the stocks they bought this year in the last 12 months were stocks they should have never bought at all for any reason. Like I look at I looked at it one year I had a bad year in 2022 maybe and I went back and I only bought 23 different open new positions. I’m trying to do what I preach but I don’t always. That’s for darn sure. I’m a hypocrite but all the time I’m like it has no earnings. There’s no chance I’m buying it. But then when I find it and it has no earnings I’m like well you’re going to have earnings. Like I’ll I’ll bend the curve. Even I bend the rules. Like when you have kids, someday you’re going to get married, hope you have kids. Uh your daughter’s going to like, I’m going to have a sleepover on a Wednesday night. We have a no no Wednesday night, zero defect policy. Well, you can let them do it once a year. You can bend the rules like I did with that stock that had a lower ROE. One variable. But when you start making every trade a special occasion, you’ve lost your discipline. Bill. Yeah, dude. He’s just the man. He Dude, everything he said to me was like important. 100 years from now. Um what do you think are the most important principles that he preached and he shared that traders will remember and continue to you know resonate with in he has the 10 variables like you know keep learning. Mhm. uh he preached modesty and spending like he talked about life and uh outside of trading. But I just think oh my god I don’t think look the the number one principle is cut your losses if you can just get that down like imagine if you if you cut every single loss forever at 5%. Dude, just doing that and people the people who are blowing up are not doing that’s principle one. That should be the first thing. Y I mean the evolution of a trader cut your losses immediately. Stop overtrading. Improve your selection criteria. Y I didn’t say pivot point. I didn’t even say base. If you just got those things down, selectivity, I think Bill never said it to me, but you can be rest assured every single every single stock he talked about was elite elite elite. Not fourth best, not fourth a sector. Yeah. And I think it’s um I think it’s Mike Webster’s rules that first rule, cut your losses. Second rule, see rule number one. Like so important. Um Jim, this has been awesome. It’s it’s so cool to get to talk to you face to face. Uh just two wrap-up questions for you that I think will cap things off in a really nice way. Um, first, if you had to learn to trade from the beginning today, you’re starting over with a 50 50k account, 100k account, whatever it is, what resources would you use? And how would you change a strategy that you’re using right now? Or or if you would, right? I’d get IBD. Mhm. I’d read Bill’s Dude, it’s so basic. This is so simple. It’s not complicated. Get these books. Read them. I would not get any other books. You do not need more than these. There’s a couple others like every market wizards book. Uh I don’t like hedge fun market wizards that well. Uh consider I would learn money management immediately which I I didn’t know money management for 20 years. What does that mean? Money money management. Position sizing. Okay. Risk management is not just cutting your losses. It’s position sizing. Yeah. Because they go hand in hand, right? Yeah. You can have Yeah. It’s very important. And knowing yourself like you got to understand if you could understand yourself before you start losing money or learning from the market that’s going to help not deviating like it’s the cross-pollination of different methods like putting GARP into can slim with uh whatever these other there’s there’s probably like 20 legit ways to make money in the market. When you start cross-pollinating them I’m a total purist. Like the O’Neal rep would come see me. Y and he go, “God,” he goes, “you” he goes, “All the people I cover,” he’s like, “You are totally I’m a knockoff artist, dude.” Yep. The Japanese, they got it right. Get the product, break it down, and copy the thing. If you’re half as successful as Bill, you’re worth $500 million. Y get a mentor. Uh don’t deviate. Don’t wander into 30 other books. You just need these books and you reread them over and over. Uh I can quote most pages of how to make money in stocks. I know what that Well, I’ve read it 30 times. Um go see Richard Moldivan, man. That that’s the boy. That’s the man. Thank you so much. I really enjoyed it. It was and doing this like we’ve done several uh on Zula and it’s a whole another world when that you’re you’re disconnected when you’re Yeah. on a screen. It’s It’s way better in person. I didn’t realize this. It It’s so much fun. And I’ve got I’ve got one more. One more. Um and it’s a little bit what you just said, but uh what advice what general advice do you have for traders watching this to help them achieve their potential? You know, reach for those triple digit returns when the market is set up for it right after a significant correction, bare market, what have you. Um you know, maybe a trader who’s in their first few years, they’ve started learning can slim. Uh this could be advice, this could be words of motivation, which you know you’re the man for. Uh what what would you say to them? So in Marty Schwarz’s book, Pitbull Trader, not a lot of insight on trading methods. I guess got some magic tea and whatever, but what he had was this ability to to identify the possibilities that this might be a stock that could really go up 500%. My really close friend, Dr. Paul uh I wrote I gave him the book and I said to a man who has vision because when we were buying CME when it just came public he’s like I think this could be a $500 stock. I’m like $500 stock. He had vision for the possibilities because he’s an optimist. Be an optimist. Get get it. Look, it’s imp it’s impossible to be a pessimist and say something like this $50 stock could be a $500. have an idea of the potential possibilities of what it can do. Study the past TMLS because it’s going to give you an idea of what a real monster can do, right? It’ll Now, again, I say take life-changing money. Like, I uh needed a timing chain for my car, a Honda uh Act Legend. It was 1,500 bucks and I had this stock called Macro Media, and it went up like $2,000. I took it because had I lost it two grand it would have been macro media had I kept it would have made 10 grand or 50 grand knowing what’s possible and then along the lines take money that’s life-changing but after you make 50 grand a couple times 50 doesn’t matter anymore now it’s 100 you make a hundred a couple times and it it the ladder just keeps going up know the possibilities and only Someone who’s an optimist can come up with bullish possibilities. Be a bull. Be bulls win. We’re more fun. Way more fun than those cranky dudes. Dude, I don’t know. I got to That’s good. That’s good. And and the la the very last question I lied. Uh somebody wanted to ask you from from axe. Uh is the golden goose of capitalism still alive today? Will it be there in 10 years, 15 years, 50 years? That’s what the uh the the the freedom and free market index. We need to find the meter like the pessimism bull index. Y, we need the world uh socialism free market index. Y I I think that unless you kill the indomitable human spirit to excel, to get your piece of the pie, to innovate, to lever up, to be better in everything. Unless you kill that, you’re not the the golden goose is never stopping. There’s going to be more Elon Musk. There’s going to be more brilliant people. Uh no, yes, absolutely. It’s gonna be better. The Golden Goose is totally chill. He’s in my garage. We’re feeding him a lot of vegetables, vitamins. He’s getting ready. He’s Oh, yeah. We’re doing wing stretches, like curls. We’re getting them be bul bulked up. We’re getting some rockets we’re going to put on him. And I suspect that we’ll be fueling up soon for big flight. Perfect. Well, Jim, thank you so much, man. Uh, we’ll leave it there. Uh, really appreciate you. Oh, hold on. Go ahead. Speaking of the goose. Oh, yeah. Where can people learn more from you if they’d like? Roelreport.com. If you want to subscribe, you can use the code goose for some big discount that my wife has told me to tell you you can get. Buy the bundle and golden. Did I say goose? Did you say goose? Golden. Golden, not goose. Oh my god. Um, and uh I’m on X. I tweet on X occasionally. And by the way, they’re programmatic. So like I’ll do a bunch of videos with my daughter and then she’ll put them in a program. They’ll come out. Well, the ones that come out five and seven days later are have stale information and I got these hacklers here. You want a better life? Ignore those hecklers on X. There you go. That’s the That’s the final advice we leave it with. Jim, thank you so much. Hit it. Bingdong. Yeah. Cheers. Uh to everybody watching, uh make sure you leave a like down below, subscribe if you’re new to the channel, and uh we’ll see you in the next one. Cheers everybody. Take care.