Get Invested: Part 2: Jason McIntosh on systemising your investment success
00:00 If you can find a process which can give you an edge, come back to that word edge, that can, you know, it can make a big difference. But an edge takes time to play out. A small edge over time can lead to, you know, really outstanding gains. But it takes the, you know, the emotional control to stay with it. And, you know, people struggle there sometimes. It's getting a handle of your emotions.
00:28 It's such an important thing. Welcome to the Get Invested Podcast, where we share great conversations with experts from all walks of life to uncover their secret know-how on where they invest their time, their skills, and their money, and the benefits that this has created. You see, the truth is that everyone invests. Every minute of every day, we're investing our time, our skills, our energy, and our money in something. Some of us are investing consciously, some unconsciously,
00:58 sometimes for good, sometimes for bad, sometimes for no impact. Get Invested will help you to start living by design, not by default. I'm going to help you to make it happen, not let it happen. You'll hear the top tips on how you can live with conscious intent so that you can live more, work less, and leave a living legacy by investing now. listen to the show to discover the top tips on how to get started make the most of your investment journey and ultimately to be living your dream not someone else's more episodes can be found on itunes or at bushymartin.com.au forward slash get invested thanks for listening
01:38 and now let's get invested hi friend fighters what's the essence of success and how do you turn failure into success and what does it take to be successful in any endeavour? For answers, I'm going to return to the world of elite professional sport because sports often are micro-ism for our lives. I'm going to start by asking you another question. If I offered you the job of becoming the CEO of a professional sports team that was the worst performing club for over 30 years,
02:16 had finished second to bottom last year and after a 16 game losing streak was tipped to take the wooden spoon this year it was $6 million in debt and on the verge of bankruptcy and had a small and dwindling base of disillusioned, frustrated and angry critical fans and displayed a club culture where there was always some excuse for why they weren't performing and the club was the laughing stock and the punching bag of both the game and the media at large.
02:50 Would you take the job? My guess, if you're being really honest with yourself, is that you'd say no. It'd certainly be too much pain, stress and headache for me. I mean, why would you? Yet that's exactly what Brendan Gale took on when he accepted the CEO role for the Richmond Tigers Football Club in the Australian Football League, or the AFL,
03:15 10 years ago, back in 2010. And now, at the time of recording this episode in October 2020, we're on the eve of Richmond playing to win their third grand final in four years. What an amazing and miraculous turnaround. So how did he do it? Well, it can be all summed up in an acronym, as you'd come to expect from me, and it breaks down into three essential integrated ingredients. in simple terms he turned on the gas with gas standing for goals attitude and systems
03:54 he started by committing everyone to a big audacious vision and inspiring motivating goals he created a consistent attitude and culture that attracted and retained the right people with the right beliefs and right behavior to achieve the goals and then collectively they created a winning, repeatable and reliable system or a set of algorithms to achieve the goals. All three were necessary and critical. He rekindled the tiger's fire and he turned on the gas. So let's break this down. Let's start with goals. Brendan started by getting every single person at the club from top to bottom to commit to a big inspiring vision with some big, hairy, audacious goals.
04:45 The vision was for Richmond to become the top performing club in the league in 10 years, supported by winning three big goals which were captured in their new motto, 3-0-75. By 2020, they would win three premierships, have zero debt and build the paid membership base to over 75,000 members. Now remember where they were coming from at that time because they were burnt out, broken and broke. No one outside the club believed them or even took them seriously.
05:26 The media and the football community scoffed at Brendan's audacity. They openly criticised him and ridiculed him. Let's listen to part of his interview when the footy media grilled him 10 years ago, soon after he started in the job. You've got to make the right decisions, mate, because you're talking about three flags by 2020. Absolutely.
05:47 We've got to make the right decisions in the most competitive sport just about in the world and one of the most competitive phases in our eras in the history of the game. I make no apologies for the fact we want to be the best football club. We want to be the greatest. You cop some flack about the fact that you put,
06:03 A document, an internal document that got out earlier than you would have liked, spoke of a membership target of 75,000, three flags in 2020, and over this five-year plan or ten-year period. It starts with a vision. And we're not here just to compete. No one is. There's no point. You might as well pack up and go, no, I'm not embarrassed.
06:21 I'm actually proud of that. And we've got a vision to compete and to be the best. The best on the field, the best off the field. If we're not, if we're not locked into that, we might as well pack up and go home. Did you hear the interviewer ask him if he was embarrassed about his vision? You disbelievers. And even better, Brendan's genuine, quietly, confident reply. No, I'm not embarrassed. I'm proud.
06:45 And we've got a vision to be the best on the field and off the field. Now, as a long-suffering Richmond supporter, since I've been four years old, and someone who's endured with unwavering loyalty the journey across the 30-year wilderness of continuous defeat and disappointment, this was absolute music to my ears, a spark of hope in the darkness of defeat. But the big goals were only the start
07:11 because goals that aren't rooted in beliefs and behaviours are just goals. We all have them. But how many of us follow through and achieve them? So the second part of the gas is attitude. This next element revolved around building out the transformational change in beliefs and behaviour that was required. Remember that at the time, Brendan inherited a beaten and bedraggled culture that was still desperately hanging on to the old and outdated macho footy psyche
07:44 that relied on recruiting big stars and heroes who were then expected to kick and mark their way to success. A couple of superheroes in footy shorts surrounded by a bunch of good but not great players. Against this backdrop, it was all about creating a culture that believed in the vision and would do whatever it takes over the long term instead of focusing on short-term results. It was about playing the long game and creating a loyal, close-knit footy family based on growing connection and cohesion built around trust and respect.
08:19 of everyone focusing on continuous incremental improvements in everything they did, just like Team Sky's 1%ers that we spoke about in Part 1 last week. They worked on creating a circle of safety where everyone had each other's backs and it was okay to make mistakes as a basis to learn and grow. Off the field, they enlisted the first ever female president in the history of the game, Peggy O'Neill, A high-achieving international lawyer who loved the club and was focused on decisions being made purely on merit. Since then, over 50% of Richmond's board are female, in what is otherwise a very male-dominated blokey boys' club game. On the field, they started with new humble coach Damien Hardwick, nicknamed Dimmer.
09:10 He focused on determining how everyone could think and play differently based on the quality of talent they had to create better results. On embracing actively choosing discomfort as the key to growth and learning in all things. Of focusing on overall team performance and how each individual player was part of a larger team like one intuitive organism with one brain and many moving parts. not a bunch of ego-driven individuals
09:41 of creating a champion team rather than a team of champions. Now the third element of gas is systems. This final action component revolved around creating winning team systems based on new algorithms a new operating system at both the individual and the collective level.
10:03 So let's revisit what an algorithm is again. An algorithm is simply a set of predetermined rules that guide behaviour In other words, our habits and our rituals Algorithms can be summed up simply and easily with the statement If, then, and applying it to everything A set of rules and operating procedures that automatically respond to events and situations based on a cascading series of If this happens, then we do this
10:34 In the great book Homo Deus, author Professor Harari tells us that algorithms are the most important concept of the 21st century. Your achievement in anything is dependent on your ability to program and reprogram your internal algorithms, your internal subconscious stories, beliefs and rules that invisibly dictate your automatic actions and behaviours, or your habits and rituals. how does a tesla car drive itself algorithms and ray dalio one of the most successful and wealthiest hedge fund managers investors in the world he tells us that the most important language we need to learn to survive and thrive in our modern world is how to write algorithms using ai or artificial intelligence but in the human sense we use a different form of ai ancient intelligence.
11:28 For over 500 million years we've evolved to operate on ancient intelligence where survival behaviours that were repeated became ingrained. Our instinctive individual habits and collective rituals and behaviours or in modern speak our algorithms.
11:45 So they started by changing player behaviour and then changing their belief algorithms the rules that they lived and played by. they knew that they needed to become the type of people and the style of team that was required to achieve their goals to develop a winning algorithm system this meant that they needed to change their behaviour by embracing discomfort and creating new habits and systems
12:12 cold showers and ice baths were introduced not only for the health and recovery benefits but for the mental toughening and mindset benefits of getting comfortable with being uncomfortable as being critical to their long-term success. Now, Dim and you, they had a bunch of good to average OK players who had lost their belief in themselves and they're up against teams with much greater star power, marking power and goal-kicking power.
12:42 So how do you turn a handful of carbon into a diamond? By applying intense pressure. They created a completely new and unique set of game algorithms that emphasised their strengths while disrupting the traditional high-flying big-kicking game. By ensuring that they were fitter and could run faster, harder and longer as a collective than any other team, they could apply continuous intense tackling pressure at ground level by swarming, shadowing and suffocating the opposition. They won based on fast and furious tackles and turnovers
13:23 where smaller, faster players could swarm and would just do anything to keep the ball moving forward towards their goals by any means forcing the opposition into continuously making mistakes and disrupting normal game flow Now, they say that a pack of hungry tigers is actually called an ambush and this perfectly sums up their aggressive, relentless, never-say-die approach. It isn't a pretty or elegant game style
13:53 but over time it gradually proved deadly and effective as the players' fitness, skills and their collective confidence and self-belief grew. And with every game win, they were bringing the future forward and becoming both the type of individuals and the type of team that was needed to win a premiership. This was a game of synergy where 1 plus 1 equals 11, not 2. A connected collective consciousness that became so intuitive that everyone just knew what to do and where to be
14:27 and where everyone else was going to be. They moved as one organism with one brain made up of individual parts. But this didn't happen overnight. Like all sustainable success, it took time. Continuous, repetitive, fast-running, intense tackling and rebound skills had to be practised time and time and time again until the game algorithms became instinctual, automatic and ingrained at both the individual and coordinated collective level.
15:02 So, six years later, they were inconsistently winning games and had managed to get into the top eight and play in three preliminary finals, but they were still a long way from looking like a grand final Premiership chance. And following a surprise, record-breaking 88-point defeat at the hands of new club Great Western Sydney in 2016, everyone in the media was calling for Dimitri to be sacked. Now, you know the old story, that if a team's doing well, it's the players who get the accolades.
15:36 But if a team's not doing well, it's always the coach's fault. And I think the two worst and most thankless jobs in Australia at the moment, given the continuous 24-7 scrutiny and criticism, are football coaches and politicians. But I digress. Now, this is really where Brendan Gale's long-term vision and algorithm game style was put to the test. It would have been really easy for the CEO and the club president
16:03 to capitulate and use Dimmer as a scapegoat. But despite enormous pressure to the contrary, They stuck to their guns, their vision and their values, and they publicly defended and supported the coach. And as is always the case with exponential growth in anything, success only comes after a long, slow period of incremental improvement, during which you just aren't seeing the expected results of your labours, and many give up, or give in, just at this point, just before all of the results are about to come. So instead of abandoning the club vision and values that were built on loyalty and this circle of safety, where growth only comes in an environment where it's okay to make mistakes,
16:50 they stayed true to the course, and just 12 months later, they won their first Premiership in 37 years. The next year, they finished top of the ladder, but got knocked out of the preliminary final unexpectedly, and then they returned to win the Premiership again in 2019. And now, despite the odds and continued criticism, they've made it through to play in their third grand final in four years. Their lofty vision of becoming a top-performing club
17:22 and realising that 3-0-75 is all but within their grasp. They've made three grand finals, they're no longer in debt, and in fact they're very profitable, and they have over 100,000 paid members. They are the top performing club. So love them or hate them, you can't help but admire and respect them. Against the odds, they've stayed the course and transformed decades of failure into success in just 10 years, all by turning on the gas.
17:57 Setting big inspirational goals, focusing on building belief in a winning attitude, and creating a unique algorithm system of play built on their strengths that has totally disrupted the way the game is now played. Goals, attitude, systems. The winning trio. Now as a loyal Lifetime Richmond Tigers supporter, what I respect and admire most
18:23 is not their premiership wins, which of course are enjoyable, but more so for the supporting, caring family culture they've created where the whole is greater than the sum of the parts. And win or lose the premiership, in my eyes, they're already winners, as they've miraculously achieved what was perceived by most as unachievable. So what can we learn from this and how can we apply it to our lives? Are you putting your foot on the gas? Setting big, audacious goals?
18:56 Constantly improving and transforming your attitude? and creating repeatable, reliable success systems based on adapting your internal algorithms, your habits, beliefs and behaviours? And if not, why not? We all have goals, but how many of us are doing what's necessary to become the type of person that's required to achieve them?
19:19 And how do you start to change your internal algorithm systems, habits and behaviours? As has already been alluded to through Richmond's example, We need to embrace discomfort as the key to change. Let me give you a current personal example. At the time of recording this episode, I'm currently in lockdown in Victoria after becoming stuck here when we came across to help my wife, Sonia's ageing mother, who's been suffering some serious health challenges. and over the months I've been confined to where we're staying without the ability to go to the gym
19:54 or play my favourite sport of field hockey I've put on some COVID comfort kilos and to be honest I'm feeling a bit demotivated worse still I've been starting to experience some early warning signs of arthritis with sensitive tenderness in my fingers, my toes, my hip and my knee now given my history of autoimmune disorders around my dodgy thyroid it's clear I'm experiencing significant inflammation
20:20 and my system is too acidic. So how do I shake myself out of this growing malaise? By challenging myself to embrace discomfort and get comfortable with being uncomfortable. So over the last few weeks I've been following the teachings of Wim Hof and his breathing and cold shower techniques which I'm going to habitualise now over the next three months
20:46 so that it becomes part of my automatic algorithm daily disciplines. Now, what does this mean? Well, to wake and shake myself up, after my morning manifestation meditation, I've started doing the Wim Hof Method breathing technique. Now, this involves quick, rapid, deep breathing for 30 breaths, followed by holding your breath for as long as you possibly can, and then repeating this sequence three times over about 15 minutes.
21:17 Already, I've extended the time I can hold my breath from 1 minute 5 seconds when I started to 2 minutes and 50 seconds, which I'm actually pretty happy with given my childhood history of asthma. So why do I do it? Well, for two reasons, one physical and the other mental. By oxygenating your body, you alkalize your system which reduces inflammation and allows healing which will eliminate my early arthritis symptoms. By holding my breath for long periods of time, the body is jolted into a reset which refires your immune system. And of course,
21:58 this routine leaves you feeling extremely calm but very energised at the same time, a sort of natural high. These health improvements will be great over time, but the real benefit is in the mindset gains. By embracing the discomfort of not breathing for long periods of time, I'm stealing and sharpening my self-control and discipline and strengthening my sense of self-belief and confidence. And this is taken to the next level with my cold showers. For me, there's nothing that jolts your system awake
22:35 or gets your heart rate and blood pressure up like immersing yourself in freezing cold water. It takes my breath away. Now, so far, I'm easing into it gradually by starting with a warm shower and then at the end, turning off the hot water and standing under the cold stream. I started at just five seconds
22:57 and now I'm up to 25 seconds with a goal of doing daily two-minute cold showers in about six weeks' time. so I'm starting slowly and building it up. Again, the physical health benefits are similar to the breathing technique as it sharpens up your entire cardiovascular system and helps blood flow. But the real prize again is the mindset strengthening which comes from consciously choosing discomfort as the key to growth and improvement.
23:27 Over time, I'm determined to use the combination of breath holding and cold exposure to be able to control my mind and eliminate any fear and stress while building my sense of self-belief and confidence that I can use my mind to handle any situation while remaining cool, calm and collected. And the famous Wim Hof, who promotes these approaches, is a living headline for their benefits. He holds over 20 Guinness Book of Records for some incredible feats
24:00 such as climbing the freezing slopes of Mount Everest in his shorts, running a half marathon in the Antarctic in his bare feet and holding his breath to swim under an ice-covered lake the length of a football field. Check him out on YouTube, he's really inspirational. By building a mental muscle that starts doing the uncomfortable now, I know that I'm on the way to becoming very comfortable in every aspect of my life later.
24:28 I know we're capable of achieving and doing anything It's just that in our comfortable cocoons that we've insulated ourselves in We've ignored our brain and body's innate ability to cope with any situation And as these mental and physical coping muscles have withered We've become totally reliant on others and other things to survive So what about you? When and how often do you embrace discomfort? it? Do you keep setting big goals, but then just keep thinking the same way and doing
25:02 the same things and wonder why nothing changes? Setting the goal is the easy part. Developing belief algorithms and habitual behaviour systems so that you progressively become the person that will achieve your goals over the long term is where the real rubber hits the road. How long have you been talking about your goals and not achieving them? Losing weight, drinking less, eating healthy, getting fit, saving money, investing in your future. The reality is that the circumstances of your life today are living evidence of your belief algorithms and habit systems that you've been living by. To transform your life, you need to transform your mental algorithms and your automated behavior routines.
25:49 And if you continue to do what you've always done, you'll continue to get what you've always got. you'll just keep getting more of the same. Believing doesn't make it so. Believing and behaving and becoming is what makes a difference. So starting today, I'm going to challenge you to challenge yourself every day to embrace discomfort as the key to your growth in any area of your life. Every time you get in the shower and are about to turn the tap on or the tap off, I want you to challenge yourself to swim against the tide of the massive comfortable mediocrity
26:28 who turn in the direction of the warm water and instead choose the path of transformational improvement by consciously choosing discomfort and switch on the cold tap only. It's an uncomfortable habit that will make you very comfortable long term. Conversely, by choosing the comfortable option now you're continuing to swim with the herd who end up very uncomfortable later.
26:56 Either choice is easy to do or easy not to do but it's still your choice. As Jeff Olson says so well in one of my favourite books The Slight Edge life is a curved construction time is the builder and your choice is the architect. It's all up to you
27:15 and what you do or don't do. John DeLemme reinforces this message when he said accountability separates the wishes in life from the action takers that care enough about their future to account for their daily choices remember that you don't have to be great to start but you have to start if you want to be great
27:39 and it's the start that stops most people if you want to achieve your long awaited goals It all starts with transforming your internal algorithms and your behavior systems to create new happy habits, daily disciplines, and rewarding rituals. And when it comes to applying this to investing in the share market, this is why I'm such a strong believer and supporter of algorithm systems trading. Why? Because it scans every stock on the market very quickly and creates definite, proven
28:14 rules around what stocks to buy when, and more importantly, when to get out in order to achieve your investment goals. In other words, to automate and habitualise your investment approach in order to remove you and your inbuilt prejudice, bias and emotions from the process, as you and how you think and behave are always the biggest inhibitor to your investment success. It's the reason why average actual investor returns are only a fraction of the actual potential returns that could be achieved in the market, as I discussed in my book, The Freedom Formula.
28:53 Now, numerous research studies show that many investors often fail to capture the average market returns and often achieve lower returns than what would have been achieved just by leaving their savings in the bank. Echoing the famous words of my childhood hero, Professor Sumner Miller, why is this so? Well, in their excellent investment book, How Much Is Enough, Aaron Abey and Andrew Ford quote the findings of Independent Investment Research Group, which demonstrated that in the 20 years to 2007,
29:27 the stock market produced an average annual return of about 11.8%. But the average investor only earned 4.48% per year, which was barely higher than the inflation rate. They missed out on 62% of the achieved return. So how did the average investor miss out on capitalising on one of history's biggest bull markets? Well again, according to Abbey and Ford, They didn't buy and hold but adopted a market timing approach where they switched in and out of shares and managed funds just at the wrong time, moving their monies out of low-performing stocks and funds just before a recovery
30:07 and moving into high-performing funds just before they fell. Share market history is littered with a shipwrecked flotsam of investors who follow the media-driven herd and buy after the market has risen and then sell when the market falls. But why do investors seem to ignore the lessons from the past and keep making the same mistakes? Well, it all comes down to the way we think and the way our brains are wired.
30:37 Most investors ignore the boring, uneventful monotony of investing in a quality, diversified portfolio. Instead, they allow themselves to be distracted and activated by the emotion of every shiny thing or the most recent media-driven hysteria. Emotional herd responses and the resulting market movements have been exacerbated by technology that's enabled everyone exponential access to constant streams of instant information
31:03 This has led to increased volatility from a greater focus on short-term results amplified by infectious mass media scaremongering So after you've completed your share investment you might start to become impatient or you get scared by the first rumour of market downturns. To achieve sustainable investment success, you need to overcome your inbuilt natural tendencies and emotional responses. In other words, the rational needs to tame the emotional.
31:35 Yeah, easier said than done, I know. Now, research conducted by Kahneman and Tversky on prospect theory has proven that the pain of a loss is twice as great as the pleasure of an equal gain. In addition, further research revealed that the sense of regret that comes from a loss has a greater emotional effect than the loss itself. And regret is powerfully hardwired from experience. As part of our natural survival mechanism, if something has caused us pain, we're less likely to do it again. This research on loss aversion and the impact of regret
32:13 helps to explain why many investors find it hard to stay the distance. to take the risk and endure the emotional rollercoaster of market fluctuations that required to persist long enough to achieve their goals. If you take investment risks, you also accept the chance of making a loss and experiencing regret. As summed up by Abbey and Ford, risk-averse investors are seeking to avoid short-term regret, but such an ostrich response may lead to even more profound regret later in life.
32:45 The implication is that we must work against the brain's response mechanism that says it's more important to get through today than to worry about the future. Risk-averse investors may avoid a temporary loss, but in doing so, they also lose the probability of significant long-term gain. In response to our self-sabotaging behaviour, today's guest Jason McIntosh has developed an algorithm-driven investing trading system that helps to considerably broaden our field of investment opportunity while insulating ourselves from ourselves. He's developed a proven, profitable, and robust share investing system that's personally returned his investment
33:29 portfolio over 10% to 12% per annum. That's really good results. And even better, Jason's proven algorithms do all of the hard work for you. And all you have to do is follow his buy and sell notifications alongside his informative equities education. As a time poor professional, I don't want to create a second job when I invest. I'm always looking for time efficient investment vehicles qualified by independent professionals that satisfies what I call the gear set criteria that I've detailed in my book, The Freedom Formula. And I've spoken about this on previous episodes of Get Invested. But I'll summarize it again for easy reference. So reinforcing the long uphill nature of investing, if your high performance investment cycle is a vehicle
34:22 that you'll get to get you close to your end destination in the quickest, safest and easiest fashion, you need to assemble your investment gear set. In bike terms, your gear set is a set of gears for transmitting motion for a specific purpose. So you need to choose the best available gear assembly that will easily transmit the power of your upward progress. Trying to ride up a steep hill is pointless if you're stuck in top gear and you simply don't have the power and energy to keep the wheels turning. So against this gear set measuring stick, as a time poor career focused professional, anything that you invest in must be G for growth focused, offering high asset growth in the shortest possible time. E is easy to
35:11 implement. A for affordable, being low cost to establish and affordable ongoing. R for risk averse, what you invest in must sit comfortably within your sleep at night factor. S for simple and quick to understand. E for equity low, so you use as little of your money as possible to secure the asset. And finally, T is for time efficient and effective. So it doesn't require much of your time to acquire, manage or monitor and doesn't create a second part time job. For example, it only requires an hour or so a month plus two or three hours a year to monitor. Anything you decide to invest in and the way you invest in it then just needs to satisfy these gear set criteria.
36:01 That is, simple and easy, time effective, low cost and high growth. Meaning you just need to pick investment vehicles that tick these boxes and the job's done. In this regard, Jason McIntosh's Motion Trader Service is a perfect fit. As the medium term nature of his investment trading system lets winning trades run for one to two years on average. This is a low touch, high traction approach. The beauty of Jason's motion trader approach is that his algorithms do all the homework and research for you
36:33 and because the work is technically based, the trading rules remove our subjective emotional judgment and reactivity, which, as you've already heard, is the cause of most investment underperformance. But of course, there's much more to investing than just buying and selling stocks. The technical trading algorithms need to be aligned with your mental algorithm behaviour rules
36:57 and your evolved AI, ancient intelligence, automated survival responses. And we cover off on many of these in our discussion today, including when you make money in shares, what rules you need to consider to invest successfully, why a medium-term investment system may suit you better and be more profitable, how you can determine your share trade size
37:22 to ensure that you can actually remain in the game and why having a sell strategy is very important. And if you're interested in learning more about Jason's five secrets of the world's best traders, then Motion Trader have kindly given you free access to his exclusive report. So if you'd like an electronic copy, just email me at bushey at khgroup.com.au and we'll get it to you.
37:49 And if you're interested in MotionTrader assisting you to invest in the Australian stock market more successfully, after listening to more of Jason's informative conversation today, just jump on www.motiontrader.com.au forward slash learn to trade shares for his free online event on how to build a profitable share portfolio now. And mention my name Bushy when you register and Jason will look after you. In the meantime, enjoy the second half of my great conversation where I resume by asking him what his business, Motion Trader, does. So please enjoy the conclusion to this engaging chat with Jason McIntosh. I'd love you to sort of share with us exactly what Motion Trader does, what's the concept, what's the approach, what's the trading style And who is it best suited for so that we've got a sense of, you know,
38:51 if the listeners are listening in now, who's going to be best served by jumping on board and taking advantage of what Motion Trader can do for them? It's – well, look, what Motion Trader is, it's – what I use is a trend-following strategy. And it's all about looking for the stocks that are displaying the characteristics of a rising trend. And so I run the daily ASX data through the system each day, and then the algorithms go ahead and make all the calculations to identify stocks which meet that criteria. and then it's a process of calculating an exit point because for every stock that you enter,
39:47 you've got to have an exit strategy and this is one of the areas which brings so many people unstuck because they sort of go into the market with only part of a strategy. There's so much thought given as to when to buy a stock but so little goes into when to sell. It's almost like an afterthought And even just the way researchers produce, you know, brokers produce by research, not so much on the sell side. But, you know, this is a thing.
40:18 You make your money when you sell, not when you buy. And it's the weakest part of most people's strategies. So a big part of the service which I provide is, of course, providing those exit points so you know exactly when you're going to, like, leave a trade. and that's a case of recalculating that as the share price moves over time. And what I'm also doing is I'm covering the entire market. So I'm producing entry ideas for everything from the largest companies through to the smallest. and it's quite amazing how many really interesting opportunities
41:06 are listed on the ASX that you just wouldn't know the name. And like I look at my own portfolio because I focus on the stocks which are probably outside the ASX 300, so that's the top 300 stocks. And most of the companies that I hold myself because I use the service on my as well and most of the companies in my portfolio i don't know the name of um i didn't know the name of before i'd um i'd seen them come up in the in the daily scans and uh so this is yeah look it's one of the one of the one of the great parts about the services is finding these these unknowable stocks and and that's where where a lot of the growth
41:50 opportunities are in the smaller companies that become medium companies which become big companies and you've got to have a strategy to identify them and that's what the algorithms are so good at doing. And another thing that I do is I explain the process because what's really hard is to follow sort of like a black box, they call it, a black box approach where someone or something is saying, you know, buy this. I'm not going to tell you so much why, but just buy it.
42:22 It's easy to do when the market's going up when you're making money, very hard to do and continue to do when you're losing money. So it's so important that you understand the process because markets just don't go up. Of course, they come down as well. And if you can't follow your process through the market cycle, you're going to struggle to be successful over the medium to longer term. so this is why i put so much emphasis on explaining the process and people think you know
42:57 you know it's all about secrets it's like oh well look you know what's the secret what's the secret to the buying of the secret to selling you know the funny thing is there are no secrets it's like the best strategies that you know the best traders and investors have been using for decades it's like they're nothing new there's nothing new under the sun and it's the same with what i'm doing and that's why it's um it's just you know it's it's so rewarding to be able to explain this to people and say look this is one of the processes that you could use to potentially do really well from the market my process is one processes there's other ones too some people like fundamental analysis some are value investors growth investors i'm on the um and my service is on the um on the
43:45 price action side of the different types of approaches you can use to do well from the market. Yeah, I tend to lean that way myself and I guess that's the reason I was sort of keen to get you on the show because I think the fundamental value side of the equation, there's a disconnect to me, particularly now that there is so much electronic training between the true performance of a company and its performance on the share market. And there's a lot of volume-driven, perception-driven activity in the market that has absolutely nothing to do with company performance, particularly if you're trading, as you say, a medium-term exercise versus a short-term exercise where you might be trying to get in and get out and reacting to market news, which, again, is often perception-driven, not performance-driven. so yeah it's very it's very hard in the short term because you um your potential to make big
44:45 gains really isn't there so one of the strengths of a of a medium-term approach is that you do enable yourself the ability to to invest in stocks that rise 100 200 500 percent and that can happen over one to two year period but it's not going to happen over you know one or two week period and it's the thing about what I do with this price approach is you're letting the price action guide your decision-making and using the trend. And like when I go back to my time at Bankers Trust where the star trader came in and said he could statistically prove
45:31 that markets move in trends and they do. is because the trend is a path of least resistance and they exist because the market's actually quite slow at digesting information. So a company will come out with an announcement, the share price will jump, but that's not it. It's not an efficient market where it instantly goes to the value that it should be.
45:57 Analysts will go away, they'll redo the numbers, they'll upgrade it, it'll get out to the brokers. it's a constant process of of a stock then being reassessed and pushing the price higher which is causing the trend and and that's why i say it's a path of least resistance so having strategies that can exploit that that statistical fact that markets do move part of their phase through a trend it's um it can be you know very empowering to for an everyday trader who doesn't have the the you know the analytical skills of a of a someone who's done an mba in in advanced mathematics and company analysis it's pretty hard to out analyze them but you can use something like
46:44 a trend to identify stocks which are on the move and which are being repriced due to whatever's happening in the company and you don't need to pull apart the balance sheet to do that you need To have processes in place to control risk and to spread risk and to exit, a lot of my members use my service to identify ideas and then they go and do fundamental analysis to zero in on the stocks that are going to work for them. That works too. Myself, I just use a price action.
47:22 I don't do further research. I don't know what most of the companies in my portfolio do. And, you know, it doesn't matter. It's like you don't need to know how a good outcome. You know, all I need to know is I turn it on, use the pedals and the wheel, and, you know, we're pretty much good to go. I don't need to know how the spark plug works, the combustion or the, you know, the hydraulics do, the brakes.
47:45 I don't need to know all that. In fact, I think it's dangerous if you do because you start to get emotionally attached again. If you start, you like a brand and therefore you think you buy at share, then you're more likely to either hold on, buy early or sell late because of that emotional attachment. If you know nothing about them and you're just trading on the performance based on proven rules that have worked in the past, then you're actually protecting yourself in the process, aren't you? Yeah, yeah. Look, I see that happen and hear that happen all the time. there's um this story of the uh one of my old old colleagues he had a stockbroking client so this
48:24 this guy was a stockbroker and he had um a client this is back in the dot-com days and uh so this this client calls up and says you know buy me um you know buy me 20 000 shares in this company called sausage software at a dollar and you know in a couple of months it was um was trading it like $10. It's gone from $1 to $10 after two months. This is 1999. It's mayhem in the dot coms. I was trading at that time. I don't remember sausage very well and its demise. So he's turned $20,000 into $200,000. And his broker is saying, look, why don't you just take a little bit off the table? He goes, no, no. I know what this company does. I'm
49:11 I'm fully invested in their dream of what they're going to do, of their plan for the future. I'm hanging in there. And so he hangs in there. And from $10, the thing peaks at $41. So he's up, this guy, he's up 40-fold in 15 months. And his $20,000 is worth $800,000. And he hasn't sold a single share.
49:36 So it's one of the best examples you'll ever find of letting your profits run. He's done that. he's done that to perfection but yeah that's that's what people do they they don't have a plan to sell so twenty thousand dollars to forty thousand dollars great i'm out of here you know twenty thousand to five thousand a lot of people will head for the exits but this guy's at eight hundred thousand dollars and uh of course you know he's not selling anything so you know where this is going two weeks later sausage is back at twenty six dollars and so what that he's down um you know he's given back $300,000, but he's still got half a million,
50:12 half a million in play. And this is another thing people do. They'll focus on the money they've given back rather than the money they're still holding. So it's like, well, no, well, I don't want to sell now at $26 because, you know, I had $300,000 more money two weeks ago, so I'll at least wait until they go back up. Then I'll, you know, if I have to, then maybe I'll lighten up there.
50:37 But, of course, it usually doesn't work that way, well, often doesn't work that way. And, you know, the stock was back at, you know, $21, $20 a few days later. And then, you know, a couple of months later it was under $10 and it was eventually back by 2003. You can probably guess where it was, back at $1. I remember.
50:57 I remember. He's done the lot. He's done the roller coaster. He's gone up and he's come back down because he was too focused on, you know what the company's long-term vision was going to be he didn't have any risk controls around when to you know when when to when to sell when the price started coming back and this happens all the time yeah people ride the boom and they hold on for the bust because they don't have a plan to sell and you know as my subscribers would would probably tell you i just harp on and on
51:32 about you know selling strategy because it's so important it's the missing piece of the puzzle like i've got this one subscriber his name's um his name's warwick and uh you know he's been with me for five years and he um he emailed in this is a while ago now it's a few years ago he said over the last 10 years he said i've been trading the markets for 30 years but unsuccessfully and in the last 10 years i've lost two million dollars he said i did all the wrong things i had big positions i traded options i um took profits early i didn't cut my losses and it was a disaster but since coming on and sort of like starting to understand how an investment process actually does work i've i've turned it around i'm now i'm now making money and you know that's just terrific
52:29 when that happens and uh it's it's yeah it's just that that missing piece for him well he actually he actually had a few missing pieces um but for many people the missing pieces you know the selling part and they just yeah it's a hard one to get right so i do go on and on about it because it's i guess it's one of the the passionate areas for me about trading is just instilling this point you've got to let your best positions run and you've got to cut them when they turn lower and you've got to cut your losers relatively early if you can do those three things you're in with a big show it's um you give yourself a big chance of doing well you've got to do a few other things but you know they're some of the big ones yeah and you mentioned some good ones there and i think
53:15 that sort of folds back into the sort of key rules for successful investing that uh that uh you mentioned, you know, trade with the trend, get good at quitting, be slow to take your profits, give the winners room to move. But what goes with that, I guess, is you've got to have a large number of trades to cover and probably smaller trades so that you can keep playing the game for long enough, depending on how much money you've got to throw at it. Would I be right in saying that? it's uh my approach is about many relatively small trades rather than a few big ones now
53:55 like i i back test all this sort of stuff and you could use this approach for you could use it so so my approach is all about you know you're trading with the trend letting winners run cutting losses giving giving stocks room to move now you could do that with on a single stock strategy and that's where you're letting luck come into play a little bit because it's like if you get the wrong stock you could you know you can do a whole lot of capital very quickly you get the right stocks you could make a lot of money and there is a process involved still so it's not you know it's you do have some some some chance i guess but the the more stocks you add the more you take the variability through having only a one-stock portfolio
54:47 out of the equation, and you take away a fair bit of the volatility. There's still going to be volatility, but it's not hinged so much on one or two stocks. So if you've got a 20-stock portfolio and one goes to zero overnight, it's going to be annoying, but it's not going to smash your portfolio. It's one-twentieth of your portfolio. You're not really going to notice it too much. The other advantage of spreading risk widely is you're increasing the odds of getting several stocks which run a really long way, whereas if you're just going one, two or maybe five stocks, it's – yeah, you're not giving yourself a great spread of opportunity.
55:30 And it's about a maximizing opportunity through having a number of trades in your portfolio or investments in your portfolio. Yeah, so if I came along to you, Jason, and let's say I've got – well, let's say we've got two people. One's got $10,000 in his back pocket and the other one's got – let's choose a bigger number because it might change the flavor of the position size and the number of trades that you take. Let's say I've got $50,000. and what would be your approach to each of those in terms of the size of the trades, the number of trades that you'd be suggesting they look at from a risk management perspective? Yeah, look, I always say to use my service, I say people really need at least $20,000 because you've got to have enough capital to spread it
56:24 into a reasonable number of positions. And you can't invest $500 in a stock, or you can, but the problem is that the percentage of brokerage you pay is too much. It's going to be too high. So if you invest $1,000 at $20 a trade through one of the online brokers, that's going to cost you 2% in brokerage. in and 2% out. So that's taking away a big chunk of your potential return.
56:55 If you invest $10,000, it's still going to be $20 for a trade, but the cost of that trade is going to be 0.2%. So brokerage becomes pretty much a non-issue. So you've got to find that balance between having a workable trade size and spreading your risk, and that's going to be different for everyone. So if you've got $50,000, you have more flexibility. You might have invest $2,000 in each stock. So it keeps your brokerage down to 1% in and out, which is still relatively high,
57:30 but it's not so bad. And you're getting a good spread of investments, of stocks. And it's, yeah, it's trade size, investment sizes. it's something that people probably don't have a great strategy for. I use a percentage of my trading capital, my investment capital, to work it out. So, for instance, you might invest 2.5% of your capital in each idea. So it becomes more dynamic than saying I'll invest $1,000 or $2,000.
58:11 Got it. So as your capital grows, your investment size grows and conversely when you have corrections and the market comes back, your investment size gets smaller. So it's always adjusting. But that makes a difference over a period of multiple years. But for the sake of like, you know, for the next 12 months, just choosing a consistent size I think is a good thing,
58:37 whether it be $1,000 or $10,000 or somewhere in between. Yeah. Just having that consistency because what a lot of people tend to do is they invest their biggest portion in their favourite stocks. Problem is that puts a lot of pressure on getting those big calls right. I prefer to have the many relatively small trades approach so it doesn't matter to me which stock does best because I'm investing the same in each.
59:09 But there are all different ways to do it. Some people, you can index, so BHP's got the most and the small stock's got the least. Different ways. For me, it's about the same for everything. I'm not differentiating between one entry signal and the other. They're all equally, have as equal amount of potential as the next one. Yeah, something I haven't asked, why the ASX?
59:36 Why would you be doing it for that rather than look at the others? Is that because it's more palatable to the average person? I'm interested in the decision on why the focus on the ASX. Look, really, there's two sides. From a business point of view, Australians want to invest predominantly in Australian stocks. I get people requesting, look, can you do the US market as well? And I could.
01:00:08 It's just a matter of getting the data and putting it through the system and producing another part of the service. But I'm not doing that at the moment. It's another layer of business for later on potentially. And so that's why motion trade is focused on ASX because that's mostly what Aussies want. They want Aussie stocks. From my own portfolio, I trade ASX because it's just,
01:00:38 it's simpler i like keeping things simple i don't like the complexity of having to do foreign markets currency transactions it's all just gets a bit bit messier um i do trade international markets through etfs so there's there's it there's there's a good case to be made for diversifying because australia is a largely resource and financial sector market and if those sectors aren't firing, it can be a bit sleepy in the ASX sometimes. Yeah. Whereas there could be something going on in another geographic location where the mix of stocks is different.
01:01:18 So, yeah, I'll use ETFs for that because that's a good way. You can find ETFs for pretty much anything you want. Yeah. And, you know, excellent. And also some fund managers. There'll be a few fund managers I'll put funds in because, again, it diversifies what I'm doing. Diversity decreases risk as well, and you can't decrease risk to nothing
01:01:45 because then you can't get return, so you can't over-diversify. But, yeah, it's through ETFs, fund managers, ASX stocks for me, and also, look, I do property as well. And so that gives me, like, you know, lots of spread with my investments. Yeah, I mean, I've got the big interest in property, obviously. Talk to me about the property side of your portfolio. What does that look like? Well, that's really passive for me.
01:02:12 So the active side of what I do is the stock market and the business. And property I use for income. Yeah, this one property, this was back in – oh, I think it was 2011, 2012, I was looking for a good income plan and I found this commercial office suite in North Sydney, in the CBD of North Sydney, which is just over the other side of the Harbour Bridge from Sydney CBD. And you'll love this, Bushy, it was on a yield of 10% net.
01:02:51 Oh, awesome. And back then commercial was yielding maybe around 8, 8.5. Yeah, yeah. for the grade building. I think it's a B grade building. Yeah, it's nice. I think like prime might have been down around seven. Yeah.
01:03:06 And this was in the heart, the absolute heart of North Sydney, just over the road from North Sydney train station. And I thought, yeah, this looks good. Been on the market for 12 months. Market was slow. And put in the bid and the guy said, yeah, okay. So I picked it up, got that 10% yield. I look back at that now and go, yeah, geez.
01:03:28 Pity I didn't buy the one next door as well. It's like who would have thought? And that's like, yeah, so it's been, I think the income alone has paid the price, the purchase price over the last nine years or whatever it may have been. And there's been great capital growth as well. So that's sort of like how I use property. Yeah, so make it in the stocks and park it in property to get income but also some capital growth that might fly from it.
01:04:00 Yeah. Yeah, and it's also diversifying things a bit. So property shares, they're correlated but they're – look, I'm doing them over different timeframes. Shares are maybe over a one- to two-year period, property over a 10-plus-year period. And it's the – yeah, it's like if the stock market goes through a low, I've still got income coming through the property
01:04:26 and then you've got times when both are going really well and it's good. It's good to have various prongs to your income and investment strategies. Love it. Mate, so the perfect investor for motion trader, what do they look like? Where are they at?
01:04:45 What are they trying to achieve? You've mentioned 20 grand as a minimum float to start playing with. Talk to me a little bit more about that And if they follow your recommendations to the T or the information to a T, what sort of returns can they expect to make from your system? Yeah, the people who subscribe to my service, they tend to be 35 years and over simply because it takes a bit of capital to implement the strategy.
01:05:19 If people with a couple of thousand dollars, I think they're best served in something like an ETF because it's not enough to be trading individual stocks and deal with the brokerage. Unfortunately, what a lot of people do, they go and get stuck in the CFDs when they've got like a few thousand dollars. Let's not talk about that, shall we? Because I've certainly got my fingers burnt there many years ago. It's a sore point for many. This is the thing with leverage. Leverage seems so appealing because people feel it can fast-track their progress, but what it often does is that it fast-tracks
01:06:02 their trading accounts demise. It's great when leverage is working in your favour, but when it doesn't, it quickly takes people out of the game. I think leverage is fantastic in property, but it's a volume switch to disaster in active share trading. Very different assets where leverage has completely different impacts. Yeah, like for property leverage, for property leverage is just perfect. Like, you know, for someone with a $50,000 deposit, go and borrow half a million dollars and you've got a $550,000 asset, which, you know, you give that five, ten years, the growth on that is going to be terrific. You can't take $50,000 to the stock market and borrow half a million dollars.
01:06:51 For one, nobody will give you the money. And even if you only have a portion of that, you're trading on margin, the market comes down, you get margin call. that doesn't happen in property so you've got to know where to use leverage and and how to use leverage to to be successful with that it's a place to you know sort of learn learn about leverage so yeah look that's that's why i say to people look you probably need at least twenty thousand dollars to use this sort of approach which i which i talk about and and i use and it's um uh so these people i get a lot of self-managed super funds who come along i've got people like um like warwick who i talked about earlier who'd been in the market for 30 years and
01:07:36 and hadn't been able to make it work and then you know what i love about those people is that they're you know that they just want to do it themselves they're just so resilient they get so much negative feedback but they keep coming back and they keep trying to do something do it differently but correctly and um so that yeah i do see quite a few people who are who are like that Look, they're also first-time people as well who come along and they just want to, you know, they just, they know they need to learn and they take the steps to, you know, get information from a source which they believe is trustworthy.
01:08:14 And it's, you know, just finding where to start is one of the hardest parts of investing because there's so many different paths you can take and so many people you can listen to, it's you kind of have to – there comes a point where you've got to decide, look, okay, I've read about a whole lot of approaches and I've heard a whole lot of opinions and now I've got to decide what works for me. What am I comfortable with? Do I want a price action type approach or do I want to learn value analysis?
01:08:51 Do I want to try and join them? what is it that I want to do? Because unless you're clear in what you're doing, it's going to be very hard to make some money. So, you know, I say to people, what I do isn't for everyone. Not everyone is comfortable following price. Some people, like I listened to one value investor talking on a podcast recently, and he said he won't buy a stock unless he knows everything about about what they do and he said that he'll that that you know people should spend at least 20 hours pulling apart the balance sheet and really getting to know the company now that's all that's all fine and people do that and they do really well from that but that sort of approaches
01:09:37 you know it's inaccessible to a lot of people so someone listening to that would go oh no i i can't do that that's just far too difficult for me and they they leave investing and they they go away or they give it to a fund manager even though they may be really interested and so what I say is there are so many different approaches if you're that way inclined that's great but if you if that's just seems above and beyond well you can look at things from a price perspective as well so that doesn't mean it's easy and that you can do it next week but it's a process which will be easier to grasp and then you can you can learn how that works over over time and i often say that you know finding a service that does what you like and then following what they do and making
01:10:27 their ways your ways is is a good way to it's a good way to learn it's a bit like having a mentor because you've got a roadmap to follow and uh and you know there are good services that provide fundamental analysis and they're good services that do price action stuff uh but what's important is you find someone who can help you because trying to do this on your own it's um there's this guy malcolm gladwell he wrote a book called outliers and he um he threw through research it's been they've worked out that it takes 10 000 hours to become really good at anything whether you know a chess grandmaster or a musician or a tennis player um an investor you know it's 10,000 hours of you know or 10 years of really focused learning and and work and that's yeah if if you
01:11:20 you know you're 35 45 and you want to start and building an investment portfolio it's pretty daunting so that's why if you can go and find someone who's already doing is already where you want to be and you can start making their ways your ways you can you can i think i really believe you can you can fast track the process to to a reasonable extent and it can make a big difference you can say you know 10 years of trial and error and blood sweat and tears 100 agree and i mean i felt for a long time after getting a blood nose many times myself in both the equities and the property market when I started out. I soon learned that successful investing is very much an elite team sport and you're not a player. You actually own your team that's going to get you the results
01:12:10 because the most precious resource all of us have, Jason, is our time. So my view of investing is I want to get the best returns that involves the least amount of my time. Sometime I need to know enough to know what I'm doing, but I want to be creating vehicles that are actually allowing me to put time into things that are important to me rather than becoming a property guru or a share trading expert. I'd rather have other people do that like yourself who do it every day of the week and give me good, trusted advice that I can act on.
01:12:41 And if we're talking trades that go over a year or two, then again, what that's telling me is that we're getting good results from a long term without revolving much of my time. Once the trades are made, we can let them run and without having to sort of be watching it every day and every morning and then make dumb decisions because we don't like what we hear on the news,
01:13:03 we can get on with doing other things and let the investing side of things do its work. Yeah, that's right. It's like my own portfolio, I've got about 80 stocks in the portfolio and on a day-to-day basis, I don't do very much with it. um each week look i'm just just just a guess maybe i spend 10 minutes on the portfolio a week there's 80 stocks now if we have a you know a covid stock you know crash well i'm going to be
01:13:35 doing quite a bit because i've got a you know i've got 80 stocks to exit but that usually doesn't happen over the course of a couple of weeks you know stocks will run their course over over different periods so it's um all the time from my perspective went into designing and back testing the approach and the actual running of it it's not very time intensive at all because it is medium term a lot of stocks i won't do anything with for 12 or so months because i'll just stay in uptrends or you know just just ticking along others i'll have to i'll have to cut and i'll rotate that capital into something else but that doesn't take me very long and it works really well. So I looked at my own results last week and from a capital gain perspective the portfolio is
01:14:29 up 50% since this time, almost this time to the day five years ago and the all ordinaries over that period is up around 24%. So it's double the all odds. And then there's dividends which go in as well. So that adds – what does that add? Look, it adds a considerable amount to the return. So I think the compound annual growth rate is comfortably north of 10%. Maybe it's, I'm guessing, 11%, 12% with the dividends.
01:15:00 That's fantastic. And so the reason that works is because the reason I'm outperforming the All Ordinaries is because I'm not – the All Ordinaries is based on top 500 stocks. So in that top 500 stocks, you get the best stocks, the worst stocks, and everything else in between. So what a trend-following approach does, you're kind of um you're kind of cherry picking you're picking the parts which are going up and
01:15:35 you're avoiding the parts which are going sideways or falling so that's not to say that the part you buy that's going up is going to continue going up that could also join the falling list but because you've already excluded the ones which are going sideways and falling it's um it's like taking the handbrake off the portfolio so it does give it the potential to outperform the index over time and it doesn't happen week in week out there'll be periods where the all ordinaries does better than um than someone following my approach so from the the lows in march after the market collapsed uh most of the stocks which had been signals as signals as um as as buys by by my system would have well they did they hit their exit stops on the way down they protects capital by by cutting
01:16:24 the position and getting out of the market but then the the market just rebounded came back you know it's the strongest rebound in history and because the way things are set up the um you exit your stops on the way down and by the time you get in you don't get it back in at the low you're buying into stocks which have already been rising for for a bit so the market tends to outperform yeah during the early stages of a new bull market um but you know that's that's fine because there's no system on earth that i've ever seen that outperforms the market year in year out week in week out day in day out but it's what happens over time over the cycle which is important and if you can find a process which can give you an edge come back to that word edge
01:17:10 that can you know it can make a big difference but it needs to take time to play out you know as a casino operator will tell you you know they've um they've only got a small edge in most of their gains but they become very profitable businesses so a small edge over time can lead to you know really outstanding gains but it takes the um the you know the emotional control to to stay with it and you know people struggle there sometimes you know it's um getting a handle of your emotions it's um well yeah it's such such an important thing well this is what i love about your system you're you're by relying on uh time-tested rules uh you're removing that emotion because it's an automatic trigger uh that that it means that you're getting yourself out of
01:17:58 the way which is really important i think in all this mate uh that is sensational performance if we're talking you know 10 to 11 percent you know for the listeners point of view you know we're in a very low interest rate environment. So money's not doing much if you're leaving it lying around. And at 7.2%, you're going to double your position every 10 years. So that's a very healthy growth margin in an interesting time, Jason. So that says a lot about the probability of what you're doing. So look, results are variable, of course. You have good years, bad years.
01:18:42 I had one guy subscribe to my service once and he sent me an email after three weeks saying, this doesn't work. I want to cancel because the Vanguard All Australian 300 has beaten your signals. And it's like, I didn't say this to him, but really and truly, you just don't get it, do you? It's not about being a winner. It's not about a winner at every post.
01:19:10 It's not about getting 100% strike rate on your signals. It's about accumulating wealth over a period of time through using a robot process. But that doesn't mean you should, like some people will see tonight's signal and go, okay, what if I put all my capital on this one? It's like, well, you might as well go to a two-up game because I don't know. I don't know which ones are going to work and which ones are not. That's why you've got to spread risk.
01:19:41 And if you do crazy things, you're going to get disappointing results. There's no quick way to get rich quick or this sort of stuff. No one gets rich quick unless you win the lottery because it doesn't work that way. It takes time to accumulate experience and capital and it happens at a slower pace than people would like. But if you try and force that pace, you invariably blow yourself up somewhere along the way and it's disappointing to sort of see potential sabotage by people just doing things which are just not appropriate for making money. I 100% agree. This is where expectations are really important. Anyone who listened to me said it doesn't matter what it is, business, shares, equities, property, sustainable success is at least a 15-year journey, I believe. You've got to be able to stay the course,
01:20:44 stay in the game, make it affordable to do that, not be too time-consuming so you're not creating a second job while you're doing this so you can still put your free time into what's important in life so you're enjoying your lifestyle on the journey but if you go in thinking that and you embrace that then all of a sudden your outlook on what you're doing and how you're investing starts to change you actually start to enjoy it because you're not fighting time you're embracing time as a big component of helping you accumulate on the journey so mate just before we switch into the ambush round and i there's a lot of stuff that we could talk about and i have We've really enjoyed our conversation, mate,
01:21:22 so I'm going to get you back on at some point in time if you're happy to do so. Oh, I'd love to. Yeah. Actually, as you've seen, I can talk about trading and investing for a while. Oh, no, and there's a lot of topics that I'd love to delve into that we haven't touched yet, but we will. You'll accumulate a few stories over 30-odd years as well.
01:21:40 Yeah, that's right, exactly. But sort of given the times that we're in, and while I'm sure you're like me, what the economic shock that we're seeing now while it has a different it's dressed differently it's it's no different from many of the other shocks we've had over the past and the and property and share markets have always been resilient and and come through those in fact times like these are actually times of opportunity from where I sit but if you are someone who's in their uh you know mid 30s to mid 40s and you've got a home and you've got a home loan and you've
01:22:15 got a couple of hundred grand of super and let's say you've got 50 grand in an offset that you're looking to do, what would you be doing now if they're going to look at getting into the market? I'm not saying which stocks to buy. What sort of approach would you suggest that they take to investing at this point in time? Yeah, look, it depends so much on the individual, what they want to do. it's um like the the number one reason i hear at the moment for people not wanting to like like like people go through and watch um i do a whole lot of training videos which i offer
01:22:53 for free for people to understand the the market and what what i do and i get feedback from people saying oh look i really love what you do but um i don't want to join just yet because i'm waiting for the um i'm waiting for the crash waiting for the next crash and uh because i can understand where they come from because they watch the news each night, as I do, and they're talking about, you know, the worst conditions since the Great Depression and all these people losing their jobs and it's, you know, I saw a couple of weeks ago it was a former Virgin Australia 777 pilot washing dishes.
01:23:31 It's just awful. And so I can sort of like see people going, well, this is really bad. the stock market's going to crash. It makes perfect sense that it will crash. It makes no sense that it won't because the economy is just so awful. But what everyone expects to happen doesn't always happen. If everyone's looking one way, you've got to be wary about what's coming from the other direction.
01:24:03 So, look, I don't know what's going to happen in the next 12 months. I say to people that I'm not in the business of prediction. My three P's are possibility, probability, and process. You want to get those three right, and amongst those three P's, prediction doesn't get a look in. But look, if you're 30-odd and you've got 50 in your offset, it's like the conservative side of me would say I'd pay down the home loan. It's a tax-effective way to get a return.
01:24:42 With, you know, homeland rates being so slow, so low the tax-effective return is pretty low as well. But, you know, that'd be my conservative side. You know, my more progressive side would probably say, well, look, you know, you've got to decide if you want to get into the stock market, are you a do-it-yourself type or should you be looking at a fund manager? And I had this same discussion with my mum and dad.
01:25:15 Like mum had a portfolio of, you know, a motley portfolio of this and that and, you know, shares she'd picked up and, you know, demutualisations and all sorts of stuff. And she's saying, look, what should I do? And I said, well, mum, are you interested? Are you interested in the market? Do you want to log on each day and see what's happened overnight and, you know, look for some new ideas.
01:25:38 And she goes, no, not really. You know, I've got bridge and I do that and I like that. And I said, well, Mum, sell it all. Sell it all and give it to the fund manager because these guys, that's what they do. They actually like markets. They're interested in them and they look at them all day. So let them have your money and they'll do all that.
01:25:54 The problem you have if you've just got this buy and hold of individual stocks is that, you know, it's all great if they're going well, but good companies turn bad too and there's no one there to press sell. So you shouldn't – look, I don't believe in buy and hold for individual stocks. You can get a few good ones, but you can get a lot of the go nowhere also. So for mum, it was all about give it to a fund manager.
01:26:23 Dad, on the other hand, he loves the markets. He's interested. He uses the service and he loves it because he gets to see all these weird wonderful smaller stocks, which, you know, takes him back to the 80s with his spec miners over in WA. And, yeah, it's great. He loves it. He's 81 next week and he, you know, it's a real interest.
01:26:46 It's fascinating to him. It's just like it is for me. I love seeing all the names come up each day, you know, big stocks, little stocks. You know, some days there's no names because, you know, it all depends what the markets are doing. Yeah. But it's, yeah, for someone with funds and with an interest,
01:27:01 and that's the key. You've got to have an interest in the markets. If you don't have an interest, fund managers do, and they can do a good job for you. But if you're interested in the markets, it's, yeah, like look around. Look around. What strategies are you comfortable with? What sort of stocks are you comfortable with?
01:27:19 Do you have the emotional make-up to be a medium-term active investor? because not everyone does, and that's not necessarily a bad thing. It's just it's not the way everyone's wired. So you've got to learn a bit about yourself. You know, what are you able to do? And, yeah, yeah. Yeah, that's great, mate. Two ways you could do it.
01:27:40 That's good. And what you're recognising there is that, again, where some people focus on the product, which might be the shares or the property, you need to spend more time thinking about who you are and what's going to actually suit you and what your interests are because that's more likely to one, last the distance and two, get the sort of results you're after.
01:28:01 Mate, brilliant. I'm going to switch gear into the quick five questions. I call it the ambush round where the listeners always want to sort of glean some wisdom from you on some key things. The ambush round, love it. Yeah, and you've mentioned a couple of great quotes already but what would your favourite quote be and why? Okay, I got one.
01:28:24 This is – so this was – I'd describe this one as a career maker for me. It's – I read it back in 1993, and here it is. If you don't bet, you can't win. If you lose all your chips, you can't bet. And so that was said by this – by an algorithmic trading pioneer, a guy called Larry Haidt. and it really focused my attention on risk. So if you look at the first part, if you don't bet, you can't win.
01:29:02 Well, that's obvious enough. You've got to be in it to win it. You've got to step up and take a risk. But the problem for most people is they don't consider the second part. If you lose all your chips, you can't bet. And so many people lose all their chips because they put big positions in risky stocks and they use leverage.
01:29:25 And, you know, if you're not in the game, you can't get the return, can you? So that was all that meant as a young trader. I went into the dealing room and I thought the way the best traders made money was they had big bets. And if you wanted to win big, you had to bet big. But Larry's comment, it swung it around for me. So rather than swinging for the fences, trying to hit the sixes off every trade,
01:29:54 it was – Take the singles and build an innings. You can still get the big hits, but spread your risk out. And, you know, just wait for the big hits. Wait for it. Not every ball is going to give you a six. Take the singles. When the shot's there, take it.
01:30:10 Hit it over the fence. Yeah, love it. Don't get bowled at the stumps charging down the wicket for everything. no that's a that's a a really good one actually mate but turning to the literary field for a minute uh what would be the top book that you'd recommend listeners read and why oh jesus there's a lot there's a lot of really good ones you know market wizards i mentioned mentioned earlier like interviews with top traders um um yeah think and grow rich uh that was written back in 1937 uh it was a it's an interview of 500 of the the most powerful men in america of the you know back
01:30:46 in the the turn of the century all these great principles and um you know you know there's too many too many to mention to mention you know in an ambush um uh another great one the the millionaire next door like this was a great book for me because i read this years ago and it explain the difference to me between affluence and wealth. And I could see myself in the book. So affluence was me in the 1990s, young guy, lots of cash flow, high life, lots of, you know, the trophy assets like, you know, nice clothes and apartments, all that sort of stuff, but no wealth.
01:31:25 Whereas wealth is when you don't spend everything you earn and you actually start accumulating. So, you know, that's a top book, Millionaire Next Door. But I'll give you a really, I'll give you an obscure one, one which I can almost guarantee that none of you listeners have ever remotely have heard of. It's called Zen in the Martial Arts. It was written in 1979 by this guy called Joe Hines,
01:31:53 and he had connections with Bruce Lee and all that said. and um so it's not a book about not a book about um drills and technique it's all about mindset yeah and as um it's it's you know it's a funny story i uh so i found out about this i was in the car i was on the way to the shops and um uh justin langer was being interviewed on abc abc radio so you know justin langer the strong cricket cricket coach and former opening batsman and he's talking about his career and he said it was a tale of two halves he said the first half was just just marred with inconsistency i was in and out of the team i'd have a have a you know a few good innings and i'd then i'd you know get a few ducks i'd be dropped someone get injured i'd
01:32:40 come back he said the second half was completely different it's um my career just went from from strength to strength and he credited um you know much of that to this this book zen and the martial arts and it was given to him by a teammate when they're on tour and it's only short it's about 130 odd pages and it's a small book as well so you know you could you could you know you could rip through it in an afternoon and he said he'd read one of the chapters each each evening before before bed when he's on tour and then you know it's all these tight all these um chapters things like um conquer haste and lengthen your line and uh and my favorite one which which i just just mentioned now is one called even the masters have masters and it's about the um it's it's it's such
01:33:28 an elegant concept to sort of like having your mind it's it's the infinitely rising staircase and uh he talks of his um you know joe the author he talks of his um experience in the martial arts he'd said he'd have all these times of frustration where he wasn't wasn't improving and um and when these times would happen he'd go and watch the genius train he'd realize how far he'd already progressed and then he'd go and watch the black belts train and he'd realize how much better he could you know could become if he kept at it and uh you know eventually he's a black belt himself and he uh and then he goes oh look but my master is still higher than me and his master is still higher than him hence the the infinitely rising staircase and this is how we progress through life
01:34:17 like you're always if you're you know if you're doing it half right you're always progressing but we get to these plateaus in our lives where we look around and go well i'm not getting any better anymore i've kind of stalled but then you do that you look down look at those below you still look at those above you and then keep climbing the stairs get to another plateau and so on and uh yeah so that was from the great justin langer that um he thinks have transformed his career and it's a it's a concept which i've had in my mind ever since i read it years ago that that's how we get good at stuff. We go up that infinitely rising staircase.
01:34:52 Love it. That's just a great analogy to constantly be looking at how we can do things better and remind yourself of how far we've come. So that's a really good visual one. Mate, changing tack a little bit here because a lot of Aussies believe that they pay too much tax. What's the top legal thing that you've done to minimise the tax that you pay? Building a business.
01:35:14 building wealth in a business you can't don't think you can beat it because you um it's just so tax effective and you eventually if you can eventually sell it to someone later on you get the concessional rates and you know back at bankers trust yeah we got these bonuses which were you know it could be a multiple of your salary and you go wow look at all that and then again your account is like hang on that's half of what they told me it's um you get so it's hard It's a lot harder to get ahead when you're paying the top marginal tax rate. But if you're building wealth within a business, it's – yeah, look, it's an effective way to do so. No question.
01:35:56 No question. Now, that's brilliant advice. Mate, back on the investment front, what's both the worst and the best piece of investment advice that you've ever received? Yeah, yeah, okay. The best – the best would be get rich slowly. it's um yeah you know an older guy told me this years ago he said that you know lots of people want to get rich in a hurry but you know i've talked about you know using things like you know leverage and and you know big bets it usually ends in tears so you know get rich slowly it's um
01:36:31 you know it's a it's a it's a long race and uh the people who you know invest their money wisely it does compound and you look at those compounding tables and it accumulates amazingly but you've got to give it time. So don't go crazy, just get rich slowly. Brilliant. And what about the worst piece of investment advice? Just one of those glib sayings, you never go broke taking a profit. People bring that sort of attitude to the stock market
01:37:05 and it makes good sense. You never go broke making a profit. So people think, yeah, okay, I'm up 5%, I'm up 10%. Yeah, I'll take that now. I feel like I'm getting positive affirmation that I'm doing something positive, I'm selling something, I can see money coming into my account. Yeah, you never go broke taking a profit. That's good.
01:37:28 But it's nonsense because, like, I'll give you an example. Say you take 10 trades and you sell nine of them for a 5% profit. and one of them doesn't go so well and you don't have a strategy for exiting and it goes down to 50%, falls 50%. So you've got a 90% strike rate, but you're trading at a loss. So you can actually go broke taking small profits if that's your strategy because small profits, you're going to really struggle to pay for your losses, particularly if you have a few big ones.
01:38:07 So, yeah, let your winners run. Forget about taking small profits because you can go broke. It's the big wins that make the difference over time. Yeah, brilliantly said and a great example there. Thanks, mate. Mate, coming back to the habit side because it's what we think, how we feel and what we do on a day-to-day basis that ultimately determines what we achieve in life.
01:38:31 What's a personal habit that you believe contributes most to your investment success? yeah it's funny how we're all we're all wired up and um look for me for me i'm i'm a runner so i've been a runner since i was at school and you know i still get out and compete most weekends so i've done every do everything from like 800 meters through to through the marathon so you know um you know covered a few few of the different um you know distances and you know the the mindset of a competitive runner it's look it's an interesting thing and i think this would apply to anyone who who does any competitive sport it's because like you know we set medium
01:39:13 term goals we spend months preparing um months following a training plan and you know like you know the top competitor i'll get out there and train whether it's rain hail or shine it doesn't matter you've got to follow the plan and you know um you know an athlete will endure pain and they'll do this past the point of where most people would say, you know, look, this is not comfortable anymore, I want to stop, but they keep going. And, you know, everyone's seen pictures of, you know, runners staggering to the finish line up of a marathon or an Ironman
01:39:47 or something like that and they collapse and it's like, you know, they put musical backdrops and everything on the images they show because it's just, you know, it's like, you know, wow, look what these people are doing. and it's uh i can tell you from experience like you know running running marathons and the last 10 kilometers so marathons 42.3 kilometers the last 10 kilometers that's that's where all the action happens and i can tell you that is it is an absolute debris field you got you got guys propped up against street poles you got others down on their their hands
01:40:23 and knees um others will be running and then they'll just just you know stop and just vomit all over the road, it's just, you know, anyone watching the spectators must just be looking on going, these guys are from the Mart, from, you know, from the moon. It's, you know, it's just crazy stuff. But, you know, that's the runner's mindset and, you know, and that's what I do. I stick at things.
01:40:46 You know, things can be unpleasant but, you know, I stick at them and I keep going and, you know, I think back to, you know, you know setting up my first business and um and um seeing on the bus coming home each night after after work going you know is this ever going to take off are we ever going to get there and uh you know I was heading back to the you know the garage where I was staying at the time and um and you know that's um that's what you know a lot of people will have these moments and they go it's hard i'll stop but it's um and look they say that most people do stop just a step or two before success so i think that that sort of mindset that you keep going and you don't stop
01:41:33 um yeah having that internal drive to keep pushing keep pushing forward that that can that's transferable it's transferable from running to or from any sport to uh business or investment stock market uh yeah it's understanding how you tick 100 and then being able to channel that channel that into you know how you can make some money out of it you know and i spot on there i think the patience the persistence the resilience and the determination that comes from long distance running and you've been doing that for a long time on a regular basis then that does become habit which then transfers into everything else you do so it's the old self health and wealth integration that ultimately leads to sustainable success what you think what you do day to day
01:42:22 will then create the means for you to achieve the the wealth that you're looking to enjoying your lifestyle mate so i love the way you brought that together mate it's been an absolute pleasure uh we've we've talked for a couple of hours and we could talk for a couple more and we'll get you back to do that on and we'll deep dive on some specific subjects around the the the equities markets but uh final question mate if i gave you a microphone that spoke to every single one of the 7.7 billion people that are currently alive in the world and i gave you 60 seconds to talk what would you say now i don't i don't know i don't know bushy i don't know whether the whole world would want to get tips from another middle-aged white guy telling them
01:43:07 how they could improve their world um but but if i were talking if i were talking to my um to the to the year 12s at my old high school i can imagine talking to them i can i think i could add them add some value to their their world and i reckon i reckon what i'd say to them would be to you know step outside your comfort zone and you know because you know because really look you think about it step outside your comfort zone because that it's when you do that that's when you allow the magic to happen and and this is something i do with my kids so i get a piece of paper and i'll i'll draw draw a circle do a little stick person okay that's you that's you in the circle and and underneath right this is you in your comfort zone then draw a bigger circle off
01:43:57 to the top right not connected okay this is where the magic happens and you go well okay how do you get how do you get from where you are to where the magic happens and invariably they'll say look i've got to leave my comfort zone and and it's it's so true what we've got to do in life we've got to step out of that comfort zone and you don't necessarily need to you know leap out of it and it's a huge you know super um superhero bound but even if you just put your toe outside it you've got to start and because so many people stay inside their comfort zones and it reminds me of this great um great quote from the there's a former coach of the chicago bulls basketball team can't remember his name i can't i can't pronounce i think he's a french canadian
01:44:43 and he said you've got to get comfortable with being uncomfortable and that's so much easier said than done but if you can do that even you know you don't have to be mega uncomfortable with everything you do but you know if you're feeling a bit uneasy don't stop keep going because that's you know that's where the magic happens isn't it and you open up so much potential by doing so and also don't fear failing and i think so many people put off doing things because you know they worry they might fail and but you know what it's okay it's okay to try and not succeed because some of the best lessons that you're going to get through life are going to be through bailing like you know look at me being made redundant from bankers trust i thought it
01:45:29 was a disaster but it was a golden opportunity so you know don't fear setbacks and you know not not having things work and uh because that becomes the scaffolding for your future success and look the classic example would have to be you know edison and his thousand light bulbs because that's what they say they say it took him a thousand goes to make the light bulb and that's a i'll tell you that's a whole lot of negative feedback and uh bouncing back from that it's you know extraordinary but you know it's the people it's the people who do bounce back who tend to do really well and if you get to the point where you go look i do have to rule off on this it's not working you want to be able to say i've done everything i could i just you know i've given a
01:46:14 big crack i've done it done all i could because i think the worst thing you can do is to look back with regret and and uh and look i i reckon the worst four words in the language strung together are i could have been you know i could have been this i could have been that i could have been a contender but you know fear held me back i didn't want to put myself forward and and lastly i'd say take your opportunities because you never know where they'll lead and i just look at my own life and like I couldn't have imagined where some of the things I've done have taken me. And to close out with Edison again, it's another one of my favourite quotes.
01:47:00 You see, I collect these quotes in my head, the good ones, because they stick and they spur you on at times. He said, most people miss opportunity because it comes dressed in overalls and it looks like work, and, you know, it's just a cracker because it's right. It's like, you know, how often does an opportunity come along and someone goes, oh, look, you know, not just now, not right now, maybe, you know, next month or next year,
01:47:28 but the opportunity's probably gone, you know. The shot's there. You've got to take it, and that's what I tell my kids, and that's what I, you know, that's what I do myself, and it's, you know, so, you know, I'd say take your opportunities, do the work, and chances are you'll be glad that you did. Yeah, absolutely, mate. I often say, you know, know your edge and then live beyond it
01:47:52 because that's where learning lives. And life, if it's going to be interesting, fulfilling is always about continuous learning, mate. So, mate, you've shared some absolute learning gold with us today, mate. It's been an awesome conversation. I'll make sure that in the intro we reinforce the opportunity for them to take advantage of your free four-part video series just by going to www.motiontrader.com.au forward slash bushy
01:48:24 and there's a tonne of information that's really going to open your eyes to the opportunity that investing in the stock market is going to give you. So I really appreciate the generosity of your time today, mate. We will look forward to further discussions and we'll talk again soon. Thanks, Jason. Oh, fantastic. I've really, really enjoyed being on. And look, I hope I've added some value to people's day. And yeah, they can take something from it and it makes a difference to what they do. So Bushy, thank you very much. Thanks, mate. Talk again soon. Bye for now.
01:49:00 Well, Freedom Fighters, how good was that? To get a summary of all this investment gold in the show notes, just email me on hello at khgroup.com.au. It's H-E-L-L-O at khgroup.com.au or check us out at www.bushymartin.com.au forward slash Get Invested. I look forward to joining you next week for another episode of the Get Invested podcast. So thanks for listening and as always, dream as if you live forever and live as if you die tomorrow. Thanks for watching!
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