The Tucker Carlson Show - Jordan Belfort

Episode Date: December 30, 2023

Jordan Belfort, the Wolf of Wall Street, joins Tucker to talk about building your portfolio, going to prison and why he'll never trust Jim Cramer. Learn more about your ad choices. Visit megaphone.fm/adchoices

The closer you've been following your equity investments recently, the jumpier you likely are. A lot of Americans have concluded that the Wall Street game may be rigged, that the whole thing is kind of a scam, but there's still a huge amount of money tied up in it. Not just in individual investing, of course, but in pension funds. The whole world is tied up in the American stock market. So how exactly do you succeed in it as an individual? We thought the man to ask would be the man who's seen both sides of this business, legitimate and less than. Jordan Belfort, the Wolf of Wall Street, with a new book, The Wolf of Investing. And he joins us now to explain

how you can make a fortune on Wall Street. Can you make a fortune on Wall Street? You can, but it takes time. I think, listen, the mistake that people make is that the average person is that when you don't have that much money to start, let's just choose a number. Let's say just $10,000. Right.

It's a random number, right? You say to yourself, if I'm going to really get anywhere as an investor, I need to make a big hit. I get to turn that into like a million bucks. I've got to find the next Apple computer, the next crazy crypto token, whatever it might some wildly successful investment, right? Which leads you to engage in you know wild speculation short-term trading trying to time the market and the truth

is is the opposite you don't need to start with a lot of money to end up with a lot of money by doing the exact opposite which is holding for the long term and and all the highest quality stocks and in relying on long-term compounding and reinvesting dividends and making small contributions along the way but forgetting like you said the noise and people are worried about their equities this is the problem because as soon as you start buying into that like you know what i think the market might be going down or maybe it's going to go up next year you should the time that by buying and selling you create taxable events and also human beings by our nature we're kind of crappy stock pickers.

And when you try to pick individual stocks, you tend to lose most of the time. Okay, so here's what I'm gonna do. I'm gonna give you my investment strategy. And I'm gonna be as honest as I can be. And you assess it based on your expertise and tell me if I'm right or wrong. Okay, so I'll get down to my rec room,

big screen TV with my dab pen and my laptop, and I'll turn on Jim Cramer on CNBC. And when he tells me to buy, I buy. And if he says sell, I sell. Yeah. You're getting financially whipsawed. Is that working for me? No, it's not going to work. So I kind of buried Cramer in this book. I guess I'm not going on CNBC anytime soon for any interviews. Why would you bury Jim Cramer? I mean, this is a guy with an uninterrupted string of correct calls by jp morgan of this generation sam bankman freed's ftx listen the best thing was was interrupted string of terrible calls by oh listen he's had a lot of good calls because he's on both sides of the market he tells

you to buy one thing on monday and sell it on wednesday and back and vice versa this guy literally is telling you you they actually just study on this where they put up his recommendations of what he said on Monday and then on Friday, the exact opposite. Like one day he's saying the market's going up, next day it's going down, buy this, go from this sector to that sector. That's a historically, mathematically, scientifically proven to be the worst possible way to invest your money. They've gone back a hundred years, the scientific, the academic studies, and the analysts can't pick the right stocks. The hedge fund managers and the mutual fund managers can't beat the S&P 500, which is the overall broader market. And there's a reason for that because all the information is out there. So unless you have

inside information, which is illegal, right? And certainly the average person is not going to have that or some other way to beat the market, whether it's a high frequency trade with computers that are lightning fast so some of the big firms they'll time the market like a millionth of a second better than an average investor they get an edge but for everyone else you can't beat the market you just it doesn't work especially when you deduct all the fees, the commissions, and also the taxes from short term trading. So let's say, let's say a hedge fund returns 15% when you say that's pretty good, right? But after they take their 2% management fee, 20% performance bonus, right? Suddenly it's not even beaten the S&P 500 and that's a good year. Most of

the time they don't even beat it without their fees. So why would anyone hand money to a hedge fund so warren buffett asked this exact question back in 2007 made a big announcement that a million bucks that i don't care what are the hedge fund you want you can't beat the s p 500 over 10 years and at first no one took the bet eventually someone did with what's called a fund of funds it was a hundred different funds right and after year seven they threw in the towel they couldn't even come close to the s p and that was without all their fees and just so you know the fees they take so it's 20 typically is a performance bonus right right if the fund makes

money off the upside on the upside but if the fund loses money the following year they don't get any of the losses so it's heads they win, tails you lose, right? The mutual fund industry is equally bad. So they're engaging in, you know, basically asset gathering. Because what they do is they try to gather as many assets as possible, money, right? Because they get their management fees. But the returns on the average mutual fund are dismal.

They don't keep up with the S&P 500, which is America's 500 biggest, baddest, most profitable companies. So, and that, those 500 companies change. So not this, the S&P this year is not the same as it was last year. So what happens when you buy that index as the centerpiece of your investments, right? And just hold it. You're always having the 500 top high performing companies in your portfolio is very tax efficient. Now it's boring, but it compounds at about 11% a year. And guess what? If you invest $10,000, right? And just compounds at

11% a year, you put a little extra money in wherever you can each month, each quarter, right? Over 30 years, 40 years, it turns into millions of dollars. But I'm still caught up in the hedge fund idea. So Steve Cohen, Ray Dalio, all these guys are billionaires. Right. So the world's biggest art collection. So how did they get so rich if it doesn't work?

Well, for a time, it was like, you know, everyone thought, oh my God, they're so great. The hedge fund sold for many in the 90s and 2000s. Like the word was really like this mystique

that you had these really high performing hedge funds. And there were a few. There were a few people that actually can beat the market. Ray Dalio is one who's done it consistently. He's not taking your money. The average, when they really are good, they don't take an average investor's money. They train their own money

in a few very, very large institutions. So those funds are not open to the average investor. But then all the other hedge funds, which kind of suck, right? They're bathing in the afterglow of the aura of the hedge fund manager. We see like on billions, right? So you just like mystical hedge fund. Well, guess what? Most of these guys suck. All right. They're not beating the S&P. They're just not. It's historically proven. They don't beat the S&P. And they take these massive fees when they do win one year and they always get that 2 percent magically so watch what happens let's say you're

managing a billion dollars so before you even start it's 20 million a year you're getting just in a little bit before it even starts plus 20 of all the profits and when you take those and how about this i'll go one step further and also when you have a hedge fund you have to show activity because unless you're you can't just buy the s p and hold it someone will say well why then how about this, I'll go one step further. And also when you have a hedge fund, you have to show activity. Because unless you're, you can't just buy the S&P and hold it. Someone will say, well, why would I give you my money? You're not doing anything.

So they almost have to show activity to justify their existence, which makes them engage in short-term trading. And people, human beings are just terrible market timers. They, and this is just over, proven over a hundred plus years of studies that you cannot trade in and out of the stock market, buying, selling, selling, buying, this sector one day. So it's just a trap.

The way I look at it is this. So Wall Street creates massive value. They do. Wall Street's necessary. You can hate Wall Street, despise them for the things they do wrong, but Wall Street is necessary. They create massive value for the economy. They take companies public. They finance the growth of America. It's needed. They maintain the debt markets, the credit markets. That's the useful side of Wall Street, where they create

massive value. Then there's the not so useful, the dark side of Wall Street, where they create bubble after bubble after bubble, where they have instruments of financial mass destruction they create for just gambling purposes, where they churn you, they have excess commissions and fees and rob the public blind. So the question in the book was, how does the average person get the maximum exposure to the good side of Wall Street,

which is the great companies they take public and finance that become huge multinationals. So how do you maximize that, but avoid the corruption or the churning and the burning and the, you know, financial bubbles and so forth, right. And play into what I call the wall street theme machine complex, which is this advertising monolith where basically they convince you like people like Kramer to play the suckers game with actively, if you go on CNBC, they're all day long trying to convince people to play the short-term trading game, which is indeed a sucker's game.

So you go into a casino, right? We spoke about Kerry Packer gambling, right? So they own casinos, the Packer family, right? So in a casino, you go in there knowing that the odds are against you by what? 5% depending on what game you play. So the odds are against you and the house will win over time, right? That's a legit casino. The odds are against you.

But what if you go into a corrupt casino where they have loaded dice and are dealing from the bottom of the deck? That's Wall Street. So now not only are the odds against you because, you know, it's hard to pick winning stocks, but there's people who have information that's more timely than you. They're trading ahead of you. They are charging excess fees. And also you have all these publications and new chat in news with CNBC Bloomberg isn't as bad, right? Because they cater mostly to professionals, but still trying to convince

people that you know, you could somehow figure out when you should buy oil, and then sell your meta and then somehow go into a steel stock and then go into overseas. It's insane. It doesn't work. And people get financially whipsaw. And I saw

it myself, my own family member, very successful guy, I start my book off telling his story. Your brother in law. Yeah, he's a very smart guy. And he's why I watched his portfolio get decimated through short term trading and using margin all the things that they was he doing himself. He's trying to do it himself. And you know, following tips he heard on TV or

online and, and it just it is so simple. What happened to him? Well, he's thankfully successfully lost a lot of of money and then he learned his lesson and I showed him what to do the right way. And he now is building a proper portfolio for the long term. So I think the distinction is this, you can get rich in the stock market, but not overnight. It's just, it doesn't work. You can't do that. And if you try to get rich by engaging in short-term trading or picking one stock, you're probably going to end up in the financial poorhouse. So the solution I put in this book, which is ironic where I came from, right, because I committed fraud 30 years ago, right? So as you said, I've seen both sides, right? So the solution in the book is it's really very simple to build a world-class portfolio and secure your future.

Because I don't think you can rely on Social Security these days. these days you have to pay for your diapers when you're in a nursing home by the time you get it right so this is about you know empowering yourself financially and it's about doing less versus more not hiring experts less trading yourself less trade it's about investing as opposed to speculating now. There's nothing wrong with speculating It's fun, right and if you want to take 5% of your capital and speculate and buy and sell it That's great. There's nothing wrong with that now you encourage people to do that because it's good You can have fun with that. Maybe you'll make some money But that's not how you secure your retirement if you want to secure a great retirement

You start off young as possible, right? And it's never too late by the way And it doesn't matter how much money you have to start a great retirement, you start off young as possible, right? And it's never too late, by the way. And it doesn't matter how much money you have. You can start with a little bit of money. You don't need a lot. But the key is making little, small, regular contributions and not worrying. Just do an index fund? Is that what you're saying?

The main one is an index fund. You want to have an index fund, low-cost S&P 500 index fund. And you want to have it in certain types of accounts that are tax deferred whenever possible and so forth right then you also want to balance that out with some you need to have some bonds in there a small amount depending on your age right and on top of that some cash for an emergency and then if you want to speculate you can have let's say five percent for speculation but the key is this don't hire an expert. For example, we've been conditioned, this is the trap, right? So you're a homeowner, right?

So if your pipes in your house burst, you probably do a lot better off calling a plumber to fix your pipes than trying to fix them yourself, right? Right. Fair enough, right? If you have an electric short, I suggest you call an electrician versus trying to go put on rubber gloves and not get electrocuted. You'll get a much better result with the expert in that too. If you're sick, let's say your appendix is about to burst, right? Don't do your own surgery, have your wife cut you open, go to a doctor that's an

expert at doing surgery, let him do the surgery. Fair. Fair enough, right? That's true for almost all things in life, except Wall Street. It's the one exception to the otherwise pretty much steadfast rule about seeking out experts to help you get the best result. On Wall Street. It's the one exception to the otherwise pretty much steadfast rule about seeking out experts to help you get the best result. On Wall Street, they don't get you a better result than doing it yourself. They get you a worse result because of all the fees, the commissions, the performance bonuses, and also they can't outguess the market. The market is too hard to beat. Now, again, there's a few people that can do it. They're not taking your money. I want to focus on them for a second because undoubtedly they're the touts. They're the people who convince the rest of us that this works because they're so rich.

How did those people get rich? So if you look at a guy like, for example, like a Ray Dalio, he got in very early into the game, right? And he's an incredibly brilliant guy. He's a great stock picker. And whatever his proprietary method is or a Warren Buffett. Right. You know, there's a few people out there. And this is one of the great studies was from an economist named Paul Samuelson. Right. In the 70s. And this is really what started the shift into index funds. He did a study that went back 100 years, all the way to the earliest days of record keeping, right? He studied every mutual fund out there since the 1920s. All the stock recommendations since 1890s, right? And he came to the conclusion, he goes, okay, maybe there were a few people who could outperform the S&P, but they remain remarkably well hidden. He couldn't find any.

Couldn't find, this is like a top, like he won a Nobel Prize, the guy from this, right? So that was really the beginning. That was like the shot across the bow. Now, Wall Street did everything they could to suppress this. So the first guy to try this was Jack Bogle from Vanguard. You know, Vanguard, right? So Vanguard's a place, a great, great place

where you could buy the best index funds with virtually no expenses. I strongly recommend Vanguard, right? And there's a few others as well but jack bogle was the first right but when he started vanguard wall street went out in the ultimate smear campaign for like a decade suppressing everything about index funds saying it's the stupidest thing who wants to be average dreyfus which is a huge mutual company said no fees no, no way. Like actually in public, in the Wall Street Journal, full page, it's like,

if you don't, that was marketed to the people who were the gatekeepers to investors. So if they're not, because Vanguard doesn't pay fees, right? So if they won't pay your fees, don't put your clients in their funds. Instead, put them in our high commission funds.

We'll pay you a lot of money. So for many, many years, Vanguard languished and was suppressed, right? It finally got traction after the crash in 87. For the first time, all of a sudden, you know, the mirage evaporated when everyone lost a lot of money. And for the first time, Vanguard started to get a fair shake in the market. And then slowly but surely, they started to grow and grow. And then as the internet came about and the high-speed connections and platforms for direct communications with customers, it suddenly became a mass exodus out of these sort of high-expense mutual funds, right?

Which I think that Bogle saved the public probably a few hundred billion by now in fees. Mutual funds were ripping people's eyeballs out forever. Now, they still do crappy. Their performance is crappy compared to the S&P 500. But for years and years, they're just ripping the public's eyeballs. That was the most lucrative industry out there. And Wall Street just spent, you know, countless hundreds of millions on advertising campaigns and whatnot, right, to make people think this is the way to go. So you're Merrill Lynch is bullish on those commercials, bullish on America, right? Although, you know, T. Rowe Price, and I want to point the finger at any one of them, right? But now they all offer this ultra low cost index

options, which historically has outperformed people trying to pick individual stocks forever. It just outperforms people because people are really crappy at picking stocks. And also, you know, there's another part to it as well, right? Just trying to time the market. It plays into all our worst impulses. So like you said, right now another part to it as well, right? Just trying to time the market. It plays into all our worst impulses. So like you said, right now people are scared, right? And rightfully so. The world seems to be on fire. And I watch your podcast all the time and it scares me sometimes.

It's a scary world, right? So you would think that, okay, the U.S. economy is laden with debt, right? Which is true, right? It's got fundamental problems. China is going to take over the world right well when i was you know in just getting started was japan taking over the world which turned to be a fallacy and they had their own problems so i don't know whether china is going to take over the be the biggest economy it's going to surpass the united states i don't know if the stock market's going to go up down sideways around circles for the next five years i mean how do you

don't know anyone tells you they know that is lying to you. So to sit there and try to watch the news and trade against what's happening in the economy and what's happening in the world is a fool's errand. You're not going to succeed like that unless you're one of these rare individuals who's full-time as

a unique gift. But then again, though, look at all these massive companies that have been created in the last 20 years, like, you know, Google, Meta, right, he's huge coming that in the video with artificial intelligence. So how do you get exposure to all that? Without having to pick the winners from the losers? The answer is very simple. You buy them all in one investment, which is the S&P 500. And then

you sit back and let time do the heavy lifting for you. So you don't have to watch Jim Cramer at all. If you watch Jim Cramer for entertainment, if you like that kind of bloviating humor, good for you, right? I personally don't like it. The worst, even worse than that is if you watch Jim Cramer and you happen to opt in, like if you have to answer one of the emails on the website, they'll start barraging you with emails. I did this as an experiment. I was like, you know, a guy that injects up with the virus to see how sick you get, right?

I actually opted into Kramer's, you know, little thing online. And I started receiving a barrage of like 100 emails about join his special club, he'll alert you to what stocks are going up and down in real time. I mean, it's like, this is insanity, but this is a major network, right? That's, you know, giving investors crappy advice.

Now on the flip side, here's the weird part. They also have good stuff on that network. Like there's legitimate news and that's the problem. So they mix in legitimate news, great reporting, interviews with great CEOs, and you learn about the economy, what's going on in the world. But they intersperse that with like this market giving advice. And it's nonsense. People

can't beat the market. And I saw it play out with my brother-in-law, many of my friends back in when the bubble burst in 2008, and even worse, by the way, in 2000 with the dot-com bust, right? So every time the market busts out, all the bullshit gets exposed. Of course. And all of a sudden people thought they were expert day traders or expert market timers. They were like basking in the glow of just an up market. Like I say in the book, a rising tide lifts all ships, right? And a falling tide, well, it lowers all ships, right? So you see the truth come out as Warren Buffett says, you know, until the tide goes out, you don't know who's not, has no clothes on, who's swimming naked, right? So, but you said at the outset that there are people

who do succeed in the market because they have inside information. Right. It feels like there's a lot of that. There is. Yeah. How does that work? So I think there's different levels of it, right? There's like the full on criminal stuff,

like you saw in the movie, Wall Street with Gordon Gekko, right? Where like people are actually paying people in moles and stuff like that to get you know information that's not public paying off directors having inside links to the company or law firms that are doing deals right that happens for sure and people do get in trouble from time to time and go to jail right but martha stewart not exactly right but she was like kind of you know a fall person she sure was like i mean people did a lot worse than Martha Stewart. Right. I mean, why did they put her away?

You know, it's hard to say, but she's, you know, famous and she's a big target. And, you know, it kind of sucks when you're famous and a big target and they want to come get you. Right. Especially if some of your views aren't that popular. They want to come after you. Right. So but that's sort of the cliched type of insider trading where they're just literally buying and getting moles. And that's highly illegal then there's the softer side of it which is where these big hedge funds have these like analytical firms that are getting like research that's inside research so like for example they're like i had a friend who was a a very big short seller right and he actually had like people waiting outside of a warehouse counting the number of trucks that were leaving the

warehouse to try to like you get it to see how are they really shipping the amount of goods it's doing this deep type of research which sometimes crosses over into inside information so what what is the line i mean you're allowed to be informed you're allowed to be informed but theoretically you should not be in possession of information that is non-public everyone's supposed to have access to the same information at the same time to make a fair market right and generally speaking it's true for everybody all the average investors but there are certainly people on wall street i mean you'd be naive to think that you know an analyst in a special relationship says doing the investment banking deal so someone raises you know 500 million dollars for a company you tell me the ceo and the owner of that firm

are not like having little conversations little inklings here and there so i'm sure that's happening that's much more difficult to prove so it's a lot of it is buried under like you know guidance and financial reports so the issue in annals report right and you know the annals report will give sort of plausible deniability for why they think a stock is going up or down right but even then i mean i i think that's difficult to prove which is why you don't hear a lot of those cases no the sec doesn't seem to bring any well the seo the whole history gets seen in the book the sec is a ridiculous organization so it was conceived listen the first chem was was was jack kennedy you know or joe kennedy the original wolf of walsh yeah right so like you know The bootlegger. Yeah, from the beginning,

it was set up with a two-tiered system where the big firms basically were protected, right? And when they got in trouble, they did things so egregious that it was undeniably egregious, they'd pay a small fine and move on, right? Which is why Goldman Sachs, for example, right? Now, Goldman Sachs serves a vital function

to the US economy, and they're also behind every great crime or the biggest crimes that are out there, including movie that was you know the wolf of walsh was financed by these malaysians right the one mdb fund that scandal that was just coincidentally and who was the banker that that paved the way for that goldman sachs out of there i think was the malaysia or singapore office that a banker there that provided the funding and you know got double or triple the normal fees for doing it and that money got siphoned off that's classic wall street so on one hand they create massive value on the other hand they rape and pillage the village and it's the average investor

and the average person that bears the brunt of that the bailouts and subpar returns so just to follow up on the wall street investment firm, I mean, information firms, research. Yeah. I mean, everyone uses those, correct? Hedge funds are very much using them. So they got in trouble, though, in the past. In some cases, they pay employees or former employees of companies to talk about what's happening inside the company. Right.

And that's very common. Yes. So that's simply lobbyist. How is that not in center trading? I've always wondered. Well, again, it's not, if someone gives you an overall, you know, sense of what's going on,

that's like nothing that's not out in the public domain, but it's sort of like an insider's perspective versus information on like, are sales going down? Is there a problem with manufacturing? It's not public, right? So that's when it crosses over the line manufacturing? It's not public, right? So that's when it crosses over the line and it's a gray area, right? But it's very common in hedge funds to use these research firms that go out there and get non-public information. And there's

a very fine line, like a drug trial, like there's a drug trial going on. Like, you know, how do you know how the drug trial is performing? Well, if you're, imagine calling up all the people or interviewing people that are in the drug trial and trying to figure out yourself, or people are intimately involved with administering the placebo studies or double blind studies, they're all over that stuff. It appears that members of Congress consistently beat the S&P 500 in their personal investment. Nancy Pelosi. And a lot of others. Pelosi especially. She's the famous one.

Yeah. So how does that, is Nancy Pelosi, do you think, a stock picking genius? No, she has to be operating on information that's non-public. Wouldn't that make her a criminal? Yeah, but, you know, look at Joe Biden right now. I mean, look what's going on right now. Listen. Do you think he's a good stock picker? Joe Biden?

No, I think he's great at laundering money, though. Yeah, apparently. I mean, honestly, from what I've seen right now, I don't get it. Just imagine if it was Trump who was president. Yeah. Every single day on the front page of the New York Times, the Washington Post, and every other publication would be like $40,000 check for $20,000 check from his brother.

It'd be game over. Cries for impeachment. Oh, yeah. It'd be like the world falling down. He's in China's pocket. But it's like we're living in an alternative universe right now where people in power, especially on

the left, right, can operate almost with impunity. And Pelosi is a perfect example. She's not the only one. But it's inconceivable that someone could have that high return on the market when everyone else can't do it. So what's the edge? The edge is she knows about key legislation. Also, you know,

maybe someone's whispering in her ear, okay, because, you know, they want to be on our good side, right? So it's hard to prove that. But it's just prima facie. So if what you're saying is true, and that is that the most sophisticated people in the world can't beat the S&P average, then any member of Congress, and I think they are on average dumber than the population. Especially the career politicians. For sure. There's no possibility they could do that with that inside information. No, it's not possible. But again, so how do you go proving that, right? They have to issue subpoenas. And listen, I think that in this case, the solution is they shouldn't be allowed to trade these people. They should not be allowed to trade. It's insane that they're allowed to.

And, you know, as you said, it's prima facie. Right. You know, if it looks like shit, smells like shit, well, guess what? Yeah. It's shit. Then that's, you know, or it's bullshit in this case. Right. So, listen, she's done incredibly well in an area where, like, the most professional investors struggle to even match the index.

So somehow she's doing three times as well. I don't know. Why is no one ever taking that seriously? I mean, this is like a feature of internet memes, but I don't know. I mean, don't we have an SEC to look into that? I mean, what? SEC is not going to look into that sort of stuff

because they don't want to make an enemy because they're funded. Who funds them? You know, they're funded by Congress. The budget's tied to Congress, right? There's a committee that's, it's the um financial services committee right so that that funds the sec but how does it make you feel i mean you got in a lot of trouble for fraud but i deserved it so like right but so do they yeah i know but like i i never one thing listen

i admit that after 2008 i got a little bit bitter i was like you know what these people had bankrupted the world economy yeah and no one went to jail, basically. Someone snuck in Germany and went to jail. So I was a little, I said, you know what? That's not really fair. But, you know, I don't think it's, you know, an empowering way to live. To say, just because, you know, I went to jail, other people should go too. I think jail is a terrible place, right?

And, you know, I did my time. And I made the best that I wrote my first book in jail, right? Which turned out to be a great thing. But, you know, I learned from that. But I made the best that I wrote my first book in jail, right? Which is turned to be a great thing, but you know, I learned that but I don't then wish it on How did you I mean a lot of people go to jail few write books. How did you how'd you do that? It's a great story. So believe it or not when I go to jail, right? How old are you? I was 41 years old. Yeah, it's a terrible time to go to jail, right? I lost everything, right? Two kids? Two kids at the time, yeah,

which was breaking the news to them was the most heartbreaking thing ever. I mean, like literally, it was like too much crying. I still get emotional about it, right? I bet. And I had to tell them, like, you know, Daddy made mistakes, and now he's hysterical.

They were 11 and 9 at the time, right? So I go to jail, and it's not the worst jail in the world. I'm not now he's in the hysterical they were 11 and 9 at the time right so um i go to jail and it's not the worst jail in the world not worried about slipping in the shower so it's like a minimum security but jail sucks right who's my bunk mate tommy chang from chichen chang what was he doing there so he's there for selling not marijuana but bongs it was the most ridiculous thing ever so he's doing a year in a day a year in a day for selling bombs i'm like like he's doing a year in a day for bonds i should probably get 3 000 years compared to how long did how long were you serving i had 22 months yeah right so he's there for a year and a day and you know the first few days you know there's not much to just tell

each other stories and i'm telling him stories about my life the insanity and did you know who he was of course yeah they put us put us together and we shared a cell. Yeah, because I think we were both high profile so they just put us together, right? So they could watch us both at once, right? So in jail as in normal life, all the famous people know each other. Basically, right. So he's a great guy and he was writing

a book at the time and I'm telling him stories and he's just rolling, just laughing hysterically every night, right? And the third night he's like, you know, I thought you were making this shit up. But my wife Googled you. And it's like all true. In fact, your sister knows you from the time of her father from back in the day. He was a friend of mine, right?

He's like, you actually sank the boat. You crashed these cars. You did all this insane. You made all this money and all these drugs. He goes, you have to write a book. And I'm like, really? You think my life's exciting like because when it's your life no matter how crazy your life is it's yours you don't of course right

you think it's just normal i'm like he's like i'm tommy chong i think your life is just insane he goes write a book so i started trying to write and i was a terrible writer terrible i couldn't write anything i've never written before like that you know it's like a month i'm like oh this is just not working i go to the prison library, I stumble upon a book called bonfire the vanities by Tom Wolfe. Of course, I pick up this book. And I'm like, Oh, my God, I want to write like

this. So I plowed through the book. And then I started with the yellow highlight. And I use this book like a textbook. And I taught myself to write by modeling Tom Wolfe. So it's like I had a model now and i spent about three months just every i mean every metaphor how he used grammar how he described locations

how he used conflict and i really started to see my writing dramatically improve so i wrote about a hundred pages when i was in jail and then i ripped them up i didn't think they were good enough i got out of jail with no pages but i had a skill now right so when i got out i was like you know i don't know what to do with my life and i was like maybe i'll just start trying to write again right so i wrote about 12 pages and i'm like wow i think those are really good like i thought they were pretty good and i hate my own writing always right it's like when you write you it's very like you always hate what you write right so i'm like i think this is pretty good i sent to a few friends and they're like laughing like oh my god it's the funny i'm like really so I sent

it to a book agent I knew very casually just a casual friend right so I call him say I want to you know write a book he goes oh great let's get you a ghostwriter well I want to write myself he goes can you write I'm like I'll send you the pages I sent 12 pages next day he calls me back he goes did you pay Tom Wolfe to write those pages it was like that close to Tom Wolfe's voice my first draft, right? I'm like, no, no, I wrote it myself. He's like, it's really good. He goes like, write 10 more pages. So I said, all right. So it took about a week to write 10 more pages. I wrote another 10 pages. I sent him the pages, 15 minutes later he calls, he goes,

stop everything you're doing. You have no idea what's about to happen to your life. This book is going to be a master hit, master hit. I'm going to get a movie made about this. We're going to get Leo DiCaprio to play you, right? I mean, right from the start, right? I was like, I thought he was delusional, right? But I didn't have much going on back then, right? So I was like, screw it. So I holed up and literally I had a little tiny apartment and I spent one

year just like doing 18 hours a day writing the book, The Wolf of Wall Street, right? About on page 60, he took it down to Random House who bought the book. I got a nice advance so I Wolf of Wall Street, right? About on page 60, he took it down to Random House, who bought the book. I got a nice advance, so I could at least live, right? And then when the book was finished about a year later, it went through seven edits, because I overwrote it. Got it from 1,000 pages down to 500 pages. And then when it was still a manuscript, it became a bidding war between Brad Pitt and Leo DiCaprio. Yeah, it wasn't even a book

yet. I know, it's crazy, right? And then, you know, Leo brought in Scorsese. I always loved Leo, so I sold to Leo and Scorsese after a nice bidding war, and so began, you know, the story of The Wolf of Wall Street, what happened with the movie. And then there was a delay, by the way, for five years, because that was 2007, and then the writer's strike hit, and it got delayed, which ended up being a great thing, and this is really empowering for all the listeners. I'll tell you why. Because when I, when they wrote the script, when the script was done by a guy named Terry Winter, who adopted the book, he did an incredible job. The first draft of the script was amazing, right? But it ended with me in jail, like, because I went to jail and got out, right? And that was the ending of the movie, of the script,

right? There was this delay then for four years after the writer's strike. And during those four years, I got very wealthy again, going out there and speaking and training entrepreneurs and teaching sales, right? So finally, four years later, when Leo called me, because we're ready to go, he came back to my new house. I was living in a mansion on the water. He's like, what the hell happened to you? Like in four years, I was in a tiny apartment, now into a very nice house again. And like, oh, I'm doing this stuff around the world. I showed him my clips from live on stage. He's wait till marty sees this he's gonna go crazy they rewrote the third act of the movie and made it a comeback story so that's yes i kind of rewrote my life story when were you happier at the peak of your success pre-conviction or on the comeback comeback i was never happy

before why number one i was a massive drug addiction yeah like i'm literally massive drug were on the comeback? Comeback. I was never happy before. Why? Number one, I was in massive drug addiction. Yeah. Like, I'm literally massive drug addiction. What were you using? Quaaludes and cocaine. Quaaludes?

Quaaludes, yeah. Is this the 70s? 70s. You know, I... Where'd you get Quaaludes? I'll tell you how. So when I got really wealthy, you know,

they made them illegal in the United States. Yeah, right. A long time ago. But, but, in Switzerland and Italy and Spain, we were going country to country

and like buying out the pharmacies of all the ludes from overseas and bringing them back into the United States. Just not to sell them, just to take them, just to eat them all. We weren't dealing with them, just consuming massive quantities of these quaaludes, right? And I got so wildly addicted.

I was taking about 10, 12 a day. You get very addicted. Yeah, yeah. And like one of them would knock out a 200 pound Navy SE for eight hours i would take four and walk around like what so what was the appeal of that you know um euphoria the incredibly euphoric they get this like the first you get this tingle phase and then you get like the slurs and the happy drool phase you get to the drool phase and, it's incredibly euphoric. And then I said, well, I'm getting...

What's the drool phase like? The drool phase is when you're drooling as you're talking, but you're like, well, drooling's not a big deal. Baby's drool. I drool. And when you're slurring, you're like, baby's drool. I drool. He's always a justification. But then the problem is the fourth phase is unconsciousness.

Baby's drool. That's great. That's the best justification I've heard. Phase four, though though is unconsciousness, which is a problem. So what do you do then? Well, a responsible drug act will then take cocaine to make sure you don't go into a course, right? So I started to balance it out. The yin and the yang, come on. Cocaine, which is great, works great. The problem is cocaine makes you anxious. So I needed Xanax to get rid of the anxiety, right? So I take Xanax to call the anxiety, but then I still

needed something to kick me over the edge with sleeping. So I took some Ambien to sleep and then some morphine for the pain I had. And before I knew it, I was taking 22 drugs at the same time. It was like a human petri dish, right? And I was just incredibly high all the time. I know I'm very lucky. I know. I don't, you know, I always wonder why I didn't have any permanent damage yeah right i think most of it was not a big drinker i think alcohol is like that wild card alcohol and quail's would kill you yeah it's a wild card it's like gasoline on the fire so um i was very fortunate i got sober in 97. how went to rehab i went to rehab i got what's withdrawal like from quail's not bad it wasn't that bad you know it for me it wasn't so much withdrawal like from Quillen's. Not bad. It wasn't that bad. You know, for me, it wasn't so much

withdrawal was the problem. It was more like just I needed like an adult time out. I need if I was so done with it. Like I think you know, people can get sober in rehab. People can get sober in the rooms of alcoholics anonymous, right? You can get

sober anywhere, but you have to be ready to get sober. Yeah, if you're not ready, right, you could be in the world's greatest rehab and you'll just relapse you'll run out you'll climb over the wall as soon as you got your use again. I was done.

I like my life was so out of control. I had my kids were starting to get older now they're four and five years old. So I was like, I got to end this. So I know I was very happy to stop using drugs, right? So that was in 97. I had a problem in 2009, where I had some terrible run of like five surgeries in this shoulder and five soldiers in this shoulder. I had really bad back, the whole thing. So I was taking Vicodin from the doctor, from the doctor. Right. And then I got off of that and went

on something called Suboxone, which is a disaster in its own right. But I could function on it. And then I finally did Ibogaine, you know Ibogaine? Yeah. And I got completely, that was not. How did that work? Well, you know, I was on this low dose of Suboxone for like 10 years. And it didn't affect me,

but it's like, it's just not, who wants to? Why did they do that? Because the pharmaceutical companies make a fortune with it. So they get everyone addicted to opioids.

Can you explain, yeah, what that Suboxone, how it works? So Suboxone, so what happens is with the opioid crisis, right? Everyone's taking Oxycontin and Percodan and Percocet and Vicodin and all these, right? And they're giving them out like they're

candy all over the place, right? So there's this massive opioid crisis, right? When they realized that, especially Oxycontin and Fentanyl was so addictive and people were dying, they said, we have to have a solution. So they put people on something called Suboxone. Suboxone is what they call a partial opioid agonist, meaning it binds to similar receptors, but it doesn't really get you high. And you can't really, it's very hard to overdose on it. It's like the modern methadone. Exactly. It's exactly what it is, right? So it's much more long acting and you could be on it and no one knows you're on it, but your mouth may be a little bit drier and so forth. You're a little bit tired or at night, but generally speaking, if you're on it, but your mouth may be a little bit drier and so forth. You're a little bit tired at night.

But generally speaking, if you're really careful, then you can live on that. And it's not the worst thing in the world. Does it affect your cognitive ability? Not at a very low dose. But the problem is most people don't stay at a low dose. They go up and they go up because they get a little bit of a high from it. So they abuse Suboxone and it's like a life sentence. And it's like you're not good for your liver.

You're taking an opioid, right? Yeah. So I was on that for a long time at a very low dose and fine saying, you know what, I'm just I want to be up. I don't want anything in my system. So I went and did ibogaine in Mexico in Cancun, which everyone, you know, heard ibogaine ibogaine is a naturally occurring plant right in Africa hallucinogen. It's a very powerful hallucinogen. But for some reason, it binds to the same opioid receptors

as morphine, right? And, you know, Vicodin, right? And it resets them. So there's this weird thing. It resets you. It brings you back to pre-addiction. So when you're done with this 12-hour nasty, scary... I mean, this trip is scary. What happens? It's not fun. I'm like, I'm seeing... Where did you do it?

Hotel River? I did it in a in in Cancun called beyond which is a great I mean, I'd recommend this place to anybody was amazing. And they really did an amazing job. Very safe. Very easy. All doctors, supervisors hooked up to a heart machine because it can be taught on your heart. Right. And, and they really like support you emotionally, right. And when I did this, what happens? You take it I didn't show a guy trip the scariest, ugliest, like terrible trip but like i was so i was petrified before i started by

that because you hear all these horror stories about eyeball game right well like you're seeing your you know dead people talking to you and your father has talked to you from back you know my father's passed away right so uh you see all these visions and stuff and you hear a lot of noises and like bugs it's terrible um and was it as bad as you thought? It was pretty bad. I was petrified. I'll admit it. The whole time? The first six hours was brutal.

The second six hours, it was like, get me out of this room. I want to be like Diaper Boy. I want to do a primal scream, right? But what I did feel... No, no. It was scary as shit.

I'm telling you, it is not fun at all. Right. But I did feel it like burning out my wrist. I could feel it, my brain working. Like I knew it. Like I knew as it was happening, like I'm done with it. Like I'm not going to need this stuff anymore.

Right. So anyway, so after it was over and I recovered like 12 hours, I got out. I never did another, you know, any morphine or any narcotics ever again that was it it's done amazing yeah it resets your receptors did it affect you in any other ways um you know some people i think have more more of a spiritual journey um because it's great for ptsd as well like for veterans right so right now they're trying to fund studies for veterans it's very helpful ptsd right i i didn't think it made that many changes in me. I was in a pretty good place when I went in there.

I just literally had a physical, like a physical addiction that if I didn't take this stupid drug, I'd get uncomfortable. And I didn't want to have that. Like I'm traveling all the time, right? So for me, you know, I didn't feel like I made any profound changes other than that, you know, for the first 45 days, I had to learn to be like completely sober again. So it was, even though I had no physical withdrawals, I had some post acute, like mental, I just didn't feel great.

But then after like 45 days, and suddenly all the clouds lifted, and I, you know, felt terrific again. So it was an amazing gift that I gave myself. And I would strongly recommend this to anybody who's suffering from, you know, opioid addiction right now. It's certainly a better solution than Suboxone. And, you know, for me, it was life-changing. So it's great. And so you've never been tempted to go back to anything ever again? No, never. No. But I mean, I wasn't even, see, the thing was, I wasn't using Suboxone to get high. It was just a maintenance thing because I got addicted to these damn painkillers when I, after my surgeries, right? So I was using it at a dose. It wasn't like I got addicted to these damn painkillers after my surgeries, right? So I was using it at a dose.

It wasn't like I was trying to get high. So I guess if someone was like reluctantly put on Suboxone because they were like a drug addict and it was, you know, they just had to because their life was so out of control. I guess they'd have to probably work through some therapy as well afterwards. But, you know, I think that it's really helpful for that too.

In other words, some people that go through ibogaine when they they emerge, they're like they get this new perspective on their life. And why would I ever want to use opioids again, it's like disgusting and terrible. So but it is incredibly powerful, like is not no joke, is no joke by the time try ketamine, you know, like it's a great thing for that use ketamine to expand your brain. I've tried other hallucinogens. I've tried mushrooms, right? You know, Ibogaine is in a

class of itself. It's like not like no one would ever abuse Ibogaine. You know, like you're not doing Ibogaine. Let's have a fun trip on Ibogaine. It's like, no, it's like, you know, it's like, let's go to the crazy house and like, you know, hold off and be alive for 12 hours. And then all your addictions are gone. And it really works. It actually works. That is wild. Yeah. Do you keep in touch with anyone you were on Wall Street with? I do, yeah. I still keep in touch with some people.

From time to time, I speak to Danny, the Jonah Hill character. Other people that might... Mostly people that were my good friends before, I still speak to. But a lot of people were like... We employed about 4,000 people at Stratton over the years. Probably more, like 5,000 or 6,000 people. And a lot of people were like you know we employed about 4 000 people at stratton over the years probably more like five or six thousand people and a lot of them you know they come and go i run into him from time to time but you know my new life is very different so for the last you know since 2009 right i've been out there coaching and you know mentoring entrepreneurs and on how to build businesses and how to do sales and increase their you know marketing capabilities

right and i never talked about wall street never like i never wrote a book and that was really my and on how to build businesses and how to do sales and increase their marketing capabilities. Right. And I never talked about Wall Street. Never. Like I never wrote a book. And that was really my core competency. Right. And what really made me do is honestly, it was my brother-in-law when I when I kind of just saw him like just getting whipsawed. I'm like, you know what? There's two sides to I think to retiring and being wealthy or at least comfortable. One is you want to make money when you're in your working years, right? So we all have to do that and you want to make as much money as you can, hopefully doing something you like. That's part of the equation, right? The next part is what do you do with the money that you can save from all the hard work? How do you put that money to work in a very safe, responsible way that's going to outpace inflation

significantly, that's going to compound and inflation significantly. That's going to compound and allow you when you're ready to retire, have an amazing life. I believe that people deserve that. So I look at this book as it's a gift. If you read this book, really, it's such, it's a, it's like a blueprint and it's really simple. It's like not that complicated, but, you know, I knew that if I wrote the book in a dry way, people would not read it. So I wrote it in a very funny and more story. So it'd be really engaging. But as you go through that, you get this,

what I consider to be a turnkey formula for a portfolio. Can I ask a dumb question? So the S&P 500 is 500 stocks. Right. But they're not all in the same tier. Right. At all. I mean, they're thriving, emerging companies

churning out a lot of profit, and then there are a lot of older industrial companies that aren't. So why wouldn't you just make your own S&P 15 or 10 or 50? Why would you? Which ones, though? And how do you know which ones are going to win and which ones are going to lose?

So here's the thing, right? Human beings and even analysts, I mean, anyway, even experts just that's terrible at picking the winning stocks. It's too hard. So you're just imagine everybody is trying to do the same thing. What's the next winner? What's the big winner, right? So all the money is chasing after this is pool of shares, right? So the question is, you know, any given moment, you know, the way you know, right? So the question is, you know, at any given moment, you know,

the way, you know, economists would say is that the market is fairly priced in this moment based on all the available information that's out there. Yeah.

This is what every single individual stock is worth, right? Now, over time, right, when you buy the S&P, now remember, the S&P 500 is the 500 biggest, most profitable companies

in the U.S. They're in 10 different sectors, but the S&P, the index 500 biggest, most profitable companies in the U.S. They're in 10 different sectors. But the S&P, the index committee, every quarter will meet and say, OK, based on the U.S. economy, is the weighting of each sector correct? Do we have enough in information stocks? Do we have enough in industrials? How about healthcare, right? So if you go back like 30 years, industrials are one of the biggest sectors out there.

But then we exported our manufacturing base to China, right? And suddenly the financials become really big and also especially computers and information and healthcare. So the biggest ones are now healthcare and computers, information technology, those are your biggest sectors. So what happens is the S&P will reweight itself every quarter to match the US economy and any of the companies that are either underperforming, right, or becoming less relevant to their sector will be replaced by companies that are doing better and are more relevant. So you have at any given moment, the 500 best companies all done for you for free by the S and P index to be who's selling that information making money in a different way. They don't make

the money you can't invest in the S and P index because it's an index. You need a fund. So there's a very big difference because when the S&P first came out, you could only watch it. There was no way to invest in it. It was like a benchmark. How am I doing compared to the S&P? You couldn't buy it. You'd have to go out and buy each of the 500 stocks, which is cost prohibitive. And you could just time prohibit them as well, right? So when the first S&P 500 index fund came along it allowed people for the first time ever to buy all 500 companies in one trade right which is incredibly tax efficient and time efficient now what else happens once a company goes into the s p all the institutions have to buy it so there's almost a self-fulfilling prophecy part of it as well right

so if you have information, like inside information, you're one of those rare people that can somehow, like one in 10 million people or 100, that can somehow figure out which stocks are going up are going to beat the S&P. God bless you, right? But my chance off to everyone listening is that's not you, right? You're not going to be able to beat the S&P.

You don't think that's me? Even with my Jim Cramer strategy, you don't think it's me? You're so much, so much talent as a speaker. God would not give one man so much talent. Fair, fair. Right, right. So anyway, so, so I really, it's been proven, like, I'm not just saying this. It's like, it's been proven by every study. When you read the book, I go through every study in a very funny way. And then when you, like, the last chapter is called Meet the fuckers. Instead of meet the fuckers, I call it meet the fuckers. So who are the fuckers? Well, the fuckers are the Jim Cramer's of the world. These are all the

fuckers who are out there. And he's just one of all the online, the Charlton's on TikTok. These five stocks about the moon. I mean, come on. Like this stuff is littered all over the internet trying to bait people into making stupid investment decisions that are self-defeating. It's the seminar guy who tells you to buy the magical trading system that's going to beat the market. You could turn $50 into $5,000 in three months in your bathroom from home with my album. Well, if it's so great, how come you're not using it yourself? Why are you freaking walking this? It's so ridiculous, but this is what people fall for it, right? Yeah, they do.

All the time. And they end up getting destroyed. And you know when it really hits them? When they're 55, 60 years old. Exactly right. And they don't have the money they should have. If you follow the advice in this book, which is arguably the best advice, Warren Buffett would give you this advice, seriously. It's an arguably great advice. And that is to play the long-term investing game, relying on compounding.

Meaning you start off with a small amount, as much as you can, right? And then add to it a little bit each month, whenever a small amount as much as you can right and then add to it a little bit each month whenever you can as much as you can and then also reinvest your dividends so when you get quarterly dividends because the sb pays a dividend reinvest those as well and just forget it don't worry about what's going on in the world like you say the us economy is going to go to okay maybe Okay, maybe it will, maybe it won't, who knows. But here's the deal. No matter how shitty the US economy gets, you still have really big companies out there that are raping and pillaging making a fortune out there. Like even the S&P 500, half the business is overseas. They're multinationals, right? So you're getting overseas exposure as well. And you know, listen, I'm also as much as America is broken, I still believe in the

American system of capitalism. I've traveled the whole world. I've never seen a country where they had this like the drive and the ingenuity that we have the US is a special place. Okay, what's wrong with it? I agree. I special place and also

compared to what is the best bad option out there, right? So I really believe and then also there's a couple other investments you want to make to balance out risk, right? You want to have a other investments you want to make to balance out risk. You want to have what's called a bond fund in there. But again, none of this is about trying to pick which bonds are going to pay more than others.

You can't do that. You're trading against bond professionals that are going to rip your eyeballs out every time you try to beat the market. So you want to be engaging in these index, let's call it passive investing. Not active, passive investing. It's Not active. Passive investing, right? It's exactly the opposite of what I told people to do when I was in my 20s. So if I could sum up your advice, it would be ignore the experts and be passive, not active. A hundred percent.

Ignore the experts, especially Jim Cramer, by the way. I'm not, I call him a carnival barking ass clown. Okay. But I mean. That's totally fair. It's fair, but it's totally fair. And everyone you see, like when I was doing my legal vetting and they got like a little problem there like at least once a day i watched jim cramer on sam bankman freed so just to make myself feel good that's enough well that's

another story to slide the whole crypto world right with sam backman freed so he got you know that's what i i knew that was gonna happen i think i was asked by maybe a year but what's gonna happen with sam backman said this guy's gonna go to jail's going to go to jail. I don't think he deserves life in jail. No, I agree. But, you know, he's probably going to get 20 years. Very few people deserve life in prison. You know, but he's getting for a world of pain. The people who started the Iraq war do.

But other than that, I agree. Jordan Belford, thank you so much. My pleasure. Great to see you. Thanks. Thank you. Take care.