Join Our Community – It’s Free!
David puts Tryone on the hot seat asking him the tough questions that most investors are not wanting to be asked. Tyrone does a great job answering questions and handling objections. He has a free eBook that you can download on his website TheWealthyInvestor.net
- How is investing like dating?
- What are the principles of Participate and Profit?
- What are the barriers to entry for participation in the Stock Market?
- Why is the conventional wisdom when it comes to trading stocks successfully all backwards?
- What makes you the “Sesame Street Investor”?
- Why is the Stock Market less intimidating than it seems?
- How can a smart investor keep from being burned by market volatility?
Tyrone Jackson, The Wealthy Investor, is a trusted stock market trader and best selling Amazon.com author, who has built his reputation on his unique ability to simplify stock trading and investing. He is also a mentor and trusted wealth building coach to major Silicon Valley and Hollywood producers. Tyrone is a frequent guest on radio and TV shows and has been quoted in the Los Angeles Daily News, CBS MarketWatch.com, Newsday, the San Francisco Chronicle, and StreetIQ.com
Tyrone: Hello there, I am thrilled to be with you.
David: Great! So Tyrone is a trusted stock market trader, he is a mentor and a best selling author, who has built his reputation on his unique ability to make stock market trading and investing accessible to people without a financial education. So Tyrone, tell us a little bit about your business, and what exactly you do. You were with the Wealthy Investor, is that correct?
Tyrone: Yeah I created a program called the Wealthy Investor. When I grew up I was always curious about money, who had it, wealth building, financial freedom. The one thing I can tell you, Dave, no one in my family actually had financial freedom. So I know I didn’t want to be like them. I was always searching for a way to do it, and like many of your listeners, I started out as a real estate investor. The only thing is, and this is really bad if you’re going to be a real estate investor. I didn’t know anything about real estate, like the repair side of it. The roof, a boiler, floors, kitchens and bathrooms and plumbing. Turns out I wasn’t very good at it. But I liked the residual income part of it. It was interesting because my father said to me after I got my first property he goes, you know you should try the stock market. I was like, what exactly is that? How does that work? He goes, well there are ways to make money on the stock market that are similar to creating residual income with real estate, and you should try it. He got me some books and tapes. I learned the language of the stock market, and I learned how to create residual income the same way someone might do it if they were actually buying and selling real estate.
David: Okay cool. So my business currently has over 50 rental properties. We bought and sold over– I guess we did 97 houses in 2018. In 2019 we are on pace to do more than that so far which is awesome. We do a little bit of buying and selling, we do wholesaling of course, that is kind of what we focus on with this podcast here. We do fix and flip and have residential property that we rent out– that generates cash flow and passive income. So I am very well versed with all of the sides of real estate. But, I am interested in picking your brains today about the stock market. I have invested in the stock market. I have invested in the stock market in the past, numerous different ways. I have made money, I have lost money, I have broken even on deals. So I am curious to hear a little more about some of the things that you are doing with your business.
Tyrone: Okay well first of all congratulations. I love the success that you’re having in all aspects of real estate. So that is to be saluted, you guys are amazing. What a lot of people don’t know– if they are buying real estate for the income part of it, right? Most people will buy a house, fix it up, rent it out, pay the mortgage and the taxes, and keep the excess cash every single month as positive cash flow. What a lot of people don’t know is that you can do something very similar in the stock market with large degree of frequency and speed, if you learn one transaction, Dave. That transaction is something called [00:04:46.11 – inaudible]. So if I buy a house, right? I’ve got to find the right property, get an attorney, get my funds together, my financing etc, etc. Clean up the house and get a tenant in that is credit worthy and going to pay the bills. Well I can do the same thing with a stock, let’s say Nike, right? A stock that is on its way up, it is rising, I can go out and buy 100 shares of Nike, and just like that, a rental property in a sec, loan out my stock to someone else. They are going to pay me for the right to buy my stock at a later date, and I am going to pull residual income, the same way I can do it will a piece of property.
Now, this process is called riding a [00:05:34.02 – inaudible], or selling [00:05:36.21 – inaudible] options. As soon as I buy that stock, I am buying it for what specific intent? To turn around and sell those shares at a profit. The only difference is I can do this transaction from anywhere in the world. Just by simply selling the rights to my shares, I can early $1000, $2000, $3000, $5000 a month consistently, the same way I would rent out a property. The only difference is I don’t own a house, I own shares in a major [00:06:05.19 – inaudible] component in the stock market. That is essentially how it works.
David: Okay, very interesting. So with my business we use the BRRRR strategy, so we are essentially getting an asset, buying it, we are rehabbing it, we are getting it rented out, then we are refinancing all of our money out so we can control an asset with very little money in the end, most of the time no money in the end. Then of course we use leverage with the bank to acquire that asset. Are there any benefits that you have on your end that are similar to leveraging your investment and or getting control of that investment with your money back at the end?
Tyrone: Yes, well it’s a little bit different in the stock market. I am willing to put my money in the stock to generate the income. It’s interesting that you mentioned leverage, because there is also a leverage component to this, which is something called Margin. When I become a really good [00:06:56.23 – inaudible] writer, right? My broker will extend to me a line of credit called Margin. So if I pair my money with my brokers money, that can allow me to purchase more shares to generate more income. The difference is– between what it is you’re doing, which I thoroughly understand, and in the stock market is something called the dividend. Look at a stock like Nike for example. That company plays a dividend to its share holders, paid out every 13 weeks. So if I am [00:07:27.23 – inaudible] getting that guaranteed residual income, and collecting that dividend; it’s a transaction I can do anywhere in the world as long as I have access to the stock market and the internet.
It’s not that stocks beat real estate, or real estate beats stocks, it is just another way of generating income, residual income from anywhere in the world.
David: I love it, man. I threw a bone at ya to try and stump you and you had an awesome answer. That was great. I like to do this in real time because I am on your team here, man. But, I do have an opposing point of view sometimes, but it is for a good reason, it’s for the audience, the listeners, the viewers. That way they can kind of see both sides. That’s great, you did an awesome job answering that question. A couple more for you, Tyrone. I am going to fire them at you.
David: With this– I understand dividends very well, I have lots of stock that pay dividends and I have investments in the stock market. I have never done a [00:08:29.19 – inaudible] or any of those type of things when it comes to options. The question is, if you are going to buy a stock, yes you can use leverage which we have addressed and that’s great, good answer. But part B of the question is– whenever you buy or sell, I guess in this case you are selling to do a call, that option, are you required to hold the stock? Or can you sell that stock while you have what I would would refer to as some sort of contingency on the stock? Are you able to unload that stock whenever you have this thing out there that is paying you? Again, what it sounds like to me is, you are banking on depreciation which is great over time, things depreciate, that kind of goes without saying. Of course if you buy a company that pays a dividend, then you get a passive income. Some a paid monthly, some are paid quarterly, some are paid annually and so on and so forth. That’s awesome. I guess my question lays more with the call, you get paid to sell that, but there is a risk there. Can you explain– what are you giving up in order to receive that income? We both know most things in life are not free.
Tyrone: That is correct. Okay so– before I answer that I want to put one thing out there. The stock market is one game and 100 ways to play it. What I’m teaching– a basic strategy like [00:09:55.10 – inaudible], I teach what I call the Sesame Street point of view. I explain the most simplistic aspects of the transaction first, and then over time I usually get into the complexities of it. So a stock has multiple income streams, right? Like some people buy stock and just hold them for years, collect the dividend, get the depreciation. Those of us who are [00:10:17.22 – inaudible] writers, we are holding some shares of other companies as well. But we are also there for that income. I don’t want to lose your audience too quickly but I will tell you this; I can buy a stock, sell a [00:10:30.24 – inaudible], get a residual income, I can also buy a [00:10:35.21 – inaudible] so if the stock actually goes down I get paid that way, then I can also buy a call. Let me say that again. I am going to buy the stock, sell a call to someone else, get paid. Buy a [00:10:49.01 – inaudible] if the stock jumps up within two or three weeks I have another revenue stream. Should the stock drop I can also own a [00:10:55.19 – inaudible].
When you are trading and investing in the stock market from an income point of view, right? Not just a depreciation point of view. There are multiple trades you can put on the same stock. How involved you want to get in that process is completely and totally up to you. However, if I start out with the advanced ways you can get paid even ways off a stock, most people say this is too much, it is overwhelming. So that’s why I give you the simplistic answer first. You are dead on; there are a lot of opportunities off of one stock to generate income multiple ways.
David: I love it, man. That’s cool. So what are the barriers to entry for participation in the stock market?
Tyrone: Well most people don’t participate in the stock market simply because they don’t have the financial education, they were not taught how to, right? One of the things I’ve learned as person who grew up working class and now has wealth, right? All wealth really to be honest with you is great math. If you enter the fourth grade and you graduated you can be wealthy. The think I notice more than anything else is people chose the modality they are most comfortable with. Some people like multi level marketing, oh I like talking to people and showing them the benefits of a particular product. Some people like real estate because they figure that there are always people who need a place to live. I happen to like real estate and stock, because real estate is a– for me, is a slower form of depreciation and return on my investment if I go slower. I like stocks because I like the freedom to be able to travel, to know every single week there is a trade I can put on to generate income. It really comes down to a matter of preference, right? One of my favorite places to go on vacation is the Four Seasons in [00:12:45.23 – inaudible]. While I am at my vacation at the Four Seasons in [00:12:49.11 – inaudible] I know I am always going to make thousands of dollars while on vacation. To me, I like my financial freedom coming in that form. It is just a particular thrill. I don’t have to monitor a contract, a job site, of it it’s raining, or the windows have arrived etc. So you know, stock market for me and my students brings a lot of joys and that freedom.
David: Got it, okay, good answer. So let me ask you this; whenever you are buying a stock and you are using an advanced strategy like a [00:13:24.11 – inaudible], is that something you buy and sell then you are done with? Or does it require additional energy, monitoring and so on and so forth? I don’t know because I have never done it.
Tyrone: Yes, it depends on the stocks. For example, what a lot of day traders do, I am not a day trader, I don’t want to be stuck at a screen all day. What a lot of day traders do is they will buy a stock, they will wait for it to move 25 cents and they will sell it, right? People who trade for income like me, we are really looking for what we call dollar up dollar down, right? So there are some days when my favorite stock goes up a dollar, and that means I have captured some profit, or it declines a dollar and I can capture profit off of that too.
The thing I love about the stock market is that I can get as close to the action as I want. There are strategies that make money when stocks move, make a lot of money really when stocks move $5 a day. Now there are some stocks in the stock market that move $3-5 a day, and those kind of moves we refer to in the stock market as [00:14:29.28 – inaudible]. So some of us like [00:14:32.17 – inaudible] trading, capturing these moves in stocks that are well known, and some of us like the conservative approach.
Now, for me with my lifestyle because I actually live in two cities; I live in New York and I live in L.A. When I’m in L.A I am a little bit more of a [00:14:49.07 – inaudible] trader. But if I know I’m going to be traveling for three days, I am a little bit more of a [00:14:53.29 – inaudible]. Then believe it or not, in the stock market you can actually set an income target, right? If you say, from trading this month I want to make $2500, right? Then you could put up a series of trades that actually allow you to earn that. However, if your [00:15:10.12 – inaudible] is a little bit bigger, you can say this month I would like to earn $25,000, right? So a lot of my students really liked real estate, so they used the money they generate from the stock market to do what? To buy property or pay them off, a lot of people have done that as well.So the whole idea about pursuing financial freedom is you give yourself a choice, right? You chose the modalities that you are most comfortable with. That is– if I have one message for your audience today, is you have choices in how you want to build wealth and create financial freedom for yourself.
David: Absolutely you do. I love it. I think it’s great so you mentioned a little bit about the Sesame Street investor. So what makes you a Sesame Street investor, can you go a little more into that?
Tyrone: Sure, so here is a little bit of education for you. The top 30 stocks, the stocks that have the most stable history in the US stock market are part of this elite group. This average that tracks the top 30 stocks that average or index was created by one guy whose name was Dall. The other guy’s name was Jones. They created the [00:16:27.10 – inaudible] index. Really what that does is that it tracks the top 30 stocks in the US stock market. You have probably heard of some of these names; stocks like Apple, Coca Cola, McDonald’s, HomeDepo, Visa, right? So if we were going to investing the stock market and we knew very little about it, we probably want to go out and purchase shares of just the 30 stocks that comprise of the [00:16:57.21 – inaudible] average, because these companies are earning billions and billions of dollars world wide ever quarter, every 13 weeks. There are some people that say well I have my favorite [00:17:08.17 – inaudible] stock, but I would like to own some stocks that are outside of the [00:17:13.26 – inaudible] average. These stocks have a greater chance of depreciating over time, and those would be companies like Google, or Netflix, or Exe, or Uber which is now public, right? Some people say, well I have a greater chance with those companies, even though they are new, I have a greater chance of those stocks quadrupling in a five year period if the company’s growth is still there.
So essentially when you are putting money in the stock market outside of the [00:17:40.11 – inaudible], you are willing to assume greater risk, but of course the rewards are extraordinary. This one thing we do know about the stock market is that it consistently creates more millionaires than any other investment vehicle available, why? Because anybody can open an account at let’s say [00:17:59.17 – inaudible] with as simple as $500 begin buying shares in [00:18:07.04 – inaudible] tracking those shares over time.
David: I love it. So speaking of opening an account. What do you recommend in terms of the least amount of money somebody should have to start investing?
Tyrone: That’s a great question. It all depends on A, your financial education, you wouldn’t open an account with $50,000 and know nothing about how the stock market works, right? But I like to talk about the minimums, right? $500-600, your income tax refund for example. Something you would consider low risk, and you purchase shares in companies that you like and you watch them over time. What I’ve found is when people take a slower approach like that, the stock market has a was of seducing you. It has a way of saying, don’t you wish you had shares in this company over here? The other thing I really love about the market is that– if you look at anyone who is a multi billionaire these days, they all own massive amounts of shares in companies they believe in, right? Some people like– I have a saying in my program, ‘never buy a stock if you don’t understand the story’. Some people love Facebook, right? Here is what we know; in the last five years Facebook has gone from $50 a share to $180 a share. So they don’t mind owning something they participate in every single day, right? But if you own shares in let’s say Snap Chat, they will have a high of $69 and a low of $13. So you have to invest the time in getting the right education to know which stocks are [00:19:48.25 – inaudible] A you like, and where the greatest growth is. Snap Chat is not making the kind of money that Facebook is making as an online [00:19:58.06 – inaudible], right?
Tyrone: We can cozy up to the stories that we like and buy shares in those companies. That is usually how most people begin their educational process.
David: I love it, good answer. So earlier you mentioned the volatility, so I want to ask how does a smart investor keep from being burned by market volatility?
Tyrone: Okay great question. Volatility comes in different shapes and sizes. If you want lower risk volatility trades you would then go inside the [00:20:30.16 – inaudible] average, those companies I named, why? Because there are billions and billions of institutional investors that are simply not going to leave the stock because the company has a great history of producing profits, right? But if you wanted to step outside of the [00:20:45.17 – inaudible], you could trade stocks that are members of the SMP 500, let me just explain what that is. Two other guys came along and said 30 stocks really don’t represent the market. We really think a basket of 500 stocks– if we just watch those on a daily basis, that is a better indication of whether the market as a whole is up or down. The first guy’s name was standard, the last was [00:21:11.16] and they put together the Standard and [00:21:13.07 – inaudible] 500, or SMP 500 index. Higher volatility stocks often find themselves part of the SMP 500, right? So if someone wanted to say I like this dollar a a day thing, they would find stocks in SMP 500– the companies are making money and the stock was upward trending, but you are not going to have as much institutional involvement, therefore that stock is going to move all over the place. Volatility traders love stock doing SMP, that do that dollar move up or down per day thing, because they enjoy taking that profit consistently.
I just want to say one other thing about volatility trading. Volatility trading is programmable, right? For example I can go get a couple of hundred shares of SMP stock until the software into my account when there is thousands of dollars, sell my share. So again, that is quite different from day trading. I don’t have to sit at a computer all day. The stocks are moving throughout the day, if I can capture that dollar on 200/300/400 shares, then I am making $200/300 a day automatically.
David: Yeah, I think it’s awesome, that sounds great, very very cool. So why is the stock market less intimidating than it seems?
Tyrone: Why is it less intimidating?
David: Uh huh.
Tyrone: It is less intimidating because it is really not that hard. Nowadays some people buy and sell stocks on their phone. I would not recommend that, because– you click the wrong thing you could buy the wrong thing. But it’s much more accessible than ever before in history. That’s why you see these commercials on the Super Bowl for E-trade, right? They are really trying to point out to every man and every woman– hey listen, you have unprecedented access to the financial markets as long as you have internet or WiFi connection. We have never in the history of the world seen this kind of access to the financial market to either trade, buy or sell stocks very quickly, or buy shares and hold them for the long term. So that’s what makes this so extraordinary, and now we have this access– anyone can participate in this game, and that is just incredibly exciting.
David: Yeah, that is very cool. I totally agree with you on that, that is very exciting. Well I have one more question for you, man. You mentioned you started doing some real estate, stocks, I am assuming you do both. Why is the stock market– investing in the stock market, why is that a good choice for real estate investors as well? What would be your opinion on investing on a stock market if you are already a real estate investor like myself?
Tyrone: This is where we get into sophisticated– you have to talk to your accountant. Every time I buy and sell a stock, right? There is capital gains on that stock, I owe the United States Government money on that. But If I have a real estate portfolio, that real estate portfolio can reduce my capital gain. I can take some of the money I am getting from the market and I can improve my properties. By improving my properties does what? Drives up the value, right? So if you put together a strategy that allows you to earn money in the stock market, let’s say $2,3,4000 a month, and you can reduce your tax liability by improving your real estate holding that’s great. I also like– for example I just did this last year. I sold stock, I did a whole renovation on one of my homes, right? So where did I get that money for the renovation? From the stock market. Then I am also buying another home in the State of Florida, where is that money coming from? Where is the down payment coming from? It’s coming from the stock market.
I really like this transfer of assets, this dance if you will between real estate and the stock market, the income that is being generated in the stock market, because it is extremely simplistic, but the stock market for me is a source of finance, my friend’s say it’s a bank, right? But it is a source of financing for buying businesses, buying real estate, paying off real estate. As long as I have a tax strategy in that process, I am going to do very, very well over time, and so will your listeners, again if they get that financial education.
David: I love it, Tyrone you did a great interview, I threw some hard questions at you and you nailed every one of them. Great job.
Tyrone: Thank you my friend.
David: This was Tyrone Jackson, and he is with the Wealthy Investor, you can locate him online at the WealthyInvestor.net. Tyrone, what is the best way for someone to connect with you if they are listening or viewing the podcast, and they want to get more information about your business, the Wealthy Investor?
Tyrone: They simply sashay over to the WealthyInvestor.net, there is a free e-book. If you don’t know anything about the stock market, you want to download the free e-book at the WealthyInvestor.net, it is a great way to get started and get an education about the market because many of your listeners have hidden stock trading talents, and they don’t even know it.
David: I love it, that sounds awesome. Also check out Tyrone on Facebook.com/TheWealthyInvestor. Head on over to his website theWealthyInvestor.net, and learn some more about the stock market. It sounds like he has a free giveaway for everyone as well on the website. Tyrone it has been a pleasure talking to you, I know I’m excited to learn a little bit more about investing in the stock market. I am going to hop on over there right now and get my free e-book. Any other closing– or pieces of advice for myself or my listeners?
Tyrone: There is more financial freedom in the world than you could possible once you get the full education.
David: I totally agree, you rocked it. Alright. Well Tyrone thanks again for coming on the show today, much appreciated. I think everyone is going to be excited to learn a little bit more about you and your business as well as some of the things that you’re teaching. Again, thanks for coming on the show and we are going to go ahead and sign off on that note. Tyrone, thanks again buddy.
Tyrone: Thank you.
Thanks for Listening
As always If you liked what you heard please help us grow by adding a review. Your reviews help us rank higher and reach more people. Thank you! Talk to you soon.