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How do some dentists seem to always have a steady stream of patient referrals without hefty advertising budgets?This episode of the Ground Marketing Series covers the art of effective networking for your practices. Get ready to uncover the secrets behind successful in-person marketing as I share valuable networking hacks to elevate your practice's local presence. From pre-event preparation to executing a seamless follow-up system, you'll learn how to transform casual conversations into lasting partnerships. I also share a compelling case study about a practice owner who became the top pediatric dentist in her area by building a strong referral network with local daycares, showcasing the transformative power of strategic networking.By tuning into this episode, you'll discover advanced networking tactics like becoming a connector and leveraging reciprocity to keep referrals flowing. We emphasize the importance of leading with value and expecting nothing in return, a mindset shift that will undoubtedly enhance your networking outcomes. Whether you're a multi-practice owner or new to the field, these strategies will help you cultivate meaningful connections that extend beyond the dental chair.This is not just about making connections—it's about making the right ones that will sustain your practice's growth.What You'll Learn in This Episode:Effective pre-event preparation techniques for meaningful interactions.Strategies for making instant connections and reinforcing relationships.Building a robust follow-up system for converting contacts into partners.Advanced networking tactics to generate ongoing referrals.Real-world success story of a dental practice owner boosting her community profile.The philosophy of giving value first in all interactions.Don't miss out—hit play now to learn the networking strategies that can elevate your practice!‍‍Learn More About the Ground Marketing Course Here:Website: https://thedentalmarketer.lpages.co/the-ground-marketing-course-open-enrollment/‍Other Mentions and Links:‍Groups/Communities:EventbriteRotary ClubChamber of Commerce‍If you want your questions answered on Monday Morning Episodes, ask me on these platforms:My Newsletter: https://thedentalmarketer.lpages.co/newsletter/The Dental Marketer Society Facebook Group: https://www.facebook.com/groups/2031814726927041‍Episode Transcript (Auto-Generated - Please Excuse Errors) Michael: Networking hacks for dental practices. Now, why most dentists struggle at networking events, this is gonna be the guide and it's a tactical, researched backed guide to winning local events.Michael: Now, networking is one of the fastest, lowest cost ways to generate referrals. Partnerships and community presence for your dental practice. However, most dentists fail to make the most of networking events because they one go in without a clear plan, so that leads to wasted time. Two, they focus too much on selling instead of building relationships.Three, they fail to stand out from other attendees. Just another dentist in the crowd, right? And then four, they do not follow up properly. Connections fade fast. So following up is huge. So the key to networking success is to position yourself as a resource for others, build strategic connections and leverage follow-ups to create ongoing referral pipelines.So this episode provides detailed steps. Backed by psychology and real world networking strategies, what we've done. So you dominate every networking event you attend and turn contacts into long term patient sources. So number one, preparing like a pro before the event. Most of the work happens before you even walk into the event.So first thing you wanna do is set a clear goal so you walk away. Real results. Okay, so most dentists attend events thinking, you know, I'm just gonna meet people and see what happens. No, don't ever do that. Okay? That's a huge mistake. Instead, define your specific objective.Here's an example. I wanna get three strategic partnerships with businesses that can send me patience. I wanna meet at least five key decision makers who can refer people to me. I wanna get 10 high quality follow-ups from business owners who fit my referral criteria. So an example you can tell yourself is by the end of this event, I will connect with three businesses that attract my ideal patients and set up follow-up meetings to discuss collaborations.so that is step number one. You wanna set a clear goal. This is all the pre networking strategy. So imagine this all falls under the pre networking strategy umbrella. So number one, set a clear goal. Two, research the event and attendees so you know exactly who to target. Most networking attendees go in blind.But the most successful professionals research attendees ahead of time so they know, number one, who is attending. So look at the events. Facebook, LinkedIn, or RSVP list two, what businesses align with your ideal patient profile, right? If you're a pediatric practice and you see a pediatrician going, you see a gymboree owner going, you see specific locations where they.Provide, information or medical attention, or they provide clothes or whatever to pediatrics or schools, that's who you wanna see, right? Businesses that align with your ideal patient profile. Brie, who are the sponsors or speakers who are often the most influential people in the room? For our competitors attending.Not to over highlight that, but just so you know, you know, you wanna differentiate yourself before the event, so our competitors attending. Now what you can do is look up attendees on LinkedIn and find common connections. You can check Google reviews and social media of businesses attending.Find something specific to compliment them on. Okay. Then search for recent press releases or events hosted by key businesses. Why this works? ' cause you enter the event with strategic targets, not just random introductions. You already know something personal about the people you meet, making your approach memorable and you can prepare specific conversation starters that make you stand out.so we wanna research the event and attendees.Step three, strategic positioning. Where to stand, maximizes high value conversation. This is huge. this is something we never think about, but you need to start thinking about it. And once I tell you about it, you're gonna always think about this now, where to position yourself, areas to avoid. So near the entrance, people are rushing in not paying attention.Avoid that. Near the food table, people are focused on eating. Get outta there at the far end of the room. There ain't no foot traffic there. Get outta there. The best spots to stand near the drink station people gather here naturally be there in the center of the room. That's where the highest traffic flows.Flows to event organizers. They can introduce you to VIPs, near keynote speakers or sponsors. People approach them first. Okay? So the best spots and then the worst spots why this works. But you place yourself where conversations naturally happen instead of forcing them, you get introduced to key people without effort, and you make it easier for the right people to find you.Those are the three things under the pre networking strategy. You wanna set a clear goal, number one, two, research the event and attendees, and three, know where you're gonna be. Strategically position yourself for maximum conversation. Now the second major step is how to approach people and make an instant connection.There's a couple steps here. Now the perfect first impression formula. This is a psychology hack. Studies show people decide whether they like you within the first seven seconds, the three step first impression formula. So number one, open with value instead of introducing yourself. Okay? So instead of saying, Hey, I'm Dr.Smith, a dentist in town right here, that's generic, forgettable, right? Say, Hey, I love what you're doing with, and then mention their business name. I actually mentioned your business to some of my patients recently, and I say, really? Oh wow, wonderful. What do you do? Right? That's beautiful. Hey, I love what you're doing with their business name.I actually mentioned your business to some of my patients recently, or I mentioned some of your work or anything like that, right? To some of my patients recently. That's it. So that's step one, your opening with value. Step two, ask a question that gets them talking. Great networking questions are like, Hey, what inspired you to start your business?what's been the most exciting thing happening in your business lately? Or, Hey, what kind of clients do you love working with the most? So I know that way I can send you those type of patients. Boom, right? That's what they're gonna love. I personally do number three all the time. What kind of clients, patients, customers do you love working with the most?That way I know I can refer those type of patients to you, or talk about your business a little bit more, right? That's step two. Ask questions that get them talking. Step three, use the name Reinforcement Trick. So as we know, we've heard this a lot of the times, we can say their name. Hey, that's really interesting, Mike.I'll have to check that out. It was great meeting you, Mike, right? Studies show that repeating someone's name makes them like and remember you more. Why this works, you immediately offer value. Instead of sounding self-promotional, you get them talking about themselves. Which makes them enjoy the conversation and you become instantly memorable.Now, how to stand out from other dentists so this makes them remember you. so most dentists at networking events sound the same. You know, I run a dental practice, we do this, that general cosmetic dentistry, but instead of saying that, say something that sparks curiosity. Yeah. Help professionals get the kind of smile that closes business deals.I make sure parents never have to fight their kids to get to the dentist. Or I work with athletes to improve endurance through better oral health. This is according to their business. That's what you're gonna say. So if it's like a fitness studio I work with athletes to improve endurance through better oral health.It's a children's facility, daycare, you know, I make sure parents never have to fight their kids to go to the dentist. Awesome. It's professionals, right? Realtors or whatever, I help professionals get the kind of smile that closes business deals. Wow. Intrigues them. Why this works. It gets them asking questions instead of tuning out.It makes you stand out from every other dentist in the room and it shifts the conversation into how you can help them. So that's what's gonna be under the how to approach people and make an instant connection. You did that. You made an instant connection.Now here's three. The follow-up system turning connections into long-term partnerships. So what most people do is they either try to hand out business cards or collect some and then they never follow up or they send a generic nice meeting you email. What you should do instead is follow up within 24 hours, reference something specific you talked about and give them value before asking for anything.an example email can be the subject. Hey, it was great meeting you at this event. And then their name, Hey person's name, it was us meeting you at the event last night. I really enjoyed our conversation about a specific topic that you guys talked about. I wanted to follow up because I think we really align well and I'd love to feature you in our next patient newsletter.I'd love to have some of your information, in our hygiene kits so our patients can see it. Do you have any promotions or events? I can share with our patients. And that's it. Looking forward to staying in touch. All the best. Your name. Now, when you do this, It's an open-ended question.You're waiting for them to hear back and they're like, yeah, we do have promotions. Yeah, we do have events happening this month and all that. Now it's easier for when you go and pick up their information. You can just say, Hey, could we ever participate in your events? Set up a small booth to the side.They're gonna say, yeah, of course. Remember that's that little small percent. You've done all this leg where you've done 95%, you've done it all. You're saying, Hey uh, can we do this? Can we do that? Blah, blah, blah. Oh my gosh, yes. They're looking for a way to give back to you and you say, Hey, well by the way, can we do this?And then boom, you're able to do it. But that's the email fault. Well, if you want to do why this works, it reminds them of your conversation. It gives them something before asking for anything, and it naturally leads them to returning the favor. perfect right now. A lot of the times you can have advanced networking tactics, so you wanna become the most valuable person in the room, you know, instead of just networking for yourself, introduce people to each other.Meaning if you meet a personal trainer and a chiropractor, introduce them. Hey Mike, you should meet Sarah. She runs a fitness center, and I think your services would compliment each other. That makes it even easier for all three of you to do an event together. But this works because they now see you as a valuable connection and they will naturally start sending referrals your way.So the final takeaway for this is the golden Networking Rule that guarantees results. Give value first. Expect nothing in return, and people will want to promote you. Okay, use this strategy and you will never leave a networking event empty handed. I love doing this. I love getting everyone's business card as well.Michael: And then I love following up with them in person the next day at their place of business. And then I'm able to even leave signup sheets, leave information, so now I can attract their employees from their business to come. I'm not just going to networking events, trying to get these one-off patients that are there.You know, Hey, are you looking for a dentist, a gym owner, then yeah. Come to my practice. Hey, are you looking for a, dentist? Yeah. Come to my practice. No, it's not all about that. You're looking to create these partnerships. Now there's many examples on how a lot of our members have done this.For example, there's a practice owner, she mastered networking to partner with a daycare and became the number one pediatric dentist in town. She searched Facebook events and looked for business networking groups. She checked her local Chamber of Commerce websites, which many cities list upcoming business mixers and luncheons by the way.So it could be a Rotary Club, chamber of Commerce website. She found a women in business meetup happening at a coworking space, and this was smart ' cause daycare owners are often female entrepreneurs, and this event had a. high chance of attracting them and parents groups and women's networking events often have small business owners who run child-focused services.So how she checked the RSVP list to find key attendees. She checked the events online page. She visited the Facebook event page and clicked the going tab. She noticed a few names she didn't recognize, but saw a woman named or a specific woman. who owned and it said like founder and director of Little Explorers Learning Center, local Daycare Center.She also checked the Eventbrite attendee list. That's sometimes available, sometimes that's not available. And she saw names linked to local businesses, and then she typed in, you know what I mean, the businesses, their names and found their websites Facebook page. So she's doing a lot of the pre-planning.She checked their reviews to see what parents loved most about the daycares. She followed the daycare on Instagram to get a feel of their branding and parent interactions, and this was smart. She knew who she wanted to talk to before even arriving. She discovered conversation starters from reading the daycare's reviews.Parents loved their hands-on activities and personal attention, and then she positioned herself to offer value based on what the daycare's valued. So how does she stand out? She didn't stand by the food table or in the corner. Instead, she positioned herself near the drink station, then closed the event organizer, and obviously in the center of the room, she didn't force conversations.She let them happen naturally. The organizer introduced them, and it was perfect from that point on, right? a lot of the times you just walk in there and you're in the back of the room and you're thinking, I want to talk to that person, you're gonna talk yourself outta that. You're gonna overthink something.Don't. Talk to other people, be where everybody's at. Then finally, the perfect conversation started so it didn't feel like a sales pitch. She said, Hey, I've heard suchgreat things about your daycare. but she mentioned the name. A couple of my patients parents rave about your daycare. What's been your favorite part of running now? She immediately made the conversation about her, the business owner, not herself.She mentioned the parents' testimonials, which showed the business owner's daycares reputation was spreading, and she used an open-ended question, allowing the business owner to talk about her passion. Now. It was fantastic. The response was fantastic. She even told us the response. She was like, wow, that's amazing to hear.I love that we get to build a safe and loving space for kids. It's been so rewarding. But at this point, the doctor has done three key things successfully. She complimented the success, and then she made the business owner feel appreciated and valued, and she got the business owner to open up about her challenges, then the reciprocity. Using reciprocity to make the business owner want to help in return. So the practice owner, the doctor I remember said, I love how much you prioritize a positive environment for kids. know, I have a lot of families in my practice who are always looking for great daycares.I'd love to share your daycare in our next patient newsletter. you have any upcoming enrollment events I can mention? Now, this was genius because she offered something first, pre-promotion. She made it low effort for the business owner, just sharing existing events and she subtly positioned yourself as an expert on child wellness.Now, the business owner obviously was like, this is fantastic. I love it. Yeah, let's make this magic happen. So then step five, she kind of continued, she also offered a way, would it be okay if I left a little signup sheet, once she was in there for the parents who might have questions about baby teeth and first visits?Maybe we can do a workshop or, do patient education, but at the same time we can, if they need a visit right now, we can offer that too. Here's a signup sheet and it was perfect. ' cause it wasn't a sales pitch, it was framed as a helpful resource. It aligned with the daycare's values, right? Child development, and it felt like a natural next step in the conversation.So she loved it and that was it. After that, it was basically just following up, going to the events, And this was a long-term referral system that followed and the daycare kept, our members signup sheet on display year round, which was fantastic because that was like a major resource for her.Every new group of parents saw it, saw this signup sheet that was always on display, and signed up for the first visit tips, at the same time for first visits and also the daycare actively referred new families whenever questions came up. And then uh, our members sent occasional check-ins and continued to promote the daycare too as well.The results are fantastic. Over 20 parents signed up within six weeks, continue to refer and lo and behold, our member became the number one recommended pediatric dentist in the community. it's fantastic. So the final takeaway is the networking formula that guarantees referrals.Five things you wanna research before the event. Two. Open with a compliment and an engaging question. Three, offer to promote them. First. Four, introduce a signup sheet as a helpful resource, not a sales pitch if you can't do that. And then five, follow up within 24 hours with a personalized message.So you want to do that right at these networking events. Now, introducing a signup sheet as a helpful resource, not a sales pitch. if you're at their place of business and you decide to leave a signup sheet, you don't have to right In the ground marketing course, obviously there's much, much more into depth.We discussed this, especially how to network, how to drop off signup sheets and stuff like that. So if you are and you wanna enroll into the ground marketing course, I highly recommend you do that. You can go ahead and check out everything that's in the course. Go on the first link in the show notes below, and you can go from there.But yeah, that's basically how to make this happen at networking events. So go ahead and check that out. I'm excited to see you in the ground marketing course if you decide to enroll, we're having tons of success with our members there, like you just heard right now. And that's just with one strategy, right?That's just what networking at events or a daycare strategy that's not with all the other businesses and locations that you can be involved in and, have, right. Definitely make sure you enroll into the ground marketing course to have that type of success and so much more. So thank you so much for tuning in, and on our next episode we're gonna be discussing creating a referral program that works.So I'm excited to dive into that. thank you so much for tuning in. I'll talk to you in the next episode.‍

What does it take to build local partnerships that matter and become the go-to dental practice in your community?In this episode of the Ground Marketing Series, we unpack the game-changing strategies practices can use to build meaningful local partnerships that yield lasting results. Rather than pouring resources into passive marketing channels, we explore how becoming an integral part of your community can lead to sustained patient acquisition. From partnerships with schools, gyms, and community centers, we delve into how connecting with organizations that matter to your target audience can establish you as the trusted local dental provider. Schools, with their network of families, present a multitude of opportunities, whether through PTA involvement, educational workshops, or sports team collaborations. Gyms and community centers are also massively valuable, where offering services like free oral health screenings can cultivate trust and lead to steady referrals.You'll hear a captivating case study of a dentist from the Ground Marketing Course who leveraged these strategies with exceptional success, achieving remarkable patient growth and slashing marketing costs. By emphasizing social proof, consistent partner engagement, and maintaining strong relationships, this approach not only brings in new patients but also fortifies your practice's reputation as a community asset.What You'll Learn in This Episode:Techniques for creating impactful partnerships in your community.How schools can serve as a hub for patient acquisition.The importance of value-first strategies in gym partnerships.Ways to leverage community centers for trust and exposure.Tactics for building a robust referral system.Insights from a successful case study in ground marketing.The role of social proof in enhancing reputation.Methods for sustaining long-term partnerships for ongoing growth.Press play to learn how local partnerships can revolutionize your practice and boost patient growth!‍‍Learn More About the Ground Marketing Course Here:Website: https://thedentalmarketer.lpages.co/the-ground-marketing-course-open-enrollment/‍Other Mentions and Links:‍Businesses/Brands:PlexCrossFitDymatize ProteinMuscle MilkBig Brother Big Sisters of America‍Software/Tools:Excel‍If you want your questions answered on Monday Morning Episodes, ask me on these platforms:My Newsletter: https://thedentalmarketer.lpages.co/newsletter/The Dental Marketer Society Facebook Group: https://www.facebook.com/groups/2031814726927041‍Episode Transcript (Auto-Generated - Please Excuse Errors)‍Michael: All right, we're going to be talking about building local partnerships that matter. So that's the key word here is that matter. Sometimes it's easy to build local partnerships with, other potential businesses or locations that aren't as important as. It should be to you or they really just don't matter.we'll see what I mean by that the episode goes along, but why partnerships? So most dentists rely on passive marketing ads. SEO, social media, but local partnerships allow you to integrate into the daily lives of your target audience. So instead of spending thousands on marketing, you become the community's trusted dental provider by leveraging existing relationships.This isn't just about getting your name out. It's about becoming the go to dentist in your town. That's the goal here, the go to dentist. So we're going to be discussing that throughout this time and how to do that. But like I always mentioned, if you want the scripts, you want the videos, you want the in depth, more of all of this, the templates.And if you want more one on one time with myself and my team. Any questions or concerns with the crowd marketing, then please feel free to join the ground marketing course, we continue to add to that course. It's an amazing course. It's going to be, in the show notes below.There's a link there. It's the first link in the show notes below. So definitely go check it out and just go check out everything you can see inside of the course and check out what everybody else is getting and the results that they're seeing and how it's improving their, practice their community.Let's dive into this, understanding the psychology of local partnerships. Now to truly embed, and that's the key here. You need to understand how and why local decision makers agreed to partnerships. And that's the key. You want to embed yourself into the community, but let's understand how and why local decision makers agree to partnerships. There's three ways. Number one is, people don't promote businesses, they promote relationships.A gym owner won't push your services unless they genuinely like and trust you. A school principal won't let you do a talk unless they see value for their students and parents. And a community director won't recommend you unless you make their job easier. Promote relationships, okay? Remember this principle, the principle of reciprocity.Give before you ask before asking for referrals, offer something of high value, make it feel like a favor. So for example, a gym owner is more likely to refer patients. If you offer something for free to their athletes, first, Or you want to give something where that benefits them first and it doesn't have to be, Hey, we're offering free whining.Would you like free whining? No. It can be, Hey, do you have any business cards? I'd love to give it to our patients. We're doing a health and wellness thing this month and we'd love to have your information in our hygiene kits. That's perfect. They're like, yes, more clients, more business.Yeah. I love to do that. You're offering first and then three positioning, right? Embed, don't sell. Okay. That's how you want to position. Instead of saying, can I promote my practice here, which from this point on, I never want you to do that, right? Can I promote my practice here?No. You want to notice the pain points, right? Hey, I noticed many gym members struggle with teeth grinding, right? I have a lot of patients who come to this gym and they, suffer from teeth grinding and I'd love to help your athletes with some free night guards. Or maybe there's kids in your school that are high risk for cavities and you say, quite a bit of kids come to my practice in this school and they're high in cavities and I'd love to do a, you fun presentation about oral health and nutrition.Or you can say many of your community members may be unaware of oral cancer if you're at a senior home, right? Can I do free screenings at your next health event? Would that be okay? You're making people's job easier. You're showing that you care. There's a principle of reciprocity and you're promoting relationships.So the goal is to position yourself as a valuable asset. Not an advertiser. I want you to get out of the mindset of, Oh my God, I got to promote my practice, I guess, get all these new patients. I got to meet production, get collection, get paid profits. And I want you to position yourself as a valuable asset.Okay. I am an asset to the community, which means my practice is a humongous asset to this community. Let me show them position yourself. And so how are you going to do that as we're going to kind of, scratch the surface on three main things, schools, gyms, and fitness centers, and then community centers.Okay. And then we're going to discuss how to make these partnerships self sustaining. And I'm going to give you a case study, an example of how this worked for a practice member. So. number two right, school is the most powerful and overlooked partnership. Schools are an ultimate hub of families.They have parents, kids, and teachers all in one place, and this is a gold mine for patient acquisition. Many times we go after the kids and we forget about the parents, or we go after the kids and the parents and then we forget about the teachers. We go after the kids, parents, and teachers, and we forget about the staff besides the teachers.I mean, There's a lot of people there, unless you're a pediatric practice, right? But there's a lot of people there who are not your patients who can become your patients. Definitely keep that in mind. Schools already have a health and wellness mandate. If you align with their mission, they will welcome you.Just figure it out. And I'm going to discuss how you can do that right now. And then three, schools have high trust in medical professionals, meaning your practice gains instant credibility. You want to be the go to practice for emergencies. But also the go to practice for whatever comes to top of mind when it's oral or dental related for these teachers, staff, and so forth, the schools.Schools are the ultimate hub of families, understand that. Now, understanding key decision makers in schools. There's a couple. There's the PTA president, they control parents, engagement programs. There's the school nurse, handle student health and make, good referrals. Three, principal, obviously, right?They approve in school partnerships. Four is the athletic director. They manage sports programs. It's perfect for those mouth guard campaigns. And then five, after school program coordinator, right? They organize extracurricular activities. So these are like the five ones. Now, if you want to go above and beyond, contact The school district in your town. to be honest with you. That's what I go for right from the back is I contact the school district. I even go inside the school district facility, where it's just the district pocket up with the people there because they oversee not just one school, right?They oversee multiple schools in the whole district. So, If you get cool with them, you're going to be able to get cool with those other schools, right? school nurse, principal, athletic director, afterschool program coordinator, their boss is. if you're able to contact the school district, get an amazing partnership with them, get them to come to your practice, the people in the district, then everything else pretty much becomes easy peasy from that point on.And in the ground marketing course, I show you how I do that contact the school district. And I give you the script and everything like that, but I also give you the script for you know, the principals and the school nurses, wellness directors, and things like that, because you can do that as well.Cause sometimes the district will tell you, we'll contact the principal and then. They will let you know. But like I said, in the course, there's so much more detail with all of this. I'm kind of just scratching the surface for everything. Cause I want you to get just a bit right now. So those are the people you can contact.They're the key decision makers. Anybody else besides that? You're just talking to someone who thinks they a decision maker, but they're not. And you may get a no from someone who that no doesn't even matter. And so what I mean by that is maybe they may say, no, you cannot come in here. And that was like the administration office.It don't even matter what they say, if the principal says yes, then, all you did was just contact the wrong person and got the wrong answer, which happens so often. So I need you to understand that you have to contact decision makers, not anybody else, not the front office, not the person answering the phones.Reach out to these people. PTA president, school nurse, principal, athletic director, afterschool program coordinator, the district, right? Reach out to them because they will most likely give you a yes. And if they do perfect, but if it's anybody else, they may give you a no, cause they don't know the answer.And now you're just not attempting to go anymore because you talked to the wrong person who doesn't even know what they're doing. So I would hate for that to happen to you. So understand the key decision makers. That's huge. Then the next step is tactics for breaking into schools or like getting into schools.So the PTA approach, the parent network hack, right? You want to attend PTA meetings, introduce yourself as a resource, not a salesperson. Offer a 10 minute talk, right? With free giveaways for kids. Propose a parent education night, examples, you can do a cavities and nutrition, what every parent needs to know, what I like to do is offer something, where every attendee can come to my practice, So offer free whitening coupon, offer something specific where you know they will come into your practice. You can also do the next approach, which is the school nurse connection. This is a referral pipeline. So offer to train the school nurse on dental emergencies. You also want to provide free dental first aid kits that can be like gauze, floss, mouth rinse, referral sheet to your office.Provide these to the schools. I cannot tell you how crucial this is, to getting new patients. Hey, instead of hygiene kits, which you can just break apart a hygiene kit, And then make it into a free dental first aid kit for the school nurses. Hey, here's free dental first aid kits. We'd like to give it to our schools.We want to make sure you guys are stocked and ready to go for this season. Let me know if you need more at any moment. I will come by maybe like in a month or so. you need any more, but also here's the signup sheet to refer, here's also our number and we always can come by like every, month or so to pick up the signup sheet to see if there's any names or numbers or anything like that that gives you like more opportunity to show your face in front of them, but at the same time, more opportunity to drop off free dental first aid kits for the children.And at the same time, it gives you more, of an opportunity to drop off more referral sheets or maybe pick up the referral signup sheet and see the names and numbers. Great. But most likely they will call you and refer you that way, but that's huge. dental first aid kits huge, huge, huge. If you can start doing that today, if you haven't do that with the schools, you want to offer VIP fast pass for urgent student cases, right?Whenever the nurse sees a dental issue, they call your office directly and you can get a same day appointment. So make that a huge thing. Okay. Like, Hey, if you ever have an emergency, here's the same day appointment pass. Okay. Like, Just let us know it's from you. You can also sponsor school events. That's visibility on steroids.I mean, Sports teams, they offer free custom mouth guards. You can do that. Career days, give a talk on what it's like to be a dentist, instant credibility with parents right there. Teacher appreciation provided teacher smile program, maybe discounted whitening or priority scheduling. They always have teacher appreciation.See how you can participate in that. Don't just let that slide make those teachers come to your practice. Be a part of the teacher appreciation program and then offer something specific just for the teachers. That's a humongous gift. And then you can have like library and reading incentives. This happens a lot.I a sponsor of for smiles, challenge kids who read 10 books, get specific goody bag, right? Like a dental hygiene kit just for them with fun stuff in it. And also information about your practice, things like that and so forth. And then you can also do summer camp and afterschool programs.You want to offer a free dental checkup day at summer camps possible. And then you can have school fundraising and referral loops. So you can offer a free dental day where a percentage of proceeds goes to school programs. Create a referral contest where the class with the most referrals wins a pizza party.Make it fun, when you're getting these referrals and you want to have them be a part of it. You can also donate a portion of every referred new patients. First visit fee back to the school as well. That's a huge way to support the school and they're going to continue to refer and so forth.So this is for school. Schools are huge. Gyms and fitness centers. That's the secret to high value patients. Gyms are huge. This is something I started. This was one of my first ever locations I went to ground market to and have yet to stop. It's incredible. They're health conscious people. That value wellness.Many gym goers suffer from teeth grinding or dry mouth and acid erosion from fitness drinks. And then trainers and gym owners are influencers. If they trust you, they will refer their entire client base. So how can you establish that? The gym owner angle, the business partnership play, You want to approach the gym owner, not as a dentist, but as a business owner.Always. They're on the lookout to get clients. You're on the lookout to get patients. So offer a value exchange, right? Go in there, offer free oral health screening days for gym members, discounted whitening for trainers, things like that. What I like to do, honestly, is keep it simple. I just, hey, can I have some of your information?I love to put it in my hygiene kits. And then say, why, maybe you're off, you're doing something that month or you want to partner up with them, They'll be ecstatic. And then at the same time, Hey, by any chance, can I give you guys some of our information as well? Yeah, cool. Awesome. And then drop off a signup sheet for the employees and the trainers there.Hey, this month, we wanted to give you guys just the employees here, this boom. And then from that point on, you're able to do more. Now, like I said, in the course, we dive way deeper in gym. So you can go ahead and check that out and become a member of the ground marketing course there. And then you want to do campaign for athletes.If this is like a specific location, like Plex, that's a gym in Texas. I remember it was just for athletes or any other type of gym. That's just for athletes, like weightlifters and CrossFit athletes. You can provide night guards, yoga practitioners. You can do something where mindfulness and oral health connection, cyclists and runners, hydration and oral health education.This one was huge bodybuilders. acidic protein shakes and enamel damage prevention. Now something we did this is what I think personally will be incredible that you should do on social media. There's a hundred and one protein shakes, a hundred and one, pre workouts, post workouts, intro workouts, all these things.How bad is each of them or how good is each of them for your oral health, How do we take this? Do we take it just with water? Some people just take it straight. I've taken it just straight and then pour water Later on how should this be taken and then rate each of them like make a video for each today, we're checking out.I don't know Diametized protein see how bad it is good it is for your teeth depending on the ingredients and then you're tasting it and then boom Okay, this is not that bad one out of ten. It's gonna be like a four and then you do muscle milk Oh, man, this has arsenic. It has lead has cadmium. Not only is it bad for your oral health, but it's also bad for this.This is a, definitely a one I do not recommend, right? Kind of A thing like that. Make videos like that. Trust me, Nobody's done it yet, So if I were you, if you are into that, this is something I'd attack and I would say, okay, we're going to do this campaign.We're going to do a hundred videos, different proteins. Right. doesn't have to be all in one day. It can be, you know, within year's worth if you want, but. Make sure you, become known as that. And then not only are you niching down on a specific target audience, which is bodybuilders who are people who care about their physique, they care about how they look and things like that.They care about their health, but at the same time, you're helping them prevent an enamel damage. So that's something to think about. And then you can also do sponsorships like at local CrossFit competitions hydration stations at 5k races or marathons, and then exclusive gym membership. You can have the trainer referral incentive.I know this is something we did. Any gym trainer that refers five patients, it's something specific. In our practice, sometimes they wanted a percentage off where they wanted, Invisalign or they even wanted just rewinding. As much as they could, right? And so we would offer that depending on how many they refer.And then eventually they just continue to refer without, getting any type of incentive, which is fantastic. So you can definitely do that. And then you can always participate in their events as well, which they have a lot of events all the time, gyms and fitness centers. So huge, huge, huge. And then, finally would be community centers the trust builder.Now this is just an example, right? There's many locations you can go to gyms corporations, salons, all these things. But. For this episode, I'm just going to be covering, like I said, schools, gyms, and community centers, and then I'm going to give you a case study of someone who attacked these three and the results that they got.finally this community centers and community centers are crucial. They serve families, seniors, low income individuals. I mean, There's a huge patient segment and community centers already have structured health programs, so you can seamlessly integrate. They have established trust. People trust community based recommendations over ads.Michael: Now, the best community partnerships, best hands down is senior centers and retirement homes. I mean, They offer a ton of stuff and there's somebody specifically there who's called the activities coordinator or director who's looking for you to do things for their seniors, for their residents.You can offer free oral cancer screenings. You can host dentures and implant Q& A sessions. You can provide a senior smile program, which is a dental discount for seniors. Your membership program, you can offer a ton of stuff. Best thing to do though, is just do a Q& A session. Once one or two of them start asking questions, the whole room is going to ask questions.And it's just up to you to coordinate it to guide the questions and answer them. And you'll notice a theme of the questions, and then you can create a program tailored just for them. If you would like, so that's something best community partnerships, senior homes, and we have a whole unit on senior centers, independent living facilities, retirement homes.You can even see me in real life doing the strategy, setting up at events, signing up people and so forth, beautiful location. love senior homes. I love working with them. It's fantastic. But like I said, strategies, scripts, templates. Live examples. You can see that in the ground marketing course, doing it there.So that's number one, Senior centers and retirement homes. The next one would be youth centers and afterschool programs, right? Partner with big brother, big sisters. You can offer free checkups, sponsor sports leagues. If you'd like create a smile scholarship for underprivileged kids. So like X dollar amount per new patient goes into a dental fund for them, right?Specific things like that. And so that's going to be it right there, right? Kind of On how you can do that with community centers. So how to make these partnerships self sustaining You want to leverage social proof and community testimonials? So always capture video testimonials from gym owners pta leaders and community members and features success stories on social media And newsletters automate and scale your outreach So use a CRM to track partnerships and follow up quarterly.In the course created for you the ground marketing worksheet. And in there, it's just literally a template. You just download it on Excel and that's it. And you can see exactly how to follow up quarterly or often what you need to write down so forth, because you can lose track if you are not organized.So you want to automate and scale your outreach, track your partnerships, follow up, create a dedicated community liaison role. So assign a team member to manage partnerships. This is what business development is. You're going to see a lot of larger corporations, larger businesses. They have a business development, partner, a business development person in their organization, in their, job who's just dedicated to developing business partnerships. So sign that, and this can be the ground market. in your team and then recurring checkpoints with partners. You want to schedule quarterly check ins with school nurses, gym owners, and community leaders.And then you want to offer new partnership ideas to keep the collaboration fresh, and this comes naturally. So don't overthink it. This is going to come naturally. Every time he's like, Hey, I ran out of hygiene kits or, Hey, I ran out of first aid, dental health kits, or, Hey, I need some more of your business cards.Quarterly check ins happen naturally if it's the right partnership. Okay. So the best marketing doesn't feel like market. When you build partnerships, patients don't need to be sold on your services. They already trust you before they walk through the door. That's what partnerships do. .Now we're going to go into the case study. Now this doctor is a member in the course and she lives in a midsize suburban town and she struggled with slow new patient growth, despite a strong online presence.Instead of pouring more money into ads, she embedded her practice into the community using a strategic partnership approach. It took her a year. Within 12 months, she increased new patient flow, reduced marketing costs, but she built a self sustaining referral system with schools, gyms, and community centers.Here's exactly how she did it. Step one, schools, the long term growth machine. The plan is instead of cold emailing schools, she identified key decision makers and provided value up front. She attended PTA meetings and introduced herself as a community resource, not a business. She connected with school nurses and provided emergency dental first aid kits.She offered a free workshop for teachers about oral health's impact on kids focus. And attendance and the teacher saw that was incredibly valuable. So they wanted the parents to come and then eventually the parents came as well to see that. So that was a workshop that was offered and shown more than once.So that was tactic number one, PTA and school nurse relationship building. Number two was monthly school visits and parent education. She scheduled quarterly classroom visits. She brought fun tooth fairy kits for kindergarteners. She hosted a smile superhero contest for older kids could maintain the best brushing habits.And then she set up a free online dental Q and a for parents hosted on the school's Facebook page. Tactic number three, referral partnerships with school sports teams. She provided custom mouth guards for the local youth soccer and football teams branded with her office's logo. And then she created a VIP referral system.Every student referred by a school nurse or coach got priority scheduling and a free treat, a specific to what they needed. And the results were incredible. Over 400 new patient referrals in the first year, teachers and school staff became loyal patients after she provided an exclusive teacher discount.And the school sports partnerships created a word of mouth effect. Parents saw her logo on their kid's mouth guard cases and so forth. And kids knew who they were. was just amazing how the word of mouth effect happened here. So that was schools.Step two was gym partnerships. Which was a hidden gold mine. The plan was she identified three high end gyms and CrossFit boxes in her area and offered value first tactic. One gym trainer and member benefits. She offered free night guard fittings for trainers who suffer from teeth grinding. She gave each trainer five VIP dental passes worth a hundred dollars each to give to clients experiencing TMJ issues and Want to put a little asterisk here.besides free nightguard fittings. She offered for you teeth whitening So it was one or the other on that for the personal trainers and the gym members. She provided an exclusive fit smile package, teeth whitening, free fluoride treatment, discounted nightguards for heavy grinders, or an asterisk here too.She also offered a discount on cleanings. So that was the fitness smile package it wasn't like a whole type of, Hey, we're doing this as long as you remember, no, it was just, Hey, we're doing this for this summer only kind of a thing. So urgency was created. Tactic 2, gym event sponsorship, so she sponsored a gym hydration challenge, she tied hydration to oral health, she set up a free dental checkup day at the gym, and then she cross promoted her practices blog on the gym's website and social media.So the results were over 50 high value patients from gym trainers and referrals nightguards became a profitable service for her. And Jim started organically promoting her practice because she helped their members.So that was two, and then three was community centers. Instant trust and mass exposure. So she partnered with local senior centers, afterschool programs to gain instant community trust. So tactic one, the senior centers, the hidden patient base, she hosted free oral cancer screening events. She created a senior dental membership plan, right?So she discounted specific services. She became a guest speaker at community wellness talks, covering topics like how oral health affects brain function in seniors and much more. This was fantastic. She continues to do this. Tactic two, low income community dental support. She partnered with a local nonprofit organization to offer low cost cleanings.She created a dental scholarship fund where 10 from every new patient fee went toward helping undeserved kids, and then she hosted a free smile day. So every quarter for families who couldn't afford to care. And this established an incredible powerful reputation. As a dentist who gives back, she was able to obtain over 200 new patients from senior centers and community programs.And she was even featured in local newspapers and community newsletters for her charitable efforts. So that was free publicity. So it was fantastic. So scaling partnership into a self sustaining referral machine. she leveraged all of this through social proof and community testimonials. She filmed short video testimonials, school nurses about her educational talks.Jim trainers about how she helped their clients, senior center directors, praising her community involvement. And she posted these testimonials on social media and her website to reinforce credibility. I mean, You're doing all this work. Might as well go for the ask. Say, Hey, can you record a short 30 second video for me, please?You can even say 15 second video. Can you record a short 15 second video? boom. And then just record a short 15 second video on your phone. Little do you know that 15 second video will be up them talking about you for five minutes. Or three minutes, right? But that's it. That's all you got to say. So leverage it to create a community referral program.So any partner, right? School gym, community center that referred five plus patients got a special sponsorship for their events. So create something like that community centers and schools started reaching out to her instead of the other way around. So instead of her having to reach out to them.They started reaching out to her and three schedule, quarterly check ins with partners. Maintain these personal relationships with school staff, gym owners, and community leaders. Always ask, Hey, what would be most helpful to you right now? How can I help you or how can I help your members or how can I do this?How can I help your residents this quarter? Be specific like that. How can I help you guys this quarter? What are you guys doing? How can I help you? And then see how you can fulfill that need. And then offer new partnership ideas to keep engagement high. This will come naturally all the time.The new partnership ideas. So key takeaways for this is stop relying on hold ads and start embedding your practice into trusted community. Networks who is school gyms and community centers provide built in credibility and trust. If you offer value first three, once partnerships are established, referrals become self sustaining, establish these partnerships for social proof, testimonial from school nurses, gym owners, and community leaders, compounds growth five, less reliance on expensive marketing, more on relationships.will equal long term success. So I hope you understand, right? I'm not saying you need to do these three specific things. if you're a member in the ground marketing course, then you already know that you've done probably gyms. I know for sure you've done senior centers and then at the same time, schools, so you can attack it like that, And then continue to nurture these locations. But this is where her target patients were. And she wanted it. So we kind of extracted that and said, okay, let's look at the three strategies she mainly did and bada bing, bada boom. It's fantastic. So leveraging partnerships is key. The easiest way to grow a dental practice isn't by spending more on marketing.It's by becoming the dentist everyone in the community already trusts before they ever meet you. Always remember that creating these partnerships are huge, and in the ground marketing course, I teach you exactly how to do this. I teach you how to create these pipelines. So referrals are coming to you consistently, okay, for years, not just once in a while, but they're coming consistently and they're compounding.So then you just depend on, I need to nurture this relationship, or I just need to continue what I'm doing and the way I'm working and being fantastic. Because now they're referring to me, my referrals are referring other people. And that happens all the time. So you want to continue to build local partnerships that matter. And if you want more information on this, not just information, but strategies, you want to learn exactly how to do this, get the exact results or better. And at the same time, build partnerships with all your schools and your community, partnerships with all the gyms and fitness centers, partnerships with all the senior centers.You want to be a part of their events. You want to be a part of their. Specific health fairs, things like that. You want to create incredible referral systems and partnerships. I teach you all that in the ground marketing course. I give you the scripts, I give you the templates, I give you the examples, the lives, everything.And at the same time, you're able to talk with me more one on one. In the ground marketing course. So that's going to be in the show notes below. It's the first link in the show notes below. I welcome you to join. Please join especially if you want to see these results. And at the same time, I'm excited for you.I'm excited to see you in the ground marketing course. So go ahead and do that. It's going to be the first link in the show notes below in the next episode, we're going to be discussing mastering your ground marketing pitch. So this is how you make sure you get your foot in the door securely and effectively. So thank you so much for tuning in. I'll talk to you in the next episode.‍

Health anxiety is a common yet often misunderstood condition that can significantly impact one's quality of life. Whether it's worrying excessively about potential illnesses or constantly seeking reassurance about your health, the effects can be overwhelming. Understanding the nature of health anxiety and learning effective strategies to manage it can make a world of difference. In this article, we explore five essential things you need to know about health anxiety and offer practical tips for recovery, with expert insights from Michael Steer. 1. UNDERSTANDING HEALTH ANXIETY: WHAT IT IS AND WHAT IT ISN'T Health anxiety is a term often misunderstood by many. It's not just about being overly concerned with your health or frequently looking up symptoms on Google. Health anxiety can be categorized into two main disorders: Illness Anxiety Disorder and Somatic Symptom Disorder. Illness Anxiety Disorder involves a preoccupation with health despite not having significant physical symptoms. On the other hand, Somatic Symptom Disorder includes severe and persistent physical symptoms that cause substantial distress. It's essential to understand these distinctions to recognize that health anxiety isn't simply a matter of being overly cautious or paranoid about one's health. Moreover, health anxiety can often intertwine with Obsessive-Compulsive Disorder (OCD), involving obsessive thoughts and compulsive behaviors centered around health concerns.  2. NAVIGATING THE MEDICAL SYSTEM WITH HEALTH ANXIETY Dealing with health anxiety within the medical system can be particularly challenging. One of the critical aspects to remember is the importance of finding a healthcare provider who listens and validates your concerns. If you feel dismissed or unheard, it is perfectly acceptable to seek a second opinion or switch providers. Additionally, distinguishing between different types of symptoms can help manage health anxiety more effectively. Medical symptoms require immediate attention, such as severe chest pain or sudden numbness. Physical symptoms, like a sore back from yard work, are often benign and manageable with self-care. Psychological symptoms stem from anxiety and can include manifestations like tightness in the chest or dizziness. Understanding these differences can help reduce unnecessary panic and improve communication with healthcare providers. 3. TRUSTING THE RELIABILITY OF YOUR THOUGHTS A common challenge with health anxiety is differentiating between real medical issues and anxiety-driven thoughts. Think of your anxious thoughts as spam emails—they're real, but their content isn't always reliable. Health anxiety often triggers false alarms that feel urgent and terrifying. Learning to question these thoughts and not take them at face value is crucial. Techniques like cognitive diffusion can help change your relationship with these thoughts. For instance, if you've convinced yourself numerous times that you're having a stroke and it hasn't happened, the likelihood that your current fear is another false alarm is high. Questioning the reliability of these thoughts can help manage the overwhelming fear they generate. 4. THE ROLE OF COMPULSIONS AND SAFETY BEHAVIORS Health Anxiety Compulsions and safety behaviors, such as constantly checking symptoms or seeking reassurance, often exacerbate health anxiety. One significant trap is becoming inwardly focused, constantly monitoring your body for signs of illness. This behavior leads to a vicious cycle where anxiety increases symptoms, which in turn heightens anxiety. Shifting your focus outward and engaging in meaningful activities can help break this cycle. It's essential to become more outwardly focused, enjoying life and participating in activities that bring you joy and fulfillment. This shift can reduce the power of health anxiety over your life. 5. EMBRACING LIFE DESPITE HEALTH ANXIETY Health anxiety often steals the very things we're afraid to lose—time, relationships, and enjoyment of life. The constant preoccupation with health can make us miss out on living fully. Therefore, the goal isn't just to reduce anxiety but to reclaim your life. Engage in activities you love and focus on adding value to your life. This shift in focus is incredibly powerful and can help you live a more fulfilling life despite health anxiety. It's not just about feeling less anxious; it's about living more fully and enjoying the moments that matter most. CONCLUSION Health anxiety can be overwhelming, but with the right strategies, it's possible to regain control and live a fulfilling life. Michael Steer's book, "The Complete Guide to Overcoming Health Anxiety," is a fantastic resource for those seeking further support and information. Additionally, his website, overcominghealthanxiety.com, offers a wealth of resources, including a free virtual support group. Remember, while health anxiety can take a toll on your life, effective strategies and a focus on meaningful activities can help you reclaim your joy and well-being. TRANSCRIPT: Kimberley: [00:00:00] Welcome back, everybody. Today I have Michael Steer here talking about the five things you need to know about health anxiety and how to recover from it. So welcome, Michael. Michael: Thanks for me. I'm really excited to be here and talk a little bit about health Kimberley: Yes. It's actually a very, very requested topic. It there's always questions about it. So I think this is really, really wonderful that we're doing it. Okay. So first of all, what is health anxiety? Let's just do a little bit of a, you know, intro, uh, tell me what it is and then tell me what it isn't. Cause that's point number one. Michael: Absolutely. Yeah. So we'll jump into point number one, which is I kind of was breaking down if I could have people know five things about health anxiety, what would I want them to know? Or people that support people with health anxiety. And number one point that you're going to bring it up is the first thing that I would want [00:01:00] people to know is exactly what health anxiety is. I feel like health anxiety is one of those things where, you know, you see somebody on their phone looking up symptoms and everybody kind of knows, right? They're like, Oh, I've been there before, right? We all kind of know what health anxiety is, but sometimes we don't know exactly like what it looks like or even more so that there's actually treatment that people can get that actually works. Not medical treatment, but maybe psychological treatment. So, um, I break down health anxiety in a couple of different ways, which is one is that. if you actually have a medical condition, so if you were diagnosed with cancer or, you know, whatever that might be. Um, there can still be anxiety around those types of things, but that's not exactly what we would be calling health anxiety. Uh, you know, kind of in a professional community, that would be an adjustment, Kimberley: Yeah. Michael: a massive adjustment, right? It's like you get this scary diagnosis, you're trying to go undergo treatment, those types of things. So that's kind of one category. And then, We also have this other category, maybe [00:02:00] what we would love them to call health anxiety, which actually is kind of awkward, too, because there's really no such thing as health anxiety, like, oops. Um, but there are some categories under health anxiety that we would say, these are actually what we're talking about. One of them is what we call illness anxiety disorder. Um, the other one is what we call somatic symptom disorder. And, uh, these are kind of the two things that we would call health anxiety. Now, Illness Anxiety Disorder is really a very basic way to break that down, is a preoccupation with your health, but you don't have a lot of symptoms that go along with it. I mean, you might have some here or there, and it's like, Oh, one day, like maybe my vision is a little bit more blurry, or I got a kind of weird pain over here. But the, usually the symptoms kind of come and go pretty, pretty quickly. Um, now, Somatic Symptom Disorder is still the preoccupation with your health. But the one big difference that people run into is usually the symptoms are pretty severe. They're [00:03:00] pretty significant, and they're usually a little bit long lasting. So, you know, maybe people are dealing with, you know, chronic stomach pain or pains in their stomach that they really become preoccupied about, but those symptoms are pretty significant where it's like impacting life, those types of things. Um, and then the other category that we can just throw in there real quick is also OCD. Um, and what we'll talk about here and, uh, maybe towards the end of this part is a lot of times I put health anxiety and OCD kind of as hand in hand. Uh, they're not the same thing, but they share so many of the similarities and how they work. And, um, if you ever look through some of the OCD literature. OCD can have health themes and so those would be times where we can be very, become very, you know, have the obsession and compulsion cycle go around health. So that's, that's really what health anxiety is, is usually one of those three things, which is either you don't really have many symptoms and you really worry [00:04:00] about it. You're actually having a lot of symptoms. you're worrying about it, or it may be a bigger dynamic of OCD, where maybe you have other obsessions and compulsions, and then maybe one of them is also just the obsessions and compulsions around your health. Kimberley: Amazing. Michael: yeah. Kimberley: What about hypochondria? Do we, where would you put that? Michael: So that's an older term. Kimberley: Yeah. Michael: So we've kind of, you know, and a lot of times, um, I feel like I'm kind of glad that that term has kind of shifted as just kind of like, you know, illness, anxiety, and somatic symptom. Um, just because there's a lot of judgment and a lot of negativity also around kind of, you know, as soon as somebody is like hypochondria, right? And it's kind of like, it comes with this like really negative experience and like, Oh, you know, they're, they just worry about their health all the Kimberley: Right. Michael: it kind of gets dismissed pretty quickly. So, um, that's just, if you ever see hypochondria, um, it's just an older term or sometimes it's still used in the medical community. [00:05:00] I think it's, even when you look up in some of the, um, Um, things to, uh, you know, for some of the coding, it still comes up as hypochondriasis. Um, however, it's just, it's the same, it's a different terminology just for what we would now call illness, anxiety disorder and somatic symptom disorder. Kimberley Quinlan, Thank you for sharing that too. Cause I think Googling, because that term has been used for decades, that is often what people are looking for. And I think, as you said, people get dismissed like, Oh, you're being such a hypochondriac about it. You know, that. I think is, I'm glad that you, you shared that. Okay. So that was number one. Number two, um, what is the second thing we need to know about health anxiety? Michael: So number two is kind of going right off of what you're saying is a lot of times, you know, what I would really want people to know is to, a lot of times people do get this mess. and even clients that I'm working with, because I work with a lot of health anxiety clients are still trying to navigate [00:06:00] that relationship between, they probably really do have some anxiety around their health, but they're also trying to work with the medical community. and that makes it quite challenging, um, because you know, there can, um, there can be some times where it can be challenging. People can get written kind of off of like, well, this person, you know, they've, they've been anxious about their health before, and then they've sort of become. Um, what could be an obsessive worry but also could be a very realistic worry of I go back into my doctor and they kind of know that I deal with anxiety around my health, they going to take me seriously? Michael: know, if I come in and I say, wow, I've been really having a pain here or here, are they really going to be listening to me? Like really take me seriously and investigating this or are they just kind of writing it off You know, this is, you know, awful, you know, this person has been anxious about a lot of those different things. So the one thing I, I think that we, um, that I think, I think is really important for people to know [00:07:00] is you're working with a medical provider and you don't feel like they're listening to you, they're not validating some of your concerns, they're, they're, you don't feel like they're really invested in some of these things. Um, it's always okay to go find somebody Kimberley: Mm hmm. Michael: That is totally okay to do. You can take it from me. Hell, like, you know, what I would, I don't know if there's no delineation of a health anxiety specialist, but I think there can be some of those times where things are not taken serious. So Kimberley: Yep. Michael: do feel like that is a relationship that you're having with a health provider, find somebody new. Go find somebody that really does listen to you, right? Now if you're also working with somebody that you feel like you really trust, you feel like They feel like they got your back, like they're, they're, you know, but maybe you're kind of running to the end of the road of like, I, don't know really what else we could test for. That's something different, right? Because at least there's that level of trust. So the second thing that we like when it goes into this piece of, you know, like Val or validating people's [00:08:00] symptoms is we also have to realize that there is a difference between physical symptoms, medical symptoms and then also psychological symptoms. And so here's how I break these things down. Medical symptoms is usually the ones we're really afraid of. medical symptom could be like if I have chest pain. And a medical symptom would be I need to go to the hospital because I'm having a heart attack. That is an explanation, a medical explanation of a symptom that I'm Kimberley: Mm hmm. Mm hmm. Mm. Mm. Mm. Mm. Michael: ER, those types of things. one category or one bucket that sometimes we put those in. A second bucket is what we call physical symptoms. And a physical symptom is something that's actually really happening in our body, probably don't need to run to the ER or the urgent care because of that. So like, for instance, if I went and did a bunch of yard work over the weekend, and my back really hurts, um, arguably because I'm getting [00:09:00] older or because I've done a lot of yard work, who knows? Um, Um, I don't, that's a real physical symptom that a lot of times our mind could try to catastrophize, but it's probably not something that I need to go and run to the doctor about. I probably need to take it easy, put a little bit of ice on my back, et cetera, et cetera. So we have medical symptoms, we have physical symptoms, but then also we have psychological symptoms and this is the way that our mental health can also affect our physical body. So for instance, if we're becoming anxious, I'm sure that, you know, if anybody has ever been anxious before, which I'm going to assume everyone has, If we become anxious, sometimes our chest gets tight. That's a real physical symptom. That's a real symptom that we have. But the origins of the conclusions of that is from a psychological standpoint. Now, here's why I think these buckets are important, why I want people to know about them. Surprise, surprise, health anxiety always usually goes to one bucket. Medical symptoms, right? It's like, Lower back pain, medical. You know, my chest is tight, medical. This weird kind of [00:10:00] feeling in the back of my head, medical. You know, all of those different types of things. And one of the things is being able to have this context of if I could start to separate some of these symptoms out to maybe there are some symptoms that I could have that are medical, but maybe there's also physical symptoms that are just happening. There's a great article that I always like to give all my clients The Noisy Body by, uh, Abramowitz, that's just a wonderful handout, a wonderful article. And it just speaks to the nature of like, well, we get signs and symptoms and weird feelings and burps and farts and all these things all the time. The hard thing is, is when our mind gets really preoccupied and starts to put them into the category of, oh no, what if, could this be this really negative thing? So I'd like to, that's the second point that I would really want people to know is. We have to realize that even though there is always this scary explanation of symptoms, it's important to have this perspective of noticing that there could be, there could [00:11:00] be medical symptoms that I need to really do something about, physical symptoms that I need to do to some TLC, and then also psychological symptoms. And then one last thing I just throw in there real quick before we can go on to the third one is, um, the most important part about this is regardless of what bucket you put this in, all of them are valid and real symptoms. that's the other piece that we get into this kind of like stigma or negativity, that sometimes people will talk about a real symptom that they're having, and then they'll be like, Oh, well, that's just your anxiety as almost as if the symptom is not happening. And so I think what I would really want people to know with health anxiety is regardless of what bucket it's coming from, it's always real. You're always valid and feeling it. The one question that we have to just ask, which is going to lead us into number three at some point is. Or can we trust that the explanation for the symptom that our brain has brought us really the explanation of what's happening? Kimberley: Mm. [00:12:00] So, I have a question, which you might answer it in, you can even use this for the, for an example. So, a lot of my followers know that I, in, um, in 2018 was diagnosed with Postural Orthostatic Tachycardic Syndrome. Michael: Mm. Mm Kimberley: one of the main symptoms of that is that you faint and a lot of, I'm very well in recovery of this right now, but one of the things was me without using this terminology, which you've beautifully put out. And I actually learned this terminology from you is it was about passing out, passing, like not, not, not passing out, like, uh, differentiating, sorry, my accent got it, differentiating. Um, is this dizziness from my anxiety? Is this dizziness evidence that I'm going to pass out, like faint? Um, Michael: hmm. Kimberley: because a lot of [00:13:00] having this condition is tolerating dizziness 24 seven of the day. Like it's a symptom of the condition. Um, so in that case, just as that as an example, how would you, which bucket would you put this in? Michael: For sure. Good. Great question. And this is where, like, health anxiety, I think that's why it's really important to, to really notice the stickiness of Kimberley: Mm. Michael: Because, you know, as an, also as an OCD specialist, a lot of times when we deal with OCD themes, not often having people, like, deal with, uh, you know, harm obsession. And also undergoing evaluations to see if they're a Kimberley: Yes. Yes. Michael: Uh, that doesn't really make sense. health anxiety starts to become this kind of interesting dynamic of, well, what happens if we have anxiety around medical Kimberley: Yeah. Michael: And also we have to like, go get evaluations and other things that are actually Kimberley: Yep.[00:14:00] Michael: that's a great point. And it's like, okay, so what if the, um, Um, you know, the symptoms that I'm feeling could be an explanation of a medical condition that's happening, or it also could be, you know, from the place of, um, you know, from my anxiety. Um, think the answer comes down to, um, is going to this, what I usually like try to call a pretty, a best guess. Which is, now, when we're thinking about passing out, the one thing I think is always important. as a person that works on a lot of needle phobias and blood phobias is that if you feel like you're going to pass out, get yourself in a safe place, right? Like sit down, make sure you don't hit your head. You know, Kimberley: Yep. Yep. Yep. Michael: But also there's this kind of conclusion that we can come through with our experience that says, know, um, if I, if I think about the symptoms that I'm having right now, where would I put my best guess on those, right? And if we're putting this, that medical side, then we could say, okay, well, [00:15:00] Um, I need to do whatever the doctor has recommended that I do in those situations because that's just what's most helpful. If I'm feeling like it's more on the anxiety side, that's maybe where I could use some of my tools that we learned in therapy to be able to manage that. Now is it a perfect system? No it's not, right? Because there's always this little piece of uncertainty and the unknown there Kimberley: hmm. Mm hmm. Mm hmm. Mm hmm. Mm hmm. Mm hmm. Michael: that's, I think that's what's also really important about being able to kind of discuss those things either with your doctor or a therapist to be able to really walk those muddy lines. Um, I have quite a few clients that we try to walk that line all the time where, I've had clients where thought that maybe this was or maybe it was assessed as like, Oh, this is just something anxiety related. That's why you're having symptoms. And then it's like, months later, surprise, I'm allergic to this, right? And so, that's why we don't always know the answers to all of [00:16:00] those things. Um, but as we kind of go, we can kind of walk that line to say, could I make my best guess about what this is at this current period of time? And if that was the case, what would I do in that Kimberley: Yeah. Michael: You know, and so do I need to go a medical route? Do I need to go to a psychological Kimberley: Yeah. Which I think takes us to next step number three so beautifully. So go ahead and share what is the third thing we need to know. Michael: Absolutely. So number three talks about. Um, a lot of times our brain can bring us to a lot of different conclusions and we just talked about the conclusions that a lot of times our brain Kimberley: Yeah. Michael: into in terms of medical, physical, psychological. And a lot of times we just take those conclusions as the truth. go with them because they're terrifying, they're scary, right? And they feel really threatening. And so one of the things that I think is important for people to recognize is I like to use the example of a spam email. is I'm sure we've all gotten spam emails. And if you haven't gotten a spam email, please let me know your trick because that would be I could clear out like [00:17:00] 75 percent of my email box. So but a spam email to me is kind of walking this line between is a spam email real? Oh, of course, we all get them in our email box, right? Like they actually come through to us. They have a time stamp, et cetera, et cetera, right? But the one question that we have to start to kind of wrestle with with health anxiety is. is the conclusion or email that I'm getting a reliable source of information. so if you get an email from tomjones1973 at AOL. com that claims to be from the FBI, why would the FBI be sending you from AOL? That doesn't make Kimberley: No. Michael: Now, is that email real? You betcha. However, if we can question its reliability to say, can, you know, do I trust this email to be what I think it is? Kimberley: Mm hmm. Michael: Then that can really start to dictate some of the actions that we take. So when we think about health anxiety, right, is your brain can give you a lot of really scary a lot of really unknown possibilities that could be going on with you. And [00:18:00] so, you know, one of the things that I think we have to really kind of start to become curious about is, do I just go with them? You know, am I there just responding to all of my spam emails in my email box? And if you do, we probably need to help like. Credit monitoring and all those Kimberley: Yeah. Michael: besides, from that point, do we get ourselves into a lot of actions that could be very unhelpful when we take these emails as as reliable? So, like, for instance, if you, you know, you have the dizziness, right? And you're, you're, you know, the initial evaluation or conclusion that your brain comes up with, aka what we could also call an obsession, right? Is like this could be an aneurysm, right? Or maybe you have a stroke or all these different types of really scary things. If we take that as a reliable piece of information, it starts to make Kimberley: Mm hmm. Michael: that we would be like, well, I need to figure that out. I need to be like, look up some symptoms of online or I need to go to the urgent care, whatever those things are, right? but if we get a, oh, by the way, I should have included this earlier, but [00:19:00] that's okay. We'll include it Michael: This is all on the premise that we have a relatively good answer. if you don't. If you're getting dizzy for no reason, and you have no idea why, I don't want you practicing anxiety Kimberley: Yes. Michael: Go to the doctor, right? Like, explore those things, figure those things out, try to get a pretty good answer. However, if we get a pretty good answer about something, and we are going to say it's like, I think this is because of my anxiety, but my brain wants to really convince me of all these other conclusions. can we use some of those tools in terms of, you know, Becoming curious about, can I really trust my brain sending me right Kimberley: Mm hmm. Mm Michael:  if this is like the 937th time that I'm convinced that I've had a stroke, what's the chances the 938th time is going to be it? Probably not. so, I could go look on things online, or probably got a lot of other things to do, too, that I could go and get involved with as well. So, that's it. One of those tools is, is really being [00:20:00] curious about, yeah, your brain's going to give you a lot of really scary medical possibilities. If we can ask that question of not if it's real or not, because those things are totally real, but can I trust the message that I'm being sent? It can start that process. Now, the other tool that I really like to use with people is diffusion. Um, and, and to kind of give it a quick breakdown of cognitive fusion, even though some people may be like some of the listeners may know, is just being able to like what kind of relationship that we have with some of our scary thoughts. so sometimes I kind of describe as like, well, it's not really necessarily getting away from them. It's just about changing our perspective towards them. So like, I kind of think about this example. It's like if you go out into like a really busy highway, you set up a lawn chair right in the middle of a busy highway and you have cars whizzing by you, you can see the traffic, but man, oh man, is it overwhelming. And so if we can use some diffusion skills and those would all be the great things, like, you know. Uh, just repeating or thanking our mind or my favorite is always just [00:21:00] singing, like, you know, the tune to happy birthday, Kimberley: Yep, Michael:  be right is sometimes those start to kind of be able to take us from this position of, could you just take your chair and put it on the side of the highway? And if we can do that, we can still see the traffic that's out in front of us, but it's much less overwhelming at that point because you don't have cars whizzing by Kimberley: all right Michael:  these cognitive interventions, I think, can be really helpful. Um, because a lot of times our brain is leading us to all of these conclusions, giving us these really scary ideas, and it might really start to go against the information that we have at that time, at least medically. Kimberley: Amazing. And I, the reason I love this is that was a big piece of it for me, just to sort of give a real example of me having health anxiety and a chronic illness when you are you're dizzy. My brain was like, this is it. You're going down, you're going down. And I had to get used to just having the thought like, yeah, you're dizzy. It could be it. But we know the symptoms of when you are, and you're just, you know, again, like you [00:22:00] often say, like, it's about being uncertain and being able to just to have the thoughts whenever they show up. So would you add anything to that or, Michael:  Know it. And I think what's important with that is, there's a piece of uncertainty Kimberley: um, Michael:  but we can also act within a reasonable Kimberley: yes, Michael:  right? It is like, you know, we can, we can always make those, you know, I always love delay in these situations Kimberley: um, Michael:  is if I start to become dizzy and I'm concerned that like this is going to be, this is me passing out, right? And if you just like, if you're dizzy and you remain dizzy and you remain dizzy, you know, those types of things and it, you know, you're just kind of like working through it and it's like, okay, maybe that's one thing if you're dizzy and then the wall start closing in, right? And you start to get tunnel Kimberley: yeah, Michael:  Well, that's what you can always make a different, Kimberley: yes, yes, um, Michael: I think the lay, but. nothing about health anxiety that likes delay, right? Because whenever these [00:23:00] symptoms come up, it's always going to be about you need to do this Kimberley urgent, Michael:  to the E. R. Currently, like right Kimberley: yeah, Michael:  wait, Kimberley: yeah, yeah, Michael:  if even if we're able to kind of like practice some type of delay, right? We'll be like, okay, this is what this feels like now. I understand the concerns my brain has, like not quite sure if I can trust it. I don't know. It's giving me some bad advice before. I But could I just wait that out and kind of see how that Kimberley yeah, Michael:  And, you know, if it continues to get worse or you start to get tunnel vision, go take care of it. There's probably something going on. But if those experiences, you know, I think what happens a lot of times for people is they, they try to move themselves on to something else, right? They get back to dinner or whatever it might be. And then they kind of have that reflection point or like later of being like, Oh yeah, I was like dizzy Kimberley: um, Michael:  earlier. And it's like, Oh, Kimberley: um. Michael:  to that? Right? So I think delay can be a really helpful Kimberley: Fantastic. Quickly, just because I have a couple of people in mind, and I know what their questions would be here, is in regards to [00:24:00] the, the point number two, where we were talking about the difference between medical, physical, and psychological. Let's say somebody. Um, has just intrusive thoughts about like, what if, actually maybe no, let's say they have a headache, a physical symptom and their brain is just constantly telling them like, this is a brain aneurysm, or this is a brain tumor, like this is cancer and it doesn't quit, um, Um, and the person also experiences this sort of intuition that this is what it is. What, how would you, what, what bucket would you put that in and would you use the same skills? Michael:  So, yeah, so the, the questions that I would have for that situation, which is number one, have you been to the doctor? You know, have you gotten it checked out? Have you like evaluated some of these, you know, headaches that you've been Kimberley: Mm. Michael:  Now if they say, uh, no, I've never been to the doctor about that. I'm, I'm not a doctor. I'm going to say would be [00:25:00] kind of silly of me at that point to be like, you're Kimberley: Yeah. Michael:  You know, that's Kimberley:  Just tolerate the uncertainty. Michael:  Yeah, that'd be good, right? We're like, that's probably not great. So because nobody would do Kimberley: No. Michael:  Like we, well, hopefully most people would not do that because if there is, so that's the first question I would always Kimberley: Mm. Michael:  is if you're having a physical symptom that's different, that's changed, that's more significant, whatever it might be, question needs to always be, have you gotten this Kimberley: Mm. Mm. Michael:  part that it's, I really wish there was a better answer to this. but there's not the least that I found, which is like how much is too much, you know? So if you're like, okay, so let's say the answer is yes, I have gotten it looked at and they can't find anything. Um, sometimes the conversation starts to become, well, how much, like, should I go for a second opinion or third or fourth or fifth or sixth? Um, and what's really difficult about that [00:26:00] is no one really knows that answer. Okay. And, um, what I try to really do to level with people, too, is that, you know, if you were having that headache and you're like, I don't know, Mike, like, this is like, I've seen like four doctors, still feel like there's something, like the intuition Kimberley: Mm hmm. Michael:  feel like there's something wrong. There's something going on. I can't, I can't fight you on that and being like, no, you shouldn't, right? Because I, the fifth time might actually be the time where it's like something comes back and you're like, oh my goodness, like, I'm so glad they found that. So. always this kind of difficult time that I get these questions where people would say like, what, what, what is too much now getting like a fourth or fifth or sixth opinion, whatever that might be, could just be reassurance Kimberley: Mm hmm. Mm hmm. Michael:  you know, getting another clear scan or whatever that might be. And it just kind of gives us that temporary relief of like, okay, goodness, like nothing's going on. But I think it's reasonable for us to know it's like it's not a very clear cut kimberley-_1_06-04-2024_101032: Mm hmm. Michael:  Of saying, like, [00:27:00] everybody's in their right to go get another opinion. you know, to, you know, however much you want to pursue that. We have to be on board and somewhat of being like, okay, like, go do that. But the other thing that I would always throw in there, too, that I like to try to work with people is, there's going to be productive ways that we can pursue that, there's going to be unproductive Kimberley: Mm. Michael:  you're having those headaches, and you're, and you're like, I've seen three people, I kind of want to go see four, I would say, I can't fight you on that. You should go see that fourth person, see what they say, but that's a productive method of trying to figure something out, right? Like, cause you could possibly, they could give you some scan, right? And be like, Oh my goodness, like right here, we found something, right? also other unproductive behaviors that sometimes people get into, um, that like your brain at 3 a. in the morning while you're ruminating about if there could be something going on in your brain or not, right? have no access to scans, like you're not gonna figure anything [00:28:00] out. You're not gonna come to some revelation of like, Oh, now that I can see inside my brain, I can see what the problem is, right? So, there's, there's kind of an encouragement that I try to give to people, too, is if you really feel like there's something wrong, and even though you've gotten a lot of things that have said maybe nothing is wrong, if you want, if you feel like it's necessary to continue to pursue those productive ways, set an appointment with a doctor. Go to that appointment when it's the time, right? Great, go do those. But some of these other things when we're thinking about like, but are we like ruminating about this for hours on end during the day? never going to become anything Kimberley: Mm. Michael:  not going to come to some insight of like, ah, I see everything clearly now, I see what's wrong. And so we try to practice those tools in those situations of saying, you know, if that's kind of an unhelpful thing to do, could I find something better to do? Uh, to do with my time than just endlessly going over this in my Kimberley: Yeah. Amazing. Which [00:29:00] ties us right into the thing number four. Um, tell us. Michael:  four, the four, I almost held up five, so that's good. Number four is, now, when we think of like, like, you know, for some of the viewers who might be a little bit more familiar with OCD, a lot of times I just use the terminology of TOs Kimberley: Mm. Michael:  triggers, obsessions, and Kimberley: Mm. Michael:  you might be saying, it's like, well, I didn't think health anxiety was really OCD. It's not. But. The functionality of these things kind of operate in the exact same way. So number four is talking about compulsions, or if you just wanted to view it as safety behaviors, that's cool, too. They kind of do the same thing, which is there's going to be physical or behavioral compulsions that we could do or mental. and one of the things that we really have to account for is just their ability to not really be able to give us an answer that we really want. and how sometimes it actually, especially with health anxiety, one of the things that I'll point with health anxiety. Usually makes things [00:30:00] worse. So there's always like pretty classic different mental or behavioral compulsions, you know, googling or, you know, going on Web and D and clicking on the little body right and being like, you know, we get the huge list, you know, you put in fatigue and it's like, gives you all these terrible things, right? It's like, Oh, maybe I don't Kimberley: There's like cancer at the bottom of every single Urban D article. Michael:  Yeah. Yeah, it's just like this. Just put it on the Kimberley: Yeah. Michael: you know, it'll be there. Um, the one thing I think is really important to consider specifically with health anxiety is the tendency for us to become really inwardly focused. And I think this makes it really difficult people to be able to have any chance of being able to move on from any of their health worries. a lot of times what we all want to do is the one thing that we want to monitor is the thing that's wrong. And so for instance, if you go back to your dizziness, right, we might continue to check in on that being like, well, my dizzy now or my dizzy now. How about now? [00:31:00] But the problem is, is that now you're like now you're swapping buckets, Because we have the medical that we have the physical and we have the psychological bucket. But what's a, um, I don't know. You feel dizzy because you drank a little bit too much coffee this morning. You're kind of feeling a little whoa, right? That's a physical symptom. not medical. You don't need to go to the doctor and be like, I've drank too much coffee and be like, great, just go run around for a little bit. Work it off. Right. Um, but the hard part about that is like, so that's a physical symptom. However, then we could start to get that conclusion that we talked about of like, Oh, my goodness, like, what does this mean? And maybe the conclusion is medical. You know, it's like, Oh, maybe I'm gonna pass out. but then the result of that is psychological. We start to get anxious about it. We're like, Oh my goodness, like this could be really bad and like, I don't want this to happen. However, now the byproduct of anxiety a lot of times is lightheadedness, right? And so we work into this catch 22. The [00:32:00] hard part about it is we keep checking in on those and there's a lot of body monitoring with health anxiety that really gets people stuck, um, paying attention to feelings and sensations and symptoms. And the hard part is it keeps going back and forth between these two things of we get really concerned about a symptom. It makes us feel anxious, which increases symptoms, which we notice more. And when we notice more, it makes us feel more anxious. And when we get more anxious, and so we just keep getting into the step ladder. So one of the things that I think is important when we think about this Catch 22 that starts to happen, is I try to really encourage people to think about, If often you get, start to get stuck within your body, your, your focus is inward thinking about how do I feel, what do I notice all of these different things? biggest goal that we can do with any of these things is how do we become more outwardly focused? That doesn't mean that you have to like [00:33:00] pretend that you're not feeling some of these things. Um, I'm a huge fan of dialectics in terms of using and Kimberley: Yes. Michael:  which is noticing like I'm feeling dizzy right now. And also I could try to be as best of my ability really involved in whatever is going on around me. Um, and so think it is, like there's a lot of different compulsions and things that we could talk about, but the biggest one I would want to bring up, at least for people to be aware of. it's becoming more inwardly focused, gets us stuck Kimberley: Yeah. Michael:  And, and it's, and understandably it's scary. to direct ourselves away from those, right? Because then it starts to feel terrifying of like, oh my goodness, if there's something that's really going wrong with me and I'm not paying attention to it? And that's where we start to get to the feared consequence, Kimberley: Yeah. Tell Michael:  some of the work starts to become, which is if I can recognize I have a pretty good answer about [00:34:00] this, maybe my brain isn't being all that reliable. I think this is just a psychological symptom. Um, maybe I'm willing to take the risk that maybe it could be something bigger, better. Um, but in service of being able to get back to my life do the things that I would like to be able to do, maybe that's a risk I'd be willing to take. Kimberley: me about number five. Michael:  That leads into number five. realize whenever I wrote these out, these were going to blend so well, but Kimberley: It's like we're flowing. We're in, we're jiving today. Michael: I know, right? The number five just goes back to this piece of The hardest thing about health anxiety is that one of the things it's not always about death because that sometimes that's what people always think is like, Oh, you're just afraid to die. Um, Kimberley: Mmm. Michael: people's faces whenever I always had the pre face, know, we always like to ask that question of like, what would be the worst thing about that? And health anxiety is always the really like, [00:35:00] uh, interesting one where it's like, well, I'd probably die and be like, what would be the worst thing about that? And people look at me and they're like, Kimberley: I'd be dead. Michael:  that'd be dead. And I'd be like, yeah, I know, but what would be the worst? And so for some people it is, Kimberley: Yeah. Michael:  death. But there's a variety of different, um, feared consequences that I think it's important for people to wrestle with too, which is some people it's around Kimberley: Mmm. Michael:  Some people it's about just the struggle. It's about treatment. It's about just how miserable it'd Kimberley: Mm. squadcaster-48hd_1_06-04-2024_121032: You know, uh, it would be about, you know, the whole process around, you know, getting treated and. You know, saying goodbye to people. For some people, it's not just about death, but it's also about, um, like, the impact that they would see a huge increase in health anxiety when people usually have, like, big life events. Uh, not just in terms of stress, but like, they get married, and now it's kind of like, it's up the ante of their health anxiety. It's like, well, now it would be kind of bad if you Kimberley: Yeah. Michael:  But it would be even [00:36:00] worse because now you'd leave like your spouse behind or even worse like Kimberley:  Yeah. Michael:  kids search into the picture, right? And it's like, Oh my goodness. And so I think it's really important to kind of start to look at is a lot of things that we could really fear to lose. The dirty trick that health anxiety plays it kind of makes us lose those things before we've even lost Kimberley: Yeah. Michael:  And what I mean by that is that sometimes we become so preoccupied with our health. Going to the ER, you know, running to the doctor again or, uh, just ruminating her mind or, you know, the family's around or you're having dinner and you're on your phone, right? Like looking up symptoms, right? things that we're afraid to lose might already be Kimberley: Yeah. Michael:  they're there in front of you to be able to engage in. the really hard thing is, is we're afraid that those would go away, but they've already gone Kimberley: Yeah. Umm. Michael: other process. So. think the one thing we have to kind of really wrestle with is [00:37:00] it's not just about trying to get rid of anxiety. I mean, that's part of the picture. Um, I'm sure for anybody that's ever in the helping profession, they'll always have somebody come in and saying, I really want, you know, this to go away, to be less pain, to feel less anxious, to feel less sad, whatever that might be. And those are cool goals. Like I'm on board with those, right? Like, I don't want people to feel more anxious. Um, I want people to feel less anxious. But if that's the extent of our goals for ourselves is just to, like, worry about my health less, I mean, that's kind of good, but we're missing a big part of the picture here, which is really, what can we add? You know, because health anxiety wants to steal all these things away from you in your life, The things that we're so scared to lose in the first place. And so a big part of number five, I think, is important for people to really recognize, is that Health anxiety is going to want to take those things away from you. And I wouldn't want people to work just like feel less anxious about their Kimberley: Yeah. Michael:  I would want them [00:38:00] to work in what are the things that you're really afraid to lose. I want you doing more of Kimberley: Yeah. Michael:  Right. And that is going to get to the point of having to work to give up some of the things that often would make us feel like we need to do to be able to keep ourselves safe. And that's hard. That is, that's the Kimberley: Yeah. Michael:  Is being able to lean into those things. But, the work also becomes, also gets with the reward, which is, we're actually being able to live life and be able to do those really meaningful and valuable things that we really are afraid to lose in the first Kimberley: Yeah. And when you start living your life, you tend to be focused less inward on all the symptoms as well. So it's sort of like a reverse snowball effect. Michael:  That one of the, absolutely. Good, I'm glad you bring up that point, right? Because that's what happens, Kimberley: Yeah. Michael: we get involved in something else, we start having fun, and then it's that tendency for our mind to want to go back to be like, well, how does this[00:39:00] Kimberley: Yes. Michael:  How does this feel? And so my encouragement for anybody is that about trying to get away from those. I try to draw a quick, line between distraction and redirection, which is a distraction is like an escape, right? Be like, I can't think about this. I got to get away from it. You know, like, let me focus on this movie, Kimberley: Mm hmm. Michael:  Where a redirection is really just trying to make a place for that of just noting of like, yeah, I am feeling this way. I noticed my brain is like yelling at me to be like, look this up on Google right Kimberley:  Yes. Michael: I could notice that. And also, I know it's going to be more helpful for me to make a place for that. Get back to the movie. Really try to get into that. Pay attention to it. that gives us a chance to do, just like what you said, is now we're focusing outside Kimberley:  Yeah. Michael: Instead of all the things that could be going on in our body, which some of them could possibly be serious, but most of them are probably just our bodies being Kimberley: and I think that's cool too is like our bodies will be bodies there, especially as we [00:40:00] age. I see a lot of people's health anxiety go up as aging. You said aches and pains, sleep issues, like it's so common. Yes. Yes. Okay. Yeah. Michael: and it's like sleeping on like something like really uncomfortable floor and And then like, I'm like, oh, I slept really good. And then like me, as I got older and there was like a sock in your bed that you slept on and you're like, oh my goodness. Like, and, and age is gonna Kimberley: Yeah. squadcaster-48hd_1_06-04-2024_121032: had to remember as, as age goes up, health kimberley-_1_06-04-2024_101032: Yes. Yeah. Yeah. Michael: you know, the question real quick, I'd just like to add with this is a lot of times I do get the question of like, well, what if you've had cancer in the past? Right? Like, is that still health anxiety? And it's like, well, you know, if you're in remission you're doing all the things that you need to do, you know, you're probably getting more frequent scans, all those different types of things. We can still become preoccupied with the [00:41:00] possibility of like, what if this new thing, whatever we're feeling is cancer again, right? And that's, I think we have to walk that, that piece of like, that's an incredibly understandable place. And also we go back to number three. which is, is like, are we getting information from our brain that's reliable? And if all the other information that we have in the current period of time, working with an oncologist, whatever it might be, is saying, Hey, your markers look good. Blood work looks good. Your scans look great. Then that's maybe what we challenge ourselves to say, maybe I need to get back the things that are most important. Kimberley:  I love this so much. Thank you so much for sharing these points and bringing so many applicable skills and tools as well. Tell us where people can hear about you. Tell us about your book. All the things. Michael: Yeah, absolutely. So, um, A couple different things with that. One is we did release a book in the mid December. Um, [00:42:00] it's right here. The Complete Guide to Overcoming Health Anxiety. Uh, How to Live Life to the Fullest Because You're Not Dead Yet. Kimberley:  Punchy little yes. Michael: Still here. So, um, there is a book out on Amazon. You can get it, uh, soft cover or you can get a Kindle version. It's written, wanted to write it. Uh, so the, my coauthor. Uh, Josh Kimberley:  Yes. Michael: and I wrote it, um, and we really wanted to write a book that didn't feel too clinical, didn't feel too like, um, you know, that, you know, like you're reading like a, an academic book or something like that. So I think if you appreciate maybe a little bit of a lighter approach, at sometimes funny, some points, uh, cringy, maybe not cringy, I'll just blame it on Josh. Maybe that was all his cringy points. I, I did all the good jokes. Uh, just kidding, Josh. I love you. Um, uh, it is, it's just written in a little bit of a different way that I hope that, you know, some of the feedback [00:43:00] is for people have said that like it's written differently, but it's just written and they feel like they can connect Kimberley: Yeah. Kimberley:  make sense. Um, but that's also very back to, you know, number three that we talked about in terms of cognitive interventions is that you know, it's really important to start to change our relationship with those. So the book is out there, but also we, we also started a website, um, overcoming health anxiety. com. Um, and it has a ton of different resources. We just redid it and try to add a bunch of different other stuff. So we have a health anxiety one on one section. We have treatment resources. have videos, you know, different podcasts. Um, we have a link to our free virtual support group that meets every Thursday of the month. Michael: So, um, uh, so, uh, we have a link to there. Because we really just want to be able to try to reach out. And like I said when we first started [00:44:00] is, a lot of people know that this is a thing, right? Because they, they know and there's even the term cyberchondria out there, right? Like people know about health anxiety. But very people do know that you can actually like get Michael: this not necessarily just through a doctor in terms of like, Oh, here's your medical treatment, but there's psychological tools that you can use that with that. So, yeah, those are our resources. We got that website. We got the book. Um, and, um, we're just trying to connect with health anxiety sufferers to show them that there's some hope to feel better. Kimberley: So good. Thank you. So many wonderful resources and amazing book. Thank you so much for coming on. Um, those folks are the five things you need to know about health anxiety. Thank you so much, Mike, for being here with us today. Michael: Thanks for having me. I appreciate it.

How should I put myself out there as a screenwriter in 2022? If you follow me on social media, you know I constantly give people that advice, "just put yourself out there." Well, this week on Screenwriter's Need To Hear This, we discuss where "there" is and how to put yourself out "there."Show NotesMichael's Online Screenwriting Course - https://michaeljamin.com/courseFree Screenwriting Lesson - https://michaeljamin.com/freeJoin My Watchlist - https://michaeljamin.com/watchlistTranscriptions are Auto-GeneratedMichael's Online Screenwriting Course - https://michaeljamin.com/courseFree Screenwriting Lesson - https://michaeljamin.com/freeJoin My Watchlist - https://michaeljamin.com/watchlistTranscripts are auto-generatedMichael:You know, there's not a lot of demand. There's not a strong demand for, for poor to mediocre scripts. And I think some people think well, but that show on TV that show's terrible. Can I do that? Mine is just as bad. It's like, well, we, we can talk about why that's bad or you know how it's unfair that their bad show is on the air, but, and your a bad show, your equally bad show is not. We could talk about that, but I think your odds, it go up exponentially by doing something great. You're listening to screenwriters. Need to hear this with Michael jam.Michael:Hey everybody. This is Michael Jamin. And welcome back to screenwriters. Need to hear this, the podcast for screenwriters who need to hear this. And today we are talking about the title's episode is when put, when putting your work out there, where is there? Because I, I say that a lot. I say, Hey, just put your work out there. And people, one guy was like, Hey, well, we have a where's there. Where is there? Which is a fair thing to ask. And so my answer to that, Phil is anywhere, put your work out anywhere. So whatever you got going on, if you've got nothing going on, which is fine, then putting out your work out there means giving it to somebody else. You know, if you're only, if you only read person, who's read your script or you seen your project is your mom. Show it to one other person.Michael:Now you've doubled the number of people. And now you may think that, okay, but that's not enough. Okay. There are other things you can do. But so many people think like, you know, when you're putting your work out there, is there a website? Is there a contest? Is there someone's door stop? Is it me? I'm not the gatekeeper. The gatekeeper is not what you think it is. You know, when I first started in the business, I was just a dude who wanted to be a writer. And I teamed up with another dude who wanted to be a writer. There was nothing special about us. We didn't have connections. We were just two dudes and we were, we became friends. Right? And that's how a lot of partnerships or, you know, that's just a lot about how opportunities, not even just partnerships, it's people who are friends, just doing things together because they both have a similar goal.Michael:And so putting your work out there means finding people like you, because making it in Hollywood is climbing a mountain. And when you climb a mountain, you don't start at the top. You don't, you know, you don't show up to Netflix with your script. Hey, get, you know, it doesn't work that way. I mean, maybe it has for one person and, but don't kid yourself for everyone else. You have to climb your way up the mountain. That means starting at the bottom, not starting at the top. And so where do you start at the bottom? The bottom is anything more. But if you've got this going on in your life, which is nothing, then do something, which is a little more than what you have. If your neighbor's shooting something and their backyard, that's more than what you got going on. It just because they don't have the universal studios backing them doesn't mean it's not worthy of getting involved in them, you know, and whatever they're doing, because those people, people with similar interests tend to do things and they rise up and you wanna be part of that.Michael:A simple thing to do, a very simple thing to do is if you live in a city, go to your local film school, like how, you know, a lot of cities have, or towns have film schools. And every semester they have they usually have like film festivals, like to, to air the kids' work, their projects. And no one's going to those things be, who's gonna go to that. Like just their mom and their dad, and maybe the roommate go buy a ticket. It'll be $5. It's not gonna be much. If anything, maybe he's free. Go sit through these movies and go watch them. And at the end, mingle with the, these kids and find something nice to say, even if they're terrible, there's, I'm sure you can find something nice to say about something. Go up to the director. I love the way you lit that scene in the alley.Michael:Go up to the writer. I love the way you wrote that, that wonderful, the triplet, you know, in the bedroom scene. I love that. I love that. Go up to the actor. You play that so wonderful. Even if it's terrible, even if like the whole thing as a whole, isn't great. I know you can find things to like about it. And just go up to those people and say, Hey, I love what you just did. Consider myself a fan. I'm a fan of your work. Now, a young kid who hears that is gonna freak out because imagine a stranger saying that and that kid, maybe they can't collaborate with some on something now, cuz they're in film school, but they'll be at a film school in a year or two or whatever. And now you are part, you know, now you're hanging out with people who want the same thing and, and maybe you collaborate.Michael:Maybe you'll work together on something. Maybe you won't, maybe they'll have an opportunity to, you know, to hire you on something. But those people are gonna go up and you wanna build that base. You wanna build that circle. And that's honestly, you know, that's one of the advantages. So we have this, this, you know, screenwriting course. And one of the advantages is that we have a private Facebook group and I see the people in this FA the private Facebook group, they've gone to my course, they've learned all the lessons and now they start, they're ha they're collaborating. Some people are teamed up. Some people are they're doing table reads together. You know, they're socializing in the, and I think that's fantastic. I'm not doing, I'm not organizing any of that. They're organizing it on their own. They're having table reads. They're helping each other out, which is so smart because that tide rises, man. You, you know, they help each other out. People are already doing great things in that, in that group. Good for them. And they don't need me. I, I don't need to, you know, prod them. They're doing it on their own. These are the fact that they're doing it on their own. These are people who are, who want it, who want, who will make something happen, cuz they want it. You know? Yeah. I've always hanging out with those people.Phil:I've always described that group as a, as kind of, there's a barrier to entry there. And I think that, you know, you and I have talked about this too. There's a price on your course and there are a lot of people like, well, why are you charging for a course, if you, why are you giving this away? And I'm the one who pushed for the price on the course because I have experienced enough. And I've invested enough in myself in many ways in the business world and the marketing world. I continue to do this. I've paid for most screenwriting courses online because the people who will appreciate it the most are the ones who will pay for it and you're giving away important information. Yeah, but that also is important to those of us who are in that private Facebook group because all of us are showing we are committed to making this work. And that means when people are asking for notes, they're asking for help. They're asking for feedback. The value that is being shared in that group is, is extremely high. And I've been in a lot of free screenwriting groups. It's people who understand, they think about it the same way. And they're just as committed to the, to making this work and making crew out of this as I am. And as the Dave Crossman's are and the mic, everyone, everyone is,Michael:They got skin in the game. You gotta put skin in the game free. If it's Free's worthless and it's not worthless. So put skin in the game and that'll keep and, and, and that'll keep your, you know, motivated. , you're investing in yourself. You're gonna be motivated to make something happen. And, and yeah, so anyway, I would, that's one thing I would do. I'd go up to those film schools and start socializing with those kids. I would, if you're in a town in the middle of nowhere, I would go to your community theater, local theater, and you'll find people, actors, writers, directors, who wanna be involved, who want maybe they want to be involved in your next project that you write. They just wanna act in it. And so that's your little circle. I mean, and there's amazing things that can be done.Michael:Remember everyone who got like, who breaks into the business? We we're, no one's beforehand. There's nothing. It's not like we had signs over, had future success. It's, you know, we're just people. And so that's what I would do. And, and a couple of a couple weeks ago, maybe it was months ago, I don't remember, but some, some kid reached out to me from film school. He wa he was looking for an actor in his fifties to, to be in his, you know, student production. Now wasn't really interested in that. But if I were an aspiring actor, you better believe I would've said yes to that. I would've you know, yeah. I'll, I'll do that because those kids are going places and now you're building out your network. And so there's just no, like where is here? Here is anywhere. Just put it out anywhere, do whatever, you know, that that's, I mean, that's what opportunity looks like opportunity. Doesn't look like someone handing you a check opportunity, looks like you making things and doing things, you know? And, and they always, one thing leads to another. It just does, you know?Phil:Yeah, absolutely. I mean, you've put yourself out there over the last year on social media and you. Yeah. Right. And that platform, you know, we had a podcast recently talking about, like, if you were trying to break in, what would you do? And you would do this. You would be putting yourself out on social media. Mm-Hmm podcast. I think I look at that and I think, okay, I am not a produce screenwriter. Why would I write a podcast? Why would I have a podcast about screenwriting? I don't know that I would, if I weren't here with you, because I'm very aware that there are a lot of Charlas and snakes oil salesmen, trying to get ahold of people and make them think they're an expert. And they're pretending to be something right. If you're interviewing experts, that's a different story. If you're providing value in getting access for a different way, that's a different story. But that doesn't mean you need to be putting yourself on social media as a screenwriting expert, if you are not. I think what you're saying is you should be showing everyone what you have. You should be giving it away for free. You should be putting it out there so that people can easily get access to the special thing that makes you a talented person who can write act direct, produce, whatever it is you're doing.Michael:And you've had some opportunities just because of your you're doing this, or people know you and people, you know, come up to you just because of this, because you're putting yourself out there. You know? So, and you know, we talked about some things off all on the side. Things, opportunities have kind of come your way as a, just because of what, just because you're here now, you know, mm-hmm, and you're showing up, you know, even on the, even on the job you were currently working in, you're showing up. Yeah. So yeah, don't I guess don't be so literal in terms of like, people say, well, you know, how do I get my show on HBO? Well, you start at the bottom. That's how, yeah. You know it, you know, I don't, I, I, I certainly did. I certainly it's so odd that people, I don't know, I guess they getting its information on the internet, but like, like they're like, how do I sell a show on HBO or, or any network really?Michael:Right. And well, I'll tell you how I did it. I started at the bottom so I can go in and I can pitch them and it's not easy. And I certainly, it's not a guarantee I'll sell anything, but I can, I can get the session. I can, I can get the pitch, but it's because I've earned it. And they've, they trust me now with that I'll do a good job if they want it. And that, you know, I know how to make it, but so a stranger, they don't just come off the street. They're not, what do they, they're not gonna just trust someone who hasn't done anything before. Why would they, would you, I mean, would anybody, you know, you're not gonna hand over a check for a couple hundred thousand dollars to someone who hasn't done anything before, that would be nuts.Phil:That message is something that separates you from every other guru in the, in the world. Not that you call yourself a guru, but there are a lot of people who claim to claim to be, and there's selling the dream. And when we started putting the course together and we started putting this stuff out there, that was one thing you were adamant about. I cannot sell the dream. I can't be the guy who goes out and tells them you're gonna make it buy my course, rah, rah, you're gonna make it. And there was a lot of pushback on putting a price tag on the course. And I said, you need to, because they're gonna need to value it. And we have to figure out a way to not to not sell the dream and your way of doing that is being so real with people.Phil:That, that seems to be the thing that stands out for you. That's the thing, time and time again, people say ouch needed to hear this. Thank you so much for being real about this because you're taking people down from cloud nine, have done real expectations that I might have had of being an nickels fellowship winner. On my first script I put in, or an Oscar winner on the first thing that gets produced, whatever it is, whatever delusions of grand or that I had to have to give me to where I am today, that dose of reality is very important because it does two things. One, go ahead.Michael:Well, no, please go, please finish.Phil:Let's say it does two things. One, it makes you take a dose of reality to take a step back and say, Hey, how committed do I need to be to this? And do I have what it takes to actually commit to doing this with the belief that I will get better at the more at bats that I have, or right. The other option is, man, this is not for me. I think I'm gonna go back and I'm gonna be in tech sales. I'm gonna make a pretty good living there, enjoy my life and just enjoy film and television,Michael:Right? ThatPhil:Possible. It's a valuableMichael:When we talk about, you know, living the dream, we're selling the dream, like to me, the dream is, and this, but I made clear about the course is the dream is I will help you become a better writer. I will help you express yourself. And hopefully right at the level, that was, that is required for you to get work. But you know, that's, that's what I can do for you. I can help you cuz you know, there's not a lot of demand. There's not a strong demand for, for poor to mediocre scripts. And I think some people think well, but that show on TV that show's terrible. Can I do that? Mine is just as bad. It's like, well, we, we can talk about why that's bad or you know how it's unfair that their bad show is on the air, but in your a bad show, your equally bad show is not. We could talk about that, but I think your odds go up exponentially by doing something great. You know? And that's, you know, that's all I can help you with. You know, I can't promise you anything other than that. So,Phil:But, but what else do we want? Like what, what more could we ask of you, right? That no one's gonna make it in this world until they happen. Like, and unless you make it happen for yourself, you cannot rely on other people to give you anything. Self reliance is the term. We call that in any other aspect. And I think there's a level of self reliance we need to have. And what you're telling people is you need to do the work. You need to sit down, you need to write mm-hmm , you need to understand the craft. You need to have those practice at bats. You don't have to go out in front of a major league ballpark and try to hit a home run. You can put in the daily singles that we've talked about early on this podcast. What can I do today to get ahead? And that's it, that's all is required as daily singles.Michael:And I'd like to also add, you know, the, the barrier entries is actually quite different than it was when I broke in many years ago. I, I, I would describe myself and this is a weird thing to say, but I, I, at this point I'm calling, I'm kind of a Hollywood insider. I've been doing it for 26 years. So when I pitch a show, you know, I'm, the guy you'd think that would they, they would buy a show from, I have 26 years of experience. Who else do you think they're gonna buy a show from? If not someone like me, right? So I guess I'm kind of an insider, but the last three shows that I've worked on were from, that were created by Hollywood outsiders, Hollywood outsiders. And so that would be Maron, re link and Tacoma FD. These are people who didn't come in through the Hollywood system and they just created something special on their own and became success, made it so big and built up a big following and, and a fan base because they just did it themselves because they didn't ask permission. And then because of that, they got so big that they needed to hire people like me to help, to help them with their TV shows.Michael:Hey, it's Michael Jamin. If you like my videos and you want me to email them to for free join my watch list. Every Friday I send out my top three videos. These are for writers, actors, creative types. You can unsubscribe whenever you want. I'm not gonna spam you. And it's absolutely free. Just go to Michael jamin.com/watchlistMichael:There's room out there for people like there is create your stuff and make it great. I mean, you still have to be great that there's there's that little matter you have to get over, but but isn't that isn't not the way it should be. I mean, should shouldn't it have to be great. I mean, yeah, that seems reasonable.Phil:I think so tying this back to what we've been talking about across the board, you practice practice, like yeah, you don't go out and become an NFL player. And again, we've, we've talked about the statistic about slightly more NFL players than there are slightly more working writers than in the NFL. Is that right? Yeah. Right. So we've talked about that quite a bit. So the odds are not great for most of us to be professional writers, but I can tell you what improves your odds. Yeah. Working out every day, getting faster, getting stronger practice, throwing the ball, practicing and, and drilling tackles and, and learning the playbook. All of those things that you would do to be a professional athlete. You gotta do 'em as a writer too, you need to come, right? If you show up every day, you need to practice coming up with ideas.Phil:You need to sort through the wheat and the Shaf to find the good stuff you gotta, right? You gotta break stories. You need to figure out when you break a story, why it doesn't work, you need to do your outlines. You need to figure out why it doesn't work in the outline, but it did. It felt like it worked in the other one. You need to write the first draft. You need to finish the first draft, which is hard for most people to do. Then you gotta do the hard part, which is share that really bad draft and know that it's bad with people who are gonna give you good feedback on it. Then you have to take those notes and you have to dust off what works, figure out how to make it better, send it out. Then you gotta do it again and again and again and again and again.Phil:And then you, when you finally have something that's good enough, you gotta put it away or send it out. And then you gotta do that again. And you gotta show it again, this whole process over and over again. And most people do not have the fortitude to do that because it's hard work, but no one's gonna do it for you. No, one's gonna get up at an hour earlier to help you sit down and write for an hour every day. No one's gonna have no, one's gonna send that email to your friend. Who's a writer and say, Hey, can you read this and give me notes? No, one's gonna sit down and get the notes and then apply the notes. No one's gonna do it. You have to do that.Michael:So my partner and I, we have a, we have a project set up an animated project set up at, at peacock now, but we also just pitched a project that didn't sell a, it was a live action project. Didn't sell. We were willing, took out into a few networks and whatever they weren't interested, which is par for the course. So my partner texts me today goes, well, when do you wanna start on the new idea? So, alright, Tuesday. So on Tuesday we start this project, this process, again, of coming up with an idea and then going out and pitching it, knowing full well that the last time I did this, I didn't sell it. And this is par for the course. So I don't just stop. I don't just think, well, I don't just have this one idea and I don't beat it down every door and, and beg people, whoa, whoa. You know, when it didn't sell, I'm like, it's done. It's done well, can find somebody. No, it's done time. Something else come up with something else.Phil:So, so major league baseball, right? We talk about at bats and swinging, you can go to bating practice. You can take swings, you can practice, practice, practice, but look at the best batting average. And in, in, yeah, the major leagues. And I'm not, I'm not a, a huge baseball fan by any stretch. I love sports and I love watching a good game and I'll sit down and I'll go to a Dodgers game or wherever I am to enjoy a game. But it's like 303. Hundred's amazing. Yeah. ThatMichael:Means, yeah. If you get on, if you get a hit, once every three times you are and I go into the hall of fame, basically.Phil:Yeah. You literally imagine. Imagine if, imagine if babe Ruth or Mickey mantle or whoever went up, struck out and said, that's it guess this isn't for me. I better walk away, better hang up the, the cleats and hand the glove off to that kid. Cuz I am not gonna make it. No, it is striking out and striking out, striking out until you finally hit one. And that makes you amazing. So yeah, none of us are gonna be perfect the first time how we talked about like the fact that if you were to start over and try to break in, you would be digital. Like you would go digital and try to put this out there. I received an email from someone in the course. I received an email from someone who was like, I don't think they're in the course. They emailed the support email.Phil:And I said, Hey. And there was to me. So they obviously listen to the podcast. So if you're listening to this, hopefully my advice was helpful. But they said, I am looking to get a short film produced. And I was just wondering like, what are the distribution? How do I get that out there? What, what should I do to make this the best possible? And my advice to them was before you put a dime into producing a project, you need to make sure you have a good script because yeah. A mediocre script shot very well, does nothing. So I would help absolutely take the time to make sure that what you have is worth shooting before. You're gonna go through the time and expense of making that thing happen. Right? Because although it's good experience for everyone involved to get out and short sort through the sound issues that inevitably come up and check, test your lenses and realize that you didn't have the audio on in the cameras. You can't sync your audio, et cetera. All those things are valuable lessons. It's much cheaper to make that mistake on paper and in your final draft or whatever you're writing with before you get on the camera before you have the record for the red. Yeah.Michael:Because what if you, yeah. What if you shoot it? And it's just media. If like the script is no good. So who cares? How well lit it is and how, how it looks like a movie and look who cares about the special, if it, if the story's boring, who cares? No, one's gonna be impressed about you, the, how you framed his scene or how the camera flew in or you know the who no, no, they're just gonna be bored. No, one's gonna say, wow, look at that sweeping camera shot. No one's gonna be impressed by the drone footage you put up there. Everyone has drone footage who cares is the story good? You know, that's all the people wanna carePhil:About. So what I said was I would, I mean, first recommendation was to invest in the course because you're gonna learn how to tell a good story once you're done with that. Yeah. You have a group of people who you send it to get notes, give feedback. And they're gonna tell you from the lens of proper story structure, what's wrong with this. And then you can hone that in. I even offered to read the script. I said, send it to me. I'll read it. I'll tell you if it's good or bad from my limited perspective. But I can say that now with a little bit of pride and say I'm at a higher level than I was a year ago. I'm at a higher level than I was six years ago when I graduated film school. Yeah. So at least what I'm gonna give you is closer to what a Michael Jamin note was gonna be on this project.Phil:Yeah. But that's the, that's the value you get when you're interacting and you have this group of people who are putting in the work and the time and the effort and they're doing it. Yeah. This, this is like, to me, this is like golf, right. We recently just did the Tacoma cup. We all went out and golfed. And I Mike rep, who was one of the writers on the show and I placed dead last. We were the worst on the team, right? He had to play in 15 years. I hadn't played in five years, but we were out there in a foursome, all teeing off, all hitting, all, supporting each other. But it's an individual game. I can't blame Mike rep for his bad shot. I have to take accountability for knocking a tree limb down on a tree, which actually happened. I don't know if I told you that, right. That's funny. But, but that's an individual sport supported by the people in my, for. And we had a great time. They coached me when I made mistakes. This is the same thing. So a lot of sports references today, but ultimately you have to get out, you have to take that bats. You have to strike out and you have to do that over and over and over again until you get incrementally better every single day,Michael:Look at the people, how they broke in and how they started. And you know, I certainly was humble. I did a post and I talked about something and and someone said like, well, Quentin Tarantino doesn't have to. And I'm like, are you Quentin Tarantino? Do, when you show up to the, the Ivy in your Maserati, do they mistake you for Quentin Tarantino? You know? No. So the rules, even though he does it one way, you're you haven't earned that right. Yet may, maybe you will. But right now you're not. And so start a little lower, start a little lower, you know?Phil:Yeah. I think being very aware self-awareness goes right along with self-reliance. I need to understand the facts of my situation. And that's that takes some time alone to journal and ask the questions. Where am I? Mm-Hmm what are my skillsets? If qu Quent Tarantino is a 10 and I want to be Quent Tarantino, realistically on a spectrum, where am I like?Michael:Yeah.Phil:Take account accounting of where you're at with the skill sets you need recognize where you need to shore up and where you need to focus and improve. Because if you're a 10 in coming up with the idea and you're a one on the execution, your average here is still pretty bad, right? Yeah.Michael:And it's a long road. So if one step at a time know that it's going to take years. That's okay. Is you're getting closer and closer with every step you take. So yeah.Phil:When you, you pointed, when you said it's like climbing a mountain is step by step. It was like, Everest has base camp. You have to there'sMichael:Yeah. They start, they start. Yeah.Phil:You have to get, you gotta camp, you got rackMichael:For your start.Phil:Then you start,Michael:Then you start,Phil:Right. Where are you on the journey? Where do you need to improve? Put in the time, energy and effort. And either way you'll, as you always say, you get to be creative, you get to be yeah. Centered and focused. And that alone is worth the effort and energy you're gonna put out.Michael:Yeah. Yeah. Because right. You're spending your time doing something you love. And if you don't love it, then don't do it. And if you're only doing it for the money, there are other ways to make money,Phil:You know, go sell or easier ways to make it you'll make. Yeah. You'll make a lot more money selling stuff.Michael:Yeah.Phil:So, soMichael:Michael, you wanna be a creative, this is how to do it. Yeah.Phil:My, I think, I think a very powerful episode today. I know it's a pretty short episode.Michael:I, yeah. Do the work. Yeah. Don't get ahead of yourself. Just, just start doing the work. Yeah. Yeah. But you don't have to write your Oscar speech yet that time.Phil:Yeah. Hey, you guys all want my social medias at Phil Hudson hit me up. I run a digital marketing agency on the side. I help some pretty influential people. Get their message out there. Yeah. Happy to answer questions. Just message me. Yeah. We'll talk about it. Okay.Michael:Yep. Yep. And that's it. All right. Everyone. Couple announcements. So I'll be touring with my show, paper orchestra. If you wanna come see me to your city and you wanna know where I'm gonna be go to Michael jamin.com/live, and I'll let you know where, where I'm coming to next. We're going to Boston next is my next city. And then back in LA for two shows in December. But we'll be, we'll be going other places as well. All right, everyone. Thank you so much. And until the next time.Phil:ByeMichael:Bye.Phil:This has been an episode of screenwriters. Need to hear this with Michael Jamin and Phil Hudson. If you'd like to support this podcast, please consider subscribing leaving a review and sharing this podcast with someone who needs to hear today's subject for free daily screenwriting tips, follow Michael on Instagram, Facebook and TikTok at Michael Jamin writer. You can follow me on Instagram, Facebook and TikTok at Phil Hudson. This episode was produced by Phil Hudson and edited by Dallas crane until next time, keep riding. 

Your home can be a powerful source of ready cash to fuel financial growth, add value to your property, or even provide a cushion should an emergency occur. Refinancing your mortgage and taking a home equity line of credit out on your home are two ways to make that capital available to you. HELOCs and refis are quite different from each other, though, so knowing which one fits your strategy best is important. In this episode, Pierre and Michael talk about the attributes of each and what situations might be best fit for either of them. Links mentioned: www.roofstockacademy.com  --- Transcript   Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Pierre: Hey, everyone, welcome to the Remote Real Estate Investor. My name is Pierre Carrillo and today I am joined with…   Michael: Michael Albaum…   Pierre: ….and today we're going to talk about refinancing and HELOC and which ones make more sense. So let's jump in.   How's it going, Michael?   Michael: Good here, I was telling you yesterday, my van broke down in the middle of California. So I had to get that taken care of and get a lift home from a buddy of mine…   Pierre: In my hometown?   Michael: In your hometown. That's right, that's right. We were smoking off the highway. So he said, oh, we got to pull over and get this thing fixed and it was going to be a week to diagnose it and get parts. So we just said let's leave it down there and then a buddy of ours was able to give us a lift home and we were like on our way home from being on the road for a month and a half. So we were super excited, super close and then wahh wahh wahh…   Pierre: Not usually the best place to get stuck, I left…   Michael: Yeah, if I had to point if I had to pick and choose it would not have been in this particular town. But that's okay, it's how it goes.   Pierre: All tight. Okay, so let's talk about refinance, what just roughly, what is a refinance? And why would someone want to use it.   Michael: So a refinancing that's not familiar is basically just getting a new mortgage on top of an existing one and it basically this new mortgage is going to replace the old one and so there are kind of there are two different types of refinances. One is called a rate and term refinance, where you're simply just changing the rates and the term of the loan and so if you have a 30 year fixed mortgage at 4%, and you go get a new 30 year fixed mortgage at 3%, because interest rates are better, but the loan balance remains the same. That would be a rate and term refinance, the other kinds of refinances called the cash out refinance and that's basically where you're actually you're getting money out of the transaction and so if you have that same 30 year fixed mortgage at 4% interest, and you have a balance of $200,000, but your home is appreciated significantly, or the property has appreciated significantly, you might be able to go get a new mortgage, a 30 year fixed mortgage at maybe the same 4% but for $300,000 and so that new mortgage is going to replace your old one, it's going to pay off the 200,000. But there's $100,000 left, that goes to you as cash in the form of tax free cash and so that can be a really, really powerful mechanism or lever to pull if you need access to cash and so those are kind of the two different types of refinances and how they work.   Pierre: So those both sound like awesome options. Why wouldn't everyone always just refinance?   Michael: Yeah, it's a really good question and a lot of people do they refinance, and refinance and refinance throughout the life of their property or maybe their own lives because it is such a powerful tool.   Pierre: Refi till you die.   Michael: Yeah, refi till you die, so it was it was not shocked to swap your job for the 1031 refi till you die. I love it. So yeah, I mean, it's a very powerful tool and of course, everyone's probably thinking, wow, if it's so powerful, like, is there no downside? I think that there are some downsides that we do have to talk about and understand. So first and foremost is it costs money to refinance, and some lenders will tell you oh, we can wrap the closing costs into the loan and so what that basically means is, if we go back to our initial example of like, $200,000, if it cost five grand to refinance, your new loan might be $200,000, to pay off that initial $200,000 loan, but it might, your new loan might actually be $205,000 and so they're wrapping your closing costs into the loan. So you don't have to pay anything out of pocket upfront day one. Now, you're still paying interest on that extra $5,000 over the course of that 30 year loan and so it ends up costing a lot. But for from a day one cash out your pocket perspective, it might not and so that's an option for folks to be asking their lenders about is that an option for them, depending on their situation. The other thing I think it's really important to keep in mind is that it resets the time clock, and for how your payment is broken down and so on a 30 year fixed mortgage or any kind of fixed mortgage, your monthly payment every single month is fixed, we know it's not going to change, it's gonna remain the same for the duration of the fixed period of the loan. But what does change over time is the amount that goes to principal and the amount that goes to interest and at the beginning of a loan, the majority of your payment is going to pay down interest. So if someone is towards the end of the life of their loan, they're paying down their principal very, very quickly and so if you go do a refinance again, that time clock is going to reset and now you're going to have a duration that you determined for the loan, but most of your payments going towards the interest. So that's important to understand that distinction as well.   Pierre: What is a HELOC and how is it different?   Michael: So a HELOC is an acronym and it stands for a home equity line of credit and basically, that is a line of credit against the equity that you have in the property and so a lot of refinances, they will give you 80% or 75% of the property's appraised value or they'll simply just replace the mortgage if you're going to take a lesser amount. So if you've got a $200,000 property, and it's worth 400k, but you do and rate and term refinance, you're gonna go get another $200,000 mortgage, that would be a 50%, LTV loan, versus going maximum 80%, LTV or 75%, if you're going to take out $300,000 loan, then you're going to be at 75%, you're gonna get cashed out. So a HELOC is basically on the equity and so if you have a let's say you have $100,000 of equity in the property, and a lender says, hey, we'll give you 80% equity line of credit, that means that they're going to give you like a line of credit of say $80,000 and the cool thing about line of credit is that they just sit there until you use them or until you need them and so if you set one up, you set up a line of credit, they're often free to set up with lenders, and never touch the thing, you're not going to pay a penny in terms of interest or principal payments, because you're not drawing on that line and you can think of it like a credit card. So with a credit card, if you're not spending any money on a credit card, you don't have any payments to make, there's no interest accruing. Same thing with a line of credit, so a lot of these lines of credit have a checkbook associated with them or an account associated with them. And so if I needed a $10,000, tomorrow, or in two days from now for repair, I could write myself a check, write Michael Albaum, a check from Michael Albaum line of credit, I'll deposit the check with my mobile deposit depositing app, it'll have $10,000 in my account, by the time the check clears now is when the time clock starts running on the interest payments and he locks are going to be traditionally interest only payments and the interest rate is going to be fluctuating it's going to be variable and it usually changes monthly. And there's oftentimes a ceiling and a floor. But so if I have a $10,000 balance, let's say my payments 100 bucks next month, if I make that $100 a month interest only payment, my balance hasn't decreased at all. So I'm not getting this benefit of the loan pay down like I am in a fully amortizing loan, which is basically what a cash out refinance or writing term refinances. So I want to just be very cognizant of what my balance is, what my interest rate is, and how much I'm paying off every month. Because you could pay off the entire thing tomorrow, or the day after, if you got a big $10,000 check in the mail, you decided, hey, I'm gonna go pay this thing off. There's usually no prepayment penalties, you can pay it off as aggressively or as slow as you'd like. It has a set period of set life that you have to pay it off in X amount of time. But that's going to be HELOC specific, but it's a very flexible tool and so your cash out refi is gonna be full interest, full interest and principal payments, fully amortized loan, your line of credit tends to be an interest only variable flexible line of credit you have access to.   Pierre: Okay, cool. I have a few questions on so the So you're essentially on a HELOC, you're borrowing that money from the equity in your property?   Michael: Yes.   Pierre: So when, who are the interest payments going to?   Michael: They are going to the bank, they're going to the lender that has that line if you have that line of credit with.   Pierre: Okay, all right. Next question is you said it's a variable rate.   Michael: Yes.   Pierre: What okay, so say you're, you have a certain amount of equity in your property based off of its current valuation, and there is some like major market correction where the value of your property drops down significantly. Does that new calculated equity in your property, then replace the amount that you had available to you and that HELOC?   Michael: It's a super good question and so it's something that a lot of people were very concerned with, sort of COVID is, hey, I've got these lines of credit out, are our lenders gonna start calling them do which they can, they're legally allowed to do that and it's all in the mortgage language and so it's important to read and understand that language very closely. But it can happen, lenders can say, hey, major downturn, like we're closing your line, you need to pay it all back and understanding what that mechanism is and how that works is going to be specific to your lender and your HELOC. Traditionally, I haven't seen that happen a whole lot, because values tend to fluctuate with time and lenders when they're looking at how much line of credit will extend to you. They're building in buffer and that's why lenders are only giving out 80% loan to value or 75% loan to value. They're like hey, Pierre, you've got to have 20% 25% skin in the game and so the property has to drop 25% before their investment is even at risk. So same thing with the locks they tend to go a little bit higher on the LTV I've seen up to 90% and so there's still that tempers sent buffer, which lenders that's how they're underwriting things, but to your question, short question long answer, they can close these lines of credit, yes.   Pierre: Okay and then how do the HELOC affect your credit rating? I mean, it's pretty big chunk of credit that you're then pulling out on $80,000. That's a huge credit card.   Michael: Yeah, potentially. So it's a lot of it'll show up as a second mortgage. That's really what it is. It's a second loan against the property and I, I'm not 1,000% sure. So I would ask the lender that you're getting the line of credit from, but my understanding is that most lenders when they do a credit poll, they'll see the full balance, the full amount of the line of credit as a debt on your credit score and so they'll just assume that you're making the minimum monthly payments on that loan, affecting your debt to income negatively. So I hope that answers your question. But again, I'm not 1,000% sure. But that's how I've seen it done in the past.   Pierre: Going back to the variable rate on a HELOC are can that rate just change from one day to the next or is there a schedule that it changes? Well, you can you plan ahead, you know, and say, you know, did you can use it within this certain time period before the rate rises or is it just like, rates are variable, we changed it.   Michael: Most lenders do monthly rate adjustments, and there tends to be a ceiling and a floor and so you know, going into it, okay, this is my maximum interest rate this, this will ever be throughout the life of this HELOC, which tends to be five to 10 years. So you can have an understanding, but no, it's really tough to forecast. Okay, rates are gonna go up on this date, and this is what they're going to go to. Okay and if you figure out how to do that.   Pierre: Alright, so that brings us to, when do we use which one? When does a HELOC make sense and when does a refi make sense? Which one's better?   Michael: It's a super good question and one that I get in the Roofstock Academy all the time, I'm constantly chatting about it with folks, especially given today's market environment where there a lot of people have made a bunch of equity in their home over the last couple of years. So it really depends which one is better, it really depends on it's a case by case basis. What I often share with folks is if you have a plan for the cash, within six to 12 months, I would go cash out refinance, if you're not sure, but you just know you want to have access to cash. I go with the HELOC because again, in that in that cash out refi scenario, you're paying on those borrowed dollars, day one, independent of what you do with the money independent what you do with the proceeds. So if I've got $100,000 proceed from a cash out refinance, but I don't quite know what I'm gonna do with it, I'm just kind of having it sit in my bank account that's costing me principal and interest every single day it's sitting there.   Versus if I go the HELOC route, I set up a line of credit for $100,000. I can access it tomorrow if I needed it, but doesn't cost me anything to have the ability to access it on a moment's notice. So it really depends, I would say on what you're planning on doing with the proceeds. It also depends on your current loan terms, and what your new loan terms would be in terms of a rate and term or cash out refi if you're at a two and a half percent loan, 30 year fixed, and you would have to go through a five and a half percent. If you want to do a cash out refinance, I would think long and hard about that depending on the loan size on the smaller the loan less impactful a delta and interest rates gonna be, but on a really big loan, that can be really really, really impactful to your monthly payment. Now you could make the argument that oh, I can always refinance again down the road. Yeah, but today, I know exactly what your payment isn't at two and a half percent and I know it's pretty darn attractive. So in that instance, too, it might make sense for someone to go the HELOC route if they have to give up a really attractive or really a really solid loan.   Pierre: Okay and can you use, is this a product like a HELOC? Can you just use this on your primary residence or can you use this on every one of your investment properties?   Michael: Yeah, also really good question. They are most predominantly used and given on owner occupant primary residences, there are lenders that will give them out on investment properties, but there are fewer and far between it comes in, it's much easier to get on an investment property. If the lender already has the first mortgage. I'm investigating this right now with a investment property that I own. I'm going back to the same lender that has the primary mortgage and say hey, can I get a line of credit on this thing, there's a ton of equity that they're being open, too or r if you own it free and clear, that tends to be very easy. But what lenders don't like to do is specifically on investment properties because it is a second loan. They're in essentially in a junior position. So they don't want to be second in line to foreclose on the property. If you're not making your HELOC payments to them.   Pierre: Okay, and so you take a HELOC out on your primary residence and then move out and now it's kind of you're renting it out as an investment property. Do you have to close out that HELOC or can you just keep that open?   Michael: Yeah, it's a great question. It's that's going to be lender specific as to what they have in their language, I would imagine you can continue keeping it in effect in force if it's if you're making payments to them. That's kind of like when you get a primary mortgage and then move out and rent it out. You don't have to close the mortgage, but it's going to be lender specific and product specific as to what you have to do what you have to disclose if it can becomes a rental and it was a primary at one point.   Pierre: Okay, cool. I think that's those are all of my questions on this topic. Do you have any, like final tips that you should that that you want to leave everyone with about both of them?   Michael- Yeah, I think they're both really powerful products, really powerful tools to have in your tool belt, there are applications for both. But if you're not sure, definitely do your research. But also, it doesn't have to be one or the other and there's this kind of hybrid approach where depending on what your new product you're going into, from a rate and term or a cash out refi is, you don't have to take your maximum loan to value. So let's say you've got $100,000 of equity to play with that you can get a loan against. Maybe you take 40,000 in cash out refi and then 40,000 in HELOC. That way, you give yourself a little bit of cash today, but you also give yourself a little bit of flexibility down the road. And again, you really want to think long and hard. What is the plan for the proceeds? What am I going to do with this money once I have it in my account and again, for me, my kind of number is six to 12 months. That's what makes me comfortable. But if you're sitting out there like no, I'm okay having this money sitting my account for two years because of the uncertainty or because of whatever justification you have. Great. But again, it's not an all or nothing type situation for either product. So definitely start chatting with lenders and it's easiest to start with the lender that currently has the mortgage if you're interested in HELOC, but there are plenty of lenders out there that have just HELOC only products that can that can complement a mortgage.   Pierre: All right, Michael, that definitely covers it. Thanks so much for sharing, anything else?   Michael: Now this was great, man. Thanks so much for that for the awesome questions here.   Pierre: All right, let's get out of here.   Michael: Let's get out of here.   Pierre: Thanks everyone for joining. Please subscribe to the podcast wherever you listen to it. If you're watching it on YouTube, hit the subscribe button that really helps us get out to more people. Thank you all for joining us and we'll catch you on the next one. Happy investing.   Michael: Happy investing.

Jaden Sterling is an award-winning, international Best-selling author of, “The Alchemy of True Success.” Creator of Wealth & Wisdom Daily Oracle Cards and founder of Sterling Stock Ed. Inc., an International stock investment program with hundreds of students worldwide. Sterling draws on 30 + years as a professional investor assisting people to become confident investors by simplifying the investment process. Prior to consulting, Sterling held title as Regional Vice President of Asset Management for Citigroup increasing sales from 100 Million to over 300 Million in two years. Sterling also worked as a financial consultant for Merrill Lynch and Smith Barney advising some of the wealthiest families in the United States. Sterling's passion and purpose is to assist people to take control of their finances and live life financially free. Sterling teaches via online platforms how to invest in stocks and how to buy and sell stocks via his software, “Sterling Stock Picker.” Join Jaden, as shares his story, his passion for teaching and helping people in real estate, what people need to be aware of going into their investment career, and an overview of his software, Sterling Stock Picker. Episode Links: https://sterlingstockpicker.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I have with me Jaden Sterling, who is going to be sharing his story about going from equity stock investor, to real estate investor to now equities teacher back in the markets which he left but with a purpose this time. So let's get into it.   Jaden, what is going on? Man, thank you so much for taking the time to hang out with me that I really appreciate it.   Jaden: Hey, my pleasure, Michael, happy to be here with you.   Michael: Awesome. Well, I think we're gonna have a lot of fun today and I know a little bit about your background. But I would love if you could share with our listeners who you are, where you come from, and what is it that you're doing in the financial sector today?   Jaden: Currently presently in British Columbia, Canada, absolutely beautiful up here and working in the financial realm. I've worked in this area for 33 years and finances and 11 years in real estate, and then the last 20 in the equity markets. So I'm super familiar with both and yeah, happy to be here with you and share some value with your audience.   Michael: Awesome and so you're living up in Canada. But did you always work up there? Are you doing equities in Canada or in the states talk to us a little bit about that?   Jaden: So I've been up here 11 years prior to that I was in St. Petersburg, Florida, where I built a portfolio of affordable housing units with the city of St. Pete partnered with them. We did 125 projects, and it worked out really well built a 12 and a half million dollar business in the real estate markets and this was even during the 0708 when it was really tough money was tight, super challenging, but got through it, thank goodness and but my background is steeped in the equity markets. My an initial training was in my 20s, I worked on Wall Street for Merrill Lynch and Citigroup and loved everything that I learned from my wealthy clients, not what I learned from the brokerage firms. That was actually kind of shocking in terms of what I learned about the equity markets and how the system is rigged and it's rigged to make the wealthy wealthier, and the firms are situated in a way to make money off of clients, not for clients. So when I recognize this, yeah, when I learned this truth, I was like, okay, I'm out of here and I'm going to help people also understand how this is set up, and then help people work through work around the situation there.   Michael: Interesting, so can you say more on that about how the system is rigged? Just curious to get, you know, an insider scoop on it, because you hear that being said, and but you also hear the opposition of no, we're here to make money for you and with you and grow with you. So talk to us about how you came to that conclusion.   Jaden: Yeah, a lot of professionals in the financial arena are great people, you know, they have great intentions to help their clients, they, they sincerely have some have a desire to really help people and make a difference and the challenge is the system is set up to steer clients in the direction that makes more money for the brokerage firm, not for the client. One aspect is you know, a lot of people think they need to diversify. We've heard that throughout the ages, right? Diversify for a safety. The challenge is it's like I love what Warren Buffett says diversification is the tax that people pay who don't know what they're doing.   Michael: That is a great quote.   Jaden: He's so right about that. You know, the key is to really focus folk focus your business when I was in real estate, I focused on one area affordable housing. Now, when the stock market, I have owned eight companies, shares of eight different companies. That's it not 100, not 200, not 300. So it really gives an investor leverage to get their money to finally work for them and not work against them. So the industry absolutely, it tracks the it's called velocity, it's still to this day, and I was in it 30 years ago, it tracks how much a portfolio turns over, meaning how much a broker or banker makes on that client's portfolio, not what they make for the client. So just in that understanding alone, you just kind of go yeah, I think I need to find another way than a banker broker to help me make money.   Michael: Yeah, yeah, that makes tons of sense and so just a curiosity. How did you end up in the affordable housing sector?   Jaden: Well, no, I got out of the brokerage business and when I was 31 and I looked around and I something very strong inside me said, start buying real estate and I didn't, I didn't really know I mean, I, you know, I didn't know what to do, I didn't have a mentor in that direction, I just knew that I had to do it. So I researched raw land, I researched apartment buildings, I researched trailer parks, I researched single family homes, commercial real estate and I landed in a, in a category that I felt comfortable with and that was like, from a personal level, doing good helping other people. I'm a big believer in that, the more the better we do for others, the more we help ourselves and it's a beautiful circle that way and so I liked the idea of affordable housing and I also felt like it gave me leverage, if I bought an apartment building that was you know, let's say 12 units, I could, I could renovate, you know, half of them in the beginning, and then still have income coming in. You know, there's only one roof on an apartment building, rather than if you buy 12 single family homes, you've got 12 roofs to deal with, and everything that comes with that. So I felt like the leverage was great and did you know with affordable housing, I didn't know this. But I learned back then that there's special financing for investors who get into that arena, you can get loans that are better rates, some of the money is forgivable in terms of the down payment, less down payment, like it had all these great attributes from an investor's standpoint and then once I bought my first affordable housing project, and made a lot of money, by the way, there's a lot of money to be made in affordable housing, it was always confirmation that when you do good by others and for others, that you'll be abundantly blessed.   Michael: Interesting. So you did that for quite a while and sounds like did quite well and then you moved back into the equities market.   Jaden: Yeah, I knew that my mission was to assist people to teach people how to become wealthy how to work with money, how to understand the principles of money that actually bring in money, rather than take someone's wealth and I wasn't teaching it. You know, I was in my office, I was running a big real estate company, I had 15 employees, we were busy, you know, so I wasn't I wasn't doing what I was intending to do, which was to teach others. So I wrapped up my entire portfolio all in one shot and stepped into my actually my twin brother got sick with cancer. He was diagnosed with stage four cancer.   Michael: I'm so sorry.   Jaden: And this is back in oh seven and he basically they told him look, you have two years to live and during that time, we had incredibly deep conversations and one at one point he said to me, you know, bro, I don't feel like I've lived my purpose and I said, What do you mean, you're doing great. You're a realtor, you're married, you got two great kids, like, what are you talking about? You know, I didn't really understand and he said, no, no, I just feel like, I didn't do what I came here to do and that really struck me because I knew at a very young age, what I was here to do, I had an epiphany at 14, you know, it's like something told me deep down inside, that I would be working with people assisting people to be empowered by money rather than enslaved by it. I just had this clear knowing and that's why I went into working in the equity markets and then ultimately real estate, you know, putting to practice what I had learned and, and I knew I had to start getting out and teaching so I made an about face right then and there. I told my brother I said, man, I'm going to do it for you and for me, I'm going to start getting out there living my purpose and start teaching.   So I did I sold my entire real estate portfolio right then I met my wife, she's up in Canada, we realize our relationship worked better and we lived in the same country. So I made the big leap and came up here and man, it's been amazing. It did bring me right back to my training and stocks and knowing because I I was able to build my real estate portfolio from what I had built from my stock investments over an eight year period. So one fed the other and you know, people ask me all the time, you know what, which do you like best right? Did you like stocks or real estate? I know this is the real estate show. I totally respect that and the thing that that I really draw from is real estate will give you a roof over your head. But stocks are a whole lot easier. There's no fixing toilets and dealing with tenants and you know that situation. So I think a balance of both is key. You can use one to support the other and one to actually buy hi there, I've, I bought an eight unit apartment building by putting my IRA up as collateral with a bank. So no money down. I just said here, take my IRA, and I'm going to do you know, X, Y and Z to this building. Once I get the rents raised and get it improved make these capital improvements, can I get my IRA back? And they said, sure. So I bought it, I got an appraisal done at that time. Six months later, after we made the capital improvements, raise the rents, I got another appraisal done. They issued they released my IRA back to me, so it was a no money down deal worked really well. But had I not had that IRA, it would have been a whole different situation.   Michael: That's unbelievable, Jaden, that's wild. So people, I think in your sphere, some of your coaching students know you as the spiritual money guy and I'm detecting a little bit of that as we converse here, but I would be loved. I'd love to hear from you. How did you come by that name?   Jaden: Two reasons. A lot of people know my background story, that epiphany that I had it 14 that I shared with you that understanding and really clear knowing I've always been a clear knower. So some people call it Claire cognizant, Claire means clear, and then Cognizant is knowing so I've had always had a super clear knowing in my life. But I live that way. You know, I just have, I have a very simple life and there's nothing complicated. I do my best by not lying, stealing, or anything like that and I think by having, having virtues like that, and paying attention to those virtues, and honoring them for yourself, you have a certain amount of clarity in life and things get a little simpler that way. So when I heard one day, it's actually a speaker in a podcast. I wish I could remember who it was because I would give her credit. But she said something really interesting. She said, look at the word prosperity, the Latin derivative of that word is pro spare, which means force spirit and she went on to say, you know, you honor your spirit when you're prosperous and that really spoke to me because I, I really, I believe that I believe she was absolutely correct in that and, you know, think about it, we're not here to worry about money, right? We're not here to let play life and in a small way to play a game that, you know, I look at life as a game. It's a big monopoly board, you know, you have so many houses that convert to hotels, and then apartment buildings, and yada, yada…   Michael: And you hope don't go to jail.   Jaden: That's right, yes right. That saves a lot of hassle when you say right, right.   Michael: Yeah. So let's get deep for just a minute if that's okay. So you I think, are a very lucky person in the sense that you've always been knowing and you've had this clear direction for your life. What do you say to folks that don't have that clarity or that are struggling to find that clarity? How do you how do you become how do you gain that clarity?   Jaden: Well, we know that purpose doesn't it's not like a billboard that drops out of the sky and says, this is your purpose. You know, it doesn't work that way. What I find for most people who asked me that question is what they're doing in that present moment is truly their purpose or else they wouldn't be doing it. So what someone is really asking is, how do I know if I need to be doing something different? That's really the question you're asking, right? Because if we start to acknowledge that where that person is, in that moment, is exactly where they're intended to be. If there's discomfort around that, if they say, you know, I know there's more for me, or there's something out there, but I'm not sure what it is, then it's, there's no way around it, my friend, it's a deep dive inside. It's, it's, you know, I, when I got out of corporate America, I took six months off and I did yoga, I worked with a shaman, I did a deep spiritual, inner work around what I was here to do and that really helped to give the clarity.   So I think people have to spend a little more time off screen and more inner work time. Push away from the, you know, these devices that we use these iPads and phones and computers, lower your brain function that your brain has to actually slowdown in order to connect in with this device to be able to take the information in. So what someone can do, I'm just thinking back then the practice that I did every morning, I'd wait before your eyes open, connect in with your higher self and just ask what do I need to know right now? So this is before the brain kicks in before your phone before any type of device phone or what have you that you turn on the that, that's the time when you're gonna get information, you're still kind of in a sleepy state you haven't fully woken up yet. Just sit with that at that time and you'll get information you'll get, you know, an idea will drop in or something inspiring or the thought of oh, yeah, I need to reach out to this person and then the universe aligns all of that for you. It happens in such an elegant way that a lot of people overlook it. Because they think oh, simple, is not powerful and actually, the truth is, peace is the new power, simplicity is the way to get there.   Michael: Oh, man, I love that I'm getting goosebumps just hearing you say that. I think my problem is I have that thought coming to me at 2am oh, I gotta call this person and then I can't go back to sleep. So I need to figure out a way to get around that.   Jaden: Yeah, super simple. Just either put a whiteboard in your room, and you get up and write that down on the whiteboard, or a pen and paper and so I just use a big fat marker, because I know I'm not gonna be able to read if I do a ballpoint, I can't read it in the morning, reach over, grab my piece of paper, write it down, and then in the morning, you'll have it.   Michael: Oh, that's great, too. I love it man, I'm getting way more than I bargained for here having you on. This is awesome, man. So okay, so let's fast forward now to what you're doing today. Because A, I think it's super interesting and B it's kind of controversial, I think from a traditional investment standpoint. So you are now picking individual stocks. Is it so I have that right?   Jaden: Yeah, so you know, like I say, I'm totally counter narrative, I anything that is out there in the narrative, generally, I'd like to turn on its head and look at it from a different perspective and we have to look at what's being pushed on people, mutual funds, packaged products, manage money, CDs, you know, all these things that are simply not going to give someone a successful retirement, a profitable retirement. And I realized, so back in 2017, I put a course together to teach people how to invest in stocks and what to look for, you know, how to read a chart what, how to interpret it and, and then one of my students said to me, you know, I love your course, could you create software around this and I was like, my brain just exploded, you know, like, oh, well, how would I do that and that's such a good idea and I'm not a techy guy, you know, and, and, and then the universe lined it all up and sure enough, I partnered with two gentlemen who are amazing IT guys, we spent three years developing software called Sterling stock picker, and it does exactly that I said to the guys, if we can create software that in three clicks, someone finds a winning stock, we could change the world and I believed, I believe it, I believe we can, and I believe we are.   So we did that we put the software together, it calculates the algorithm calculates all the metrics that someone needs to know so they don't have to worry about you know, it, about not knowing and it empowers people to find stocks aligned with their personal values, aligned with their risk tolerance level, it's a really comprehensive software that we've put together. And it worked out so well it became profitable right out of the gate that now I'm in the middle of a Regulation A offering where we've raised half a million dollars, I'm taking the company public in two years. So we've got two more years to go to increase the revenue for the for the software, and then our subscribers who get in at 50 cents. I'm going to just do a super low issuance and the float. So my goal is $8 a share to go public in 2024.   Michael: Holy crap, that's amazing. So how has someone not done this before? It seems it seems from the outside looking in so obvious, right?   Jaden: Like yeah, yeah. Oh, there's software out there man. But it's so convoluted it's so cuz I've paid 10s of 1000s of dollars to buy software to invest in the markets and I was confused and I'm like, if it's confusing for me, like this is my background. It's you breathe know what I did for a living for 11 years. If I was confused, there's no way that most people can understand it and it was so confusing. I couldn't put it to work. So we've made our super simple, so easy and I think that's our superpower is we've simplified the complicated with the software.   Michael: So Jaden, tell me why everyone like that is so different and counter to what you hear from everyday investors to the professional investors go get mutual funds, they're safer this and that. Why does this work?       Jaden: Well, it works because people are getting 30 4050 120% return on their investment. Like, first of all, you know, my biggest challenge, Michael, when someone comes into our platform is I have to, I have to teach them that 8% that average is not what they need to be shooting for. But everyone has been so conditioned to focus on, you know, just settle for average returns, right? Don't expect to outperform the markets. I mean, it is why it is so easy to outperform the markets, when you have the right information. That's, that's the key you got you got to have, you got to know when to invest. So our stock, where it tracks when to invest in certain sectors, it's been heavy and mining and oil and gas companies for the last 18 months. Those have been super profitable over the last 18 months, as we know, with the price and rising in oil, and hard assets, commodities, like gold, silver have been, you know, doing fairly well, I think they're still being suppressed in the prices. But that will change at some point, it has to. So yeah, I'm totally contrarian but you know, think about it as a if you're a business owner, entrepreneur and if you have 150, or 200 products to sell, right to manage in your company, you'd be like, I don't even know where to start, let alone how am I going to be profitable and successful, right. But if you have six to eight products that you're selling, you know, you're super focused in your business, you know, what you're doing, you know, your target audience, you know, your, your manufacturing costs, like you just have the six to eight products that you're selling, there's a really good chance your business is going to be really profitable. Wouldn't you agree?   Michael: Yeah, I mean, I'm thinking back to my prior career, and we sold one thing and one thing only, and killed it, as opposed to the other competitors that had multiple lines of similar business, so.   Jaden: Then you answered your question, my friend, it's exactly why we know a smaller, concentrated portfolio of stocks of these are the some of the largest companies in the world, mostly in North America that you know, buying into those shares, you can get rich, there's no question. I did it with one company, the decade in my 20s. It was the company that I worked for Citi Group, that the parent company at the time was travelers, and that stock tripled. So I turned literally $70,000 into over a million and that's why retired.   Michael: Holy smokes… That's incredible. All right, so talk to me a little bit about the software itself. I mean, it must be really expensive.   Jaden: You know, it's not, it's $33 US a month, we have a 14 day free trial. So someone can take it for a test drive for free for 14 days. We priced it in a way that everyone could take advantage of it, you know, we know it should be probably a few $100 a month. But we didn't want to do that. We want to just leave it at a price that people are comfortable paying. If you're paying 15 a month for Netflix, you might as well pay a little bit more.   Michael: That's such a that's such a reality slap in the face like yeah, I'm willing to pay 50 bucks for Netflix, don't even think twice about it. But for to help yourself get rich like well, 33 bucks.   Jaden: That's it, that's it my friend. Exactly, you know, it might as well invest in your future and learn a little bit. I'm in there. Every Monday I do a live stream every Monday at 12:30 and I  share what's going on in the markets from an a macro economic standpoint and then I get into the micro aspect of what I'm buying why I'm buying I tell I'm very, very transparent. I tell people what I'm buying the reasons behind it and why. You know, two weeks ago, I was gonna buy Tesla stock, it was $1,200 a share. I went on to the live stream and I said this these other reasons I'm not buying it here. I know it's going to pull back and I walk them through the software and show them. This is why the stock broke below their short term averages the MFI The Money Flow Index is too high, you know, we just go on and on. So I like to educate people through the platform. That's one of my big things in life is to teach people what to look for when they're buying the stock. So yeah, that's the that's the software.   Michael: That's awesome and so how well versed does someone have to be in the stock market in order to participate or really take advantage or utilize the software to its fullest intent or can someone literally just click a button and it'll spit out based on their inputs, stocks that they should buy?   Jaden: That's it right there, three, three clicks, and they're going to find a list of winning stocks that they can buy at the exact right time. We've already figured it out for them. We actually incorporated personal values as well because, you know, my belief is if you're if you're aligned in alignment with the companies that you're investing your money and then it'll work out far better than you know, let's say if you're a health nut, you probably don't want to own McDonald's. Well, did you know McDonald's is in most mutual funds and most equity funds in the US has holds McDonald's stock in there. So it just depends, right? If you want to steer clear of that you can with individual stocks. That's what's so cool.   I'll tell you a story and this is really this hits home as to why I do what I do. When, when I was a broker with Merrill Lynch, I was like 25 years old. I had a client named Dr. Walter Arnold, and he told me a story about a friend of his who was a back then we call them secretary, she was a an executive secretary and she, she invested $5, every single week in her stocks $5 back then and she did this for 40 years, while she retired with $1.2 million and her stocks grew like exponentially like she had 20% annualized growth year after year after year and he said, he said the fascinating thing was, was how she found these companies what she did back then, in the 40s, and 50s, it was very expensive to advertise in magazines in color. So she would flip through these magazines and any companies that advertised in color, you know, back then it would have been Kodak and just companies that were doing really, really well. IBM was advertising and color back then she said she bought shares of those companies. She had four different companies in our portfolio and she just kept investing in them week after week after week, $5 a week, her portfolio grew. She didn't touch it, she didn't take any dividends out until she retired with $1.2 million.   Michael: That's incredible.   Jaden: Isn't it simple?   Michael: It sounds totally the KISS principle.   Jaden: That's it, yeah…   Michael: My gosh. So it's funny, because you took the question before I can even ask it and I was gonna say, one of the things I think that's so powerful about real estate is leverage that you can take $20,000 and go control $100,000 worth of asset where you cannot do that, with lesser buying margin sort of thing in the stock space. So is it worth it for someone to take a little bit of money and invest it or does it need to be something a larger amount to really become impactful? And it sounds like I got the answer to that question. But curious to hear your thoughts.   Jaden: Yeah, well, you got to start somewhere and with how the equity markets are set up, you know, if you're in the US, you can buy stocks for free, it doesn't cost I my US accounts with TD Ameritrade zero commissions, right. Robin Hood, same situation. So yeah, all of that money goes to work for you were when I was a broker at 25, we were charging several $100 to buy stock. I mean, in one transaction, right? It was it was a lot of money back then. Now it's just that barrier is gone. So more now than ever. It works with starting to invest someone can dollar cost average into the equity markets. That's what that's what Ann did $5 a week. So she didn't try to time the market, she didn't try to figure out you know, what's the best price for a stock she just said, hey, I've got five bucks a week I can invest, put away and not touch and so that might be someone can start with $100 or but we got to start somewhere and like you said, margin is another aspect that can increase their purchasing power.   But you know, we're seeing something very interesting happen in these markets, real estate as well. There's, there's a construction happening, right? The Federal Reserve Fed is starting to raise interest rates on mortgages and I lived through like I said, oh seven and oh eight where it was a scary time. You know, it was a totally the market was contracting lines of credit were being reduced. It was hard to get access to cash. So I would say for an investor today you know, look at it from a multi approach standpoint, have some money in equities, stocks, companies, four to six different stocks. Consider real estate, but also hard assets like gold and silver coins. The actual physicality of gold and silver, I think, I think if you look at you know, there's talk about a central bank digital currency coming in. That has to be reset in the previous 500 years, whenever a currency went bust, it was reset against gold, the gold standard. So when that happens again, which it will at some point, it's probably sooner than later at this point. They're going to have to mark to market gold at a fair price. So that may be instead of 2700, or $2,000 announced it might it might be 20,000 an ounce. It could be 30,000. We don't know what that number is going to be. But if someone starts investing that way, thinking that way, you know, how am I going to maintain my wealth? How am I going to preserve my wealth and grow my wealth during this time? Because this is a tricky time we have we have inflation, probably hyperinflation, you know, on the horizon. We've got interest rates going up, which to me sounds totally counterintuitive. I don't know why they're raising interest rates as inflation starts to run rampid. But the printing presses printed and minted way too much money. So now they're trying to make up for that that's at least that's the narrative that they're telling us. So we have to plan for that and prepare for that.   Michael: Okay and one last question for you Jaden. As so many people, you hear talking about how frothy and how top heavy the equities market is, the stock market is so high, it's never been higher. You know, what do you say to that in terms of people who are just getting started?   Jaden: Yeah, so there's so much new money going into the equity markets right now. It's on an it's an add a net 15 billion, that's what the be a month net buying. So there's more 15 billion more month being purchased equities purchased on the exchanges than being sold. Because frankly, it's one of the best investments out there. So there's tons of money going into the equity markets that will continue to drive then the markets did pull back early this year 15% decline and just two years ago, remember, it was down 35% in a six week period once this COVID pandemic kicked in. So there's, it's pulled back. But what drives the market is buyers, not sellers, and we see the buyers continuing.   Michael: So okay, I like to have one follow up question for you. When Warren Buffett says I think it was Warren Buffett who said be greedy when others are fearful and fearful when others are greedy. To your point of there's all this money going into the market, I mean, is that people being greedy and so therefore should we be fearful or should we be kind of jumping on that bandwagon thinking, Well, hey, if these people that make a lot of money are investing, maybe I should to, you know, hitch my horse, my horse hits my car to their horse, so to speak?   Jaden: Yeah, it's that's such a good point. Because there are so many great companies out there right now that are thriving during this time, and you can make a lot of money in stocks. So I think I think you have to have a balanced portfolio in terms of some money in real estate, right? That's, that's important. People always have to have a place to live and equities and then like I mentioned hard assets, the golden silver coins and then once you have that perfect trifecta of investments, you can really sleep better at night because you're not worried about, you know, what the markets are going to do. You know, you have a study plan. If the market does pull back, well, you get to buy more shares, which is pretty good.   Michael: Now they're on sale.   Jaden: That's right now they're on sale, exactly, right.   Michael: Awesome. Jaden, this was so much fun, super, super informative, and interesting. Where can people learn more about you or take advantage of your software if they'd like to?   Jaden: Sure, https://sterlingstockpicker.com/ is where you can find me reach out to me, we have a clear, great website that shows how to get started in the stock picker software, and how to connect with me if you'd like, I always return emails. It may take me a while because I get a lot each and every day but I promise you I'll certainly get back to you.   Michael: Right on. Well, thank you again for taking the time to chat with me really appreciate you coming on and I'm sure we'll be chatting soon.   Jaden: My pleasure, Michael, I look forward to chatting again. Thank you!   Michael: Awesome, you got it take care. Alright everyone that was our show a big thank you to Jaden for coming on super, super cool software he's developed I will definitely be checking it out and I thought he shared some really interesting perspectives about how to balance a portfolio. So if you liked the episode, please feel free to leave us a rating or review wherever it is you're listening to this podcast and as always, we look forward to seeing the next one. Happy investing…

Investing $50,000 in real estate can go a long way toward creating a diversified rental property portfolio that generates strong cash flow, provided that you do it right. Today we are asking each other the question how we would invest this amount of cash. In this episode, Tom, Emil and Michael share how they would invest $50,000 in real estate if they were just starting out, and if they know what they know now. --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Emil: Hey, everyone, welcome back for another episode of the Remote Real Estate Investor. My name is Emil Shour and today I'm joined by…   Tom: Tom Schneider   Michael: and Michael Albaum.   Emil: And on today's episode, we're going to be talking about how each of us would invest $50,000 in real estate, and we're gonna frame it as what we would do with that 50k when we were first starting out, versus how we would approach it now, so let's hop into this episode.   Well, I can't ask what's on your guys's mind? Because we just went through that so, huh… Hmm. You know, I used to have this boss that every every meeting every week, he would come in and just ask some random question to avoid the like, so how's everyone doing? That was like, it's a good way to kind of start a meeting, get like really random answers from people.   Tom: You got an example of one?   Emil: He would honestly as a really weird, he's like a weird dude. But like funny, weird. Yeah, probably not suitable for this show. The ones I remember.   Michael: There was a my, my wife loves David Sedaris. And he does a masterclass and he talks about comedy. And one of the questions he loves asking people was, so when was the last time you touched a monkey? He asked him on this and they were like, oh my gosh, like, can you smell it on me, I was working with him earlier at the zoo today? And he was like, no way and it led to him like being able to go play with the monkeys at the zoo. Like and that's why you should always ask random questions.   Emil: He had asked like 400 people, and they all I never spoke to him again, but that one person…   Michael: The one was a big one.   Emil: Then he finally got to meet a monkey at the zoo.   Michael: Yeah…   Tom: Bad news man, getting a baby monkey and then growing up a lot of sad stories about …like ripping arms off. Anyways, sorry…   Michael: That's a… go hard left fast…   Tom: Yeah.   Emil: All right with that we're gonna hop in and talk about real estate. So the topic today is how do you invest 50k? I think this will be interesting. If Michael ever gets it together here.   Michael: Oh man…   Emil: How would you invest 50k If you know what you know, now, but you're just starting out. So take yourself back to you have your current mind, you're going back to when you first started. So how would you invest 50k? And then we'll talk about you're at where you're at currently, you're 50 grand, you want to invest in real estate? What do you guys? What are we all doing? So who wants to kick off? Going back to the past with 50k?   Tom: So, Tom's gonna go first. I would… So me with real estate investing, I really enjoy real estate investing, but I also really enjoy the kind of passive nature of it, more probably more than Michael and Emil, I think they're like, way more active. So I think this is going to be a good diverse range of responses to this question. So what I would probably do so I'd say there's there's two options, right For me, as I also really like single family off of multifamily, just a little bit less to do plus less turns plus XYZ. What I, I would see this as two options, I can either go to, to pick buy two properties in more kind of class C markets, not not as in like, negative, but like smaller markets, right? Talking about like, maybe Birmingham or buy or like Memphis?     Emil: We'll call it Tier 3, it's classy…   Tom: Sure, sure. Sure. Sure. So the my options would be to that or to buy one property in like a Class B area, you know, maybe a, you know, Atlanta, Raleigh, you know, Dallas, one of those guys and where I am right now, if I had 50k, I'm still trying to deploy as much capital out there. I would get debt for sure. I would, I would max out my debt on it. You know, I … we know well, being conscious of not getting over my tips, making sure that my income could support my debt coverage. But I would probably, I'd probably got two properties in one of those smaller markets. But you know, I might have a old fishing pole in the water on some of those larger markets. If something were to come up, I'd cast a wider net, you know, it's a busier acquisition time. So that's why we deployed by SFR, I would look at those smaller markets max, loan to value most of it… That is what I would do, went a little bit long didn't it… Ehmm, yeah. Done…   Michael: Love it. Would you buy… Would you buy both in the same market? Do you think it would use spread them out? Peanut butter spread, as they say…   Tom: I would probably buy them in the same market. Again, like so important to that to develop a thesis when investing in me is a little bit less overhead. So just using a single property manager, you know, doing that work and finding the right property manager, maybe having them help me out on the acquisition side, as far as evaluating neighborhoods and whatnot. So yes, it's a market. Good question, Michael.   Michael: Love it, love it, love it.   Emil: So, Michael, what would you do?   Michael: I think I'm taking that 50,000 and like Tom gonna go get some debt. But I am probably going to go buy a multifamily building, something a little bit bigger that I could, you know, really, really scale with. And it's probably going to be a little more turnkey, because having done the whole multifamily value, add thing, it can often be a lot more expensive than first anticipated. So something that's, you know, relatively easy, stable. That's why you may go to but in close second, what I'm also going to be considering is going and using a 15%, down DSCR loan and going to go purchase a short term rental, which would probably be a single family out in one of those vacation markets that are out there. But I think it can be a really, really, really great use of cash to generate quick income to then go to buy additional properties.     Emil: Michael, for anyone who doesn't know, what is a stable multifamily property, what does that look like?   Michael: Yeah, it's something that has, it's really good question. First off, it's something that has probably already been rehabbed, either extensively or lightly, doesn't have a whole lot of deferred maintenance, rent is probably going to be pretty close to at market rent. So I'm not going to feel the need to, to get new tenants in place when their leases are expiring, because they're already up at market rent. Just something that has been taken care of, or well maintained. Doesn't need a whole lot of CapEx.   Tom: Short term rentals are interesting. How do you find your overhead as an owner relative to your multifamily single family versus long term versus short term rental? Do you find it pretty similar? I would imagine that there's obviously range like there's variants with each of them, but just general ality generally speaking…   Michael: Yeah, it's a big range and it so depends on like my older vintage multifamily, it's gonna be a little bit even less than some of the expense ratio on that just because that has a lot more maintenance, regular, recurring maintenance type issues. On newer single families, comparing across the board to long term versus short term, short term is definitely more expensive from an expense ratio standpoint. But the income generated is still stronger. And so from a cash on cash return, it's it's still performing quite quite well.   Tom: I bought this as a metric, number of times you as an owner, you have to like make a decision or get involved.   Michael: Oh, see, short term versus long term?   Tom: Yeah, yeah, I would think I mean, I would assume short term rental, like there's a little bit more overhead as an owner. Is that wrong?   Michael: Yeah, I don't think that that's, I would say that there is more on the front end. So like we were involved in the decorations and decision making process around what amenities to include, but from a day to day…   Tom: … FF&E and OS&E those are some acronyms, Michael…     Michael: What's a OS&E?   Tom: Oh, OS&E is operating supplies in equipment, and FF&E is furniture, fixtures and equipment.   Michael: Ahhh!   Tom: No big deal, just drop an acronym…   Emil: A unit count into, what's going on here?   Michael: Yeh, sounds like an accounting term.   Tom: I know about luxury man.   Michael: You're just steeped in luxury. But no, I would say other than that. It's pretty much about as hands off as as long term if not more. So. I've really I've made very few decisions, I've been involved in very few of the conversations, we're looking at converting the garage into additional space so that of course, there's a lot more involvement in but that would be the same as if I was doing some kind of rehab work on a long term rental.   Tom: I heard a great story a description of short term rentals as comparing them to fire trucks and that they're constantly getting turned and washed like a fire truck has been around but oh, it gets it gets a fresh wash every time it goes out. So like while you might think it's a you know, getting beat up a lot it perhaps it is but it's it's getting a lot of Washington. It's like a fire truck. I don't know. I like that.   Michael: Yeah, I think I mean, I think so and it's getting eyes in it every turn. So the festering kind of long term deferred maintenance stuff tends to not be again, for my experience as big of an issue because there's people constantly putting eyes on stuff. And if there's an issue you'll hear about it immediately. Like these tenants are going to tell you because they're paying good money to be in these places. Hey, this is an issue you need to fix it.   Emil: Are you is your short term rental being professionally managed, do you have a property manager?   Michael: Yes, yeah, I'm a full service property manager, I definitely pay for it. But I'm not. I'm not at the point where I can set, you know, neither myself or my wife or I are at the point where we have enough time to be able to learn how to do that remotely for this particular property. And you know, if anyone listening is interested in learning more about short term rentals, we did a podcast episode with Avery Carl, which was a phenomenal episode, in my opinion, where she talks all about the short term rental market, and short term rentals in general and things you need to be aware of, if you're going to get involved in this space.   Tom: Did you pencil… Emil needs to give his answer, but just really last question I have on that… Did you pencil it as a longer term rental as well, just to like, see what…   Michael: I did. And it doesn't work. And so I had to always take in the opinion that it has to work as both because if something changes, I don't want to be stuck holding the bag. And after extra chatting with Avery about the short term rental market, this is out in the Smokies. She was like yeah, but the thing of it is, is the regulations aren't going to change out there. Like it is such a through and through short term vacation rental market, that she is not concerned with it being the next Santa Monica or Santa Monica, city regulators come in and say I can't do Airbnb, because it's always been short term rentals. So that's given me a lot more comfort to say, okay, I'm okay, kind of taking that leap of having it only makes sense as a vacation rental?   Emil: Well, I had one final question. I asked Michael about the third party property manager because I, what I really want to know is how does your time commitment with a third, like you have property management and on a long term and a short term? How does your monthly time commitment in terms of speaking with your property manager being involved? Like how, how much more time is it with the short term compared to long term, if any?   Michael: You know, I have probably spent less time with the short term manager than I have with long term management. I was so impressed by this company, they've been awesome and they're just like really good at what they do. And I think that universally speaking, that's kind of what I would expect in the long term world as well, I have my that one of the best property managers I have is up in Alaska, I hear from him, like once a quarter, unless we're just calling to check, you know, checkup and chew the fact sort of thing. So if a property manager is good at their job, you really shouldn't hear from them, in order for you to make decisions, they could update you and tell you what's going on and this and that. But from a decision making standpoint, if I have to hear from you and talk to you regularly, like it's probably not going very well. Right Emil how would you spend in those 50 G's?       Emil: For me, if I'm just starting out, and I want to invest in real estate, I'm, I like single family as a first starting point. And we can debate this later on a showdown. I think single family is a good way to get started, I think having one tenant, one unit to worry about just a lot less hectic. And so I'd start with a single family, I would want to do a tier two city, somewhere where the climate isn't so severe, right? Like I have properties in Indianapolis and every winter, I'm like, man, our pipes gonna freeze and explode. You know, you hear all those stories. Usually, if you have a tenant who's there, like they're running the water, and that doesn't happen. But you know, if you have a turn in the winner, always think that could happen. So I choose something with a little bit less harsh climate, just because it's going to keep everything solid for a little bit longer. And I'd probably just use it on one property to get something a little bit better, ewe just talked about on a different episode, six things we wouldn't do, again, six mistakes and for me it was buying a really cheap property on the… in the beginning, I get something a little bit nicer, less headache, you know, newer build, that's just going to be an easy learning process for me, because the first one isn't going to be the make or break. It's really you're just like learning how to deal with real estate how to deal with the property manager all this stuff. So having it be something that's going to be better long term is what I would prioritize.   Michael: Are you okay, accepting less cash flow?   Emil: I wasn't in the beginning and on the other end of it now, yes, you should like it's not going to be a huge difference. You think it will be and you know, excel math will tell you different but it's a different story. I think when you get into it.   Michael: How much cash flow, how small of a cash flow are you willing to accept and still consider it cashflow positive?   Emil: For me like even like if you're being conservative, right, like not going oh, best case scenario, right? You're ending up with like at least $50 of cash flow a month right? I think that's a good place to be at least obviously, I…   Tom: Got to beat inflation, got to beat inflation.   Michael: Beat it back with a stick…   Emil: We don't, you know, we're just talking about cash flow and again, these this isn't going to be a make or break for you. You're trying to learn and you're trying to grow. You also have equity building right in a better property that's going to be more dollar like appreciation. 10% appreciation on something that's $250,000 Verse $100,000, you're gonna make more than that equity anyway, right? It's appreciating, it's a higher appreciation.   Michael: So you're sticking to one, one property… One more expensive property?   Emil: Yes, yeah.   Michael: Alright.   Emil: Not even just expensive to be expensive just better quote like a turnkey, nicely done property that I'm not going to have a ton of headache right out the gate.   Michael: Well, there you have it, ladies and gentlemen.   Tom: It's been a few seconds on zero scape, just installed some fake turf on my backyard. It's killer man.   Michael: Is it good?   Tom: Yeah, yeah. And then like if leaves come on it you get the power washer. And just like my my own little zen…   Michael: What about dog puppies?   Tom: That's a thing. But you know, that's where the power washer. And also that's where gates like preventing the dog to go out there. Come in…   Emil: Anyway, anyways, you could also have a dog like mine who we have we have turf in the backyard too. It's like turf in concrete. And he is afraid of it doesn't like walking on turf. So he makes us take him out in the front yard where there's real grass to go. So that's fun.   Tom: He is natural… Michael: Some… double apply.   Emil: He's a purist. He's got a good taste.   Tom: Good for him.   Michael: So Tom, are you saving some of that 50,000, so you can install zero scaping in this investment property?   Tom: Yeah, probably. I mean, the right warranties are in place with the Zero Escape. You're like basically making money when you install it, so…   Michael: Are you, are you working on zero escape installation side hustle?   Tom: I am yeah, I got a, I got a, I got some, I got some hints.   Michael: You need a guy, I got a guy…   Emil: Probably not that awesome on a rental property. Like the ROI on that is, is not great.   Tom: Nooo, problem.   Michael: Depends on who is paying this utilities though…   Emil: Yeah…   Michael: If you include these utilities in your bill…   Emil: It's your tenant.   Tom: Oh…There could be markets Emil, before you jump the gun. There could be markets with it makes a ton of sense, Las Vegas, Arizona…   Emil: I prefer talking generalities, we're not getting into nuance on this on this podcast, sorry…   Michael: I thought you only spoken absolutes.   Emil: That's it, that's it…   Michael: Now you're speaking in generalities. Man pick one Emil.   Tom: Yeah.   Emil: Ehmm, absolute is what I met. It's not... Moving on. Alright, what do we do with $50,000 now? If $50,000 is now, in your investing career, what are you guys doing? You're not a beginner, you're at your stage now, so what's next?   Tom: I am making the transition to getting some multifamily, you know, I don't know, I don't actually know short term, Michael's got me hyped up on some learn a lot more about short term, I don't know. I'm all over the place right now. This is what I'm gonna do, this is what I am gonna do actually, I'm going to set up a coaching session with Michael and we're going to go through some options and get to the root of it. I swear to God, that's like the real answer, right.   Emil: That is actually a very solid strategy. Alright, Michael 50,000, I feel like I know where you're, where you're putting money, but if 50,000, where's it going?   Michael: Yeah. Now in today's world, I'm probably splitting that. Truth be told I'm probably do you like for sure a short term rental 50% down DSCR loan, and then I'll probably wait half or two thirds and then I'm taking the other half and I'll probably park it in a syndication to be perfectly honest and just kind of enjoy the passivity that syndications provide. It's, we've been doing a lot of podcasts recently and had a lot of passive investment experts on talking about benefits, pros cons of passive investing, and I'm like, huh at this stage of my career, it's definitely sounds interesting. My back's already, you know, a little tired from from caring so much. So I'm ready to slow down a little bit and just kind of enjoy the fruits of the labor.   Emil: Nice, yeah. I'm sagging into what I'd do, I'm right there with you. So I like that I have nowhere near the amount of units like you, right that I own directly, I have six units. I think that's perfect for me and where I'm at right now, I would put $50,000 honestly, either in a REIT or yeah, in a in a private deal or something like that. Something where I'm going to be completely passive. Just given we've got two little kids, we got the six units again, that we own directly and that takes off takes up enough time and you know, business I started a year ago that's taking up a lot of time as well and attention. So I'd be looking for something passive to pocket.   Michael: I love the fact that Emil, you mentioned that you have like little kids and so you're kind of at this stage in your life where the active hands on direct investment isn't a great fit for you. But that could easily change and so you go park your money and one of these indications. Hopefully it doubles or better in a couple years' time and then you get it back and you get to decide okay, well what I want to do next I want to continue the passive route now maybe the kids a little bit older, you have more time on your hands to do something else. So I love it. I think it's, it's such a good point that there's like seasonality to this whole investing thing.   Emil: Yeah, it's not like, I'm done direct investing. It's, I'm done direct investing right now. Like, we have what we have, we're good, we're not getting rid of those and it's time for a different strategy. But you know, life changes, maybe you have a windfall, whatever, and you're like, now I'm bored. And I want to go do something more challenging and I'm gonna go do some, some value add stuff myself, maybe even like, in a market closer to me, or what did you know there are just so many different ways you can take this and it's not like those strategies you start with is going to be the strategy you end with.   Michael: Mike drop Emil out.   Emil: Don't listen to me, I don't know what I'm talking about.   Michael: That's great, man. I love it, I love it… Should we get out of here?   Emil: Yeah, let's do it.   So thanks, everybody, appreciate you tuning in for another episode, hope you got some value out of this one. And as always, please leave us a review or subscribe if you're watching on YouTube. We love seeing that number go up, it boosts your ego and it keeps us coming back every week. So we'll catch you all in the next one. Happy investing.   Michael: Happy investing.  

Andy: "What if we changed our outgoing answering machine message, so it just had a little more… zing, and a little more pep?" Michael: "Zing and pep, see that’s those are the kind of words we’re looking for. Yes, Jim?" Jim: "What about if we did an even newer voicemail message that had even more zing and pep?" Michael: “Now we’re cooking." This week we answer voicemail questions from our listeners! We talk Office-inspired tattoos, Michael’s confidence going for the corporate job, corporate Ryan going after Jim, and much more before wrapping up with a quick message from a potential new paper client.   Support our show and become a member of Scott's Tots on Patreon! For only $5/month, Tots get exclusive access to our monthly Mailbag episodes (+ the video version!) where we casually pick through every single message/question/comment we receive. On top of that, a portion of all show proceeds are donated every  month to organizations that help fund education opportunities for minority students. Help us accomplish the mission that Michael Scott could not.

Our guest is Michael Now, LA native and career musician. We discuss the state of creative work in LA and finding inspiration while staying focused.

Michael: Hello everyone. This is Michael Gross of OptionSellers.com here with head trader, James Cordier. This is your monthly Option Seller TV Show. James, welcome to the program this month. James: Always a pleasure, Michael. Glad to be here. Michael: We have a lot to talk about this month. We have turmoil in Washington, we have some activity coming back to the VIX, and we have OPEC announcements, so there’s some volatility coming back into a lot of the markets. We’re going to talk to James about how that might affect some of the commodities we’re looking at. James, what’s your take on the new burst of volatility we’ve seen? James: Well, Michael, there is a lot of uncertainty right now. The stock market continues to meander and make new highs practically once a week, it seems, to get a new sell-off, and then buyers come back into the market. The VIX, which has been in the news recently, under 10, which I believe is about a 2 or 3 decade low, basically is saying that there’s no fear amongst investors, continue to pile into the stock market and continue to buy. The volatility index is just starting to pick up, however, in commodities. We’ve seen a dramatic move up in basically the energies and some of the metal VIX indexes, and it tells us that there is some ideas that some large moves in either the stocks or in the dollar denominated commodities might be approaching soon. Of course, we like the VIX going up – that increases premiums on both puts and calls that we follow. Michael: Now, is that spilling over from equities or anything going on in Washington, or is that happening on its own accord for different fundamentals going on in the commodities? James: I think a lot of investors are taking the cue from what’s happening from Washington and abroad. We have North Korea, we have a situation with Russia and the election, we have things going on in the Middle East right now along with Washington D.C. and a lot of the proposed changes are meeting some stone walling right now that’s going on. It is causing a lot of uncertainty and, of course, that’s something we enjoy following. Some investors don’t care for that very much but it’s certainly something that we like to see happening and it pumps up premiums on commodity options. Michael: Well, with that background setting for the month, let’s move into our first market. We are going to talk about the grain markets this month. June is a big month in U.S. agricultural markets. This is typically the month where planting is completed in markets like corn, soybeans, to a lesser extent wheat, cotton, and those type of things. When you look at seasonal factors, the end of planting season can play a big role in that. James, maybe you want to talk a little bit about what that often means for certain grain prices? James: Michael, a lot of our viewers and listeners here today hear us talk about seasonal factors. Corn and soybeans, a lot of people don’t realize, are practically everything that’s consumed. Whether it’s in China, Europe, or here in the United States, it comes from a kernel of corn or from a soybean. Practically everything we eat, dining out or cooking at home, that’s what takes place. Corn and soybeans are an absolute essential to the food system for practically everyone on the planet. It’s a huge market. The corn and soybean market basically has some type of fear or anxiety going into planting season. The planting season has to be just right or a lot of investors feel that we’re going to have smaller yields and possibly a smaller crop. Generally, it’s either too wet or too dry or too hot in May or June, and that does bid up prices often. Generally speaking, at the end of that rally and once the corn and soybeans are planted in the United States, of course, prices then come back down to earth and, lo and behold, the U.S. farmers are some of the best in the world and sometimes a bumper crop. (4:18) Michael: Now, when we talk about a market like soybeans, we didn’t really see that big run-up this year. We had relatively stable planting season and I think that kind of moves us toward what the fundamentals were this year. There’s a reason we didn’t really see a big run-up in the spring. Would you agree with that? James: We certainly haven’t seen that run-up yet. Right now, we have soybeans and corn planting just about on schedule. There was some ideas that there would be delays because of too much rain, but boy… too much rain makes a lot of grain later on this year. There still might be one or two rallies in June or July, possibly, there’s a dry spell in there somewhere. People are also talking about El Niño, which can certainly change weather patterns here in the United States. For the most part, the fundamentals are already in gear for low grain prices at the end of this year. Ending stocks, of course, are extremely high and production out of Brazil is at all-time record highs. So, if we get this weather rally sometimes in June or July, that would probably be a selling opportunity. Of course, for our clients, we are already short the grain market based on the fact that, like you said, the fundamentals right now are going to probably overwhelmed seasonal factors this year. I think we’re on the right side of that market. Michael: I know you were a proponent of selling calls this month. As far as ending stocks go, as you said, global ending stocks are “over 90 million metric tons”, which would be an all-time record for world ending stocks for the ‘16-‘17 crop year. When we’re going into this seasonal time of year where prices often start to weaken in the summer, as you were talking about, we’re going at with a backdrop of record global supplies. Even though prices have come down, I know you were very interested in selling call options on soybeans, not necessarily because you think the bottom’s going to fall out just because you think it’s going to have a hard time rallying in this type of environment. Is that correct? James: Exactly, Michael. Of course, as option sellers, we’re not exactly trying to predict where the market’s going to go but, of course, where it’s not going to go. With world ending stocks at all-time record highs, record production out of Brazil and Argentina, record production likely here in the United States. Do soybeans fall 5-10%? We’re not sure, but then going up 30%, of course, seems very unlikely. Of course, as option sellers, we are basically betting where the market is not going to go as opposed to where it has to. This year, with record ending stocks and just huge supplies from everywhere, a 30% rally in prices seems quite unlikely. Michael: Great. If you want to read James’ feature article on the soybean market for May it is on the blog. You can go back and take a look at that where he really outlines the case for selling calls this month. For those of you that would like to read more about seasonal tendencies and the agricultures or other commodities, you can also read about it in our book, The Complete Guide to Option Selling: Third Edition. That is available on our website at OptionSellers.com/book. James, lets move into our second market this month, which is the crude oil market, which we’ve certainly seen a lot of developments there. A lot has been in the news about crude this month. There’s big talk of OPEC. In fact, today right before we came on camera, we just had a big announcement for OPEC. Do you want to talk a little bit about that and what’s going on there? James: Well, Michael, ever since you and I have been in this business there has been the old adage of buy the rumor and sell the fact. I think that happened in great text today as the OPEC nations and non-OPEC nations decided, and certainly have been discussing for a long time, to extend the production cuts that were announced approximately 6 months ago. They were going to now announce that there were going to be 9 months of further production cuts. Certainly, that has been well advertised. The market did rally on those ideas over the last few weeks. I think crude oil went up from around 48 to 52 recently based on the fact that they would be extending cuts. Today, the cuts were announced that 9 months would be prolonged into the smaller production of many OPEC and non-OPEC nations. The market answered that with a resounding $2 down and the price of oil went from 52-50. Basically, the world is awash in oil, and if the fact that production cuts are going to be extended, they weren’t really that bullish to begin with. Of course, what’s happening in the United States that we might want to talk about is really the deciding factor and what’s changing oil prices. Michael: I know, even going into these cuts, you weren’t really bullish on crude and that was because of the supply and the production situation in the United States. Is that correct? James: Correct. Going into the large announcement from OPEC and non-OPEC nations some 6 months ago, very few people are familiar with the fact that weeks leading up to the announcement, OPEC ramped up production to levels never seen before. Though they did cut for the first time in 10 years, or something like that, production just prior to that went up a million and a half barrels. So, cutting and announcing a 1.5 million barrel cut really doesn’t move the needle at all. Of course, here in the United States, mainly the Permian Basin in Texas, production is now ramping up into all-time record highs. If in fact the U.S. does start producing 10 million barrels a day, which is looking like it will happen late this year or early next year, that completely erases the cuts from OPEC, which were thought to be so bullish, and the bottom line is if we have one more barrel of oil than we need the prices go down. Right now, it looks like we’re going to have approximately 1-2 million barrels more per day than we need going into 2018. The real key is going to be can OPEC stay together, be cohesive with these cuts when prices start to fall in the 4th quarter of this year. They’re going to have to hang tough because if they start cheating, this thing can really snowball and come down. We don’t’ see that happening. There’s something going on in Saudi Arabia as far as their first IPO of the largest extent ever seen before, and they’re going to do everything they can to keep oil prices high. Michael: That in the backdrop of last energy report here this month, still looking at record supplies for this time of year in the states. I think were 528 million barrels or something like that, which is an all-time record for this time of year. All this news, they’ve really been playing up this OPEC deal in the media for the last couple of weeks. Yet, here we are with a backdrop of record supply. A good point you brought up as well in the newsletter was how U.S. frackers have really ramped up production. I think we’re at 9.3 and I think you said we’re headed to 10 here at the end of the year. You can see right where they made those cuts and you put a good chart in the newsletter of where U.S. production starts trekking up again, just making up for what OPEC wants to give away. James: Exactly right. It is an absolutely gift to the frackers here in the United States that OPEC and non-OPEC nations are cutting production. It’s keeping prices still relatively high, giving new developments here in the United States chances to lock-in hedges. We were reading in the Wall Street Journal today that no longer are producers in Texas and North Dakota and everywhere in between, they’re not so susceptible to the large moves in the price of oil. They’re getting very sophisticated. A lot of areas, especially in the south, they’re able to produce oil anywhere from $20-$25 a barrel, some as high as maybe $30-$35, but they are now locking in future production using the futures market. When you can produce oil for $25 and sell it for $50 and lock that in, that’s what they’re doing. They’re taking advantage of that. As prices do fall, possibly in the 4th quarter this year, they don’t feel any pain. They just keep pumping because they’re locked into futures price at $50 printing money basically. What that’s going to do is exasperate the overproduction and the large supplies, we think, and then we could look at some prices possibly in the low $40’s to $40 later this year. Michael: Now, one more thing to talk about here as far as the seasonal tendency goes. We talk a lot about seasonals. Seasonals have kind of been knocked a little bit out of whack since the OPEC announcement back in November, but you are thinking that with the latest OPEC moves, we might see that kind of knock the market back into alignment with the seasonal tendencies. James: We really see that happening. What OPEC will be likely be doing at the very least is coming close to balancing the market again. We’ve had this boom bust every 6 months for oil production and oil prices over the last 2 or 3 years. That did change with the last production cut announcement 6 months ago. We see a slight balancing of oil production versus consumption, and that should throw us right back into the seasonalities that we enjoy so much. We love going short crude oil just as we’re coming out of driving season going into what we call the shoulder season, which means no longer driving season and yet too warm to have to heat homes and businesses in the Northeast. That is shoulder season. The market rolls over in the 4th quarter of the year so we take advantage of selling calls here in the summer and then reverse that position later this year and beginning of next. Michael: So, although we are bearish crude, neutral to bearish, we are not positioning money that we need the market to necessarily fall. Let’s maybe talk about for our viewers that maybe aren’t that familiar with option selling yet how you would position to take advantage of this type of market. James: When we heard of the announcement 6 months ago, we thought that would probably neutralize both bullish and bearish factors. We have too much supply, however we have production cuts from OPEC. We immediately put on a strangle in the crude oil market. We did think that the seasonality would probably take a pause until the end of this year. We basically took the excitement by selling $75 calls, meaning we are betting the market can’t get to $75, at the same time putting on a strangle, and by doing that we sold $33 puts – an absolute enormous window for the market to stay inside. That position has worked extremely well. Both of those positions are approximately 20% of what we sold them for. We should now go back into a seasonal pattern where we top-out in summer. What we mean by that is if oil is trading around 50-51 currently, what we would do is look at the winter contracts, say January, February, March, and look to sell options there. If we sell a $70 call while price of oil is at $50, we are basically betting where the market won’t be. This winter, we do expect the smaller demand season of January-February to take hold of 40% rally in crude oil prices during the weakest season of the year. That’s a bet we like to make and with oil at 50 selling calls, for example, around 70, basically what you’re doing is you’re playing football. You’re not necessarily passing to where the runner is or the receiver is, you’re passing it to where you think the market is going to go. Everyone is bullish in the summer and that’s where you go short. What you do is you throw it to the receiver who is running in January when demand is going to be at its least. Michael: As far as the market goes, the bulls seem to be running out of arguments here. OPEC was a big thing a lot of them were hanging their hats on and that hasn’t taken place. Now we are into summer driving season, which they will probably be talking up a little more, but with the supply where it is right now, prices tend to actually top in early to mid summer. We are just betting it’s not going to go up. It seems like anything can happen, of course, but it certainly seems like pretty high odds position from that point of view. James: I think with what’s happened to the market here in the last 6 months, we will have some equilibrium. You have producers locking in hedges, you have smaller production, so these moves from 30 to 70 are probably behind us. Crude oil prices 40 to 55 are more likely going to be the norm here for the next few years. Selling puts and going long in the low 30’s, and selling calls in the mid to upper 70’s, I think, is going to be a cash cow the next several years. As you said, anything can happen. We will have to wait and see. Selling options 40% and 50% out-of-the-money in crude oil, I think, is going to be ideal. That market is going to start finding equilibrium and some sort of balance, and what we call historic volatility is still in when you price options. The new norm is going to be more of a $40-$50 price and the volatility that was created over the last several years allows us to sell options 40%-50% out-of-the-money. That’s why we talk about volatility. That is the life-blood of what we do. From time to time, whether it’s fear of turmoil in North Korea, something going on in the Middle East, that is ideal for us is something that pumps up energy price options and we like to take advantage of that. Michael: Hopefully the media keeps helping out with that and keeps public buying those distant option premiums. James: That’s the hope. Michael: For those of you that like to learn more about the crude oil market and our strategy there, it is our feature article in the June newsletter. That will be out at or around June 1st in your mailbox. Keep an eye out for that. Obviously, in addition to our outline for crude, we also have some lessons in there about how you can sell options and manage risk is our feature this month. So, there’s quite a bit of new information there. You don’t want to miss the June issue. James, lets move into our lesson this month. This is one we haven’t done on video yet, but it is one we have talked about in our booklets if you have received our booklets in the mail. A lot of people that call in will ask us, “How do you pick the option you’re going to sell?” It’s really a short question with a very long answer, but we thought what we could do is just provide a few bullet points that if you are looking at trying to understand how this is done, the type of things we look at when we’re selecting a trade in commodities. There is really 5 things that we look at, James, that you and I have discussed. We’ll just kind of go down that list and talk a little bit about each of them. The first one on that list is something we are very big on which is the supply-demand fundamentals of that individual commodity. Do you want to talk about how you approach that when you’re looking at a commodity? James: Michael, I think a great analogy is years ago when people were investing in dot-com companies and these are names that you’re seeing on TV, they’re names that people are talking about, and the market started falling and people are looking at dot-com companies… “My gosh, I can buy it at 50% of what the price was just a few months ago. It has got to be a great buy.” They buy XYZ dot-com company, it’s down 50% from its highs, it sounds like a great buy. Then it is down 75% from its high and people are just getting white-walled here back in the crash of 2006, 2007, and 2008. You ask that investor, “What are you getting beat up in?” … “Well, I bought this dot-com company.” “What do they make?”… Not sure. “What do they do?”… Not sure. It is very difficult to stay with a position like that. We do fundamental analysis on about 10 commodities. I’ve been trading silver since when I got my driver’s license. I’ve been trading coffee for the last 20 years. We count barrels of oil constantly to try and understand what the value might be. When selecting short options based on fundamentals, when the market moves a dollar against you or people are on TV yelling about OPEC announced the cut or the market is up or down, for an investment to work you have to have staying power. You can’t get bumped out of the market on a small move. So often, if you have fundamental research and analysis, you’ll know that when the market moves slightly against you it is just noise. Computerized trading is moving the markets a lot more than it used to. We love computerized trading, it’s making our options more liquid to trade, but it also does send gyrations through the market from time to time. Having the fundamental research already in place allows you to be patient with your position. We sell options based on fundamentals. If they are not there, or we’re not sure what they are, we simply wait 6 months for them to maybe become more clear in a particular market. We want to sell options far enough out in time and price so that small gyrations in the market doesn’t disturb our position. How often does someone who does look at selling options on commodities or stocks? They’re attracted to selling the short-term option, selling a 30-day option or a 60-day option thinking, “Well, I only have a short period of time. That’ll have to wait.” But what ends up happening is a small move knocks you out of that position. Of course, what happens once month later is that market’s doing exactly what you thought it would do, except you don’t have your option anymore. We look at selling options 6-12 months out. If we thought the sweet spot for short options was closer in than that, that’s what we would do, but I have found that selling options 6 months out-12 moths out allows you the selling power to stay in your position. We were based on fundamentals when the market goes slightly against us, we just aren’t able to have patience and let the market come to us. Michael: When you know the underlying fundamentals, it’s really giving you the confidence to stay in a position and not get shaken out by this or that or what’s on the news today, which, you know, we talk about over and over and over again in everything we do. James: Writing short options, you are one thing – you are paid to wait. If you know what the fundamentals are and if they’re on your side it makes it much easier to do that. Michael: When we’re looking at trade, we look at fundamentals first. Second thing we’re going to look at is seasonal factors, which we’ve already touched on a little bit here today with some of our other things, but seasonals kind of play into the fundamentals because they’re really just reflecting certain fundamentals that tend to happen at different times of year. James: Exactly right. With the grain market, seasonal factors are there’s fears of planting, too hot or too dry conditions in the summer, and then you go right back to supply and demand in the fall. What seasonals do is they are basically fundamentals. It tells you exactly when the demand might be the most for gasoline, when the demand for natural gas might be the least. What it does is it helps us decide whether we should be long or short that particular market. If you combine that with a supply and demand, basically you are putting everything in place to allow you to put on a position and to stay with it. Michael: So, those are going to be the 2 core factors we look at when selecting a market. Obviously, the third thing on the list is volume and open interest. We have to find a market that not only is seasonally or fundamentally favorable, but there has to be enough options in there for us to go in and sell some. If there isn’t sufficient volume rope and interest, it’s not a viable market, so that’s the third selection process. That’s kind of self-explanatory, you probably don’t need to expand on that I wouldn’t think. James: Just the algorithms and the computerized trading is just making option selling just such a pleasure right now. The volume and open interest is increasing dramatically, even on far-out options. Making sure that there’s the ability to get in and out of the market is, of course, of the utmost importance. With computerized trading it is certainly helping a lot. Michael: We are using those 3 things to really select our market. The last 2 things on the list we are using for timing. What you’ll find is the last 2 things on our list are usually the first things that most option books will tell you to look at, or option gurus or option traders. That’s volatility and the technical setup. Those are the last things we’re looking at because by the time we are looking at those we’ve already picked the markets we want to be in. we are just using those 2 things for our timing, correct? James: Exactly right, if you’re trading a 2 week or 4 week option, you do need to have perfect timing. We have done all of our homework basically telling us whether we want to be long or short a particular market. Once we’ve made that determination, we try to blend in a little bit of timing to help us sell options when they might be at their peak or close to it. The desire or the need to have perfect timing with our form of option selling isn’t there, but certainly when we can see some technical buying or selling it can increase options that we’re looking to sell maybe 10-15%. We will certainly take advantage of that when we can. Michael: For those of you that are interest in this, we do get a lot of questions on this so we are probably going to be doing some new upcoming videos on these things, how you can use them, how we incorporate them when we’re managing portfolios as well. You’ll kind of learn from both sides of that. As far as just a little update here for this month, our waiting list for accounts is booked into July now, so if you are interested in possibly working with us directly, you can call Rosemary to schedule a consultation and she is filling the final slots we have now for July openings. If you haven’t heard about our accounts yet and you’d like to learn a little bit more about them, you can request our Discovery Pack, which looks like this, and that will tell you all about OptionSellers.com managed accounts, requirements, and how you can get started in them. You can request that on our website OptionSellers.com/Discovery. We thank everyone for joining us this month. James, thanks for your analysis this month. James: My pleasure, Michael. Always enjoy it. Michael: We’ll look forward to talking to you again in 30 days. Thank you.

Michael Coté: @cote | cote.io | Pivotal | Software Defined Talk Show Notes: 00:54 - Pivotal 04:39 - Being a Professional Muller aka Analyst 11:08 - Iterative Development 32:54 - Getting a Job as a Professional Muller aka Analyst Resources: Pivotal Cloud Foundry GemFire Greenplum Pivotal Labs Wardley Maps Software Defined Talk Episode #79: From a vegan, clothing optional co-op to working with banks and oil companies - Coté's professional life, part 1 Software Defined Talk Episode #85: Being an analyst without being an asshole - Coté's professional life, part 2 RedMonk Transcript: CHARLES: Hello everybody and welcome to The Frontside Podcast, Episode #66. I am a developer, Charles Lowell at The Frontside and also host-in-training for 65 episodes. This is my 66th and I'm flying alone this week but we do have on the show with us a very special guest. Actually, the person who taught me how to podcast, I think it was about 10 years ago and he was like, "Charles, we should do this podcasting thing." I started my very first podcast with him and I still haven't figured it out. But his name is Michael Coté and he's a fantastic guy and welcome to the show, Coté. MICHAEL: Thanks for having me, Charles. It's great to be here. CHARLES: Now, what are you up to these days? You're over at Pivotal. MICHAEL: That's right. I work at Pivotal and probably people who are in the developing world know them for Spring. We have most of the Spring people. Then we also have this thing Pivotal Cloud Foundry. We're not supposed to call it a platform as a service but for matters of concision, it's a platform as a service that's the runtime that you run your stuff in. Then we also have a bunch of data products like GemFire and Greenplum and things like that. Then, 'openymously', if that's a word, we have Pivotal Labs. Now -- CHARLES: I think, it's eponymously. MICHAEL: Eponymously, yes. Now, you might remember Pivotal Labs as the people who use Chef Scripts to configure their desktops. Remember that? CHARLES: Yeah, I remember that. I was into that. MICHAEL: Yeah, in coincidental kind of way, the inspiration for the project Sputnik thing, which is coincidentally because now Dell Technologies owns Pivotal so all of that stuff has come for a full circle. I guess also since I'm intro-ing myself, I work on what we call the Advocate Team because we don't call them evangelists. No one likes to be called that I guess. I guess there's 12 of us now. We just hired this person, also in Austin actually McNorma who's big in the Go community and apparently can make images of gophers really well. I'm sure she does many other extraordinary things, not just the illustrator master. Everyone else basically like codes or uses the terminal but I do slides. CHARLES: Well, that's your weapon of choice, right? It's a more elegant weapon for civilized time or something like that. I'm going to look it up on Wikia. MICHAEL: Yeah, basically what we do on our team is we just talk about all the stuff Pivotal does and problems that we solve in the way people in an organizations like would think to care about our stuff. Most of what I do is I guess you call it the management consultant type of stuff. Since I have a background as an analyst and I used to work on corporate strategy and M&A at Dell so I have a vantage point in addition to having programmed a long time ago. If you're changing your organization over to be more agile or trying to devops, we would say cloud-native with a hyphen. How do you change your organization over what works and doesn't work? Most people in large organizations, they sort of pat you on your head. I'm sure you encounter this. That sounds really nice that we would be doing all of the good, correct ways of using computers but we're basically terrible and we could never make that happen here. Thanks for talking with us, we're going to go back and stew in our own juices of awfulness. You've got to pluck them out of that self-imposed cannibal pot there in the jungle and show them that they actually can improve and do things well. CHARLES: Would you say you feel like your job is being that person who shakes them away and can be like, "Good God! Get a grip on yourself!" MICHAEL: Sure. That's a very popular second or third slide in a presentation -- the FUD slide, the Fear of Uncertainty and Doubt slide where you're basically like, "Uber!" and then everyone just like soils their pants because they're afraid that are like Airbnb and Uber and [inaudible] and Google is going to come in and, as they say, disrupt their state industry. I try not to use the slides anymore because they're obnoxious. Also, most people in large organizations nowadays, they know all of that and they've already moved to putting on a new pair of pants stage of their strategizing. CHARLES: You've got the kind of the corporate wakeup call aspect of it but then it's also seems like a huge component of your job which is when you were at RedMonk, when you were at 451 and even to a lesser extent, it was Dell who was paid well to just kind of mull it over, like just kind of sit there and asynchronously process the tech industry, kind of like organizational yeast and let it ferment, kind of trying to see where the connections lie and then once you've made that presented, do you think that's fair? That's what sprung to mind when I heard you say like, "Yeah, we just kind of sit around and think about what is Pivotal and what does it do and what's it going," but like how do you get that job of like, "I'm just kind of a professional muller." MICHAEL: That's right. First of all, I think professional muller is accurate, as long as, I guess mulling is also for -- what's that thing you drink at Christmas that you put the little -- CHARLES: Mulled wine. Like low wine. MICHAEL: I can feel like that sometimes late at night. But having a job as an analyst, I was an industry analyst at two places for a total of about eight years or so. Then as you're saying doing strategy at a company, now what I do here, essentially a lot of what you do is very difficult. I know it sounds to people. You just read a lot of the Internet. You just consume a lot of the commentary and the ideas of things that are going out there and you try to understand it and then synthesize to use that cheesy word. Synthesize it into a new form that explains what it is and then finally, the consultant part comes in where you go and meet with people or you proactively think about what people might be asking and they say something like, "What does this mean for me? And how would I apply it to solve my problems?" I guess as an example of that -- I apologize for being a little commercial but these are just the ideas I have in my head -- Ford is a customer of ours and they also have invested in us which is kind of novel. We have GE and Ford invested in Pivotal and Microsoft and Dell Technologies as an interesting mix but anyways, they have this application called the Ford Pass Application. I drive a Ford Focus -- CHARLES: Like Subaru? But you do drive a Ford. MICHAEL: Yeah, because I don't care about cars. It's a bunch of nonsense. I see this app and basically the app, if you have a more advanced one, it might tell you your mileage and even like remotely start your car. But it doesn't really do that much. You have the app and it will tell you information about your car and where to park and it even has this thing where it links to another site to book a dealership thing, which is annoying. CHARLES: Why would you want to book a dealership? To buy another car? MICHAEL: Well because the Ford Focus I have is notorious for having transmission problems so you're like, "I got to go and take it into the dealer to get all this recall stuff taken care of," so wouldn't it be nice... I don't know if you've ever worked with a car dealer but it's not desirable. CHARLES: Yeah, it would be nice if they didn't charge $6000 for everything. MICHAEL: Right. It's a classic system of having a closed market, therefore that jacks up prices and lowers customer service usually. What's the fancy word if there is a negative correlation, if you were to chart it out? Like price is negatively correlated to your satisfaction with it. Kind of like the airline industry, not to bring up a contemporary topic. You pay a lot of money to fly and you're like, "This is one of the worst experiences I've had in my life," whereas you go to the dentist and get a root canal and you're like $20 co-pay. Loving it. [Laughter] MICHAEL: Anyhow, this Ford Pass application doesn't really do very much so what does that mean for what I was explaining. If you go look up and read about it, starting back in the late-90s, your extreme programming and then your Agile Software Development and your devops nowadays, one of the major principles is what you should do is ship often. Maybe you should even ship every week or every day. Don't worry about this gigantic stack of requirements that you have and whatever you should be shipping all the time and then we've trained ourselves to no longer say failing fast. That was a fun cheeky thing back in the late-2000s. CHARLES: Did we trained ourselves not to say that anymore? MICHAEL: I don't hear it very often. CHARLES: Man, I got to go scrub my brain. MICHAEL: Yeah, well this is why you consult with me every 10 years as I tell you the new things. CHARLES: Okay, here we go. We're going to have you on the podcast again. MICHAEL: That's right. You have this idea of like, "We should be releasing weekly," but then if you go to Ford, you're like, "What does that mean?" To shave the shaggy dog here, essentially the idea that they're shipping this mobile application that doesn't really do very much is an embodiment of the idea that they should be shipping more frequently. This may be a stupid example. It's not that it's not going to do very much like permanently but as I have witnessed, very frequently they add new features so Ford is in this cadence but there's this app that instead of working on an application for two years and having everything in it, they're actually releasing it on, I don't know if it's weekly but they're releasing it on a very frequent basis, which allows them to add features. What that gets you is all the advantages of a fast iteration cycle small batch thing where they can study this actually a good feature. They can do all your Lean Startup nonsense. That's a very like weird, perhaps example of how you explain to someone like a large car manufacturer like Ford, this is what devops means for you. Therefore, why you should spend a lot of money on Pivotal? Now that's the part that lets me pay my mortgage every month, the last bit there. CHARLES: Right so Pivotal builds apps. MICHAEL: Well, the Labs people build apps for you. CHARLES: I'm kidding Coté. MICHAEL: Yeah, they actually do. The Labs people are like a boutique of another boutique like ThoughtWorks is kind of a boutique but they're kind of a boutique-y version of ThoughtWorks. That probably is terrible as someone who markets for Pivotal to do that. Do you ever notice how political candidates never really name their opposition? Like you never really want to name your competition but anyways... CHARLES: Pivotal marketing are going to come crashing through your window. Everybody, if we hear them in the next five seconds -- well, I guess you can't call 911 because this is not live. MICHAEL: Yeah, that's true. The Labs people build stuff for you and then the part that I work, in the Pivotal Cloud Foundry people, they have the actual runtime environment, the cloud platform that you would run all that stuff. Plus all the Spring nonsense for your microservices and your Spring Boot. I understand people like that. CHARLES: So good for Ford, for actually being able to experience, either in the development and the joys and the benefits that come with it. But this is actually something that I actually want to talk about independently was as I kind of advance in my career, I find myself pushing back a little bit against that incredibly tight, iterative schedule. Shipping things is fantastic and it's great but I find so much of my job these days is just trying to think out and chart a course for where those iterations will carry you and there is a huge amount of upfront design and upfront thought that it is speculatory but it's very necessary. You need to speculate about what needs to happen. Then you kind of measure against what's actually happening but I feel that kind of upfront design, upfront thought, we had this moment we're like, "We don't need that anymore. Let's throw it all in the garbage." In favor of doing things in these incredibly tight loops and finding where's the clutch point, that kind of long range thinking and long range planning comes and meets with the iterative development. I have no idea. What's the best way for those to match up those long cycles and those short cycles? Where is the clutch play? MICHAEL: I'll give you two and a half, so to speak trains of thoughts on that. One of them is I think -- CHARLES: Two and half trains of thought, I like that. Can we get straight to the half train of thought? MICHAEL: Yeah, I'm going to start with the half, which is just taking all of your questions and putting periods at the end of them before I round up to answering the question. I think a lot of the lore and the learnings you get from the Agile world is basically from consultants and teams of consultants. Necessarily, they are not domain experts in what they're doing so their notion is that we're going to learn about what it is we're doing and we don't actually know we can't predict ahead of time because we're not domain experts so they almost have this attitude of like, "We'll just figure it out on the job." Let's say The Frontside gets hired to go work on a system that allows the Forest Service to figure out which trees to go chop down or not -- CHARLES: If you're the Forest Service, we are available to do that. MICHAEL: I'm guessing you don't have a lot of arborists who have 10 or 20 years of experience working there. CHARLES: No, we don't. MICHAEL: And so you have no idea about that domain so in doing an iterative thing, you won't be able to sit down and predict like everyone knows that when you send the lumberjacks out, they're going to need these five things so we're going to have to put that that feature on there. They need to be able to call in flapjacks when they run out. That's just what's going to happen so you don't know all of these things they need to do so you just can't sit down and cogitate about it ahead of time. Also this comes in from the Lean Startup where there's a small percentage of software that's actually done globally and the notion of a Lean Startup is that when you're doing a startup, you're never going to be determined what your exit is, how you cash out, whether that's building a successful long term company while you get sold to someone or whether you IPO, you're not going to able to predict what that business model is so you just need to start churning and not think a lot ahead of time. Now, the problem becomes, I think that if you are a domain expert, as you can do the inverse of all the jokes I was just making there, you actually can sit down and start to predict things. You're like, "We know we're going to need a flapjack service," so we can predict that out and start to design around that and you can do some upfront thinking. Now similarly, developers often overlook the huge amount of governance and planning that they do for their own tools, which I know you're more cognizant of being older or more experienced, as they like to say. But basically, there's a bunch of, as we used to call it when I did real work and develop stuff, iteration zero work like we're going to need to build a build system, we're going to need a version control. You actually do know all these things you're going to need so there are all the things you can plan out and that's analogous to whatever domain you're working in. Sometimes, at least for your toolchain, it is worth sitting down and planning out what you want. Now, to hold back the people who are going to crash in my window, one of the things you should consider is using Pivotal Cloud Foundry. That's probably something you should cogitate on ahead of time. CHARLES: I think they're going to crash through your window and give you a Martini, if the marketing ninjas are going to do that and if you mention them in a positive light. MICHAEL: You know, it's 10:52 Central but if we were in London, it would probably be an appropriate time so we'll just think about that. Now, on the other hand, you don't want to go too overboard on this pre-planning. I'll give you an example from a large health insurance company that I was talking with recently. They had this mobile app -- it's always a mobile app -- that had been languishing for 15 months and it really wasn't doing anything very interesting. It was just not working well and they could never release it. This is a classic example of like, "We took a long time to release a mobile app and then we never released it again and then it blows." It's not achieving all of the business goals that we wanted. Mostly, what a health insurance company -- I've talked with a lot of the health insurance companies -- want with their mobile app is at least two things and probably many more but these would be the top of the list. One, they want their customers, their users to look up what their health insurance is, figure out doctors they can go to, the basic functioning that you expect from your health insurance company. And two, they want to encourage their customers to do healthy behaviors because if you think about it as a health insurance company, health insurance in my mind is basically like this weird gamble of like, "I'm gambling on the fact that you are going to be healthy," because then I pay out less to you and you just give me money so the healthier that your users can be, the more profit you're going to make. That's why they're always trying to encourage you to be healthy and stuff like that. The mobile app was not achieving, at least these two, if not other business goals they have. They basically were rebooting the effort. The way they started off is they had -- I don't know how many inches thick it was -- a big, old stack of requirements and the first few iterations, the product team was working on it and talking with the business analyst about this and going over it and what they sort of, as we were calling Pivotal Labs the product owner but the person who runs the team, realize is like -- to cut a long story short -- "This is kind of a waste of time. We shouldn't just prioritize these 300 features and put them in some back road and execute on them because these are the same features that we based the more abundant application on, we should probably just start releasing up the application," kind of like the FordPass app. That said, they did have a bunch of domain experience so they had a notion of basically what this app was going to do and they could start planning it out but they figured out a good balance of not paying attention to, as Martin Fowler used to call it the almighty thud, of all the requirements. What they ended up doing is they basically -- CHARLES: What's the almighty thud? MICHAEL: You know, he's got some bleaky or whatever. It's basically like we started a project and I think it's from 2004 and someone FedExed me about 600 pages of an MRD or whatever and I put it down on my table and it made a loud noise so he calls that the 'almighty thud', when you get this gigantic upfront requirement thing. What happened in this health insurance thing is they stopped listening and talking with those people and they kind of like chaff them out, not like when your rub your legs together but they kind of distracted them to that fact but eventually, they just got them out of the cycle and they started working on the app. Then lo and behold, they shipped it and things are working out better now. CHARLES: Hearing what you're saying and kind of thinking it over, I think if you're going to have an almighty thud, what you really want is you want all that upfront research and all that upfront requirements gathering or whatever, not necessarily to take the form of a set of features or some backlog of 300 things that the app 'needs' to do or 'should' do but just a catalogue of the problems, like a roadmap of the problems. MICHAEL: Exactly. CHARLES: You know, that actually is very valuable. If it's like, "These are things that are true about our users and these are the obstacles that they face. If we do choose that we want to go from Point A to Point B, where we are at Point A, then we actually have a map of what are the things that are sitting in front of that and what are the risks involved." It's like if you got -- you played, you're from my generation, you play the Oregon Trail, right? MICHAEL: Yeah. "You have dysentery." CHARLES: Right. I don't know where I'm going with this analogy but my point is developing that app is like going from Kansas City to Portland. But the thing about software is you don't necessarily have your corn meal. You don't need to say like, "We're going to need six pounds of cornmeal and we're going to need these wagons and we're going to need these mules," because this is software and you can just code a mule if you need it. But you might not need a mule, if the rivers are not in flood... I don't know. Like I said, I don't know where I'm going with this analogy. But do you see what I'm saying? The point I'm trying to make is that having the map of the Rockies and where the passes are is going to help you. MICHAEL: Yeah, this is probably where I'm supposed to expertly rattle off what Wardley maps are and how they help, which is fine. I think that's a great tool. There's this guy Simon Wardley and he's actually a great contemporary philosophizer on IT-led strategy. I think he works for CSC who no longer owns mercenaries but they used to -- Computer Science Corporations. I think they own a little bit of HP Services Division but he works for some think tank associated with CSC and he has got a couple of OSCON talks on it, where it's called a Wardley map and it's a way that you start figuring out what you're saying, which is to say your company's strategy. Using your front metaphor of the era of tall hats, if you remember that other movie, if you're on the Oregon Trail, broadly your strategy is -- and people get all up in your face about the difference between a plan and a strategy and we'll just put mute on them and edit them out of the audio because they're very annoying -- CHARLES: We'll call it an approach. MICHAEL: That's right. Your plan or your strategy -- and pardon me if I use these phrase free and loosely and everything -- is you would like to get to Oregon and you would like to live there and maybe grow apples or start a mustache wax company or some donuts, whatever it is you do out there once you get to Oregon and their strategy is -- what are the assets that I have. I have a family, I have some money and I also know some people who are going there so I'm going to buy a stagecoach and a mule, then I'm going to kind of wangle it out and we're going to go over there. Also, part of our strategy is we're going to go through the northern pass because we're used to winter versus the southern pass, which isn't the Oregon Trail because reasons. Maybe Texas isn't part of The Union yet so I don't want to deal with the transition between whatever that weird Texas thing down there -- CHARLES: The desert, there's the southwest and the desert. MICHAEL: I don't have the capabilities to survive in a desert so I need to go to the north and hopefully I won't be like that movie and have a grizzly bear rip up my backside and everything. You sort of put together this plan. Now going back to what you would do in IT world is to your point, someone does need to define what we would call the business value or the strategy, like what you want to do. Looking at the Ford thing, what Ford wants to do is they do cogitating thing ahead of time and they're like, "We manufacture cars," and you've got electric cars and Uber. That's where the scarce light comes in. In the future, who knows that people will still buy cars? It might be like that I-Robot movie where all the cars are automated and you just go into one. As a company, whose responsibility is to be as immortal as possible, we need to start making plans about how we can survive if individuals no longer buy cars. Let's do that. This is a huge upfront notion that you would have and then that does trickle down into things like my Ford thing -- I'm kind of speaking on their behalf -- if we have a direct connection with people, maybe eventually we introduce an Uber-like service. You can just check-out a Ford car. Then maybe this and maybe that. It's the strategy of how do we set ourselves up to do that. Now, I think the Agile people, what they would go for is it's really good to have that upfront strategy and you'll notice that in a lot of lean manufacturing in Agile talk, no one ever talks about this stuff, much to my extreme annoyance. They don't ever talk about who defines the strategy and who defines that you're working on this project. That's sort of left as an exercise to the reader. The Agile people would say like, "The implementation details of that are best left to the development team in an Agile model." Just like the developers are always arrogantly are like, "Hey, product manager. How about you f-off about how I should implement this? I am the expert here and let me decide how I'm going to implement the feature that you want for me." It's kind of like that rushing dolling down of things. To the development team, you worked on some, what was it? Band frame wire thing, a long time ago? It was basically like, "We don't know it. Maybe this is not the case. Let's pretend like it was." We don't know exactly how you're going to implement this stuff but our goal is that there's bands and they need sides and ways of interacting with their users so let's just figure out what that looks like but they had that upfront idea of ways that they were doing things. CHARLES: Let's start walking. MICHAEL: To add on some more. There's another edge case that you're making me think of, which is a good way of thinking through almighty thuds versus how much planning you have and that's government work. Government work that's done by contractors and especially, military contracting work. What you notice in government work is they have, seemingly way too much paperwork and process. They literally will have project managers for project managers and the project managers have to update how the project is going and they reports. If they don't do the reports correctly, their contract is penalize and you might even get fired for doing it. If anyone stops and says while the software is working, they were like, "No, no, no. don't be naive. It doesn't matter if the software is working or not, if we don't fill up the project report, we're fired." Until someone like yourself or me, it's just like your head explodes and you're like, "But working software, not a concern." In that case, it actually is part of the feature set, part of the deliverable is this nauseating amount of project reporting and upfront requirements, which has this trickle-down effect of annoyance but that's what you're getting paid for so that's what you do and if you want to make yourself feel better about it. I don't know how it is in the rest of the world but in the US, basically we think the only person worse than maybe, Lucifer is the government. I don't know why this comes about. We enjoy the fruits of the government all the time but for some reason, we just think they're awful. Whenever we give money over the government, we want to make sure that they're spending it well and if they're not corrupt and they don't hire their entire family to help them run the government and make sure that they're making extra money globally in their businesses, I wouldn't know anything about that. But essentially, you want to make sure there's no corruption so transparency is almost more important than working software. The way you achieve that transparency is with all this crazy documentation. CHARLES: Here's the thing. I agree the transparency is fantastic but nothing is more transparent than working software. Nothing is more transparent than monitored software. Nothing is more transparent than software whose, by its very nature is radiating information about itself. You can fudge a report but you can't fudge a million happy users. MICHAEL: Don't get me wrong. I'm not saying that the way that things currently operate is the ideal state. I'm saying that that desire for transparency has to be addressed and for example, using your example, let's say you were delivering working software but you were also skimming 20% off the top into some Swiss bank account -- you're basically embezzling -- and then it turns out that you need 500 developers but you only actually had 30 developers. There was corruption. The means even though the ends, even though the outcome was awesome, the means was corrupt so that's the thing in a lot of government work that you want to protect against. I just bring that up as an edge case so a principle to draw from that, when it comes to almighty thudding is like sometimes, that is part of the deliverable. We would aspire in our fail, fast, Agile world to not have a bunch of gratuitous documentation as part of the deliverable because it seems like a waste. It would be like every morning when you battle with your kids to get their shoes on, you had to write a two-page report about how you're getting ready to go to school stuff with your kids was going. As a parent you would be like, "I don't need that." However, maybe if you were like an abusive parent and it was required for you to fill out a daily status report for you to retain the parentship of your kids, maybe it would be worth of your time to fill out your daily status report. That was an awfully depressing example there. CHARLES: Let's go back to the Oregon Trail. What I'm hearing is that -- and we will take it back to the Oregon Trail -- you also need to consider, as were saying, you have some sort of strategy which is we want to go sell apples and moustache wax. But what we're going to do is we're just going to start walking, even though we don't have a map. But obviously, if you send out scouting missions, like you know where you're going, you know the West Coast is out there somewhere, you start walking but the stakes determine how much of your resources you spend on scouting and map drawing -- MICHAEL: Yeah. My way of thinking about strategy and again, people strategy is this overloaded word. But my way of thinking about strategy is you establish a goal: I would like to go to the West Coast. Now, how you figure that out could be a strategy on its own, like how did you figure out you want to go to the West Coast. But somehow, you've got to get to a prime mover. Maybe those tall hat people keep beating me up so I want to go to the West Coast. I want to go the West Coast is the prime mover. There's nothing before that. Then you've got to deal in a series of constraints. What capabilities do I have, which is another way of saying, what do I not have? And what's my current situation and context? On the Oregon Trail thing, you might be like, "I have a family of seven. I can't just get a horse and go buy a pack of cigarettes and never show up again." I guess I could do that. That's probably popular but I, as an individual have to take this family of six other people. Do I have the capabilities to do that? How could I get the cash for it? Because I need to defend against all the madness out there, I'm going to need to find some people to meet with. You're thinking and scenario planning out all of this stuff and this gets to your point of like, "If you're going to Oregon, it probably is a good idea to plan things out." You don't want to just like the next day, just figure it out. [inaudible] tell a joke. It's like, "Why do they sell luggage at the airport? Is anyone is just like, 'Screw it. Pack a clothes and we'll sort it out at the airport.'" It's an odd thing to sell at the airport. But you do some planning and you figure out ahead of time. Now, to continue the sort of pedantry of this metaphor, the other characteristic of going to the Oregon Trail, unless you're the first 10 people to do it is hundreds, if not thousands of people have done it already so you kind of know what it's going to be like. It's the equivalent, in a piece of software, if they were like, "This application is written in COBOL. I want you to now write it in --" I don't know, what are the kids do nowadays? Something.io? I-want-you-to-write-this-in-a-hot-new-language.io and basically just duplicate it. You're going to still have to discover how to do things and solve problems but if the job is just one-to-one duplicate something, then you can do a lot more upfront planning for it. CHARLES: While you're doing it, making the Uber and Airbnb. MICHAEL: Yes. CHARLES: Then you're done. MICHAEL: I think that's the truth and I want to put it another way. We used to be down here in Texas, the way we run government here is just lovely but we used to have this notion of a zero-budget, which is basically like, "Assume I'm going to give you nothing and justify every penny that I'm going to give you." I think that's a good way to think about defaults. I mean, about requirements is default is you don't need any and only get as many requirements as you need. If you're building tanks or going to the Oregon Trail, you might need a lot of requirements upfront that are actually helpful. CHARLES: But like a suit, you're just going to just strike out naked walking with. MICHAEL: That's probably a bad idea unless you -- CHARLES: Yeah, that is a bad idea but that's the bar but what happened if I were to do that? I might make it for 20 miles. MICHAEL: And build up from there and then have all the requirements that you need. I'm sure when Lewis and Clark went they were like, "We're going to need a quill and some paper and maybe a canoe and probably some guns and then let's see what happens." But that was a whole different situation than going to establish Portland. CHARLES: That was an ultimate Agile move. That was a pretty Agile project. They needed boats, they built them but they didn't leave St Louis carrying boats. MICHAEL: Right and they also didn't have a family of six that they needed to support and all this kind of stuff, right? CHARLES: Uhm-mm. MICHAEL: There was a question you asked a long time ago, not to steal the emceeing for you -- CHARLES: I would say, we need to get onto our topic -- MICHAEL: Oh, yeah. Well, maybe this is a good saying, what you're asking is, "How do you get this job?" and I don't think we ever addressed that. CHARLES: Yeah, that's a great question. You said you had to consume a lot of stuff on the internet. MICHAEL: Right. That's definitely how I do the job but I think how I get the job, there's an extended two-part interview with me on my Software Defined Talk Podcast Episode, available at SoftwareDefinedTalk.com, where I talk about my history of becoming an analyst and things like that but the way it happened is I don't have any visible hobbies, as you know Charles except reading the stuff in the Techworld. I would read about what's happening in the Techworld and would blog about it back in 2004, 2005 and I was discovered as it were by the people at RedMonk. I remember for some reason, I wrote some lengthy opinion piece about a release of Lotus Notes. I don't know why but that was a good example. This is back when all of the programming job were going to be off shored and I thought it was imminent that I was going to lose my job. I was looking for a job and I shifted over to being an analyst. That like the way that you get into this kind of business is you establish, there's two ways -- CHARLES: You established expertise, right? MICHAEL: Yeah, which is like always an unhelpful answer because it's sort of like, I was joking about this in another podcast, it's like Seth Godin's advice about doing good marketing, which is the way you do good marketing is you have an excellent product. If you have an excellent product that everyone wants to buy, then your marketing will take care of itself. I think if I'm asking how to market, I'm trying to figure out how to market a bad product. That's really what people want. CHARLES: That's also just not true. That's just like flat ass not true. That's a lie. MICHAEL: I mean, people who want to know how to diet better are not already healthy and dieting successful. You can't start with the base assumption of things are going well. CHARLES: Well, it is true. I like to think that we have an excellent product. We sell an excellent product but the thing is you can just sit on your excellent product all day and you have to tell people about it. If you want them to come sample it and try, maybe eventually buy it like the advice that you just need an excellent product. I'm amazed at anyone who can actually can say that with a straight face. MICHAEL: Well, he only writes like 150-word blogpost. I think his point is that you should aspire to have a unique situation and then marketing is easier. Similar with everyone's favorite example like an Apple or like a Pivotal or a ThoughtWorks. We eat all three of us and yourself as well, once someone gives you the benefit of the doubt of listening, you can explain why what you have is not available anywhere else. CHARLES: What it boils down to is if you want to easily differentiate, allow people to differentiate your products from others, then be different. That's fair. I'll give -- MICHAEL: To summarize it, it begets more of the tactics of how one gets a job like I do. What's the name of the short guy in Game of Thrones? 'Tyrian'? 'Tyran'? 'Tyron'? CHARLES: Tyrion. MICHAEL: At one point, Tyrion is like, "I do two things. I know things and I drink," so that's how you get into this type of business as you establish yourself as an expert and you know things. Now, the third thing which I guess Tyrion was not always required to do is you have to be able to communicate in pretty much all forms. You need to be good at written communication, at verbal communication, at PowerPoint communication, whatever all the mediums are. Just knowing something is not very useful. You also have to tell people these things. CHARLES: I think Tyrion is pretty good at that. MICHAEL: Yeah, that's true but he doesn't ever write anything. There is no Twitter or things like that. CHARLES: I feel like [inaudible] been a pretty big deal in the blogosphere. MICHAEL: Sure, no doubt. The metaphor kind of breaks down because the lattice for the continuing counterarguments do not exist in the Game of Thrones universe but whatever. CHARLES: They've got the ravens. That's like Twitter and it's bird. MICHAEL: That is true. Knowing how to deploy a raven at the right time, with the right message is valuable. CHARLES: We buffer up our ravens so that they fly right at eleven o'clock. MICHAEL: That's true. I could be convinced otherwise. CHARLES: That's why they arrived both at 6PM in the Westeros -- MICHAEL: I guess true to the metaphor of a tweet, most of the communications in Game of Thrones is either, what are they called? Little Birds? That the [inaudible] always has and then the Big Birds. You've got to tweets and the blogs. CHARLES: This is like it's nothing but Twitter. MICHAEL: Exactly. You got to really communicate across mediums. Now that the other thing that's helpful and you don't necessarily have to do this but this is what I think gets you into the larger margin. The more profitable parts of the work that I do is you have to be able to consult with people and give them advice and consulting is largely about, first figuring out the right opportunity to tell them how they can improve, which usually is it's good if they ask you first. I don't know about you but I've found that if you just pro-offer advice, especially with your spouse, you're basically told that you're a jerk. CHARLES: Well, it'd be like a personal trainer and walking around me like, "Hey man. Your muscle tone is kind of flabby. You got to really work on that." MICHAEL: The line between a good consultant and being overly-explain-y is difficult to discern but it's something that you have to master. Now, the other way you consult with people is you study them and understand what their problems are and you're sympathetic to them and I guess you can be like a British nanny and just scold them. That's a certain subset of consulting. CHARLES: Don Rickles of consulting? MICHAEL: That's right. You just help them understand how all of this knowledge that you have applies to them and hope solve their problems like the FordPass thing. When I went from being a developer to an analyst, it was a big risk to take on. I think I probably took like a $30,000 pay cut and I went from a big company health insurance to being on a $10.99 and buying your own health insurance which a whole other conversation. We talked about that every now and then but like it's a risky affair. It's not a promotion or even a lateral move. It's just an entirely different career that you go into. Then you talk with people a lot. As an analyst, you're constantly having to sort out the biases that you have with vendors who want to pay you to save things versus end-users who want to hear the truth. You can't really see a lot of Gartner and Forrester work but the work that you can see publicly from people like RedMonk, it's pretty straightforward. CHARLES: Yeah it is and whatever they did, a piece that was for one of their clients, there was always a big fat disclaimer. MICHAEL: Now, the other thing I would say is what I've noticed -- not to be all navel-gazing -- about myself and other people who are successful at whatever it is I do is there's two things. One, they constantly are putting themselves out there. I remember and this is probably still the case. This is probably all in Medium. There's probably a Medium post every quarter that's like, "If you're a developer, how do you give more talks. What your first conference talk?" Basically, the chief advice in there, other than bring business cards and rehearse is essentially like you just got to get over that idea of self-promotion. You basically have to self-promote yourself incessantly and do all those things that you find nauseous and be like, "Me, me, me," which is true. You've got to get over that thing. If you're like me and you're an introvert who actually doesn't really like that many people, except a handful of people like yourself that I'm friends or family with, you have to put on the mask of an extrovert and go out there and do all this extrovert stuff or you'll fail. I shouldn't say you'll fail, you won't increase your overall comp and margin and everything. You'll basically bottom out at about $120,000 a year or so because that's about as much as anyone will pay for someone who just write stuff but doesn't actually engage in the world and consult. You've got to do that. Then the other consequence of that is you always have to be trying out new types of content and mediums like here we are in a podcast. Long ago, you and I, in 2005 or 2004 -- CHARLES: You got me to sign up for Twitter. MICHAEL: Yeah, like we started off a podcast because I remember hearing the IT conversation stuff and John [inaudible], who is a big inspiration for me, a role model, I remember he was just trying out podcast and I was like, "All right. I'll try that out. That looks like fun," and then here we are. CHARLES: I remember you tried out the podcast and you're like, "Let's go into your backyard or my backyard. Let's talk about software for 15 minutes." I remember that very clearly and that was 12 years ago. Then I remember also like with Twitter, you're like, "Now, you should sign up for this Twitter thing," and I remember I did and that's when it was still coming through SMS on your phone and like "I'm walking around Teatown Lake. I'm going to get tea." And I was like, "Oh, my God. This is so fucking stupid." But little did I know, you were actually signed me up to a service that changed my life. MICHAEL: Yeah, it was the stage direction era of Web 2.0 where you're just supposed to give people your status updates, instead of your searing insights. But yeah, you've tried it all these different mediums because again it goes back to your job is to communicate. You need to tell people things that you know. CHARLES: Coté, what is your strategy on virtual reality? MICHAEL: My strategy in virtual reality. Well, you've caught me, Charles because I'm not into that. You remember when Time Magazine had that Chinese lady who was like a... Not Frontside. What was the name of the big virtual reality thing that was big...? CHARLES: Second Life. MICHAEL: Second Life, who is a Second Life millionaire. CHARLES: Yeah, she had armies of people. She was mining some resource in Second Life and then reselling it and she made a lot of money. MICHAEL: I don't really like visual mediums so as Marshall McLuhan would say 'hot mediums'. I guess I like the cool mediums. That's not my thing. That's where my principle fails. Maybe I'll do that one day. CHARLES: This is pretty hot. This medium is pretty like -- MICHAEL: I think maybe audio broadcast is hot. I'm just pretending like I know. This is another trick that you can deploy that my wife has picked on is most of the time, 78% of the time, I actually have no idea what I'm talking about. I just know words. I don't actually know Marshall McLuhan theory. I read that one book a long time ago and I remember that scene in Annie Hall where he gives a little diatribe to whatever the Woody Allen character is. That's the extent of my Marshall McLuhan knowledge. CHARLES: Was Marshall McLuhan actually in Annie Hall? MICHAEL: He was. CHARLES: Don't sell yourself short, Coté. MICHAEL: Sure. CHARLES: You know things and you drink so let's talk about that second aspect because I know that you like me whole tearing up as a role model. MICHAEL: I should say since we're both happily married, except for the third thing that he does which he -- CHARLES: Oh, right. MICHAEL: Another unmentionable word. He too freely hangs out with the ladies. CHARLES: Right, anyway aside from that, throughout doing all this stuff, you keep a very, very chill perspective on things. I feel like the tech world gets so wound up around itself and it gets so tight and so stressed about its own problems. There's constantly wars in JavaScript and before we were in the JavaScript world, we were warring in Ruby. I remember when Twitter went over to using Scala instead of Ruby. Oh, my goodness, it was terrible times. I feel like there's a lot of stress and yes, you want to take it seriously but I feel like you've always been able to maintain an even-keeled perspective about technology which actually allows you to commentate on it effectively and intelligently because you're able to unwind yourself from the squabbles of the day and see maybe a bigger picture or something like that. MICHAEL: That's nice of you to characterize me to use a -- is that a hanging, dangling participle there, when you're in [inaudible]? CHARLES: Yeah, I don't know. MICHAEL: I think that's also just a function of being old. CHARLES: So are you actually not stressed or is it just part of your persona of being an extrovert or something like that? MICHAEL: About the tech world? No, I'm not stressed about that. As you kind of outlined, especially I was not sent the demographics for the show, which is fine. I'll overlook that but I'm guessing that that was a joke. CHARLES: Who got some designers, developers -- MICHAEL: I'm guessing there's a lot of people who actually are on the frontlines of working on software. I think this happens also in the white collar set. But essentially, it's really easy to slip into over allegiance to something and I don't know what rhetorical fallacy this is but it's the bias of over allegiance to something, you get all wrapped up in defending a tool over something and the virtue of it, whether it's Emacs and vi. I'm sure reactive people, whatever that is, have all sorts of debates. The thing is when you're heads down on this stuff, you don't realize how petty all those discussions are. It's not so much that it's a waste of your time but it's just one battle in an overall war that you have. It's good to have opinions and figure things out but you should just relax about it because the more angry and emotional you get, you're going to make a lot of mistakes and decision and problems. I wish I had an example of this but this is one of those things that intuitively as you ages as developer, it's not like your literal age. It's just the amount of time you've been developing software. You could be a 25-year old who's been developing software for 10 years and you would probably get this notion but you just realize that stuff changes and you just learn the new things. It's kind of not a big deal like one day, you're going on and on about how vi is great and the next day you're using that Atom editor and then whatever and you just use the tool that's appropriate and it's annoying when you're younger and people are applying Hacker News with like, "You should use the tool that is appropriate," which is a stupid reply. That's just kind of how it is. Also the other thing, in the more white collar world, as an analyst, especially doing strategy for a company, you can't be biased by things because then you'll make poor decisions as an analyst. Also when you're doing strategy in M&A that result in bad business outcomes so you actually be very unbiased about things. CHARLES: I think it applies in everything. If you get too emotionally invested in one particular approach in software, literally in anything you do, it does result in bad outcomes. The problem is you may not actually realize the consequences of those bad outcomes far down the road from the poor decision that you made that caused you that outcome so you might not necessarily connect it back. MICHAEL: Yeah, and I keep bringing this up but I think another effect of being calmer in your nerd life is having something that you do outside of your programming life, which is either having a family or having hobbies or something like that but you know -- CHARLES: Or having a wild turkey. MICHAEL: Yeah but you've got to have something, a reason to stop thinking about your tech stuff or it'll consume you. I suspect when you see the older graybeards who go on and on about open source and they're very like... I don't know. What's the word? They're very over the top and fervent about tech stuff. It's probably because like me, that's their only hobby and they haven't figured out how to how to control it. It becomes part of their identity and it defines them and then they're down this twisty, turny path of annoyance to the rest of us. CHARLES: Again, don't sell yourself short, Coté. You've got plenty: you love the cooking and eating and the drinking so close this. Do you have a favorite drink that you've been mixing lately? MICHAEL: No. CHARLES: Or any kind of favorite food because every time I go over to your house, even if we're having pizza, there's always a nice hors d'oeuvre or something to drink, something to tweak that appetite for something special. I kind of wondering if there's anything that you're into. MICHAEL: I have some very basics. One, I don't know if I drink a lot or drink a little. I think the science on this is very confusing, kind of like drinking coffee. I try to drink less. I basically go back to the basics of I want cheap wine that's not terrible. That's what I'm always trying to discover. I think I've also started to rediscover just straight vodka. That's pretty good. I think that fits into the grand scheme. CHARLES: I just can't do it. I can't follow you there. I need some, what do they call them? Gin florals? I can drink gin -- MICHAEL: Oh yeah, that's good too. CHARLES: That's about as close as I can get to straight vodka. MICHAEL: And then food-wise, I just wrapped up finally figuring out how to cook fish and chicken without it tasting terrible. CHARLES: Oh! What's the secret? MICHAEL: No, I want to put a disclaimer out. There's a EULA on this. I'm not responsible for anything bad that happens but what you want to do is cook at about 10 degrees less than you're supposed to. A chicken is supposed to be 165 degrees but you take it out of the pot when it's like 150 or 155 on another part of the pan. Fish is supposed to be 145 degrees but you take it off when it's about 130 or 135. It cooks a little bit more but these guidelines to cook your meat to that thing, it ruins it. Also you can brine a chicken and things like that. Also, what you want to get is an instant meat thermometer. One of those that you can just poke in your meat so you're always checking the temperature. That's what I've been working on. CHARLES: I have a theory about that. I will laid out really quickly, maybe it's just because the juices. It's the juice that so yummy there so you want those to be locked in and boiling but not boiled away. I'm going to give that a try on my -- MICHAEL: And fish is particularly tricky. CHARLES: Because all it takes is five minutes. Sometimes, it's two minutes and 30 seconds too long and you ruin the fish. MICHAEL: Then the next theory I want to try out is that you can actually fry fish in pure butter but you've got to paper towel it off afterwards because too much butter ruins it. But I think if your paper tower it off like you do grease off of bacon, then I think that's how you achieve -- not as good as a restaurant because in a restaurant, they have those butane torches and the crisp it up on the outside or reverse sear or whatever -- CHARLES: Is that what they do? Do they just run their torch right over the fish? MICHAEL: That's all I can figure. They might also be professional cooks who know how to cook things. CHARLES: They might have done it a lot of times. They might have had someone like Gordon Ramsay yelling at them constantly. "I can't believe this fish is so terrible. Waah!" All right. I'm going to give the fish a try. I'm going to give the chicken a try and I'm going to give everything that you just spent the last hour talking about, also a try. MICHAEL: Well, thanks for having me on. It's always fun to have a show with you. I just posted yesterday our second revival of the Drunken Retired Podcast, which is over at Cote.show. It's just '.show'. URLs are crazy nowadays. I guess the only self-promotional thing I have is I'm over in Twitter @Cote. It'd be nice if everyone should just go follow me there because I'm always very sad that I don't have enough followers and they'll never verify me. I don't understand what the problem is. I'm clearly me. Then I mentioned earlier, the main podcast that I do is Software Defined Talk, which is at SoftwareDefinedTalk.com and you should come spend a lot of money on Pivotal stuff. I'm happy to tell you all about that. Just go check out Pivotal at Pivotal.io CHARLES: I guess that is about it. We will talk to everybody later. Thank you for staying tuned and listening to this supersized episode. Come check us out sometime!

Michael: Hello, everybody. Welcome to the January 2017 edition of the Option Seller Radio Show. This is Michael Gross of OptionSellers.com here with head trader, James Cordier, of OptionSellers.com. We’re starting off a new year here in the week of the Presidential Inauguration. James, it appears markets may be treading water here, kind of waiting to see how things play out after the Inauguration. What are your thoughts on the markets here as we start the new year? James: Well, Michael, welcome to 2017, as well. Really excited about the next 12 months, and we’ll see what the markets offer us as far as opportunities and looking at landscape as we go forward. The stock market certainly got a shot in the arm after the election, thinking that a Trump presidency is going to be very business friendly. The stock market certainly enjoyed that; however, over the last 3-4 weeks it is simply treading water going sideways, waiting for another idea. As far as “Will this actually help the economy? Will some of the Trump policies that are being tossed around actually be and do what we are hoping for the economy?”, the stock market is kind of going sideways waiting for a little bit more information. I think you’re right – right after the Inauguration I think people are going to get either the warm and fuzzies of the new president or possibly a little bit of a caution and then the stock market has some profit taking. The one thing that’s interesting right now is the put-call ration is the most bullish it has been in the stock market in years. Usually, that’s a bit of a caution flag for the market to have a correction. I guess we’ll find out in the next few weeks. Michael: Yeah, I saw Soros is one of the guys that took a beating on betting against the stock market with the Trump election. The big shooters aren’t always right. Of course, us here, we don’t trade the stock market but we do watch it closely, primarily because: one, a lot of our investors are in it and, two, because it can have an overall impact on a lot of other things going on in other markets. So, not a direct impact, but it’s something that we do keep an eye on. What we’re going to talk about here this month is obviously diversifying into commodities and we’re going to talk about a big advantage you have as a commodities investor. That big advantage is seasonal tendencies and commodities. January offers a plethora of seasonal tendencies that we can watch and take advantage of, and that’s what we’re going to talk about this month. James, why don’t we start out with some of our listeners that may not be familiar with seasonals. We do talk about them a lot, but maybe just start off by explaining exactly what a seasonal tendency is in a commodities market. James: Michael, that’s a really good point that you make about seasonals that do come up this time of year. For currency traders, they don’t know what a seasonality is. Trading silver, you probably don’t know what a seasonal is; however, trading corn and coffee and heating oil and crude oil is simply a propensity for a market to make a particular move during a particular time of the year based on supply and demand. New production that comes online certain times of the year, some of the biggest demand, certainly, for certain markets, comes at a particular time of the year. For example, heating oil and crude oil often starts getting large demand in the winter for heating oil and driving season for crude oil. The coffee market certainly gets a bump usually in December and January as demand for coffee, especially in the western hemisphere, does increase as temperatures cool. The propensity for the market to fall off starting March, April, and May, when temperatures in the United States and western Europe start to warm, people simply drink less coffee. That’s basically the ABC’s of seasonal trading. It seems incredibly simplistic but if you followed, and certainly we follow, the price of unleaded gasoline going into driving season, and the price of soybeans going into planting season, you become a true believer. Certainly, that is something how we like positioning portfolios using a portion of seasonality to diversify accounts, and January-February seem to be 2 months that offer the most trades like we’re describing. Michael: Now, we are going to talk about some of the more pronounced seasonal tendencies that do tend to happen in January and February, but, before we do that, we want to cover briefly here one of the mistakes people make, and maybe one of the misinterpretations people have about seasonal tendencies. A lot of people, when they first find seasonals, they look at them and it looks like they’ve found the Holy Grail of investing, the secret hand behind the markets. There are certain factions of truth to that, but the mistake most people make is they use them improperly. In other words, they may look at a seasonal chart and say, “Boy, this average looks like it falls every year on January 10th, and so I’ll sell it on January 10th and buy it back on January 31st because that’s when it looks like it goes up again.” What people don’t realize is that’s an average and trying to time that to the day is extremely difficult. A lot of people that try and do that end up losing and then they say, “Oh, well seasonals don’t work. They’re no good.” That is absolutely not the case; in fact, when you combine the strategy of selling options with a seasonal tendency, it can become a very powerful asset to your investment arsenal. James, can you maybe touch on or explain why that’s the case? James: Well, option selling, as the majority of our listeners know, is certainly putting odds in your favor. A lot of our clients and a lot of people that we speak to make it seem like you’re betting against the house. We are the ones selling the options, the people that come into the casino, if you will, are buying options. When you take the percentages of options expiring worthless and you combine that with seasonalities of when the market usually rallies or usually falls, you’re really putting the odds in your favor, but you have to keep your eyes open. Every single year you’re not going to have a seasonal tendency work the way it does on its 15 or 30 year average. You need to be aware of what the current conditions are in that particular market and see if it’s trading seasonally prior going into a sell or a buy for a particular market. Michael: One thing to mention there, too, is if you’re a futures trader or even some guys try to trade ETF’s with seasonals, which I do not recommend, but for futures traders, their timing has to be perfect. Option sellers, you don’t need perfect timing because you’re selling way above or way below the markets. So, if you miss the seasonal move that happens a couple weeks early or a couple weeks late, it doesn’t really make a big difference to you as an options seller, where if you’re a futures trader it can make a huge difference. So that’s one additional reason why combining option selling with seasonals can be such a powerful strategy. As far as the markets, I want to talk about one, James, you and I spoke about earlier that’s a little bit different this year. That’s the crude oil/unleaded gas market. We talked a lot in November about some possible big moves coming up in seasonal’s tendency in crude oil, the potential for prices to start moving higher, and we’ve had a little shift this year. Do you want to talk about that and what you’ve seen happening this year in the crude oil market seasonally? James: Michael, it’s interesting, crude oil and unleaded gas normally is extremely weak in the December-January time frame. Then, as you start approaching driving season, you normally see a large increase in price, albeit slow and steady, but it does go from its low in January to often its high in June and July. 2017 is certainly a different trade this year. With the first announced production cut by the largest world oil producers in the last dozen years, certainly it’s going to change the seasonality for this year. We were seeing crude oil pushing down into the low 40’s and then, lo and behold, Saudi Arabia and Russia and some of the other largest producers in the world decided we need to do something about balancing this market. They did come together and they did announce what seems to be production cuts that are sticking, to a certain extent, and the oil market, which normally rallies from January to June, made that entire rally the days and weeks after the announcement. So, like I was saying earlier as far as keeping your eyes open in reference to what’s happening on any particular year, 2017 is a perfect example of that. Michael: So, you think as far as a seasonal move goes, where the normal seasonal for crude or unleaded tends to start pulling prices up in January in anticipation of driving season, you think we’ve already seen the bulk of that move already? James: I really do. We will have stronger demand for products such as gasoline starting in March and April; however, we have oil pushing in the low-mid 50’s right now. A lot of the production cuts that apparently will take place at approximately 1 million barrels, it’s thought that those missing barrels can come back onto the market relatively soon. We’re expecting the seasonality this year of higher prices going into driving season muted quite a bit. Michael: So, in the near term, you’re not necessarily bearish prices, you’re just not as bullish as you normally would be, simply because the price has already moved up. What’s the strategy to trade it then? James: Well, the strategy is actually one of our favorites. The fact that we do have fewer barrels coming online from OPEC and non-OPEC nations should underpin the market. We should not see oil trade into the low 40’s, certainly not the high 30’s, going into driving season. That certainly is not going to happen, especially with the OPEC and non-OPEC production cuts. We would be really interested in selling puts in the low-mid 30’s for crude oil for later this year delivery. At the same time, the fact that the market has already done its seasonal rally and we expect the U.S. production to come online, we would not see oil go into the mid-upper 70’s. Practically ideal for the clients who follow along and the listeners that we hear today that know about what’s called a strangle, you would sell crude oil puts in the low 30’s and crude oil calls in the high 70’s. I think that is a really good opportunity as far as collecting premium on both sides of the market. There’s a lot of volatility and that’s when you get the luxury of being able to sell a strangle. I think, right now, the crude oil market is practically ideal for doing that right now. Michael: … and that’s what, close to a $40 strangle there? That’s a $40 window prices could move and both options still expire worthless? James: Well, that’s how we started out the conversation today with selling options far out-of-the-money. We’re strangling oil $40-$45 from the put to the call and we feel very confident that crude oil, which used to have large swings in the past, is not going to have a move like that, not in 2017. Oil is a great value in the mid 40’s. It’s quite a sale if it gets in the 60’s. Certainly, our strangle would be $10 above and below that. That’s the way we like to play it. Michael: All right. For those of you listening that want to learn more about seasonal tendencies, how they work, we did devote 2 full chapters to seasonals in The Complete Guide to Option Selling. If you do want to see some of our favorite there and some of the ones we recommend for individual investors you can find those in chapters 15 and 16. That’s in the new Third Edition. Of course, if you want to purchase a copy of that you can at www.optionsellers.com/book. You get it at a discount at Amazon or Barnes and Noble there. Let’s move on to talk about another seasonal tendency that does appear to be tracking closely this year, and that’s over in the grain markets. We have 2 markets there we’re watching very closely. Both the soybean and the wheat market have strong seasonal tendencies that tend to start in January. I’m going to talk about wheat here for just a second. As far as the tendency goes in wheat, wheat has a strong seasonal tendency to start declining in price in January. Unlike most of the grains, wheat is the only market that can grow in the winter. In fact, you may not know this, but, 75% of the wheat grown in the United States is winter wheat. Therefore, that gives it a different seasonal tendency than the other grains, from oats to corn to soybeans. Winter wheat sprouts in January, typically. Unlike the other commodities, it doesn’t have extreme heat to deal with. There are some weather factors, but typically once that wheat crop sprouts a lot of the anxiety comes out of the market and once that sprouts and it starts growing, a lot of traders will start selling wheat because the fear of the upcoming winter wheat crop tends to start to come out of the market. That’s why you often see wheat prices start to decline in winter and continue that weakness through spring. Obviously if your investor wants to take advantage of that, you may look at a call selling approach. We’ve taken that a step further and that involves a different market. That’s the soybean market, which has a different seasonal. James, you’re going to talk about soybeans here a little bit. James: Michael, that’s interesting. A lot of investors, whether they’re close to commodities or they simply keep one eye on them from time to time, would think that corn, wheat, and soybeans are always moving in the same direction. Soybeans have very different fundamentals and very different seasonality than the wheat market does. In the winter, January and February especially, demand for soybeans and soybean meal is at its greatest, as many U.S. producers and producers around the world are feeding livestock. Of course, that is when demand is the greatest for protein seed. At the same time, in South America, quite often you’ll have weather problems because it is grown in so many areas. Especially in Brazil and the surrounding southern countries of Brazil, they seem to be having, once again, some weather developments down there that are supporting prices. At the same time, the weather in the United States, for especially the Midwest, is always either too wet, too dry, too hot, or too cold. Sure enough, a weather premium starts getting built in the months of March, April, and May. For soybeans, January is usually quite a strong buy time as far as expecting prices to start moving up, just the opposite of the wheat. For those reasons, we like selling puts below the soybean market in the months of January and February. It’s almost a squeeze, if you will, by being short wheat and going long soybeans over the next 90-120 days. Certainly, that is something that we have followed closely in the past and, sure enough, looks like it’s setting up again for 2017. Michael: Yeah, we talk a lot about combining strategies to boost your odds, how the option strategies you can’t just view them in a vacuum when you’re trading them in a portfolio. You look at how one position offsets the other and a perfect example of that is one of the things we’ve talked about here. It’s called the Minnesota Squeeze. We’re not going to go into it here, but we are going to explain that in detail in your upcoming Option Seller Newsletter, which is slated to come out next week. We have a very special combined January/February seasonal issue and we are going to show you how you can combine these two seasonals to really boost your odds when it comes to getting those worthless expirations, selling the wheat into the growing season fade, and in buying the soybeans on the potential weather rallies in addition to winter being a high-demand season for soybeans. That will be in your upcoming special issue January/February newsletter. Look for that the week of January 23rd. In addition to that, in your upcoming newsletter, it is a special issue on seasonals so we’re going to talk in a little bit more detail in some things you can do to put these seasonal tendencies in your favor. It really is an advantage you have as a commodity options seller, as opposed to being in the stock market or bonds. It doesn’t really exist in any other asset class, so it’s something you can take advantage of in commodities. We’re also going to cover another subject that’s near and dear to our reader’s hearts and that’s staying properly diversified and how sometimes investor fear, even savvy high-net-worth investors, can let fear get in the way of getting properly diversified. There’s some good stuff in this month’s newsletter. I hope you enjoy it. James, before we go this month, let’s talk about one of your favorite markets, as we continue our coverage of big seasonal tendencies this month, that is the coffee market. We just published a special coffee article this week that is available on the blog at www.optionsellers.com/coffeejan. Let’s talk a little bit about coffee. We’ve got a strong seasonal tendency for weaker prices coming up here. Can you talk a little bit about that, James, and why that tends to occur? James: Michael, the coffee market looks like in 2017 it will be trading seasonally. Often, the winter time frame is when many of the producers in South America and Central America have to watch the weather quite closely. As long as those areas get ample rains, cherries then form on trees and, of course, those become green beans and later on roasted into the lovely mocha color that we all enjoy… most of us do each morning. Once the fear of the weather patterns in South America and Central America dissipate, and they usually do, that is normally short-lived and it looks like set-up is taking place again this year. At the same time, during the winter period is the strongest demand. So, we do have in western hemisphere areas the strongest and most consumption of coffee is in the winter and colder months. As we get into March, April, and May a lot of tendency does go to either soft drinks or flavored waters and I know that sounds kind of interesting to be talking about that, but when you multiply it by 300 million people in America, changing their drinks by just a slight amount really does make a large difference. Quite often in the winter, we have the most fear for any type of drought conditions in the coffee growing regions. That is now behind us. Coffee consumption in the United States will start to taper in February and March, and that is why we usually look to sell calls in coffee at the very beginning of each year when the seasonality and propensity seems to be setting up. 2017 looks like, yet, another year to be selling calls in this market. Coffee has been trading around $1.50 a pound on and off for the last quarter or two. The market did bump up here recently on what was expected to be a slightly smaller production in exports out of Vietnam. Then, earlier this week it was just announced that Vietnamese exports were up 25-30% from the previous year. Once again, knowing your fundamentals is really important. When you can combine that with the seasonalities and the odds of selling options, you can find out just by watching this for maybe 12 months why we do follow seasonalities and why it can combine with selling options to be really good for someone’s portfolio. Not every single time, like any other investment, but, on the averages, I like where we stand. Michael: Needless to say, as an option seller here in January/February, certainly no shortage of opportunities coming our way. If you’re a managed client, you have obviously seen the majority of these trades in your account thus far, and we certainly look forward to some more of those coming our way as we work through the first quarter. If you’re not yet an account, these are markets you can look at and maybe learn a little bit more how these trades work. We do have some availability for new account consultations in February. If you are interested in a managed account that is your first step. You can call Rosemary at our main office at 800-346-1949 to inquire about availability for those. If you’re one of our international listeners you can call at 813-472-5760 or you can also e-mail… that is office@optionseller.com. James, thank you so much for your insights this month. James: My pleasure, Michael. Always great chatting about what it is we do for our clients and our listeners. Beginning of this year looks like there might be some very good landscape and some very good opportunities. We’ll just have to wait and see. Michael: Well, perfect. Everybody, have a great month of option selling. It’s 2017- if you’re not diversified into alternative assets this is a great year to think about it. We wish you all a great month of option selling and we’ll talk to you next month.

Michael: Hello, this is Michael Gross here with James Cordier of OptionSellers.com. We’re here with your October edition of the Option Seller Radio Show. This will probably be or will be the final Podcast you’ll here from us prior to the election. The next time we speak we will have a new President-elect. We have a lot of things going on this month. Some investors worried about the stock market looking like it might be getting a little bit toppy, a lot of interest in diversification and uncorrelated assets. Right now, we’d like to talk to James a little bit. James, maybe just give your overview on the state of the markets right now leading up to the election. What’s your feel on just the general vibe right now? James: Well, Michael, quite often people try and front run the candidate who looks the best and some people actually, investors alike, want to try and take advantage of who they think is going to win the election. Quite often, what does best is when we have status quo. Quite often, everyone’s expecting “Well, if a democrat is elected President, then the market is going to do this. If it’s a republican, it’s going to do that.” Looking back on the history and looking at the 12 months post election, there really doesn’t seem to be a strong correlation. It appears to me that what the Federal Reserve is doing is more important. Chances are, going into 2017, I think that’s the same way it’s going to play out if we continue to have interest rates at a quarter and a half, if Janet Yellen and the Federal Reserve continues to keep hands-off of interest rates going higher more than a quarter percent. I think we’re going to have basically the same market that we have right now, probably for the next 12 months. I don’t see a big change no matter who gets elected; however, there will be some extreme movements in the market prior to the election and probably right after. I also then see the market just kind of steadying out and then going back to the fundamentals and they’ll quite possibly be the fundamentals that we have right now. Michael: James, that’s a great point. A lot of investment shows right now and magazines are talking about which stock you want to buy if Hillary wins and which stock you want to buy if Trump wins. Do you go short the market or do you go long the market ahead of the election. Like you said, I’m guessing a lot of that’s going to be knee-jerk type reaction stuff and serious investors are looking 1-5 years down the road, they’re not looking 2 or 3 weeks into the future. On that note, we’re going to talk a little bit here about getting diversified and, of course, what we do is in the commodities markets. A very interesting sector we’re going to cover this month is the softs markets. We have some great fundamentals and seasonals but also some complete non-correlation of what’s going on there. I know you wanted to talk a little bit about that. Let’s talk about coffee and sugar, first. Some strong bull markets there. What’s going on in coffee? What’s your take right now? James: The coffee market is almost similar to the oil market, where Brent crude oil and WTI crude oil, in some cases, have different fundamentals. Clearly, if Brent is rallying $5 a barrel then WTI’s going to rally 3 or 4… they usually go in the same direction. Robusta coffee is completely in the news right now in stealing the headlines as Robusta coffee, which is produced in several different countries, namely Brazil and Vietnam. We definitely have a shortfall in the more acidic coffee bean known as Robusta. It’s normally grown in lowlands, it’s not as sweet as Arabica coffee; however, it does make up a large portion of world supply and demand. Production in Brazil right now is going to be down about 10-15% because of dry conditions for the Robusta beans. At the exact same time, production in Vietnam because of weather problems and concerns is down some 20-25%. Robusta coffee beans are absolutely on fire right now. They continue to make new 12-month highs, and that’s what has been dragging up the Arabica coffee. It has been trading between $1.40 and $1.60 for the last several months. We’re pushing up along $1.60 and we think that the fundamentals will start separating themselves and we’re probably going to have a two-tier market going into the end of 2016 and the beginning of 2017. The reason why is while Robusta coffee beans are extremely tight, Arabica beans are just the opposite. We’re looking at a record production this year in Brazil. We’re looking at Arabica coffee production for the year 2016-2017, looking at a 6-7 million bag surplus, and that will definitely be putting a cap over prices as we go into the end of this year and the beginning of next. Seasonally, it is flowering season in Brazil. Traders watch that extremely close. As long as we continue to have extremely favorable conditions for flowering season in Brazil, like we have right now, we see a very large crop production next year and the Robusta beans that we lost because of dry conditions this past year will probably be fixed going forward. We see both Arabica areas and Robusta areas of Brazil getting ample rains and we should have a pretty nice rebound in Robusta production next year, as well as Arabica. We’re probably looking at the mid to upper 50’s again for production. At the same time, we have Columbia producing a great deal of coffee going forward. They’re going to be setting new records and we think that this rally in coffee, especially the Arabica bean, is probably going to be short-lived. Michael: James, that’s a good point you’re talking about that’s the two-tiered market because you have both Robusta and Arabica prices. Arabica makes up the majority of the ICE contract that we trade. Is that correct? James: It is. It is a blend; however, the majority of it is Arabica beans. As long as that’s the case, we could have a two-tiered market. I’ve been trading coffee for decades and usually they go in lock-step with each other. We’re going to see that correlation dissipate some later this year and we think that coffee around $1.60 right now really holds a great opportunity to go short. We would be selling coffee calls for 2017 strike prices nearly double the value that they are right now. We see coffee probably settling down to around $1.45-$1.50 later this year as flowering season continues to go well and fears of a small crop again this year, especially for Robusta beans, that seems to go away and then we’re looking at large supplies again next year. Michael: It seems like the market really ran away. Looking at the fundamentals, I can see what’s going on with the Robusta and that’s driving price up, but you look at Brazil’s total coffee production estimate… I’m looking at 49.4 million bags, that would be the estimate right now, although estimates vary depending on what source you get it from. It’s lower than the last couple of years, but it’s not that low. That’s still a pretty solid figure. When you’re talking about the seasonal for Arabica coffee prices, or at least the ICE contract, looking at a 5 year seasonal right now, the thing that seems to come to a pretty good top right in the middle of October and then just falls off a cliff. You’re talking about flowering, maybe some of our listeners might not know exactly what that is. What is flowering? Why is that so important? Why does price tend to come down afterwards? James: Well, flowering, of course, is the period in the year when the tree develops a flower, the flower turns into a cherry, the cherry turns into a coffee bean. It then gets picked and it gets roasted. It is called green coffee bean after it gets picked from the tree. It then is either roasted on site in Brazil or it is shipped to different areas like New York, New Orleans, and Atlanta where they do roasting there, depending on what type of brew they want. If we have ample rains during flowering season, trees can flower 2, 3, and 4 times. If in fact the flowering season does take place like it is right now, we’re looking at a tree that has the ability to produce anywhere from 15-20% more coffee beans than it had if it was a dry season. That is why this period of October and November is so crucial to understanding the size of next years’ crop. Precipitation in the majority of the Brazilian coffee areas started off early this year. That can be a two-edged sword. If it starts early and then it cuts off, that can be detrimental to the coffee production. If it starts early, like in August and September, and rains continue through October and November, a tree can flower 3 or 4 times versus just 1 or 2. Simple math tells you that the production next year could be greatly increased by ample rains. That’s why we have a critical time period in October. That’s why the prices usually rally during fears of possible dryness, like we had last year. Once inspection of these trees takes place and the flowering went either well or very well, like it appears to be this year, you can start putting the numbers for coffee beans and bags of production next year already into a spreadsheet and you can tell exactly what type of surplus we’re going to have the next year. It’s almost like science right now as far as coffee production in Brazil. We do have the ability to do that and right now it’s looking like a very healthy crop next year. Michael: So in the flowering season, that anxiety builds prices up. After we get past flowering, that anxiety tends to come out of the market and that tends to drive prices down into the fall. The seasonal chart seems to reflect that pretty good. Let’s talk just a minute about sugar. I don’t want to get too far into that, but sugar prices kind of mimicking coffee prices – really on a tear. Are we looking at the same type of fundamentals there or is there something else driving sugar? James: Sugar has rallied for completely different reasons. On sugar we actually have a production deficit this year. It’s the first deficit we’ve had in approximately 6 years. We’ve had sugar deficits in the past. The market does rally certainly when that happens. This year, there is anxiety as to whether it’s a large deficit or small. A lot of the most recent indications is we’re going to have a smaller deficit than previously anticipated, but, nevertheless, world production is going to be less than consumption, thus a deficit. That is why sugar’s probably rallied from around 16 to 17 cents up into the low 20’s. We think that we’re going to be seeing more production in the coming year or two as producing sugar at 22 and 23 cents is a windfall for producers, especially in Asia. Of course, China is the big consumer right now. That’s what has created the deficit. Often, we’ll see China purchase sugar and it’s though they’re never going to be eating anything other than sugar and all of the sudden they just turn off the buys and all of the sudden the production deficit that you’re looking at turns into more of an even balanced. We think that’s what’s going on right now in China. We think that they bought a lot more than a lot of people were anticipating; however, they’re very great traders. Chinese buy soybeans and cocoa and sugar based on trends. You’ll notice that they seem to buying every day and all of the sudden, once they have enough, they stop buying, the price falls back, and then they wait for another opportunity to get in. That’s what we think is going on in sugar. Sugar does have a similar seasonal. As harvest in Brazil and other areas concludes a lot of sugar gets dumped onto the market. We think that’s what’s going to happen later this year. We see sugar probably falling back down to 20 cents, maybe 19, so we are looking at call opportunities in sugar much above the market. We are still doing more work on what type of production figures we have, so we’re holding off on selling right now, but we see ourselves probably doing that in either November or December. Michael: So, in sugar you have a somewhat bullish fundamental of stocks to usage ration right now just under 19%, which would be the third lowest in over 20 years. That’s what’s driving prices up, but what you’re saying is that eventually, at some point, high prices cure high prices and you see that happening right now in coffee and possibly sugar, as well. Is that correct? James: Coffee for sure. We haven’t seen coffee at the $1.60 level for quite some time. The big situation that has caused coffee prices to rally is weather. As soon as we have weather changes, of course El Niño has now changed to La Niña, so we went from a dry pattern to a wet pattern. That’s already showing up in Brazil. We expect it to show up in Vietnam, as well. So, as they have better weather for 2017, this 20% reduction in their production this year should probably snap back to a smaller sell-off as far as the value of their coffee. As long as we have decent weather in the western hemisphere, we expect Arabica beans to probably go under pressure possibly $1.40-$1.45 at the beginning of next year. Michael: Now, if you’re an investor and you’re listening to this at home and you’re hearing James talk about different factors affecting coffee and sugar prices, on the surface some of it might not make sense to you. One thing to understand here is in commodities; we’re talking about the fundamentals right now. These are the underlying supply/demand factors that really drive prices. If you really want to invest in commodities, knowing these fundamentals can give you a tremendous advantage over the other investor who’s just sitting looking at a chart, looking at technical indicators, having no idea what’s actually moving prices. That’s why these things are so important if you’re going to trade these type of markets. Knowing this information and what’s really driving price can give you an advantage in the market that frankly most investors don’t take the time to learn or they don’t know even while they’re trading. One thing we also want to point out here is diversification aspects. When you’re talking about coffee and sugar prices, those are what’s known as softs markets. There’s other softs markets, too, such as cocoa, cotton, orange juice. Cocoa has moved the exact opposite direction of coffee and sugar. So unlike stocks that tend to move in tandem, commodities can move completely on their own. Cocoa is almost in a bear market right now, James. It looks like we maybe making a low, but very low prices right now in cocoa. James: The cocoa market certainly has just fallen off the table here recently. It was in the low 3,000’s per ton and now we’re trading around $2,600 per ton… a very large move to the downside. I think a lot of anticipation was similar to what we just discussed in sugar. We had very strong buying out of Asia, and then they just stopped the buys. That’s what’s taking place right now. Production in the Ivory Coast is about what was anticipated. Production in Brazil is about as anticipated, but the buying just stopped. We feel that a lot of manufacturers, that’s what you call the people that turn cocoa beans into chocolate bars that taste so good, they’re the ones that dictate the price right now. When production is steady, what’s the difference? That is whether manufacturer companies are buying or they’re not, and they just basically stopped buying completely. A lot of traders inside the cocoa market thought that there was going to be a large shortfall and it just turned out that there wasn’t, and that’s why cocoa has fallen off so much. Michael, just to point out a couple things that you were just referring to, the data points that we’re referring to and talking about Vietnamese production and the weather in Brazil, this just not tell us, as you know, what the price of coffee is going to do next week. It doesn’t tell us what it’s going to do next month. What it tells us is where the price is not going to go. That is the key to understanding the fundamentals to the market. If someone’s listening to us today and they think they’re going to trade coffee and take 2 cents out of the market and then continue programming their computer to buy and sell on the market based on these fundamentals, that is not what this program’s all about. This program is for people understanding the fundamentals the fundamentals won’t allow the market to fall 50%, it won’t allow the market to go up 100% without our prior knowledge, and that’s what we’re doing here. Anyone listening right now, the fundamental factors will allow the market to move a small amount, but if they’re bearish the market won’t double in price, if they’re bullish they won’t fall 50%. Those are the option strikes we’re selling, and that is how we sleep at night trading markets like coffee, cocoa, and sugar. Michael: One question for you, James. These market’s you’re talking about… coffee, sugar, cocoa… they’re trading on the weather, they’re trading on what their supply is, they’re trading on how much they plan to ship next month. DO these prices care one iota about what’s going on in the stock market? James: No, they don’t. The beauty behind getting diversified, the beauty of being diversified in something like commodities, whether the stock market goes up 20% next year or down 20%, the value of cocoa will probably not change, the value of coffee probably won’t change, the fundamentals certainly won’t, and that is the beauty of being diversified. For investors listening to us now that maybe have stock holdings, or whether they do or they don’t, a lot of people need to be diversified. At least, that’s what we hear when people call us. I think we do a very good job of getting their assets in something that will not be determined by the price of Apple or any other telephone-making company. So often, the NASDAQ moves up and down based on different ideas and how many phones were sold. The beauty behind what we do, I feel, is that coffee, cocoa, and sugar have been around for a long time, and they’ll continue to be. What happens in Washington or what happens in San Francisco doesn’t make any difference, and that’s why I love what we do. Michael: Alright, let’s move over. Speaking of diversification, let’s talk a little bit about soybeans here. Nice thing about soybeans is not only are they not correlated to stocks or equities or anything going on in financials, but they’re also not correlated to anything going on in the markets we just talked about. Commodities tend to march to the beat of their own drum or their individual fundamentals for a while. Even on some of the commentary we read right here at OptionSellers.com, the soybean market has had a very bearish fundamentals. The market has been in a downtrend. As a lot of readers and listeners know, that can be very profitable if you’re a call seller. Certainly that was a market to take advantage of on the downside in the latest USDA report that came out October 12th, the USDA gives their monthly supply/demand report. That was expected to be a very bearish report for soybeans. Ending stocks were at 365 millions bushels. In this USDA report, they raised that to 395 million bushels, which is bearish but not quite as bearish as many had expected. What tends to happen, and James I’m going to pass this to you in just a minute, but talking about seasonal tendencies… when you get into the heart of harvest, which is in October, that’s when soybean supply is typically at its highest because of new supply coming in. Prices, agricultural prices, soybeans in particular, tend to be at their lowest. From that point, traders tend to start focusing on forward sales again. Prices tend to put in a bottom this time of year and then they start to rise. This USDA report might have been an impetus for that. I don’t know if a seasonal low is in but it certainly looks possible right now. Prices are starting to rally. That sets up a situation. Is it overly bullish, James, or what do you see coming up here? James: The October low and the report that just came out are probably going to coincide. We had soybeans trading $10.50, $11.00, $11.50 a bushel, recently. Now we’re in the mid $9.00. I think that does coincide with the harvest. Harvest lows normally are made in the first and second week of October. The report that just came out from the USDA showing ending stocks not quite as bearish as previously thought, that is likely the low in soybeans. We think that, going forward, all of the sudden you’re into December, then you’re into January, then there are worries about planting season. Likely, soybeans will be trading well above $10.00 at the beginning of 2017. So, we are looking at put selling opportunities for that April-May, May-June timeframe for next year. That is when the anxiety hits for planting season in the Midwest and the United States. We’re expecting soybean prices to probably rally 10-15%. If we’re looking at selling puts 20-30% below the market, which we are, that sets up a really nice safety net for the market to either go sideways, go up a little bit, or actually fall like we talk about in our book in all 3 scenarios of selling puts and soybeans. It’s likely going to be profitable over the next 3-4 months. We are looking to do that here in the next week or two. Michael: So, you could sell puts and then if it rallies a bit possibly sell calls, turn it into a strangle. James: The bullishness really isn’t there for soybeans to rally to $12 or $13. We do see the market rallying possibly a dollar from where they are now, especially going into early 2017 as we starting looking at weather conditions and things of that such. Brazil, Argentina, there will be weather problems there, possibly. It seems as though the trade always makes something up and the market does rally, especially after the harvest in the United States. So, we would look for a rally in soybeans early in 2017 and to what we say “leg on a strangle”. We would sell puts now, if the market rallies we would look to sell calls and put a very large window around the price of soybeans. We think that would work probably through the first half of next year. Michael: If you’re a high net worth investor and you’re listening to this and you’re want to learn more about some of these things we’re talking about and how we apply them when we’re investing for high net-worth investors, like yourself, you can go and watch some of these instructional videos we have on our website. If you want to learn, for instance, we’re talking about ending stocks, stocks to usage ratio, two very important figures when you’re doing agricultural analysis, you can watch our video at OptionSellers.com/agriculture. If you want to learn about the strategy of strangles that James just talked about, you can watch that video at OptionSellers.com/strangle. Let’s talk a little bit about the upcoming newsletters. If you’re on our mailing list and you get our newsletter, the November newsletter, which you should be getting sometime on or around November 1st, interesting piece in there. We’re going to talk about 5 ways to survive the next 4 years, regardless of who’s the President. We talked a little bit earlier in this broadcast about not focusing on the next couple of weeks but the next 4 years. We’re going to list 5 things that, as a high net worth investor, you can focus on. We’re going to talk about those things that should help you reap higher returns. As far as our trading strategy in this month’s newsletter, we’re going to get into some specific strategies for some of these softs markets that we talked about earlier. We talked heavily about the fundamentals today. The newsletter is going to give you some specific strategies you can use to potentially profit from that. These are strategies we’re using here. Obviously, if you’re a client, you’re having these done for you. A lot of investors at home, they want to look, they’re trying to learn this. Sometimes they’d like to follow the trades. Some people actually like to take and do one or two of them to get a feel for how it works to see if it’s something they might want to invest in. So, that’s what these are for. Also, going to talk about the two key criteria for judging an alternative investment. There’s some original insights in there that, if you do invest in alternatives, this will be helpful to you. Getting into our trading lesson this month, James, this is a question that comes up often. As far as structuring, building a portfolio to target returns that different investors want to look for. I know that when I’m talking to potential investors on the phone and, certainly, when you’re speaking with new clients we’re setting goals and then we’re putting together a plan to hit those goals through writing option premium. We have one program here, but we have the ability to scale that to a conservative, moderate, or aggressive posture. I think some of our listeners might be interested in hearing how you do that when you’re building out this type of portfolio. Can you talk a little bit about that? James: Certainly. When I speak to a new client, we go over their goals, their objectives, their risk tolerance, and what they’re hoping to achieve over the next 5-10 years investing with us. The question always comes up, “If I’m conservative, do I sell these certain options? If I’m aggressive, I sell closer in options? Or I’m trying to sell premiums that are wider than the possible $600-700 per contract that we normally sell options for.” The answer is quite simple. We are basically selecting the most conservative strike prices with the highest availability of opportunity and decay in those values that we can find. So, we are going to sell options that are 50, 60, 70% out-of-the-money. For a slightly more aggressive client, we sell the exact same options, we’re just utilizing more of their margin money. A slightly conservative client would be positioning their account approximately 40-50%. A moderately traded account, we are positioning slightly higher percent. An aggressive account is a 60% plus. We’re utilizing the same option strikes that we would for a conservative account as well as an aggressive account, and we’re simply throttling their leverage. That can make quite a difference. When we are utilizing the ability to use more leverage and sell a greater deal of premium, on positive years that can make quite a difference. We are looking at trying to produce returns of 15-25%. Conservative account is on the 15% side and the aggressive account would be 25% or greater. Very happy, as you know, Michael, to talk about how we did last year. We beat all of those numbers. We are on track to beat those again this year, whether you’re a conservative or aggressive client. That is how we throttle someone’s leverage, and that is how we understand risk for each client. Before we get started trading, that’s exactly what we talk about and make sure that everyone’s on board with exactly what we’re trying to accomplish and the risks that are involved. Michael: James, I want to throw in a disclaimer here. I’ll be the compliance guy … there’s risk involved and you can always have loss in any type of investing, including this one. Although we’re not making guarantees, these are the type of targets we go. Based on our past, we feel these are realistic targets. One of the questions we get often when we’re talking about the differences to these conservative, moderate, and aggressive stances. One program, we scale it up and down only through the use of margins. Some investors might think, “well, aggressive you use different strategies. You might write different types of options for that than you do a conservative. You might manage risks differently.” What we tell them is what you were just saying – that’s not the case. We manage risk the same across the board. The only difference there is really how much margin you’re keeping as backup and your position size. So, an aggressive account would have slightly more positions on than a conservative, but they’re going to be the same positions. Is that correct? James: That’s exactly right. It’s very easily done. We are selling the exact same options, the exact same strike prices, for all of our accounts. We simply tailor the leverage to what a client and their goals are. It’s very easily done, but we do have a long discussion before someone does start investing with us. That’s exactly how it’s done, Michael. Michael: James, one final point to make here. I know a lot of listeners out there, if you’re listening to this, a lot of index option traders. Whether you’re trading the S&P, a lot of Russell 2000 traders… one thing about this type of portfolio, if you do get into it on your own or through a company like ours, it offers the ability to diversify across a whole sloth of uncorrelated markets. We were just talking earlier about coffee, sugar, cocoa. They’re trading in complete opposite directions. If you’re just trading a Russell, you’re in one market. If you’re in the wrong side of that market and the thing moves against you, you’re not very diversified. The advantage of this type of portfolio is you can diversify over a group of different uncorrelated markets. You’re selling options and many of them, even if 1 or 2 of those markets goes the wrong way, you still have 4, 5, 6 that are working in your favor. Is that what you’ve found, James? James: Michael, it’s interesting. You know what our portfolios look like, our clients know what our portfolios look like. We’ll have a strangle around gold that we’re short from 2,000 and long from 1,000. We are bullish crude oil for the summer driving months, we’re bearish for the winter months. We follow seasonalities for cocoa, coffee, sugar, and orange juice. We watch seasonal fundamentals to trade soybeans. We follow the silver market extremely closely. The ability to diversify inside a portfolio like this, I know I’m kind of beating the drum on it, but I know so many investors right now are listening to the Carl Icahn’s of the world right now and saying, “The stock market might not be the place to be over the next 5-10 years.” Nobody knows that. Not even Carl, he doesn’t know it either, but when you hear people talk like that there is no diversification. If the stock market falls, it doesn’t matter really what stock you’re in. The fact that we have the ability to be neutral on different commodities and at the same time be bullish and bearish another basket of commodities, it truly does diversify you. Of course, we don’t have anyone have 100% of their portfolio with us, certainly it’s a smaller than that. The ability to, as we state on the front cover of our book, “Possible good returns in bull and bear markets”, and that’s what a lot of people are excited about right now as the stock market might be at an inflection point. I know I’m not a big cheerleader for shows like Bloomberg, or CNBC, or what have you because they have so many different people coming on, but you talk to these billionaires that they are interviewing and they are certainly waving a couple flags when it comes to stock market for the next several years. So, we’ll see what happens. Maybe being in commodities is not for everybody. Everything we do we are not right all the time; however, being in another asset class certainly is looking more interesting to a lot of our listeners and, certainly, our clients. Michael: James, that’s a great point to bring up just in closing here. When we were writing our newsletter and putting stats together, we pulled a stat from Barron’s a couple weeks ago. I might have to put a disclaimer on the end of our podcast here just to document where I got it and who said it, but out of Barron’s looking for a, I believe, 1.4% annualized return in the S&P over the next 10 years. That’s after inflation. Even if the thing doesn’t roll over, that’s not the type of investment I’d be looking to put money in, but take that for what it’s worth. I’ll get the stats from where it comes from. James: Michael, I’m a big Barron’s reader and I missed that stat, I missed that article. That is almost jaw dropping. Can you imagine being invested like that and that is your goal? We’ll see! To each their own. Investing is personal. When people say, “How much should I invest? How much should I do?” Investing is personal. Those are definitely interesting stats that Barron’s and the people that they were talking to are looking out at the next 10 years. I think mattress sales are going to go up quite well, as in “Put you money under mattresses”. That’s an interesting stat. Michael: Well, we’ve had an interesting talk this month. For those of you inquiring about new accounts, unfortunately we have none available until after thanksgiving right now; however, Rosie still has a few consultations available in November. If you’re interested in booking a pre-account interview consultation, you can call Rosemary at 800-346-1949. You can also request online at Office@OptionSellers.com. James, thanks for your great answers this month and information for our listeners. James: Michael, it has been my pleasure. I love doing this show and educating people who think outside the box, like our listeners, is just so entertaining and so much fun for me. Looking forward to doing so again for the next several months. Michael: Of course, anyone listening, if you’d like to learn more about our company and our program, you can go to OptionSellers.com. There’s a wealth of information there. Have a great month of option selling, everyone. We will talk to you at the end of November.

Michael: Hello, everyone. This is Michael Gross of OptionSellers.com, here with head trader of OptionSellers.com, James Cordier. We’re bringing you your monthly Option Sellers Radio Show. This is for the month of July. Today, we’re going to talk about quite a few things. I want to start off with the gold market, because, James, you were featured on CNBC this month talking about gold, taking a little bit less than bullish view on that. Is that still your view on the gold market right now? James: Well, Michael, as you know, everyone’s bullish gold simply because of 0% interest rates and negative interest rates around the world. The last time that quantitative easing was introduced in the United States, that’s what raised gold from $1,100 up to $1,900. Now, a lot of investors are thinking basically along the same lines. Quantitative easing was supposed to create inflation. Several years ago in the United States, when we went to QE, it didn’t happen. Now, I believe investors are falling maybe into the same trap, thinking inflation’s on the way. Because of negative interest rates, it may not play out that way. As a matter of fact, lower prices for commodities because of a weak global economy, we think, is more likely. Michael: That’s counter to what a lot of people feel right now because of times of anxiety, we have terrorist attacks again in Paris this month, seems to be a lot of turmoil in the world right now that’s bringing a lot of investor interest into gold. You seem to feel that the inflation argument probably will be what dictates the direction here over the longer term. Is that correct? James: Michael, eventually it always does. Quite honestly, inflation is the catalyst for gold and silver to go higher. If we have deflation, we just don’t see how it can produce gold prices of $1,600, $1,700, $1,800 an ounce, which a lot of investors are looking forward to. But the fact of the matter is, gold did rally to $1,800 and $1,900 an ounce several years ago. Commodity prices were raging, soybeans were at multi-decade highs, so was copper, so was crude oil, so were many of the foods. We are going into a very weak economic/global state as far as demand for commodities. We have overproduction of everything from steel, to zinc, to iron ore, to copper, and silver. We just don’t see the inflation scenario taking place. Is gold good for hiding out when there are situations going on around the world? I guess it is; however, inflation eventually dictates the price, and we’re seeing probably deflation at the end of this year. Michael: Well James, you make some good points, and maybe they’re listening to you because since your appearance on CNBC at the beginning of July, gold has had a pretty good retracement down. I also noticed, and this is something that we mentioned in the article that you did last week, that we have a very big speculative long position in gold futures. It’s on the record that with 50,000 contracts it’s pretty heavy, so oftentimes when you have that heavy speculative yet small speculators pouring into the market, they’re heavy along the market and you have commercials getting short. Sometimes that can be an indication of a trend change. James: Michael, we think this is one of the most crowded trades ever. Just about practically everyone who’s a gold bug is double down on getting long gold. We have had a decent rally. It rallied nearly $100 an ounce. We’ve come back about $50 real rapidly over the last 2 weeks or so. Basically, the U.S. economy is doing okay. We’re not looking at negative interest rates anytime soon here. We think that the smart money, who probably was buying gold around $1,100 and $1,200, probably feels that they just have too much company right now. We see gold probably retracing into the $1,200’s over the next quarter or so. We think gold is a great market to trade. We would not be stuffing it under our mattresses… not at this price, certainly with commodities headed lower, we think gold and silver are going to probably be sold off slightly as we go to the end of the year. Michael: Now, that brings up a good point, James, and I know you’ve made this point before, as well. When you’re talking about gold prices, or writing about it, people have the viewpoint of, “Well, what is it going to do? Is it going to go up? Is it going to go down? Where do I need to buy it? Should I buy it now?” Obviously, first of all, our listeners know that’s not really how we’re trading here or how you’re supposed to. What you can’t say on CNBC is “Look, I don’t know if this is the top, but we’ll see it going through the roof and you want to take advantage of selling some of those high option premiums.” Do you have any you’re looking at now or how would you go about trading that market? James: Michael, we like talking about volatility and low-hanging fruit at the same time. That just took place in gold and silver the last 2 or 3 weeks. Gold is probably fair valued around $1,300, and silver is probably fair valued around $20. The gold bugs and silver bugs just came out in full force over the last 2 weeks. Silver bugs buying $40 calls for silver out several months in time, buying $1,900 and $2,000 gold calls several months out in time. We just feel that the likelihood of that happening is so minute. It simply isn’t going to happen, in our opinion. Gold production is doing quite well, as a matter of fact. A lot of investors are familiar with the fact of oil production has gotten better and more productive with fracking. There’s a new technology in the gold production. It’s similar to oil fracking except it’s in gold production. There is no shortage of gold, and as we see investor appeal go towards other markets and realize that buying gold of $1,350 and $1,375, they’re buying the top price in the last 2 ½ years and that might be a good place to be taking profits. We think that selling calls, you know, $1,900 and $2,000 in the gold market right now is going to be ideal. We think that silver and gold are probably going to be around 10-20% cheaper than where it is right now. That’s probably the best sale on the market right now is selling silver calls at 40 and gold calls at $2,000. We think that’s probably the best way to find yield anywhere right now. Michael: Yeah, and I love that strategy, James, and I know it’s one you and I have talked about. You get so much investor interest and you get media interest and it kind of feeds on itself. That’s what brings us speculators in to start buying those deep out-of-the-money strikes. Targeting them is what you’re talking about now. A lot of investors probably aren’t aware that there are strikes available that far out of the money when you’re trading futures, and I’m sure a lot of them appreciate you pointing that out just now. Speaking of the anxiety, a lot of anxiety now coming about the election season. A big election coming up and the question I get a lot when I’m consulting with investors, and I’m sure you do too, is “How is the election going to affect commodities? How can it affect the price of my selling option portfolio?” How would you answer that question? James: Every time we have an election, all of the smartest minds in the world trying to figure out if that is going to be bullish or bearish for the stock market. Is it going create inflation if the democrat or republican wins? This has been going on for the last 200 years in the United States. We feel what it does is it provides opportunity because it’s uncertainty. Investors will buy puts who think the market is going to fall, they’ll buy calls at extraordinary levels that think it might be bullish, and we never use the terminology at the end of the day because let’s say at the end of the year from now on. That does not change the supply and demand of raw commodities. It changes it so little that going into an election, when there’s a type of fear on the upside or downside of a particular market, you want to sell that going into an election, because when the dust settles several days later, we’re right back to supply and demand, and that never changes with an election. We don’t see that happening in 2016 either. Michael: Yeah, that’s a great point. You get in an election year, especially right around the election, and maybe a couple days after you get sometimes a reaction in the stock market, and maybe even in some commodities, but the fact of the matter is, at the end of the day, no matter who gets elected, people are still going to eat their Corn Flakes, they’re still going to put gas in their car, and they’re still going to want their cup of coffee in the morning. The supply and demand cycle goes on, and that’s really how it affects the commodity portfolio. In the longer term, it probably won’t have that big of an impact. Speaking of coffee, you have a nice feature in the newsletter coming up this month that you put together on the coffee market. That’s kind of an example as where you get a news story or something pushing up prices against the fundamental. Can you talk a little bit about that? Just maybe give our listeners a preview of what’s coming up in that piece? James: Michael, what’s happening in coffee in 2016 is so similar to what has happened over the last 10 or 15 years. We have several fronts right now. We have dry conditions in some of the growing regions in South America. We have free season in Brazil, which historically was a big driver to higher prices. Of course, we have a lot of investors thinking that coffee consumption has increased dramatically. These are 3 things that have pushed coffee up recently. Coffee was trading around $1.30-$1.35 a pound. It has rallied up to $1.45-$1.50 a pound recently. Historically speaking, coffee rallies in June and July based on the fact that it is free season in Brazil. In all actuality, come September, October, November, Brazil is picking beans and Brazil, like all other nations, need to turn their commodities into cash. We see very large sales happening in September and October of this year. We see that the price of coffee will likely be around $1.30 to $1.35 at harvest time and we are very much salivating over selling calls at the $2.60, $2.70, and $2.80 level. We think that coffee will be half that price this fall, and that I think is probably one of the best examples of low-hanging fruit here in the month of July. Michael: So, it’s high right now, you think it’s fundamentally over-valued, if that’s a fair statement. You made some good points there, but is any of that based on where we are with supply right now? I know Arabica production hitting a record this year in Brazil- 43.9 million bags. Is that already priced in or is that yet to be priced in? James: The Arabica production in Brazil this year will be a record. The Robusta production in some of the northern regions of Brazil is down this year. It’s down about 2 or 3 million bags. However, there is no shortage of coffee by any means. We did have difficult weather because of El Niño this past year. La Niña is now taking place and we think that is going to return a lot of the precipitation to areas in Columbia, Brazil, Honduras, and Vietnam. That will help production in the upcoming year. Supply is worldwide; it’s practically a glut. Here in the United States, they call something known as green coffee stocks. That is counted and announced every month. In June 2016, coffee supplies hit a 13-year high here in the United States, 6.2 million bags, and no shortage of coffee in the United States. We’re the largest consumer, and as long as there’s a lot of coffee around the consumption country of the United States, we don’t see prices getting any higher than a weather scare, which is basically what we’ve had here recently. We think this is going to be a short-lived rally. Supplies are burdensome and demand is about the same, believe it or not. Michael: So, in short, this is almost like the ideal market we talk about in our book where you have a fundamental situation. The market, for whatever reason, rallies against that fundamental, it gets overvalued, the call options get overvalued, and we don’t necessarily now where that top is going to be, but when you know it’s overvalued you know it’s going to be there somewhere. When there’s options so far out-of-the-money, that’s a time you start cashing in on, that’s the time you start collecting premium. James: Michael, what we’ve noticed last 12 months is that any time a commodity rallies on headline news or slight weather concerns in different parts of the world, especially in producing nations, you have investors chasing yield. It happens in silver, it happened in soybeans, it has happened in coffee recently. When you have negative interest rates around the world it sets up opportunity, because what winds up happening is investors will end up buying commodities above and beyond their fair value, they come down to their fair value after the frenzy ends, and during that time there’s a crescendo, and that’s when you sell calls on commodities 30, 40, 50% above the market. In some cases, like in silver and coffee right now, you can sell calls 100% over the value of the market. That is just ideal for option selling in our office. Michael: Yeah, you made a point there. I want to go back to because I want to segway into talking about the upcoming newsletter this month. The front-page article we were talking there a little bit about modern asset allocation because it’s becoming kind of a hot topic in the media right now – is 60/40 – 60% stock, 40% bond, that’s what everybody is supposed to do. That’ll make you healthy, wealthy, and wise into retirement. Given the way the economics of investments are right now, you have negative interest rates, a lot of people worried about stocks, alternatives are about to get bigger. In fact, I don’t know if you’ve seen it, but there’s an ad now on TV, I believe it’s for Invesco, that they are making that statement: “60/40 is dead. The new allocation is 50/30/20, with 20% going to alternative investments.” Do you have a viewpoint on that or what type of asset do you favor? James: You know, that asset mix is becoming more and more popular. Reading the Wall Street Journal today, they were talking about CalPERS, of course the largest investment fund in the world. They made .7% and their fiscal year ending in June there is no question that investment funds, CalPERS, and everyone down to just someone investing their $1 million account of their own are looking for return. Simply put, the stock market is going to go up and down 5% at the end of the year, it might be down 1%, we’re not sure, that’s not the game we try and play. Selling options on commodities is just a great way to diversify in our opinion. It allows investors to take advantage of bull and bear markets, the economy gets weaker, it gets stronger, and it just continues to be uncertain. That’s ideal for what we do. A 20% allocation of a portfolio into diversification, if you will, into, for example, alternative investments like what we do, I think that’s about right. I know a lot of the investors that I speak to are probably around 15-20% and I think they’re happy that they are. Michael: James, I have kind of a personal story to share here. My mother came to me the other day and she wanted me to go with her to her financial advisor to meet with them. I said, “Why?” She said, “Well, I used to make money and now I don’t make any money.” It hasn’t grown, it doesn’t go anywhere, and she’s concerned she is in the wrong stuff. I said that I’d be glad to do that. I took a look at things and they have here in about 70% bonds, which may or may not be right for a retiree, and we’re certainly going to discuss that. I had to explain to her, “You’re in this bond market that maybe used to pay you yields, but it’s not paying any yields anymore, so that’s why you’re not getting money from it. I think that there is probably a lot of people in that mindset of, “Why isn’t there money coming out of this anymore?” It’s because of the state of where interest rates are right now. James: Absolutely. Central banks all around the world are doing everything they can to try and increase investment and how they do that is they punish savers. They punish people who wanted to be conservative in the past, and that’s a perfect example. 70% in bonds, getting absolutely zero return and it is just not right. Why in the world savers and people who do things as they were always taught, work hard, save your money, get a fair interest on it. Why in the world do central banks around the world force you to invest in a fashion that you normally wouldn’t do is just what has taken place recently. That is what is basically changing the real value of assets. The stock market this past week has gone up to all-time highs and what is the global economy? It’s awful. Why do you think interest rates in Germany are negative right now? Because the economy is doing good? No. They are forcing investors to take on more risk than they normally would. It is creating opportunities and everywhere from commodities to stocks, a lot of investors are fearful of the stock market right now. It’s going up right now because it has a FED put under it. In other words, the Federal Reserve and central banks around the world are going to continue pumping money into the system, punishing savers, and making people invest, and that’s really a scary scenario for sometime down the line. When the stock market bubble blows, who knows, but I can’t imagine that there’s going to be a chair for everyone when the music goes off. I don’t think I’d want to be long stocks on that day. We don’t know what the stock market’s going to do the next 12 months, but a lot of the investors I speak to right now are getting a little bit fearful of it. When the stock market makes all-time highs on bearish news, you really got to think twice about what you’re doing. Michael: Yeah, I don’t know about you, but the whole thing is starting to feel like a house of cards to me. I did a little research this weekend on that figure we were talking about, the asset allocation. There was a survey, there was a number of different big banks on here, they all add up different opinions, there’s no real consensus. They interviewed Barclay’s, Goldman’s, you know, a bunch of the larger organizations, and there is quotes there anywhere from 5%-45% of your total assets and alternatives now. I’m imagining some of those are starting to skew upwards, given the current state of affairs. We’re going to be talking about that a lot more in this month’s newsletter. The Option Sellers Newsletter for August should be in your mailbox, or at least your e-mail box, by August 1st. You should expect your hard copy probably a couple days after that. James, not to totally give away the newsletter, but there’s also a discussion in this month’s newsletter about option selling as an alternative investment, but it’s a type of account that doesn’t really… it acts like a business more than an investment. What we mean by that is a lot of people think that an investment, you buy something and hope it goes up, where a business, you get paid to sell something. If you’re explaining that to someone who doesn’t know how to sell options, it’s probably a better way to explain it. Is that how you would explain it to somebody that doesn’t how to sell options? James: Michael, it’s interesting, so often we’ll have investors who are really astute. They’re very intelligent, they’ve been trained in the stock market, and they understand economics 101 all the way to 1,001. But, when it comes to explaining option premium selling to them for the first time, it is a complete mystery. It is so much like owning an insurance company. It’s like running a business. Basically, you’re selling to people buying. 80% of the time these options expire worthless. The insurance company probably has even a better ratio than that, but you’re basically running a business. As opposed to an asset, like Apple stock or gold, and hoping that it rallies, you’re basically running a business by selling insurance premiums to whether investors are familiar with the price of calls or puts that they should be buying or not. The fact of the matter is, we’re basically running this investment more like an insurance company. It’s been that way for the last several years and, with the uncertainty abound right now, it feels like it’s going to continue over the next 2-3 years, at least, until a lot of the uncertainty around the world gets unsettled. Premiums are much too high for the underlining value of commodities. It is a lot like running an insurance company and, as long as option buyers continue, we’ll continue selling them. It is a whole lot like taking in premiums. Every once in a while you have to pay them out, but for the most part, it’s a good place to be. It’s almost like being in the house in Las Vegas or an insurance company, depending on which scenario you want to look at. It has been interesting and it seems to be getting better and better. Michael: Buffet says insurance is the world’s most profitable business. I think that’s a pretty good analogy. We will be covering that a lot more in the newsletter. You can look for that, again, on August 1st. James, let’s transition here and do our lesson for the month. There’s a good thing I want to bring up because we ran a series of blog entries this month entitled 7 Ways to Get Higher Premiums. It was, as you know, we discussed different ways you can get higher option premiums. It doesn’t necessarily say that we recommend all of them or we use all of them, but we talked about 7 different ways. I know you have your favorites and I thought maybe you could talk about some of the ways or some of the methods you use when you’re managing portfolios. How do you or what do you look for to target higher premiums? James: Michael, it’s interesting. When selling options, there are many different ways described as to how much time to sell, how far out-of-the-money, what type of premiums to look for. One really easy secret that I can share with our listeners today, is that if you look at options that are 30-40% out-of-the-money and you look at options that far out-of-the-money that are 30 days left before expiring, 60 days left before expiring, 90 days before expiring, they’re almost practically at the exact same price. If that is the case, why wouldn’t you go out an additional 90 days when you sell an option? If 30% out-of-the-money a 1 month, 2 month, 3 month option is basically at the same price, go out an additional 90 days because you will get, when you initiate that short option, you will get 40-50% more premium by going out that much further in time. Yet, when it gets closer to expiration day, whether you have 1 month left on your option or 90 days left on your option, it’s practically the same price. The easy secret is to go an additional 90 days further than you think you normally would because, come expiration day, as we approach that time, you are able to cover that option 90 days left, 60 days left, 30 days left at practically the same price. So, very easily said, go out further in time. It allows you to get much more premium, in some cases 30, 40, 50% more premium, and as you near option expiration, you can cover it at 10% of what you initially sold it for. That is something that we do for our clients constantly. There are a couple other secrets. I can’t give them all away today, but, for those learning exactly what we do, that is something for you to consider. Quite often, a portfolio opens with us and they’re surprised at how far out-of-the-money we sell. Often, people think that gives the market a long time for you to be wrong. We don’t look at it that way- it gives us much more time to be right. That’s the way it has been turning out for the last several years. Michael: James, that is a great point, one that strikes home with me because I remember back in the day, years ago, we used to debate that. You used to always say it was better to sell further out. I kind of favored selling a little bit nearer. Over time, I came to see the light. Your way of going at it, I really saw the logic in it and the years have proven that to be an astute way to approach this. It seems to give you a lot more leeway, there’s a lot more margin for error, and you get a higher premium off of it. James: Michael, trading a lot is not what we’re interested in. Increasing high, high, high probability of option expiration is what we’re after. It all really pays off in the long run. Michael: Yeah, and you shared your favorite strategy for getting higher premiums. I’m going to share mine, too. We’ll give our listeners 2 out of the 7 that are our favorites. This is probably one of the ones you like, as well, because I know it’s something that we do often. In selling credit spreads, and a lot of people think that protection is expensive, you’re selling an option, you take a premium, and then you’re buying that protective call or put to limit or curtail your risk, which can be a great idea. Often times, after that first few months, and those options are already well into decay, the odds of those options ever going in the money begins to drop substantially. If you can unload your protection and sell it back to the market, that brings in some extra premium for your credit spread. You just let the nakeds expire. I know that’s one you like to use, as well. James: Michael, the time to do that is when volatility is the highest. Buying protection when volatility is low is expensive. Right now, buying protection is very cheap. Once again, it increases the odds of the trade going favorably for you. Buying protection right now is absolutely excellent timing to do that right now because of the high volatility, the high premiums. It gives us the luxury of buying protection and, talk about sleeping at night, option expiration happens worthless so often. If you can add protection to that, it just increases everyone’s odds that much more. Michael: Excellent. For those of you listening, if you want to hear more of those strategies, obviously we recommend our book, The Complete Guide to Option Selling: Third Edition. It’s available on our website, OptionSellers.com/book. We cover those strategies and many more for getting higher premiums and protecting your downslide, hopefully building a long-term income stream. We’re going to close this month by letting you know that we do have a couple spots left for our President’s Club. I have a client group this month that’s accounts $1 million and up. Those accounts do receive some special benefits. If you’re interested, you can feel free to give us a call at 800-346-1949. Other accounts, we do have some pre-qualifying interviews left in August. If you’d like to inquire about an account and schedule an interview, you can contact Rosemary at that same number… 800-346-1949. If you’re out of the United States, you can reach us at 813-472-5760. Obviously, if you’d like more information today, you can also find out at our website, OptionSellers.com. We’d like to wish you all a great month. We’ll be updating you on your portfolio progress on the bi-weekly videos. James, thanks for your great insight this month. James: Michael, it was my pleasure. There’s nothing that I like talking about more than short options on commodities. They’re getting more lucrative and certainly something that’s near and dear to our hearts. Michael: All right. Well, everybody, thanks for listening. We will talk to you again next month, and have a great month of option selling. Thank you.

Michael: Hello everyone, this is Michael Gross of OptionSellers.com, here with your monthly guest expert interview. This month’s guest expert is Don Singletary, author of the Options Exposed Playbook. Don spent 25 years as a consultant for commercial commodity hedge plans, helping him to implement option strategies to lower cost and increase their efficiency. He has also spent much of that time as an individual options trader. He is going to bring a unique perspective on that to you today. Don, welcome to OptionSeller.com Guest Expert Series. Don: Well, thank you very much, Michael. I’m glad to be here. It’s my pleasure. Michael: Don, let’s start off by telling us a little bit about your background and how you got started in the trading industry. Don: Well, there is a lot to talk about today about options and making money, so I’ll get to the buy out part pretty quickly here. I started in broadcasting at the age of 15 and I grew up in a small town that only had 2 radio stations. I worked for both of them- they used a different name at each one. While I was in high school, I became a licensed broadcast engineer, continued electronics in the Air Force, worked countermeasures during the Vietnam era, and worked for the Motion Picture Bureau at the Florida Department of Commerce and Economic Development. I had the pleasure for several years, a week every month, I spent in Hollywood, California. It’s a pretty remarkable “bubble-world” out there, and it still is. Patty and I were just starting a family in those years and that took a lot of travel, so I gave being a stockbroker a try. One of my specialties there was introducing customers to the covered call writings, sort of a specialty of mine. Now, back in those days, in the mid 1980’s, it was very much a bull market. I think a drunk monkey with a dartboard could’ve made money. As luck would have it, I got to be a broker during those few months. I got a good offer to teach at a technical college right before the big bust in October of ’87. I took a lot of my customers in cash before I left, not because I was smart or I knew a market crash was coming, I just needed to make a lot of money and they had become friends of mine and I didn’t want to leave them hanging. I kind of put them all in cash and gave them a proper goodbye. Now, when the market crashed 30 days after I left to take the college professor job, my clients thought I was a genius. That’s certainly not true- I was just lucky! So, the greatest work and financial undertaking I ever had was the last 20-25 years. I never saw it coming. I don’t think anybody grows up to be a consultant to private corporations for risk management. I never even knew such a thing existed. I spent thousands of dollars on commodity books and the best option modeling software that I could ever find, and I bought a few of the newest and most powerful computers in the early 90’s. I think I thought I was going to be a trader and make a lot of money, but fate stepped in. That was coming, but it’d be later. It was something I never even thought. I got a call from a commodity producer who’d seen some of my option modeling that I’d faxed to a buddy. That phone call resulted in the working in risk management for the next 25 years. I got to work with some amazingly smart and creative people at the top levels of some major corporations, and it was just my good luck. I really got an education that money can’t buy. Michael: Well, we’re hoping you can share some of the pointers you picked up there with us today, Don. I know one of the reasons we wanted to have you on was that you kind of have a unique insight and you have insight into the commercial side of this business, but you’ve also been an individual investor, so you have insight into that side as well and can give maybe people a perspective from both sides of that coin. Before we get into that, Don, I want to talk just a minute about you book, Options Exposed Playbook. Just a great options book for anybody that’s interested in learning about options. Don does cover some option selling strategies in there that I thought were very excellent discussion of. Don, you told me a great story earlier about how you came about writing the book. Can you share that with our listeners? Don: Yeah, I’d be glad to do it. I was winding down my standards of risk management consulting, and I decided to stay home. There’s an old saying by Ernest Hemingway that says, “I drink in order that my friends are more interesting”. I wanted to take some time off and give that theory a test. Fate wasn’t to be. A friend of mine had called and we often talk investments. He said “Hey, I got something here I have to show you. I want to get your opinion. You’ve got to see it!” I said okay. So I met him for breakfast one morning and he showed up with two or three pages he had printed out on the Internet. Attached to the papers, the first thing I saw was that he had already made out a $3,500 check to some investment guru to buy this system. Now, my friend, he’s usually not that excitable, but he was just real excited and said “Look here”, he put his finger on the paper, and I read with him. It said “98% winners for 5 years”. It promised that anyone could probably turn $25,000 into $2 million in that 3-5 years, and that it would only take a couple hours a week, and it took almost no work. I stopped believing in the tooth fairy a long time ago. There are people that live in Austin, Texas in a little bubble who still believe in him, but I’m not one of those. So anyway, I took a good look at the pages he gave me and this magic system used vertical credit spreads, covered calls, and iron condor spreads. It promised the subscribers all they need to make themselves plenty rich with almost no work and in quick time. Now, years ago, I did a stint in the Air Force and I lived a while in West Texas. West Texans have a colorful way with language, so I told my friend a little saying I picked up back in those days in West Texas. “If a fella comes at you with a ten gallon hat pulled over his ears in an ear to ear grin, and he seems too glad to see you while shaking your hand a bit too much, you better look down and make sure he ain’t peeing on your boots”. We’ve all seen them, and we get these kinds of things in e-mails and in the regular postal mail all the time. By the way, Boone Pickens didn’t say that, but maybe he should. I took a couple of sheets and scratch paper and I showed my buddy how to do these pre-strategies. I had a little experience with them doing options. But I just told him, this is all the guy is really doing and he is doing it over and over again. Personally, I don’t believe for a minute the fantastic claims he makes. My friend interrupted and said, “Well, if he’s half right, I’m going to do really good!” I said “Yeah, that’s true! I can’t argue with that!” After I took a couple of pieces of note paper and scratched out some diagrams and made a few notes, suggested a few places where he could find some more information, he tore up the check and he said “You should write a book about this”, and I was giving my friend all the reasons why I was not, absolutely not, going to write any book on options right now. I left that meeting thinking that I had done my good turn for the day. When somebody tells you not to think of elephants for the next 2 hours, every time you close your eyes it’s all you can see. So, I started thinking about it if I was to write this book. I’m more or less retired now, but if I were going to write this book, what would be in it? Before I knew it, I was consumed by it and it only took about 10 weeks to write the book. That’s the Options Exposed Playbook that I have and I was a lucky man as far as selling really well right away. I got very interesting e-mails from a lot of readers. Some had absolutely no experience and ranging all the way up to Ph.D’s who were asking me about the inadequacies of the Black Scholes Formula, and that’s a conversation that I did not want to get into. Before I finish this story, I was preparing for this interview this morning, and here’s one here from The GURUS Selling System. It says “I know I’m reaching you on Sunday, so I’ll be brief, but you’re about to miss out on the best opportunity to make money you’ve ever seen….You see, this guy selects trade recommendations with a high probability of doubling your money. For example, on May 16th, made 106.9% gains in 3 days. May 17th- 70.4% in 2 days. May 23rd, I made an amazing $8,000 in 24 hours.” Now, these kinds of ads prey on people. Often, it’s people who are desperate who could believe an ad like that. Here’s another one that says “Just 7 days, you pocket $2,000 on one trade and you make $725 the next day in 4 short days. You make another $950 and people make $100,000 a year this way”. These types of ads cater to people- not a sophisticated audience, but they cater to people who are hardworking people and think like my friend did that if they’re half-right, they’re going to make a fortune. One of my motivations in writing that book- I don’t spend a lot of time in it bashing these kinds of systems, I think that’s a waste of time- I simply wanted to save beginner and small intermediate investors, beginners small and medium sized accounts, I wanted to save them from playing the slot machines. I noticed in your book and mine, as we did this completely independent from each other years ago, we used casinos as an example when we talk about selling options. In my book, there’s a line in there that says “You went to a casino and the manager said ‘you’re kind of stupid. We’re only going to let you play the slot machines’.” You can’t sell options if you’re not sophisticated yet because you don’t have the experience. The slot machines pay out 95-98% of the money that’s put into it, and there’s always somebody that’s at the machine ringing and flashing its lights. When I go to Las Vegas, the first thing I do, just to remind me where I am, is I go down… Las Vegas is a Petri dish for human behavior, and I’m a people watcher…. I go down and I pick out rows of a hundred slot machines. At any given time, one of them is ringing and flashing loud bells and whistles, but I’m looking at the other 99 who all have losers sitting in front of them. Those things are like parking meters. The more you play, the more you lose. I think buying options can be that kind of game, but somebody hits it big once in a while. It’s like playing golf- you tell somebody about your hole in one you made for years, but you never talk about the ones you lost flushing them into the woods. I think investing and gambling may have some of that human behavior in common. There’s an old saying that says “Experience is what you get when you get what you didn’t want”. I’ve had a lot of experience! Michael: Well, your experience has certainly resulted in an excellent book, Don. Wanted to congratulate you on that and certainly recommend that to anybody reading the book. I wanted to go back and touch on the point you made about the guy selling courses for thousands of dollars, and usually selling them to the people that aren’t really educated that much in trading, although not always. Even experienced investors sometimes will buy these courses. I don’t want to bash all of them, because I know some of them have some good information. Don: Sure they do, Michael. One of my favorite books is by the old guy Will Rodgers. It’s what keeps me humble- that and investing. He said that everybody’s ignorant, just about different things. When I’m talking about neophyte investors, who earnestly are hardworking people, are very prodigious people in their work and their demands, and they’re just trying to do better, their motivation is absolutely stellar. Anyway, go ahead. Michael: Sure, no, that’s a great point. But there are a lot of these courses at there that they are charging these thousands of dollars for promising outrageous profits. In fact, I wrote about one in the upcoming newsletter where there’s a guy on CNBC now that said he took $4,600 and turned it into $460,000 in 2 years. I would be a little skeptical of those types of claims. The thing about it that a lot of these people don’t realize, even these courses that are good, a lot of that information you can get by picking up a couple of books for $30, $40, $50 a piece. Your book is a perfect example. When I talk to you about this book, I said “So, are you selling a course? Do you have a seminar?” and you said no, I just wrote the book to help people understand how to do this, so you don’t have anything you’re selling. It’s purely a book that is showing people option strategies that have worked for you, kind of bringing a perspective of both the personal and individual investor side to it. When you wrote the book, what would you think the biggest difference is or maybe the biggest advantages of being a commercial player or the advantages of being an individual investor? Don: That’s a great question. A lot of people- just hate the word hedge fund, which when you’re in risk management working with a corporation, usually ad commodities, it’ll be something like cotton, coffee, or orange juice or sugar. The goals of the commercials and the individual speculators are almost polar opposites. In helping people with their commercial risk management plans, and the term hedge fund is not the same as a fund you use to hedge for risk management. I don’t want to get into the semantics of it, but there is a big difference between the two. Commercial players I work with and the people who use hedge funds, their motivation is to preserve their capitol, to eliminate risk, and to get the highest possible margins on their products that they can. Now, some of them are selling commodities and some of them are buying them, and these can be commercial players on both sides of the same market, of course. It’s not just the speculators vs. the commercial players. I’ll give you an example: Maybe a speculator is selling a $5 bushel call for a relatively small premium and maybe this plant makes ethanol and has to buy corn. If corn goes over $5 a bushel and he has to pay that price, then he’s not going to have much profit margin, if any at all. So, what he does is buy a $5 corn call and if pollination doesn’t occur right, or weather gets too hot, or demand ceases or whatever the reason, if corn prices soon pass $5, instead of going out of business or having a year so bad he has to work the next 2 years just to make up losses, then they buy $5 calls and pay too much for their product, corn, which helps them make ethanol. At the same moment, somebody else on the other side of the market is saying, maybe a speculator, “Boy, corn has got some of the lowest stocks it has had in 5 years. Last year topped at $4.60 and maybe it’ll hit over $5 this year. Maybe I can afford to spend a few hundred dollars to bet that corn prices are going to hit the ceiling. Then, these two orders at the markets someplace meet, the transaction occurs, and everybody’s happy with what they did. It’s just about a zero sum gain. I don’t really see what we did. In fact, we used to have a rule and I explained this to my customers because I knew the CEO’s I was talking to would be talking about risk management. I discouraged them from using the word “profit” at all, and substitute the word “margins”, because we don’t care. We lose a bunch of money in a risk management account, and they say they’re startled to hear me say that. I say “Well, if it means you make more profits, then that’s fine! A higher profit margin is the goal and we’re not going to call them profits because they aren’t profits for the company.” Motivations in conserving capital to get rid of price risk and delivery risk, weather, or government upheavals, or changes in the laws and all those things. Plus, frankly, in the risk management programs, they can make some very creative contracts about buying options that they can offer their potential customers to give them an edge over their competitor…. things like that. Michael: Okay. So, a lot of the things you did in the commercial side of it was really helping to manage the true definition of hedging, where you’re helping them manage their risk for the price of the commodities they’re actually working with, whether they’re taking delivery or selling them. You have speculators on the other side that are taking the other side of those trades and both sides are getting what they want. Don: Many times, I work for an orange juice company, _____, at a processing plant, and they had a lot of their products sold, but they still had millions of gallons of orange juice in the tank. It wasn’t priced yet, it wasn’t sold, and they had uncertain profit margins to consider. Another of my clients, at the same time, was on the other side of the market. It was a very large grocery store chain, and they knew how much shelf space they had for orange juice, and they knew from years and years of selling orange juice about how much they were going to sell in the coming year. All the orange juice they know they have to put on the shelf but they haven’t bought yet is a price risk to them. If you had a freeze and all of the sudden prices went up and people who couldn’t even deliver the orange juice because of the damaged crops, the grocery store still has the same shelf space and demands from their customers. So, they would hedge and release themselves by selling options and contracts to speculators, they could insulate themselves so the contingency of price and delivery risk, that kind of thing. What’s fascinating is I felt like Dr. Jekyll and Mr. Hyde for working both sides of the market, but, actually, they weren’t really at odds with each other, they were at odds with the risk that was in the market – and both of them could successfully make trades to help meet their margin goals. Michael: Yeah, that’s a great point. A question we get often here is, a lot of people ask, “Well, you guys are selling these options. Who’s buying these deep out-of-the-money options? Yeah, sometimes it’s other speculators that are buying lottery tickets, but a lot of the time it’s these commercial players that don’t want to buy them, they have to buy them to insure their business. It’s like buying insurance. Don: Absolutely. It may be from a speculator who said, “Man, I’d never do that. Who’s crazy enough to take the other side of this trade?” 80% of the options expire worthless, as you point out in all of your material, too. That’s pretty good odds from the start. The thing I love most about selling options, and this is all in your book and mine I supposed, it doesn’t demand that you have to guess price direction. The amplitude of the price changes, nor do we have to do that within a defined time. Buying options is like standing on one leg and shooting at a moving target. Selling options can be like making a partnership with gravity. Gravity and time decay both work regardless, rain or shine, 24/7, in all kinds of conditions. They’re not dependent on the stock market and commodities, and they don’t depend on public opinion or on anything. One of the things about the financial channels, and, you know, this is July of 2016 and we’re in the middle of this presidential thing going on, which is the real Petri dish of human behavior, I think. It’s interesting no matter which side you’re on. It’s just crazy what the news channels do. It was all about the candidates a few days ago, they were running out of news, they were getting in experts to talk about every contingency that might happen. It was a slow news day, so they would take the small stories and somehow embellish them a little bit and bring them to the top so they could keep listeners, so they can sell adds, so they can make more money. It’s really funny on the financial channels, they even do that. This tragedy that happened in Orlando, Florida 2 days ago, now the financial channels are not talking about politics, but they’re talking about terrorism and what that means to investments and which investments would be best if there is a terrorist attack. These guys, with all do respect, they have some very bright people, but they have a tough job. They have to show up every day to a non-scripted program, and this goes for network news, too, and they have to take whatever is in front of them and make it sound like the sizzle on a steak and sell it to the listeners every day. With TV, they’re able to do that. Aaron Spelling, I think it was, said one time “The TV, you don’t have to be really good at programming because TV is a medium that has a default that’s kind of the most effortless thing to do- you just sit there and watch it.” I do it, everybody does it sometimes. It’s a rest for your brain sometimes, or whatever your reasons. It’s interesting and all of this fast Internet information everywhere we can get, it’s a lot of toxic half-truths and innuendo information. My mother-in-law, who’s in her 90’s, I tried to keep her from watching the news because she would just buy a new lock to put on the door every time she saw the nightly crime report. I think investors made that mistake when they watch the financial channels, and maybe some of the other news. It’s just a type of telescopic fear. It’s like you never think about an asteroid hitting earth. Matter of fact, just 3 weeks ago, there was a comet that came within 2.2 million miles of the earth and it was ½ a mile wide, and it would have had a giant impact and probably killed hundreds of millions of people. But you didn’t hear about that in the news, and we’re always in that unlimited risk like that, or satellites breaking, or things like that. I think unlimited risk gets a really bad rap because people are always taught to be afraid of it. There’s some merits that you go into in some great detail, and you and James Cordier’s material about what unlimited risk is and what other people sometimes fear. There’s a way to understand it and a way to be able to use and to do it intelligently and within the laws of a very good mathematical probability. You guys do a great job with that. Michael: Thank, Don. I appreciate that. You made a great point there I want to go back to for just a second, because I think it’s important and we talk about it a lot as well. The role of the media in both stock and commodities prices… we talk about, in some ways, you can actually use it to your advantage. The way you do that is by doing your own research or knowing where to go to look for that fundamental research on your own, and knowing what’s important and what isn’t, because if the media, like you said, they have a slow news day or they feel like covering something, they can take something that’s really, in the big picture, somewhat insignificant, and make it seem like it’s a big story for that individual stock or commodity. That can move the price- maybe not for the long term, but for the short term. If you know what the real story is, you can take advantage of that as a trader. It’s one of the reasons we spend a lot of time on fundamental research here and we recommend individual traders, if they’re trading on their own, they do the same thing. Don: Right, and that’s another reason why I love commodities. I have great respect for the work that you and James do there. It’s because you study the fundamental information on these markets. You know where the corn stocks are, you know the seasonal patterns, you know when grain pollinates, you know when the harvest begins, you understand world market, and you understand the United States Market. There was a story on TV on something that kept the commodity prices really not in sync with the true supply and demand. You have the ability because of your experience and because you stay up on these things- that’s your job. You can talk with your investor and let them know that it’s a puff news story or rumor or whatever. A number of years ago, there was one case of mad cow disease in Canada or someplace that crossed the Northwest United States. This sent ripples through the commodity markets, just on potential that we might not be able to buy a steak in 6 months. As a result of that, on down the line, prices went way up on the cattle. A lot of people that thought they wouldn’t be able to afford cattle got rid of the breeding stock and we’re still recovering from that, even though it was years ago. It takes a specialist in commodities and in these markets. Each market can be very specialized, and I don’t know very many people, any people, who are good at all the commodities markets. I know people claim to be, but I’ve never seen it and I’ve never heard of it. You have to go with 4 or 5 markets that I’m familiar with and have experience with and it’s kind of like writing a book. You have to write what you know and you invest what you know. You take things that you have all that experience in, rather than take a whack at something that might look attractive temporarily but you really don’t understand the market. That’s the value of having somebody like you at Option Sellers. These high net investors you serve, that’s the pivot and the very heart of what you do. The other side of that is being able to know the math and understand the mechanics of the market and things like seasonal volatility, and you incorporate fundamentals in there. With a high net worth investor, they can do things that most of my readers probably will never be able to do. They have a large enough capitol. You take a small investor that’s just starting out and maybe has an account of $10,000. There’s no way he can afford to draw down $5,000 the first week he makes a commodities option investment. I find net worth investors are not only able to tolerate that, but able to use the system that you guys use. I think it’s amazing and they can have a great deal of success with that. The huge benefit to investor for the types you do, I don’t recommend people start off dealing with a highly complicated commodity market, and the strategy that might be a naked option with unlimited risk, because, for a small investor, that can put you out of business in 2 days. You’re done. I teach that we’re going to start this way, we’re going to practice it, and we’re going to build it slow and sure and they can be able to do that. They can’t afford the same programs you offer for high net worth investors. For the people who do fit that category, I’ve never seen a better way to do it than what you guys do. Michael: Well, I appreciate that Don. I do, that’s a great point to make, as well. I do agree with you. I think there are some advantages of economy of scale when you get into and working with higher dollar amounts. Obviously, that’s one of the reasons why we have our minimum where we do. There are strategies that can fit almost any size of investor. It’s just a matter of matching the strategy. Let’s talk about that a little bit, Don. You’ve traded commodity options, you’ve traded stock options, do you have a preference for either one or an advantage(s) you think one might have over the other? Don: Yeah, well, like you just said, you’ve got to find suitable investments for the right advisors. For myself personally, since I have a lot of experience in both stocks and commodities, I stay in both. To me, normally, people will trade stocks first because some of the volatilities and some of the limits on all the smaller accounts, and they will start off in stocks and things. Those are the people that I suggest in my book a great deal, and I don’t talk a lot about commodities in there because I don’t want to give beginning investors the impression that they can make a killing in commodities. I’d start to sound like one of those ads I read a moment ago. Those things are doable, but they have to be doable to the right investor. Giving advice to my readers, one of my favorite trades is the vertical credit spread. They can put a capitol on a risk and make a relatively high return in 30-60 days out selling some options, and then they buy an option further out-of-the-money so they put a cap on any lawsuits they might have. When you do that, you can compute the risk of war ratios and it helps you with your money management in the account. Just like a floor trader, your first job every morning is to get up and survive to invest another day in preservation of the capitol, whether you’re a large investor or a small one. That’s number one above everything else. Now, I don’t get paid for selling any advisory services. I just do not want to do that. I ran around for a long time and managed a lot of money in hedge accounts and things, so it’s not something that I want to spend, at my age, the rest of my life doing. So now, I just love being able to write and share some of the information every day. I had a note here that I wanted to go over with you… These days, the old pros that learned years ago when they were doing Black Scholes computations, slide rules, it’s so 1985, to tell new investors that you don’t have the experience, you’re better off not even going with those options at all. You go find yourself different stocks. I read a Warren Buffet story one time that had a great impact on me. You remember the old mutual funds, and still many people have them these days. The ETF did kind of a better version of some of that type of investing. I don’t miss mutual funds lately, but I don’t choose investing in them. It’s because of what I read that Warren Buffett had said. I’m paraphrasing, “If I own race horses and I have a stable of 80 horses, and I know that 10 of those horses win 90% of their races. I’m not going to run all 80 horses, I’m just going to run the winners and stop picking now when the market has a new normal because of the news channels, the types of investments, and the sophistication. I think you have to find some winning bets. Frankly, 80% of options expire worthless; they’re certainly investigating to be able to go there. But you don’t race the whole stable, even though they are all thoroughbreds, because you just tend to jot down your profits. We live in an age with Internet and all the toxic information along with the good. The trick is being able to shift that out and to be able to discern which kind of investment is right for you.” I think Warren Buffett was on to something there. You know what they say about normal- it’s just a setting on the dryer. None of us are normal. Our needs and aspirations and everything are just not the same. I think those are decisions everybody has to make for themselves. Michael: I love that analogy of the racehorses and I also like the way you applied it to the options because it really does carry over like that. As you mentioned, if Warren is listening to the OptionSellers.com Radio Show, we certainly invite him to call in and give his opinion on that. Don: Well, he has been known to make millions off of covered calls. Michael: I know. It’s surprising if you go in at times in different part of the Wall Street Journal articles about who bought or sold these many options in the options market, and you don’t picture guys like Warren Buffett and Carl Icahn making these big option trades. You see them taking positions in stock, but they sell a ton of options. It’s well documented. Don: They’ll buy a great dividend stock these days that’s 2 ½ or 3% and then they sell covered calls on it. I don’t have their numbers in front of me, and I never will, but they might be able to make 5-15% more a year depending on the markets and the timing, but they can make a very nice return. Putting your money in the bank these days, you remember the old rule of 72... you just divide the annual interest rate into 72 and you get the years that it takes to double your money. If interest rates are 2%, it’ll take 36 years with your money in a bank savings account in CD’s to be able to double the money. For most of us, that’s just not acceptable. Michael: Yeah. I agree. I want to go back to something you mentioned because I did want to re-visit your book for just a second. You describe some really solid option strategies in there, but you said your favorite option selling strategy, you preferred vertical credit spreads. That’s one of our favorite strategies, too. Can you maybe just go through a quick description of how you would write that if you’re writing it on a stock or commodity, for instance? You probably talk about stocks in the book, so maybe just talk about how you would do that on a stock. Don: Sure. Well, first of all, I’d pick a stock. The nice thing is, and you go over this in your material too, anybody selling options has to understand that one of the major advantages is that I don’t have to guess prices direction or the amplitude of the timing. I just need to know where I think the stock price will not go. Then, in ¾ of the time, I’ll make money with it. That’s the whole thing. Vertical credit spreads limit themselves to this. If I had a stock that I think is going down or that it has already gone too high, I don’t try to press the reversals, but maybe it starts reversing. You want to be able to try and sell some options. With the market near it’s top all-time highs now, there’s a school that thinks it’s going higher, a school that think it has got to turn around and go lower, citing the bad economic news given daily now. I have no idea which one is going to be right. That’s why I don’t sell the apart, out-of-the-money call if I think the stock is going down. That leaves you with unlimited outside risk, because if price overruns your strike price, you’re going to be in the hole- it’s going to cost you and you’re going to lose money. With a vertical credit spread, you go just a little bit above the strike price. You go a little bit above the price where you sold the call and you buy a cheaper, less expensive call, and that puts a cap on your potential losses. So, with a cap on your losses, let’s say you’re a beginning option writer in stocks. You may collect $150 in premium by selling the call at a lower strike and then by buying one of the higher strike you might spend a third or a half that money, say $50 out of $150 to put a cap on your losses. So, if you have losses that are at the most $500, and you can make $100 profit off of it, that’s 20% in 30-60 days, which is great return on your money. Michael: Now, that’s a great strategy. I was glad to hear you say that because a lot of books and going back to some of these courses out there, they’ll talk about things like converted butterflies and everything. I know those can have their place, but a lot of times, especially for individual investors, they can be difficult to implement, especially if you’re doing it on a larger scale. We always say simple is better and vertical spreads are a great, simple strategy that can also be very effective. Don: One of the things, I get a lot of e-mails from my readers, and a lot of these people have never dealt with options. Most of them have little stock experience. A lot of them, frankly, are young millennials who had a couple of babies, they’re married, and they’re working as hard as they can, and they have money saved and they want to be able to use their laptop or iPad or whatever it is to be able to fiddle with options to try and make a little extra money. Of course, I try to tell them fiddling is not the preferred word and let’s get to work. You can make some money that way, but you have to be very, very careful about what you do as part of that with money management controlling your risks. The vertical credit spread and small steps are able for that. Another thing about most of the e-mails I get from my readers- almost everybody and I think that as a society, the financial planners have taught us to think this way. Maybe they’ve heard too many bank commercials, I don’t know what it is, but people immediately start thinking in terms of making thousands of dollars over years of time. I think that doesn’t allow them the focus that they need. It’s fine to dream and have a plan, we all do it, but when you wake up in the morning and you have something in front of you that you have to deal with, investing some place, so I try to tell them just to find an easy goal. Maybe start with trying to make $50 or $100 a day or a week or whatever suits their account. That’s very doable. You can’t get up in the morning and make several hundred thousand dollars and put it away and wait 20 years to collect it. I suppose there are some ways you could do that, but for an individual investor, you have to deal with what’s in front of you. I think trying to help people focus their attention to something they can do right now to begin to achieve some of the longer-term goals is the way to go. Michael: Yeah, that’s a great point. It’s a great discussion on options there, Don, and I appreciate that feedback. Let’s just talk a little bit briefly here to talk about how you pretty much trade for a living now. Would you say that’s a fair assessment?... or professional trader? I know you trade a lot of your own money, but do you have an opinion on the stock market right now for 2016? What’s your outlook? Don: Well, it depends on what the talking heads on the network say. What’s so funny to me is that those guys can come out one day and explain a bull market and then get up the next morning, go in at 6:30, and they’re talking about the bear market that we’re in and they never bat an eye. They can change. There’s a reason for that- it’s almost impossible to forecast what the market is going to do next. I can’t do it- I’m not that good. For that reason, I choose options and I try to make my money by knowing probably ¾ guess on what’s not going to happen instead of trying to predict what is going to happen. I think my odds are a lot better. I know it’s a disappointing answer, and when they get these experts on CNBC or wherever, at the end of the interview they say, “Well, what do you think about the market?” They always have a good answer and then they back-petal a little bit. Then, when it’s all said and done, I’m thinking, “What exactly did you say?” It’s confusing to me. I can’t tell the future. All of us can connect the dots backwards, but trying to do it forward is just impossible, which we talked about the other day. Nassim Nicholas Taleb has a book called Black Swan, and it’s about improbable events. If you’re a little bit of a sophisticated investor and you love to figure the odds of investing I think it’s a must-read. It’s a really interesting book. Whether you’re an investor or not, it’s a little walk down probability and philosophical terms. Michael: I’m familiar with the book. It’s a great book for especially sophisticated investors- somebody that’s really looking to get into trading and understand the nuances of it. Your answer was not disappointing at all. In fact, the guys that say “I don’t know what the market’s going to do. Nobody knows what it’s going to do”, those are usually the guys that really know what’s going on. I like that answer. Don: It’s like you say in your new material- sometimes you can take a news event or whatever happened, whether it’s stocks or commodities, sometimes those over-reactions or under-reactions can present some great investment opportunities. Michael: I agree 100%. One of the things we like to say is, and it takes people a while to get their arms around that, because it’s almost the opposite of what everyone else is doing, but you’re saying “Look, I don’t know what the market is going to do. I’m just going to pick something I think it’s not going to do.” Once people can understand that approach, it changes their whole outlook on how they invest. Don: That’s right, and a lot of people will tell you otherwise. But by and by, just keep your boots dry. Michael: Yeah. That takes a minute to think about, but that makes a lot of sense. Going forward, I know we’re not making predictions here, but do you have any favorite sectors of stocks or commodities or anything you’re keeping an eye on for the rest of 2016? Don: Well, I think part of the new normal that is developing, and we don’t know if it’s right, hindsight or not, but I look at the individual stocks and the ones that are my favorites are not gambles on new technology, but trends because of disruptive technology. The greatest example of that right now is a stock that I own known as Amazon. To these people, there seems no end. Half of their income now is from AWS, Amazon Web Services, in this cloud computing that they’re selling. They’re not even famous for that and it’s half of their income for the company. I’ll be the first one to tell you, on our way downtown, my wife asked me the other day what I want for Father’s Day. I said, “Well, I have a few items”, and she said, “Well, I’ll take you shopping”. Immediately I’m thinking, “Whatever it is, I can get it cheaper on Amazon and have it here in 48 hours”. I’m guilty. I know people do this all the time but I’ll admit it that I walk into brick and mortar stores and I’ll find something there and I’ll just think that I can make a better deal by internet shopping. I’ve done it for years. I’ll step outside the store and get a cup of coffee, get my iPad, and I’ll order one. A lot of retailers get mad at me for saying that, but it’s just the elephant in the room- that’s what people are doing. Not in every instance, of course, there is still people who enjoy going through the deals and being able to go out, it’s a social activity. When I need something, I’m busy and I don’t want to spend 30 minutes in the car to go down and buy what little item I needed- I’ll just order it online. Again, that’s my point with disrupted technology. This is what happens for investors, too, specifically smaller investors. Maybe you and I were investors a few years ago and we didn’t have the same information the pros have, we didn’t have instant quotes, and our smart phone has more electronics in it than the Apollo 11 Moon Mission to put a man on the moon. Commissions have fallen- first it was the discount commissions, you know, Charles Schwab and those who were innovative in that area. Now, electronic trading on a portable computerized device - iPhone, iPad, Tablet, Microsoft, whatever it is – that has displaced a lot of the brokerage business. For small investors who want to use self-directed accounts, it’s a perfectly great way of doing it. Conditions are low and you have the same (virtually) news and quotes that the pros have. Of course, for high net worth investors, they have the option because of their accomplishments of being able to probably find an easier entry point by finding somebody like you guys. Michael: Well, yeah. I agree with your assessment there. Disruptive technology is really affecting almost every industry. It’s certainly a sector to keep an eye on if you’re a stock investor. Don, just on a personal note, what’s your favorite investment book? Not counting yours or mine… Don: Well, like I say, although it’s not written as an investment book, I like books like Black Swan. I’m a voracious reader and I always have 2 or 3 books going at one time. I’ve got all 3 of the Taleb books right now and I’m alternating between them. There’s such good information out there in many things. I’ll just say Black Swan for right now, it’s not the book of a lifetime, but it’s one of the books I find pertinent in the type of environment that we have to invest in. We have to be aware and keep in mind those black swans – if you’re read the book or heard those terms, those are things that seem to come out of the blue and they’re totally unexpected but they have a very profound and lasting impact on society and culture and finance and everything else. It’s a wonderful topic and it’s very interesting to explore. Michael: Absolutely. Don, how can investors buy your book? If they want to get a copy of it where can they go? Don: One word: Amazon. The quickest, fastest way to get the best price, just go to Amazon.com and you can search for Options Exposed Playbook. That’s it. Michael: Excellent. Well, Don, this has been a great interview. We really appreciate you coming on. We hope you’ll be willing to come back again sometime to give us some great information here. Don: You bet, Michael. It is a pleasure to be able to talk with you more. I appreciate the opportunity and I want to thank all of the listeners you have out there and the people who have been reading your blog. Thank you very much, good day, and I’ll see you later. Michael: Great, Don. Thank you.