Podcast appearances and mentions of michael one

Roboburger is billed as the “World's First Burger Chef In a Vending Format.” RoboBurger condenses the average kitchen by 99% into just 12 square feet, including refrigeration, heating, ventilation, prep line and cleaning. Burgers are automatically grilled and assembled in under 4 minutes. Roboburger RoboBurger was invented by Audley Wilson, a data scientist; Dan Braido, a Rutgers PhD grad; and Andy Siegel, a serial entrepreneur. Audley and his team have been working on Roboburger for about five years but Audley's passion for robotics goes all the way back to his childhood. Audley has been passionate about robotics and automation from a young age, and one of his teenage years robotics prototypes got him a scholarship at Carnegie Mellon. RoboBurger was in beta phase up until SharkTank. They launched their first beta location in a dive bar in Jersey City in 2020. They launched an NSF-certified model in 2022. The units now – generation 5 – are UL certified and are launching in locations from Indiana to Missouri. Future locations for Roboburger machines include colleges, airports and rest stops. Friends encouraged Audley to take his idea to Shark Tank since the earliest days of the Roboburger process. Shark Tank producers noticed the media coverage about RoboBurger and reached out to Audley in 2022 with an offer to appear. It wasn't until 2023 that Audley and his team decided the machine was reach for a prime time appearance.  QUOTES “No one ever went bankrupt trying to feed America burgers.” (Michael) “One of the biggest challenges (with Roboburger) has been the health requirements. Getting that NSF certification was a gargantuan challenge and getting our UL certification on top of that was even more.” (Audley)“We clean the griddle after every burger. We do heat sanitization every four hours. We've actually got our cleaning process certified by a third party.” (Audley) “(One of our goals is to) make food service accessible for vending.” (Audley)“People are starting to shift to a higher convenience lifestyle. How can I get what I want, when I want it, wherever I am.” (Audley) “When you get to Shark Tank, it's just one go. You're standing on a carpet. It's live. There are no cuts.” (Audley)“Shark Tank was a really interesting experience. I've done thousands of pitches over the years, but I've never had one (like Shark Tank).” (Audley) “We're very happy with the (Shark Tank) deal. Those are exactly the sharks that we wanted to make a deal with.” (Audley) TRANSCRIPT 00:01.57vigorbrandingHello there to Fork Tales. Today’s guest is Audley Wilson. Now, typically, I have chefs on. Typically, I have restaurateurs. But today, we have a robotics expert. ah He is a burger expert and founder and CEO of Robo Burger, the world’s first burger chef in a vending machine. That’s right. He makes burgers within a vending machine. He also recently appeared on Shark Tank to pitch his idea to the investors. Audley, thank you so much for joining us today. 00:31.42Audley WilsonWell, thank you so much, Michael, for having me on. I’m excited to be speaking with you. 00:36.82vigorbrandingAwesome. wow You and I got to meet, I think it was a little over a year ago and I i saw you then again in LA and I got to actually not only see you, but I also saw the Robo Burger. So that’s super cool and I i got to test it. I got to have the burger and it was ah it was impressive. So let’s start with some background about rogo Robo Burger. I’m sorry, it’s like a tongue twister. ah Tell us about Robo Burger and how it all got started. 00:58.35Audley Wilsonhey five times but So, oh man. Well, so it’s a long story. I’ve been working on a robo burger for in this current incarnation for about five years, but I’ve been working on food robotics over the course of my, for my entire life and burger machines for about 20. So, uh, you know, my first burger machine, my first food machine, uh, got me into Carnegie Mellon. Uh, and like, you know, then it was really focused on. residential kitchens, right? So like, how can you make an entire kitchen, fully automated? 01:31.33Audley WilsonAnd yeah so, you know, talk about really ahead of your time. um So like, that was, that was my first machine, and it was really, could do a variety of different meals. 01:34.72vigorbrandingRight. 01:40.23Audley WilsonBut really all it can make well is rice and chicken. when Yeah, it’s ah but first i college kid that’s great. 01:44.40vigorbrandingSo, but was that something that you did before? yeah Was that something you did before school? Like before you got into the into Carnegie Mellon or was it a contest or talk about that? 01:51.97Audley WilsonYeah. Yes, I was working on this since ah when I was in high school. 01:56.90vigorbrandingThat’s crazy. 01:57.18Audley WilsonSo when I was in high school, I was there, so you know, constantly working on this crazy machine because I was like, you know, I got to feed myself in college. So why not just have a crazy machine that could do it? um And but really, one of the challenges was it was trying to do so many things in one machine. So it was a super, super, super complicated. um But yeah, so that was that was what I was working on in high school. um I’ve been making food, ever since I learned, I self taught electrical computer engineer. So when I was like eight years old, my dad started teaching me how to do electronics. And then I was like, this is this is awesome. Took his college textbooks and started going through those. And I was like, you know so I taught myself electronics. And then I was like, well, if I could make motors move and lights turn on, why not make a food machine? I was watching the Jetsons a lot back then. 02:44.85vigorbrandingUh huh. 02:44.83Audley Wilsonum you know, because it was on constant replay back in the 80s. So was it was like, okay, you know, like, I can make, I can make, you know, Rosie goes up to a machine and she enters what she wants. And then she, you know, outcomes as like, you know, ham on a bone or whatever. ah yeah and I wanted to make that machine. 03:03.40vigorbrandingThat is, that’s crazy. That’s it’s wild. And you know I gotta to say, you’re probably the only human being on earth that can say, I’ve been working on a burger machine for 20 years. 03:13.02Audley WilsonYes, taking a little longer than I expected. 03:13.63vigorbrandingah but But you’re dedicated your life to the burger machine. I think that’s awesome. I mean, you know. 03:19.72Audley WilsonOh, yes, definitely. um you know In college, yeah when I got into CMU, one of the reasons I got in was actually because of that that’s residential food machine. 03:29.71vigorbrandingSure. 03:29.84Audley Wilsonum and In college, own they CMU was awesome and know they they were able to fund some of my development. I was working on the machine throughout the time period. My junior year, i was I was an entrepreneurship major there, so my junior year I had to start a business. So, that’s when I started my first business, which was actually a restaurant. um So, because I was like, okay, my robot isn’t there yet. um If I actually want to dedicate my entire life to food robotics, I should probably learn how to to cook and how a restaurant works. um So, I started a restaurant, you know, because there’s no simpler way to do that. um 04:03.50Audley Wilsonyeah But yeah that’s really yeah everyone’s like, that’s a horrible idea. Don’t do this. This this industry is hard. And you know I definitely learned that that’s the case. 04:13.68vigorbrandingyeah 04:13.75Audley Wilsonum and But to what it was excellent about that time period is they it ah enabled me to really understand what the problem was that I wanted to solve. um you know the labor What I was facing was massive labor problems, um you know tons of really really long hours that I needed to cover, a lack of consistency between my chefs on the weekend or the the late night shifts, um you know and also the size of the kitchen. right My kitchen took up a large space, like you know how can I make this all smaller? 04:39.33vigorbrandingRight. 04:43.44Audley WilsonAnd then like you data. There was like no data in my kitchen. I got data really by putting it in at the end of the day, so I didn’t really have that much data back in 2004. So you know that’s that’s what i wanted to solve like how could i just make this that and it like hit me like one night when i was uh when i was closed down my restaurants like wow what if i just like made this a lot simpler to go back to an automated food restaurant that that ma machine i was working on upset focus on commercial. One thing, just the burger, because it’s yeah like’s it’s pretty standardized for the most part. 05:16.00vigorbrandingHmm. 05:19.52Audley Wilsonright you know Top bun, bottom bun, patty, and anything else that goes on in the in the middle there. 05:22.28vigorbrandingOkay. 05:26.00Audley Wilsonso like you know It’s consistent. um so yeah I could do one thing over and over and over and over again. and At that time period, I really wanted to like automate the whole back end of a Burger King. but 05:36.58vigorbrandingYeah, that’s it’s fascinating. So when you did your restaurant i mean and obviously you summed up everybody’s issues in the restaurant business. I mean, quality of food, consistency, the the labor shortage and just the cost of labor. I mean, you know, ah you’re you’re talking to everybody here and that makes ah that makes a ton ton of sense. um but But just real quick on your on your restaurant, like when you started a restaurant, it was at one location, was it a QSR, was it a focused, it it was it one of those where you focused on just one sort of type of food or one one sort of like like li burgers or a hot dogs or anything like that. Talk talk about that a little bit. 06:11.34Audley WilsonYeah, so I was writing a trend back in 2004. I’m not sure if you remember hookah lounges. They had just came through New York City. 06:17.58vigorbrandingSure. 06:19.21Audley WilsonSo one of my friends dragged me to a hookah bar in LES, you know, checked out the scene. I was like, this is actually pretty cool. This is an experience I haven’t had before. And, you know, it didn’t exist in Pennsylvania at the time. So, you know, I was the first hookah bar in Pittsburgh. um yeah so I opened opened the the concept there at first it was a hookah bar mediterranean tea and drinks and then i then i built out the kitchen myself and with my friends and my fraternity brothers built out the kitchen so went through the whole ah you know process of getting all the like the licenses and everything there so that’s what i learned about the permitting processes which. 06:59.52vigorbrandingUh-huh. 06:59.86Audley Wilsona big part of our life now. And yeah and then then after that, we turned it into a whole music scene. We had like lines around the block. It was it was pretty cool. um and It was Mediterranean food was the ultimate focus. um Because it was so hard to build out the kitchen, we ended up going all electric um you know using these huge pizza ovens to heat up legs of lamb because we couldn’t do a stack. And that’s really one of those things I think my machine really solves for. you know it’s a vetless solution So you can put it anywhere, just plug it in literally, cleans the air, filters it. 07:27.98vigorbrandingYeah. 07:35.57Audley WilsonBecause they told me it was like 100,000 to put in my vent, ah just just the vent solution. 07:37.84vigorbrandingOh, sure. 07:40.66Audley WilsonI was like, really, this is crazy. um So I unfortunately limited the options that I had in my my establishment. 07:48.17vigorbrandingYeah, and you are obviously a serial entrepreneur. I feel like you you can see something and you can, you know, and it’s not a problem. It’s an opportunity, right? And everyone says that, but I think it’s obvious you’ve executed on that all across the board from evolving your hookah thing to the to the robotics. to If I can do electronics, why can’t I make burgers with it? too I’ve got to eat. So therefore, I should make something that can feed me. It’s pretty crazy. That’s that’s awesome. And you know it just goes to show, I guess, that that that drive and positivity and and the and the willing to have your eyes wide open and and execute. 08:20.60vigorbrandingThat’s the key, execute. 08:21.19Audley WilsonAll 08:21.52vigorbrandingAnd I think it’s awesome. So I get to talk to a lot of entrepreneurs, but I’m really i’m really impressed by all that you’ve done. 08:26.79Audley Wilsonright. 08:27.36vigorbrandingIt’s really, really super cool. So, okay, we’ll get to Robo Burger here. 08:29.93Audley Wilsongo 08:31.40vigorbrandingNow, why why not pizzas? why and but eat Why not hot dogs? Why not chicken wings? Why why burgers? 08:37.09Audley WilsonYeah, again, it’s the standardization. um One of the hardest parts of food machines and in general, when I’ve been building them, has been dispensing the ingredients, right? So, you know, if you have like too wide a variety of ingredients, then it could be like challenging. um But really, I love burgers. ah Back in the day, I was eating probably about five burgers a week. um yeah know So it’s pretty ah pretty high pretty high percentage of burgers. 09:07.61Audley Wilsonum and you know And I think they’re really the design of it. I love the sandwich. yeah It’s like ah the perfect meal on the go. 09:14.05vigorbrandingYep. 09:16.30Audley WilsonYou know you could grab it. You could take it in your car. I think it’s just a very convenient form of of heating yeah what I think it’s a little more sloppy. 09:25.77vigorbrandingWell, look, yeah and no one’s ever going to, yeah no, no, one I don’t think anyone ever go really bankrupt trying to feed America burgers. 09:28.80Audley Wilsonyeah 09:33.69vigorbrandingCause I mean, that’s definitely, uh, it’s definitely on the forefront of, uh, I think America’s palette for, uh, uh, for a lot of reasons, but. 09:34.35Audley WilsonYeah. 09:40.37vigorbrandingSo, but like, okay, vending machines, they’ve been around for a while as far as food, hot food, but obviously pre-made and, you you know, soggy thing, not necessarily good for sure. 09:49.14Audley Wilsonyeah 09:50.50vigorbrandingah You know, what what were some of the challenges with putting the process into a 12 square foot box? And talk about the process of your burger because it is not just you know, ah just reheated. It’s not just a microwaved pre-made sandwich. I think maybe that might be even a drawback. Maybe people might think, well, geez, this is probably what this is, but it’s not. It’s it’s it’s made fresh. 10:10.34Audley WilsonYeah. 10:11.16vigorbrandingSo can you talk a little bit about that and then some of the um some of the challenges? 10:15.55Audley WilsonYeah, throughout this journey, I’ve been blessed to have two really good co-founders, Andy Siegel and Dan Bredo. Dan was my CTO. hes Me and him went to Carnegie Mellon together. So he’s really been faced with having to conquer these insane hurdles of really taking an entire commercial kitchen and putting it into 12 square feet um and getting and NSF and UL certified as such. 10:30.03vigorbrandingThanks. 10:40.26Audley Wilsonum So you know one of the biggest challenges, again, was ah you know the, you know, all the health requirements, right? You know, getting that and NSF certification was a gargantuan challenge, and then getting our UL certification on top of that was even more. You know, you always hope that there is some governing body that is ultimately saying, is this good is this safe and am I going to die by eating this? what these these um These groups are there for, um you know, their standards really have pushed us to the next level in making a much better, safer um thing, but ultimately the the ah challenges are or great. um So some of them, you know was you know, most vending machines start with food in a pre-packaged container and they stay there the entire time. 11:30.83vigorbrandingMmhmm. 11:31.17Audley Wilsonhours actually starts in a package. We open the package, dispense the part, the components from there, close those packages, then cook and assemble everything and then put it into a second, into a final packaging. So, you know, due to that, the food touches, you know, food touching zones for all the chefs out there, you know, obviously everything needs to be cleaned. You know, so how do you actually cook? So we, like I guess you could go through the cooking process for ah listeners who don’t know how this machine works. So Roamer Burger, when you after you’ve done ordering what you like on the screen and paying, it’s going to then take a frozen patty out of the freezer, put it onto a griddle, and cook it on both sides. 12:14.66Audley WilsonWhile that’s cooking, it’s going to dispense buns from the toaster into the toasters from our sealed dispensers, and and then start toasting those. Once the buns are toasted, it’s then going to grab a box, put the buns into the box, add the chosen condiments, get the patty, and then get grab go over and get cheese a layer of cheese on top, and then go out to the user and where the user will see it come out, and then the clamshell box will close. So that’s ultimately the process. That’s our our patented procedure for making a burger. 12:46.19Audley Wilsonum We have five patents there. So those are like we have five different inventions. um First one is the oven system, the way we actually cook it on a griddle. 12:50.62vigorbrandingMm hmm. 12:55.89Audley Wilsonyeah So that like yeah we’re actually cooking that. Making it really you know, you really get to the char we really you know, it’s the same way you would want a patty cooked the toasters or another patent that we had because ultimately we had to toast the but toast the bun and also perfectly dispense it our first burger machine back in 2019 that we put that we we were we put live in Andy’s Bar in Jersey City it would flip the buns half the time like ah 13:26.69Audley Wilsonah Every time, just with the buns half the time. It was, it was, it was the worst. We called it a lucky burger because they just kept it. But it was like, we were always lucky. It was horribly unlucky with the the buns. 13:36.98vigorbrandingMm 13:38.74Audley WilsonIt’s, you know, but that’s the thing, you know, these simple, these products are very soft and delicate, you know, the bun. 13:43.78vigorbrandinghmm. 13:44.11Audley Wilsonum And you actually have to get it there right side up every single time. um And, you know, every, everyone’s, everyone is used to having a burger but prepared one way. So, you know, if it’s ever done wrong. um The next, next patent we had was our dispenser, which is actually what holds all these, uh, these a bench, all these, uh, the buns and the top on the bottom button and the paddy sit in different dispensers. So that was a real challenge because, you know, the buns are soft. Um, sometimes, sometimes things can stick. How do you actually you know dispense it every single time? Um, so that was a huge challenge for us. 14:20.49vigorbrandingMmhmm. 14:20.83Audley Wilsonevery Every step was just huge hurdles, but my team must have a really good team, people really solving these problems. it The list just keeps going, but you now now everything is really down to the hardware mechanisms have been perfected, and now we’re getting to do some really, really cool things on the software side, which is really exciting. 14:42.88vigorbrandingYeah, very cool. And it is amazing because, excuse me, the the the the burger is grilled and it’s not just nothing. And that’s the thing, I guess I wonder that that you have to not not overcome, but I think people would just assume because why wouldn’t you that, oh, it’s pre-made, pre-packaged, it’s in a microwave and that’s not it at all. And in fact, I’ll say, I’ll give some plugs here. You know, um Quench, our agency does CPG, food and beverage. ah We started in Pennsylvania and your buns are Martin’s potato rolls, which are very famous here in Pennsylvania, and they are making their rounds around the country, and it’s a really quality product. And and I think Heinz Ketchup is what you’re using too, another Pennsylvania brand. 15:19.59Audley WilsonYeah, so yeah, yeah we love Heinz. The machine that you know has these Heinz bagged products in it. So pretty much all of our condiments start in the Heinz bags and then they get stayed sealed throughout the entire system and that’s like one of those big tests that they also make sure. 15:37.29vigorbrandingYeah. 15:37.29Audley WilsonHow do you actually clean these lines? Have you guys ever had a beer line in your in your restaurant? right Lines are the worst. 15:41.48vigorbrandingYep. Yep. 15:42.87Audley WilsonYou got to clean them. 15:44.02vigorbrandingThat’s right. 15:44.03Audley WilsonSo like you know the machine also has like automatic processes to clean our condiment lines and systems like that because Every line is a problem um if you don’t have an actual cleaning solution. 15:54.10vigorbrandingYep. 15:54.22Audley WilsonSo a machine will automatically do soap, sanitizer, hot water. It has built-in hot water heater. Pretty much, we have as many many things that you could possibly fit into 12 square feet. um and you you know Everything that you would expect to be in your in a restaurant is inside of this. 16:12.20vigorbrandingYeah, and candidly, there’s there’s there’s there’s ah I mean, you guys are cleaning after every burger. So we hear about health inspectors. We hear about, oh, don’t go back in their kitchen, you know about restaurants. Oh, boy, you don’t want to see what it looks like back there. But you guys are actually cleaning after every every burger. and and and and you know and and So the the sanitation part of this thing, the the health part of this thing is like first, foremost, and and extremely well thought out. 16:27.01Audley WilsonYeah. 16:37.05vigorbrandingIs that correct? 16:38.22Audley WilsonYeah. 100%. You know, that’s been, uh, from the very beginning, it was like, you have to get the and NSF certification. Otherwise we can’t do this. We have to be able to really scale this across the country. Um, you know, in the and NSF, you know, that blue sticker that says and NSF, that was our goal from the beginning. 16:51.00vigorbrandingMm hmm. Mm hmm. 16:53.73Audley Wilsonum So, you know, like we clean off clean the the griddle after every burger, we do heat sanitization after every four hours, we do every day, it does a the daily soap, sanitizer, hot water treatment, you know, the three bin sink that you, you know, obviously required by the health department, um we do that process. And we’ve actually gotten our cleaning cleaning procedure certified by a third party. um like, you know, after you months and months and months of usage and doing the cleaning process, you know, in like, indetectable levels of microbes. So, you know, we did the whole culture growth and everything. My, Dan, he’s a PhD, so it’s been ah insane to have him on, you know, fighting this battle because he’s 17:37.98Audley Wilsonyeah He’s really been leading the charge. We’re actually going to the American ah the Association of Food and Drug Officers’ Apto conference next week to present the machine to all of the health the big health officials around the country because you know we’re we’re we’re not we’re we’re not shy now to show what we’ve done because it’s it’s been challenging to get here, um but it’s pretty cool. 17:54.22vigorbrandingVery cool. 18:01.29vigorbrandingYeah, ah yeah you should be you should be incredibly proud. and You know, you always are smiling and you’re always laughing. and I can only imagine how many obstacles you faced. And so you you’re you have the perfect attitude as ah as an entrepreneur because you’re you’re willing to smile and figure out the next thing. And that’s that’s ah that’s a gift. It sounds obvious, but boy, it’s so hard. And yeah, yeah. 18:21.34Audley WilsonOh man, yeah, those was hard days where it’s just like, you’re just like, you go home, you’re like, I don’t even know how we’re gonna, I don’t know how to put a smile on the face. 18:28.18vigorbrandingYeah. 18:29.13Audley Wilsonit And then you go in the next day, it’s like, gotta kick, gotta kick ass today to enter. 18:32.63vigorbrandingYeah, that’s right. That’s right. That’s absolutely right. All right. So you opened up your first row robo burger pop up in Jersey city in 2022. 18:36.44Audley WilsonYeah. 18:39.98Audley Wilsonyeah 18:41.01vigorbrandingHow many locations you have now and then where do you see your machines being successful? 18:45.62Audley WilsonYeah, so it’s been we’ve been in the beta period up until Shark Tank. so That was actually when we had pulled our our machines for all of our beta machines from the market. so First, we and we actually launched our first um unit to the market in 2020. That was in that that dive bar in Jersey City. 19:00.78vigorbrandingOkay. 19:03.87Audley WilsonThen in 2022, we introduced our and NSF certified Mark II generation Two model to the mall and then we then after that we went to a pilot flying J and a couple other locate in the college in Queens and a couple of the locations um to you know, just perfecting the technology getting up to the next levels and then now we just got our and NSF or UL certification for our generation five units and those are the units now we’re rolling into the market. 19:28.50vigorbrandingMm hmm. Hmm. 19:33.91Audley WilsonSo we have ah we we just launched our first units like a month ago into the market in ah in a business in a business and a business location with Pfizer. And now we’re and we’re launching with Penn Entertainment some casinos. in Pennsylvania they’re who are actually launching in their location in Indiana and then in their location in St. 19:51.77vigorbrandingMmhmm. 19:57.67Audley WilsonLouis this month and then next month we’re launching with another location for that same business and then machines after machines so going into a bunch of airports in terms of where we see the best bits you know convenience It’s really like where we are the the kitchen for convenience, both unattended retail as well as the traditional convenience store. So we we really are we really are looking forward to working with partners there. Bending, obviously. Bending partners, who we’re now able to 20:32.03Audley WilsonMake food service accessible for vending, which has really never been the case before. Food service previously was always prepared food, and distribution just dropping it onto to a cold case. and Now we’re talking about real food service, you know being able to offer their customers a higher so higher level solution. airports. We’re going into Orlando, MCO, and we’re going to be going into a few other airports throughout the country when our partners in the travel hospitality industry. And, you know, we’re excited to go into a few colleges. 21:05.70vigorbrandingSure. 21:06.61Audley WilsonHopefully our album amount is over the course of the next few months. So I’m just really excited to start getting this technology out there. 21:11.14vigorbrandingThat’s awesome. Well, it makes sense. Yeah, I mean, it makes sense. You know, it’s kind of interesting because, ah you know, candidly, I was watching the your episode of Shark Tank, and we can talk about that. yeah But when I was watching, I was watching with my wife, and my you know, my wife’s smart. 21:23.90Audley Wilsonyou 21:26.40vigorbrandingShe’s like asking questions like, yeah do you really need um a vending machine that serves burgers? She was impressed by how fresh it was and all that. and i said to her i said well but like Someone did the first vending machine for a soda. and At the time, you could get a soda at your house, you get a soda at a grocery store, you get a soda probably at a convenience store. so There’s plenty of places to get a soda. Why did you need to build a refrigerator, put it somewhere? and and When you think about it from that perspective, i mean it probably seemed a bit outlandish and maybe almost unnecessary But yet, let’s face it, ah soda vending machines are huge. 21:58.43vigorbrandingSo why not burgers? why i mean it makes total When you look at it from that perspective, I think it makes total sense. 22:00.66Audley WilsonIndeed. 22:02.65vigorbrandingBecause again, to your point, like colleges or airports, there’s people that want to have a decent, ah you know a good quality food experience, and places aren’t open. And especially now after COVID, there’s so many issues with employees and you know cutting down hours and and and all of that that you you’re you’re actually answering. You’ve been working on the solution to a problem that probably has been exacerbated over the last couple of years. you know it’s a 22:27.50Audley WilsonYeah. it It’s interesting as well. 22:28.14vigorbrandingso 22:29.57Audley WilsonThink back to like even like 2000, like there were so many more cafeterias, like, you know, in every business that was open, c catering to the office. 22:34.22vigorbrandingRight. 22:38.83Audley WilsonObviously there’s more work from home now, which has sort of caused a sort of shift, right? 22:40.66vigorbrandingMm-hmm. 22:43.75Audley WilsonSo people have gone from like these, the cafeterias and people sort of moving back into this unattended retail. 22:46.82vigorbrandingRight. 22:50.78Audley WilsonVending solution. Um, you know, so going back to the world where the the automat was a solution, right? You know, so if you think back about that back in the 50s, there was the automat Um, so I think people are really starting to shift back to this high high convenience, right? How can I get what I want when I want it wherever I am? um And at the same time businesses need to handle for the fact that there’s ah you know, there’s less labor out there um at ah significantly higher rates than it was yeah I’m thinking back to minimum wage when I had my restaurant in 2004 was six dollars six dollars an hour 23:22.47vigorbrandingYeah, sure. Yeah. 23:25.27Audley WilsonI’m like, wow, I can’t even imagine. so you like having like you know I had 20 people. like I can’t imagine having that many people in a tiny small business with today’s minimal wages and increased food costs. 23:33.43vigorbrandingRight. Right. 23:41.09Audley Wilsonso you know like the The challenges are getting are bigger for the operator than ever. But yeah know by by going to the small unattended footprint, people are able to you know the distribute their costs over multiple locations, and make more money, um and and find new opportunities for growth. 24:01.13vigorbrandingThat’s great. so i mean we We talked briefly about the Shark Tank episode. I think people are really interested because it is ah as an entrepreneur, i mean i like I said, it’s one of those things where I’d sit there and and and focus on. I couldn’t watch it late at night because my brain would be spinning. you know i I loved it trying to figure out the angles. Would I do the deal? If I was selling the idea, how would I sell it? you know Looking at it from a marketing perspective, looking at it from a business perspective, it’s just you know my head’s going to explode. so Talk about that. like did you Did you pitch your idea? Did they come to you? What was the experience like? Did they do run-throughs? Talk a little bit about that and how the whole thing came together. i mean we see you know What do we see? Like 15 minutes, 12 minutes of any segment. um and you know but But what all is in there? i mean how How does that all work? I’d love to hear hear sort of like the behind the scenes a little bit. 24:51.43Audley WilsonYeah. Yeah, I remember when I started working on my burger machine back in the day, you know, Shark Tank had came out and they were everyone was like, you should go on Shark Tank with this idea. So it was crazy to to actually go on Shark Tank eventually. The way it all came about was through, I guess, you know media When we launched our first mission our first Gen 2 machine in the mall here in Jersey, we got 4.4 billion impressions, like 43 million in earned media value. 25:22.69Audley WilsonSo like we just got so much media. 25:23.32vigorbrandingMm hmm. 25:24.93Audley Wilsonum like I remember my wife ah my wife’s mom from Moldova saw us on TV and filmed it and sent us the video in Moldova. 25:30.52vigorbrandingMm 25:35.28Audley WilsonI was like, wow, this is… And I think that shows that like you know people have a lot of interest in this type of technology, and burgers specifically burgers are completely automated in a vending format. 25:39.48vigorbrandinghmm. 25:48.13Audley Wilsonum So that’s when we got the eye of the, I think, Shark Tank team. 25:54.63vigorbrandingGotcha. 25:54.68Audley Wilsonum So at that point they you know they reached out to me back back in 2022. I didn’t even respond because I’m like, there is no way I’m going on Shark Tank with this machine. It is way too early. I need to itate iterate, iterate, iterate, iterate, iterate, iterate, iterate. And then we did probably about 100 more iterations after that. 26:14.76vigorbrandingwow 26:14.72Audley WilsonAnd then you know a year later, i yeah like i get ah i get a response I get the same email again. It’s like, hey. I was like, wait, hold on. Did I respond the last time? And that’s what I realized. I didn’t respond like, wow, I’m a horrible person. ah hu So like, you know, it’s like, all right, you know what? I think we’re ready. So we responded, then then that pretty much got us into the process. And then we we had to do our practice pitches where, um you know, the producer’s feedback to me was usually around, you know, like every everyone did great, upset oddly, more energy. 26:49.93Audley Wilsonbut So my other two partners, they’re like very photogenic. So they like yeah they they really love being on camera. um but So yeah that was that was ah that was a fun process of you know just trying to you try to actually get nailed the pitch, because you get to practice, or they’re practicing it amongst ourselves um with some of our friends, trying to like, you this is you know this is what we’re, or what do you think about this these lines guys? 26:56.32vigorbrandingah 27:14.59vigorbrandingMm hmm. 27:15.64Audley Wilsonum And then, Yeah, but yeah we never when you actually get to Shark Tank, it’s just one go. it’s You get on stage, and you know that youre you’re there that you’re standing on this carpet, and the next, to you know the door’s open, and and it’s it’s live. it’s a the never no no No cuts. 27:36.12vigorbrandingGot it. 27:36.28Audley Wilsonyou and there you know they The team there is amazing. There’s so many cameras trained on your every move. um they’re you know they’re They’re amazing. um Yeah, it but it was ah it was really it was a really interesting experience. It was, you know, I’ve done thousands of pitches, you know, over the over the years, you know, thousands, but this one was, you know, I never had one. It was, you know, quite the same film where, you know, it’s going to be viewed by everyone and with everyone’s ah full ego and energy and enthusiasm coming for television, you know, in terms of the the judges on the other side. So, you know, it was quite an experience. 28:13.83vigorbrandingThat’s awesome. so So I read somewhere that that entrepreneurs who appear in the show required to meet with a show psychologist afterwards, just to make sure you weren’t beat up too bad or tortured by the experience. Was that true? Did you guys talk to somebody afterwards? 28:24.62Audley WilsonThat’s 100% true. That’s 100% true. I know, like, everywhere they told us before, it was like, ah that’s weird. And then author words, it was like, it actually was it was nice to talk. Like, we were all very over the moon and excited. So it was nice to, you know, they they really, you know, they’ve been doing it for 15 years. 28:40.86vigorbrandingYeah. 28:45.31Audley WilsonThey know what they’re doing. It’s an impressive of organization. 28:46.60vigorbrandingYeah. Yeah. I mean, I’m sure. Hey, and you guys got a deal. Congratulations. I’m sure some people are over there and they’re in the fetal position crying in the corner. You know, like I spent most of my life, bill you know, dedicated to this business and they’re telling me it’s a terrible idea. So, ah but but yeah. 28:58.91Audley WilsonYou know, at one point, and you you know you you saw the episode, at one point in the middle of the episode, it’s like, wow, that’s good to be me. 29:05.63vigorbrandingYeah. Well, my wife said, Oh, they’re not going to get a deal. I’m like, well, just watch. Let’s see. You know? And, uh, you’re, by the way, you said about not being photogenic. I disagree with you, but your, your, your partner, the CMO was hilarious because he got a lot of closeups because in the beginning they were saying some stuff that wasn’t so nice and his eyes are just like, you look like a deer in the headlights. It was awesome. So he made he made for good TV. That’s for sure. That guy’s he’s a character you can tell. 29:26.93Audley Wilsonyeah 29:28.22vigorbrandingUh, but. 29:28.42Audley Wilsonyeah he’s so He’s definitely a character. He used to be on ah TV commercials back in the day, like Mr. Bubbles and all this other stuff. And and he’s ah you know he he’s is ah quite a character. 29:41.26vigorbrandingYeah. And so you you you got in with Mr. Wonderful, Kevin O’Leary and Michael Rubin. So you got a $1.5 million dollars loan at 9%. And are you are you happy with the deal? Have you guys ah gotten any traction? 29:52.16Audley WilsonYeah, we’re very happy with the deal. These are exactly the sharks that we wanted to work with. 29:54.39vigorbrandingOK. 29:57.73Audley Wilsonyeah We wanted to we wanted to know work with Mr. Wonderful. We wanted to have him ah up on stage and interacting with the machine. ah And that that was before we found out who the guest shark was going to be. 30:08.71vigorbrandingMm-hmm. 30:08.88Audley WilsonAnd it was Michael Rubin. And we’re like, wow, Michael Rubin. That’s really cool. So like you know we ended up getting exactly the sharks that we wanted to do a deal with. two sharks and especially after coming to a point where we thought we were going to have like zero sharks at one point. 30:23.43vigorbrandingYeah, yeah. 30:23.51Audley Wilsonis So you it was it was ah was it it was just a it was ah it was a lot of fun um after it was done. It was the most intense 34 hours and but of my life, the most intense 34 hour trip to LA ever. 30:41.85vigorbrandingYeah, I’ll bet. 30:41.91Audley Wilsonum It was just nonstop. 30:44.97vigorbrandingThat’s awesome. Okay. So let’s talk back to back on the rubber burger. Can you share some details about what you’re, you’re cooking up for the future? I mean, like, you know, some people want bacon on their burgers. You know, we know the lettuce and tomato thing and fresh vegetable. That can be obviously comp an issue. Can you talk a little bit about maybe some of the decisions you made to do things, not to do things and some potential ideas of what you might do next? 31:00.46Audley WilsonYeah, 31:04.12Audley Wilsonyeah so so let let’s talk about lettuce and tomatoes first. The reason we didn’t do do lettuce and tomatoes first is Dan would always say is because of E. 31:08.15vigorbrandingYeah. 31:13.30Audley Wilsoncoli and some of the challenges there and being able to detect it. 31:13.77vigorbrandingHmm. 31:16.27Audley Wilsonum It actually is just another hurdle for the operator and our goal is trying to reduce hurdles for the operator to be able to deliver road burger to their end consumer. So yeah that’s why we’re not offering it our first first iterations of these units. um In time, we’d like to operate. But actually, the operators that we’ve been working with haven’t been asking for that so much. But we’d love to be able to do it so that we can do more brand partnerships with you some of the bigger fast food companies that are out there that do use lettuce and tomatoes. In terms of bacon, we would like to do bacon. 31:52.30Audley WilsonWe’re not sure how or when. We definitely want to add it to our lineup. In terms of coming soon, what we’re working towards, we want to be able to make the unit smaller. We want to have a smaller unit that we can even reduce the cost to the operator even more. 32:05.61vigorbrandingMm 32:10.34Audley WilsonWe want to be able to make a bigger unit that can really be able to do really high volume. you If you think about replacing the back end of burger production for any of the big fast food companies. and So we want to be able to go about bigger and smaller while constantly just trying to reduce the cost to the operators that way. Because at the end of the day, like yeah I’m an operator, Andy’s andy’s had ah three restaurants as well. 32:32.35vigorbrandinghmm. 32:33.68Audley Wilsonum you like We know how how annoying it is to actually take a portion of your profits out of your pocket to fund X and Y expenses. So we just want to make it lower and lower and lower so that way they can make more money. 32:46.69vigorbrandingthat’s fantastic 32:47.31Audley WilsonThat’s really where our focuses are on. Um, and, uh, you know, faster, you know, it’s currently takes us about four minutes to make a burger. We like to be able to get more throughput, you know, cause at the end of the day, you know, it’s all, if you’re there, which is multiple people right now, we can, we can spread, if there are multiple machines, we can spread orders across a few, the cluster of units, but you know, we don’t want to be ah that same unit to be able to make burgers two times as fast. 33:11.36vigorbrandingYeah. Yeah. And if I remember correctly, your, your machine currently can hold like 50 burgers, right? Like so, uh, it stacks. 33:17.53Audley WilsonYeah. 33:18.40vigorbrandingYeah. So, and I mean, depend obviously depending on how many you sell that someone’s got to come in and then service the machine and, and restock it and everything else. 33:25.40Audley WilsonExactly. 33:26.22vigorbrandingSo yeah, that makes total sense. 33:27.31Audley WilsonExactly. 33:27.63vigorbrandingSo so 33:28.47Audley WilsonSo in some of the airport applications in the busy or high volume, then yeah what we’re they’re doing is putting multiple machines, two, three, four machines in like clusters and then multiple clusters throughout the locations. So that’s ah really what we’re building towards that world where you have food anywhere, anytime. Because we’ve all been to that airport where yeah um the your flight gets delayed. 33:48.16vigorbrandingYeah. 33:50.29Audley WilsonYou’re there till like 2 AM. m yeah The bar closed down at 8 PM. 33:52.45vigorbrandingYeah. Mm-hmm. Yeah, no doubt. 33:56.34Audley Wilsonjust there waiting 33:57.88vigorbrandingYep, I totally, totally. 33:58.23Audley Wilsonyeah so well 33:59.76vigorbrandingI’ve experienced it pretty much every week. you know I’m on a plane every week and ah you know every other week umm I’m in a situation similar to that. like When do I eat? When should I get something? What can I get? What’s the quality I can get? you know And then with delays and layovers and canceled flights, you never know when where you’re going to be. So I think it’s i think um it makes a ton of sense. Now, I have a couple of other just really simple questions for you. 34:21.39Audley WilsonAnd you’re just there waiting. 34:21.65vigorbrandingAnd I know your burger’s great. I’ve had it. So between, I’ll say, Burger King, McDonald’s, and Wendy’s, who makes the best burger? 34:28.40Audley Wilsonah wendy um Wendy’s, Dave Thomas all but all day long, but Shake Shack is definitely my my favorite here as a New Yorker. 34:33.92vigorbrandingYeah, right. 34:39.09Audley Wilsonum yeah I’m a big Shake Shack fan. 34:42.94vigorbrandingYeah, I totally and you know what i agree with exactly what you said. I do agree with Wendy’s out of those three. And I i love Shake Shack. I’m a diehard Phillies fan. They have one down outside the stadium or inside the stadium. And that’s that’s usually my go to that or hot dog. Of course, it’s a baseball game. um And, you know, I was at Burger America in New York and who does the smash burger? and ah the Mr. Mott’s and he said he dedicated his life to the hamburger. So you two have a lot in common. You ought to yeah you you ought to connect. 35:07.38Audley WilsonOh, man, yeah. 35:08.79vigorbrandingHe’s a 35:09.12Audley Wilsonum but i ever I think that’s I’d love to connect to it. another 35:11.99vigorbrandingYeah. Yeah. And so now like one final meal, if you have to, you could pick anything other than your burger. I can’t let you just pick your burger, but anything, what would your, yeah what would your final meal be? 35:19.30Audley WilsonOh, definitely. Yeah, let’s see. 35:22.01vigorbrandingWhat would it be? And where would you have it? Why? 35:26.91Audley WilsonProbably lobster and oysters um on a beach in Jamaica. 35:30.29vigorbrandingVery good. 35:33.31vigorbrandingOh, nice. Well done. I like that. I can, I can picture that. That’s fantastic. 35:37.01Audley WilsonBecause I’m Jamaican, because I’m Jamaican, and whenever me and my wife are down there, I love love hitting up a nice lobster um but from like the rust, the shack on the beach. 35:41.71vigorbrandingThat’s great. 35:50.49vigorbrandingThat’s fantastic. Ollie, you were wonderful. Is there anything else you want to mention about what you’re up to or anything else about the ah Robo Burger? 35:58.65Audley WilsonYeah, well, you know, so right now we’re offering robo burger for sale for the first time really to the general public. Previously, we’ve only been working with like some of the, the biggest players that manage food and, uh, and convenience. So now we’re actually, uh, selling these units. 36:14.19vigorbrandingFantastic. 36:14.15Audley WilsonSo if anybody is interesting in getting their hands on the unit, we’d love to speak with you. Um, come check us out on our website, the robo burger.com th E robo burger.com. Um, and, uh, looking forward to speaking with you. 36:27.91vigorbrandingAli, you are awesome. I appreciate your time and I love your passion and congratulations on your success and your fortitude, I’ll say. You just smile and keep going forward. So, I mean, it’s amazing and I’m really, really impressed by what you’ve done. Thank you. 36:41.09Audley WilsonWell, thank you so much. I appreciate speaking with you. 36:44.92vigorbrandingGood deal. 

Sir Stevo Timothy, an Irish comedian who killed his friend after making 'the worst decision' to get on his motorbike while drunk has revealed the stark three choices he gave himself as he recovered in hospital. Stevo, also known as Farmer Michael, killed his friend John Laffey in 2005 after the pair had been drinking until the early hours in the Mervue area of Galway and he agreed to drive them home. Stevo, who had battled alcoholism since his teens, lost control of the bike, on which John was riding pillion, and woke up hours later in hospital, having lost feeling from his chest down. His father later told him that his friend had died in the crash. He now speaks about what happened to encourage others not to drink and drive, saying: 'When you're sitting up in the National Rehab hospital and you're paralysed from the chest down and you're naked and a man is showering you or voiding your bowels - that'll really help you reevaluate the decisions you've made in your life." The actor and comedian, who has more than a million followers on social media, broke his neck and back and was left with serious spinal injuries in the accident. He now uses a wheelchair. Stevo also talks about the positives and negatives of having a large following on social media. Hosted on Acast. See acast.com/privacy for more information.

Last month Eenzy caught up with Atlanta-based chaotic hardcore luminaries Apostle for a heartfelt hobnob after a show. The band gets into how they adapted to losing a member and becoming a trio, how they support each other creatively and emotionally in the band, and they land some solid burns at the expense of jazz and black metal (genres famous for their sense of humor). They're currently supporting their latest release Liminal. Listen to the interview down at the bottom or on our Spoofy channel and read the edited transcription below. [Fan crashes interview to tell the band how great the show was] Eenz: Hey guys, Eenzy here outside 529 once again, this time with Apostle.  You guys wanna introduce yourselves? Michael: Hello my name is Michael and I play bass in the band. Murice: I'm Murice I do guitar and vocals. Evan: I'm Evan - I play drums. Eenz: I just sat through a pretty bitchin' show with you guys, Malevich which is another local blackened grind band, Hexis -  a great band from Denmark, and.. I forget the last band actually.  But I have questions about your band so it doesn't matter. My first question is about the name: where did the name Apostle come from? Is there a story behind it? Did you just pick a word out of the dictionary like Health? What's up? Evan: It was kinda something I was sitting on in my early 20's, I was going through my kind of angsty, atheist-phase. To be totally honest I was like 'Yeah, it'd be cool to have a band in a chaotic and abrasive style kind of tongue-in-cheek named Apostle'. Honestly, I just thought it sounded kinda cool at the time, and it stuck. When we started playing with Cam when the band actually formed, I had that name in my back pocket from over the years and was like 'what if we just named it Apostle?' and it just kinda stuck. Eenz: Cool, I like it - the bible's pretty metal in certain parts.  Other parts are pretty fucked up, but whatever [editorial note: dude, the metal parts are super fucked up too] Second question: You guys blend a lot of different metal genres. I hear like grindcore, maybe some crust, definitely blackgaze, maybe some mathy parts. How would you describe your style of music and the bands you're influenced by in this project? Murice: I always just like put us in the category of like chaotic hardcore, just cause it's an easy catch-all term. I'm sure all of our influences vary, but mine are stuff like Yaujta, Sumac, Infernal Coil, Iron Lung, Coke Bust, The Chariot. Just names like that - listening to them really pushed me to like try to do something more with the music I'm making. Michael: One of the cool things about this band is that we all have different influences and we listen to a lot of stuff.  For me, especially when I started playing bass instead of guitar, a lot of like Glassjaw - the Material Control record especially, and things like Botch and Russian Circles - just Brian Cook's bass tone and how he uses a lot of chords, even like Jawbreaker, how their bass player would use a lot of chords to get a thicker sound. When we went down to a three-piece I just wanted to fill as much sound as possible, so for me it was more of a tonal thing, like this band with just a guitar and bass player were able to bring a thick sound I want to try to bring to this band. Evan: Not to sound cliché, but it really is just like expression. I myself am a huge jazz nerd to a certain extent, I mean Tony Williams is my favorite drummer and probably my biggest source of inspiration. But like Murice was saying, the more extreme forms of punk - grindcore and powerviolence-type bands. You mentioned blackgaze, like yeah the atmosphere is indicative of a little black metal in there, but I'm really just trying to push myself as a drummer and get faster at playing blast beats cleanly just hoping to support the songs and further create an atmosphere for the melting pot of shit we have, the stew we have going. Michael: Just to jump in there,

Hype. The definition can vary wildly depending on who you're talking to. Today's guest Michael F. Schein, founder and president of MicroFame Media and author of “The Hype Handbook,” defines it as “any set of activities that get a large number of people highly emotional, so that they'll take the action that you want them to take.” From Virgil to the Punks and the Beatles–and of course the South Bronx where hip-hop and the term as we know it today was born–artists throughout history have used human behavior, particularly group behavior, to create propaganda and what we now know as personal branding.The most successful people, he explains, use hype not as a separate marketing strategy but as part of the art itself, creating whole worlds (like Warhol's factory) and personas consistent across all media (Steve Jobs' wearing the same black turtleneck and jeans, for example). This creates more organic interest and brand integrity. Most people are pretty similar and have been and will always be driven by the same desires. If you can learn these, Michael says, you will know how to get and keep their attention no matter which trends or technology platforms move in and out of vogue. The Hype Handbook is the culmination of ten years of research and life experience. Starting out in a punk band–where he and his bandmates proved to be natural marketers–before moving into marketing and writing, Michael realized there were about 12 key principles that make for good promotion. Join the conversation to learn why he believes happiness and a fulfilling life are found through side doors and why having a Plan B is, well, over-hyped. Quotes“I guess that's what hype means. It's not just having a marketing budget. It's conducting experiments to figure out how you can embody your values in a very public way, how you can tap into human psychology to get people excited about that. And then how you can embody that in everything you do.” (9:53 | Michael)“If you're seeing all of these articles telling you that AI, or the metaverse, or social media, or whatever the latest thing is, if you don't have a strategy on that, you're going to fall behind…they use these tools as accelerators, but it's not the route.” (17:33 | Michael)“One of the strategies in my book is packaging is the essence of propaganda.” (18:57 | Michael)“I don't think things are linear at all. I think history is cyclical. I think trends are cyclical.” (24:44 | Michael)“Human beings are more alike than they are different…these are things that you can reverse engineer and figure out. We all like to think we're individuals, but we're about half a percent individual.” (25:34 | Michael) “You're never going to know exactly what the recipe is. You're always going to have to conduct experiments. But if you have a firm understanding of the way that humans behave in groups and the way human minds work, you can conduct experiments quickly and strategically, in a way that you won't waste time on stuff that will never work.” (37:43 | Michael) LinksConnect with Welcome to ElomaInstagram: @welcometoelomaWebsite: WelcometoEloma.comConnect with KileySocial: @kileypeters + Linkedin.com/in/kileypetersWebsites: RAYNEIX.com, KileyPeters.comWeekly Email Newsletter:...

Featured in this episode is previously unreleased material from a post-interview chat between channel creator Rod Bland and Jason Janas, who had a near-death experience after Covid-related tumours burst in his lungs, causing him to drown in his own blood.  Jason talks more about his relationship with Archangel Michael, the importance of embracing life's challenges, the concept of simultaneous existence in multiple dimensions and universes, and many other divine insights and knowledge he continues to receive since his NDE.

Some say the role of Australian Cricket Captain is second only to the Prime Minister, so when former cricket captain Michael Clarke was seen shirtless, yelling obscenities in a Noosa park it made headlines.  From rumours of flushing a ring down a toilet, to being a bit of a crwanky boi with his teammates, it's Michael Clarke's turn to be trialed in the Cancelled Courtroom. But do you agree with the charges and sentences?   THE END BITS Subscribe to Mamamia GET IN TOUCH: Feedback? We're listening! Call the pod phone on 02 8999 9386 or email us at podcast@mamamia.com.au CREDITS:Hosts: Clare and Jessie Stephens Producer: Talissa Bazaz Audio Producer: Thom Lion Mamamia acknowledges the Traditional Owners of the Land we have recorded this podcast on, the Gadigal people of the Eora Nation. We pay our respects to their Elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander cultures. Just by reading our articles or listening to our podcasts, you're helping to fund girls in schools in some of the most disadvantaged countries in the world - through our partnership with Room to Read. We're currently funding 300 girls in school every day and our aim is to get to 1,000. Find out more about Mamamia at mamamia.com.auSupport the show: https://www.mamamia.com.au/subscribeSee omnystudio.com/listener for privacy information.

“There is no more complex strategy game in the world that I know of than building companies,” says Michael Zuerchner, CEO and Co-Founder of Prismatic. He would know. At age 19, he started a software company whose product integrated 600 tasks to be used in all aspects of law enforcement, such as jail door systems to alarm systems for putting dots on maps when 911 calls were made. It started as a summer job getting his hometown's law office records software up to date, and then he and a friend bootstrapped that software into a fully-fledged business. It became unsustainable once they scaled. After leaving the company, the two started Prismatic to solve the problems they encountered in the first place. Michael explains that integration platforms have been historically focused on integrating the things the company uses together, taking all the things that are in their ecosystem and making the data flow well among them. Prismatic offers a complete iPaaS, or integration Platform as a Service, solution for your whole organization to make everything run more smoothly and at optimum potential.  In this episode, Michael discusses the unique challenges of running a sophomore company and the problem with overestimating your experience and underestimating the variables of starting a company.  Quotes: “At the end of the day you're going to have to do what is going to serve your target market the best. (4:32-4:37 | Michael) “We're all obviously end users of B2B software in some form or fashion, and wouldn't we all like it if there was just one end-all answer that was the magic solution and we didn't have to deal with all of this? If that could exist that would be amazing. I think the hard thing, of course, is building that one true thing that meets the demand of enough of the market.” (9:21-9:40 | Michael) “I don't know very many people who were successful who didn't love the game so much that they wanted to go right back into it.” (16:30-16:39 | Michael) “For all the people that are out there grinding right now, the beach is not all it's cracked up to be, just sitting around doing nothing. It's nice to have freedom, one hundred percent. However, go do nothing for a month; it gets tiring really quickly.” (17:14-17:34 | Brendan) “There is a fundamentally different problem if you are a sophomore company. I don't need to integrate together the things that I use—or maybe I do, but that's a separate thing. I need to connect the product I sell to the other products my costumers use.” (19:52-20:07 | Michael) One of the challenges in our market, and something that I think we do well, is doing a good job for both of those personals. I think we have a solution that speaks very well to product folks and the problems they have, and a product that's very friendly to developers without turning off the rest of the organization. And I think that's a fine line to walk.” (32:28-32:50 | Michael)  Connect with Brendan Dell: LinkedIn: https://www.linkedin.com/in/brendandell/ YouTube: https://www.youtube.com/c/BrendanDell Instagram: @thebrendandellTikTok: @brendandell39 Buy a copy of Brendan's Book, The 12 Immutable Laws of High-Impact Messaging: https://www.indiebound.org/book/9780578210926  Connect with Michael Zuercher:Website: http://prismatic.io/ LinkedIn:https://www.linkedin.com/in/michael-zuercher/ Check out Michael Zuercher's recommended books:• No Man's Land: Where Growing Companies Fail by Doug Tatum: https://www.indiebound.org/book/9781591842491 Startup CEO: A Field Guide to Scaling Up Your Business by Matt Blumbert: https://www.indiebound.org/book/9781119723660 • The Strategy and Tactics of Pricing: A Guide to Growing More Profitably  by Thomas Nagle and Reed Holden: https://www.thriftbooks.com/w/the-strategy-and-tactics-of-pricing-a-guide-to-growing-more-profitably_thomas-t-nagle/272437/?resultid=b8ecc8a1-c660-4d32-8904-d6ccb162d545#edition=19123891&idiq=53411030  Please don't forget to rate, comment, and subscribe to Billion Dollar Tech on Apple, Spotify, or wherever you listen to podcasts! Use code Brendan30 for 30% off your annual membership with RiverSide.fm  Podcast production and show notes provided by HiveCast.fm

Squirrel squabble… One of the reasons businesses or even just individuals fail is being they have too many distractions in their heads. Today in the latest episode of the Disruptive Successor show, Jonathan Goldhill welcomes Michael Neill, a Transformative Coach, Best-selling Author, and CEO at Genius Catalyst, to talk about his work in helping people clear their heads. Tune in as Jonathan and Michael discuss how the vertical dimension of coaching works and how to transform squirrels into humans.HIGHLIGHTSMichael's Vertical Dimension of CoachingManaging Humans vs. SquirrelsMichael's coaching processTransforming squirrelsEffects of an isolated environmentSettling down into clarityMichael on work-life balanceQUOTESMichael: “The tactics can be learned, the strategies can be developed and practiced. But if you're a mess, you're going to be a mess, applying strategies, and they're not going to work as well.”Jonathan: “To me, the best leaders, and the best clients who are leading their businesses, there, let's just talk about how they show up, they're authentic, they're transparent, meaning they are truthful.”Michael: “When you've tried doing it the way you think you've got to do it, and it becomes obvious that's not going to work. At that point, anything is worth trying, other than more of the same.”Michael: “One of the ways I define leadership is it's the art of aligning intention. So part of my role as a leader is to align the intentionality within my family, it's to align the intentionality within my business.”Connect with Michael and learn more about his work using the links below: LinkedIn: https://www.linkedin.com/in/mineill/Website: https://www.michaelneill.org/If you enjoyed today's episode, please subscribe, review and share with a friend who would benefit from the message. If you're interested in picking up a copy of Jonathan Goldhill's book, Disruptive Successor, go to the website at www.DisruptiveSuccessor.com.

Follow Phuc, an entrepreneur In Boston as he chases the American Dream, works on cool startups (using cutting edge science/tech) and investigates spirituality, family, UFO's (UAP's) and the meaning of life. Hosted by Roberto Souza an entrepreneur that's living the Canadian Dream in sunny Dominican Republic (with his wife/kids) working remotely as a videographer/digital animator/graphic designer.So, come join us on today's talk with our guest Mike, one of the geniuses behind Vision Valve!Check us out on our other socials!Spotify: Instagram:https://www.instagram.com/whatthephucwtp/https://www.instagram.com/phucnet8/https://www.instagram.com/souza.now/Facebook:https://www.facebook.com/What-The-Phuc-262051428996070

Give everything one more try, even if you really, really shouldn't.  A tragic tale of a TV series that never was. www.dailynotes.co.uk 

Michael Dhillon of Bindi Wines is one of the most famous winemakers in Australia. Bindi is a 170 hectare farm of which 7 hectares are planted to Chardonnay and Pinot Noir. Michael Dhillon had gained renown through his beautiful wines which show balance and purity in the expression of Bindi's individual vineyard sites. Famous winemaker and writer James Halliday writes of Michael: “One of the icons of Macedon. The Chardonnay is top-shelf, the Pinot Noir as remarkable (albeit in a very different idiom) as Bass Phillip, Giaconda or any of the other tiny-production, icon wines. The addition of Heathcote- sourced Shiraz under the Pyrette label confirms Bindi as one of the greatest small producers in Australia.” Image from https://www.visitmacedonranges.com The area of Macedon Ranges has dramatic mountains and those high elevations translate to cool climates. Pinot Noir, Chardonnay, Shiraz, and sparkling wine are the specialties of the region. Most of the wines are made by family-owned producers who make small amounts of wine. Among them is Bindi  In the show, the articulate, passionate Michael Dhillon joins us to introduce this magical region, and tell us about his wines, which many think are the best of Australia.    Here is a list of Bindi's wines: Bindi Block 5 Pinot Noir Bindi Kaye Pinot Noir Bindi Original Vineyard Pinot Noir Bindi Dixon Pinot Noir Bindi Quartz Chardonnay Bindi Kostas Rind Chardonnay Pyrette Heathcote Shiraz You can get Bindi Wine in the US from www.wineworksonline.com (send them an email if the wines are not up on the site and they can get them for you if you reference the podcast -- I don't make money off the wines, they are helping us out! ) __________________________________________________________ Thanks to our sponsors: Wine Access      Visit: www.wineaccess.com/normal and for a limited time get $20 off your first order of $50 or more!  Wine Access is a web site that has exclusive wines that overdeliver for the price (of which they have a range). They offer top quality wines by selecting diverse, interesting, quality bottles you may not have access to at local shops. Wine Access provides extensive tasting notes, stories about the wine and a really cool bottle hanger with pairings, flavor profile, and serving temps. Wines are warehoused in perfect conditions and shipped in temperature safe packs. Satisfaction is guaranteed! Check it out today! www.wineaccess.com/normal    Thanks to YOU! The podcast supporters on Patreon, who are helping us to make the podcast possible and who we give goodies in return for their help! Check it out today: https://www.patreon.com/winefornormalpeople

In this episode, Emil and Michael chat with Tyler Jahnke about how he persevered through a nightmare of a first deal to being a part of 100s of unit of real estate.   --- Transcript   Emil: Hey everyone. Welcome back to another episode of The Remote Real Estate Investor. My name is Emil Shour, and today I'm joined by my cohost,   Michael: Michael Albaum.   Emil: And we are interviewing Tyler Jahnke. Tyler has become a good friend of ours and is also one of the writers on the Roofstock blog. So you may be familiar with him on some of the content he's written there. And this was a really fun episode. We got to talk to Tyler about the story of his first rental property. He lives up in the Bay area and he talks about investing in the Midwest and some of the painful lessons he learned along the way of buying that first property and how he's grown to be a partner and owner of over a hundred units through syndication deals. All right, without further ado, let's hop into this episode.   Theme Song   Emil: Tyler. Welcome to the show, man. We're excited to have you.   Tyler: Thanks very much. I appreciate you reaching out and getting my attention and allowing me to hop on today and talk with you and Michael.   Michael: This is going to very much feel like every day on Twitter when we're always chatting about real estate investing stuff. Anyway, it's just on an audio format.   Tyler: A quick little plug for Twitter there, I guess, right? Like most of us I think, met on Twitter and that's been a great platform for both of us or all of us and engaging in and connecting with people so happy. We met there and happy to talk real estate as much as we want.   Emil: Yeah, it's funny. I've been on Twitter for years and I never realized there was this real estate investing and money, Twitter corner of Twitter. Like I always just used it for marketing and other stuff. And I was so stoked when I found this little community that's super engaged and loves talking and sharing best practices. So it's been fun, man.   Michael: It's funny. This is my first live Twitter interaction coming off Twitter. And I'm so glad to see Tyler and I were chatting before we started recording it. And his personality on Twitter matches his personality in real life, which is always great because sometimes you meet folks. It's like, wow, you're really well written. And I can't stand you as a person, not the case at all here, which is always nice.   Tyler: I'll be honest. I was a little worried thinking it just through like seeing you in person, it's like, how is he going to think I come across in reality versus someone who's behind a keyboard or a, you know, a mobile device typing 280 characters. I'm sure there's plenty of people out there that are completely different. And I was like, hopefully I come across similar, online as I do in person.   Michael: I think by the same thing, I don't want to catfish anybody.   Tyler: Yeah. Now I will mention the first thing I noticed about you and Michael was the longer hair. I'll say that.   Michael: For anyone who hasn't seen, the reason they have leveled, they let myself go with the head hair and facial hair department. I'm going out the quarantine cut on, call it.   Emil: Cool. So Tyler, before we hop into the good stuff what's going on in your world, what's new.   Tyler: Oh, that's I mean, that's a big question. So first things first I work full time still. I am not a full time real estate investor. That's something that I think some people maybe assume that I am. So I do work full time in a sales and business role out here in the Bay area, born and raised in Berkeley, California. My office is in as in San Francisco, clearly we're all working from home right now, but so, you know, a lot of my day is still consumed by that full time job. But my nights weekends are still very much real estate or whether that's analyzing deals, talking to partners, talking to investors and networking, engaging, and then doing a lot of content build out on my platform and then just, you know, talking real estate as much as I can on my nights and weekends. So that's kind of what my day looks like right now. It's, it's becoming somewhat repetitive, but I have enjoyed it. And I do try and get out on weekends and hike and see the outdoors a little bit.   Emil: Now that you've mentioned that you live in the Bay, my follow up question is how did you get into real estate investing? And why did you choose remote real estate investing? I think part of the, you answered with you live in the Bay area, but give us the back story.   Tyler: Yeah, I guess I'll tackle the question of how I got in first and then we'll go to why out of state. But so I started investing in 2016, so about three and a half years ago now I was working a good job that I enjoyed in an industry that I also enjoy and still enjoy. But I did see myself, you know, kind of the future Tyler down the line, probably having to work another 40 years and reaching that age of 65 and then maybe retiring. So I think in my late twenties, a little bit of self reflection and trying to figure out what I wanted to accomplish in life. And a lot of that had to do with time freedom, which I think a number of your listeners are probably also conscious of right now, if they're thinking about real estate. And so I had to try and figure out ways to bring an income outside of my W2 job and just try and accelerate my growth on the financial side.   So through business podcasts, through investing podcasts came along this topic and strategy of real estate, which is abundant and everywhere, but no one really thinks about it. I mean, when I say no one, the majority may not really think of it as an investing opportunity. And so, you know, I saw it as somewhat of a logical step and I guess, strategy just by the fact that you could bring in monthly recurring income through tenants, paying off your mortgage and insurance and taxes, and maybe even letting you cashflow a little bit. And then to answer your question on why out of state for me at the time, it was pretty obvious. I couldn't afford anything in the Bay area. And I also wanted that cashflow and it's very hard to cashflow property in Oakland when you're going to pay $750,000 for it. It's quite impossible. Now I'm not saying it's impossible, but there's definitely challenges there.   So, you know, jumping into, out of state investing made sense for me, it was definitely a little scary because you emotionally get attached to these investments. I think as a newbie and you're like, I want to see it in person. I want to touch the front door, but at the end of the day, it's not necessary. If you have the right team on the ground to help you out and really guide you along the way. And so long story short, why out of state, it was affordability and the cashflow potential.   Michael: So I want to know Tyler, how did you make that leap? Really, a lot of people call it a leap of faith jumping into this out-of-state market. Having never been there, maybe having never met your team on the ground, walk us through the mindset and the decision making that you went through to end up where you did.   Tyler: That's the important part is to make the actual leap. And I think I will admit early on, I was rather naive and I didn't have everything buttoned up from an education standpoint. I didn't really know how to properly run the numbers that actually worked for me. I'm not saying, you know, leap in uneducated. I think again, that helped me initially because I was naive in the challenges and maybe dangers of investing at a state. But now thinking back, you know, over the years, my advice to others that are in a position of, okay, I want to do this, but how do I take the next step? I think it can actually be seen as a quite simple process. If you are educated in a market that you want to invest in, if you know how to analyze property, and if you have, you know, the longterm vision of what real estate can do for you, I think that's enough confidence to make the next step.   If you know the market you want to invest in, you know how to analyze property, you have the vision, like it's just going to be a mental at that point. So I don't have the exact advice for people on how to make the next step, because it's completely mental. Once you get those three things down, a market analysis and a vision, once you have that, it's all mental. So it's just going to come down to the individual and some people do it. Some people don't and that's fine. It's just mindset and personality.   Michael: How did you find your first market? What did that look like?   Tyler: My very first property that I bought in closed in December of 2016, I went the turnkey route and I felt that the fact that I had a full time job and working 40 plus hours a week, I felt that the turnkey route would be the best option for me to at least dip my toe into real estate. I will say the turnkey route is not always the best method. If you don't understand the partners on the ground properly, like I found out later. So I went to Turkey about found the market in the Indianapolis area. So the Midwest, which had high cashflow potential good acquisition to price ratio and had some of the metrics of a cashflow market, like population growth, job growth with higher wages, diverse economy. This could be a whole separate topic. So I apologize if I'm jumping too far ahead on what to look for in a market.   Michael: This is great.   Tyler: But I'll say that I hooked up with a drinky company out in the Midwest thought I vetted them properly, picked up a property for $37,000 cash back in the day, which is like the cost of a somewhat nice car. But it actually, instead of depreciated quickly, it's actually an asset that would produce income. So yeah, first property turnkey out in Indianapolis.   Emil: I read your blog a bunch and I know you've talked about the experience of this first property and it's such a good one. And I'd love for you to share the story of, okay, you bought this property 37 [inaudible] on paper. It looks like it's going to cashflow nicely. I'll let you take the floor. Tell us about the story.   Tyler: Yeah, yeah, yeah. So this is the best and worst investment of my life. So best in a sense that it got me in the game, right? I'll keep preaching this, like getting the game, getting the game, getting the game, whether that's a good or bad investment on paper, it's kind of a start that snowball. So yeah, $37,000 cash worked with a turnkey company that I barely vetted. I hopped on the phone a couple of times they started sending me leads via email routinely.   Michael: Did you chat with any other turnkey companies or this was the one?   Tyler: You know, me, you know, I didn't talk to anyone else. So it was all, I put all my eggs in one basket and that's kind of also my personality too. I'm pretty quick to trust and that's a double edged sword, as we all know, I'm usually pretty optimistic and very trusting. So that's good and bad, good and bad. So anyways, I talked to this company, you know, I started getting leads. I started evaluating the properties and my simplistic formula of figuring out how to actually calculate cash flow back in the day. I remember, you know, the estimated rents at seven 50 a month for a property that costs $37,000 napkin math on that was basically okay. Let's give the property manager 10% and let's account for property taxes and insurance. But you know, in my eyes, seven 50 a month, taking away all those expenses, I could probably cash flow 300, three 25 a month. We'll call it, which I wouldn't even touch anyways. My plan wasn't to actually spend that cashflow. So I was like, okay, if I could get a few of these properties in the next five years, you know, now we're talking substantial numbers on the cashflow side.   So I acquired this property and then that's when I decided to fly out. So after I actually close on this property in December of 2016, I decided to fly out to Indianapolis in March of 17. I initially wasn't even going to do that, but my parents were like, Tyler, I think you might want to like meet the people you're working with and just see if that property exists. I was actually kind of reluctant, but now I kind of make it a routine to check on my markets annually. We'll call it pre COVID. So we closed on that property. It takes about two or three months to actually renovate. And it wasn't really a big rehab job. They refinished like the hardwood floors. They replaced a window. They did a little bit of painting.   Emil: The turn-key company is doing that for you?   Tyler: Correct, yes. So the turnkey company, I guess the term turn-key by definition means it should be easy. There are some good Turkey companies out there and there's bad ones. My advice is just to vet them properly, if you go that route. So it took a few months to really quote unquote renovate it. And there were some red flags that popped up initially. And those were some things that I've, you know, looking back I've learned from if red flags are popping up, that you're not happy with in terms of maybe lack of communication or miss deadlines and timelines, I kind of became ignorant or I guess I ignored them because I really wanted to just close on this property and become a real estate investor. And so I think emotion took over and in some points where I was like, you know, realistically, I should have questioned these red flags up front, but I didn't. Cause I was like, real estate is a thing I'm going to acquire 10 properties and become financially free.   So I was too focused on that end goal. Finally got that thing rented. We did have a tenant in there for about 11 months. They paid on time every month, seven 50 a month. I took out, you know, 10% for property management. I made sure I had some reserves for property taxes, insurance. And then I just kind of pocketed that cashflow fast forward to the, you know, as I mentioned that cashflow for 11 months, we'll fast forward to that 12th month. My buddy who's actually in the real estate space as well in the Indianapolis market. He randomly drove by my property just to check up on it. And it was like Tyler, there's a lockbox on the front door. And I'm like, what do you mean? There's a lock box in the front door? Like what, first of all, I was shocked and I trusted him, but I didn't know what that actually meant.   So that caused some alarms in my brain, I guess you could say. It was like at that moment I was like, is this real estate thing gonna actually work? Because that was my first real, real big hurdle. And I guess I had to think through from a business standpoint, what would the next step be? So I didn't mention anything to my turnkey provider. I actually kept that quiet to start with. I wanted to get some verification from others. So I then began the process of actually building another team on the ground out there, aside from the turnkey company I worked with. And that was kind of again, why I go back to like this being my best and worst investment. It forced me to overcome these challenges and build a new team on the ground.   Michael: So Tyler was this turnkey provider also managing the property for you?   Tyler: Yep. They did everything. They sourced the deal. They walked me through the closing process, set me up with insurance and insurance agent. They renovated it. They managed it from a property management standpoint.   Michael: One stop shop.   Tyler: A one stop shop, everything you could have in one box there. Okay. So anyways, I called a couple of property management companies had them drive out there, pay them a little bit money to help me out and just verify that it was in fact clearly that the lock box on the front door meant it was vacant. I don't know the whole story. Apparently the tenant had left without telling anyone and the property was vacant and I was never notified. And that was the last straw. So I fired the turnkey company, had another property manager, take it over. I know this story is kind of going on, on and on and on.   Michael: This is all great stuff.   Tyler: We're getting towards the end of that first property. So after having a new company take over management, after vetting a number of them, I really had to make sure that this next hire of a property management company would be right. So I was on the phone, every lunch at work and at night, just talking to people to try and figure out who the best property managers in Indianapolis were finally selected someone. They went out there, cleaned it up, took over management and they crafted a scope of work on what would be needed to get this thing rent ready. Cause my thought was okay, small little blip in the radar. Let's just get this thing cleaned up, get this thing rented again, get it back on the market and get a tenant in there and then start cash flowing again. And then I'll live my happy life. So they go in there, they craft the scope of work. First of all, I'll say the scope of work was probably a little more than I needed, but it was still a bill for $16,000. And I'm like, uh, wait, what? So, uh, so the property cost 37,000 up front. I need to put another 16 K into this thing to get this thing a rent ready. And I was like, there's no way I'm going to do that. Now along those, you know, the first 12 months of me owning that property too, I think I became a little bit more savvy. I actually, I learned a lot more after I had closed on real estate than I had. And so that's when I started really focusing more on the impact of location and obviously like the partners you work with. So my strategy in owning that first property had actually changed within those 12 months.   And I decided that buying in better neighborhoods with a little bit less risk and a different tenant profile would be the strategy I wanted to take. So ultimately I ended up selling that property. I did not put the 16 K into it. I did not think that that property would have a good longterm outlook. And I started buying in better neighborhoods. So long story short bought the property for 37,000, sold it for 41 a year later, took a year of cashflow minus closing expenses or closing costs. I probably netted, I think it was like 2% in a year. So I honestly call that a really big win on my part. I was like, if I could just break even on that first property, I think there's just so much knowledge and education and experience you get from that first property.   Emil: So why did you decide to keep going? This is, I feel like I've heard so many stories where people, something like this happens and they give up and they're like, ah, this real estate investing thing isn't for me or someone who's new has zero properties is hearing this and is like, I don't ever want to deal with this. Yeah. Why did you keep going?   Tyler: I'll give you a couple answers. Some you may want to hear some of you may not. The first answer you may not want to hear is I already had a second property under contract. So by default I had to keep going.   Michael: That's great.   Tyler: But so I was actually really confident after that first property, given all those circumstances and those challenges, I was like, I know what I did wrong. Like I bought in a bad neighborhood. I hired the wrong people. I just followed, you know, my napkin math. And I touched on this earlier. Like I became better at analyzing properties. So the deals would be better. And then again, like just buying in a better neighborhood with a different tenant class profile, that to me was important. I wanted someone who could afford rent and not be challenged by if their car broke down, that they have to decide between the car repair or rent.   I wanted, I guess, a little bit more security. So that's why I started buying in better neighborhoods. But I felt like, you know, after that first property round to the second property, I had learned so much in that first one, I could do it better and I could just get better every time. And so that was, it actually built confidence. And so, yeah, I went through some short term struggles and I think a lot of people will go through that short term struggle period. But if you really think that real estate is something that's going to be part of your life for 40 years, and it's a longterm strategy that one year of education and challenges will just amplify our growth, you know, as you move forward,   Emil: I love that.   Michael: Such a good story Tyler. I've got a couple of questions for you. And then 11 month period, when you were collecting rent and cashflow, did you think that you were a fricking genius that you had just got a dialed?   Tyler: Yeah.   Michael: Me too.   Tyler: Oh, I was smiling. Every check that came in, the first check that came in, I was traveling with my buddies in Vietnam and I remember waking up one morning and I'm on vacation. Right. I'm on vacation Vietnam. And I got a paycheck. I got a check that came in at like one in the morning and I was like, this is unbelievable. I need to keep buying these as soon as just rapidly. And so, yeah. And it's funny because I started off my journey in the content space by just posting on bigger pockets and I kind of posted my life experience and I love going back online and be like, Hey guys, just want to give you an update. I got my payment, my check came in and I'm good. So yeah, it was definitely all smiles for a solid 11 months until, you know.   Michael: Until it wasn't until it wasn't.   Tyler: And so that's what got me back to reality.   Michael: The learning process that you're talking about and the education process that you're talking about, it seems like that'll happen in month 12. Like that was a massive ramp up for you because for 11 months things were good. So you thought you had done everything right?   Tyler: My education prior to closing was not the greatest, but I really started ramping up the education process after I started closing. So that was, I got addicted to podcasts. I got addicted to bigger pockets. I got addicted to just consuming, consuming, consuming content in the real estate space. And that's why I had my second property already under contract. By the time, you know, all these challenges popped up. So I guess I would say I really started continuing that education process, you know, after I closed and I still do today, even though, you know, I've kind of grown in, in the investing space, but it's podcasts, it's books, it's websites, and it's talking to people like you guys.   Michael: I think that's such a big takeaway for everybody listening is, Hey, after you've accomplished the goal of purchasing that property, whether it's your first fifth, 10th, or whatever, don't stop being educated. Don't stop getting educated because I think too many folks sit on their laurels and think, well, great. I did it. I know how to do it now. Yeah. Well you did that deal. Maybe the next one's going to be slightly different. And so there are things you can learn in the interim that are gonna help make that next subsequent deal even better for you. So I love that.   Emil: I feel dumber now than when I first started. When I first started six months in same thing, I'm laughing, I'm getting checks. I'll just do this 10 times and I'm going to be rolling in dough. And then like reality hits and you learn more and then you're like, wow, I know nothing. The more you learn…   Michael: I think it's because we all started so similarly right? Buy one single family house, your purview is no one can see my hands, but they're very narrow right there. It's a very small scope. And then as we grow and expand and learn and educate ourselves, we realize there's this entire investing world out there that is comprised of so many different things. And we know so little about it. So I think that's a great point. And the old that just further goes to illustrate don't stop getting educated. Can't stop. Won't stop. Right.   Emil: Rockefeller records.   Michael: That's right. That's right. So I'm curious now, Tyler, you, you did that deal a couple of years ago, you know, what are you doing today? Where did you go from there?   Tyler: Yeah. So it's been a journey and I don't want to come across as any type of expert. I'll say that, you know, looking back at my timeline, I've been investing for three and a half years now. So started in my late twenties now in my early thirties, I think there's still a long, long, long ways to go. But I will say within that timeline of three and a half years, my strategies have definitely changed. And so, you know, after that first I learned about, you know, the importance of location and really building that team on the ground. So I bought a second property and other single family house I'm in a better neighborhood with a better team.   I then kind of tiptoed into we'll call it the journey of scaling, scaling up. And so I bought a duplex that was like huge for me. So I went from like a couple single families to a duplex that was me scaling up. I think from my standpoint, my strategy now has changed because like you mentioned earlier, Michael, the education process, there's some things I do now in the real estate space that I was not even aware of, you know, a few years ago. And so I tiptoed around and investing passively in larger multifamily complexes. That's how I started off in the multifamily space was literally, you know, I come in as almost like a silent partner, we'll call it limited partner, they'd say invest in my cash in these larger deals for some equity. And then through that process, learn more about the larger multifamily value of ad space.   And that's where I am now focusing on the value add, but multifamily space, the GP role in these larger apartment complexes. But my portfolio is kind of two prominent we'll call it. We had the cash flowing properties in the Midwest and then the work that my partners and I do in Phoenix on the value of ad side. And like I said, in three and a half years, I've learned so much. And like you said, a meal too, like it's such a massive world out there in real estate. There's so many different techniques and strategies that you can go down into some rabbit holes, but yeah, it's a combination of cash line properties and Midwest plus some value add deals with partners in the, in the, in the Southwest region.   Michael: For those of our listeners who don't know what is that LP GP thing called and what are those roles?   Tyler: The term is syndication, which has good and bad, I think connotations or I guess definitions, but it's really just, it's a partnership between two groups. The general partnership group is generally a group of individuals that are tasked with acquisition of a property lending up financing, building out the business plan, building up the strategy, managing the actual renovation and reposition, and then really making all the decisions on whether to refinance or exit or whatnot. The LP limited partner side is a bunch of investors that come into these deals with some capital and with the intention of really not being involved in the day to day, it's a passive investment. It's like any business that needs, that requires funding and you have the team that's managing everything and then the, like I keep saying this, the silent partners that come in with capital to help fund the project, that's the basic structure of what a syndication is, but it's almost like any type of startup even, or any type of business that needs capital to close. And then you execute a business plan and hopefully pay off, you know, yourself as well as your investors primarily   Emil: I know you're a part of a couple of different indications, your general partner in some where you're more active and your limited partner in some others. Right?   Tyler: Correct.   Emil: How did you decide to get into that? And which one did you start out with? I'm curious.   Tyler: I started out on the LP side after I bought my first two houses and then the duplex, I wanted to experience life, not as a landlord to put it bluntly. There's always going to be some stresses as being a landlord. You know, you're going to have the email from your property manager saying a pipe has burst and we need some money or there's a hole in the roof and we need some money. That's just part of being a landlord. And so I was like, well, you know, at that point in my life too, I was really trying to value my time to one of the biggest things I try and follow right now is kind of, there's a quote out there that says, like start with the end in mind. And I envisioned my life, you know, 40 years down the line where I am selfishly bringing in income without really much active work.   That's kind of what my ideal life looks like right now from a freedom standpoint. And so I was like, let's just try out what this passive investing really is. And I know passive is always going to be a loose term, but I felt that if I could hop into a deal passively and try and learn the business plan and a strategy of what value add is, and then tap into the power of multifamily, which is extremely powerful. We're pretty much doing what people call. Like, I call it the big BRRRR. We're finding a undervalued property, repositioning it through innovation and then bumping rents up that leads to additional cashflow plus increasing the value of the property. So I liked that strategy. So I wanted to kind of hop in there, learn from those people passively and then eventually get into those deals more on the active side events.   Michael: So in syndications, I've only done them locally, kind of with friends and family, never on a big scale, but when you were an LP on your first deal, and you mentioned several times that you learned from the GPS, were they happy to answer your questions as an LP? I mean, how did you go about learning this business as a quote unquote silent partner.   Tyler: It's not like a relationship where you automatically become, you know, the mentee and they take you under your wing. Really what I was just trying to figure out was to slowly get into the game. And that was to begin to just review what a, an offering memorandum looks like, what do these business strategies look like? What do the cost of renovation look like? What are the loan terms like? That was the very first step for me. And as an LP, you get to do that because you're reviewing all of the terms and strategies.   So that was a very, very, very first step of me in education. Now, to your point, Michael, there's no way that these GPS are like, yeah, I'll take, I mean, maybe there's some out there, but I wasn't gonna email them and call in and be like, Hey, can you just tell me exactly what to do and how to do it? They're not going to say yes to that. They have much more important things to do. So really it was just being exposed to the industry and the business plans. That was the very first step. Luckily, you know, after that, the second deal. So the first deal I did was in Louisville as an LP, second deal was in Phoenix, which is now with partners that I work with. So through networking, through connections, through some mutual friends, I was able to kind of position myself in a way where yes, I was an LP, but the GPs actually knew who I was.   And so that led to further opportunity down the line. I'm really just through connection and through building relationships. But yeah. So I think to answer your question, Michael, how do you learn as an LP? There's some you can pick up just by being exposed to the industry, but again, you're not going to have someone take you under your wing most likely   Michael: And hold your hand and say, this is..   Tyler: Exactly.   Michael: Okay. Yeah. Cool. Man, So, you know, I am also a multifamily value add guy. I've always done things on my own for the most part. What is it that you look for in these undervalued deals that are right for syndication? If you had to pick two or three things that like, yep, this is going to make a screaming deal. What are they?   Tyler: The first thing I will say is I am no master of acquisition. That's not my role, but luckily I have partners on the ground that are, you know, educated and know the market much better than I do. But really what you're looking for is, as you mentioned, is undervalued property. And that in the multifamily space can be something that maybe it's mismanaged. Maybe they have a lack of capital to make any renovations. So, you know, the properties that we're acquiring generally are occupied pretty well in our market, which is Phoenix, but they're outdated. And because of that, rents are lower than what they could command. So that's one area where value add is really, you can take advantage of is just an old dilapidated property that maybe mismanaged, maybe you're not even collecting rent properly. There's just so many different areas in where you can find that value add. So to answer your question, I mean, what we're looking for is a specific type of asset that is in need of a cash infusion because the amenities are not the greatest and can definitely attract a better tenant with a higher rent.   Now we're also kind of in areas and neighborhoods where there's actually a lot of class A stuff going up. And so we're, we're buying things that we think we can reposition to be just under class A, to kind of create a little bit of a subclass. So similar amenities, you know, the grant granite countertops, the under Mount sinks, new cabinets, washer, dryer in unit, the dog park, that, all that stuff, right. So we're building a property that's right under class a but more affordable. So we're kind of creating that subclass and that's, I think another way that we're protecting ourselves and being able to draw in that tenant and be able to bring in that rent that we've backed. So yeah. Undervalued property and then creating that subclass is what we do.   Michael: Love it. I do the exact same thing, just on a much smaller scale. That's great.   Tyler: Yeah.   Emil: So you've been on both sides, you acquire properties yourself, you've been part of syndications. Do you have a preference of which one you like, or do you kind of mix and match in both in you kind of see that happening in the future?   Tyler: Yeah. I see myself mixing and matching. Like I mentioned, I have kind of two prong attack of the cashflow, the immediate cashflow in the Midwest right now. And that portfolio is small and I still have some time to keep building that thing up. I, you know, I still am attracted to the immediate cash flow of those properties in the Midwest because the bigger deals are great, but they're a little bit more of a longterm play for me. If anyone is familiar with how this structure works, you know, you, as an LP, you get paid out quarterly as a GP. You know, the big pallet kind of comes at the end when you exit. So that side of my portfolio is more of a longterm play. And when I say longterm, we're talking five to seven years, which really isn't super long term. But I think having a combination of both is really a nice way to diversify having that cashflow from the Midwest or wherever your market is in individual properties that I own personally mixed with the passive income on a syndication and then a big pile. Hopefully once those properties are sold and you exit. So I think ideally I continue to keep attacking those two prongs, keep building those portfolios side-by-side and parallel.   Michael: So Tyler, something we talk a lot about in the restock Academy is about risk adjusted returns and that, you know, in the more risky areas we should anticipate and expect and really demand a higher return and the less risky areas say for investment, we could expect a lower return where you willing to give up a little on the cashflow or on the return side of things, making that transition over to a better neighborhood or a more expensive neighborhood.   Tyler: A hundred percent. Yeah. I don't think I had the specific data on what that would actually look like.   Michael: Sure.   Tyler: But to me, even just from an emotional standpoint, I was like, I'd rather have an investment in a neighborhood with better schools, less crime, you know, community amenities, a grocery store. Like I felt that I was a hundred percent willing to take less cash flow for a better neighborhood, but also on the flip side, generally in a better neighborhood, you might have better appreciation as well.  So it's almost like right to me. Yes. I wanted to get out of that CD class neighborhood, get into that B class, we'll call it on my personal portfolio. I'm already seeing a much better appreciation numbers on that side of things. And it just, there's a lot more comfort in, in, in knowing that you have a property in a, that's not in a war zone, it's not crime ridden. You know, it, it's a good suburban neighborhood with consistent cashflow and, and most importantly, a tenant that's going to pay on time. That to me was a lot more important than the amazing numbers on paper in that war zone. That would cause me more headaches.   Michael: Yeah. You bring up such a great point that, you know, on paper and mathematically and physically, sometimes those properties in the war zone pencil out really well and might even perform really well. But there's the mental health side of this business too. And, and I think that's so important so often gets overlooked of, yeah, I can make a killing over here, but I'm gonna make myself crazy and not sleep at night. And so we often say that there shouldn't be emotion when it comes to investing, but there is sometimes is. And that, you know, based on how it makes us how the investment makes us feel from an owner and operational standpoint, I think does need to get factored into the calculation   Tyler: A hundred percent. Yeah. I'm all on board with buying, you know, it's not the A-class stuff that, not the D class stuff somewhere in that middle, you know, BC area. That to me is the most safe investment, at least in my opinion.   Emil: Right. You see a lot of people, you know, they'll, they'll flash the similar situation, right. 35, 40 K home it's renting for basically the 2% rule. Right. So it will be running for seven to 800 and it's just like, it looks so good on paper, but there's all these other risk factors that you have to adjust for. And you have to have the appetite for like, dealing with messes more often than something in a better class neighborhood. So always important to consider that   Tyler: Nice little segue to there on like just evaluating cap rates too. Like people will flash, Oh, I got, I got a 12 cap, right? It's like that's numbers. But like, if you look at it from a perspective of risk versus reward, that's probably going to be a more risky investment than a six or seven cap, you know? So it's been interesting to kind of learn that through the years to that high return on paper, doesn't always mean a high return in real life.   Michael: Well, and also what's your time worth. If you've got to go spend 20 hours a week dealing with a 12 cap property, or you can spend two hours a month dealing with a six or seven cat property, you have the opportunity now to go buy more, you know, go buy two or three of those six caps and make us the same or even better returns. Yeah, absolutely. I think that's such a valid point.   Emil: So we've been ending a lot of these episodes. We used to quick fire questions. We've been transitioning into…   Tyler: Slow fire?   Emil: Think about this for five minutes before you answer. No, it was just a random question that we just kind of riff on.   Tyler: I'm all about that, man.   Emil: I know you travel a bunch. Where's the first place you're going to travel to once all the restrictions are done and like, we can start moving around again.   Tyler: I actually had a flight booked to Paris that I got super cheap and my buddy and I were going to go out there and explore the Dolomites in Northern Italy that is still in the back of our heads. And if, and when travel restrictions kind of open up, I think that's where we might go as the Dolomites in Northern Italy.   Michael: I was just there in January Tyler. And it's unbelievable.   Tyler: Yeah.   Michael: Unbelievable. You can go in the winter. I don't know if you're planning on going in winter or summer, but the ski, like the snow sports, they're the snowboarding skiing, snowshoeing is unbelievable.   Tyler: The plan was to go this summer actually, but just seeing photos of it is like, we were inspired to just find a way to get there. So that would be the first destination.   Emil: I'm looking at pictures now. Cause I had never even heard of it. And it is…   Tyler: I hadn't heard of it till recently as well, but yeah, the Dolomites.   Michael: They get, I think the most sun out of anywhere in Europe, in winter, they have the most like sunny Bluebird days and yeah, just don't have enough good things to say about it. Emil, where are you going to go?   Emil: Well, now that I have a kid makes traveling, you have to think a little bit more. You're like, Hmm, where can we go? That's kid friendly and things like that. Probably a surf trip. I'm thinking Costa Rica, Costa Rica is like one of the more family friendly areas that has really good surf. That's not too far from Southern California. So probably Costa Rica, friends. And I have been talking about doing a trip down there for a while.   Michael: Right on.   Pierre: Michael can we get your synopsis of Costa Rica since you live there as well too?   Tyler: We now have a travel podcast guys!   Emil: Hey this is The Remote Real Estate Investor.   Michael: Bait and switch everybody. Yeah that Costa Rica is awesome, man. It's a super, like you said, I know it's a super easy, but you've been there before, right?   Emil: Yeah, I went there like seven years ago with a buddy. Yeah. Different type of trip.   Michael: The surf is so killer. Yeah. You were also Nicaragua. We talked about that to you, right?   Emil: Yup. Nicaragua's surf is amazing.   Tyler: You've also mentioned Bali to me, Emil as well.   Emil: I sound really cool right now. Cause have you guys been there. I've been there, but yeah, Bali, I need to go back to Bali. It is like surf paradise and there's so many good waves and I will probably watch a video on YouTube three times a week of incredible waves there. And I'm just like drooling. But anyway…   Michael: Drooling at waves.   Emil: That's right. That's right. What about you, Michael? Where are you headed?   Michael: I think I have to go back to Portugal. I'm purchasing some investment property out there and sort of do some paperwork type stuff we need to get back out there.   Emil: No big deal. Just buying a property in another country.   Tyler: Are you going the Airbnb route on that.   Michael: Yeah. So it's the Airbnb it's like professionally managed, but actually we're applying for what's called the golden visa so we can get our permanent residency status and ultimately citizenship out there as well to be able to live and work and travel in the EU without needing…   Tyler: Awesome stuff.   Michael: Yeah. So we're pretty pumped on that.   Tyler: My buddies living in Portugal right now and he's just been working abroad for the last year. He did, he actually did Costa Rica for a while and then just flew to Portugal. And he's, he's actually writing a book right now about working from, uh, working abroad.   Michael: That's awesome.   Tyler: I'll connect you guys with him.   Michael: That would be great. That's something that I did last year too, is a lot of fun. I've actually been to Costa Rica, Latin American then all over Europe. Portugal also has amazing surf, has amazing, awesome waves. Pierre, where are you headed, man?   Pierre: I was thinking to go to Mexico, but I'm out of maple syrup. So I might have to go up to Canada.   Michael: Get up to Canada.   Pierre: Yeah.   Emil: Can't live without that maple syrup.   Pierre: No man.   Michael: It's a lifeblood.   Pierre: It really is.   Tyler: I mean, you even have a piece of bark on your wall back there, it's like yeah.   Emil: It's probably a good spot for us to end this one. Tell her before we let you go. Where is a good place that people can get in touch with you? Maybe ask you some questions.   Tyler: My website is jump in real estate.com. You can find my contact info. They're always happy to hop on a phone call or even just exchange emails with anyone really, really enjoy chatting with people like yourselves. And I'm sure your listeners as well. So I just love talking to real estate.   Michael: Awesome. And Tyler if someone wanted to be an LP and one of your syndications is your website the best place for them to get in touch with you regarding that type of stuff as well?   Tyler: Yeah, I would say that's probably the main route I'd want people to kind of route to me is the website. So jumpinrealestate.com. There's an ask Tyler tab. You can just find my contact info there and, or follow me on Twitter at jumpinRE very active on that, which I talked to Emil and Michael pretty much daily on.   Emil: Yes, follow Tyler on Twitter. Very good follow. Awesome man. Thanks again so much. Really appreciate you coming on.   Tyler: Thanks.   Michael: This was so awesome.   Tyler: Definitely. Thank you both.   Emil: All right, so that's our episode. Thanks again, everyone for tuning in. Before you go and make sure you subscribe to the podcast, you get an update every time we release a new episode and let us know what you think of the show. We're always looking for feedback, leave us a review. Let us know you think what you want to see more of maybe what you want to see less of and we'll catch you in next week's episode. Happy investing!  

In this episode, Micheal, Tom and Emil take on some common worries that friends and family have when you tell them that you are considering taking up remote real estate investing and provide solid arguments for reasoned responses.  --- Transcript   Michael: Hey, everyone. Welcome to another episode of their motor real estate investor. I'm Michael album, and today as usual, I'm joined by Tom Schneider and Emil Shour. In today's episode, we're going to be talking about kind of an interesting topic. Do those around you, not support your remote real estate investing dreams. We're going to be giving everyone today some tips, tricks, and fodder about how to speak intelligently about remote real estate investing. So let's jump into it.   Theme Song   Michael: Alright guys, before we get into this episode, I just wanted to check in with you all, how are you guys doing? There's some new quarantine issues that just came out from the governor and wanted to check in how you guys are doing.   Emil: Welp. Can't go surfing this weekend because LA beaches are locked down.   Michael: Oh no!   Emil: So that's unfortunate, but I got out there this morning in anticipation of not being able to,   Michael: How was it ?   Emil: It was crowded a little bit slow, but it was fun. You know? It's good. Anytime you start the day out on the water.   Michael: Yeah, absolutely.   Tom: Is a bad day on the surf. Better than a good day, not on the surf guys.   Michael: Yes!   Emil: Of course. Michael would say yes, because he's the eternal optimist, I would say. Yes. There's times. I get really frustrated. Sometimes I get out of the water and I'm like, damn it. And I'm just like huffing and puffing on my way to my car and just like, but yes, in hindsight, it's always like, at least I got out on the water and did something fun   Michael: Without being too cliche. I think every time I get into the water, I'm able to think about stuff and I go in with problems and come up with solutions. Even if it's not a great day, it's way more fun. If it is a great day, given the choice between the two, I would absolutely choose better day, but I don't think I've ever had a bad day out in the water   Emil: Hashtag no bad days.   Michael: That's right.   Tom: What I've been doing lately is our community pool… I live in this neighborhood that used to be part of an HOA and there are still some of the HOA amenities, but now it's just like people have the option to join. And I joined cause it's like a really cool feature, but they have really, they need a monitor at the pool just to make sure that people are not bringing in guests and they limit the number of people and a bunch of other County related restrictions. But anyways, so I've been doing that and I've been working from down there. There's really good wifi. I'm out in the sunshine. I've been having some of my meetings with my background, with Emil, Michael and Pierre, where there's like, you know, a pool in the background and every, you know, couple of hours instead of going on a walk, I'll do a Cannonball and a that's the latest little update. And it's been a really, I don't know, I think there's something about being outside and being creative and that feeds into that. So that's been my, my new thing work from pool.   Michael: I'm curious to know what the HOA, you know, if they just everyone mutinied like, no more HOA!   Tom: Right. I think it fell apart. I think in like the seventies or eighties, I gotta, I gotta get to the bottom of it, but uh, yeah, really just random, big pool. Um, I don't know. Yeah. It's cool.   Michael: Killer. That's awesome.   Emil: How about you, Michael? What's new in your world?   Michael: Um, not a whole lot. I've been staying up quarantining at the in-laws and just kind of hanging out in here. It's been hot as ever like the surface of the sun. They lived just outside Sacramento, so it gets really, really hot up here, but we've been playing a lot of tennis, which has been really nice, cause there's nobody on the tennis courts. Cause it's so hot. And I think people drive by and like what a bunch of schmucks, like who's playing tennis, it's a hundred degrees outside. So it's, it's been a lot of fun to just get out and sweat and be outside.   Emil: Nice man.   Tom: Pierre with so many hobbies. I'd love to hear. I think you might mentioned getting in some woodworking again.   Pierre: Yeah. Yeah. I moved into a new place in Alameda and needed some furniture to fit my record collection in this little nook that we have. So I built like a little mid century modern table with some cubbies, for my records and a rack to hang my guitars.   Tom: That's a fantastic quarantine hobby and practical!   Emil: I give up, Pierre's just the coolest out of all of us. Let's just,   Michael: Oh, it's not even, yeah, it's not even close.   Pierre: Now. I got the edge though. I want to build all my furniture. We were looking at buying some online but now it's not seeming as attractive.   Michael: You can build a better.   Tom: I love it.   Emil: Awesome. And for anyone who's new to the show, wondering who that voice was. That is our producer Pierre.     Michael: All right, guys. So I want to break down some of the very common aversions to remote real estate investing and then talk through some of the counterpoints to each of those. I think any real estate investor at some point in their investing career has likely come up against some aversion or caught some flack. So I want to talk about the first one that I think might be one of the most common ones. And that is how could I possibly ever invest in real estate remotely? I don't know anybody in inter X market here. Tom, do you want to take a shot at this one? And then, you know how you would respond to someone who's throwing this at you?   Tom: Yeah, totally. And what a relevant first topic for the remote real estate investor. So I think a common misconception about real estate investing is that it, you are a lone wolf in and out doing on your own. And that is so far from the truth, especially, uh, as a remote investor. So what I would say for this is you should invest as a lot of time in building your team just because you are not in the region, you're specifically your local property manager. That's really going to be a key key point of being able to do this remotely. So a way to, you know, go about that is have a very thorough vetting process of identifying, sourcing and vetting your local property manager. And one of the great things that Roofstock does is when we open a market, what we'll do is we'll find from word of mouth and looking it up online, the top 20 local property managers. And from there we'll do phone interviews. And from there, we'll cut more down to where we have about five of them. And then we'll go into the office and visit them, get their standard operating procedures, get their, a copy of their lease that they use, get all of these different and then say, okay, yup. These are good guys that we would recommend. Now me as an investor, if there's a company that's doing that, that's great. That gives me a head start, but I will still take the time to vet them myself. One of the aspects we have within Roofstock Academy is some pretty thorough interview templates for talking to property managers and identifying good ones. But to combat that is you have a really thorough process of building your team local there on the ground. So, you know, once you have identified that property manager that is going to be your remote eyes and ears is really not that different than doing any kind of local investing. Once you have that trusting partner   Michael: And Tom breaking down that big rock into an even smaller bite sized rock, how do you go about finding these people? If you're not investing through Roofstock and they are not doing it for you, what's the actionable step that people can go take to go meet or start talking to these folks.   Tom: I always put an extra points on referral from people that I trust and know. So I'd say if you can get referrals that way from either lenders or other investors, you know, that's a great place to start, but you should expect what you inspect. So you need to go in and expect it in, inspect it to now that is a mouthful.   Michael: That's a tough one to say.   Tom: Yeah, yeah. We use that saying a bunch of our, the last company that I worked at, but the gist is if you don't do the work to verify, you should expect that it's not going to be that awesome. So you need to put in a little bit of the work of talking to these partners. So I digress a little, I guess let's see. I'm going back to your question. What was your question?   Michael: It was how can someone go find these people?   Tom: How can they find people? So, okay. References number one, number two, don't shy away from looking on the internet of just searching the city of who are the major property managers. And you know, this, isn't making the decision on who you're picking. This is just building that initial list to widdle down with conversations on the phone and potentially in house visits to make sure that it's all buttoned up and such. But I'd say again, your greatest resource would be getting referrals. Bigger pockets, I think on their forums have some references of some potential local property managers, but I would definitely expect what you inspect. So make a point of doing that. Like work.   Emil: One of the thing, I want to point out with this one, cause I remember getting this one a lot. When I first started investing, you know, people would be like, you're going to invest where across the country, like that's insane. What if something happens to the property? What if it gets vandalized? What if this and that? And the thing is, is those things happen, whether you're local or you're investing remotely, right? It's not like if you live 15 minutes away from the property, things aren't going to happen. Things are still going to come up no matter where you invest again, it's just making sure you have a partner. And that's why we keep talking about this property manager. Who's invested, who cares and who is a good member of your team. That's one of the big things we're going to be talking about is, you know, you hear a lot of real estate investors say you have to build a team. This is a team thing, especially if you're investing remotely. So that's the big thing is things will still happen. It's just a matter of getting the right partners to help you handle all these things.   Michael: You guys nailed it. I have nothing to add. The one thing I would add is that it really forces you, which I see it as a pro. Some people might see it as a con, but it forces you to get really good at time management. Because then they'll just like you said, stuff's going to happen. Whether it's next door or whether it's across the country. So if it's across the country, you've got to rely on people to take care of that. You've got to have set the systems up and placed on, like you were saying, to be able to have that dealt with without you needing to become involved. So if it's next door, you're going to be tempted to go fix it yourself or go deal with it yourself. But if it's across country, you physically can't. So being really good at time management and task delegation is I see it as a big pro.   Tom: I guess one last thing I'll say is, you know, ideally the home that you own and you're renting out is close to you, but there are so many benefits to investing remotely. Like you have access to so many more properties, so many different types of returns, such different like economies, like that makes it a little bit of barrier to entry is doing that extra homework of finding that great partner. So for me, being able to access these cash, flowing properties all over the US that extra work of finding the good property manager and then vetting them and building that relationship is worth it.   Michael: Yeah. And to that point, I mean, what's the alternative here, not investing or not investing remotely. And if you're in a really expensive market, you might not ever be able to break through. So if it's invest remotely and learn a bunch of stuff or not, I'd say you can't afford to not learn how to do some of this stuff.   Tom: Word.   Michael: Okay. So let's move on to the next one. Uh, so many times I hear people say this, I know someone who tried to investing in real estate and they would take these midnight calls, fixed toilets. I don't want to do that. Why would you ever want to do that? Emil, you wanna run with this one?   Emil: Yes. So this is another common one, right? So people say, okay, I get why you want to invest remotely, but are you going to handle fixes? What if someone calls you? And again, this goes back to what we were just talking about. It's this is why you hire third party, property manager, again, building the team, right? I would say the property manager is one of the most important pieces of your team. And the thing here is I don't know how to fix most problems, right? I would call a handyman or whatever anyway. Right? So the property manager is just, they're just your barrier. They're taking in those calls and they're finding a local specialist. Again, you're not going to be good at everything in your business. What you want to do is hire the professionals who are in the property. Management is the best that operating your property.  I would probably do a much worse job and I'd spend way more time than a property manager who does this for a living. So the rebuttal to that question is while I'm going to hire a third party property manager, who's an expert in the area. Who's going to manage it for me. And in return, they take a certain percentage of my rent each month. The other thing is the important thing here is this frees up a lot of your time, right? If you're constantly dealing with your operational stuff, you're not going to be thinking about how can I grow this? How can I scale it? A lot of us who are doing this, we have full time jobs, right? Like instead of fixing things on the weekend, I could be thinking about how can I start a side gig, earn more money or whatever. So I can go buy more properties, which I would argue is more important than handling the day to day stuff.   Michael: It's so interesting. I think people in the day to day world in life can really wrap their head around hiring professionals to do things, right. Nobody says, I'm not going to go buy a car because I don't know how to fix it. No, we all take it to the mechanic. I think it's the same thing with real estate and with investing where people are. So whatever reason can't get their head around that you might not have to do that, that kind of stuff. There are professionals that will take care of it for you.   Tom: Right. It's such a great point. I, I love that, your, uh, isms, Michael isms. I think we'll say, I think in talking to a lot of people who are interested in investing in real estate locally, they're like, yeah, then I can go and I can run out and paint the house when, or do these things that happened. It's like, no, you don't have to do that. And you know, we were talking about these costs that you incur with either repairs or maintenance or paying your property manager, but those are good costs to pay. And also at the end of the day, it's going to help you on your tax basis. It, you know, there's just so many tailwinds in doing this.   Emil: One last thing I want to add here is you can always later down the road, maybe you're ready to retire, right? Maybe you have X amount of properties. You have enough cashflow coming in. You want to retire. Maybe at that point, you feel confident enough where you do want to self manage. If you go back to episode five that we did with Chris Bennett, he talks about how he self his properties from thousands of miles away. I personally probably won't get to that point. I'd rather let somebody else deal with it. But it's always one of those things where I think you can even just observe your property manager for years, learn how they kind of run everything. And then if you want to down the road, you can switch back or switch to self managing. If that's interesting to you.   Michael: Funny, I think the longer I invest, the less I want new self-manage. I realize how much goes into like yeah, no way.   Emil: Yeah, same. I had somebody who I was talking about. Who's looking to buy a property on Roofstock and they were asking me the same thing. It's like, should I self man? He's like, I'm actually thinking about self managing first, just to like, get an idea of how all these things work and then handing it over a property manager. And I was like, if anything, I would do the complete reverse for all the reasons I just mentioned. Like, dude, you're brand new. Don't don't do it. It's going to be a nightmare. And you're never going to want to invest in another property again. Promise   Tom: That's the Emil Shour guarantee.   Michael: Awesome. Okay. So the next one I want to touch on is something I'm sure we've all heard a lot about, and it's that real estate is such a risky investment. Look at what happened in 2008. And so I'll take this one. If you guys don't mind, you know, my response is you're spot on don't invest. No, just kidding. I would say, you know, 2008 was the direct result of poor lending practices and those have definitely since changed. And so I don't anticipate seeing a financial disaster as a direct result of poor lending practices again. Don't misinterpret that as me having a crystal ball, that's just my personal opinion and be very may well see a financial disaster from other, but the poor lending practices seems to have gotten cinched up pretty tight. So I would actually argue that real estate is often a safer investment than the stock or the bond market.  And I think so often people say, okay, real estate is risky, but these other things aren't, there is also people that say real estate is risky, put your money in the bank. And to that, there's all kinds of counter arguments and counterpoints that are all based in fact about inflation and how you actually lose money. If it's just sitting in the bank, if you're not earning at least the inflation return, but so in looking at growth, the comparison to simply stocks, bonds, and real estate. So with real estate, there's just such a higher degree of control. The tax benefits and potential returns are typically going to be better than your average year in the stock market. I think it's pretty well accepted that stock market returns average between six to 8% in any given year real estate, you can do significantly better with that from a pure cash on cash return perspective that doesn't even account for the tax benefits associated with it, as well as the appreciation and loan pay-down equity that you're essentially buying into your property. So I personally I'm drinking the Koolaid. I think there are tons and tons and tons of facts and figures that you can throw at someone that's saying, Oh, it's such a risky investment. My guess is that they probably haven't invested in real estate. And if they have, they aren't looking to do the same type of thing you're doing remote investing with a property manager. So I just want to make sure that everyone's comparing apples to apples. Whenever they're hit with something like this, you really want to understand what's being talked about.   Tom: That's great and a good overview of like all the benefits of why, at least in our opinion, like the benefits outweigh the rewards. And what I love about drinking the Koolaid is there's so many different flavors of the Koolaid. So I kind of switch off on which one I'm most excited about. So the tax advantages is great. The immediate cashflow is great. The appreciation is incredible, but the Koolaid I've been sipping a little bit more of is the loan pay-down aspect. And it's just crazy. You can borrow like a hundred thousand dollars and someone else will pay it off for you. Like, I don't know, like wording it that way is really kind of mind boggling of how incredible investing is. So even if you're not cash flowing, say your cashflow is zero, but you still have a loan on the property. And you're not paying that loan. The person who was renting the property has paint alone. It's like obscene right property after you get a free property. So anyways, just kind of in your, going through your ran, I was just thinking of what is currently spinning through my mind a little bit heavier on like, wow, it's unbelievable. How much of an opportunity is. So anyways,   Michael: I thought you were gonna say that you're really excited about sour green, Apple Kool-Aid flavor.   Tom: That might be the loan pay-down is the sour green Apple.   Emil: Oh man. Kool-Aid when you're a kid and   Michael: The best, the best. How do you guys feel about Hawaiian punch?   Tom: I think American tastes have gotten a little bit less sweeter. At least I could rant on this for a little bit, but I'll finish it. There's been a shift in American culture kind of going to more subtle. Like if you look at like Hintwater LaCroix, if you compare like the drinks that are consumed today, versus the drinks that were consumed like 10 years ago, it's like hummingbird water back then. So I think I have a feeling if you had some Hawaiian punch, like you would be like, what the heck is, this is this like, meant for like a hive of, of hummingbirds, like anyways,   Michael: And it's that bright red too!   Tom: But the great thing about Koolaid is you don't have to put all the powder in. You can make it culturally adjustable by just putting a little bit of it in and boom, welcome to 2020, just 10% of it and have it. All right, go ahead.   Emil: I don't know how I can follow that up with something serious, but just to finish this section, I remember we had this blog post on the Roofstock blog talking about how did single family rental returns compared to stocks and bonds. And the Roofstock team did a little study. It was from 1992 to 2017. So a 25 year period. And if we found that single family rental returns were nearly identical to stock returns and the outperformed bonds with far less volatility. So that was one other thing I wanted to highlight here as well. Plus all the other benefits, like we talk about like tax advantages and all that, which I don't think was factored into this study.   Tom: I'm almost sure it wasn't.   Michael: Yeah, that makes sense. Because everyone's going to have a different tax basis.   Emil: Yeah. This was just looking at returns.   Michael: Okay, cool. So one of the last ones I want to touch on which we can all kind of tag team, but I kind of want to give it to Tom to give him a runway to rant. But so many people I've heard say owning real estate makes you a greedy landlord getting rich off the backs of other people. Tom, what would you say to all those people?   Tom: I think that people need safe housing, people need housing, and this is just kind of part of the wheel of providing that. So like I think above all, and we've talked about this before an earlier episode, like at the end of the day, it's about like habitable safe places for people to live. And I think as an owner, that's like a key part of the responsibility, so sure. Their incomes earned. It's like a little business that you own with every single one of the houses. But at the end of the day, like at this, we're talking about people's where they live and being able to provide that is valuable.   Emil: I think anyone who kind of believes this, I think you should a hundred percent become an owner because then you'll have a better idea of both sides of the coin. Right. You'll have owned, you'll have rented, I've rented, I've owned. I think having been in that spot right where you're a renter and you know, you've dealt with a landlord. I think it makes you more empathetic to your tenants. Like I want to provide a safe habitable unit, like Tom mentioned for those reasons. Like, if you're, if you're a good person, you care about other people, it's not like you're going to become an owner and all of a sudden just be like terrible person not providing for them. So I actually just, if you believe that, I think you should become an owner and just have experienced on both sides personally.   Pierre: As a renter, I have to say that it's way better to have a cool landlord.   Michael: Yeah. It's way better renting experience to have a cool landlord. Someone that's a real person as opposed to just a machine.   Tom: Yeah. And I don't, it has to be so black and white at that. Like you're only trying to maximize your return at every single look. I think there's a lot of places where that makes sense, but there's this humanity aspect. So one of my tenants, you know, started just recently had some issues around payment on like an employment and stuff. And you know, I talked to the, reached out to the property manager and said, Hey, you know, is this, is this something, you know, that has to do with the virus or they cause I'm very open to helping them out. Like if we need to make some adjustments or some concessions, you know, as an owner in real estate, you don't have to put on the monopoly outfit and just, you know, drill people into the ground, like, like half a conscious, like this is a good business to build wealth, but it's multidimensional, right? Because you're owning a place where somebody's living at. I think that's a really important aspect to have some humanity as an investor. So it's not, you have to go down this one path, right. You can do business consciously.   Michael: Yeah. And to anybody out there that thinks this or anybody out there that you know, is, is catching this type of comment from other people, I'd say, look, you need to understand what actually goes into real estate investing and real estate investors pay tons of money every single year to local school districts in the form of property taxes. So I'm not sure how that makes them greedy, but I would also follow that up with asking them how much money they contribute every year to their local school districts and see what they say. So there's so much money that gets poured into the local economy via real estate investors. And that comes in the form of real estate taxes, property management fees, paying local vendors for goods and services. So, so many investors spend a ton of money on these properties and local neighborhoods that actually are making them more attractive and welcoming, which can often lead to safer communities. So it's so easy for someone to just see one side of the coin and say, Oh, you you're collecting rents. You're making money off this person. Well, yeah, but also there's the other side where I'm contributing to society, paying taxes and making the schools better. So if you want me to stop doing that, that's a different conversation, but you really have to understand both sides of that coin to have an intelligible conversation about it.   Emil: Bravo, sir, drop the mic, please.   Michael: Mic drop it and walk away from that person. And just kind of in this same vein, I would also encourage anyone who comes up against any kind of resistance to really try to have a discussion with that other person about why they feel the way that they do. And try to understand why what they're talking about may or may not be applicable to your personal situation. Because I think real estate investing is this huge, huge topic. On the podcast, we talk about the remote real estate investing, which is one kind of niche of that, but there's so many other different topics and variances on real estate investing. So a lot of people here real estate investments like, ah, they're evil, they're the worst people in the world. Well, okay. Yeah. There might be some that are evil. It might be some of the worst people in the world, but you don't know me necessarily. And so let's try to understand what you're talking about and what I'm talking about. Cause so often they're not all the same thing.   Emil: I like that well said.   Michael: So just curious. I mean, have you guys ever run into any type of these comments? Have you gotten any flack for, you know, doing something that's maybe perceived as different from what your peers or others were doing? Emil: Yeah, definitely. I mean, I've mentioned on other episodes. My dad is a real estate investor here locally in Los Angeles and he thinks, you know, I'm kind of crazy. It's still, uh, when I was first starting, especially like what you're gonna buy property, where again, and it's common for people to feel that way because traditionally, everyone felt like, you know, my dad's whole thing is like, if I can't see it, touch it, feel it, there is no way. And that's fine. I think for some people, it just doesn't work mentally as just a blocker. But like Michael said, I think it's about being open to different things. And again, if the option is, do nothing or invest somewhere else to me, I'm not going to let that stop me personally.   Tom: Yeah. I think so many people have preconceived notion of what it means to be a real estate investors. And they have this idea of them running out with a hammer and taking the call and it's like, no, it's different than that. It's way more passive. It is way more team-driven, which has kind of been a theme of this episode. So throw away or assumptions on what it looks like and, and come to Roofstock Academy. No, but throw away your assumptions on what it looks like and look at some of these different strategies that we're talking about. If you're looking to do it in a more passive way and not throwing so much of your time of trying to make it work. The other comment that I've heard from some friends is, and this goes again, I think the greedy landlord piece is, you know, someone teasing, I was talking about real estate investment, like, Oh yeah. Always money and being a slum-lord. I'm like, you know, get outta here. Like I think, as I said, like there's a wellbeing aspect and like having these safe habitable places and working with your property manager to make sure that's part of your brand at the properties that you have, you know, it's, it's not about cutting corners and like maximizing every dollar. There's so much more to that.   Michael: Yeah. I totally agree.   Tom: And several of my friends have now invested, so I, uh, won the day. So go ahead.   Emil: And that was the point I was just about to make is I think when you network with other remote real estate investors and you realize there is an ecosystem of us doing it, it makes you feel a lot more confident. So if you don't know anyone else who's doing it, I highly recommend getting in touch with somebody network with them, talk, join groups, join, whatever. Just say, like build that network. I think it's, it's invaluable to have people around you who are doing things similar to you.   Michael: Yeah, absolutely. You know, when I first started investing, like you both, I caught so much of that flak of you're going where to invest, you know, why, what, that's stupid, you're there. You're crazy. And I'm like, yeah, well it makes sense to me. So, and now most of those friends I haven't since invested to, Oh, they see what's going on here. But yeah, so much of it too was I felt like this lone wolf, I didn't know there was a community out there. I didn't know the other people doing this. I just heard, yeah. People invest in real estate, but I didn't happen to know very many of them to ask them, you know, am I crazy? Is this insane? But now I realize no I'm laughing all the way to the bank. All right guys, any final thoughts on this stuff?   Pierre: I have a question in this vein of remote versus local investing. When would it make more investment sense to invest in your local market as opposed to remotely, if you live in an expensive area?   Michael: Super good question. I'll let you guys take it first.   Tom: I'll take the first stab at it. So excellent question Pierre of, when does it make sense to invest locally versus is remote. And I think it all has to start at what is your investment thesis? Like? What is your end game map? If I live in an area where I don't necessarily need the cashflow right now, and I'm pretty bullish on appreciation, I live in Northern California where properties are a little more expensive. Maybe it does make sense to invest in a property out here locally. If I'm looking for a property where there's a little bit more of a blend of appreciation and a bit more immediate cashflow, then maybe it would make sense to invest remotely. And to kind of get us to rephrase a little bit is, you know, what kind of returns are you looking for? Like if I had to make this analogous and that's right to like the stock market, like, am I investing in a growth company or am I investing in a new startup, but am I setting a value investing? Like what kind of strategy? And I think that will answer the question on where you're doing your investing at.   Emil: The only other thing I would add there is I think comes down to your comfort level. If you just can't for whatever reason, get yourself to invest remotely. I don't think you should just not invest. I think if you can invest locally, go for it, right. If you just can't get over the remote factor and you know, like you could be making better returns elsewhere. The thing is, is there's people investing locally doing insanely well and there's people investing remotely doing insanely well, I don't think this is a, you have to go local. You have to go remote. I think it's just by your comfort level, how much money you have to invest, you know, just your strategy and that your thesis, like Tom mentioned   Tom: Price point, great point. And also the volume of homes available. I mean, you're limited just in your own backyard of how many homes are for sale. Go ahead, Michael. I see you.   Michael: Yeah. I see you too buddy.   Tom: The light in me sees the light in you!   Pierre: Namaste!   Tom: Namaste   Michael: You know, from avatar, we need to hook up our ponytails.   Tom: Yeah. I'm touching the microphone.   Michael: So the last, I think those are both really great points. The last thing I want to add too it, is what the goal is and what are you trying to accomplish? But one thing I don't think that it has mentioned is the idea of house hacking, which is kind of this concept of you buy a house bigger than you need or a place bigger than you need and you live in it and rent out the other room. So you're kind of getting the best of both worlds and a kind of hybrid approach with, I have a place to live now and I'm making some rental income alongside with that. And so if you do that well enough, you could absolutely see similar returns to a traditional investment property at distance, but get the benefit of living in a house locally. And so what I think is really important to look at as the true opportunity cost and true total cost, because if you're investing somewhere else and continuing to rent while there's a cost associated with that, versus if you buy a house hack locally and are living in it, well, there's a different cost associated with that, but you're not paying rent anymore. So look at the whole picture. And I think just like Tom mentioned, you know, look define what your goal is. So I think I ha how's hacking is a really, really great way to get started in real estate investing and kind of get two birds with one stone and then just like Emil said, what the price point is and what your, you know, you're only going to qualify for X amount of dollars in a loan if you're going that route. And so that's going to be a limiting factor as well.   Pierre: What about buying from a family member would buying from a parent, make it more interesting in the way of tax benefits or anything like that?   Tom: I mean, a huge way to get ahead in real estate is any kind of discount to valuation. So like if there's any kind of sweetheart deal with that, I mean, you don't want to take advantage of your parents, but like if they're like open to giving you a little bit of a discount, like, man, that could be an immediate, huge head start because you already have like a little bit of equity in the house where some of the tools that we talked about pulling out equity, like cash out refi or HELOCS or all of that stuff like that can give you an advantage there in just the question of like, let's say you're paying fair market value. It really depends on if that house fits your investment thesis. So looking at the type of returns that you would get, then if it fits that then great. That makes sense. I'd say just kind of like specific to your question around family members. Like if you're able to get a little bit of, maybe it's not sweat equity, it's love equity. That's a huge step up.   Michael: One other thing too, that I've seen here that works really well. Especially if the house is owned free and clear is your family can finance it for you basically be the bank and you pay them a monthly payment as opposed to getting a mortgage. You can just get, you know, you guys decide what the terms are amongst yourselves. And it's so much easier. The one thing that I definitely would encourage people to look out for and I harp on this literally every day in the Academy is property taxes and especially if it's in California, because I asked my attorney once I was like, what if I just sell this house to my wife for a dollar? Because my property tax base is X, what my property tax has dropped to a dollar. And she's like, yeah, no, that's not how it works. If it's, if it's priced way under market, they're going to assess it at the fair market value and tax you on the fair market value. So even if you're getting a discount on the purchase price, that's great. You just want to be aware of what the taxes are going to look like after the fact. And especially with a lot of these family properties, they've been in the family for so long, they were purchased at such a low tax rate. So being aware of the tax rate and what that's going to jump to is really important for sure. It's going to move in California, but you just want to be aware of it. If you're in another state doing this type of deal, just be, you know, find out what that tax rate looks like. But great questions, man.   Tom: I got one more for this. So in the theme of this episode of your friends being able to speak intelligently, when you're, when people try to talk you out of investing in real estate, why aren't you just buying somebody else's property? Isn't there like a reason they're selling it? Why, why, why, why   Michael: Is it trash?   Tom: Isn't it trash if somebody's selling it, it must be a bad deal or something wrong with it. Michael, would you like to lead this one?   Michael: Yeah, it's a super great point and a really great question. I think I hear all the time in the Academy. I mean, it's just goes back to one. Man's trash is another man's treasure, but also you're probably not buying trash. I mean, people sell for any number of reasons. So we'd never know a motivation unless we ask. And so often sellers are selling out of desperation, whether that's, you know, divorce or they need cash for something. So it could be a really great property, could be really great deal. They're just selling it because they need the cash. They could also be selling because they got a nonperforming assets to be performing. And now it's really great. And so we talk about that a lot is adding value. You buy a crummy property, you fix it up. And now it's a really nice property. I mean, that's what turnkey is. Someone is selling a perfectly functioning and performing asset. And so giving people an opportunity to buy it means that they get to make some profit in the middle. So I definitely definitely disagree with that wholeheartedly. I think that people need to understand that there are so many reasons why someone could be selling a property.   Emil: No, the only other one I would add is what we call a tired landlord. So someone who just been doing this for 30, 40 years, they're done right. They've maybe they've been managing it this whole time by themselves. And they're like, I'm just, I've made my money. My market has appreciated. I'm going to do well on the sell. I just want to get out of the business. So they're tired and they just want to move on. That's another one.   Michael: I love how you said that. They're just, they're just exhausted.   Emil: Just, just tired man. I could,   Pierre: Did you have your dad in mind when you're commenting on this?   Emil: My dad is such a, such a tired landlord. He's an exhausted landlord. He is. He is just like, pardon me. Thinks he loves complaining about being a landlord though. It's just like in him that he likes to compete. It gives him a discussion topic.   Tom: Yeah. My comments would be on this is concerns around, you know, why is the sellers have a process and the way that you evaluate the homes that is consistent. So once the property goes through the ringer where you're looking at, you know, condition value, tenant, if they're, it is occupied, all that stuff, you can really make the assessment. If it's a good or a bad deal. And don't overthink seller motivations, just like Michael said, there's going to be any number of reasons within Roofstock there's all kinds of different types of sellers. There are individuals, there are bigger institutions, there are funds and sometimes the funds just expire or sometimes they move, you know, the geographic concentration, they might move to a different market. So I wouldn't overthink it and just do your homework and follow the right steps and doing your evaluation of the property.   Michael: Okay. So now I've got a question for you guys kind of a fun one. And just so all of our listeners know, I didn't tell a meal pier and Tom, what the question was before we started recording this. So they are totally going to be blindsided by this. And it's a, it's a pretty traditional question. It's one that, you know, I think is asked pretty regularly of people, but I put a little bit of a spin kind of unique twist to it. So the question is you're stranded on a desert Island. There's the very typical question that I want to know the answer to of what two items would you sum into your location to help you escape to survive? But also I want to know where's the most ideal setting for said deserted Island,   Emil: Bali, a surf board, because the waves are going to be amazing deserted Island. I'm just, I don't even know if I'd want to leave. Honestly. I'm not trying to get out of there if I'm just stranded in Bali, no one around amazing waves.   Tom: Do you guys watch naked and afraid?   Michael: Yeah. It's so good.   Tom: What would your survivor score be?   Michael: Oh, I would start it probably a six and end at a 7/8. Oh, underdog performing. Sorry. I interrupted. Go ahead.   Emil: Alright, so I'd want to surf board item two…   Tom: Are we picking locations or picking what we're bringing with us? What's the situation?   Michael: Both! Emil: A laptop that has a never ending battery and access to internet.   Michael: No dude, we're not playing this “imagine if the best invention” game.   Emil: You did, you did not give me any rules, constraints. It's up to my imagination. Creativity.   Michael: All right. That's reasonable. And the first thing I would do is use said computer magical computer to get a ticket for my wife and daughter to come join me at the Island.   Tom: So, if you're going down, you're dragging them with you.   Emil: That's right. Tom, what would you, what would you bring and where would you be?   Tom: I think I'd be on the oldest Island of the Hawaiian islands. I'd be in Kauai just because it's, you know, lots of fish around there. I would bring some Kool-Aid from 2000 just cause I know it's diluted. I could just use a little bit. That's going to last me a very long time to match my 20, 20 taste buds. It would last a very long time and yeah, I think I would somehow finagle my wife and son to come join me too with that magic computer that I would borrow from Emil. So there we go. I got Kool-Aid and magic computer.   Michael: All right, Pierre, where are you stranded and what would you bring?   Pierre: Hmm, maybe somewhere in the Mediterranean, like Malta and I would bring a guitar and a hatchet.   Michael: Nice see. Pierre's the real survivor here.   Tom: Which guitar?   Pierre: I'd bring my acoustic. Probably my Taylor. Yeah, my guitar and a hatchet. Cause I forget what the saying is exactly, but it's with a pocket knife, you can survive, but with a hatchet you can live like a king. a nice I'd built some stuff for sure.   Michael: Nice.   Tom: You're already practicing. You're hurting right now. We go to peers does desert Maltin paradise and he's mid century. Nice couches beds built. Starts a popup shop.   Tom: You're turn Michael.   Michael: I would probably go to be in Bermuda because I hear some crazy stuff happens there. I'd be very curious to see what's going on. My two items would probably be a satellite phone so I could order all kinds of great stuff. And if I say anything other than hatchet, I'm looked like a chump. I think I should also bring a hatchet.   Tom: Your survival skill just went down. Your Pierre's survivors went down because you had advanced tools.   Michael: I could have brought a chop saw.   Tom: Yeah. You just went to a 5.5.   Michael: Oh, it's such a ridiculous show. Naked and Afraid. But it's so interesting to see what people bring I'm waiting for the day with two people bring the same thing. Like they both bring a lighter and like, Oh crap. Like we didn't talk about this beforehand.   Michael: Well, that was our show. Everybody. Thank you so much for listening. We hope you enjoyed it. Don't forget to give us a rating or review wherever it is. You listen to your podcasts, subscribe as well. And we look forward to seeing you on the next one.   Tom: Happy investing.   Emil: Happy investing.  

In this Episode, Tom, Michael and Emil talk about the element of luck in real estate investing and how to put in the work to be ready to move when opportunity arises.  --- Transcript: Tom: Greetings and welcome to the remote real estate investor. In today's episode, we're going to be talking about the concept of chance luck. It goes by many names. And how does it apply to real estate investing? How can you tip the scales in your favor and what are the hosts thoughts on the different aspects of luck? All right, let's do it.   Tom: All right, guys. So today's episode, as we alluded to in the intro, we're going to be talking about the elements of luck and how it applies to real estate investing. And before we get into any specific, I'd love to hear from both you guys, a meal and Michael, are you guys lucky? What are your thoughts on luck and real estate investing at a high level and lucky that's, you know, I ask that questions in your life. And it's a interview question that a lot of companies use where they ask if an applicant is lucky and they take luck, which I think might be a theme, at least for me, in this episode of, by putting a lot of little things in your favor, it can generate luck in your favor. So anyways, Michael, you go first, go ahead and spiels your kind of thoughts on luck.   Michael: And yeah, so, you know, I thought for a long time that I was a very lucky person, things kind of seemed to go well for me overall. And then I think it was my dad who first told me that luck is just preparation, meeting opportunity. And I wholeheartedly believe in that. I think that people who are lucky or who appear lucky from the outside are probably doing a lot of things that go unnoticed. And an  analogy is like a duck treading water on the surface of like super calm. But underneath there is so much going on and the surface wouldn't look the way it did, if what was going on beneath the surface wasn't happening. So I do consider myself a lucky person, but I also think that I spend a ton of time, energy and effort preparing for the opportunities that I seem to encounter.   Tom: I love the visual, the visual just got me.   Michael: Yeah Emil, what about you?   Emil: Michael, you're such an optimist. Every time I talk to you, I'm like, I need to be more like Michael and just be just super optimistic. I'm kind of, it depends on the day you ask me, I was chatting with somebody the other day and it feels like the moments you're unlucky things just pile on, right? You have a tenant issue or things that feel like headaches and make you feel unlucky. A lot of times in real estate investing for whatever reason it is, they pile on top of each other at the same time. And then you have these mud like months go by and you're seeing your property value go up. You haven't had any tenant issues, no big maintenance costs. And you're like, man, I'm so lucky. I'm collecting passive income, not doing anything. So for me, I'm kinda, there's times where I feel super lucky and times where I feel unlucky. So I don't know.       Tom: I like that for you.   Emil: Straight answer for you.   Tom: It comes in bunches.   Michael: Yeah. When it rains, it pours. Yeah. Who's got any more platitudes to pile on.   Emil: We're getting real basic on this episode.   Michael: What about you Tom? Do you consider yourself lucky?   Tom: Yeah. I consider myself a lucky person. For sure. I think it's similar to, like you were saying, Michael it's where preparation meets opportunity. There definitely are things outside of your control where no matter what you do, like things can go up or things can go down. But as a whole, I'd say the arc tends to go towards, you know, taking care of the little things and all that stuff adds up or not taking care of the little things and all that stuff adds up and tends to bend towards whatever. I don't know how you would put it either your work ethic or just taking care of knowing where to put the work in is really important. So I, you know, yes, there is definitely some elements of chance and luck that are real, but generally speaking, I think a lot of times people create their own luck. So how I want to apply this to remote real estate investing is I've broken down categories where I think chance exists and we're going to go through all of them and talk about them. The ways that we can tip the scale in our favor and the categories I have selected. And you guys, we can add some other ones, but we're going to jump into each one is property value. So appreciation kind of like neighborhood related stuff, the tenant. So either evictions or renewing leases or the rent going up, the property condition, repairs and maintenance and acquisitions, those are going to be our four key categories. And we're just going to spend time in each category, knocking them down and onto the next one. So it makes sense, guys, let's do it. Let's do it. Alright. Property value, Emil. Why don't you lead us on this one? So let's talk about the different aspects of luck in property value.   Emil: So for me, the big one here, the luck part of it is choosing an area that appreciates, well, I think it's probably two things choosing a market that appreciates well and choosing an area within that market that seems to be appreciating is more desirable than the other parts of town. Those I would say are probably the two luck aspects. Do you guys have anything else to add on property value?   Tom: Yeah, I'd say there's, you know, with property value, a way to get above the fold of the luck is just looking at all those variables that go into appreciation and there are several of them. So crime population growth, different major economic centers. So I mean, my thought with property value is, you know, it's not throwing a dart at a board, there's doing your homework and looking at some of those key contributing factors to appreciation. You can get ahead of the curve with that.   Emil: So I have some examples of good luck and bad luck I'm gonna lead with the bad luck story. So a property I bought about two years ago out in Memphis, bought it for around 63,500 has a one, a half or two star neighborhood rating on Roofstock. I ended up holding it for about two years, decent cash flowing property, but I ended up just selling it last month, took me a couple months to sell it. And I ended up selling it for basically what I paid for. So even after two years, the market's been great across the country, took me several months to sell it and it didn't appreciate at all. And we had just made some repairs to the property. So that was an instance where I probably bought, I lean too hard on cashflow, right. And bought in a one and a half star neighborhood, so lower quality neighborhood and the property, it didn't end up appreciating as much as some of the properties I have in other markets where the neighborhood is just better and the market better as well. One of the other things I probably could have accounted for is Memphis. I learned this later, Memphis has a lot of great cash flowing properties, but there's a lot of rental properties. And it's just one of those markets that you're not going to see a lot of appreciation here. So my goal wasn't when I bought this, I didn't think I'd be selling it two years down the road and my goal wasn't appreciation. But…   Michael: Did you anticipate to see some appreciation from the property in addition to cashflow?   Emil: I mean, I think we all do, right. I think we're all cashflow and we've talked about what do we want cashflow or appreciation? We're all cashflow investors, but you start to realize that appreciation is really an amazing cherry on top. And it allows like if you hold for a small period of time, your property appreciates, you can just steam roll that, snowball that into another property. That's maybe bringing you more cashflow. So it's, I've realized it's a little shortsighted to just think about cashflow.   Tom: I think that's a good example. You know, in thinking about appreciation is it's in property value. It's luck if you close your eyes and just kind of throw a dart at the board, but if you're proactive in evaluating, what are the different underpinnings that make for appreciation, it becomes less of a luck thing. Right? So talk about an example where you would say you were lucky with appreciation and how maybe it wasn't so much luck looking at it in hindsight.   Michael: So my very first property I bought in Southern California, I had no idea what I was doing. And we talked about it in a prior episode, or we talk about our first deals. And so I had no idea what I was doing, but I knew the market a little bit just anecdotally, because I had spent time there as a kid. So I thought of my first investment, I'll just buy into their California, great, whatever I bought that house. And it's since appreciated North of a hundred thousand dollars since I've owned it, which is super, super exciting. And that was dumb luck, some would say, but that was also a little bit, a little bit of preparation meeting opportunity. And in hindsight, looking at that market, it has, it would be a five star neighborhood if was on Roofstock, the schools are all 10, 10 tens. It constantly gets rated amongst some of the best schools in the state. And it's in a small HOA association. So the neighborhood around it is maintained really well because everybody is subject to the same HOA rules, looking at that whole picture. It's obvious that that house is likely to appreciate, but I didn't have the whole picture going into it because I didn't know to look and zoom out at all these things. I just thought, Oh, here's a neighborhood that I know, and here's a house that I can afford. So I think that's a kind of prime example of luck mixed with a little bit of preparation.   Tom: I like that story in that, you know, in going through it, you were fortunate to be in that neighborhood and just to buy it, but over time it seems like that would, I think that the big arc of the story is what started as a luck thing, turned into less of a luck thing, as you have learned more about the different elements that go into appreciation like your school scores.   Michael: Absolutely. Absolutely. And I know for me that I'm able to then convert that luck into now more of a science, because I understand what's going into that. As you say, what's going into the sausage making right understand at school scores play a role that neighborhood's scores play a role that physical property attributes play a role. So those all things have been a tip in my favor and this one particular example. But now that I understand that I can go take those lessons learned and make the process repeatable in any other market.   Tom: That's great. I'm going to go ahead and flip us to the next category of tenant. And what I mean by this is vacancy is, you know, touching into evictions a little bit. And I would say that at a high level, a lucky situation with a tenant is a tenant that never moves out that always pays rent on time. That is always renewing right? Continuing the lease to keep vacancy down. And I think there is a lot of things you can do upfront to tip these scales in your favor. And I think thinking about either buying occupied or vacant, there's different things that you can do to help you out here.   Michael: Tom, what would you say are some of those things?   Tom: So let's talk about an occupied property first. So if I buy a property that is occupied and the next day I find out that the tenant is an eviction and wants to leave and whatnot. I know now knowing what I know there are some things I could have done to put the odds in my favor that that wouldn't be an issue. So you could say I'm on, I'm unlucky. Some of the things that I could do with a property that has occupied is no. What was the screening criteria for that tenant, with the seller? So was there a debt to income ratio? How was that tenant vetted before the seller brought them in? Did they talk to previous landlords? If I go into buying an occupied property without knowing some of this stuff? I think then yeah, this is definitely you're rolling the dice and getting lucky, but as an investor who wants to push the luck in their favor, getting to know what is that criteria of the occupied owner I think is really important.   Emil: I have a couple of things we can add here in terms of tipping luck in your favor. So you can find a lot of us lean on property managers to handle finding tenants, dealing with tenants. So there's some property managers who put some skin in the game when it comes to tenants, they'll do things like if the tenant requires an eviction, they will handle replacing the tenant for free. So usually most property managers charge you a new lease fee like half of a first month's rent or full month's rent. And some of them will just waive that and find you a new tenant. And they won't also take their management fee from that first month to replace them. So I think one thing you can do to tip the scales in your favor is make sure your PM has some type of skin in the game when it comes to tenant quality. So that's something I've learned over time. And I like property managers who offer that another one I'll quickly mention is it kinda has to do with the tenant it's every year lease will come up for renewal. And a lot of times people will just always want to go and get the market rate. And so I talked about an example today on Twitter, and I'll just kind of read off what it was. So let's say you want to increase your rent from a thousand dollars to 1,050, and you're not willing to be flexible. And the tenant decides to leave. So let's say you have to pay $1,500 to get the place rent ready, and you lose a month of rent finding a new tenant. So $2,500 you have to make up. Now, if you're generous and assume you'll be able to get $1,100 per month from the new tenant, that's a hundred dollars more than you were bringing in before. Right? So stick with me. I'm gonna try to bring all this together. So it'll take you 25 months to make up that $2,500 difference, right? So $1,500 for making it rent ready. And the thousand dollars of one month of lost rent. So 2,500 divided by a hundred, you have 25, takes you 25 months, more than two years to make up that small increase in rent. So another thing you can do to tip things in your favor is having some type of flexibility in making sure you don't lose tenants, right? Don't just say I'm a hundred dollars under market rent. I'm going to get 50 to $100 more per month. And if they leave, they leave, it's actually theirs. When you do the math, it's better to be a little bit under marketing. Keep that tenant in for longer. At least for me.   Tom: What I love about that example, Emil is, another element of luck is, you could say at the end of the year, you're looking at your cashflow and you're like, Oh, I was, you know, up X amount or down X amount by that exercise that you just went through in calculating out the difference of what your return would be on driving up market rent and maybe dealing with vacancy or, you know, well maybe a less market rent growth. You're being super proactive at what those end of the year cash flow is. And having that information as a tool in your arsenal when going to the table with the tenant on what the rent renewal is. So I think that's a great idea of at the end of the day, this is maximizing your cashflow. And you're doing that by being data driven and looking at the numbers on making that type of decision. So another great example,   Michael: related to that point a meal, I think that not enough people talk to their tenants and whether that's themselves personally, or through their property manager. And so when a tenant moves out, owners are often like, Oh, bummer, the tenant moved out. Now have to go through that exercise. And Neil just mentioned of turning the unit and getting the market rent if they so desire. But there's so much that you can do proactively before that tenant moves out by asking them questions, Hey, what would you like to see done to the property? Are there things that I could do as an owner or the manager can ask on your behalf to do to the property, to incentivize them to stay? And so that's really, again, some opportunity and some preparation that are meeting. And so if someone has a tenure tenant, someone might look at them and say, Oh, they're so lucky. They haven't had a vacancy in 10 years. Well, really that owner might've been talking to that tenant the whole time.   Emil: That's a great example. I like that a lot.   Tom: Be the duck legs, the duck legs,   Michael: Swim, swim stroke stroke.   Tom: The last thing I'll say on tenant before we move on to property condition and RNM is it puts yourself in the position of a tenant. So instead of just sort of blindly looking at an address and a bed count, bath count, do the Google street view, is this property on a thoroughfare? Is it going to be a place that you would want to live? I love the golden rule of putting yourself on the other side of the tenant and saying like, Oh, is this some place I'd want to live at? And one of our new and all that good stuff. And if it checks those boxes, chances are you're going to probably going to be luckier and have tenants that stay longer and renew longer and all of that good stuff. All right. Let's jump into property conditions. So this is about RNM. How can you be lucky when it comes to repairs and maintenance and costs of turn Michael, you want to lead the way?   Michael: Yeah, sure. So I think the biggest thing that you can do to be proactive and get lucky is just set expectations on the front end, give the tenant a very clean place to move into, keep it well maintained, keep it safe. There are more likely to feel a pride of ownership or rentership rather in a nice, clean, safe environment. And if you make it very clear that look, we are giving you this safe, clean place to live. We expect it to be safe and clean when, when it gets returned to us. And if you don't, these are the consequences. It's not threatening. It's just very level setting. This is what we expect of you. This is what you can expect of us. And again, someone who has a tenant move out and has a sparkling clean unit, someone might say, wow, you're so lucky. You're so lucky right at that happened. When in reality, no, you spent the time, energy and effort on the front end to set the expectation and make it very clear. Who's responsible for what.   Speaker 4: Yeah. Love it. It's building trust and being the duck legs under the water.   Michael: That's right.   Emil: Lots of duck legs, lots of duck legs.   Tom: Well, how about yourself? Any thoughts with regards to property condition and repairs and maintenance and turn costs and how do you tip luck scale into your favor?   Emil: Yes. One thing it's going, gonna kind of go off what Michael mentioned, but I think when you take over a property to set a, a good example or a new precedent, right? When you take over, let's say there's a couple of things in the inspection report that you could maybe defer, just taking care of them up front, especially if they're on the inside where the tenant they're in front of the tenant's face, right? Like holes in the wall, broken things, right. Fix those things and just clean up the place, make it more of that pride of ownership. When you take over, I think that kind of helps set the precedent for your tenants to know that this is under new management, you care, and you want this place taken care of. So it kind of goes along the lines of what, what Michael mentioned.   Michael: I just wrote down that note too, that I wanted follow up on. I'm so glad you touched on it. That it's showing, being responsive when it comes to repair requests or maintenance requests really shows that you as the owner care and thus will often incentivize the tenant to care because if you don't care as the owner, why should they care being a tenant in your property?   Emil: Yup. Tom, anything else?   Tom: So getting, building luck on property condition stuff, I would say quality is going to go a long way. And what I mean by that is you could, you know, there's always a decision when things come up repair versus replace with costs. There's a third element. I think of the quality of the work that is done. And it doesn't matter as much if you choose to repair or replace, if you do it with really bad quality. So when you're thinking about the vendors that you're using, making sure that they have a track record and a history and are reputable by sometimes you may pay a little bit more upfront to do work versus other options in doing the work. But if it's by a vendor that is reputable and does good work, a lot of times it's gonna end up being a lot cheaper because it's, you're not gonna need to go back, redo the type of work. And I know for myself, I lean on third party, property management, pretty so instilling, you know, my expectations with that, with the property managers and having a relationship and being the Duck's legs under the water and saying like, okay, Laura, who's my property manager. You know, if you're in my position, this is what I'm thinking about. I'd much rather have the quality work done. I'm willing to pay a little bit extra. What are your history of work with this vendor versus that vendor? If they're bringing me multiple bids. So really making sure that if you're going to spend money, which stinks on like repairs and maintenance, but it's really important, right? Because we need to have safe habital spots getting the work done by a, that has a really good track record of doing work. So I can measure twice cut once and just get it done with,   Michael: To piggyback on that. Tom, I also think that doing proactive steps physically to improve the property and making it more tenant proof can also tip the luck scales in our favor, such as you know, instead of cleaning the carpet or replacing the carpet, tearing it out and putting in hardwood or laminate flooring. And so that's going to reduce our costs in the long run, likely to have that stuff clean at every tenant turn, it makes the property more durable. It can often make the property more attractive. And so again, the Duck's legs being proactive on the front end, doing things that are going to increase our likelihood of success, I think is huge. When it comes to the physical property itself.   Tom: Regular inspections. That's a good one, too.   Michael: Absolutely.   Tom: Sometimes stuff can fester and it just gets way worse over time. It's if you pay for it right now and deal with it, it can be significantly cheaper versus letting it fester, especially anything that has anything to do with water, water. If it's wet, you're going to pay a lot I bet.   Michael: Did you just come up with that?   Tom: I did. Trademark.   Michael: That's really good.   Emil: What do you guys think about potential? Where can you set yourself up for bad luck with property condition? One thing I wrote down, let me know if you guys agree with this is let's say you buy a property. That's not in the best part of town. And you know, you're probably not going to get the type of tenant that takes pride in ownership and where they live. I think one thing that can set you up for failure is over renovating or making it too nice. Right? Getting stainless steel appliances, granite countertops, like making it look like a five-star neighborhood property would have when it's actually an, a one and a half or two star neighborhood. What do you guys think? Do you think there's a, that sets you up for bad luck if you over renovate or make things too nice if you're maybe not in the best part of town.   Tom: Yeah, I would say so. I would say being really cognizant of keeping it consistent with the neighborhood. I mean, there could be a situation, you know, it's not a one size fits all with everything. There could be a situation where you might be able to get a little extra boost on the rent by putting in the granite countertops in an area that's maybe a two star, but I'd say generally speaking is knowing that neighborhood and keeping it consistent, right? Cause you could be just dumping money into, you know, getting the fancy gold toilets may not be necessary. So, and this is being the duck legs, knowing the neighborhoods that you're in   Michael: I think to echo Tom's point, chatting with property, local property management and getting an idea and understanding of what's neighborhood. By that same token though, you could be the spark that ignites the dynamite, so to speak of a neighborhood changing, it's got to start somewhere. So if you're going to be that person that over rehabs, the property that could get everyone's attention and saying, wow, look at what's going on in this neighborhood money coming in, let's start also rehabbing our properties because clearly this neighborhood is changing. So that's kind of the opposite end of the spectrum is you could be the change investor.   Emil: That's a good point.   Tom: I like it. Let's jump into this next aspect of luck, which is on the acquisition side. So finding deals, buying deals who wants to start us off here talking about acquisitions and getting lucky with acquisition.   Michael: Why don't you start us off Tom?   Tom: I like it. I had some stuff in my back pocket. So I..   Michael: Always.   Tom: The biggest thing about acquisitions is always having the lights on always being up to evaluate a deal and to just beat this into the ground as being the duck underwater. I know, sorry, but here's the thing though. Like the machine doesn't turn off, right? So there's always deals coming up. That's available. And the people who are lucky are the people who are constantly looking through what is available. Now I understand life gets busy and there's times where you can put in a little bit more time or you're in more of an acquisition cycle. But even if you're not an acquisition cycle, still be constantly having your finger on the pulse and having enough dry powder available where if that screaming deal does come along, good news, you're going to be lucky and then you to buy it. And the reason you gotta be lucky is because you're constantly looking at stuff. And I feel pretty adamant about that is how you get lucky with acquisitions. It's just always knowing your market, always seeing stuff coming through, being persistent.   Michael: Yeah. To echo that. I think having your head on a swivel, even if you're not in a buying cycle, we've talked about this a lot on other episodes about kind of where we are in our own personal business, what cycle we're in. And many of us are not in a buying cycle, but absolutely keeping our eyes open our ears peeled, listening, looking for those great deals. I think in addition to knowing the market, being able to foreshadow a little bit and forecast a little bit above and beyond what you're seeing today and looking at trends and interpreting those trends to see where things are going to end up can be a huge, huge, huge advantage, and can often make people appear lucky. I bought in a neighborhood like I share with you guys numerous times in the Midwest and Northern Kentucky that has some really amazing government, local government incentives. And so I saw that and I understood the writing on the wall to mean that this area is really up and coming. And I did the homework to understand what's going on historically. And what's happening currently to then project on, where do I see this place? I'm going to go. I'm going to bet big on it. And that's seemingly proving to pay off. And so again, being the Duck's legs, you know, doing all that stuff on the front end to understand where this is going to end up.   Emil: I like that. Other things I would add here is if you are in a buying cycle, maybe you have multiple deal finders, right? So either have a couple of agents out there. You tell your PM, you're looking for a property you're on, Roofstock sending filters, get notifications. And also, I, you mentioned keeping your eye on the market, even when you're not in a buy cycle. I think that's so important because let's say you're buying a property once a year. If you buy a property, don't keep your eye on listings. Aren't keeping a temperature read on the market. You take a year off, you come back, you may have the bias you did a year ago and the market has changed the bunch. So I think keeping your eye on the market and looking at listings, seeing how quickly things are selling, how much are they selling for? I think that that just always pays whether you're buying or not.   Michael: One other thing to mention is we talk about, again, the opportunity for success and where preparation meets opportunity. I think the greatest deal of the century could come around, but if we're not prepared to execute on it, we're never gonna get it. We're never gonna seem lucky. And so being educated above and beyond understanding your market, I think is so, so, so hypercritical. And I know for me, if I had been educated prior to when I started investing, I would have been able to have invested sooner and hit even more home runs even more grand slams. So getting educated on how to purchase real estate, what that looks like, how to evaluate markets is so, so critical. I really can't stress that enough. And that's something I talk a lot about with people inside the Academy of, you know, the fact that you're here, getting educated is going to put you in such an advantageous position to be able to execute on things when they present themselves.    Emil: Well said. All right. So transitioning away from real estate investing, I'm curious to hear what you guys think is the luckiest thing that's happened to you in your life. So outside of real estate investing, what do you guys think is the luckiest thing that's happened to you?   Michael: I am going to force my wife to listen to this because meeting her is far and away, the luckiest thing that's ever happened to me in my entire life. You're welcome Claire. And thank you.   Tom: Oh, and we cannot repeat any of these ones that we have. So Emil, I'm going to leave you with a bunch of scraps.   Emil: Don't you, don't you say your kid!   Tom: Was definitely going to, I mean, people talk about the lights from the sky, getting a little bit brighter when you meet your offspring, your first child and it's real, man. I'm just love struck such a crazy life experience of meeting a child that is related to you. I'd say. And thank goodness, yeah, mom as well. But Michael already took that one and my beautiful wife. Gosh, I'm trying to think of, I could go on any other stuff. I mean, just generally speaking, I think I'm pretty lucky. Gosh, luckiest thing, luckiest thing.   Michael: I I've never heard anyone. Tom, I think say that they met their offspring, but it makes sense. Did you shake their hand?   Tom: Yes. I shook his hand, formally. Nice to meet you, sir. Tom Schneider pleasure is mine. Pleasure is mine damn glad to meet you. So yeah, I'm going to go son, meeting son, really crazy mind blowing stuff.   Emil: So awesome. So I get to be the direct that doesn't get to mention his wife or, or his baby daughter. I love them both. They are the luckiest things that have happened to me outside of those two. I'd probably say learning marketing. I mean, that is my profession and it's not what I started doing out of college. It was my third job out of college that I got into marketing. And to me, I see it as a skill that will always be there. I don't see robots or automation overtaking that I think they help marketers, but I don't see those types of things overtaking the marketer. And so for me to just have found something that I really enjoy doing that creates a good livelihood and that I think will be in demand. And I think it also just teaches you a lot about human psychology. You know, a lot of people look at marketing like ads and tools and all these things, but really it's learning how it's understanding people and how people work and what motivates them. So outside of my daughter and my wife, I'd say the luckiest thing that happened to me is learning about marketing and taking that on as a profession.   Michael: Emil, did you find marketing or did marketing find marketing find you?   Emil: Marketing found me. You know, I was, I was lost and I found my way through marketing.   Michael: That's awesome.   Emil: I was face down in a ditch somewhere. Yeah.   Michael: Marketing's like, Hey, are you okay? I can help   Emil: Marketing parted the clouds and shined its light on me.   Michael: That is lucky.   Tom: Alright. What else? Anything else? Alrighty then.   Alright, thanks for listening to today's episode, we hope you found it valuable. If you found this lucky duck episode to be valuable, please rate us on your podcast platform that you're using and feel free to reach out to us. You can reach out to us on Twitter or on Instagram. If there's any content you would like to hear, we would like to hear from you any questions, comment, and happy investing.   Michael: Happy investing   Emil: Happy investing.

BONUS EPISODE In this bonus live episode, artist Michael Smith talks about how to get creative with bad teaching evaluations. Season 3 coming soon! ABOUT THE GUEST Michael Smith’s recent solo exhibitions and performances include Museo Jumex, Mexico City; Yale Union, Portland, Oregon; Tate Modern, London; and Greene Naftali, New York; and the Institute of Contemporary Art, Philadelphia. His work is in the collections of the Blanton Museum of Art, The University of Texas at Austin; Inhotim Institute, Brumadinho; LWL Museum für Kunst und Kultur, Münster; Migros Museum für Gegenwartskunst, Zürich; Mumok, Vienna; Museion, Bolzano; Paley Center for Media, New York; Centre Georges Pompidou, Paris; and the Walker Art Center, Minneapolis. ABOUT THE HOST Neil Goldberg is an artist in NYC who makes work that The New York Times has described as “tender, moving and sad but also deeply funny.” His work is in the permanent collection of MoMA, he’s a Guggenheim Fellow, and teaches at the Yale School of Art. More information at neilgoldberg.com. ABOUT THE TITLE SHE'S A TALKER was the name of Neil’s first video project. “One night in the early 90s I was combing my roommate’s cat and found myself saying the words ‘She’s a talker.’ I wondered how many other other gay men in NYC might be doing the exact same thing at that very moment. With that, I set out on a project in which I videotaped over 80 gay men in their living room all over NYC, combing their cats and saying ‘She’s a talker.’” A similar spirit of NYC-centric curiosity and absurdity animates the podcast. CREDITS This series is made possible with generous support from Stillpoint Fund.  Producer: Devon Guinn  Creative Consultants: Aaron Dalton, Molly Donahue  Mixer: Andrew Litton  Visuals and Sounds: Joshua Graver  Theme Song: Jeff Hiller  Website: Itai Almor Media: Justine Lee Interns: Alara Degirmenci, Jonathan Jalbert, Jesse Kimotho Thanks: Jennifer Callahan, Nick Rymer, Sue Simon, Maddy Sinnock TRANSCRIPTION NEIL GOLDBERG: Hello, I'm Neil Goldberg, and this is She's A Talker. We recently finished our second season, and we'll be launching Season Three very soon. In the meantime, we thought as a bonus we'd share a live episode that was recorded with artist Mike Smith way back in the good old days of February, 2020. The event happened at the New York headquarters of the Skowhegan School of Painting and Sculpture. Skowhegan's primary program is an intensive summer residency up in Maine for sixty-five emerging visual artists from all over the world. And in 2015, I had the good fortune of being faculty there, and it was actually there that I took the first steps for what would become this podcast. I was inspired by all the experimentation happening, and I decided to play around with this collection of thoughts I'd jotted down on index cards for the past twenty years as the basis for some sort of performance work. So here we are. My guest, Mike Smith, was also faculty at Skowhegan a couple of years before me and has been a favorite artist of mine for years. He's recently shown work at the Tate Modern in London, and his work is also in the permanent collections of MoMA, the Walker Center, the Georges Pompidou Centre in Paris, and many other places. Here it goes. NEIL: Hi everybody. Thank you so much for coming. So, the premise of the podcast is I typically start with some recent cards, uh, before I bring on a guest. And I thought, uh, this is a recent one: seeing an unflushed toilet at an art school. Now, um, I teach at Yale and, uh, I try to like use the bathroom as far away from where I teach as possible. And I also like to try and mix it up a little bit. So, you know, every now and then I'll go into the basement. Other times I'll go to the second floor. Uh, keep them guessing. And there was a while, very recently at Yale, where every time I walked into a bathroom stall, there was an unflushed toilet full of shit. And I started to think like, okay, is this like a student's like art project? Um, but then beyond that, I really was cognizant of the impact it had on the crits I did later in the day, which is like, I found myself sort of evaluating everything I was seeing in relationship to the impact that seeing a unflushed toilet unexpectedly will have on you. Because think about it, that moment where you're kind of like, you open the stall door and there is the unflushed toilet. That is, I think, what we're all going for as artists. Um. Anyhow.  With all that in mind, I am so happy to have, as my guest, Michael Smith, who I have been a fan of for a very long time. I have actually had the experience, Michael, of going to your shows, and I will say that its impact on me was not unlike that of an unflushed toilet encountered by surprise. So, please welcome Michael Smith. NEIL: Hi, Michael, how are you?  MICHAEL SMITH: I'm okay. I guess I, I don't know if I should be flattered or - what I'm following in terms of the conversation or - NEIL: when in doubt, be flattered.  MICHAEL: Yeah. I have so much to say. I don't know if we'll be able to get to another card.  NEIL: I know, right? Well, what's your elevator pitch for yourself when you? When you encounter someone who doesn't know what it is you do, how do you succinctly describe what it is? MICHAEL: Well, it's usually layered. I usually, I mean, if it's a total stranger, I'll say I'm an artist. And then they say, "Oh, are you a painter?" And I say, no. And then sometimes I'll just cut to the chase and say I'm a performance artist. And then it doesn't go any further.  NEIL: Do you feel like that's accurate though? I mean, that doesn't feel to me like it encompasses the breadth of what you uh, do. MICHAEL: Well, when I first started performing or thinking about performing, I would tell people I was a comic. Because it was, I dunno, it was a little more interesting at parties or whatever. And also performance artist wasn't really part of the vocabulary then. Usually I'd say I'm a comic, and then they'd look at me and they said, "You haven't said anything funny." So, it was like, well, I didn't say I was funny, you know? So.  NEIL: Um, are your parents alive?  MICHAEL: No.  NEIL: When, when they were alive, what would they say that you did?  MICHAEL: My mother probably would say, Michael is Michael. And Michael -  NEIL: That is a full-time job, isn't it?  MICHAEL: Michael had such a sweet voice when he was a child. And my father said, I don't know what the hell he does, you know, he didn't know what it, yeah.  NEIL: Right. I didn't know you were Jewish until quite recently. You're like one of those stealth Jews, you know, Smith. Okay.  MICHAEL: I asked my father once what it was before Smith, and he, he said, Sutton.  NEIL: Sutton? That's like a wall that's been painted multiple times, like, okay, and what was it before Sutton? That's where it gets into like Schmulowitz or whatever. MICHAEL: That got too deep.  NEIL: Yeah, exactly.  MICHAEL: It was, yeah. It's opaque.   NEIL: And what's something on you - today, what's something you've found yourself thinking about? MICHAEL: Well, you know that card you first - NEIL: Oh yeah.  MICHAEL: That card you first brought up. I actually, I've been in my studio for, since '99. And I actually cleaned the toilet in the public bathroom for the, the building because it was just getting a little gross, so I thought I'd clean it.  NEIL: You just took that on yourself?  MICHAEL: I took it on.  NEIL: Wow.  MICHAEL: Yeah. I should also say that when I first came to New York, I was a professional cleaner.  NEIL: Really?  MICHAEL: Yeah. I was very good.  NEIL: I bet.  MICHAEL: Mike the Wipe. I was originally I, I was, I originally was going to be a house - well, I was going to, I advertised in the New York Times, "Mr. Smith will cook and clean." And no one wanted me to cook, you know, just wanted me to clean. NEIL: So many follow-up questions, Mike. Um, shall we move on to the cards? You don't have a choice at this point. We're all in. Uh, this card says: There are no friendly reminders. You know, like, I feel like, is there anything more passive aggressive than someone's like, just a friendly reminder.  MICHAEL: That's like, if they, if they preface what they're going to say with that, yeah. That would be horrible.  NEIL: But they do all the time.  MICHAEL: Really?  NEIL: Yeah. Or in an email - friendly reminder. How many, I mean, haven't you? I've probably gotten a friendly reminder in the last week.  MICHAEL: I guess FYI is not a friendly reminder, huh?  NEIL: No, FYI can be pretty passive aggressive too, but I use it a lot  MICHAEL: BTW?  NEIL: That's fine. Yeah. I dunno.  MICHAEL: So, I have a feeling I probably do it, but I'm not aware of it.  NEIL: Of a friendly reminder?  MICHAEL: Yeah.  NEIL: Hmm. So you're not bothered by it? MICHAEL: Probably, yeah.  NEIL: Probably not bothered by it?  MICHAEL: Probably bothered by it. Yeah, I am. I get bothered by people easily. And I had something really good to say, but I've, I've already forgotten it.  NEIL: I'm excited for the rest of this conversation, Mike. This is, um.  MICHAEL: I'm still thinking about that dirty toilet.  NEIL: We could go back to that anytime you want. NEIL: Uh, this card says: Things that are lost but you know will turn up. Talk to me.  MICHAEL: Well, I, I was with a friend the other day, and, um, I, I said, Oh, I don't, I don't recognize that person. I said, I'm not good with faces. And then she mentioned the name and I said, no, I'm, I don't recognize the name. I'm not good with names. And she said. Mike, what else is there besides faces and names? So anyways, I just wait until it comes, you know, it just till, the name comes, I just wait and wait. And in the morning, I figure, after looking at all those places for the keys or whatever, I'll eventually find it. And then I'll look in the unlikely places and I find it. NEIL: What are the unlikely places in your life for keys?  MICHAEL: You know where I've been to keeping them lately? On my front door. So I go outside and they're always there now, so yeah. That's where I seem to keep them.  NEIL: That is really, why don't we all just keep them there?  MICHAEL: Right. I trust my neighbors, evidently.   NEIL: We just very recently got a knock on the door from our neighbor Arlene. A shout out to Arlene if you're listening, and I know you're not, but, um, bless Arlene who very aggressively knocked on our door. She kind of is like policing the hall in a very loving way, but authoritative. And I left the keys in the door. And um, you could tell Arlene lived for this moment. The keys, they're in the door! You know, it's like, and uh, and then of course I have to like reciprocate with like, um, thank you so much. Oh God. Wow. How did we do that? Thank you, Arlene.  MICHAEL: I have - the person that polices our place, uh, has a Trump hat.  NEIL: Oh no. I don't know if I could deal with that.  MICHAEL: He is taking over the recycling, which is great, but he's got it under lock and key, literally under lock and key. So you go downstairs to get rid of your bottles and stuff. And it takes a lot longer. So then everybody just leaves it down there.  NEIL: Every now and then, forgive me, is there like a, an immigrant child in there as well?  MICHAEL: Oh, there's not an immigrant child, but there is something I think it, I realized it bothers him, that people pick through the garbage and it's mostly like, you know...  NEIL: The people who shouldn't be here. From the shithole countries. MICHAEL: Yeah. So I thought about that later and then I just didn't want to think about it anymore cause I was getting all upset.  NEIL: Um, have you had a political conversation with him or?  MICHAEL: I don't go there. Yeah, he's on, he's a little unstable and he asked, one time he asked me if I wanted to take something outside.  NEIL: Oh, he asked you if you want to, I thought, take something outside like garbage. MICHAEL: Right.  NEIL: But no, he wanted to take a discussion outside.  MICHAEL: Yeah.  NEIL: Wow. I'm gay enough that I have never had that conversation, you know? Uh, or if it is, it's like, it's nasty and it's happened a long time ago and it wasn't a fight. Um, wow. Okay. I'm glad that worked out okay. Uh, this card says: Read my - MICHAEL: Can I be, can I, I had a hard time reading that, kind of, reading them.  NEIL: Yeah. Well.  MICHAEL: Your penmanship is like...  NEIL: Well, I always say if my, if my handwriting were a font, it would be called Suicide Note, so I'm...  MICHAEL: Not judging. I just said I had a hard time, you know, deciphering it at times.  NEIL: Yeah. Read my course evaluations at my funeral. That's what that says.  MICHAEL: Oh, well, I was thinking that when, when I do pass, I would like to get ahead of the thing and have people send out a, uh, an announcement saying, if you happen to be in the neighborhood, you know, come to my show, I'll be like, you know -  NEIL: I'll be here for eternity. MICHAEL: Um, class evaluations. Yeah. I love my class evaluations and I save them and I, I find them very funny. One, I actually made a poster and it was, uh, it was, "I'm not sure if I agree with the way Professor Smith teaches this class. He called my work crap and he called us idiots. This is a waste of my time and money." I was very happy with that.  NEIL: And you made that into a poster?  MICHAEL: I made it into a poster.  NEIL: Do you, do you have any other ones that come to mind? I bet you get great course evaluations.  MICHAEL: Some are good. But like I, I forget them, you know, um, I get them, I still get them handwritten. You're supposed to, a lot of people just go online, but I always, I always hand them out and, and I, I have to leave the room and I always say to them, before, "My livelihood and my future is dependent on how you judge me. And I'm so sorry, I meant to bring the donuts. We'll get to that." NEIL: Huh? See, I try to be real coy about it. Like, you know, they make me do this and, you know, try and like keep it open to, um, other than positive feedback. But obviously it's a desperate wish for approval. MICHAEL: Yeah. I, I always tell them I care deeply for them too, when I'm, yeah. You know, I care deeply for all of you.  NEIL: See, you can,  MICHAEL: One thing - I, one of my students who I happen to, like, he-  NEIL: Happen to like. Whatever.  MICHAEL: He came up to me and he said, you know, Mike, even when we're watching videos in the dark, we always know what you're thinking. We can always read you.  NEIL: Wow. That's a scary thought.  MICHAEL: It is. Cause I'm, I have no filter with, you know, I, I just, it, it comes out, I just sort of convey it with my face.  NEIL: See, I find you, because there is a kind of like genial neutrality, you know, like the, the idea of like quote unquote resting bitch face. You have kind of like resting, mm, bemused face. Um, I find it actually kind of opaque. I wish I knew what you were thinking.  MICHAEL: You know what? A lot of times nothing. I get the feeling I'm not answering the, I'm not answering these cards very, uh.  NEIL: Do you need me to take care of you a little bit right now in terms of - I think you're doing a phenomenal job. You know, this is a fucked up, um, project, by the way, because everyone, like I, I once was doing an iteration of it and this kind of high powered curator said to me, did I do okay, or did I do it right? And I wanted to say like, you did, there's no way of not doing this right, but let's talk about why you've never put me in a show. But that's a different story. The faces of spectators at art world performances. The dutifulness and absence of pleasure. We've all seen this like documentation of a performance at an art event and you see like the spectators, like-  MICHAEL: I often say to my, uh, um, to myself and sometimes my students, where's the joy? Looking for the joy. You're talking about pleasure. I'm looking for the - all the time, I'm wondering about that.  NEIL: Where's the joy? Yeah. I'm stealing the hell out of that for any teaching I do. And also, that would be my teaching evaluation for like 95% of the art I see. I mean, it can be art about, um, Auschwitz and you can still appropriately ask the question, where's the joy? Don't you think? Provocative question.  MICHAEL: Um. NEIL: What was the question?  MICHAEL: No, no, no. I thought I'd get some room tone. You know, we start with the toilet and then we put, where's the joy with Auschwitz. You know, this is- NEIL: This is like a balanced meal or something. I'll take the toilet, joy, and Auschwitz. Well, we'll have to talk about what constitutes dessert within that.  NEIL: Uh, okay. Let's try this: The brutality of a memorial service having a duration. MICHAEL: All right. Are you, a duration, like a time limit or like, um, it doesn't end?  NEIL: You answer it however you want.  MICHAEL: Well, I, I, I think brevity can be good, you know, um, and I don't think I need to go to a durational memorial. I may have misunderstood the question or, not the question, the card. I have been in position where I've, I've helped organize them in a, you know, like emceed them. So you get a little nervous, you know, so you want to keep it like, it becomes like a fucking variety show. NEIL: Exactly. That is so true. Memorial services are a variety show.  MICHAEL: I don't know if that's appropriate. You know?  NEIL: What should it be instead?  MICHAEL: Well, it can, I guess it, it should be kind of free-flowing and with me at the helm, it's not going to be free-flowing. NEIL: Because you keep it, you keep it moving? MICHAEL: I try to, yeah.  NEIL: That's a lot of responsibility. I've never, I, I've done, I, I seem to be the person who you will call to do the slide show for your loved one's memorial. I've done a number of them.  MICHAEL: That's a lot of work.  NEIL: It is. And you can't complain about it. Uh, you know.  MICHAEL: And also you have to be in touch with people to get that material.  NEIL: That I - that I have subcontracted and, you know, but even so, it's a lot of work. And you do not want to fuck that one up. Um. But see, for me, I love the idea of durational, like for those of our listeners who don't know, there's a terminology within the art world of durational art, and to me that is like the height of decadence. Like we have such a surplus of time, you know, that we're going to make art from that surplus or something. You know what I mean?  MICHAEL: I have a, getting back to my students, I have a, um, a three-hand rule.  NEIL: Oh, let's hear it.  MICHAEL: Um, well, if some of the, when I'm covering some work like early seventies, you know, and you kind of get the idea after like five minutes and it goes on. If, if one person, three people raised their hand, we'd go onto the next video.  NEIL: I am learning so much today.  MICHAEL: But I don't think you can do that in memorial service. I don't think that'll, I don't think that'll work, no. NEIL: Oh, that's funny.  MICHAEL: How surprised would they be if you, you mentioned that in the beginning of the memorial? NEIL: Yeah, listen, not to create pressure, but it's kind of like the Apollo where you get the hook. MICHAEL: How am I doing, how am I doing? Yeah. Right.  NEIL: Okay. A bad X you would take over a good Y. So, for me, perpetually, my example is I would take a bad episode of RuPaul's Drag Race over a good Godard movie. So, what's a bad X you would take over a good Y?  MICHAEL: Well, I'm of the school that something bad can have lots of charm. There's something redeeming about it. Where there's something is overly so good, like a certain kind of Broadway kind of, um...  NEIL: Careful.  MICHAEL: Yeah. Well, you understand a certain kind of large delivery or something. A certain styling, a certain song-styling. Um, oh, I'm going to lose the whole audience on this reference. NEIL: Go for it. You have me.  MICHAEL: Okay. The, the, the Bobby Short commercial singing Charlie. I would, I will always cringe at that one. And then I would much rather take a bad public access, uh, commercial than that.  NEIL: There's a fragrance that's here to stay and they call it Charlie. NEIL: Um, so Mike, uh, what is it that keeps you going? MICHAEL: Uh. Hm. I don't know what's keeping me going right now. Um, that's a big one. Um, I, you know, when I was lot younger and doing my work, I, you know, and reinventing the wheel, you know, reinventing the wheel and stuff, I was very excited. But I don't, I wonder what, what keeps me going? No one knows. No one knows. Looking for the joy.  NEIL: On that note, thank you to all of you for being here. Thank you, Mike, for coming to this live taping. Thank you to everyone at Skowhegan. Sarah, Katie, Kris, Carrie, Paige, everyone else. Um, now, this series is made possible with generous support - thank you Jesus - for Still Point Fund. Oh, Siri, something set Siri off. That's, that's my husband, Jeff. Um, oh, sorry. I know, you know, it's interesting. One of the cards I have is every time I stub my toe, I look for someone to blame. And it's often Jeff. And, um, so. Uh, the calls are coming from inside the house. The house being my subjectivity. Let's do that again cause this is important. This series is made possible with generous support from Still Point Fund. Devon Guinn is our producer. Molly Donahue and Aaron Dalton are our consulting producers. Justine Lee handles social media. Our interns are Alara Degirmenci, Jonathan Jalbert, Jesse Kimotho, and Rachel Wang. Our card-flip beats come from Josh Graver. And my husband, Jeff, sings the theme song you're about to hear. And he's going to perform it live. He's a professional. JEFF HILLER: She's a talker with Neil Goldberg. She's A Talker at Skowhegan. She's A Talker, it's better than it sounds. NEIL: Thank you, everybody. Thanks everyone for listening to this bonus episode. Keep your eyes open for She's A Talker, Season Three, coming soon. And in the meantime, be well.

Hello everyone, welcome to episode 218 of the LitRPG podcast. I’m Ramon Mejia. I’m here to bring you the latest LitRPG news, reviews, and author interviews. We have 3 new reviews just for you. For the full show notes visit us at: https://litrpgpodcast.com/litrpg-podcast-218 New Releases and Reviews: Inheritance: A LitRPG Space Adventure (The Last Enclave Book 1) (07:41) Good Sci-fi survivalism and LitRPG Base Building Score: 7.8 out of 10 https://amzn.to/39rk72a The Dark Continent (Underdog Book #3): LitRPG Series (09:59) Continues the slice of life adventure Score: 7.4 out of 10 https://amzn.to/34SKoE6 Ian’s Picks Of the Week Reborn: Apocalypse (Volume 3): (A LitRPG/Wuxia Story) (13:11) Michael: One man army Score: 9.0 out of 10 https://amzn.to/3baWz2s (Play Music 2) LitRPG News With so many people stuck at home under quarantine or practicing social distancing. I thought I’d bring you some good LitRPG novels that are on sale, either as a way to help readers pass the time during this pandemic. LitRPG Books on Sale The Fifth Survivor series $0.99 https://amzn.to/2Jfv9g9 Aether Gate Online series $0.99 https://amzn.to/2whqbfY Alpha World 1: Gamer for Life - $0.99 https://amazon.com/dp/B06XC6YJSH https://amazon.co.uk/dp/B06XC6YJSH Last Horizon: Omnibus - $0.99 https://amazon.com/dp/B079BF8QVG https://amazon.co.uk/dp/B079BF8QVG Resurrection Quest 1: Greenways Goblins - $0.99 https://amazon.com/dp/B07YYS2G8W https://amazon.co.uk/dp/B07YYS2G8W Sentenced to Troll book 1 $0.99 https://amzn.to/2vB3SBl Awaken Online series FREE https://amzn.to/33FkYuv Monster Hunt NYC Book 1 FREE Monster Hunt NYC Book 2 $0.99 https://amzn.to/2x9PFvI Amazon LitRPG search - priced low to high shows Free and $0 books. Varied results for good stories or ones actually LitRPG but nice place to browse. https://amzn.to/33xMXMN Audible to give kids and teens free books through Audible Stories while schools are closed. Hundreds of titles listed. https://stories.audible.com/start-listen Out Now! Sentenced to Troll 3 https://amzn.to/2FUwxmw Traveling the Dungeon (Dungeon Travels Book 2) https://amzn.to/2HW0AeN The Hive [LitRPG series:The Beetle] Book 2 https://amzn.to/2tUQuHs Darkworlds Paris: A Cthulhu LitRPG https://amzn.to/37KVPyW Power Fantasy: Chronicles of the Shattered Earth https://amzn.to/33wyIYy Nova Terra: Guardian - A LitRPG/GameLit Adventure (The Titan Series Book 4) https://amzn.to/2xgGU2M Enter the Daemonpits: A Hundred Halls LitRPG and GameLit Novel (Gamemakers Online Book 4) https://amzn.to/3a8x5CO New LitRPG Audiobooks Rust (A Rebirth LitRPG): Ghoul Empire, Book 1 https://amzn.to/33wzuoo A Black Soul - Grimdark LitRPG (Forsaken Talents, Book 2) https://amzn.to/3bekxtH That’s it everyone! Thank you for watching/listening. You can follow us on Facebook: https://www.facebook.com/litrpgpodcast/ Twitter: https://twitter.com/LitRPGPodcast YouTube: https://www.youtube.com/channel/UC3-eBvpm-g7IkjfVktObGAA Patreon: https://www.patreon.com/geekbytespodcast Our Webpage: www.litrpgpodcast.com Other LitRPG facebook pages https://www.facebook.com/groups/LitRPG.books https://www.facebook.com/groups/LitRPGsociety/ https://www.facebook.com/groups/TheFantasyNation/ https://www.facebook.com/groups/541733016223492/ If you enjoy the podcast and want to support us you can also find all the other ways to support the podcast at www.litrpgpodcast.com/support Thanks for hanging out with me today. Until we can hangout again, remember to go read some LitRPG! (Music 4) Music Credits "Blip Stream" "Mighty Like Us" "Big Shift" "Vivacity" Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 3.0 License http://creativecommons.org/licenses/by/3.0/

10-9-2019

We discuss the idea of being a black executive in Corporate America with Frost Bank President Michael Williams.Michael Williams' LinkedInHelp Beat Triple Negative DCIS Breast CancerTRANSCRIPTZach: It was a dream job, the type of assignment that could make or break the career of an ambitious executive with an eye towards the top. "It was my first big promotion," says Bernard J. Tyson, the 57-year-old CEO of Kaiser Permanente, a health care company with nearly $60 billion in annual revenue. The year was 1992, and Tyson, then in his early thirties, had been named administrator of one of Kaiser's newest hospitals in Santa Rosa, California. "Everyone knew this was the hospital to lead," he says. His physician partner, an elderly white gentleman named Dr. Richard Stein, was less excited by the news. "It was one of those "Guess who's coming to dinner?" sort of welcomes," Tyson recalls, and it went downhill from there. The two men were constantly at odds, unable to collaborate, with most conversations ending in angry standoffs. "He would say something, and I would react," says Tyson. "It was the most difficult relationship I have ever had." Failure seemed inevitable. One day, Stein invited Tyson for a walk. "He said, "I have to confess something to you, something that may end our relationship,"" Tyson recalls. "I have never worked with a black man like this." He meant as a peer. Stein, it seems, didn't know what to say, to act, what to expect. Tyson saw it for the opening it was. "It was this moment I realized the majority of the population doesn't have any sort of mental road map for how to relate to and work with someone different from themselves." This is an excerpt from Why Race and Culture Matter in the C-Suite, an article written by Ellen McGirt, for Fortune Magazine, and I believe it highlights the reality many people of color in leadership face every day. Being in spaces where few of us are present is challenging enough, but compounding that with the task of leading teams, as in telling them what to do? How does one succeed in that environment? Further, what does success even look like? This is Zach, and you're listening to Living Corporate.Zach: So today we're talking about what it means to be a leader of people while also being a person of color in Corporate America.Ade: Yeah. So to be honest, I usually get so focused on making sure that I'm good in my career and navigating all the nonsense involved with making sure that my individual contributions are recognized. I usually don't even think about what it means to lead a team full of people who don't look, think, or behave like I do.Zach: I know, right? And to your point, all of those things you just mentioned, they're critical and of course very important and really don't change as you become a leader, but it's interesting because when you look at that article that I read by Ellen McGirt, it highlights Bernard Tyson's experience about white men having to engage him as a equal. So I'm a manager, so I'm not an executive. I'm not a CEO. Nothing fancy like that. I'm the manager, but even as my managerial experience, I can say that beyond leading a team, being in a position where folks who would typically have to--or typically would overlook me actually have to submit to listening to my ideas and my proposals and my direction. It's been a really interesting experience. Ade: Hm. So I hear you, I get your point, but do you perhaps have any examples for us?Zach: For sure. So a few years ago I was working on a project where I was dealing with a manager, and I was telling them what the approach should be for a specific task. I was walking them through the methodology and just the reason and rationale behind why we were gonna make this approach, and as I'm talking to him his face starts just turning bright red. Ade: What? [laughs]Zach: Yeah. [laughs] Like, it's like he ate, like, a habanero pepper or a ghost pepper, and he's trying to hold it in that it's not spicy. Like, he doesn't want anyone to know it's spicy, right? So he's just sitting in there, and his head is shaking, and he's got a little vein bulging out the side of his head. I'm like--Ade: What in the world?Zach: I know! And so I'm talking to him, and I'm just kind of--I'm just having my normal--I'm not talking at him, right? I'm just talking to him. I'm having a normal exchange, and I'm trying to, like, keep up the same casual cadence of my talk while seeing him clearly, clearly be uncomfortable.Ade: Huh. So I'm just curious. Like, was there anyone else in the room who saw this? Who, like, witnessed what was going on and pointing it out?Zach: Yeah. So I was in the room, then my manager was in the room, and he was in the room of course. So they saw this the whole time, and it wasn't like a one-time occurrence, right? So for those folks listening like, "Well, maybe it was just a one-time thing. Maybe he had a hard day." He had multiple hard days, okay? Ade: [laughs] It be like that sometimes.Zach: [laughs] Right? It happened so many times. It happened, like, literally every time we spoke. We spoke once a week for, like, two months, two or three months, and I'm like, "This happens every single time." So now--even when I spoke to my manager about it, I'm like, "Hey, are you noticing this?" Like, "Do you see what's happening here?" You know, she was even reluctant to admit and acknowledge, like, "Oh, I do notice this," and so why she was so uncomfortable talking about the situation and why she was even more reticent to talk to other people about the situation, including, like, our project manager, is for another podcast, but needless to say it was pretty weird.Ade: Okay. Well, I know that you've had experiences as a manager. I personally have not. I am, like we've said multiple times, at the beginning of my career, but wouldn't it be great if we had someone on the show who had about 20 years of experience as an executive within the finance industry, which--Zach: 20 years?Ade: 20. I would argue that the finance industry is one of the most politically-charged spaces, but you didn't hear that from me. So I'm not sure. I feel like it would be good if we had someone who has had to climb multiple ladders, maybe build coalitions of support, maybe who has had active participation as a leader in his community and has acted as a mentor to other people of color.Zach: Hm. You mean like--wait a minute, let me check my notes--you mean like our guest Michael Williams?Ade and Zach: Whaaaat?Zach: [imitating air horns]Ade: Never gonna get tired of that. [laughs] All right, so next we're going to get into our interview with our guest Michael Williams. Hope you guys enjoy.Zach: And we're back. And as Ade said, we have Michael Williams on the show. Michael, thank you for joining us. Welcome to the pod, man.Michael: Man, thank you so much for inviting me.Zach: Absolutely. So for those of us who don't know you, would you mind sharing a little bit about your background?Michael: Sure, sure. I guess--where to start? I'm originally from Dallas, but I moved here and attended Texas Southern University and the University of Houston. Met my wife, who is an only child, and guess what? I was gonna stay a Houstonian. So after school--I had always wanted to be in banking, so I started down that line of pursuing a career in banking, and I have not looked back since. I guess it's been going on 27 years. 26, 27 years. Somewhere in there. I need to do the math. It's in there.Zach: [laughing] That's awesome. So when did you first start leading and managing teams in Corporate America?Michael: So I've been leading a team of corporate bankers for about eight years now, and I actually--for the bank I'm currently employed, I actually am what's called a market president. I run the entire [Southwood?] side for the bank. So I have a team of 13 commercial lenders that work directly for me, and the way we're structured, while I don't do anything in the branches, I have three branches--excuse me, five branches where my people are located, but all of those individuals have a dotted line responsibility under me as well. So while I in effect manage 13 directly, I have actually management I guess authority for somewhere over about 40, 45 people.Zach: Wow, that's amazing. So, you know, this show we're talking about--we're talking about leading while black, and so can you explain a bit for the audience--and shoot, for myself as well--the difference between being a manager and being an executive? And in your career, how do you manage that shift?Michael: Sure, sure. You know, it's--one of the things I continue to do is just aspire to read. I'm an avid reader, and I've read many books on not only how to manage but also--frankly, if someone would have told me management was more about managing the people relative to how they coexist, I would've actually got--instead of getting a degree in finance, I would've gotten a degree in psychology, because really that's where the buck stops. If you can understand that you have influence as a manager, you can easily--and I don't mean just regular influence. I mean you have to understand that everything you do has the ability to set the table up for your future, and those decisions that you make, you need to be calculating because you have the ability to influence people without you even knowing it. And so when I made the switch is when I decided to get an advocate for me at a senior level that allowed that person to see me and my skill set and be able to be my advocate above my pay grade to allow people to say, "Okay, this guy, he not only knows what he's doing, but he's also someone that we can actually incorporate into our senior management team."Zach: That's really interesting. Can you talk a little bit more about when you say advocate and really what you mean when you say advocate, and what were some of the things that they were able to do for you as you were able to transition into that next level of leadership?Michael: Sure. Here's the one thing we all have to--the people who--the vast majority of your audience needs to understand. As a minority--and I'm African-American, so as an African-American minority, the one thing that we don't have is direct access to the highest levels of any corporation, and in many instances, as it stands today, there are not gonna be a lot of people that look like us. And so I remember back when I was at another institution and there was one senior-level African-American gentleman there. That individual decided that it was in his own best interest not to uplift and promote and advocate for younger African-Americans. It was a sad--it was a sad sight to see. It was a very difficult experience to go through personally, but what I learned from that, I took away from that is I will never do that to anyone.Zach: Amen.Michael: Because people sitting back trying to figure out how to gain more ability--excuse me, more control and/or allow their skill set to show that they have the ability to be at the next table, and he would block them 100%.Zach: Wow.Michael: And so my career has been all about making sure that I help those coming behind me who have the requisite skill set and the requisite training. That's first and foremost. So in terms of--in terms of understanding your point, how you make that switch, the biggest thing is you need to--I said find an advocate, but you also, in my mind, have to bring people up behind you that are highly competent and qualified, and now you've got this team of people around you, and if you have that advocate, they see that and they want talent. They want talent absolutely. They just have not been used to having talent, and they certainly--in terms of African-American talent. So they don't necessarily embrace that, but what they do is they lead those people to the side to try to figure out who's on first, what's on second, and how you actually get to tell them you're on first and John is on second and Theodore is on third or whatever the case is is you have to embrace getting someone to get to know you. So in my--in my (life?) career, when I figured that out in my previous institution, I actually had the chairman of the bank--excuse me, the president of the bank here in Texas as my mentor. Today, I've got the president of the bank as my mentor. He is the #2 in the bank. We meet on a quarterly basis. I don't ask him for anything. I ask him for his time, and I want to share his--I want him to share his thoughts, and he wants to hear my thoughts about a various, just a various amount of things. It has nothing to do directly with "How do I get promoted?" "How do I do this?" It's all about just communication, because what I'm trying to do and what I have learned, if you break those walls down and are able to communicate, then that allows that person to see you as someone that they can feel comfortable with, and that really is the biggest barrier to any minority trying to break into the upper levels of executive management if it's not your company because they don't know us as a people, as a rule. All they do is listen to, unfortunately, Fox News and other similar detracting and negative news accounts about us as a people in general, and they make these generalizations without knowing you individually.Zach: We introed the show talking about and sharing a story from Bernard Tyson, who is the CEO of Kaiser Permanente, his experience in having to deal with individuals who had never worked with a black man as a peer. So I'm curious to know how many instances you've had where you've said, "Wow, you've clearly never worked with a black man before." Like, has that happened? And if so, would you mind sharing a story or two?Michael: Sure, sure. That has absolutely happened, and you could see it coming 100% down the line. It's amazing. I've had it happen so many times, but I remember a couple of different instances. I'll give you a couple stories. One, as a young analyst, you know, all of us who come through commercial lending, investment banking, all of these corporate-type lending groups, we all have to go through this vetting process and this training process, and it's generally about a year, and we'd learn all this stuff, and then we're out--we're put into these groups, and we're analysts, so we're at the bottom of the rung, right? We're [runts?]. And so I'm in this group, and this--[laughs] calling him a gentleman is good. It's way above where he was in [inaudible], however this gentleman ran the group, and this was--this was in the early '90s. And so this guy--to give you kind of just an overall view of who he is, this guy would smoke in his office. It was illegal to smoke inside of the building, but he would smoke in his office. But he was an old head, he was a successful old head, and senior management didn't bother him. So they let him smoke in his office. Well, okay. So this guy, the manager of group, he was clear that he did not like me, and he made himself clear by several different things that he did. And I'll give you one nice example. So I am in the habit of drinking a gallon of water today, and actually I still do that to this day, and I had my jug that had a lot of water in it, and we were in meetings, and he turns to me in front of everybody and says, "Why do you have all that water?" "Because I like to drink a lot of water." He said, "Well, you know what? That is so sophomoric of you. It's like you're a little kid with a jug." I was like, "Whoa. Okay, this is just water." So we go forward. I take that as a note and I keep moving. Of course I didn't get rid of my water. I just decided to hide it from him all of the time. So there was an instance where when we get into work in the morning we would go get something to eat for breakfast, 'cause typically we'd have to get in early, so we typically would get something to eat for breakfast. My counterpart, the young analyst that was with me, would go--she would check into the office, sit down, turn her computer on, and then go get something to eat. I would go get something to eat, come back, check in and sit down and get something--and start working. I was told that I was habitually late. Now, mind you, I got in before it was the normal working hours all of the time, but because I got breakfast first, came back to my desk, she came to her desk, checked in, meaning face time--and I'm using total air quotes right now--Zach: Right. [laughs]Michael: Meaning face time. It was acceptable to do what she was doing and unacceptable to do what I was doing, and these are very small, minor things, right? Well, one thing everyone needs to take away from anything--if you don't take anything else away from what I'm saying, it is absolutely this - you cannot progress, move up, move forward in any career unless management likes you. Period. Stop. End of story. You could be the most highly-qualified, the brightest--have the brightest mind, have the best work ethic, but if your manager does not like you you will not be able to move up. As a matter of fact, your job is in peril and you don't even know it.Zach: So that was when you were, you know, a new analyst. You were coming in. You were getting hired. You're working for the old head. Was there anybody--was there any instance or experience you had as a leader where you were like, "Wow. Okay, you've clearly never dealt with a person of color before." Michael: Oh, sure. Sure. So we're working on a very sizeable transaction, and my team is managing--I am managing my team, and it's one of my lender's opportunities, and this deal is north of $100 million, so it's gonna be a nice year--Zach: Whoa, whoa, whoa, whoa. Whoa, whoa, whoa. You said one zero zero million dollars?Michael: Yes, sir. Yes, sir. I do corporate lendings, so, I mean, I've worked on several significant-sized transactions for many publicly-traded companies in my past.Zach: Wow.Michael: So at any rate, this is gonna be our year. This deal is basically gonna make our year. So this is my deal. We're working on it, and unbeknownst to me there was some chatter in the background by a counterpart, so another manager, and this person made some questionable comments about me and my ability to lead us through the closing of this deal. I had never even interacted with this guy, so the things that he was saying about me and my inefficiencies. He went on about being efficient, not having ever done a deal of this size before, it actually needs to be done by him and his group. Zach: Wow.Michael: You know? And I sat back and I said, "Wow, interesting." For me, one of the things I'm real keen on is documentation, and so along the way of that particular process I was able to have my documentation in order so that the president, who was the final arbiter, came down to find out what was going on and why we were having some discord, and I simply said, "I'm not sure." And this is another nice little note here. Michelle Obama said it best. "When they go low, we go high." Never get into the mud when people are throwing mud at you. Never. Never. Because you will never win that situation as a minority. You will never win that situation. Even if you win that situation, you've lost. You've just lost because they're already afraid of you, they don't know you, and then now you've got quote-unquote real with somebody, oh, they don't want you around. They don't want you around. That scares the living crap out of them.Zach: But this is my thing. So Michael--like, for those--you know, I've known you, or at least I've known of you for a while, and so I know--but you are a keep it real type of dude, and you're definitely not, like, a back down kind of guy. So let's talk about this documentation and how you stood up for yourself, right? 'Cause I know that's not who you are, so let's keep it real, right? Like, let's--Michael: [laughs] Oh, you are so real with it, and I will admit 100% to have always been an enforcer. I'm just gonna be clear about that. I'm not gonna lie about who I am as a person. Zach: Amen. [laughs]Michael: I grew up--I didn't give you all of the background, but I grew up in the projects of south Dallas. So I grew up fighting. I know how to fight, man. That's not even a question. These hands are real good. These hands are real good. However, what I've--what I've learned over my career is that in order for me to be who I want to be--and now, maybe earlier on I probably would've put hands on him or done something that probably would have not allowed me to move forward as far as I have today, however he caught me at a time in my life where I know better, and I know that I am--my level of intelligence taught me early on, through my mistakes probably, but I wanted to be able to be smarter, more intelligent, and more calculating. I can't say that enough. Here's my phrase that I say all of the time. "I play chess, not checkers." And in life and in Corporate America, it's always chess. If you think you're playing checkers, you've just lost. It's always chess. You've got to think two to three steps ahead and why is that going on and why did that just happen? See, it just didn't happen for a reason. Something happened. And oh, by the way, there are multiple conversations going on without you even knowing about it. You don't even know conversations are happening and they're happening. So it's not about trying to be paranoid or being paranoid. It's all about realizing that they're having these conversations, making these judgments, making some assumptions about you without you even knowing about it. So go back to your question. I have always documented what's going on, and I've always done that to the point of understanding two things. One, it helps me to make sure I'm clear about what's going on, and then two, there's a little saying--although I've never been soothed, there's a little saying that says, "Everything is discoverable," meaning I look at--I look at every situation like there's a lawsuit pending, and as long as I'm looking at it like there's a lawsuit pending or this could promote a lawsuit, I make sure that not only am I keeping my ducks in a row, but I make sure I limit the things that I say that are a part of public record, be it in writing or orally, because I want to limit my exposure while documenting and keeping up with what everybody else is doing.Zach: See, the thing about it is I'm kind of--I'm kind of shook, to be honest with you. Right? [laughs] I'm kind of like, "Okay." Like, I'm listening to you, and honestly I'm hoping that my sound man puts a little bit of House of Cards type music in the background because I'm hearing what you're saying. I don't disagree, right? So this is just good information to have, and I'm a few rungs down the ladder, and so politically understanding how to navigate these spaces--and there are plenty of people who are listening to this show who are aspiring to get there. I'm curious though. We have folks in our spaces, and I think as you know when you look at the history of civil rights and just black liberation, you have to have allies. You have to have folks that don't look like you who are advocating for you. You talked about advocacy at the beginning of our interview. I'm curious to know--you know, there are people who do look like us, but there are people who don't look like us also who listen to this show who are passionate about diversity and inclusion, who are passionate about being supportive and really leading that next generation. What advice do you have, right, for our non-Wakandan brothers and sisters listening in?Michael: As I cross my arms and let my fists down.Zach: And bounce your shoulders a little bit. [laughs]Michael: [laughs] Right, bounce up a little bit. Let me tell you this. The thing that I can say is judge people--I mean, it's funny. MLK said it best. "Judge people for the content of their character, not for the color of their skin." Yes. Are there people out there that have--are trying to run a [gang?] Maybe not as qualified but have snuck into the door, yes, but guess what? That's on both sides. Zach: Hm.Michael: That is not exclusive to minorities, and in particular African-American minorities. That's on both sides of the equation. So judge people for their content, their capacity, and their intellect. That's how you--that's how someone with aspirations of being an advocate can do--get work in whatever their chosen field of human endeavor is, because there--first of all, there's not enough room at the top for everyone. Period. Stop. End of story. Full stop. However, people get passed over for reasons that, in a lot of instances, didn't have to be necessarily. But it happens because that's life, right? You know, life is truly Mike Tyson's big ol' heavy hands. It just keeps coming at you, and you're gonna get your butt knocked down, and you gotta figure out whether or not you can get up and/or have the will and the power to get up because they gonna come right back at you. Those people who get up, those people who have that fighting instinct, who are intelligent, who are hungry, those are the individuals. If you can just look at them for who they are and what they bring to the table, that's a good deal.Zach: Absolutely. I'm curious--I'm curious about this, kind of as a follow-up to really what you just said. You know, are there any--are there any specific experiences or points of advice you've received in your career that have stuck with you and really helped you drive and continue forward to the place where you are today?Michael: One, have that drive, have that inquisitive nature. Always ask the question. You don't ever know what the answer is, nor should you think you would know the answer, but you've got to be willing to ask the question. And once you ask the question? Oh, by the way, learn and don't repeat whatever it is you did before. Okay? So I'm a big one-time guy. Ask me the question or let me ask the question one time or tell me one time, I got it. I've got to move forward. Now, the responsibility thereafter is on me 'cause you told me. So now I want to demonstrate whatever it is. I have the capacity not only to remember what's supposed to happen here but to incorporate it into what I'm doing and move forward. That's one. Two, more important than anything else, never ever lose yourself. Whoever you are, it is you. God brought you into this world. Your experiences up to whatever that point is have made you who you are. Never lose yourself. Learn to navigate within the political world that we live in, especially in Corporate America, and refine your edges. Like you said, you've known me. You guessed that I was a fighter, [laughs] but I've learned to smooth my edges out and to be able to be--to walk in any room and strike up a conversation. Insert name here, insert title here puts his pants on every single day like I do, one leg at a time. So he's no more special than I am in that regard. All he has done is he has made himself or have been able to get the breaks to make himself--put himself in a leadership position. Maybe at the top of the company. Maybe at the next level. It doesn't matter. He's still a person who puts his clothes on--his pants on one leg at a time, therefore I have the ability to interact with this person and find maybe some level of commonness that would allow us to engage in conversation and then, again, continuing to erode any kind of preconceived notions and ideals about who I am simply because I showed up and my skin was a little bit darker than yours. Zach: This is just so helpful, Michael. Thank you so much for joining us today. Before we let you go though, do you have any plugs? Any shout outs?Michael: Oh, what could I shout out? I could shout out my wife's foundation. I lost my wife now seven years ago to breast cancer, and I started a foundation for her in an effort to help find a cure for this dreaded, horrible cancer called triple negative DCIS cancer. It is one of the most aggressive forms of breast cancer for--unfortunately for African-American women, and we have an annual walk to celebrate her life, but also to raise funds. We raise funds through corporate giving as well. The website is www.YEF.org, and that stands for Yolanda E. Williams Foundation. YEF.org. You can go on the site. We're preparing for our October walk now. The date has not been set. We will be doing that in a matter of weeks, and you can go on the site and check that out. And so my plug is help me figure out, through raising funds and donating to research, how to get rid of this scourge called triple negative DCIS breast cancer. I don't want anything else.Zach: Amen. So this is what we're gonna do. So first of all, we'll make sure that we have that website in our show notes, and we'll shout that out when we publish this, and then what we'll also do is when you confirm the date, Michael, let us know, and we'll make sure that we shout that out on the podcast as well.Michael: I will do just that.Zach: Okay. Well, first of all, just thank you so much for joining the call. I appreciate you joining the show. I appreciate the insights and just stories that you've been able to share. We wouldn't have had you on the show if we didn't know and trust that you would give us honest, frank, transparent conversation, and I believe we've had that today. We'd like to think you're a friend of the show, and I want to thank you again, and we hope to have you back real soon.Michael: I look forward to it.Zach: All right, Michael.Michael: Count me as a friend.Zach: I will. All right, now. Peace.Michael: All right. Thank you.Ade: And we're back. Zach, that was a great interview. One thing it did remind me of though was the fact that we interviewed a black man, but because the way the system is set up--you know, sexism, racism, and all of the other -isms--I believe that if we had had a black woman on the show talking about this we might've had a slightly different conversation due to the relationship of being a black woman in positions of authority.Zach: You know what, I agree. If you don't mind though, go ahead and expound on that.Ade: Right. So I'm sure you've heard of intersectionality, although for those of our listeners who haven't, it's simply the idea that there are--that your identity form different axes of the way you relate with the world, and so that means your relationships with the world and with certain aspects of the world such as Corporate America as a black man differs from mine as a black woman, and there are different aspects of that. So your sexuality also interacts with that. Your age interacts with that. Your class interacts with that. And so all of that said, I think that if we think about things like the angry black woman trope and how that would reflect in being a leader and how, for example, black women usually aren't allowed to get angry or to express dissatisfaction with anything, otherwise it's "Oh, she's so bitter. She's so angry," as opposed to "No, I'm rightly disappointed in your work product," and all the other ways in which that could affect, you know, the final outcome as a--as a leader. I definitely would like to have that conversation with a black woman in maybe a part two, you know?Zach: You know what? That's a good point, and I agree. Let's make sure that we get a part two on the schedule and get going on that.Ade: Most def. I definitely want to interview, like, an Oprah. Trying to get my auntie on the show. Maybe a Viola Davis. Let's see what we can pop on. How are you feeling?Zach: I feel great about that. You said a Viola Davis?Ade: Or an Oprah. You know, I'm not too picky.Zach: An Ava DuVernay, perhaps?Ade: Ava DuVer--see? [inaudible]Zach: Maybe an Issa Rae?Ade: Stop it. I have a girl crush on her. I have a crush crush on her, but I also have a girl crush on her.Zach: I have an artistic cross on Issa Rae for sure. I was gonna say Issa DuVernay, which would be an amazing combination if both of those, like, fused into one person. My gosh.Ade: Oh, my God. Think of awkward black girl but [shot by?]--[Sound Man throws in a swerve sound effect]Zach: What?Ade: [laughs] Okay, now we're going down different tangents. Okay, anyway. Today we have a listener letter, so as a reminder to everybody at home, we encourage conversation, and so we're looking forward to reading any letters, comments, questions from everyone. So let's get into it. So today we have this letter. We're gonna call this listener Nicole, and let's read Nicole's thoughts. Okay, so it says, "Hi, guys." Hi. "I love your podcast and your insightful advice. This is a career question." All right, let's go. "I usually don't ask anyone I don't personally know about advice, but when I told my circle of friends about this particular situation they were stumped. They didn't know what to say, so here we go. I've been at my job for close to three years, and I've adapted to the many changes that came within my department. A year in, I got switched to a different sector of my department, which meant that I was part of a team of two - the manager and I. My manager has been working with this company for close to ten years and is jaded by all of the politics that comes with working at a large company and in our department. She's much older than me and has been working in this particular industry for decades. My manager and I obviously make for a small department since it's just the two of us, but we're overloaded with work and last-minute projects, which sucks, but it's part of the inner workings of the culture. Anyway, very recently my manager was having a meeting with the director during which the convo switched to me. I was not attending the meeting, but my name came up. The director then asked my manager, "How are you expanding her role?" It seemed as though it was a slew of questions about my potential and what my manager was doing for me in order to make that happen. This didn't seem to go over too well. When I came back from lunch, my manager was venting to me about this meeting. She basically told the director that if she, being my manager, is unclear of her own role and didn't see how she could advance in the company, how could she advance me? And this is just a paraphrasing of the events. And so while she was venting I was simply nodding my head because what else could I say to someone who feels stuck in their job and is managing me? For someone who is much older, I thought she was gonna be a good example, but I've come to realize she isn't. Lately I've been looking for new jobs that pay better because even though my department seems to make millions for the higher-ups, they're stingy when it comes to raises. I've only received one raise, which equated to pennies in my paycheck." Pennies? Oh, Lord. Okay, all right. Anyway. "Should I hit the pavement looking for a new job that pays more or should I try to stick it out and work with my jaded manager? Thanks again, and I hope to get some encouraging advice. Nicole." My goodness. Okay, Nicole. There's so much happening here. I don't--I hate to sound like a typical situation, but this really did rock Zach and I when we gave this a first read-through. And so, Zach, if you don't mind, I'm just gonna go ahead and give my thoughts on it. Or did you want to go first?Zach: The floor is yours.Ade: Okay. So as I see it, there are, like, several different layers of suck here. I'm sorry that--first of all, I'm sorry that you're going through this. It's not a fun or funny situation when you feel as though your career is in the hands of someone who doesn't care about you, but like I said, there are several different layers, and I think it would be best to separate all of those things. So on the one hand, you have a situation where--and at the beginning of Living Corporate, we actually had--I believe it's our very first episode--where we were talking about separating your sponsors for your mentors, knowing the two and leveraging the two. Currently I believe what you need is a sponsor, not a mentor. Your current mentor isn't doing her job. And then the other issue is the matter of your money and getting a new job. So I'm just gonna address them one after the other. So I believe you need to go on the hunt for a sponsor, whether that is within your company, somebody who has a role that you eventually see yourself taking. So obviously this requires first figuring out what you want your trajectory to be at this current moment. That doesn't mean that it can't change, but I believe that everybody needs a five-year plan for themselves. And so in five years, where do you see yourself? In ten years, where do you see yourself? And find people who have optimized their career and go talk to them, whether it's within your company or without. Go on coffee dates. Hit people up on LinkedIn. And I promise you that's not a weird thing. I just came to realize that myself. Like, I'll hit up people on LinkedIn and just kind of ask them to go for coffee or, you know, get their thoughts on certain things. So that's one. The other is that, you know, I understand that you might be feeling hurt, but what your manager is going through is about her and not you, and so although it feels as though she's kind of set herself up as a barrier instead of helping you in your career, I wouldn't take that too personally. Don't let that reflect in your work. If anything, allow that to spur more conversations with, again, those sponsors that you're looking for because they're the ones--within your company, they're the ones who will be putting you on new projects, who will be putting you in places, in rooms, in situations where they feel you have the potential to progress. And outside of your company, those sponsors are the ones who will slide you those job links like, "Hey, I saw this come up. I think you'd be a perfect fit in this situation. What do you think? Go ahead and apply," which brings me to my next point. Any raise that's pennies per paycheck--Zach: Yeah. If that's literal then yeah, that's a pause-worthy statement.Ade: Yeah, that's not it. That's not the lifestyle that I'm hoping and praying for for all my people. I was actually just having this conversation with a group of my friends that closed mouths don't get fed, and it's very typical, particularly of people of color, particularly of women of color, to feel as though we should be grateful for, you know, the pennies as opposed to asking for the thousands, and I don't know if that's gonna, for you, look like--and this is all gonna be personal to you, whether you feel as though you need to be in this company and so you need to figure out how to have the conversation about raises or if you need to step outside and start looking for new jobs. And to that I would say optimize your LinkedIn, get your resume together. If you need to find a professional to look at your resume for you or if, again, those sponsors that you're looking for can take a look at your resume and help you in that regard. But I would definitely say you should start networking. Go to industry events. So whatever your industry is, Meetup is a really good place to find organizations or groups where you can network and meet people and kind of--if you have business cards--give your business cards out, ask people out to coffee at those events. People there are open and willing to mentor you, but you just have to ask. And so those would be my two biggest recommendations for you, and definitely, definitely, definitely keep your head up because this is something that I can relate to personally, and I'm sure Zach has, in some form or fashion, been in a position where he's had to advocate for himself, but you are always your own best advocate, and so this is just a matter of fine-tuning the language and finding the people who are willing to listen to you. Zach, what you got?Zach: Yeah. I mean, one I absolutely agree with your point, right? With all the points that you've made. Ultimately, just to keep it a little bit more succinct, I think it comes down to two things. First of all, you are your best advocate, and then two it's your own career. So it's really one point, right? So you have a couple things here, right? So you have challenges internally where you have your manager who's a bit frustrated and jaded to the language that you're used to, and you now have concerns if they're going to be able to advocate for you. Well, like to what we've been saying, rejecting the premise that anyone else is responsible for advocating for you and that you own your career, it starts with you saying, "Okay, what is it that I want to achieve here?" And then just talking to people, knocking on doors inside your company and being like, "Look, this is what I want to do. This is how I want to do it. Can you help me?" And be comfortable with the people who say no. And they may say no by just flat out saying no. They may say no by just not following up. They may say no by some long-winded answer, but just be comfortable with the people saying no 'cause eventually you'll find someone saying yes. Now, if you can't find the yes internally then it is time to leave, and you already were talking about the fact that you're looking for--you're exploring another opportunity. So your salary--like, your salary is a personal problem. So what do I mean by that? Your salary is a personal problem, meaning you having an issue with your salary, that's an issue between you and you. So you need to figure out a way how you're gonna answer that question. So are you going to get put together a case internally and say, "Hey, look. This is the number I'm looking for because I haven't had a raise in this many years," or "I've only had this one raise," or whatever the case is, or are you going to find another job, right? So plenty of studies show that when it comes to job hunting, you know, you're gonna get a bigger bump transitioning away from a company than you are staying inside. And I'll--there might be people who argue or disagree with me on that. If you do, please send in a letter, send in your comments. And there's more to a job than just your salary, but my point is you have to figure out a way to address that for yourself, right? And, like, I'm not attacking you. I definitely understand where you're coming from. I've definitely been there, where I've got caught up in the illusion of waiting for people to advocate for me, but I realized that people only advocate for you as much as it helps themselves. And so your manager who has her frustrations and things of that nature, that's perfectly human, and she shouldn't be shamed for that. At the same time, that's not your problem. Your problem is how are you gonna make sure that you take care of yourself? So Nicole, like, we're really excited about you sending us another letter, like, letting us know what's going on. We definitely are praying for the best. There's definitely a lot going on for sure, but yeah, advocate for yourself. And we actually have an article dropping on Living Corporate soon about strategic self-advocacy, so keep an eye out for that. If you have any additional questions, just reach back out and we'll make sure to chop it up. Offline.Ade: And definitely thank you for writing us and trusting us with this. So that about wraps it up for our listener letter portion of the segment. As a reminder, we do encourage conversation, so please reach out if you have any questions, comments, or concerns for us.[segment break]Ade: All right, y'all. It is another episode of Favorite Things. So I have a confession actually, guys. Please, please, please keep this on the downlow, as I say this on a podcast. I had my first bite of mac and cheese recently. I know. I know.Zach: Your first bite? Like, you've just now--you've just now tried--Ade: I just--like, I literally just tried mac and cheese, and it was--and I feel like the only real reason that I liked it was because it was a seafood mac and cheese because I've always been really, really averse to cheese, but I've only recently started being okay with it. Like, it doesn't automatically make me nauseous. And so, like, I had my--my friend made--there was a kickback, and my friend made seafood mac and cheese, and I was like, "Seafood? I guess I can give it a shot." I don't know what that voice was. [laughs] But I gave it a shot and I ate it, and it was good. Like, it was really, really good, and I was like, "Hold on, wait a minute. Are you telling me that I've been missing out on deliciousness this whole time?" I was like, "No, this is probably a one-off. It's because of the seafood." And then I went to another event with friends, and my friend made just regular old mac and cheese, and I was like, "You know what? I'm gonna give it another shot," and it was astounding.Zach: [laughs] It was astounding?Ade: Astounding. Astounding. Are you kidding me? And so now I am mad that I have wasted all of these years of my life not eating cheese, specifically not eating mac and cheese, especially since I apparently make good mac and cheese, but I've never eaten it because I've always been afraid of what it does to my life afterwards--of what cheese does to my life. And so now I'm just trying to spend all this time, like, making up for lost time.Zach: With cheese.Ade: With mac and cheese, to be specific. Zach: With mac and cheese, to be specific. Okay. First of all, that's very funny. Ade: [laughs]Zach: Because mac and cheese is--first of all, it's just such a common dish from my perspective, right? But at the same time I'm excited for you, and I actually think what we should do is maybe add a fun segment from time to time just called Ade's Cheese, right? Like, where you try, like, a new cheese, right? So, like, maybe next time you try Gouda, and then another time you try feta. Ade: Actually--it's so funny you say that because I bought a smoked Gouda from the Amish [inaudible] market in my apartment, and it's in my fridge right now, okay?Zach: Okay. So okay, great. So look, let's take a note 'cause the next time--the next time we're together we'll bring up your review on Gouda. Ade: Look, listen. I actually already took a slice of it with some pepper jelly, and I want to fight every single one of my friends who did not inform me that cheese was this good.Zach: Right. Now, look, cheese is--cheese is good. Like, it's a seller for a reason.Ade: I want y'all to know that there's no way you love me and left me out of the secret for this long.Zach: Nah, see--actually, I challenge that, right? I challenge that because they could've been holding you back from cheese purely for the health reasons, right? Like, there's no--Ade: Nah, forget all that, because, like, they watch me eat three slices of cake and they actually encourage me. Like, "Here, have my slice of cake." Zach: Okay. Well, then I understand your frustration.Ade: See? Mm-hmm. They're not loyal. Not a single one of 'em. [laughs] My only other thing this week, it's a book called Perfect Peace by Daniel Black. So it's a book about what happens--there are several different themes. Part of it is gender. Part of it is, like, family betrayal. And so, like, the plot is it's this family in the rural south. Mama has six boys already, and she's pregnant with her seventh, and she, the whole time, is thinking, "Oh, this is gonna be my girl." She has a lot of issues surrounding her relationship with her mother, and so she wants to really, like, nurture a girl, a daughter. Turns out that she has a son, and so what she decides to do is raise her son as a daughter, and so she names this boy Perfect. Their family's called Peace. And so Perfect is raised, up until he's 8, as a girl. It's just this really, really gripping story about, like, love and family and what it means to--like, what gender means and what family means and what truth means and all of these other things, and you find yourself just, like, shocked every other page. But yeah, that's my favorite thing, and that was a whole lot, but I hope y'all take a look. What about you, Zach?Zach: Well, first of all, that's cool. We've got to make sure that we add Perfect Peace to our reading list.Ade: Oh, yeah.Zach: That's right. Make sure you check out our reading list. It's great. So sticking with my record of aggressive book titles, my favorite thing right now has to be this book I'm rereading called This Nonviolent Stuff'll Get You Killed by Charles Cobb. It explores the history of nonviolence during the civil rights era and its function. It also breaks down the history and culture of gun ownership for black people in America. It's a really interesting read. Academic while not being too heavy. It's just a really approachable book, and it's also on our reading list, so make sure you check that out.Ade: And that's our show. Thank you for joining us on the Living Corporate podcast. Make sure to follow us on Instagram at LivingCorporate, Twitter at LivingCorp_Pod, and subscribe to our newsletter through www.living-corporate.com. If you have a question you'd like us to answer and read on the show, please make sure you email us at livingcorporatepodcast@gmail.com. Also, don't forget to check out our Patreon at LivingCorporate as well. And that does it for this show. My name's Ade.Zach: And this has been Zach.Ade and Zach: Peace.Kiara: Living Corporate is a podcast by Living Corporate, LLC. Our logo was designed by David Dawkins. Our theme music was produced by Ken Brown. Additional music production by Antoine Franklin from Musical Elevation. Post-production is handled by Jeremy Jackson. Got a topic suggestion? Email us at livingcorporatepodcast@gmail.com. You can find us online on Twitter, Facebook, Instagram, and living-corporate.com. Thanks for listening. Stay tuned.

Listen Here: iTunes | Overcast | PlayerFM Keep up with the North Star Podcast. My guest today is Michael Nielsen a scientist, writer and computer programmer who works as a research fellow at Y Combinator Research. Michael has written on various topics from quantum teleportation, geometric complexity and the future of science. Michael is the most original thinker I have discovered in a long time when it comes to artificial intelligence, augmenting human intelligence, reinventing explanation and using new media to enable new ways of thinking. Michael has pushed my mind towards new and unexpected places. This conversation gets a little wonky at times, but as you know, the best conversations are difficult. They are challenging because they venture into new, unexplored territory and that's exactly what we did here today.  Michael and I explored the history of tools and jump back to the invention of language, the defining feature of human collaboration and communication. We explore the future of data visualization and talk about the history of the spreadsheet as a tool for human thought.  “Before writing and mathematics, you have the invention of language which is the most significant event in some ways. That’s probably the defining feature of the human species as compared to other species.” LINKS Find Michael Online Michael’s Website Michael’s Twitter Michael’s Free Ebook: Neural Networks and Deep Learning Reinventing Discovery: The New Era of Networked Science Quantum Computation and Quantum Information Mentioned In the Show 2:12 Michael’s Essay Extreme Thinking 21:48 Photoshop 21:49 Microsoft Word 24:02 The David Bowie Exhibit 28:08 Google AI’s Deep Dream Images 29:26 Alpha Go 30:26 Brian Eno’s Infamous Airport Music 33:41 Listen to Speed of Life by Dirty South Books Mentioned 46:06 Zen and The Art of Motorcycle Maintenance by Robert M. Pirsig 54:12 Cat’s Cradle by Kurt Vonnegut People Mentioned 13:27 Rembrandt Van Rijn’s Artwork 15:01 Monet’s Gallery 15:02 Pierre Auguste Renoir’s Impressionist Art 15:05 Picasso’s Paintings 15:18 Paul Cezanne’s Post-Impressionist Art 25:40 David Brooke’s NYT Column 35:19 Franco of Cologne 56:58 Alan Kay’s Ted Talk on the future of education 57:04 Doug Engelbart 58:35 Karl Schroeder 01:02:06 Elon Musk’s Mars-bound company, SpaceX 01:04:25 Alex Tabarrok Show Topics 4:01 Michael’s North Star, which drives the direction of his research 5:32 Michael talks about how he sets his long-term goals and how he’s propelled by ideas he’s excited to see in the world. 7:13 The invention of language. Michael discusses human biology and how it’s easier to learn a language than writing or mathematics.  9:28 Michael talks about humanity’s ability to bootstrap itself. Examples include maps, planes, and photography  17:33 Limitations in media due to consolidation and the small number of communication platforms available to us  18:30 How self-driving cars and smartphones highlight the strange intersection where artificial intelligence meets human interaction and the possibilities that exist as technology improves 21:45 Why does Photoshop improve your editing skills, while Microsoft Word doesn’t improve your writing skills? 27:07 Michael’s opinion on how Artificial Intelligence can help people be more creative “Really good AI systems are going to depend upon building and currently depend on building very good models of different parts of the world, to the extent that we can then build tools to actually look in and see what those models are telling us about the world.”  30:22 The intersection of algorithms and creativity. Are algorithms the musicians of the future? 36:51 The emerging ability to create interactive visual representations of spreadsheets that are used in media, internally in companies, elections and more. “I’m interested in the shift from having media be predominantly static to dynamic, which the New York Times is a perfect example of. They can tell stories on newyorktimes.com that they can’t tell in the newspaper that gets delivered to your doorstep.” 45:42 The strategies Michael uses to successfully trail blaze uncharted territory and how they emulate building a sculpture   53:30 Michael’s learning and information consumption process, inspired by the idea that you are what you pretend to be 56:44 The foundation of Michael’s worldview. The people and ideas that have shaped and inspired Michael.  01:02:26 Michael’s hypothesis for the 21st century project involving blockchain and cryptocurrencies and their ability to make implementing marketplaces easier than ever before “The key point is that some of these cryptocurrencies actually, potentially, make it very easy to implement marketplaces. It’s plausible to me that the 21st century [project] turns out to be about [marketplaces]. It’s about inventing new types of markets, which really means inventing new types of collective action.” Host David Perell and Guest Michael Nielsen TRANSCRIPT Hello and welcome to the North Star. I'm your host, David Perell, the founder of North Star Media, and this is the North Star podcast. This show is a deep dive into the stories, habits, ideas, strategies, and rituals that guide fulfilled people and create enormous success for them, and while the guests are diverse, they share profound similarities. They're guided by purpose, live with intense joy, learn passionately, and see the world with a unique lens. With each episode, we get to jump into their minds, soak up their hard-earned wisdom and apply it to our lives. My guest today is Michael Nielson, a scientist, writer, and computer programmer, who works as a research fellow at Y Combinator Research. Michael's written on various topics from quantum teleportation to geometric complexity to the future of science, and now Michael is the most original thinker I've discovered in a long time. When it comes to artificial intelligence to augmenting human intelligence, reinventing explanation, or using new media to enable new ways of thinking, Michael has pushed my mind towards new and unexpected places. Now, this conversation gets a little wonky at times, but as you know, the best conversations are difficult. They're challenging because they venture into new, unexplored territory and that's exactly what we did here today. Michael and I explored the history of tools. This is an extension of human thought and we jump back to the invention of language, the defining feature of human collaboration and communication. We explore the future of data visualization and talk about the history of this spreadsheet as a tool for human thought. Here's my conversation with Michael Nielson. DAVID: Michael Nielson, welcome to the North Star Podcast. MICHAEL: Thank you, David. DAVID: So tell me a little bit about yourself and what you do. MICHAEL: So day to day, I'm a researcher at Y Combinator Research. I'm basically a reformed theoretical physicist. My original background is doing quantum computing work. And then I've moved around a bit over the years. I've worked on open science, I've worked on artificial intelligence and most of my current work is around tools for thought. DAVID: So you wrote an essay which I really enjoyed called Extreme Thinking. And in it, you said that one of the single most important principle of learning is having a strong sense of purpose and a strong sense of meaning. So let's be in there. What is that for you? MICHAEL: Okay. You've done your background. Haven't thought about that essay in years. God knows how long ago I wrote it. Having a strong sense of purpose. What did I actually mean? Let me kind of reboot my own thinking. It's, it's kind of the banal point of view. How much you want something really matters. There's this lovely interview with the physicist Richard Feynman, where he's asked about this Indian mathematical prodigy Ramanujan. A movie was made about Ramanujan’s mathematical prowess a couple of years ago. He was kind of this great genius. And a Feynman was asked what made Ramanujan so good. And the interview was expecting him to say something about how bright this guy was or whatever. And Feynman said instead, that it was desire. It was just that love of mathematics was at the heart of it. And he couldn't stop thinking about it and he was thinking about it. He was doing in many ways, I guess the hard things. It's very difficult to do the hard things that actually block you unless you have such a strong desire that you're willing to go through those things. Of course, I think you see that in all people who get really good at something, whether it be sort of a, just a skill like playing the violin or something, which is much more complicated. DAVID: So what is it for you? What is that sort of, I hate to say I want to just throw that out here, that North Star, so to speak, of what drives you in your research? MICHAEL: Research is funny. You go through these sort of down periods in which you don't necessarily have something driving you on. That used to really bother me early in my career. That was sort of a need to always be moving. But now I think that it's actually important to allow yourself to do that. That's actually how you find the problems, which really get, get you excited. If you don't sort of take those pauses, then you're not gonna find something that's really worth working on. I haven't actually answered your question. I think I know I've jumped to that other point because that's one thing that really matters to me and it was something that was hard to learn. DAVID: So one thing that I've been thinking a lot about recently is you sort of see it in companies. You see it in countries like Singapore, companies like Amazon and then something like the Long Now Foundation with like the 10,000-year clock. And I'm wondering to you in terms of learning, there's always sort of a tension between short-term learning and long-term learning. Like short-term learning so often is maybe trying to learn something that feels a little bit richer. So for me, that's reading, whereas maybe for a long-term learning project there are things I'd like to learn like Python. I'd like to learn some other things like that. And I'm wondering, do you set long-term learning goals for yourself or how would you think about that trade off? MICHAEL: I try to sit long-time learning goals to myself, in many ways against my better judgment. It's funny like you're very disconnected from you a year from now or five years from now, or 10 years from now. I can't remember, but Eisenhower or Bonaparte or somebody like that said that the planning is invaluable or planning plans are overrated, but planning is invaluable. And I think that's true. And this is the right sort of attitude to take towards these long-term lending goals. Sure. It's a great idea to decide that you're going out. Actually, I wouldn't say it was a great idea to say that you're going to learn python, I might say. However, there was a great idea to learn python if you had some project that you desperately wanted to do that it required you to learn python, then it's worth doing, otherwise stay away from python. I certainly favor, coupling learning stuff to projects that you're excited to actually see in the world. But also, then you may give stuff up, you don't become a master of python and instead you spend whatever, a hundred hours or so learning about it for this project that takes you a few hundred hours, and if you want to do a successor project which involves it, more of it. Great, you'll become better. And if you don't, well you move onto something else. DAVID: Right. Well now I want to dive into the thing that I'm most excited to talk to you about today and that's tools that extend human thought. And so let's start with the history of that. We'll go back sort of the history of tools and there's had great Walter Ong quote about how there are no new thoughts without new technologies. And maybe we can start there with maybe the invention of writing, the invention of mathematics and then work through that and work to where you see the future of human thought going with new technologies. MICHAEL: Actually, I mean before writing and mathematics, you have the invention of language, which is almost certainly the most significant single event in some ways. The history of the planet suddenly, you know, that's probably the defining feature of the human species as compared to other species. Um, I say invention, but it's not even really invention. There's certainly a lot of evidence to suggest that language is in some important sense built into our biology. Not the details of language. Um, but this second language acquisition device, it seems like every human is relatively very set to receive language. The actual details depend on the culture we grow up on. Obviously, you don't grow up speaking French if you were born in San Francisco and unless you were in a French-speaking household, some very interesting process of evolution going on there where you have something which is fundamentally a technology in some sense languages, humans, a human invention. It's something that's constructed. It's culturally carried. Um, it, there's all these connections between different words. There's almost sort of a graph of connections between the words if you like, or all sorts of interesting associations. So in that sense, it's a technology, something that's been constructed, but it's also something which has been over time built into our biology. Now if you look at later technologies of thought things like say mathematics, those are much, much later. That hasn't been the same sort of period of time. Those don't seem to be built into our biology in quite the same way. There's actually some hints of that we have some intrinsic sense of number and there's some sort of interesting experiments that suggest that we were built to do certain rudimentary kinds of mathematical reasoning but there's no, you know, section of the brain which specializes sort of from birth in solving quadratic equations, much less doing algebraic geometry or whatever, you know, super advanced. So it becomes this cultural thing over the last few thousand years, this kind of amazing process whereby we've started to bootstrap ourselves. If you think about something like say the invention of maps, which really has changed the way people relate to the environment. Initially, they were very rudimentary things. Um, and people just kept having new ideas for making maps more and more powerful as tools for thought. Okay. I can give you an example. You know, a very simple thing, if you've ever been to say the underground in London or most other subway systems around the world. It was actually the underground when this first happened, if you look at the map of the underground, I mean it's a very complicated map, but you can get pretty good at reasoning about how to get from one place to another. And if you look at maps prior to, I think it was 1936, in fact, the maps were much more complicated. And the reason was that mapmakers up to that point had the idea that where the stations were shown on the map had to correspond to the geography of London. Exactly. And then somebody involved in producing the underground map had just a brilliant insight that actually people don't care. They care about the connections between the stations and they want to know about the lines and they want some rough idea of the geography, but they're quite happy for it to be very rough indeed and he was able to dramatically simplify that map by simply doing away with any notion of exact geography. DAVID: Well, it's funny because I noticed the exact same thing in New York and so often you have insights when you see two things coming together. So I was on the subway coming home one day and I was looking at the map and I always thought that Manhattan was way smaller than Brooklyn, but on the subway map, Manhattan is actually the same size as Brooklyn. And in Manhattan where the majority of the subway action is, it takes up a disproportionate share of the New York City subway map. And then I went home to go read Power Broker, which is a book about Robert Moses building the highways and they had to scale map. And what I saw was that Brooklyn was way, way bigger than Manhattan. And from predominantly looking at subway maps. Actually, my topological geographical understanding of New York was flawed and I think exactly to your point. MICHAEL: It's interesting. When you think about what's going on there and what it is, is some person or a small group of people is thinking very hard about how to represent their understanding of the city and then the building, tools, sort of a technological tool of thought that actually then saves millions or in the case of a New York subway or the London underground, hundreds of millions or billions of people, mostly just seconds, sometimes, probably minutes. Like those maps would be substantially more complicated sort of every single day. So it's only a small difference. I mean, and it's just one invention, right? But, you know, our culture is of course accumulated thousands or millions of these inventions. DAVID: One of my other favorite ones from being a kid was I would always go on airplanes and I'd look at the route map and it would always show that the airplanes would fly over the North Pole, but on two-dimensional space that was never clear to me. And I remember being with my dad one night, we bought a globe and we took a rubber band and we stretched why it was actually shorter to fly over the North Pole, say if you're going from New York to India. And that was one of the first times in my life that I actually didn't realize it at the time, but understood exactly what I think you're trying to get at there. How about photography? Because that's another one that I think is really striking, vivid from the horse to slow motion to time lapses. MICHAEL: Photography I think is interesting in this vein in two separate ways. One is actually what it did to painting, which is of course painters have been getting more and more interested in being more and more realistic. And honestly, by the beginning of the 19th century, I think painting was pretty boring. Yeah, if you go back to say the 16th and 17th centuries, you have people who are already just astoundingly good at depicting things in a realistic fashion. To my mind, Rembrandt is probably still the best portrait painter in some sense to ever live. DAVID: And is that because he was the best at painting something that looked real? MICHAEL: I think he did something better than that. He did this very clever thing, you know, you will see a photograph or a picture of somebody and you'll say, oh, that really looks like them. And I think actually most of the time we, our minds almost construct this kind of composite image that we think of as what David looks like or what our mother looks like or whatever. But actually moment to moment, they mostly don't look like that. They mostly, you know, their faces a little bit more drawn or it's, you know, the skin color is a little bit different. And my guess, my theory of Rembrandt, is that he may have actually been very, very good at figuring out almost what that image was and actually capturing that. So, yeah, I mean this is purely hypothetical. I have no real reason to believe it, but I think it's why I responded so strongly to his paintings. DAVID: And then what happened? So after Rembrandt, what changed? MICHAEL: So like I said, you mean you keep going for a sort of another 200 years, people just keep getting more and more realistic in some sense. You have all the great landscape painters and then you have this catastrophe where photography comes along and all of a sudden you're being able to paint in a more and more realistic fashion. It doesn't seem like such a hot thing to be doing anymore. And if for some painters, I think this was a bit of a disaster, a bit of dose. I said of this modern wave, you start to see through people like Monet and Renoir. But then I think Picasso, for me anyway, was really the pivotal figure in realizing that actually what art could become, is the invention of completely new ways of seeing. And he starts to play inspired by Cezanne and others in really interesting ways with the construction of figures and such. Showing things from multiple angles in one painting and different points of view. And he just plays with hundreds of ideas along these lines, through all of his painting and how we see and what we see in how we actually construct reality in their heads from the images that we see. And he did so much of that. It really became something that I think a lot of artists, I'm not an artist or a sophisticated art theory person, but it became something that other people realized was actually an extraordinarily interesting thing to be doing. And much of the most interesting modern art is really a descendant of that understanding that it's a useful thing to be doing. A really interesting thing to be doing rather than becoming more and more realistic is actually finding more and more interesting ways of seeing and being able to represent the world. DAVID: So I think that the quote is attributed to Marshall McLuhan, but I have heard that Winston Churchill said it. And first, we shape our tools and then our tools shape us. And that seems to be sort of the foundation of a lot of the things that you're saying. MICHAEL: Yeah, that's absolutely right. I mean, on the other side, you also have, to your original question about photography. Photographers have gradually started to realize that they could shape how they saw nature. Ansel Adams and people like this, you know. Just what an eye. And understanding his tools so verbally he's not just capturing what you see. He's constructing stuff in really, really interesting ways. DAVID: And how about moving forward in terms of your work, thinking about where we are now to thinking about the future of technology. For example, one thing that frustrates me a bit as a podcast host is, you know, we just had this conversation about art and it's the limits of the audio medium to not be able to show the paintings of Rembrandt and Cezanne that we just alluded to. So as you think about jumping off of that, as you think about where we are now in terms of media to moving forward, what are some of the challenges that you see and the issues that you're grappling with? MICHAEL: One thing for sure, which I think inhibits a lot of exploration. We're trapped in a relatively small number of platforms. The web is this amazing thing as our phones, iOS and whatnot, but they're also pretty limited and that bothers me a little bit. Basically when you sort of narrow down to just a few platforms which have captured almost all of the attention, that's quite limiting. People also, they tend not to make their own hardware. They don't do these kinds of these kinds of things. If that were to change, I think that would certainly be exciting. Something that I think is very, very interesting over the next few years, artificial intelligence has gotten to the point now where we can do a pretty good job in understanding what's actually going on inside a room. Like we can set up sufficient cameras. If you think about something like self-driving cars, essentially what they're doing is they're building up a complete model of the environment and if that model is not pretty darned good, then you can't do self-driving cars, you need to know where the pedestrians are and where the signs are and all these kinds of things and if there's an obstruction and that technology when brought into, you know, the whole of the rest of the world means that you're pretty good at passing out. You know what's inside the room. Oh, there's a chair over there, there's a dog which is moving in that direction, there's a person, there’s a baby and sort of understanding all those actions and ideally starting to understand all the gestures which people are making as well. So we're in this very strange state right at the moment. Where the way we talk to computers is we have these tiny little rectangles and we talk to them through basically a square inch or so of sort of skin, which is our eyes. And then we, you know, we tap away with our fingers and the whole of the rest of our body and our existence is completely uncoupled from that. We've effectively reduced ourselves to our fingers and our eyes. We a couple to it only through the whatever, 100 square inches, couple hundred square inches of our screens or less if you're on a phone and everything else in the environment is gone. But we're actually at a point where we're nearly able to do an understanding of all of that sufficiently well that actually other modes of interaction will become possible. I don't think we're quite there yet, but we're pretty close. And you start to think about, something like one of my favorite sport is tennis. You think about what a tennis player can do with their body or you think about what a dancer can do with their body. It's just extraordinary. And all of that mode of being human and sort of understanding we can build up antibodies is completely shut out from the computing experience at the moment. And I think over the next sort of five to ten years that will start to reenter and then in the decades hence, it will just seem strange that it was ever shut out. DAVID: So help me understand this. So when you mean by start to reenter, do mean that we'll be able to control computers with other parts of our bodies or that we'll be spending less time maybe typing on keyboards. Help me flesh this out. MICHAEL: I just mean that at the moment. As you speak to David, you are waving your arms around and all sorts of interesting ways and there is no computer system which is aware of it, what your computer system is aware of. You're doing this recording. That's it. And even that, it doesn't understand in any sort of significant way. Once you've gained the ability to understand the environment. Lots of interesting things become possible. The obvious example, which everybody immediately understands is that self driving cars become possible. There's this sort of enormous capacity. But I think it's certainly reasonably likely that much more than that will become possible over the next 10 to 20 years. As your computer system becomes completely aware of your environment or as aware as you're willing to allow it to be. DAVID: You made a really interesting analogy in one of your essays about the difference between Photoshop and Microsoft Word. That was really fascinating to me because I know both programs pretty well. But to know Microsoft word doesn't necessarily mean that I'm a better writer. It actually doesn't mean that at all. But to know Photoshop well probably makes me pretty good at image manipulation. I'm sure there's more there, but if you could walk me through your thought process as you were thinking through that. I think that's really interesting. MICHAEL: So it's really about a difference in the type of tools which are built into the program. So in Photoshop, which I should say, I don't know that well, I know Word pretty well. I've certainly spent a lot more time in it than I have ever spent in Photoshop. But in Photoshop, you do have these very interesting tools which have been built in, which really condense an enormous amount of understanding of ideas like layers or an idea, different brushes, these kinds of ideas. There's just a tremendous amount of understanding which has been built in there. When I watch friends who are really good with these kinds of programs, what they can do with layers is just amazing. They understand all these kind of clever screening techniques. It seems like such a simple idea and yet they're able to do these things that let you do astonishing things just with sort of three or four apparently very simple operations. So in that sense, there are some very deep ideas about image manipulation, which had been built directly into Photoshop. By contrast, there's not really very many deep ideas about writing built into Microsoft Word. If you talk to writers about how they go about their actual craft and you say, well, you know, what heuristics do use to write stories and whatnot. Most of the ideas which they use aren't, you know, they don't correspond directly to any set of tools inside Word. Probably the one exception is ideas, like outlining. There are some tools which have been built into word and that's maybe an example where in fact Word does help the writer a little bit, but I don't think to nearly the same extent as Photoshop seems to. DAVID: I went to an awesome exhibit for David Bowie and one of the things that David but we did when he was writing songs was he had this word manipulator which would just throw him like 20, 30 words and the point wasn't that he would use those words. The point was that by getting words, his mind would then go to different places and so often when you're in my experience and clearly his, when you're trying to create something, it helps to just be thrown raw material at you rather than the perennial, oh my goodness, I'm looking at a white screen with like this clicking thing that is just terrifying, Word doesn't help you in that way. MICHAEL: So an example of something which does operate a little bit in that way, it was a Ph.D. thesis was somebody wrote at MIT about what was called the Remembrance Agent. And what it would do, it was a plugin essentially for a text editor that it would, look at what you are currently writing and it would search through your hard disk for documents that seemed like they might actually be relevant. Just kind of prompt you with what you're writing. Seems like it might be related to this or this or this or this or this. And to be perfectly honest, it didn't actually work all that well. I think mostly because the underlying machine learning algorithms it used weren't very clever. It's defunct now as far as I know. I tried to get it to run on my machine or a year or two ago and I couldn't get it running. It was still an interesting thing to do. It had exactly this same kind of the belly sort of experience. Even if they weren't terribly relevant. You kind of couldn't understand why on earth you are being shown it. It's still jogged your mind in an interesting way. DAVID: Yeah. I get a lot of help out of that. Actually, I’ll put this example. So David Brooks, you know the columnist for the New York Times. When he writes, what he does is he gets all of his notes and he just puts his notes on the floor and he literally crawls all around and tries to piece the notes together and so he's not even writing. He's just organizing ideas and it must really help him as it helps me to just have raw material and just organize it all in the same place. MICHAEL: There's a great British humorist, PG Boathouse, he supposedly wrote on I think it was the three by five-inch cards. He'd write a paragraph on each one, but he had supposedly a very complicated system in his office, well not complicated at all, but it must have looked amazing where he would basically paste the cards to the wall and as the quality of each paragraph rose, he would move the paragraph up the wall and I think the idea was something like once it got to the end, it was a lion or something, every paragraph in the book had to get above that line and at that point it was ready to go. DAVID: So I've been thinking a lot about sort of so often in normal media we take AI sort of on one side and art on another side. But I think that so many of the really interesting things that will emerge out of this as the collaboration between the two. And you've written a bit about art and AI, so how can maybe art or artificial intelligence help people be more creative in this way? MICHAEL: I think we still don't know the answer to the question, unfortunately. The hoped-for answer the answer that might turn out to be true. Real AI systems are going to build up very good models of different parts of the world, maybe better than any human has of those parts of the world. It might be the case, I don't know. It might be the case that something like the Google translate system, maybe in some sense that system already knows some facts about translation that would be pretty difficult to track down in any individual human mind and sort of so much about translation in some significant ways. I'm just speculating here. But if you can start to interrogate that understanding, it becomes a really useful sort of a prosthetic for human beings. If you've seen any of these amazing, well I guess probably the classics, the deep dream images that came out of Google brain a couple of years ago. Basically, you take ordinary images and you're sort of running them backwards through a neural net somehow. You're sort of seeing something about how the neural net sees that image. You get these very beautiful images as a result. There's something strange going on and sort of revealing about your own way of seeing the world. And at the same time, it's based on some structure which this neural net has discovered inside these images which is not ordinarily directly accessible to you. It's showing you that structure. So sort of I think the right way to think about this is that really good AI systems are going to depend upon building and do currently depend on building very good models of different parts of the world and to the extent that we can then build tools to actually look in and see what those models are telling us about the world, we can learn interesting new things which are useful for us. I think the conventional way, certainly the science fiction way to think about AI is that we're going to give it commands and it's going to do stuff. How you shut the whatever it is, the door or so on and so forth, and there was certainly will be a certain amount of that. Or with AlphaGo what is the best move to take now, but actually in some sense, with something like AlphaGo, it's probably more interesting to be able to look into it and see what it's understanding is of the board position than it is to ask what's the best move to be taken. A colleague showed me a go program, a prototype, what it would do. It was a very simple kind of a thing, but it would help train beginners. I think it was Go, but by essentially colorizing different parts of the board according to whether they were good or bad moves to be taking in its estimation. If you're a sophisticated player, it probably wasn't terribly helpful, but if you're just a beginner, there's an interesting kind of a conditioning going on there. At least potentially a which lets you start to see. You get a feeling for immediate feedback from. And all that's happening there is that you're seeing a little bit into one of these machine learning algorithms and that's maybe helping you see the world in a slightly different way. DAVID: As I was preparing for this podcast, you've liked a lot to Brian Eno and his work. So I spent as much time reading Brian Eno, which I'm super happy that I went down those rabbit holes. But one of the things that he said that was really interesting, so he's one of the fathers of ambient music and he said that a lot of art and especially music, there will sort of be algorithms where you sort of create an algorithm that to the listener might even sound better than what a human would produce. And he said two things that were interesting. The first one is that you create an algorithm and then a bunch of different musical forms could flower out of that algorithm. And then also said that often the art that algorithms create is more appealing to the viewer. But it takes some time to get there. And had the creator just followed their intuition. They probably would have never gotten there. MICHAEL: It certainly seems like it might be true. And that's the whole sort of interesting thing with that kind of computer-generated music is to, I think the creators of it often don't know where they're gonna end up. To be honest, I think my favorite music is all still by human composers. I do enjoy performances by people who live code. There's something really spectacular about that. So there are people who, they will set up the computer and hook it up to speakers and they will hook the text editor up to a projector and they'll have essentially usually a modified form of the programming language list a or people use a few different systems I guess. And they will write a program which producers music onstage and they'll just do it in real time and you know, it starts out sounding terrible of course. And that lasts for about 20 seconds and by about sort of 30 or 40 seconds in, already it's approaching the limits of complex, interesting music and I think even if you don't really have a clue what they're doing as they program, there's still something really hypnotic and interesting about watching them actually go through this process of creating music sort of both before your eyes and before your ears. It's a really interesting creative experience and sometimes quite beautiful. I think I suspect that if I just heard one of those pieces separately, I probably wouldn't do so much for me, but actually having a done in real time and sort of seeing the process of creation, it really changes the experience and makes it very, very interesting. And sometimes, I mean, sometimes it's just beautiful. That's the good moment, right? When clearly the person doing it has something beautiful happen. You feel something beautiful happen and everybody else around you feel something beautiful and spontaneous. It's just happened. That's quite a remarkable experience. Something really interesting is happening with the computer. It's not something that was anticipated by the creator. It arose out of an interaction between them and their machine. And it is actually beautiful. DAVID: Absolutely. Sort of on a similar vein, there's a song called Speed of Life by Dirty South. So I really liked electronic music, but what he does is he constructs a symphony, but he goes one layer at a time. It's about eight and a half minute song and he just goes layer after layer, after layer, after layer. And what's really cool about listening to it is you appreciate the depth of a piece of music that you would never be able to appreciate if you didn't have that. And also by being able to listen to it over and over again. Because before we had recording, you would only hear a certain piece of music live and one time. And so there are new forms that are bursting out of now because we listen to songs so often. MICHAEL: It's interesting to think, there's a sort of a history to that as well. If you go back, essentially modern systems for recording music, if you go back much more than a thousand years. And we didn't really have them. There's a multi-thousand-year history of recorded music. But a lot of the early technology was lost and it wasn't until sort of I think the eighth, ninth century that people started to do it again. But we didn't get all the way to button sheet music overnight. There was a whole lot of different inventions. For instance, the early representations didn't show absolute pitch. They didn't show the duration of the note. Those were ideas that had to be invented. So in I think it was 1026, somebody introduced the idea of actually showing a scale where you can have absolute pitch. And then a century or two after that, Franco of Cologne had the idea of representing duration. And so they said like tiny little things, but then you start to think about, well, what does that mean for the ability to compose music? It means now that actually, you can start to compose pieces, which for many, many, many different instruments. So you start to get the ability to have orchestral music. So you go from being able to basically you have to kind of instruct small groups of players that's the best you can hope to do and get them to practice together and whatever. So maybe you can do something like a piece for a relatively small number of people, but it's very hard to do something for an 80 piece orchestra. Right? So all of a sudden that kind of amazing orchestral music I think becomes possible. And then, you know, we're sort of in version 2.0 of that now where of course you can lay a thousand tracks on top of one another if you want. You get ideas like micropolyphony. And these things where you look at the score and it's just incredible, there are 10,000 notes in 10 seconds. DAVID: Well, to your point I was at a tea house in Berkeley on Monday right by UC Berkeley's campus and the people next to me, they were debating the musical notes that they were looking at but not listening to the music and it was evident that they both had such a clear ability to listen to music without even listening to it, that they could write the notes together and have this discussion and it was somebody who doesn't know so much about music. It was really impressive. MICHAEL: That sounds like a very interesting conversation. DAVID: I think it was. So one thing that I'm interested in and that sort of have this dream of, is I have a lot of friends in New York who do data visualization and sort of two things parallel. I have this vision of like remember the Harry Potter book where the newspaper comes alive and it becomes like a rich dynamic medium. So I have that compared with some immersive world that you can walk through and be able to like touch and move around data and I actually think there's some cool opportunities there and whatnot. But in terms of thinking about the future of being able to visualize numbers and the way that things change and whatnot. MICHAEL: I think it's a really complicated question like it actually needs to be broken down. So one thing, for example, I think it's one of the most interesting things you can do with computers. Lots of people never really get much experience playing with models and yet it's possible to do this. Now, basically, you can start to build very simple models. The example that a lot of people do get that they didn't use to get, is spreadsheets. So, you can sort of create a spreadsheet that is a simple model of your company or some organization or a country or of whatever. And the interesting thing about the spreadsheet is really that you can play with it. And it sort of, it's reactive in this interesting way. Anybody who spends as much time with spreadsheets is they start to build up hypotheses, oh, what would happen if I changed this number over here? How would it affect my bottom line? How would it affect the GDP of the country? How would it affect this? How would it affect that? And you know, as you kind of use it, you start to introduce, you start to make your model more complicated. If you're modeling some kind of a factory yet maybe you start to say, well, what would be the effect if a carbon tax was introduced? So you introduce some new column into the spreadsheet or maybe several extra columns into the spreadsheet and you start to ask questions, well, what would the structure of the carbon tax be? What would help you know, all these sorts of what if questions. And you start very incrementally to build up models. So this experience, of course, so many people take for granted. It was not an experience that almost anybody in the world had say 20 or 30 years ago. Well, spreadsheets data about 1980 or so, but this is certainly an experience that was extremely rare prior to 1980 and it's become a relatively common, but it hasn't made its way out into mass media. We don't as part of our everyday lives or the great majority of people don't have this experience of just exploring models. And I think it's one of the most interesting things which particularly the New York Times and to some extent some of the other newsrooms have done is they've started in a small way to build these models into the news reading experience. So, in particular, the data visualization team at the New York Times, people like Amanda Cox and others have done this really interesting thing where you start to get some of these models. You might have seen, for example, in the last few elections. They've built this very interesting model showing basically if you can sort of make choices about how different states will vote. So if such and such votes for Trump, what are Hillary's chances of winning the election. And you may have seen they have this sort of amazing interactive visualization of it where you can just go through and you can sort of look at the key swing states, what happens if Pennsylvania votes for so and so what happens if Florida does? And that's an example where they've built an enormous amount of sort of pulling information into this model and then you can play with it to build up some sort of understanding. And I mean, it's a very simple example. I certainly think that you know, normatively, we're not there yet. We don't actually have a shared understanding. There's very little shared language even around these models. You think about something like a map. A map is an incredibly sophisticated object, which however we will start learning from a very young age. And so we're actually really good at parsing them. We know if somebody shows us a map, how to engage, how to interpret it, how to use it. And if somebody just came from another planet, actually they need to learn all those things. How do you represent a road? How do you represent a shop on a map? How do you represent this or that, why do we know that up is north like that's a convention. All those kinds of things actually need to be learned and we learned them when we were small. With these kinds of things which the Times and other media outlets are trying to do, we lack all of that collective knowledge and so they're having to start from scratch and I think that over a couple of generations actually, they'll start to evolve a lot of conventions and people will start to take it for granted. But in a lot of contexts actually you're not just going to be given a narrative, you know, just going to be told sort of how some columnist thinks the world is. Instead, you'll actually expect to be given some kind of a model which you can play with. You can start to ask questions and sort of run your own hypotheses in much the same way as somebody who runs a business might actually set up a spreadsheet to model their business and ask interesting questions. It's not perfect. The model is certainly that the map is not the territory as they say, but it is nonetheless a different way of engaging rather than just having some expert tell you, oh, the world is this way. DAVID: I'm interested in sort of the shift from having media be predominantly static to dynamic, which the New York Times is a perfect example. They can tell stories on Newyorktimes.com that they can't tell in the newspaper that gets delivered to your doorstep. But what's really cool about spreadsheets that you're talking about is like when I use Excel, being able to go from numbers, so then different graphs and have the exact same data set, but some ways of visualizing that data totally clicked for me and sometimes nothing happens. MICHAEL: Sure. Yeah. And we're still in the early days of that too. There's so much sort of about literacy there. And I think so much about literacy is really about opportunity. People have been complaining essentially forever that the kids of today are not literate enough. But of course, once you actually provide people with the opportunity and a good reason to want to do something, then they can become very literate very quickly. I think basically going back to the rise of social media sort of 10 or 15 years ago, so Facebook around whatever, 2006, 2007 twitter a little bit later, and then all the other platforms which have come along since. They reward being a good writer. So all of a sudden a whole lot of people who normally wouldn't have necessarily been good writers are significantly more likely to become good writers. It depends on the platform. Certainly, Facebook is a relatively visual medium. Twitter probably helps. I think twitter and text messaging probably are actually good. Certainly, you're rewarded for being able to condense an awful lot into a small period. People complain that it's not good English, whatever that is. But I think I'm more interested in whether something is a virtuosic English than I am and whether or not it's grammatically correct. People are astonishingly good at that, but the same thing needs to start to happen with these kinds of models and with data visualizations and things like that. At the moment, you know, you have this priestly caste that makes a few of them and that's an interesting thing to be able to do, but it's not really part of the everyday experience of most people. It's an interesting question whether or not that's gonna change as it going to in the province of some small group of people, or will it actually become something that people just expect to be able to do? Spreadsheets are super interesting in that regard. They actually did. I think if you've talked to somebody in 1960 and said that by 2018, tens of millions of people around the world would be building sophisticated mathematical models as just part of their everyday life. It would've seemed absolutely ludicrous. But actually, that kind of model of literacy has become relatively common. I don't know whether we'll get to 8 billion people though. I think we probably will. DAVID: So when I was in high school I went to, what I like to say is the weirdest school in the weirdest city in America. I went to the weirdest high school in San Francisco and rather than teaching us math, they had us get in groups of three and four and they had us discover everything on our own. So we would have these things called problem sets and we would do about one a week and the teacher would come around and sort of help us every now and then. But the goal was really to get three or four people to think through every single problem. And they called it discovery-based learning, which you've also talked about too. So my question to you is we're really used to learning when the map is clear and it's clear what to do and you can sort of follow a set path, but you actually do the opposite. The map is unclear and you're actually trailblazing and charting new territory. What strategies do you have to sort of sense where to move? MICHAEL: There's sort of a precursor question which is how do you maintain your morale and the Robert Pirsig book, Zen and the Art of Motorcycle Maintenance. He proposes a university subject, gumptionology 101. Gumption is almost the most important quality that we have. The ability to keep going when things don't seem very good. And mostly that's about having ways of being playful and ways of essentially not running out of ideas. Some of that is about a very interesting tension between having, being ambitious in what you'd like to achieve, but also being very willing to sort of celebrate the tiniest, tiniest, tiniest successes. Suddenly a lot of creative people I know I think really struggle with that. They might be very good at celebrating tiny successes but not have that significant ambitions, but they might be extremely ambitious, but because they're so ambitious, if an idea doesn't look Nobel prize worthy, they're not particularly interested in it. You know, they struggle with just kind of the goofing around and they often feel pretty bad because of course most days you're not at your best, you don't actually have the greatest idea. So there's some interesting tension to manage there. There's really two different types of work. One is where you have a pretty good goal, you know what success looks like, right? But you may also be doing something that's more like problem discovery where you don't even know where you're going. Typically if you're going to compose a piece of music. Well, I'm not a composer, but certainly, my understanding from, from friends who are, is that they don't necessarily start out with a very clear idea of where they're going. Some composers do, but a lot, it's a process of discovery. Actually, a publisher once told me somebody who has published a lot of well-known books that she described one of her authors as a writing for discovery. Like he didn't know what his book was going to be about, he had a bunch of kind of vague ideas and the whole point of writing the book was to actually figure out what it was that he wanted to say, what problem was he really interested in. So we'd start with some very, very good ideas and they kind of get gradually refined. And it was very interesting. I really liked his books and it was interesting to see that. They looked like they'd been very carefully planned and he really knew what he was doing and she told me that no, he'd sort of come in and chat with her and be like, well, I'm sort of interested over here. And he'd have phrases and sort of ideas. But he didn't actually have a clear plan and then he'd get through this process of several years of gradually figuring out what it was that he wanted to say. And often the most significant themes wouldn't actually emerge until relatively late in that whole process. I asked another actually quite a well-known writer, I just bumped into when he was, he was reporting a story for a major magazine and I think he'd been working, he'd been reporting for two weeks, I think at that point. So just out interviewing people and whatever. And I said, how's it going? And he said, Oh yeah, pretty good. I said, what's your story about? He said, I don't know yet, which I thought was very interesting. He had a subject, he was following a person around. But he didn't actually know what his story was. DAVID: So the analogy that I have in my head as you're talking about this, it's like sculpture, right? Where you start maybe with a big thing of granite or whatnot, and slowly but surely you're carving the stone or whatnot and you're trying to come up with a form. But so often maybe it's the little details at the end that are so far removed from that piece of stone at the very beginning that make a sculpture exceptional. MICHAEL: Indeed. And you wonder what's going on. I haven't done sculpture. I've done a lot of writing and writing often feels so sometimes I know what I want to say. Those are the easy pieces to write, but more often it's writing for discovery and there you need to be very happy celebrating tiny improvements. I mean just fixing a word needs to be an event you actually enjoy, if not, the process will be an absolute nightmare. But then there's this sort of instinct where you realize, oh, that's a phrase that A: I should really refine and B: it might actually be the key to making this whole thing work and that seems to be a very instinctive kind of a process. Something that you, if you write enough, you start to get some sense of what actually works for you in those ways. The recognition is really hard. It's very tempting to just discount yourself. Like to not notice when you have a good phrase or something like that and sort of contrary wise sometimes to hang onto your darlings too long. You have the idea that you think it's about and it's actually wrong. DAVID: Why do you write and why do you choose the medium of writing to think through things sometimes? I know that you choose other ones as well. MICHAEL: Writing has this beautiful quality that you can improve your thoughts. That's really helpful. A friend of mine who makes very popular YouTube videos about mathematics has said to me that he doesn't really feel like people are learning much mathematics from them. Instead, it's almost a form of advertising like they get some sense of what it is. They know that it's very beautiful. They get excited. All those things are very important and matter a lot to him, but he believes that only a tiny, tiny number of people are actually really understanding much detail at all. There's actually a small group who have apparently do kind of. They have a way of processing video that lets them understand. DAVID: Also, I think you probably have to, with something like math, I've been trying to learn economics online and with something like math or economics that's a bit complex and difficult, you have to go back and re-watch and re-watch, but I think that there's a human tendency to want to watch more and more and more and it's hard to learn that way. You actually have to watch things again. MICHAEL: Absolutely. Totally. And you know, I have a friend who when he listens to podcasts, if he doesn't understand something, he, he rewinds it 30 seconds. But most people just don't have that discipline. Of course, you want to keep going. So I think the written word for most people is a little bit easier if they want to do that kind of detailed understanding. It's more random access to start with. It's easier to kind of skip around and to concentrate and say, well, I didn't really get that sentence. I'm going to think about it a little bit more, or yeah, I can see what's going to happen in those two or three paragraphs. I'll just very quickly skip through them. It's more built for that kind of detailed understanding, so you're getting really two very different experiences. In the case of the video, very often really what you're getting is principally an emotional experience with some bits and pieces of understanding tacked on with the written word. Often a lot of that emotion is stripped out, which makes can make it much harder to motivate yourself. You need that sort of emotional connection to the material, but it is actually, I think a great deal easier to understand sort of the details of it. There's a real kind of choice to be to be made. There's also the fact that people just seem to respond better to videos. If you want a large audience, you're probably better off making YouTube videos than you are publishing essays. DAVID: My last question to you, as somebody who admires your pace and speed of learning and what's been really fun about preparing for this podcast and come across your work is I really do feel like I've accessed a new perspective on the world which is really cool and I get excited probably most excited when I come across thinkers who don't think like anyone who I've come across before, so I'm asking to you first of all, how do you think about your learning process and what you consume and second of all, who have been the people and the ideas that have really formed the foundation of your thought? MICHAEL: A Kurt Vonnegut quote from his book, I think it's Cat's Cradle. He says, we become what we pretend to be, so you must be careful what we pretend to be and I think there's something closely analogously true, which is that we become what we pay attention to, so we should be careful what we pay attention to and that means being fairly careful how you curate your information diet. There's a lot of things. There's a lot of mistakes I've made. Paying attention to angry people is not very good. I think ideas like the filter bubble, for example, are actually bad ideas. And for the most part, it sounds virtuous to say, oh, I'm going to pay attention to people who disagree with me politically and whatever. Well, okay, there's a certain amount of truth to that. It's a good idea probably to pay attention to the very best arguments from the very best exponents of the other different political views. So sure, seek those people out, but you don't need to seek out the random person who has a different political view from you. And that's how most people actually interpret that kind of injunction. They, they're not looking for the very best alternate points of view. So that's something you need to be careful about. There's a whole lot of things like that I enjoy. So for example, I think one person, it's interesting on twitter to look, he's, he's no longer active but he's still following people is Marc Andreessen and I think he follows, it's like 18,000 people or something and it's really interesting just to look through the list of followers because it's all over the map and much of it I wouldn't find interesting at all, but you'll find the strangest corners people in sort of remote villages in India and people doing really interesting things in South Africa. Okay. So he's a venture capitalist but they're not connected to venture capital at all. So many of them, they're just doing interesting things all over the world and I wouldn't advocate doing the same thing. You kind of need to cultivate your own tastes and your own interests. But there's something very interesting about that sort of capitalist city of interests and curiosity about the world, which I think is probably very good for almost anybody to cultivate. I haven't really answered your question. DAVID: I do want to ask who were the people or the ideas or the areas of the world that have really shaped and inspired your thinking because I'm asking selfishly because I want to go down those rabbit holes. MICHAEL: Alright. A couple of people, Alan Kay and Doug Engelbart, who are two of the people who really developed the idea of what a computer might be. In the 1950's and 60's, people mostly thought computers were machines for solving mathematical problems, predicting the weather next week, computing artillery tables, doing these kinds of things. And they understood that actually there could be devices which humans would use for themselves to solve their own problems. That would be sort of almost personal prosthetics for the mind. They'd be new media. We could use to think with and a lot of their best ideas I think out there, there's still this kind of vision for the future. And if you look particularly at some of Alan Kay's talks, there's still a lot of interesting ideas there. DAVID: That the perspective is worth 80 IQ points. That's still true. MICHAEL: For example, the best way to predict the future is to invent it, right? He's actually, he's got a real gift for coming up with piddly little things, but there's also quite deep ideas. They're not two-year projects or five-year projects, they're thousand year projects or an entire civilization. And we're just getting started on them. I think that's true. Actually. It's in general, maybe that's an interesting variation question, which is, you know, what are the thousand year projects? A friend of mine, Cal Schroeder, who's a science fiction writer, has this term, The Project, which he uses to organize some of his thinking about science fictional civilizations. So The Project is whatever a civilization is currently doing, which possibly no member of the civilization is even aware of. So you might ask the question, what was the project for our planet in the 20th century? I think one plausible answer might be, for example, it was actually eliminating infectious diseases. You think about things like polio and smallpox and so many of these diseases were huge things at the start of the 20th century and they become much, much smaller by the end of the 20th century. Obviously AIDS is this terrible disease, but in fact, by historical comparison, even something like the Spanish flu, it's actually relatively small. I think it's several hundred million people it may have killed. Maybe that was actually the project for human civilization in the 20th century. I think it's interesting to think about those kinds of questions and sort of the, you know, where are the people who are sort of most connected to those? So I certainly think Doug Engelbart and Alan Kay. DAVID: Talk about Doug Engelbart, I know nothing about him. MICHAEL: So Engelbart is the person who I think more than anybody invented modern computing. He did this famous demo in 1968, 1969. It's often called the mother of all demos, in front of an audience of a thousand people I believe. Quite a while since I've watched it and it demonstrates a windowing system and what looks like a modern word processor, but it's not just a word processor. They're actually hooked up remotely to a person in another location and they're actually collaborating in real time. And it's the first public showing I believe of the mouse and of all these different sorts of ideas. And you look at other images of computers at the time and they're these giant machines with tapes and whatever. And here's this vision that looks a lot more like sort of Microsoft Windows and a than anything else. And it's got all these things like real-time collaboration between people in different locations that we really didn't have at scale until relatively recently. And he lays out a huge fraction of these ideas in 1962 in a paper he wrote then. But that paper is another one of these huge things. He's asking questions that you don't answer over two years or five years. You answer over a thousand years. I think it's Augmenting Human Intellect is the title of that paper. So he's certainly somebody else that I think is a very interesting thinker. There's something really interesting about the ability to ask an enormous question, but then actually to have other questions at every scale. So you know what to do in the next 10 minutes that will move you a little bit towar

Michael: Hello everyone and welcome to your June edition of the Option Seller Podcast. This is Michael Gross of OptionSellers.com. I’m here with head trader James Cordier. James, a lot of talk this month about bull market in commodities. It’s been getting a lot of media attention, obviously crude oil has been leading the charge, but what are your thoughts on that? Are we in a bull market right now or is it just speculation? James: You know, most often, Michael, at the 3rd and 4th and 5th year of an expansion economically is usually when prices of commodities start going up. There’s usually a glut of commodities during a recession. As years go by, a lot of the excess commodities are then purchased and consumed, and usually that is when you start normally getting higher prices. I do believe we’re in a bull market in commodities. It is lead by energies, which of course was pretty much facilitated through OPEC cuts in production, but let’s face it, practically everything comes from a barrel of oil. Whether it’s cotton or soybeans or coffee or what have you, everything derives off of a barrel of oil or a gallon of gasoline. Of course, energy prices have really risen quite a bit over the last 18 months. That leads us to believe we are in a bull market in many commodities. There are 1 or 2 that have certainly oversupply in them, but the commodity market has been in a nice uptrend. Usually, this does happen 3 or 4 years after the beginning of an expansion and its kind of textbook so far. Michael: So, we have oil markets possibly leading the charge here. Some of the grains have been aided by some weather issues. Do you see this spreading to all commodities or is it primarily limited to a few sectors? James: I think it’s limited to a few sectors. If you look at the price of sugar or coffee, we’ve got just massive production expected in South America this year. The coffee market recently hit a 12 month low, the sugar market recently hit a 12 month low, so it is really a market that needs to be picked, if you will, to be in a bull market. A lot of commodities do have up trends, but some of the major commodities that we follow are over supplied. I think that’s why we really enjoy doing what we do best, and that is analyzing fundamentals on the different markets, simply buying a basket of commodities or selling a basket of commodities. I think you can be more sophisticated than that, and that’s what we try and do here, of course. Michael: Yeah, in the media they like to get a story line, “Bull Market in Commodities” and that’s what they tag and they really maybe only focusing, as you said, on a few markets, some of the other markets. That’s why you get that play within the commodities where they’re not really as correlated to each other as maybe stocks. James: Certainly not. That’s where diversification comes in. If you’re long or short the stock market, basically you’re living or dying by if it goes up or down. Of course, in commodities, we follow 4 different sectors about 10 different specific commodities and they really do have their own individual fundamentals, and that’s what makes following the same commodities for so long very prosperous, because you do get to know them. They all do have personalities. You don’t simply buy a basket of commodities like you do stocks. It’s different than that. Michael: So, the person watching at home now and they’re saying “boy, it’s a bull market in commodities. This must be a good time to sell options”… that’s really kind of irrelevant if you’re an option seller, isn’t it? James: You know, the interesting commodities, I think, is what bodes well for us. Whether you’re selling options on your own or you’re doing it with ourselves, it does increase premiums of options on both puts and calls. Certainly, the interest by the speculator, whether it’s a bank in London or whether it’s a hedge fund somewhere in San Francisco, it does increase the value of the options. If you are picking up bull or bear market, it allows you to get in at very good levels, sometimes 40-50% out-of-the-money depending on which market it is. Michael: So now matter which side of the market it’s on, the media coverage of prices going up brings in a lot of public speculators and that drives premium. James: Whether you’re selling options on your own or you’re doing it with us, it really plays into your hands… it really does. Michael: Great. We’re going to take a look at a couple of these markets that’ve moving pretty good to the upside or we feel we have some pretty good opportunities to look at this month. Why don’t we go to the trading room and get started? Michael: Welcome back to the market segment of this month’s podcast. We’re here in the trading room with head trader James Cordier. The title of this month’s podcast is taking advantage of the bull market in commodities, and we’re going to feature a couple of markets this month that are leaders, what’s driving the bull market in commodities, but how to take advantage of it might not be exactly how you think it would be. A lot of people might think, “Oh, well I’ll just go out and buy a commodities index fund or maybe I’ll buy some individual commodities stocks or what have you”, and the problem with that is, one, as James mentioned earlier, sometimes these commodities aren’t all going to move together. So, you may buy one commodity and it’s not going to participate in that bull market like other stocks wood. Also, we don’t know when this bull market might end, so we want to position ourselves so, yes, we can keep taking advantage of this if the bull market continues, but also if it stops tomorrow we still want to be able to make money. So, we’re not going to position how just a common traditional investor might try and position. We’re going to talk about selling options here. Let’s go to the first market for this month… the cotton market has been one of the leaders of the commodities bull here. Obviously we’ve had a pretty sharp rally here since last October, James. We’re up almost 25% in prices through this week. What’s going on here as far as prices go? James: Cotton’s another example of one of the bull markets of 2018. We do have some more demand out of Asia than we thought. They were speculators that thought that supplies in China were slightly less than what early was previously expected. Cotton production in China is supposed to be down slightly because of some weather. Of course, the big news is we had just an incredible drought to start out the planting season here in west Texas. Basically, commodities like soybeans and cotton, everyone’s so concerned about the weather and when they talk about dry conditions or there’s drought going on, speculators come and bid up the market. A lot of the end users then need to get insurance and they’ll buy futures contracts for cotton, as well, and that really boosts up the price usually right as growing season is beginning. That’s what we’re here looking at again today for the cotton market in 2018. Michael: Okay. So, that drought has been pushing up prices, but here in the last couple of weeks, that started to lessen a little bit. We’re looking at a map here of Texas, west Texas, big cotton growing region. If you would’ve looked at this map, the darker colors indicate a severe drought portion, so we still have some going up in northern part of Texas, but if you would’ve looked at this chart 3-4 weeks ago, almost half of Texas was in that red. So, this has mitigated quite a bit to where we are right now and that has allowed a lot of these planters to really make some progress in planting over the last couple of weeks. As a matter of fact, stats we just pulled today, James, at the end of the week of May 13th they were 28% planted. At the end of the week of May 20th, Texas farmers were 43% planted, so that’s a lot of progress to make up in a week and that’s due to that they finally got some moisture. They were able to get the crop in the ground. 5-year average is only 33%, so they’re actually ahead, quite a bit ahead, of where they normally are in a 5-year average, so that moisture they did get has really done a lot of good for the Texas crop. USDA just came out with their most recent/first estimate for the ’18-’19 crop. You’ll see here, James, ending stocks actually above last year is what they’re targeting. James: Really a weather market right now. Anyone who lives in the United States, especially in the eastern half of the United States, I know we have clients and viewers from all over the world, but here in the U.S. it’s raining all the time. Precipitation is just dominating the weather market right now and, in the chart you just mentioned, for the Texas state, that was truly an extremely dry condition and that has mitigated quite a bit. We’re now 5-6% above the 5-year average for plantings. We now have precipitation coming in. We’re going to wind up having a larger crop than a lot of people thought about and then we’re going to have carry-over in the United States, the highest level in 10 years. I know a lot of people are going to look at this, “well, the carry-over was much higher 8-9 years ago”, but cotton was also around $0.40-$0.50 a pound then, too. That’s a big difference. Michael: One other thing we should probably bring up that’s really carrying a lot of weight here is that cotton also has a very strong seasonal tendency. Actually, it doesn’t even really start to break until about mid-June. What’s usually behind this? What causes this? James: Just as we were describing, Michael, if there’s any type of weather fears in Alabama, Mississippi, this year it was Texas, generally speaking, until the crop is planting and until the weather conditions look favorable for production that year, generally speaking that’s going to be the high point of the year as planting’s taking place in the southern states of the United States. As the planting is completed, it’s 85-95% completed, which will be probably in the next 2-3 weeks, weather comes in, the dramatic dry conditions no longer are pushing up prices. Sure enough, as you start harvesting the crop in October, November, December, big crop once again, U.S. farmers are the best in the world, and once again we had a lot bigger crop than most people anticipated. That’s what’s winding up in timing right now looks perfect for the seasonal average and it’s setting up the same way into this year. Michael: Yeah, it does seem to be lining up pretty well. If the rains continue, we don’t have a big drought surprise, this seasonal looks like it’s set up to be pretty close. So, we’re looking at a trade here. I’ll let you talk about the trade, James, but you’re looking at a December call right now. James: Exactly. We have cotton trading in the low-mid 80’s recently. There was a recent spike up with a lot of discussion about the problems in Texas. Generally speaking, we do have the market rally May, June, and then July it usually rolls over. We are now looking at really decent call buying by speculators and hedgers alike at the $1 and the 105. There are no guaranteed investments in this world, but selling cotton at 105 looks like a pretty darn good one and if it does follow along with the seasonal, if it does follow along with the idea that supplies are going to be at 10-year highs at the end of this year, cotton will go from 80’s to a 105 looks very slim chances to us. We think this is going to be one of the better positions going into the 4th quarter of this year. Michael: So, when you’re talking about taking advantage of a bull market rather than buy into cotton, what James is talking about is the bull market creates interest in these deep out-of-the-money calls. So, how you take advantage of it and sell these deep out-of-the-money calls, we don’t know if the drought’s over. It sure looks like it’s taking a lot of big steps towards mitigating, but if we’re wrong and they don’t get rains and somehow the second half of the planting doesn’t go as well, cotton can still go higher from here. So, we don’t want to bet on that it’s going to turn around right now, right on seasonal. It could keep going. We’re just going to sell calls up here and it can do whatever it wants. It can keep going, it can mitigate, or it can roll over with the seasonal. Either way, there’s a pretty good chance these calls are still going to expire worthless. James: We really like that as an opportunity selling those calls. Michael: Okay. If you’d like to learn more about trading these types of markets, taking advantage of upward markets by selling calls, you’ll want to pick up a copy of our book The Complete Guide to Option Selling: Third Edition. You can get it now on our website at a discount than where you’ll get it in the bookstore or on Amazon. That’s www.OptionSellers.com/book. James, let’s move into our next market we’d like to talk about this month. James: Okay. Michael: We’re back with out second market we’re going to talk about here in our June Podcast- How to take advantage of the bull market in commodities. That second market is one we talked about here last month… that’s the crude oil market. We’re going to update this trade a little bit to give you some insights into how these type of strategies work. James, last month you talked about selling a strangle on the crude market, the February 45/90 strangle. Why don’t you update us on how the market has done and how that trade is doing? James: Let’s talk about both sides of this investment. Just 6-12 months ago, there was considered a 300 million barrel oil surplus globally. That has evaporated to approximately 30 million barrels. The market is practically absolutely flat right now. Every barrel of oil that’s being produced right now has an owner before it even comes out of the ground. That fundamental will not be changing in the next 3-6 months. They’re not just going to find oil, it’s not going to go from a 30 million barrel surplus to a 300 million barrel surplus overnight. That’s not going to happen. That’s going to keep oil well above the $40 level. The $45 put that we sold, I think, is excellent sales-ship, not ownership… you don’t want to own those. Crude oil over the next 6 months is likely not going to this level. The call side, what’s developing over the last 60-90 days really is what’s going on in Europe. Basically, the European Union has been dealing with quantitative easing for as long as the United States have. Of course, now we’re no longer doing QEs. The U.S. economy is doing extremely well. Europe? Not so much. We have quantitative easing still in Europe and PMIs in Germany, England, Italy are going straight south. Consumer confidence in Germany is at one of its lowest levels in years. The European economy is starting to roll over while it has quantitative easing. Europe produces practically no oil whatsoever and they are very susceptible to oil shocks. Oil at Brent commodity is up to $80 a barrel. In the United States it’s around $71-$72. That level is practically double of where it was 12 months ago and Europe is really feeling a brunt about that. What OPEC is very keen to know is to not kill economic growth. Oil just went from basically $45-$50, recently now up to $80 on Brent, and economies in Europe, especially, can’t sustain that. We’re looking again about discussion about Greek bonds and if that market rolls over again, and if Europe goes into slight recession going on in the next say 4th quarter of this year 1st quarter of next year, stock markets start to slide, U.S. economy starts to slide. Then, OPEC can basically claim a big part in slowing economic growth. They don’t want that. OPEC is producing oil for $35-$40 a barrel. Rent is up to 80. They’re likely going to start rolling back some of the production cuts and that’s what makes the $90-$95 calls a great sale, as well. Oil is likely not going to be hitting $90 going into the 4th quarter of this year. That’s the shoulder season, that’s when demand worldwide is at its lowest. That should make the $95 a very good sale. We like being short in 90 and 95. We love being long at 40 and 45. This is probably one of the best strangles available right now in all of commodities and the reason why those premiums are so high, as you mentioned Michael, is because the bull market in commodities. It gets people out buying options that they normally wouldn’t, reaching out for higher levels than normally they would, and that’s what makes cherry-picking in puts and calls, selling commodities in options right now, I think, the timing is just about perfect. Michael: Yeah, the trade we recommended last month, you were talking about this trade… 45/90 February. You’ll notice last month we were about here, so the market has bumped up about $3 a barrel, but it’s still right in the middle of the strangle and this strangle is actually profitable now from where we recommended it. So, just what we talked about last month, we’re not trying to pick highs or lows or guess what the market’s going to do. We don’t care as long as it stays between these levels. This strangle is performing just about optimally as how you’d want it. James: This form of investing is much more simplistic than trying to pick exactly where all these markets are going. This could look like Apple stock and trying to figure out what Apple is going to do next week or next month. Basically, selling options, especially on a strangle, you’re throwing the football to where you think the market is going to be. So, if you’re in the lower 3rd of the trading range and you still think the market has got a little bit higher to go, look where we’re winding up right now with the $2 or $3 rally. We’re right in the middle of the strangle… right where we like to see it. Michael: Okay. Now you did mention you think oil prices could be starting to slow here over the next several months. Again, we’re not calling a talk, but you think as it goes along there’s going to be a second conversation here with OPEC as far as their quotas. James: I really think so. 2 years ago, Saudi Arabia and Russia got together and said, “We’ve got to try something. We just saw oil for under $40 a barrel, we’re basically making little money.” They basically said, “Let’s try and reduce production by 3%, 4%, 5% and see what happens. The U.S. is now the largest producer. We have to do something or the market’s going to stay low.” That conversation worked extremely well… oil at Brent to $80. The second conversation now is let’s not get greedy. If the oil goes up another $2, $3, or $4 a barrel what difference does it make to you as a producer? If you’re making $40 a barrel or $42, it doesn’t make that much of a difference, but to consuming areas like the Euro area, another $3, $4, or $5 can tip that economy over and that is a big deal. I think that’s the conversation they’re going to have in June when OPEC meets. Michael: James, you just gave this talk you had on the oil markets to TDAmeritrade and they’re, what, 11 million trading customers? James: Yeah, we had a lot of investor eyeballs on us today. It’s quite interesting how many people actually do invest in commodities. There is an advertisement on TV recently… people aren’t investing in this and they aren’t investing in that and they aren’t investing in commodities. They really are investing in commodities and we certainly saw that this morning with the viewership that we had talking strictly about options on commodities. We really blew it off the charts today. Michael: Great. You can see that interview on our website probably later this week or early next week. It’ll be on the blog. The full interview will be posted there and you can take a look at that. If you’d like to learn more about some of the things we’ve been talking about here, you’ll want to take a look at the June OptionSeller Newsletter. That should be out on or before June 1st. If you’re already a subscriber, it’ll be in your e-mail box and your physical mailbox around that time. Let’s go ahead and move into our Q & A section and see what our readers have to ask this month. Michael: Welcome back to the Q & A portion of this month’s podcast. James, we’re going to take some questions from some of our viewers and readers here and see if you can answer what they have to ask. Our first question this month comes from Omar Fallon of Galveston, Texas. Omar asks, “Dear James, I am currently selling options with the assistance of your excellent book, The Complete Guide to Option Selling. I’m also following your 200% rule that you recommend. My question is, do you still follow the 200% rule when you’re writing a strangle or is there a different risk strategy for a strangle?” James: Okay. Omar, thanks for the question. We often consider that every time we do write a strangle. From time to time, of course, one side or the other goes against us slightly while we’re waiting… patiently waiting in most cases. I do like using the 200% rule on the total value of the strangle itself. If you take into consideration the fact that both sides of the put and the call combined premium has to first double before you exit the trade, that is truly putting a lot of room between you and the market and giving you a lot of time, hopefully, to hold onto that position. I do recommend using a 200% rule on the total value of both the put and the call sale. Michael: And that’s primarily because if the market starts moving against one of your strikes, that option on the other side of the market is balancing that out. So, you can afford to let it go a little further because you’re making some of that up on the other side of the market. James: Exactly right. Omar, if you sold your option fairly well, you’re going to have a really good opportunity for the market to stay inside that strangle and, as you approach option expiration, if you choose to hold on to it the very last day, we don’t always do that; however, that window should be extremely large and I do like giving the whole 200% risk tolerance on both the put and the call. If you sold the option fairly well, the market should wind up inside that window when it is time to close them out. Michael: Let’s go to our next question. This one comes from Jonathan Hartwig from Springdale, Arkansas. Jonathan asks, “Dear James, I’ve noticed from your videos that you seem to focus more on some commodities and less on others. I traded commodities about 11 years ago and did markets like hogs and orange juice, even pork bellies. Is there a reason you don’t feature these markets and how many markets do you actually trade at your firm?” James: Jonathan, great question. It sounds like questions from my favorite movie, Trading Places… orange juice and pork bellies. Those are certainly near and dear to our hearts here. Basically, we ant to be in the most liquid commodity markets that there are. Pork bellies, lean hogs, orange juice is a very domestic trade here in the United States. Orange juice, of course, is produced 90% in the United States, pork bellies is certainly a U.S. domestic commodity in market. Lean hogs, of course, is a U.S. domestic market. What that does is it allows the fundamentals to change dramatically in a very short period of time. We like investing in crude oil produced in so many nations. Gold, silver, sugar is produced in over 2 dozen different nations and coffee is produced all over the world. Wheat is produced in almost every nation of the world. So, if the fundamentals or dry conditions in one zone of the United States or in part of Asia, 90% of the world is going to have a different weather pattern or a different structure that’s causing the market to move. That’s going to give the commodity a lot more stability. We always want to sell options based on fundamentals, and the fundamentals in every sector of the world rarely are going to change at the same time. Where if you’re trading a domestic market like orange juice or pork bellies, a small freeze, a terrible draught in a certain location, swine flu in Iowa can determine the entire investment. Here at OptionSellers, we want to be in markets that are extremely liquid and will not have changing fundamentals on a small whim. We sell options based on a 3, 6, 12 month time period. If you’re trading and investing in options that are based on commodities that are grown all around the world, produced all around the world, you’ll rarely have a really brief quick change in fundamentals. Right up our alley for the way we do things. Michael: Yeah, a lot of people are surprised when they’re asking about what commodities you actually trade. There’s really only about 10 or 12 that we follow and those are those high volume markets you’re talking about. It’s not like we’re following 500 stocks here. There’s 10 or 12 markets, you just get to know them really well. James: They all have personalities, Michael. I’ve been trading silver and gold, coffee and sugar, natural gas and crude oil for decades. That doesn’t mean we’re right all the time, but they do have a personality. You get to know the fundamentals and when there’s a little headline or blip here or there it really doesn’t rattle you, nor should it with your investment. Michael: So, the point is, Jonathan, if you’re selling options you’ll probably want to stick to your highest volume markets that are going to have the highest volume, most liquidity in the options. That’s where you’re going to get the safest type of trades. If you’re watching this at home, thank you for watching this month’s podcast. I hope you enjoyed what you learned here today. James, thank you for your insights on the markets. James: Of course. Always. Michael: If you’d like to learn more about managed option selling portfolios here with OptionSellers.com, you’ll want to be sure to request your Option Sellers Discovery Pack. This is available on our website for free. It comes with a DVD. You can get that at www.OptionSellers.com/Discovery. As far as our account openings go, we still have a couple openings left in June for consultations. Those would be for our account openings in July and August. So, if you’re thinking about possibly, you want to make an allocation this summer, now is the time to give a call and get your consultation/interviews scheduled. You can call Rosemary at the office… that’s 800-346-1949. If you’re calling from outside the United States, that’s 813-472-5760. Have a great month of option selling and we’ll talk to you again in 30 days. Thank you.

Michael: Hello everyone. This is Michael Gross and James Cordier of OptionSellers.com. We are here with your July OptionSeller TV Show. James, welcome to the show this month. James: Thank you, Michael. Always glad to be here. Michael: We have a pretty full slate this month, so we’re going to jump right into things. First thing to talk about this month, obviously, is the FED rate hike coming down. It hiked another quarter point in June. So, that’s going to have a different type of effect on commodities. James, I know you talked about it in your weekly video, but maybe just cover that a little bit right now for our viewers and what that might mean for commodities markets. James: Okay. Most recently, interest rates have been, here in the United States, pegged at zero. With this latest quarterly rise we are slightly off of zero- somewhere between half and one percent. The quarter point rise really wasn’t a big surprise, certainly, but what Janet Yellen specified was the rollback of the incredible amount of cash and bonds that the government is holding. This rollback of the size of what the government is holding is just incredible – it’s some 3.5 trillion dollars and we’re going to see them start to sell that back into the market. Michael: So, how would that affect say… the first thing you think about when you think of interest rates is probably the U.S. dollar. How is that going to play out, do you see, as far as its affect on commodities? James: Well, as we effectively went into quantitative easing, as you know, some 8 or 9 years ago, the talk of the town was “We’re going to have an incredible amount of inflation, we’re going to have inflation, and we’re going to have infrastructure spending creating inflation”. A lot of people weren’t familiar with quantitative easing or what that meant to interest rates. Basically, a lot of people would put commodities into their portfolio. Someone who has never traded commodities before, thought that having gold or oil or something like this as an investment because of quantitative easing thought that would be the way to go because, certainly, interest rates at zero was going to spur a great growth worldwide and inflation. It simply didn’t pan out that way. Now, rolling back the balance sheet of the federal government from 3.5 trillion dollars to 3, then 2.5, then 2, then 1.5 is going to reverse this thinking for the majority of the people who are looking for inflation hedges. The inflation hedge is probably going to be not so popular going forward. As a matter of fact, not only not having an inflation hedge in your account or in your portfolio, but the fundamental factors that create inflation aren’t with us anymore. So, we don’t have 0% interest rates, we don’t have quantitative easing, we have that rolling back, and a time where inflation never really actually took place, clearly everyone is very familiar with what happened to China the last 7 or 8 years with the infrastructure spending. That’s done. That’s complete. Without quantitative easing and without 0% interest rates, the need for investors to put gold or oil in their account just haphazardly just to own it as an inflation hedge, we think that that time has come. So, gold and silver and crude oil will rally on its own accord, but as far as simply people buying it, hedge funds, private investors, we think that’s in the 9th inning and that’s likely wrapping up. Michael: Of course, we have better ways to take advantage of commodities prices other than buying them outright, as most of our viewers know. What we’re going to point out to those of you watching and listening, we talk often about how commodities are diversified and they are uncorrelated to equities and interest rates and that type of thing, especially the way we approach them or you would approach them as an options sellers, because, yes, when James is talking now about interest rates and it’s affect on inflation, that’s a bigger macro-type issue. That doesn’t mean that the individual fundamentals of these commodities aren’t still important and aren’t still a driving force in what’s moving them. If you’re trading commodities you want to be familiar with these macro factors, as well, because they can put a head wind or a tail wind depending on what side of the market you’re on. That’s why we talk quite a bit about them. We’re going to switch things up a little bit this month. We’re going to do our lesson portion first because we have a couple markets here that the lesson applies to. We want to review the strategy first so you understand it and then we’re going to talk a little bit about a couple of markets that we think are excellent opportunities for applying it. That strategy, of course, is the strangle, the option strangle, which is selling a call on one side of the market and a put on the other side of the market - one of our favorite strategies here. James, maybe you just want to briefly cover that for our viewers for how a strangle actually works. James: Certainly. I think most of us who are following along and have been trading or investing in commodities or stocks for a period of time, we’re dating ourselves here slightly, but of course the great thing I like talking about, I know I’ve heard you say it as well, Michael, but it’s The Price is Right. The person guessing the window that the car or the showcase or something is going to be inside, basically, we are playing The Price is Right. When suggesting a strangle, we are identifying fair valued markets. From time to time, the idea that crude oil is about to make a large rally or a great fall, usually oil and gold are generally trading exactly at their fair value. Basically, what we’re doing is we are identifying where the market might be over the next 6-12 months. If we see the gold market, per say, trading around $1,250 right now, and we think it’s fairly valued, what we are going to do is put a strangle around that market. How you do that is by selling a call option way above the market, selling a put option at extremely low levels below the market, and expecting it to stay inside that parameter. For example, the gold market, there’s still gold bulls out there. Whether quantitative easing is over or not, there’s still gold bulls out there. You might sell an $1,800 or $1,900 call above the market, at the same time you would be selling a put. That would be the lower end of the bracket that you’re putting around the option strangle and possibly selling a $900 or $950 put under gold. Basically what you’re doing is you’re saying gold is going to stay inside of a $900 price range for the next 6-12 months. Now, that sounds like an extremely wide window, and that’s because it is. We’re talking about selling puts and calls some 40-50% above and below the market, and all we have to do is see gold stay inside that band and 6-9 months later these options are worthless and we’ve collected money on both sides. Michael: James, something too I think our viewers would be interested to know about is we have a lot of stock options sellers, maybe you’re selling index options, and you’re thinking, “Well, I do that but it has to stay in a fairly narrow range for me to make money”, whereas if you’ve never traded futures before, you talk about sideways market but you use that term loosely because the range we can sell these options the market can do a whole lot of things. It can go up for a long time or it can go down for a long time and trade at a fairly wide range, and you and I call it sideways because we’re so used to those big ranges, but to somebody unfamiliar with futures they may say, “Oh the thing is screaming up”… Yes, but it’s still far away from our strike, so that’s probably a bigger difference they would have to get used to. Do you agree with that? James: These $25 and $50 moves in gold, or these $2-$3 moves in crude oil, they make great TV., especially when they’re talking to someone on the floor and they’re hearing pandemonium going on. “What’s going on down there, John?” “Well, gold’s up $25 because of this or that”, and people are thinking “Oh my goodness, I need to get into this” or “Thank goodness that I did puts instead of calls, or what have you”. $800 or $900 trading range in gold, these parameters are likely not going to be seen tested, much less touched. Quantitative easing rallied gold up to $1,900 an ounce. That was an all-time high. These levels, in my opinion, won’t be seen for years. On the downside, being long gold from $900 or $950 is a very great value and we don’t see the market falling down to levels like that with the stock market trading at all-time highs and people talking about diversification. Part of that will be buying gold, because when the stock market does finally take a dip, and certainly it’s not a matter of when, but when it does take a dip gold is probably going to come back into flavor, but without inflation it’s not coming up too high. Michael: Obviously a good article on the blog James wrote this month about that exact strategy, some of the bullish and bearish factors affecting gold and why we feel it should remain in those ranges. Obviously, if you haven’t guessed, our first market this month is gold, so James is already kind of explained the strategy at what we’re looking at there. With the current hike in rates, the current strength in gold, James thinks, is going to mitigate/stay in those ranges. Another thing we should probably talk about, James, is a lot of people when they hear us talking about strangles, and you write about them a lot or talk about them a lot because it is one of our core strategies here, is do you put the thing all on at once or do you wait until it rallies and sell the call or wait until it falls and sell the put? How do you know when to do that? That’s a strategy called legging-in. It’s a little more advanced for more advanced traders, but I know it’s something you like to do at times. Can you maybe just talk briefly about that or how you approach that? James: That’s interesting, Michael. Approximately 2-3 weeks ago, just as the month of June was beginning, gold did have a rally. It tested up towards $1,300. We really saw a lot of resistance at $1,300 and we did start legging on gold strangles at that time. We were able to sell gold calls even higher than you can now because gold was on a bit of a rally. As long as you’re legging on a position, if you feel that if you don’t get the other side of a strangle on and you’re still good with the investment, legging on is a great idea. When gold rallied up to $1,300 recently, we were selling gold calls with both hands. Not that I knew the market was going to fall $50, which it seems like it has over the last week or two, but we’re quite confident it wasn’t going to the levels that we saw. Now with gold back and down about $40-$50 recently, we are applying our puts to our strangles, so we did successfully leg in to this gold strangle that we’re most recently involved with. As long as you are able to live with one side or the other, if you don’t get the other side on and you’re comfortable with that, legging on is a great idea. When we were putting on our calls here recently, the lowest a put we could sell was $1,000 and now we can sell the $900-$950’s, so we were rewarded in legging on this position. Generally, commodities will trade. Technically, gold is doing extremely well right now, and that gave us a window to make our strangle some $50 wider than it would have been had we just put the position on. Michael: A lot of people watching are used to hearing us talk about bushels of soybeans or bags of coffee. It switched to macro here this month and it may seem a little bit different, but when you’re trading gold that is really what it is. It’s kind of a different animal than a lot of these other commodities. You have a lot of public interest in gold, everybody has an opinion on gold, but as an option seller that helps because the public interest comes in and they usually like to buy options. Would you agree? James: Michael, so many investors right now are looking at diversifying away from the stock market, and that is not a call on what the stock market might do, it’s just that a lot of investors, I know you talk to perspective clients all the time and I speak to clients myself, and that is the keyword everyone is talking about right now: diversification. People delving into commodities often want to buy options. That’s their best way to get involved with it. A lot of them are newbies, of course, we have a special relationship with our clearing firm and we actually sell a lot of our options to banks, who have extremely deep pockets. Often when we are making a sale of a particular commodity available, a bank might hear about it and they might want to purchase a lot of these options from us, so we both get the excitement of the public to buy our options, as well as large banks. We mainly deal with banks in New York and London. They’re taking the other sides of our market lately, and it really gives us a great deal of liquidity as long as the conversation about things going on in the administration and things going on globally, the debt in China, constant demand for commodities, and lot of these are option buyers. Certainly, we are very happy to have them. Michael: That’s a question we get often is “who is on the other side buying these options?” That’s a long list of people, but a lot of times it is banks and I doubt they’re buying them as an outright long strategy. Often times, these are part of complex spreads or hedges they might be putting on, but they’ve certainly got a lot of liquidity. We have a special guest that’s going to be on the show here later that’s going to talk a little bit about that with us; however, in the meantime, let’s finish our discussion here about strangles. If you would like to learn more about strangling the market, you can go to the blog. We do have our seminar videos there. Also, don’t miss James’ article last month on the gold market, The Golden Brackets. It’s exactly what we were talking about here. That’s also available on the blog. If you’d like to learn more about the strangles strategy, I do recommend our book, The Complete Guide to Option Selling: Third Edition. You can get that at OptionSellers.com/book. James, let’s move in to our second market this month. This is a market we’ve been talking about now for a couple months. Last month, crude oil was trading in the low 50’s. The media was ablaze with the story of how OPEC’s cuts and how high oil would go, and you were saying “It’s going down. It’s going into the low 40’s”, and here we are today at $43 a barrel. The market has come down and now we’re thinking of a different type of option strategy again. Maybe you want to talk a little bit about that. James: Michael, very interesting point that you make. We were bearish crude oil when it was trading around 50-52 recently. It is headed to the low 40’s right now, or certainly it seems that way. You mentioned something very interesting a moment ago. What we do is we count barrels of oil and we count pounds of coffee and we count pounds of cocoa. Just laying out a fundamental analysis and a fundamental reason for getting into the market. When OPEC announced cuts, what people didn’t talk about then was the fact that they amped up production the weeks prior to this taking place. What that inevitably did was it locked in production at all-time record highs at a time when demand for oil right now is slipping slightly, basically because cars around the world no longer get 15 miles to the gallon, they get 30 miles to the gallon. The demand from China seems to be slowing just slightly. The main player in oil right now is the Permian Basin in the United States. Rate counts have doubled in the past year, and we’re going to be awash in oil, we think, in the 3rd and 4th quarter of this year. We are looking at crude oil starting to trade seasonally again. We mentioned this a couple of TV shows ago that the crude oil market, the seasonal trade this year, got hijacked by the production cut announcement in OPEC. We see crude oil returning to the seasonalities that we’re so accustomed to, and that is selling oil in June and July and selling it in December and January. We will likely be doing that again this year. The crude oil market is probably going to base out near 40, it’s going to rally near 50, and this window and this bracket around oil is likely going to be staying with us for quite some time. We know that, at least we feel we do, by counting barrels of oil and understanding the market. So many investors were piling into crude oil recently and the production cuts. Simply knowing what the fundamentals are and not watching headlines allows us to be a little bit ahead of the market. If you have option selling to produce a position for you, some 50% out-of-the-market sets up a nice scenario for us. Michael: That’s pulling out, too. We talked last month about oil returning to its seasonality. Here we are at the beginning of July and all through June and crude oil did nothing but come down. I mean, it’s almost aligning with the seasonal chart again. Just like we discussed last week, the energy markets are some of the most seasonal markets on the board. Nothing guaranteed, of course, but just because of the cyclical nature of demand, it seems to match up- it’s definitely a factor you want to look at if you’re trading energy markets. James, we talked about the media’s effect on crude oil. Last month, they were all about OPEC and talking about potential rallies in the market and they are ignoring things like seasonals. I don’t know if they actually don’t know about them or they are looking for a story, but here we are and now the crude is falling. I’m watching CNBC this morning and Cramer’s on there talking about oil in the 30’s. Now they are bearish and they can’t get bearish enough. You’re talking about, really, looking at a strategy similar to what we talked about in gold, where we may be looking to trade both sides of a possibly range-bound market. Is that correct? James: It is correct. Herd mentality in stocks, even more so in commodities, just takes place like you wouldn’t believe. The same absolute experts, the talking heads on TV, so bullish in oil when it was at 55 and 60, and it’s certainly going to go to 65 and 70. These exact same experts are now talking about oil going into the low 30’s. I think, sometimes, you could just watch CNBC, especially CNBC, and just do the opposite of what everyone’s doing, because when everybody is bullish, you can get one analyst and one expert all saying the same thing, “My gosh- oil is certainly going up. How high is it going to go? I’m not sure.” You can close your eyes and sell calls when that happens. Now, when the market is falling possibly into the 30’s this fall, that will be the time to get bullish for next summer. I think last TV show we did, I talked about passing not to where the market is but where it’s expected to be. This winter, when we have extremely low prices, we’re going to want to sell puts to the June and July time frame. Michael: Do you like the strategy of strangling the market right now? James: We strangled the market some 6 months ago when OPEC had made its announcement. We went long from 33 and short from 76. We love that position. Those positions are basically retired now. We’ve collected some 75%-80% on both of those positions. What we’re going to look at doing is that the fall has already begun. We just dropped practically $10 here in the last 2 months for oil. Our next position will be strangling the oil. We will be looking at legging on this position, and we will probably be putting our puts on as the first leg and then waiting for the market to rally some later on and putting on a call position. We will be strangling oil. We’ll be strangling oil probably for the next 2-3 years. We think we can see that far out. We think we know what the band is going to be. Right now, we’ve had a $9 decline on oil real rapidly. We could probably see it fall another $3-$4 and we’re going to start getting our calculators and pens out and starting writing some puts. Michael: So, you think to a point there, and it’s a good point that we should probably make, because the point you’re talking about is a longer-term investment based approach. Some of the viewers watching today are probably traders, and there is a difference there between trader and investor. You’re talking about, “Well, we will leg this position on in the fall and then we’ll add another leg to it in the spring.” Those are long-term type projections, where some people used to trading options are thinking, “Well, what can I do today? What can I do today to make a profit by the end of the month?” That’s not really how we approach it. You can gear option selling to be that way if you want, but it’s really not an investment based approach that you have really shifted to and had a lot of success with. James: You know, we don’t consider ourselves traders. We take a fundamental view on about 8 different commodities and we make positions as investments. The market does have gyrations, the stock market does, the commodities market will certainly gyrate from time to time, and we need those to pump up premiums on both puts and calls. The key to the fact is, if you’re a fundamental trader, you are able to stay with your position when the market has a small move against your position. We sell options, both in time and in price, much further out than probably most anyone does. We want to be invested in our positions and not simply be trading them. When you are selling options in commodities some 40%-50% out-of-the-money, granted it might be 6-12 months out, much further than most people would every consider selling options, especially in commodities, people say to us, “James, that leaves a long time in the market for you to be wrong.” We look at it as that gives us a lot of time to be right. So often, when you sell a short-dated option, the market will make a short move against you and knock you out of your position. Lo and behold, 30 days later, the market was doing exactly what you thought it would do, except you’re not holding your short option anymore. We get paid to wait. If you know what the fundamentals are and if you’re applying them in long-dated options, being paid to wait is much easier and it gives you the ability to be patient. Michael: Great point to make. You talk about that a little bit in this month’s newsletter. We got questions about timeframe and what’s a good timeframe to sell options. That’s addressed in this month’s newsletter. The July Option Sellers will be out on July 1st. You can look for that in your e-mail box as well as your hard copy mailbox if you’re a subscriber. We’re going to take a little bit of a detour off of our usual schedule for our show this month. We brought in a very special guest for you. He’s going to bring you some different trading insights, and we will be back in just a moment with him. All right, everyone, we are back. We have a very special guest with us today. With us is Mr. Dave Show. Dave is one of the floor traders that actually has been a tremendous help to OptionSellers.com. He gets our orders filled up to Chicago board to trade with a lot of our orders up there in the agricultural markets. Dave, welcome to the show. Dave: Thank you very much. It’s nice to be here. Michael: One of the things we’re going to talk about is, as a floor trader, Dave has some unique insight in option trading, getting fills, and how orders are actually getting through the system. One of the things we’ve talked about, a big topic, is electronic trading. Is it going to make floor traders go the way of box TV sets? We don’t necessarily feel that’s the case. There are still some benefits, substantial in our case, we feel, of still trading through the floor. Dave, maybe you can talk a little bit about that and what do you see happening with that? Dave: I’d be happy to, Michael. The floor trading still exists because there is a marketplace and a need for it. Electronic trading certainly has its place. It’s used substantially in our markets, but especially in the options markets, which there are so many permutations and different strategies to ploy. It sounds very difficult to get that expressed on a screen and to get a response, a bid or offer, on that. Whereas in the pit, we have several hundred people on the floor that are participating and have instant access to whatever quote you’d like to get. It’s usually a best bid invest offer. It’s not a feeler kind of bid or offer. We have huge backing down there with these traders, different banks and different huge trading companies, and they keep their traders there to make the best market. As a trader and investor, you may wish to ask for a market at a strangle, spread, call, or whatever. You put down the screen and you wait for your RFQ to come back. You call the floor, you call your broker, and he can get you, in 3 or 4 seconds, a market that is tight and is deep and is transparent. So, if you have size to do, to move many hundreds or thousands sometimes of transactions, it’s much more efficient to do it that way in the pit where you get it all done at a specified price and at one time and the trade is completed. James: That’s an interesting point. Quite often, we will be selling some strangles and some outright positions on the screen and it doesn’t seem like there’s that much volume on the floor until the screen trade actually takes place. I know, from time to time, we will bait the market, it seems. We will have a certain market to trade on the screen, maybe 100 lots, and then I will be speaking to you and I’ll ask you, “Does the floor see this trade? What do they think about it and can they help us move some size?” Can you speak to that? Dave: James, that is very much often the case. We’ll have customers that when they need to move a large amount, they will tickle the screen with a bid or offer. They will also simultaneously put it in the pit. The screen has a much larger audience, granted, and there will be someone out there starting to lift the bid or take the offer and get your order filled. Once our pit community sees that, they will generally, as a mass feeding, come out and take on whatever we have to match the screen so that it stays with us instead of going on the screen. Michael: Dave, one of the things we talk about and investors ask us there at home is, they’re trading 2 or 3 lot options on the screen and we talk about an economy of scale where instead of doing that they say, “well, I can’t get a fill.” Yet, if you want to sell a thousand it is easier to get a fill. Can you kind of speak to that or how that affects it with you? Dave: Absolutely. There is a bid and offer for every market out there. Generally, it’s a certain range depending on how liquid the market is. We all see the parameters that the world is putting out on a screen. We, as traders in our pit, will generally, as a rule, be able to get inside that current bid or offer you see on the screen to make a tighter more liquid market, because if people in our pit are not trading 2’s or 3’s, they are equipped to trade 2 or 3 thousand. They are very well capitalized and they have management teams upstairs in the offices handling what they are doing in the pit. Any trade that is done in the pit, we’ll generally admittedly go up to the office and they’ll take it from there, and they’ll spread and hedge that off somewhere in the outside markets. Michael: Dave, just in closing, in your professional opinion, you’ve been on the floor since 1980? So, you’ve been on the floor a long time. Do you think there will remain a place for floor traders in the next 10-20 years or do you see it going electronic? Dave: That’s a long time, Michael. Let’s talk near-term. I think near-term there is certainly a place for us. The exchange has never stated they intend on doing anything but stay open. We provide a service, especially for the larger markets, and we expect to be there for many years to come. Michael: That’s good. James, I know you and I, we still rely on those floor traders and really think they can still give us an advantage. Wouldn’t you agree with that? James: It’s interesting, Michael, there are people probably trying to trade 2 and 3 lots. Like Dave mentioned a moment ago, we’re trying to trade 2 and 3 thousand lots. Wherever we can increase the volume and increase the liquidity, that’s something we’re always going to try and take advantage of. I know that when we’re selling options in the grains, Dave has probably brought more liquidity to the ability for us to do that than any other way to do it. We hope the floor stays around for a little bit longer, hopefully a lot longer, and we’ll transition if we have to, but right now we are glad to have you on the floor. Dave: Thank you. I’m glad to be there. Michael: Let’s hope he stays there. Well, everybody, thank you for tuning in to this month’s show. Just a reminder, if you’re interested in opening an account with us, we are fully booked for July and we are into our waiting list for August. If you are interested, feel free to call Rosemary. It’s 800-346-1949. She can get you schedule for our remaining consultations, which are still taking place in July. If you’re interested in learning more about our accounts first, you can request a discovery pack online at www.OptionSellers.com/Discovery. Have a great month of option selling. We will talk to you in 30 days. Thank you.

Michael: Hello everyone. Welcome to the April edition of the OptionSellers.com Podcast. This podcast will be both video and audio podcast. This is our first video podcast. James, welcome to the podcast. James: Thank you, Michael. Very excited about doing both video and audio – get our mugs out there! Michael: I think first on the agenda this month is what we have going on in the stock market right now. Is this going to be the long awaited correction everybody’s been awaiting or is this just a little blip? What do you think? James: It’s interesting, Michael, the stock market has just been on a historic tear here ever since the election – and with good reason. If we have deregulation and we have a lot of pro-business ideas coming out of Washington along with a U.S. economy that’s doing fairly well right now, a lot of investors have been pouring into the stock market. We had the first shot across the bow, of course, with the healthcare issue being quite a bit of a swing and a miss for Mr. Trump this past week. A lot of investors right now are thinking, “Well, if we can’t get that passed maybe the deregulation and lower taxes and interest rate help may not be as much of a slam dunk as a lot of investors thought.” This could finally be the catalyst for the long-awaited 5-10% correction in the stock market. Everyone was absolutely factoring in the best-case scenario. Now, Washington D.C. quite isn’t as put together as people thought. The whole idea of a strong U.S. economy along with a very business-friendly administration, some of that’s being taken off the table right now. I wouldn’t be surprised that a lot of investors do take some chips off the table. Some of the largest investors in the world right now have thought about that and Goldman Sachs and large banks like that are talking about making their position smaller. That tells me maybe the long awaited correction probably in the 2nd quarter this year might not be such a big surprise after all. Michael: Yeah, I’ve noticed a lot of the news channels are still bullish, they’re still cheering it on, but you can’t underestimate that public sentiment. If it starts to go, everybody’s pricing in this big economic boom. If that doesn’t happen, you can’t underestimate what that can do to prices, as we’ve seen in commodities, as well. James: Absolutely. We start getting just a little more selling than buying. We keep buying the dips, buying the dips, buying the dips, and one of these times we’re going to cross a certain moving average that’s going to cause the computer to do some selling. Then all of a sudden, everyone’s racing for the door. The stock market’s not going to collapse. We’re not going to have an epic fall of 20-30%, but this long awaited correction that gets people to re-think their investment, that’s overdue. I think we could see that happen in maybe April or May. Michael: All right, well, lets talk about some ways people can get diversified, obviously what we specialize in. This month we’re going to talk about the cotton market. Some things are starting to take place there. It’s been on a pretty good bull market here for the last year or so. We’ve had lower supplies and cotton has just been gradually trending up. You and I have been talking about this over the last several weeks about we could be seeing a shift here, we think there’s some opportunities for selling premium. Talk a little bit about it. What do you see happening here? James: Generally, the ten commodities that we follow will have a spurt of buying from an importing nation and then will have a spurt of selling from producers that have an abundance of whatever the commodity is. What’s happened this past 12 months is we’ve seen Chinese imports have gone up dramatically over the 5-year average. That, of course, rallies the market. Cotton right now is at practically a 1-2 year highs. What’s so interesting, Michael, is that a lot of investors will hear that the Chinese consumption last year was up like it was and they’re going to pile in on this long position. I know we were talking a little while ago about the SPEC position in cotton. It’s at near all-time highs. It’s basically the herd driving into a market that sounds like it has bullish fundamentals, only to have the Chinese buying. Watch this- all of the sudden it will turn off the beginning of 2017. This timing coincides with plantings in the United States. They’re expected to be up some 10% this year. So, you have all this bullishness, you have all the speculators piling in. China is one of the greatest traders of commodities in the world. Obviously, they have the largest population and they need to feed them, clothe them, and provide energy. They seem to be some of the best traders, so they were buying cotton last year when cotton prices were low. Now, they’re at multi-year highs. Speculators pour in and now the U.S. farmer plants 10% more cotton than they did last year and now you watch the market turn back down. It’s a seasonal trade and it lines up with the fundamentals. Doing the opposite of what everyone else is doing right now in commodities has been quite a great trade over the last 12-24 months. Speculators race into the cotton market. All of the sudden, the fundamentals turn and all of the sudden you have them heading for the door probably this 2nd or 3rd quarter of this year, as well. Michael: Yeah, that’s an interesting point. You’re talking about prices going up on SPEC buying and demand. We were looking at the ending stocks for cotton and they are low by maybe historic standards but relatively over the last 4-5 years they are fairly high. I’m going to check my stat over here- I know I don’t want to get the figure wrong. Ending stocks for cotton this year at 4.5 million bales, that’s still the highest in 8 years. Now, what you’re talking about is you have farmers because prices are so high they are planting in 9-10% more cotton this year. We’ll know for sure here in our report at the end of the month. We’ll get planting intentions reports, but early estimates – if we’re planting 9-10% more cotton, plus we have that seasonal tendency for prices to start declining this time of year, those call premiums have really escalated up above the markets. You’re thinking this might be a good time to start picking some of those off? James: We do. It’s a great way to diversify a portfolio. Cotton right now is overpriced. The supplies worldwide are high enough to not cause any type of shortages over the next year or two. The Chinese buying is probably going to slow down and the United States is probably going to produce quite a bit more cotton than the last several years. It almost turns out to be a perfect seasonal play. We’ll wait and see if that’s the way it turns out. Michael: All right. Now, in our piece, we did write a piece on this earlier in the month, you can see it on the blog if you haven’t seen it yet, you were looking at the Dec 90 calls. Is that still a strike that you like right now? James: The Dec. 90 is like our dream call right now. We’re hoping that the market can edge up a little higher to reach that level. Selling cotton in the high 80’s is probably what we’re going to wind up doing. If we can walk into the 90 calls a little bit later in maybe April or May certainly we’d put our tuxedos on and jump into that trade. That one looks like a good one. Michael: That’s one we put out there for when we write our public articles. Obviously, when you and I are trading we’re doing this, often times a series of strikes, a series of months, sometimes even a series of strategies all in the same market for our clients. I think you kind of picked that one as a good example for people that may not be clients and are just reading this and seeing a typical type of strike we would look at. James: That’s how we would play it, both for our clients and anyone trading and taking advantage of short options or riding out there. That’s why I would steer them that way, yes. Michael: Obviously, for any of you listening to this that are interested in how we put these fundamentals together and select this type of trade, like in cotton, you’ll want to get a copy of our book, The Complete Guide to Option Selling: Third Edition. That is available on our website at www.optionsellers.com/book. You’ll get it at a better price there than you will at Amazon or your local bookstore. All right, so let’s move on and talk about one of your favorite markets, the crude oil market. We have been addressing this market over the last month or two, but we’ve come to a point now in crude oil where you think there’s some major fundamental shift going on and I think that’s presenting some pretty good opportunities for option writers. Do you want to give your overview of crude oil right now and what’s happening there? James: Michael, one of the markets that we follow most closely is because it has the most trading volume and open interest. We were earlier talking about speculative buying or selling and different commodities. Often, it’s based on headlines. We noticed that when OPEC announced production cuts earlier this year speculators raced in to the long side of crude oil. Headlines The Wall Street Journal: First OPEC Production Cuts in over a Dozen Years. Clearly, the market is going to rally, clearly it’s a great buy, it’s just a matter of how much money you’re going to make buying crude oil. That’s what speculators did. They accumulated the largest SPEC position in history right after the production cut announcement. What’s so interesting is that this herd mentality so often is wrong. Needing to peel back the onion just a little bit just prior to the production cuts, especially from OPEC, non-OPEC nations cut production as well, that’s not as important, with the exception of Russia, of course, which is the second largest producer in the world. The 3 months prior to the production cut announcement, OPEC ramped up levels of new supplies to the largest level ever. As a matter of fact, the production cut that was announced was basically equal to the increase in production the previous 30 days to 60 days just prior to the cut. Nobody hears about that. All people talk about is production cut from OPEC and the market’s going to go to the moon. Investors start buying calls and buying crude oil futures and crude oil companies, for those of you who are investing in stocks, at an all-time record pace. This past week, we’re now starting to count barrels and we’re looking for the supply cuts. Certainly, with all these production cuts by OPEC announced, we’re going to have smaller amounts of crude oil worldwide, right? Didn’t work out that way. Here in the United States, of course, the Permian Basin, the Dakotas, different parts of Oklahoma and Texas are ramping up oil production to all-time, all-time highs. The investors and speculators that push prices up to north of $60 a barrel for far-out contracts built in the greatest hedge that the people in Texas have ever believed that could absolutely happen. Texas production is approximately $16-$18 per barrel to pull it out of the ground. They were just allowed to hedge their production over the next 2-3 years at approximately $60 a barrel, a.k.a. printing money. So, the old adage of low prices curing low prices may not take place this year. Production in the United States is expected to make all-time highs at a time where OPEC is going to start probably becoming slightly fragile. OPEC production cuts, everyone is doing a fairly good job of following along with the cuts that they talked about and oil prices start to fall. OPEC nations then start to cheat and at that point we have a snowball effect. It’s probably too early for that to happen. June and July are very strong demand months here in the United States. We don’t expect to see prices really crater this summer, but this fall if we have a slight tick up in prices in June and July of this year then we’re going to be looking at call selling opportunities for December, January, February, March, the weakest time frames of the year, at the same time when supplies will probably be at their all-time greatest. We are watching with both eyes very closely for a small tick up in energy prices this June and July. Clearly, they’ve fallen off dramatically. We were talking about selling a crude oil when we did not believe production cuts to be so bullish, crude oil fell $7 shortly after that. I remember talking to clients and other people that are in the industry that don’t trade with us. I said, “Watch out! Don’t listen to this OPEC production business. It’s not bullish, the market’s going to likely fall.” We had a couple of colleagues that said, “James, why are you telling me this?” I said, “I’m just warning you because we think that the market’s going to fail here”, and he was basically saying, “Well, the whole world is bullish. We’re going to have less production.” It didn’t turn out that way. Oil fell some $6-$7 a barrel. We’re hoping for a slight up tick with strong demand for driving season this year in the United States. If we get that, we think call selling in crude oil could be good for 6-12 months out. Oil this fall and winter could be in the low 40’s, it could actually have a 3-handle on it, and we’re going to be taking advantage of that when that happens. Michael: Yeah, I just put together out summary. We sent our summary to CNBC this week on the oil market. Hopefully, they’ll want to have us on and talk about it, but if you’re listening, CNBC, we’re ready for you with our quarterly oil analysis. Feel free to give us a call. I know you, James, talking about the cuts, have not affected supply. In fact, right now, all-time record highs in the United States- 528 million barrels. That’s 27% over the 5-year average. So, I would think that still qualifies as a glut. Would you? James: Michael, that’s definitely a glut. If we have one more barrel in the world than we need, prices go down. We have just a dramatic over-supply in the United States. Ever since we’ve been counting barrels of oil in the United States, we have never had a higher supply than we do right now. At a time where production in the United States is now going to ramp up, it is a bearish scenario. Am I saying that oil is going to fall every day and it’s going to go down to zero? We’re not saying that, but as far as the investors that like the herd mentality, this June and July we’re probably going to have more ramblings out of OPEC. They’re going to say, “We’re going to extend the cuts. We’re happy with the way it’s working but we’re going to proceed to extend these cuts further.” We’ll probably get another pop from that on the bullish news, and that’s the one we’re going to use to probably lay out some calls out 6-12 months and I think that’s going to work out pretty well. Michael: For those of your listening that may not be that familiar with option selling, what James is really saying is we don’t need prices to fall, although we think that’s a distinct possibility, we just don’t need them to go skyrocketing up in this environment. With this type of supply we don’t think that’s likely, that’s why we go high above the market and sell calls. As long as the market doesn’t get there, those calls expire and investors keep the premium. Did you have your eye on any strikes you want to share right now or do you want to save that for another podcast? James: We’re going to be selling crude oils calls with a 7 on them, and I don’t mean 7 or 17, I mean 70. If they’re producing oil in Texas at 17, we’ll go short at 70. We’ll take our chances on that and I think it’ll turn out pretty well. Michael: All right. For those of you who want to read our full forecast and analysis of the crude oil market, along with some potential trades you can look at, that is coming up in our April newsletter. It’s going to be coming out within the next couple of days. Look for it in your mailbox. If you’re not a subscriber yet, you can subscribe at our website. If you come to our website and order anything you’ll be on our subscription list. We do have a special crude oil feature this month because this is the trade we’re going to be looking at now for the next several months. One thing about option selling is if you’re taking premium out of a market, you don’t just have to sell it once and take it, you can often keep mining premium into that market for months at a time. Am I right? James: That’s how we do it. Michael: Okay. In addition, in your upcoming April newsletter there’s also a special feature this month on some of the top mistakes high-net-worth investors make, particularly 1 percenters... people that are in that higher-net-worth strata, that even though we tend to be sophisticated investors, at the same time there are some blind spots there. We did a lot of research here, a lot of different reports we found, and I think you’re really going to be fascinated to see some of these things. A lot of them, James, you wouldn’t even think of as high-net-worth investors making these type of mistakes, and they do. We really put that in perspective and I think a lot of our readers will enjoy it. James: You know, money doesn’t come with instructions. So often, you hear about investors that are making their money in whatever line of work their business or company that they had, and when they go to invest on their own they don’t quite have the success. A lot of our investors, the clients of ours, made their fortunes being experts at what they do and hiring someone to do it for you is probably a pretty good idea. Michael: Well, the first hint is don’t keep it all in the stock market. I’m sure most of you probably know that. So, we’re going to move on to our lesson portion of the podcast this month. James, this month we’re going to talk about an aspect of risk management. We did a piece on some more advanced ways to manage risk this week on the blog and we got a lot of feedback and a lot of questions. Thank you, all you viewers, for that. One of the things and questions we got there was, “Well, that’s great for naked options, but what about if I’m doing a strangle? How do I manage my risk on a strangle? I’ve sold a put and I’ve sold a call on the same market- how are you managing risk on those?” I think that’s something we want to talk about and address some of our readers who maybe want to learn how we do that. James: One of our most attractive commodity options sale that I find when I’m scouring the 10 markets that we’re closely watching, and that is identifying fairly valued markets. Quite often, you will have CNBC or Bloomberg go to the pit and the gold market is down $20 or it’s up $20 and people are talking, “Oh, the gold market got hammered today. The gold market’s soaring today.” A $20 move in gold makes a headline. It makes a headline on T.V. and they go to the pits and they’re talking to the traders and what have you. A $20 move in gold doesn’t move the needle for the options that we sell. When we sell options on crude oil or coffee or gold, often they are 50-60% out-of-the-money. So, these 1-2% blimps in commodity prices for the underlining contract makes a lot of headlines, but as an option seller, whether it’s yourselves doing it for your own account or we’re doing it for you, it very rarely even moves the needle. When selling a put and a call in gold or silver or crude oil, often the distance between the put and the call is the same value as the underlining contract itself. In other words, gold is trading around $1,200. We have option sales where we strangle gold and the strangle is $1,000 wide. So, identifying fairly valued markets, gold happens to be one of them right now, we think it’s pretty close to fairly valued, the put and the call they babysit each other while you’re waiting is basically the best way I can look at it. For example, if you’re short a gold strangle, your call is $500 above the market, your put is $400 below the market, this one is offsetting the other one at the same time. So, in other words, if the gold market moves $20-$30, your call position might go against your slightly, but your put is now taking care of the differential between from where you put the initial position on. If you use the 200% rule, and we do that ourselves, it is a very, not necessarily strategic, but it’s a very easy management tool that you can use. If you have 12 positions on in the year and 2 of them double in price, do the math. That still can be a very, very great return and it does hold your risk parameters in check. If you are selling a strangle in gold, you might take in $600 on the call, $600 on the put, you have $1,200 worth of premium. Not only will a naked call or put often double, unless the fundamentals change, but that $1,200 in premium that you take in on a strangle, that will almost rarely, practically never, double in value. So, if you have a $1,200 premium in strangle, the $1,200 level for it to double to $1,400, rather $2,400, just happens so rarely. The strangle is our best approach to markets that we find that are fair valued. If you do have your put or your call pinching you just a little bit you’ll notice that the opposite direction option is doing extremely well for your account. Needless to say, you have to have risk control parameters when you first enter a position. You can put in a 100% rule on your short put or your short call. I would put 100% rule on the entire premium itself. It gives your position a great deal of time and room to work. The strangle, I think, is the very best option sale going. If you want to keep a very close reign on your put or your call you can do that. If you wind up stopping yourself out of a strangle on most commodities, in my opinion, you’re not selling enough time. A lot of investors and a lot of books talk about writing options, they talk about a 30 day, 60 day, 90 day option. If you’re getting stopped out of your short position, those are probably the options that you’re selling. I would go further out in time and in price. Commodity options you are paid to wait, and patience is the name of the game. If you’re able to put on a strangle and you’re able to wait, more times than not you’re going to have very good results. You’re not hitting homeruns selling a strangle that far out, but for those of your who want to win the game and are okay with hitting singles all year round I think that’s a great way to do it. I think our investors certainly know about that and our viewers could find that out for themselves if they wanted to. Michael: One way of looking at that, you’re talking about risking the whole premium of the strangle. In other words, you’re saying if you take in $1,200 you can risk up to $1,200 on either side. So, actually, you can be a little more aggressive on your risk management on both sides because you have that balancing affect on the opposite side. Correct? James: Exactly right. Michael: So, instead of risking your call to double value, you can almost risk it to triple value and still get away with it because you have some extra risk management with the strangle if you’re following that. James: The stay ability in a strangle, and that is the key to option selling, is being able to ride out the small blips in the market that change the premiums. Patience and the ability to wait is the key and a properly placed strangle will give practically anyone the ability to stay with that market. That is something that we find at our office for our clients that we do a great deal. The proof is in the pudding. The strangle is a great way to go. You need to identify a fair value market. If you’re able to do that, the strangle is going to be very fruitful. Michael: One of the things we talked about this week in our risk management lesson is the purpose of the risk management tactics often is just to slow the market down long enough to let them expire because time is always working in your favor. So, if you’re using a strategy like the strangle where you’re risking premium to a certain value, you can also incorporate things like a roll. You can use a roll in a strangle where you’re rolling up or if fundamentals change then maybe you just roll it into a one-sided trade instead of just a strangle. Getting a little more creative there, but all of those strategies that we talked about can also be applied to spread, even to a strangle, to get a little more advanced. James, when you’re talking about that, the 200% rule is a good basic rule that can be used either with naked or with a strangle you just described. James: Correct. For all the times you put a strangle on, there’s a chance your put or your call will double in value. As long as the fundamentals in that market didn’t change, feel free to roll down the put or roll up the call. 9 times out of 10 that will not double again and you will be collecting 75% of the premium that you originally sold for instead of 100%, but that’s a very great investment. Michael: Excellent. Well, I hope everyone’s enjoyed our first audio and video podcast this month. For those of you that are writing in asking questions and sending them, please keep those coming. We love to address those on our shows, such as this. For those of you interested in our accounts, unfortunately we are fully booked for April. We are working into our May availability now. We still have some availability for new accounts in May. If you’re interested in learning more about this, please call Rosemary at the office. It’s (800) 346-1949. She’s scheduling consultations, which will take place in April. So, if you’re interested in one of those, give her a call. She can get your scheduled. James, I appreciate your input this month. We’ll be back next month and we’ll update some of these trades and see what’s going on then. Thank you, James, for everything this month. James: My pleasure. Always happy to do this. Michael: For all of you out there, we will talk to you in 30 days. Thank you.

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.

souvenir.... 00:00, GM, Careless Whisper, N / A, N / A, 04:28, GM, Spinning Le Whee, N / A, N / A 10:20, GM, Vous savez que je veu N / A, N / A 14:12, GM, Embrasser Un Foo, N / A, N / A 18:31, GM, One More Try, N / A, N / A 23:43, GM, par, N / A, N / A 28:43, GM, roxanne, N / A, N / A 32:47, GM, Jus un enfant, N / A, N / A 39:20, GM, This Is Not Real Love (Feat. Mutya Buena, N / A, N / A 43:53, GM, Libert '90, N / A, N / A 49:13, GM, Comme (Feat. Mary J.Blige, N / A, N / A 53:19, GM, Cowboys et Angel, N / A, N / A 58:00, GM, Foi, N / A, N / A 61:12, GM, Too Funky, N / A, N / A 64:41, GM, I Want Your Sex- Pt. 2, N / A, N / A, MIX IPAD.......FUN MIX....TONTON

souvenir.... 00:00, GM, Careless Whisper, N / A, N / A, 04:28, GM, Spinning Le Whee, N / A, N / A 10:20, GM, Vous savez que je veu N / A, N / A 14:12, GM, Embrasser Un Foo, N / A, N / A 18:31, GM, One More Try, N / A, N / A 23:43, GM, par, N / A, N / A 28:43, GM, roxanne, N / A, N / A 32:47, GM, Jus un enfant, N / A, N / A 39:20, GM, This Is Not Real Love (Feat. Mutya Buena, N / A, N / A 43:53, GM, Libert '90, N / A, N / A 49:13, GM, Comme (Feat. Mary J.Blige, N / A, N / A 53:19, GM, Cowboys et Angel, N / A, N / A 58:00, GM, Foi, N / A, N / A 61:12, GM, Too Funky, N / A, N / A 64:41, GM, I Want Your Sex- Pt. 2, N / A, N / A, MIX IPAD.......FUN MIX....TONTON

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.

Recorded: 17 September 2016 Hosts: Joel, Barry & Michael Podcaster’s Anonymous BooZe—Review Michael – Viridiana Wine Barry – Ice Tea Joel – Sam Adams Octoberfest Days of our Lives Barry – Dodge Ram 1500 vans… Have no leg room Barry – Quick trip to Pa. Michael – One of the Brother-In-Laws in town for the … Continue reading "LN-QRM 221: Winter is Coming"

Michael: Hello everyone, this is Michael Gross at OptionSellers.com. We’re here with your monthly Option Seller Radio Show for June. We have a lot of stuff to talk about here this month, simply because of the news going on this month. Probably first and foremost, James, what we want to talk about here is the FED decision or inaction, as we say. Obviously, that was a big topic on Investor Mines here in June. The FED did not act – the reasons why were kind of obvious to everyone so we don’t need to talk about it here. I think probably one of the first things we should talk about for out listeners is what the means for commodities right now. What’s the macro picture in commodities? James: Michael, the macro picture right now is perfectly mixed. We have 0% and negative interest rates all around the world, which is extremely the main reason why the Federal Reserve here won’t be raising interest rates at all this year, possibly once maybe after the election, something along those lines. U.S. companies certainly can’t afford to have a strong dollar. With everyone else racing to zero and now below zero for interest rates, clearly the Federal Reserve is going to hold off on raising interest rates here. The strong dollar would be a catalyst for other strong economies to do well, and for the U.S. economy to suffer, and certainly we don’t see that happening. So, we’re looking at the newly 0% interest rates here in the United States, negative interest rates everywhere. Generally speaking, historically, that is going to be bullish for commodities; however, the fact that we have such low interest rates because economic growth around the world is so weak right now. So, on the flip side of 0% interest rates is that economic growth right now is small. Copper demand, steel demand, zinc demand, and soybean demand is way down. For that reason, we see a very mixed picture for commodities for the last half of 2016. We see a lot of up and down because of that, and we think a lot of commodities are fairly priced, and what the Federal Reserve is doing right now is simply jawboning to get the market to do what they want it to do. At the end of the day, we’re looking at very few interest rate hikes this year. That is, I think, what Janet Yellen spelled out in June. Michael: Yeah, it has been all the talk on the financial channels and the paper and what the effect is going to be on equities now, and you have Jim Cramer talking about buying defensive stocks because he’s more concerned about the global financial picture. Do you have any thoughts on that? Stock traders have two choices: they can be long or short. The typical investor gets advice like “Well, you buy defensive stocks and hope to try and ‘ride it out’.” So, they’re playing defense if they’re expecting lower prices. A lot of times, shows like Cramer’s don’t cover “Well, why not go on the offense with strategies like options?” You certainly brought that to my attention, because now’s the time you can go on the offense with different commodities markets, even the stock market if you want, but commodities in particular. James: Michael, I think that’s why we have so many investors knocking on our door right now, simply because they do want to diversify away from the stock market. Buying defensive stocks, if the stock market falls, isn’t going to help your portfolio all that much. Basically, as Mr. Cramer’s referring to, getting involved with defensive stocks is simply going to make your portfolio fall less. As we know here at OptionSellers.com, if we see something developing, whether it’s a bull market, bear market, or something in-between, take advantage of that, and that’s what we’re able to do selling options on commodities. We can actually bet on lower values. As a matter of fact, that’s what we like doing best, as you know. Of course, call options on commodities, sometimes 50% and 100% out-of-the-money, certainly a great way to participate in what might be a bear market 2016 and 2017. Go on the offense, and that’s certainly what we do here at the office for our clients on a daily basis. Michael: Something we talked about in the newsletter this month, and I don’t remember if it was a letter you got or not, but somebody asked, “It seems like you guys sell a lot of calls. Are you perpetual bears on the market?” Your answer was, “No, we’re not perpetual bears on the market. We can be bullish or bearish. It just so happens that oftentimes because it’s public speculators, calls are often more over-valued than puts.” Can you talk about that for a minute? James: It’s certainly true. When we have a move up in silver, silver recently moved up from $16 to $17.50, when soybeans rally because of dry conditions in the Midwest, the public really pushes prices on call options further than they normally would be. Fair value is still something that we follow. Puts sometimes get overpriced, but call prices on commodities get absolutely inflated. We had made note recently in one of our videos that we think that June and July we’re going to look back at the end of the year, that absolute crescendo in call premiums on many commodities, and so many stock portfolios that sell options on stocks. We’ll talk to new clients and they’ll say that they’re selling options 2%, 6%, 8% out-of-the-money, when you can bet on a commodity to not double in price by selling a call 100% out-of-the-money. What would you rather do? Michael: Alright, James. Speaking of taking alternative approaches with options, etc., a lot of high net-worth investors have an interest in hedge funds or may have investments in hedge funds. I wanted to bring up an article here from the Wall Street Journal, last month, from May 13th. Its called Hedge Funds Annual Bash is Downer as Industry Flags. The whole thing is about this big annual party they have out in Las Vegas for all these hedge funds managers. Bernie Sanders would not be happy – I’ll put it that way. They have all these bands and celebrities and everything else. This year, there’s a real downer mood there because a lot of investors are pulling money out of hedge funds. Major hedge fund clients, including Chinese sovereign wealth funds, during this thing aired doubts. The general feeling was that 90% of hedge fund managers probably weren’t skilled enough to navigate the markets. That’s how they felt and that’s why this money is coming out of hedge funds right now. Do you feel that’s accurate or do you have any input into that? James: Well, Michael, I read the same articles. A lot of that was floating around over the last month or so, especially in the Wall Street Journal, paying hedge funds two and twenty, simply trying to chase return right now is extremely difficult. I think there was a record number of hedge funds that closed in 2015 and the first half of 2016. It’s easy to be a hedge fund when the stock market is going straight up. It’s easy to produce returns that way. What happens when interest rates are at zero? What happens when the stock market goes sideways for the last 18 months? Where do you make 15%? Where do you make a 20% return? It doesn’t exist. I think my favorite piece out of that Las Vegas soirée this past month was some of the biggest banks sticking out their biggest chests over the last several years. We’re telling they’re clients that they had to get to the club and back using taxis and they weren’t using limousines this year. When the hedge fund industry can’t get their best prospects to and from the restaurant and they need to get their own vehicle and their own transportation, I think that says really something. Going to Vegas once a year, you have to just be absolutely confident that the returns are still coming and sticking your client in the back of a cab probably isn’t a good sign. Michael: Well, the thing about hedge funds, and they argue that it helps reduce volatility etc., etc., and that’s why you shouldn’t bail out, but a good piece of the article was about that stocks have been going up for the last how may years. Nothing against hedge fund managers, there’s a lot of great strategies and very gifted individuals, but, on the other side of the coin, a lot of these guys are just glorified stock pickers. If that market’s going up they’re going well, and a lot of investors look at that and say, “Great… I made 8% or 10% last year. I could have done that on my own. Why am I giving you 20% of my profits and 2% of my account?” So, that’s what I saw and that was my takeaway from the piece. It was an interesting piece, nonetheless, and for those of you that invest in the hedge fund industry, maybe look for some alternative strategies other than ones that focus entirely on stocks. Speaking of alternatives, we did a special report this month on natural gas. A lot of that revolved around the seasonal tendency, James, and how a lot of people get it wrong. The pop analysis is you buy natural gas in the summer, and that’s not necessarily the case. Can you talk about that a little bit? James: Michael, I think what happens in natural gas during the summer is similar to other commodities that people just jump on. Fundamentals are what dictates eventual price, and short-term headlines is what creates opportunities for investors like OptionSellers.com. The bottom line is this: everyone is watching the weather, everyone is trying to chase return, everyone’s looking for the next best way to make a buck, especially with interest rates flat like they are. It’s 120 degrees in Arizona, breaking records, let’s buy natural gas for this heat wave. This sort of thing happens all the time. Fundamentally, we have ginormous supplies of natural gas, both in the United States as well as around the world. What investors need to know when the jump into a commodity like natural gas, because it’s going to be hot this summer and they think we’re going to need electricity to cool homes and cool factories. The bottom line is this: winter demand for natural gas is 5 times greater than natural gas consumption during the summer. So, as investors pour into natural gas because it’s 120 degrees in Arizona and they think they’re going to get rich going long natural gas, that probably isn’t going to work out so well. Natural gas demand is needed in the winter. We have production ramp up for natural gas supplies that are going to be needed in the fall and wintertime of the year, not in summer. We are looking at selling natural gas here with both hands. We had a one handle on natural gas, Michael, as you know, just a month or two ago and the November and December contract are pushing up towards 3 and 3.50 per million BTU’s. That, in our opinion, is a sale. We have the public and headlines pushing natural gas right now. This fall, natural gas is going to be pushing the low 2’s and possibly the high 1’s. Once again, don’t trade your investments and your hard earned money based on headlines. By the time it hits the headlines, you probably want to go the other way and, if you have the ability to sell options, we actually can go the other way. Similar to being on the offensive, Michael, like you mentioned at the beginning of our show today, there are ways to go on the offensive. You don’t have to just get out of the market, you don’t have to buy defensive stocks, you can go on the offensive, and I think selling natural gas for the rest of the year is a great example of doing just that. Michael: The best defense is a good offense. You talk about selling deep out, so the thing just rallied. Funny you brought that up, because natural gas was in the Journal yesterday. They’re talking about warm weather and a lot of specs coming in, so the thing rallies and obviously that drives up volatility, but how far out-of-the-money are you looking to sell calls now? James: Natural gas, the timing is a seasonal trade. Quite often, we sell options 6 and 12 months out. On this particular, what we think is a great opportunity; it’s not that far out. The spot month, of course, for natural gas is going to become August here in the next week or so. The November and December contract are the ones that we are keying on. September, October, November, a lot of investors and analysts think that’s the beginning of winter, but, in all actuality, in Boston, New York, and Philadelphia, it’s not that cold in October. So, we’re looking at selling options for early winter delivery and we’re selling options anywhere from 30%-40% out-of-the-money. We checked the margin rates on these and the possibly decay and that trade looks excellent, so we’re starting to position our clients in that this week. Michael: One thing I like about it, as well, is that it’s not just a seasonal trade. Overall supplies of natural gas right now are 32% above the average for this time of year. As you mentioned, just a huge glut in the market right now, which that’s the bottom line fundamentally in natural gas, regardless of what you’re reading in the headlines. James: Michael, that brings up a great point. A couple months ago, we were talking about trading seasonally, however you want it to line up with fundamentals, and vice versa. Every once in a while, we’ll have a seasonal trade comes up and it’s not geared with the fundamentals. This trade has both. As you mentioned, the supply of natural gas is just huge and it’s several percentages above the 5-year average. It’s 30%-40% above what it was last year. This trade appears to be lining up quite well. The fundamentals is how we trade: that always comes first and seasonality comes second. The fundamentals right now, as you mentioned, are very bearish long term for natural gas. Michael: If you’re listening to this, this isn’t a discussion where we’re saying the natural gas markets are going to crash tomorrow and you need to short it today. We don’t know if the market is going to turn around tomorrow, it could keep going up for the next month. That’s one reason why we are talking about selling so deep-out-of-the-money is you give the market room to do that and still take advantage of those longer term fundamentals and seasonals that James was just talking about here. Speaking of the longer-term fundamentals, in our upcoming newsletter, we also have a feature piece on the cattle market for the summer. That’s going to be coming out here at the end of the month in June. It’s steak and barbeque season and, again, another seasonal there that some people don’t really understand, so we really get it straightened out for you in this month’s newsletter. You can look for that at the end of June, probably July 1st, most of you should be receiving that both electronically and via hard copy in your mailbox. Also, one thing I want to point out in this upcoming newsletter…. We have a very unique interview this month with a gentleman named Don Singletary. Don recently published a book called Options Exposed Playbook. He worked in the commercial hedge industry for over 25 years, so he really brings a unique insight into the difference between what commercial traders do and what the public is doing. If you have any interest in commodities or selling options, it’s just a really insightful interview. I really like this guy and I think you will, too. James, you also had some media coverage this month at a little debate on CNBC with a gentleman named Andy Lipow. How do you think that played out on air? James: Well, it’s interesting. We’re not on CNBC all that often, but we’re on from time to time. What I like most about when CNBC calls, either the gold market or the oil market or the coffee market are at extremes, whether they be the high or the low, and that’s when they often bring us on. We, of course, think that the oil market is probably overpriced. We think it was a seasonal rally and the fundamentals, we think, are going to probably bring crude oil prices down later this year. Andy was bullish. There were several reasons for his side in the interviews that we did. He was siding on Nigeria, we have problems there, and, of course, the Canadian wildfires. I went on to say that all of those are temporary. Iraq and Iran are now producing record amounts of oil. That’s okay for overproduction from certain countries when demand is high. Here in the United States, of course, driving season is the highest peak for consumption of oil anywhere in the world during this timeframe, but overproduction when demand is down this fall and winter, that, I think, is going to spell quite a different story. We went on to say that we expect oil to be in the high 30’s later this fall, like November and December. That, of course, is one of our favorite positions that we have on right now. We recently sold $75-$80 call strikes for fall and winter delivery on crude oil, and we believe that prices will be roughly half of that. Once again, the call options that we sold might be 100% out-of-the-money this fall. We think that what makes a market is a bull and a bear. Andy was bullish, and we think that it’s time to start looking the other way. As a matter of fact, that’s one of our favorite positions that we have on going right now, going into fall of the year. Michael: James, you made some good points. Backing up the hypothesis that oil prices are getting overpriced right now, I want to bring up another piece in the Wall Street Journal recently. This was from May 27th. There was an article in the paper titled Everyone’s Trading Crude, from Moms to Millennials. If this sounds familiar to you, it’s similar to what typically happens when markets get a little frothy. If you remember back in 1999 with the tech bust when everybody and their brother thought they could trade tech stocks, it’s kind of the same thing going on in crude right now where you have 22 year old college kids and moms all trading crude oil and different crude products, talking about how fun it is, and how they like to watch the market go up and down. Here’s a quote from a lady. This lady’s a math tutor. She says, “If oil goes from $43.50 a barrel to $43.70, you’ve made $100!” So, this lady is doing this for fun and entertainment, and when you have that crowd that are coming into the oil futures markets, that can often be an indication that the thing is possibly getting a little bit out of hand. Would you agree with that, James? James: You know, Michael, when the stock market is at all time highs and the barber is invested, and the guy who shines your shoes is talking about stocks, that sounds familiar. The gold market, when it rallied up to 1,900, everyone was going into coin stores and buying gold. This move in crude oil feels a lot the same. Once you have moms and millennials staying home to trade crude oil and, of course, be on the long side, because the market is bullish, that has signaled a lot of tops in the past and certainly it has all of the makings of one, as well, this summer. You know, crude oil was down at 27, rallies up to 50, that’s going to make a lot of headlines, but it’s maybe not the right time to get in. Michael: Well, for those of you listening, if you missed James’ debate with Andy Lipow, you can see it on our website at OptionSellers.com/CNBCJune. Also, we had a question that came in from people asking how to get our newsletter. There’s no specific place on our website you can request our newsletter, but if you request anything from our website, whether you request our booklet or buy our book, or you get on our e-mail list getting our free report, you’re automatically subscribed to the newsletters. So, if you do want to get copies of the newsletter you can go on and request our free report and you’ll start getting the newsletter. James, let’s shift gears a little bit here and do our strategy lesson for this month. This month, what we’re going to cover for our listeners is not so much a strategy, it’s the approach to the strategy, and that’s selling deeper and the ability to sell a very deep out-of-the-money in commodities. As a lot of you listening right now may be stock options sellers or sell options on indexes, commodities allow you the ability to sell much deeper out-of-the-money and it’s really a matter of trading time for distance. James, can you talk about that a little bit about what your philosophy is on that and how you go about employing that? James: You know, Michael, that’s probably the most frequent asked question when we have a new client come on board with us is how far in time do you want to sell out-of-the-money. I normally have felt like everyone else did the 90-day option, as it probably gives you the best decay, gives you the furthest amount out-of-the-money. That’s reasonable when you’re considering risk and reward. I have now sold millions of options on commodities over the last several years, and what I simply do is look for the furthest out-of-the-money that I can find that offers the greatest amount of decay. You can simply look at option tables by pulling up your CQG or your Bloomberg Terminal and you simply look at what the decay is probable for the next 8 weeks, then the previous 8 weeks, and the previous 8 weeks. So, if we sell an option that is 9-12 months out in time, we can judge by looking … for example, if we’re looking at selling the July silver options, we simply look at the May. If it’s roughly 50% of what the July contract is, we know that even if we’re selling 9 months out, we can expect to see 50% decay in just 8 weeks. You then will look at, say, the March contract. That will often be 50% of what the May contract was for a particular strike, for example, in silver. You are now looking at a short 16 weeks, have an option practically go from $600-$700 down to just $100 per contract. That is fertile territory for selling options. Though we are selling strikes that are 50%-100% out-of-the-money, and it appears that we are selling out nearly a year in time, the sweet spot is much closer than that. You’re looking at simply 2 sets of 8 weeks for an option to lose ¾ of it’s value. That is what I consider low-hanging fruit and that is who we detect the best time value as far as selling options. It’s something that anyone who is interested in learning more about that, I can explain it to them further so that you can understand it maybe a little bit better. The ability to sell 100% out-of-the-money is just priceless. In commodities, you can do that and you can gage what the decay is by looking at the previous options that are just before it. The decay can be fantastic in just a very short period of time, even though you’re selling options that far out. Michael: It’s quite a contrast from a lot of the options books and courses out there that tell you if you’re going to sell options then you have to sell them 30 days out because you get the fastest time decay. But then, you’re also selling them right at the money almost. James, an important point you made there is you sell an option 6, 8, 9 months out. That sounds like a long period of time, but what you’re saying is “Look, you don’t have to stay. If you sell an option, it’s 9 months out, you don’t have to stay in the thing 9 months. You can be out of it in 3, 4, 5 months because you’re buying it back early when it’s nearly worthless.” Is that correct? James: My job, Michael, is to fundamentally position our clients in fundamentally sound trades. By finding that 90-120 day period where the decay is going to be the greatest is my job. If we have collected 80%-90% of the premium, we’ll buy back options that have 2, 3, and 4 months remaining on them. Our job is to find the most decay, the furthest distance out-of-the-money, and, after selling millions of contracts of commodity options, I get paid the same whether I sell a 90-day option or a 9-month option, and we sell the 9 month option because those are the best ones to sell. Michael: Well, that’s a great discussion. I was going to do an example here, but I think we already did one with the natural gas here earlier, kind of a perfect example when you talked about natural gas. If you want to go back and listen to that part of it, you get a pretty good example of what we do here. As we mentioned, the newsletter will come out at the end of the month if you want to look for that in your inbox. Also, I have a note here that new account consultation interviews are booked for June, but we do still have some available after July 7th. So, if you’re interested in talking to us about an account you can certainly call and schedule a consultation. That’s 800-346-1949 or 813-472-5760 if you’re listening from outside the United States, and, of course, you can always email us at office@optionsellers.com. And final thought before we sign off here during this podcast, we didn’t mean to ignore the elephant in the room, which is the Brexit Vote. We have the disadvantage of recording your podcast this week 2 days prior to the Brexit Vote. Right now, the surveys seem to indicate that it is pretty much split down the middle. It’s going to be a really close vote. It could have different impacts on the market, but initially we may be looking for some more volatility in different markets that can certainly be an advantage to option sellers. James, would you concur with that? James: Michael, that’s what the first half of 2016 has been, is turmoil, uneasiness about several different things, and lots of headlines. This just feeds into option selling and premiums being too high. We certainly enjoy this and will be addressing this in upcoming videos that we make for our clients and for the audience. Michael: Exactly. James is going to be doing a special video on the Brexit Vote. That will be available next week on the blog. If you like this podcast and the information you get here, you can certainly subscribe to us on YouTube, and subscribe to us as well on iTunes. We also want to invite you to follow us on Facebook. We apologize. We’ve been a little negligent to our Facebook, but we are correcting that. We are going to start providing a lot more content on our Facebook, so feel free to follow us there, as well. Everyone have a great month of premium collection. We will talk to you in July. Thank you.

特别感谢中南财经政法大学【吕欣欣】同学对文稿听译的贡献！！！It is the last day of 2015, and officially the end of the year, so it is fitting for us to talk about year-end bonuses today (年终奖). It is a tradition in China for employers to give out a certain amount of bonuses to show their appreciation of the employees’ hard work in the past year.又到了年底，我们几个没有年终奖的，坐一起纸上谈兵，给大家讲讲年终奖发什么，怎么发。Laiming: So can you tell us more about the year-end bonuses? When is it usually handed out?Luo Yu: Well, as usual although we call “year-end bonus” “年终奖”, they’re not necessarily always handed out at the end of year. In some cases they’re given in April or at the beginning of the next year. And usually they’re in a form of cash and a red envelope, but I think that’s more of a traditional way. Sometimes they come in various forms, for example, you will be given a car if you’re top performer of a company, an iPhone, and some eggs as perks and the value may vary from person to person and from organization to organization.Laiming: Who would want eggs? Michael: I was just thinking that.Luo Yu: Definitely, I want to share with you my story. I used to work in SOE【注：国有企业】, right?Laiming: And you got eggs?Luo Yu: I got not only eggs but also vegetable, oil, pork and mutton and lamb. Basically it’s a lot of daily necessities and you’ll be given even shampoo and conditioners, especially previously before the anti-graft campaign was taken place, a lot of SOEs and public agencies would like to give the employee the perks as the final award.Michael: I think if I was given an egg, I think I would have been somewhat insulted by that. I think that to me seems like a bit of a wooden spoon trophy【注：木匙奖，通常颁给比赛的最后一名】, you know, for last place.Laiming: Yeah, I wanted a car and you guys gave me eggs.Michael: Yeah it doesn’t look very good, does it?Luo Yu: But that’s just supplementary and those eggs are organic eggs.Laiming: Despite all the eggs, the company failed to keep you, so you’re now working for us now. I don’t think everyone gets to receive this year-end bonus.Michael: I don’t know. This is…I like this Chinese tradition, I must say. This isn’t something that we really do so much in the UK. I mean when you talk about year-end bonuses in the UK, it’s usually you’re talking about maybe people who work in a bank, or in finance, or law or in industry where there’s a lot of money changing hands and people get paid very high salaries. And in a lot of cases, a lot of their salaries come in the form of a bonus which you could argue inadvertently contributed to the financial crisis. But here in China, it seems to be almost everybody will receive some sort of bonus however a bigger…(Not for us, not people in CRI) Oh really, oh dear, oh maybe I should’ve rethought my career move. But I remember when I first came to Beijing and I first started to work there, and I started to work in December, so that’s obviously just before the Chinese new year. I mean I wasn’t expecting to get any sort of bonus at all, coz I didn’t even be working here a few weeks. But you know I did receive a bit of money in a red envelope which…It wasn’t much, but I thought it was quite a nice gesture. I was very touched by that.Luo Yu: Definitely it’s a gesture that can finally touch your heart. Even you were given not a very big amount of the money and the red envelope, but you still feel very delighted.Michael: Yeah absolutely I mean it’s not the sort of thing I would ever expect to find…In fact I don’t think before I came to China, I don’t think I’d have ever received any sort of special bonus just for the new year or anything like that. So yeah it’s a Chinese tradition I could definitely get behind.Luo Yu: Just keep it. It’s our fine tradition.Laiming: So is there any patterning behind this? Who gets to decide what kind of gifts they give to the employees? I guess it’s usually the boss who gets to decide.Luo Yu: I think it really varies according to different organizations and corporations. If you work in a private sector, I think usually it’s the human resources department or the boss. I think the boss will have the final say. However if you work in a Chinese state-owned enterprise, they have the department of labour union, and usually it’s labour union or “工会” which is to decide what “年终奖” you will get.Laiming: I also think what people get from the employers also vary based on the occupations they take. For example people work in, as described by Michael, people work in the finance sector might get more money out of their employers than people work in, say, in the grocery industry who might get just eggs.Michael: Yeah that would be unfortunate. I would imagine we were talking earlier on about the effect of anti-graft and everything in China and how that might affect the consumption and disposal of wealth. I wonder how much this New Year bonuses will be affected by that. I wonder if maybe instead of giving money, people or organizations might want to give their employees something a bit less overtly to do with wealth and finance. Maybe gifts rather than just money on its own or maybe coupons for supermarket or something like that.Luo Yu: Right, actually we’ve got have some evidence here. As Michael’s mentioned, if you work in a capital intensive industry, usually you will be given more bonuses and commission. And the size of the year-end bonus largely depends on one’s profession, for example, if you work in finance sector, e-commerce sector, automobile industry and aviation sector you tend to get more when it comes to year-end bonuses.Michael: But I guess it also… if you’re working for a foreign company as well with an office in China, I guess your year-end bonuses are largely dependent on the performance of the company throughout the year. So we’re seeing here that Volkswagen has reportedly cancelled year-end bonuses this year coz it obviously at the moment got much bigger things to deal with what was the emission scandal that broke earlier on this year. So maybe that’s another thing to take into consideration.Luo Yu: Definitely, apart from the emission scandal by Volkswagen, if you look at the sales record, the revenue generated by the company in China, I mean this company has been underperforming for at least half a year already. So definitely the company has to consider whether to give their employees year-end bonus or not.Laiming: There’re also other tricky businesses involving year-end bonuses, for example many employees will wait until they receive their year-end bonus to resign. So apparently that’s quite an attraction for employees to stay employed.Michael: One thing that I’ve noticed what I’ve heard about the year-end bonuses is especially if you’re working in an industry which isn’t particularly well-paid, maybe you know if you work in domestic help for example, from what I’ve heard actually a lot of these people who don’t get paid very much rely on their year-end bonus. From what I see, it’s almost sometimes maybe an entire month or maybe more, an entire month’s salary as the year-end bonus. And a lot of these people I think use this to then be able to travel to their home to see their families for the Chinese New Year.Luo Yu: That’s probably one of the strategies to retain the personnel they need by those company because it’s so labour intensive.Laiming: Ok, there we go. There was discussion on the year-end bonuses which I have a feeling what happened every year on Round Table.