World’s Greatest Trader Reveals His Secrets

0:00 a data point I saw recently is that the single best day to buy the market is at an all-time high that is the most curvefit ridiculous like data I've ever heard in my life that is only applicable in hindsight in a bull market that is crap totally think so oh yeah we've researched this because people have said that so what's up guys today I've got a great episode with Tom snof he is the founder of tasty trade and the CEO of tasty live he also happens to be an entrepreneur with nearly $2 billion in exit including selling think or swim the great brokerage account for $750 million back during the global financial crisis this conversation will blow your mind Tom brings a fresh perspective to understand why many of the data points that you've been told they're wrong why he built

0:45 such great products how he thinks about trading a 100 positions per day why he makes 18,000 trades a year and what exactly is going on in the Traders mindset throughout the day given so much information so many different moves in financial assets and why he also thinks that he could literally just tell you all the answers to various economic outcomes or political outcomes and you still couldn't trade it correctly this conversation will make you laugh and it also will inform you here's my conversation with Tom snoff all right guys I've got Tom here Tom I thought a great place to start the conversation is you built the same company twice and you sold it for $1.8 billion doll give or take uh combined um you built these interfaces that have been the gateway to trading for millions of people over the years you built think or Swim then tasty

1:31 trade uh help me understand what was the Insight that you had as to why a new interface would lead to such value creation right I mean it's it's just incredible that you were able to do this two different times and sell these companies for so much money well the easy answer is why not us you know why not us um I'm I'm a weird entrepreneur I don't really care like I'm never trying to solve a problem I don't believe that good entrepreneur should ever try to solve a problem I believe you should just kind of do you know stay in your whatever your strength is wherever your knowhow is strongest stay in that kind of Lane and just do it better than everybody else and I think we were lucky we were able to pull it off twice um when you talk about staying in your lane

2:17 you are a Trader you started your career in the pits and I think you told me that you do between 13 to 18,000 trades per year yep is that right um what are you trading 18,000 times per year is a lot of trading that's like what over a 100 trades per day it's probably it averages probably 75 plus you know I don't know exactly yeah um but uh yeah most days like between 75 and 100 trades and is this like you put a position on and five minutes later you're saw in the same position or you just have a massive portfolio Howes so I have a lot of so so I'm a very short my perspective is basically 45 days so I'm not like a typical passive investor I don't I mean I do have a stock portfolio with some stocks like I hold for a long time but for the most part I have about i' would

3:03 say on average about a 100 different positions in everything we're talking Commodities all listed products so Commodities stocks and mostly option strategies and so all those positions need need adjustments they need you need to put on new ones you need to take off old ones my my time frame on average is 30 to 45 days like the whole duration of the trade so things can be adjusted every single day and what does it take to make it into the long-term portfolio versus the short-term portfolio so you see a company you see commodity a l a loss okay explain a payer loss you know you buy you buy a stock it goes down it's a longterm hold you know I mean in the option world you don't have to deal with that but in the stock world that's you know that's my life okay um and then

3:50 when you're looking at something walk us through let's say that you're looking at equities sure um and you know that your uh proclivity is for 30 to 45 days what are you looking for to say hey I'm going to put this position on and then do you go into the trade knowing what are the Milestones or kind of uh things we're going to look for that's going to tell you to sell that I go into the trade um I'm I'm a very simple Trader I don't care about fundamental analysis cyclical analysis anything I don't care about anything macro or anything like that I'm strictly base everything off implied volatility and I base everything off expected move now I that doesn't mean I'm not directional cuz I am so part of my portfolio is non-directional Delta neutrals we say yeah option world and part of my portfolio is very directional and um but I set my kind of mental

4:36 targets at where expected move is and let's just walk through um you know you wake up do you immediately run to the computer like let me check these hundred positions that I have okay so like how do you manage these 100 positions and what does the day look like for you oh well I'm always on you know like I'm I'm always I'm always involved in Mark but but my day so I have a weird schedule I I usually get up at 4 and I live in Chicago um I'm an email junkie too so I answer you know about an hour of emails from 4:00 to 5 because my brain works best really early in the morning late in the day I start to everything starts to get fuzzy I start to melt down but 4 in the morning man I'm good so 4 in the morning I'm answering emails I'm I'm

5:23 going to look at the market but I usually don't trade that early the only thing open by the way at early in the morning is the Futures markets and I would say about 20% of my positions are Futures and Futures options um so I may adjust Futures options around 5 in the morning but for the most part I'm not going to put on new trades I'm just going to adjust existing trades like let's say crude oil moves $2 overnight I'm going to adjust my crude oil position flatten it out and then answer email some more um and then when after the Market opens in the morning that's when we start to get you know it opens 8:30 Chicago time so that's when we start to get more aggressive Now what is your target do you have like I want to make 1% a day do you have a 1% a week is it just no target at all and you're just like hey I'm just looking at the assets my Target and this is what I say to

6:09 anybody because first of all it's hard for me to put into you know like I don't want to the easiest way to explain for about active trading targets is to talk about it as a multiple risk-free rates because nobody should be actively trading if you're targeting to make 7% if risk-free rates are let's just say 5% and and you know you need some multiple of risk-free rates to make it all worthwhile so the way I like to explain targets is has nothing to do with you know daily weekly monthly or anything like that but at the end of the year you know you need to set up a Target based on whatever your risk profile is at a minimum of three times risk-free rates and a maximum is usually you know who knows it could be anything you want but for for most people it's somewhere between let's say 22 and 32% like somewhere in there that's your target

6:56 doesn't mean you get there by any stretch it just means if you're going to put in all this work all this resources you know all the time it takes to manage all this stuff and and a lot of it's fun too um you have to have some in your head some multiple risk free rates so sure 20% 30% in that range I think that's fair is it just like a big video game yeah and how do you know you're winning is it just literally the return or is there some other measurement it's literally the return but you know you're winning if you do a lot of other things right like I can't put a like I don't know if I would have built these companies if I hadn't traded my whole life and and was totally okay with you know when we built thinkers we just roll the dice with all the money we had you know literally for 20 years just roll the dice and we built tasty we almost

7:43 did the same thing it there is you know you have to have a certain tolerance for risk that you develop through all trading trading makes you think faster it makes your brain process decisions way faster I mean you trade you know and and so you do everything faster and the most successful entrepreneur make fast decisions period And as you trading you have a 100 different positions um I think a lot of people would say hey concentration builds wealth diversification uh would protect it but you're still trying to make money you're still trying to build wealth um and so does the diversification actually hurt you in that Pursuit it may I don't know like in Bull markets like when you have a when you have um let's talk about like the last you know decade or

8:28 something or the last 5 years when you have a concentration of seven or 12 stocks that basically you know controlled this Market as far as returns go it it definitely hurts you know because you're not going to be in those stocks and if anything you're probably going to be short them um I think in a flat Market to a down Market to just kind of a normal more more normal Market I should say more normal um it probably helps you know non-correlated positions are great when when something ugly happens when the hits the fan non-correlated positions say save your ass when everything's going up and everything's very concentrated you know I mean you would have rather been in five tech stocks over the last 5 years yeah I think I saw a statistic that over the last 5 years the tech sector of the S&P 500 was up like 25.9% or something

9:14 uh compounded which means that uh you actually outperformed majority of the Venture funds during that same 5year time period and you had the public liquidity and so um is that something where you're almost barbell like you have all 100 public positions but then you had a massive concentrated bet in the private market and building think or Swim and then tasty yeah I mean listen that that's it's interesting how that works and I you know I always say that the reason we were able to do it is because that's just the way our minds work you know like there's just that's we we're comfortable with that risk MH you know I mean it's it's hard to say it's hard to it's hard to rationalize it any other way I don't think it's that risky right like you are by all measures

10:00 an expert in trading uh because you've been doing it for so long well what's risky is that that in the industry you know you're talking about a business that runs at 50% let's call it 50% net margins which is pretty pretty good there should be 100 firms but there's not so it's not that easy why because building the technology and building the right create attracting customers to a space that's this narrow and attracting customers to a space that has kind of you know not necessarily a great reputation um because because big passive firms that annuitized that annuitized money management don't want it to be it's a challenge there should be more firms there's not how do you look at the difference between a think or swim or tast versus let's say a Robin

10:46 Hood or a public kind of you know some of these firms that I think are kind of mobile first design heavy uh pinee payment for orderflow Stuff Etc like are they all competitive with each other or are they kind of different parts of the market no they're they're pretty competitive I mean we we view every customer whether you're Robin Hood customer public customer um you know Schwab customer Fidelity customer we view them all the same they all should be our customers that's we look at it um but you know that's that's like I I don't know um I mean those companies have done a great job you know with um I've always been impressed with Robin Hood um and there's a couple of companies out there that are you know to me have always been impressive but um you know we we've always also been impressive in our own right you sold thinker swim for 750 million give or

11:33 take and you sold tasty for 1.1 billion uh second time you just had more knowledge and experience you got a bigger number or were there things that you did differently the second time that uh kind of drove a better outcome well thinkers was we sold thinkers slom in 2009 and that was you know during the big meltdown so we it was a billion dollar company before that we were public and then it it sold off a little bit um you know in the kind of all the financial stocks in 2008 2009 sold sold off but we were very particular about not taking cash so they tried because cash is a creative to comp you know if a big company's buying you out they want to give you cash because then it makes the deal a creative we wanted stock so if you want to hear a fun story I would

12:18 love it okay so fun story so TD marit trade was started by the Ricketts um Joe rickets started it I think for $25,000 in like the late 7 early ' 80s uh Joe's an incredible entrepreneur I don't know if you know him but whatever he's he's um still alive today and uh I think he's a rancher in Montana or something like that but anyway so Joe started it and um built it up but then in 2009 TD Merit trade wanted to buy um wanted to buy thinkers some but the rickets also wanted to buy the Cubs and the and the rickets needed cash to buy the Cubs so what never has actually been discussed we did kind of a three-way trade I don't know if you remember when um Joe rickets gave the money to buy the Cubs to his

13:04 son Tom rickets who who runs but that's a close family so they needed about $800 million to buy the Cubs they had about let's say they had plenty of money billions but they only had a certain amount of cash so to raise the cash and we wanted stock so we got the stock from the Ricketts the rickets got the cash from TD trade we did a three-way trade no way yeah so you actually didn't get stock from TD we did we did but that's how it worked out on paper it was a three threeway trade that's pretty cool it was really cool did they bring that idea to you guys or did you somehow know that they wanted to buy the Cubs well it was pretty public that they wanted to buy the Cubs and the CEO of TD Merit trade worked the whole deal Fred Tomac who's now the CEO of the um of the CBOE

13:50 so it's a small world and Fred's a great guy and we've stayed friends you know all the way all throughout the years if you had to give yourself a grade on taking the TD Merit trade stock A+ F minus where where well we took the stock at at um 11 or 122 so I don't remember the exact price but it was around let's say $12 okay and you know we were able to it never traded lower so that was a good trade and what do you think you ended up selling it probably between 18 and 30 okay so you really sold for way more than $750 million once you actually got out of the position yeah but don't tell anybody yeah I won't nobody listens to this don't worry um okay and then what did you learn from the first acquisition that you then went and implemented in the second one was there another three-way trade no but what I

14:37 learned is that so when we built we started building thinkers in 1999 and we were just a bunch of Floor Traders we didn't really know anything about Building Technology not at that level so we learned a lot about Building Technology but when we sold it we realized there was a missing piece or at least I thought there was a missing piece and the missing piece was the content piece like we built this cool technology and we did did some content but we didn't like we never took the content to the next level and things like CNBC and Bloomberg and you know Wall Street Journal bar all the content Financial media drove me crazy because it was such it just wasn't interesting to me it wasn't you know it wasn't engaging and so I thought there was room for a digital Financial Network so we had this crazy idea about building a

15:23 content-based you know digital Network and it turned out to be the largest digital Network Financial digital Network in the world and we started it in 2011 um as tasty trade and the first investor was TD Merit trade so you got the people who bought your company to be your first investor in your new thing our only investor and they did that because they were just like you're amazing or was there some sort of competitive Dynamic where they're like we can't let this guy squeeze out of our our no they did it because for the right reason I said listen you guys are amazing entrepreneurs and we knew you weren't going to stay here and we would be foolish not to R the dice with you one more time and they did and um they actually tried to buy tasty again couple years later you know five years later

16:08 but we do you remember Theo Epstein when he was when he okay so so Theo Epstein once I heard him give a talk and he said you know 10 years is like my number that's what he that's when he left like Boston to go to the to the Cubs Cubs yeah and uh we held thinkers we we built it in 99 2000 we sold it in 2009 and we built tasty in 2011 we sold it in 2021 10 years um and in both times that entire 10-e period there was no like real activity like nobody really came after us in either company like in we built tasty not one person talked to us for 10 years but 10 years into it five companies tried to buy us 10 10 years into thinker swim three or four companies tried to buy us at the same

16:53 time like somehow like word gets out I don't know how it happens do you think is that you crossed over some sort of financial Milestone do you think that it's like Bankers can't keep their mouth shut yeah they just go to some conference and everyone talks about it or something they're like holy cow who are these guys and um yeah so you know the reason we did the deal with IG group um with their London based public company is I wanted to go Global and I couldn't do it it's just too hard you know it's really hard where I am in my life it was too hard for me to start getting licensed in all these different countries and everything so I really wanted an opportunity to take tasty Global so we chose IG group as a partner and um you know they've been a good partner we'll see what happens so in 2009 you sold at the bottom of the market in 2021 it sounds like you sold

17:40 at the top of the market or close to it and was that intentional in terms of understanding where the market no it wasn't intentional just that that was the 10year period that was up but you know what's funny is in 20 in 2021 if you remember that was the spack Mania yep and we had all these spack offers for like double like you know we'll give you two billion we'll give you 1.8 B like crazy numbers and we're Traders and we were looking at each other like okay we're not worth that like why would somebody give us like $1.85 billion do you know in a spack deal for tasty when we think we're worth like 1.1 1.2 one one million somewhere in that range and like it didn't make any sense to us and we're always like if something is too good to be

18:26 true you can't it's the markets are too efficient they can't something has to be broken so we didn't take that we took the lowest number that made the most sense to us because we thought that meant that we were probably you know at least that made that that deal seemed like it was sustainable and it was what was the concern that you were going to take all stock in the spack and then it would trade down and so your 1.8 would become like 500 million um part of it I mean we would have got a couple hundred million out of it and we would have had to turn that couple hundred million you know we had two concerns one is that we're we're really good at what we do but what we're not really good at is we're not like a traditional marketing firm so a couple hundred million dollars extra wouldn't mean that much to us if

19:14 we had to spend it on marketing because it's not our strength like like Global Global Marketing when I mean Global I mean you know all us and and some big huge national campaign I'm not sure we would have converted on that so that was one of our concerns the other concern was hey you know you know what these spa deals look they look stupid like it didn't make any sense to us if I could have shorted every one of them we would have do you do you short in your portfolio oh my god um yes okay so why didn't you short the specs it's really hard to they um when the new issue comes out you virtually can't sell it for a certain number of days and then they're hard to borrow and there's you know there are issues with it's it's very hard to sell um you know there's no options right away it's almost possible

19:59 it was almost impossible short specs so shorting in general there's some very good short sellers who have uh over the last couple of years maybe even months kind of throwing their hands up in the air and said hey I'm not shorting anymore we obviously have the GameStops of the world and things like that um but these are people who really weren't on the wrong side of those specific kind of you know Mania type trades um are they just getting old and they don't know what they're doing anymore or is shorting now uh much less desirable than maybe it was previously well I mean the Market's you know shorting is tough when the market just doesn't do anything but go up every time it sells off it goes higher um uh I think that you know my history in markets is is I spent almost 20 years as a market maker which means you're just the counterparty you

20:44 know when you're standing there making markets you just do the opposite anybody else wants to you're almost like a bookie in that sense okay what do you want to do and I'll buy the bid I'll sell the offer I don't care what you want to do so you're the counterparty so for me I've always been a contan something goes up I sell it something goes down I buy it it's not that I I'm not a short seller like I only sell short I'm a short seller because if something goes up I sell it now how do you um kind of balance that with uh a data point I saw recently is that the single best day to buy the market is at an all-time high because one three and five years out the outperformance of buying on the all-time high price versus any other day of the month or any other day of the year is hundreds of basis points and so is it just like the longer the time period it's just that is the

21:31 most curvefit ridiculous like data I've ever heard in my life that is only applicable in hindsight in a bull market if you were to say the absolute so so we so tasty is a think tank just so you know and you could not have come up with a more that is a that is crap totally oh yeah we've researched this because people have said that so so we have a think tank which is just a bunch of phds physicists mathematicians we Smart Way Way smarter than any than I am and so we studied that exact fact using a lot of data we we basically so we have our own database but we use essentially we go back to 2005 most of our data goes back 20 we go back to 1990

22:16 with some stuff but we studied that since 2005 and and I'm not talking about one two and five years out or 1 three and five years out but there is absolutely zero cuz I've I've always heard you know you should buy you know buy breakouts all this stuff there is zero truth to that the markets are completely random there's no statistical significance whatsoever that you should buy tops now why does momentum investing work so well who says it does well you look at returns I'm not saying that it's better than other investment strategies but it does seem to uh work in the sense that uh people who buy on momentum tend to make money more times than they would necessarily sell lose money on again there's a difference between a bull bull

23:02 market phenomenon and and random you know efficient markets do we have efficient markets I think we do do you I no I think that the market is we're just in a Perpetual bull market forever because I believe in positive drift so I believe in so positive drift is just that over time everything get better like I believe positive for everybody like like if you said to me hey here's where I am in my life right now my arguments well 10 years from now you are going to be doing better than you're doing today and 20 years from now you're gonna better I think that everybody that commits themselves something there's there's we have positive drift in our lives and we should and we have positive drift in the markets over time the markets are going to go higher but I don't think that we I don't think that's an easy perspective to have and I don't

23:47 think that that I don't think that with respect to markets that actually helps people see my thought has always been um and we should call out that you have a very kind of trading Centric perspective course that's fair uh I as I told you started out trading and very quickly realized hey maybe I should just buy and hold and whether I'm losing or winning on paper like just hold is a little bit better um but my thought process has always been uh if you are younger which I think is important caveat so call it you know sub 50 years old or so okay you have 10 to 20 year you know kind of timeline based on a whole bunch of different factors uh it is very hard to make an argument that markets will not be higher over a 10 to 20 year time period sounds similar drift um but in the last I don't know 5

24:33 years maybe um maybe 8 years it seems like the central bank has perfected the Playbook where if we get near a market downturn they're just going to stimulate the hell out of the market and economy to the point where you could ask yourselves like have they outlawed a bare Market do you think that we'll ever see another three to five year kind of sideways to down Market yes you think so yes I don't know so so the one thing that's changed to me is first of all the movie The Script really doesn't change but what's changed is the speed at which things change okay so the I don't know if we're ever going to see another 5 to 10 year bore I don't think like the 70s is going to happen again um and I'm not so sure that we're going to see another you know 2008 2009 which was

25:20 what 500 days or something like that because the speed at which things move now is just so crazy fast um so we call that like the the rate of change or the gamma with respect to the markets has completely changed so you might be right in that sense we have like weekend bare markets now right like in crypto I always laugh like everyone goes home on Friday they're euphoric somehow on Saturday everyone's like oh my God it's over and then by Monday again the markets are up every's happy yeah I mean we haven't there's an entire generation that's never seen you know that's really never seen a prolonged pullback yeah I mean look I I remember in 2021 there's this particular person that was you know Beware of the bare Market Beware of the bare market doing the whole thing golden sacks no this is like a a venture capitalist and uh I remember I wrote a

26:07 piece I said um you know the difference here is one I think that the markets are now heavily manipulated not in a nefarious or malicious way but just they have a stimulus Playbook and they're going to stimulate like literally the word stimulate means they're going to push the stuff back up um but two and maybe most importantly is uh there's an entire generation of people who I'm going to call them the crypto generation but it could be GameStop or or you know whatever ass say um the volatility that they experience let's say in holding Bitcoin where there are you know th% upswings 80% drops and happen multiple times um and in those th% upswings there are five six seven 8 50% drops or 30% drops along the way they're just used to a level of volatility that you wouldn't normally see in the traditional stock market yeah and so um they kind of have

26:53 like the diamond hands maybe the better thing is like there like the diamond hands generation right is just like the volatility and speed and all like they're used to this and so um my argument was if a bare Market comes you think that like oh the younger generation is going to get punished because like they committed all these you know sins of the Timeless investing principles or whatever and my point was like no dude these people are crazy they're just going to get on the internet and be like hold right and they're not going to sell and they're going to come out the other side be like look how smart I am and so if you actually look over the last two or three years yeah that's I mean sure some people sold but actually most of them just held for two years and not even two years maybe it was a year of kind of down yeah and now we're hitting new alltime highs you know seems like every week or whatever and so in a weird way

27:39 you're almost training people to behave in a way that also helps to mitigate bare markets today's episode is brought to you by Gemini Gemini is a fantastic platform how do I know cuz I've used it for years these guys get it they right now have a special offer where they are offering all eligible new users the opportunity to earn $100 in Bitcoin that's right 100 big ones they're going to give out in Bitcoin if you go and you trade $1,000 in crypto within the first 30 days of signing up what is Gemini Gemini builds crypto products that are simple elegant and secure Tyler and Cameron winkl boss the billionaire Tyler and Cameron winkl boss founded Gemini in 2014 with the security first mentality

28:26 and Ethos of asking for permission not forgiveness they've been Pioneers for the crypto industry since day one and unlike many exchanges they are available in all 50 US states Gemini has tools for new and advanced Traders they've got an advanced trading platform called active Trader which is where crypto Traders go for advanced charting tools access to over 300 crypto trading Pairs and multiple order types to trade the way you want head over to gemini.com Partners Pomp and start trading with g today to earn $100 in Bitcoin that's right Gemini will give you $100 in Bitcoin you head over to gemini.com Partners Pomp and you trade $1,000 in crypto within the first 30 days yeah the

29:13 the crypto world has not helped the active trading world there's no question about that it's not so the beauty about crypto is that it's like you said super high volatility and it's essentially a tech stock with super high volatility it's a Tech play with super high volatility which we love the bad thing about crypto is that it's dead money and so what does that mean meaning that most people buy crypto and that's it it's just like that's the play you you go out oh buy just like Buy and Hold You Buy and Hold yeah it's it's just and and and you can't borrow against it and you can't sell anything against it so you can't reduce your basis like that you can't sell calls against it you you can't sell puts to get long it you can't borrow against it it's absolute dead money so in The Brokerage world we offer crypto and digital assets as much much as we can with the with you know with

30:00 the SEC overreach but we do as much as we can do but the money goes in it never comes out like that money never gets turned it never gets played it never it's it's never in play which I think is definitely Bitcoin maybe some of the other cryptos that that is part of the pitch is like hey buy hold you know forever give it to your kids and it'll be worth more money whether that ends up being true or not uh what I do find interesting is now that these assets you know we have the Bitcoin ETFs we have ether ETFs do you think that all of the options all of the borrowing like the financialization of these assets is coming and so 10 years from now people will be able to have access to all those tools and therefore that might change the dead money there's there's no question that all the derivatives are coming but sometimes it's the first to Market play and I

30:47 don't really think that the cash Market in digital assets is going to change dramatically because the that particular Marketplace and the players in that market place are very different than traditional derivatives Traders and everything else so I don't see that Dynamic changing but the bad thing about it is you have this entire generation of young people that loved getting involved in digital assets loved crypto love all the stories by love all the technology but they're not learning anything they're just stuck in this again in this dead money this Deadpool of money that doesn't mean anything because even if it goes higher who cares they're not learning anything they're not learning anything about Finance or anything about strategy or anything about the rest of

31:32 like all Market structure which to me is so important like just being long Bitcoin great so what it goes higher who cares so you made a little money now what you didn't learn a damn thing and that's my biggest issue with crypto and and listen we're huge Advocates of the space we're the lead investor in zero has which is the one of the largest digital asset settlement companies the us we we help to um we finance a company where um we I'm I'm on the board there I mean we've we've been fighting for crypto assets on our platform from day one um you know I love the space I love the technology there's so much I think I think the whole world's going to be tokenized do you really yeah you think like the US Stock Market as well not exactly but I think us investors will be able to trade a in a

32:19 lot of other places that we currently can't trade because we have to deal with currency conversion quotes clearing all that kind of crap and I think that will be tokenized yeah what about like hours of operations well you know one of the things I think people like about cryptos it trades 247 365 um it's a lie that the stock market only trades in the kind of the narrow hours of operations there's now overnight trading uh at times there's been studies that show overnight trading actually performs better than you know kind of regular hour trading sometimes it's not true um do you think we just eventually move to 247 trading in US Stocks um I think well we already have 245 in Futures so the Futures markets have been 245 for years now um and crypto's been 27 you 247 so um the problem with stocks is that the liquidity doesn't necessarily dry up

33:05 that much in the stocks but it dries up in like the options and places like that because there's no place to lay everything off and the high frequency firms it is really hard for us to find high frequency firms that want to make markets over you know overnight why because they don't want to because they don't make any money because there's not enough liquidity and so the problem is that we're stuck with exchanges and exchanges you know remember what a crypto exchange is it's not really an exchange it's you know it's a high frequency Market making firm the the problem with you know the New York Stock Exchange and and all the different option exchanges and all the different you know NASDAQ is they stink their technology stinks they stink nobody makes markets for them you know if you take the high frequency Traders out of the equation there's nothing there like these whole markets are run by you know

33:50 high frequency highfrequency prop firms that essentially are are the most important and dominant factor of creating Marketplace efficiency when we look at let's say tasty what are the assets people are trading that would surprise us like what are the most popular assets that are being traded on the platform well I mean I I don't think it would be any different than the most liquid assets like if you're talking about equities um probably the two most outside of ETFs I mean obviously the SPX because of the zero days and and the big product that it is and the spies and qes and things like that if you're talking about equity ities um Tesla and Nvidia are the two biggest that trade from customer perspective I mean occasionally you'll find you know something that's hot all

34:36 of a sudden um or something that has earnings you know that so a lot of people might play it for earnings or stuff like that but if you're talking about just like you're probably talking about 20 or so stocks dominate about what feels like 75 plus perc of the duras business and it starts with Tesla Nvidia and it works its way down you mentioned zero day options uh I believe that's now more than 50% of all options trading in the United States is zero day um what has been the impact of the introduction of those assets um I mean the more the more the the more the merrier you know the more the better I mean I don't know we shouldn't take full credit for this but they were our idea really and we

35:21 introduced those to the CBOE in 2006 and we introduced dailies and weeklys and they didn't have them and they started them in the SPX and so we actually put the whole proposal in front of the CBOE back then and they adopted it wow what um what do you think about people who say that the stock market is just a casino now and people are just gambling yeah it's ridiculous I yeah I think so because the difference is that gambling has an embedded Negative Edge and the stock market doesn't so so the the challenge here is that in the stock market right now you can trade you know let's say the using the Spy ETF as an example you trade um 200 shares of spy it's $100,000 right a little over

36:07 $110,000 $116,000 200 shares of spy and the Market's a penny wide so basically for $2 you can buy or sell $116,000 worth of notional in the in the S&P 500 how is that gambling in gambling you did $116,000 notional at Caesar's Palace give them EXT or 10,000 MH you know or or more 11,600 whatever you want to say but give them that that's the juice the VG that they're going to take off the top that's gambling when you can't possibly win because you can't make that back it's mathematically impossible to make back that Negative Edge because after you lose a couple times you've got to essentially win twice as many times MH in the in the stock market everything

36:53 is without mechanics everything is relatively close to a zero sum game and as you see many of these assets and uh kind of investors you know kind of uh learning about this stuff how much of your trading is just you sit in front of a screen you can look at a chart you know Steve cooh like famous for this uh he can just look at the chart start trading he he doesn't even need know what it necessarily is versus are you reading uh mainstream media are you consuming other content like like how are you deciding what to do well I love I don't really consume other content at all but we have all our own content content so I love to fade our own hosts like I I love to fade our own hosts our own guys on on on our own network because if if any of them have a macro

37:38 ID I'll take I'll do the actual opposite I think that's the best thing why but just because I know they're probably going to be wrong um but we we is that just because everyone is is usually wrong when talk about Mac everyone's usually wrong about everything they want if they think if people are really sure that they know something like if you said to me Tom I there it's Tuesday so there's no games tonight but if you said to me like last night I really love the Dolphins you know I would said fine I'll take Tennessee you know I'm that's just the way my mind works um but I don't look at charts so but I do follow a lot of stocks and a lot of Commodities and so um you know I have my own opinions about price extreme both ways to something gets too cheap something gets too expensive I have my own ideas is that

38:24 just gut intuition yeah and it's just dialed in over you know 40 plus years of just looking at these charts and understanding prices and well just looking at the prices of these assets and understanding hey nvidia's been trading in a certain range and is that towards the bottom of the range right now and so it's a buy versus you know tomorrow I'll tell you a funny story when we built thinkers because you use thinkers when we built thersome you said you were in college right so we came off the trading floor we had never used a chart ever so we built terson we didn't build charts hilar and we launched the platform without charts and people were like like what the f is wrong with you guys how do you launch a brokerage platform without charts everybody uses charts we're like they do because I had never seen anybody use charts for spent 20 years in the business and never saw a

39:09 person use charts so we're like really so so let's get some charts so the guy you were watching when you said to me this is your network his name is Tim Knight he built a company called profit charts I met Tim in 1999 and he was one of the first entrepreneurs in paloalto and he built this platform called profit charts like called called him up I didn't know him I called him up and said hey can we you built yours in Java we're a Java platform can we embed ours your charts in our platform because we we need we needed some time to build a charting platform he goes sure I'll lease it to you so he leased it to us and that's how we became friends 25 years ago but we had no idea we built the whole platform without charts that's nobody anybody used charts are there charts in tasty now there are reluctantly because we want people to

39:54 use numbers like charts don't mean anything there is and I'm going to get a lot of for this I'm sure from your listeners but there is there is no proof that you can look at a chart and something that happened historically has anything to do with what's going to happen in the future so what are you looking at then when I look at Price yeah oh it's just you know just I'm just thinking hey this thing was 100 two days ago and now it's 80 maybe it's cheap so let's use that example uh how do you know it's not going to 70 or 60 or 50 you don't okay so you just buy and close your eyes well we don't really buy anything we we'll sell and out of the money put M so you know I'm an option Trader more than I'm a stock buyer so um but I I I don't get me wrong I do buy stocks um but um I would sell the put

40:42 and so you're basically saying hey with that gut feel and the instrument that you're using you've got higher probability of winning than not sure okay exactly what's the best trade that you've ever made he's like my company TD Mar trade at 12 bucks no it might be no no no no that's there there's a lot of not company-wise yeah um the best trade ever um well I have a best story about a trade okay okay you're probably to how old are you 36 you're too young um remember Desert Storm yeah okay who I know what it is yeah right right so there was a kid that used to um clerk in

41:30 the ox pit which was the S&P 100 at the time and he always wanted to be a cameraman and and he got a job you know clerking in on the floor of the exchanges was kind of like a a low paying job you're hoping to get a job as a Trader well this kid didn't want to tra be a Traer he wanted to be a cameraman he got a job to go to the front lines in Iraq and with CNN for this was like the first televised War okay and this kid was like standing behind us for like two or three years and he we get a call from the literally from the front lines in Iraq that he goes we're going to war tonight okay in the whole pit you know within 2 seconds knew but everybody else had known it too I we did we just didn't watch news yeah we didn't know the whole world already knew this and so but we thought we were like so everybody in the pit four or 500

42:15 guys are all fighting over each other trying to buy every put they can get their hands on you know thinking the Market's going to crash tomorrow morning and some broker that was standing next to me cuz when you're a Trader you can't be a broker you you have to be one or the other some broker standing next to me sold me like a 50 lot of calls that were in the money because he couldn't get rid of them and he said you got to take these for me because I I owe the customer fill so I took the 50 lot of calls I bu buying like as many puts I can get hands I I took this 50 lot of calls we're all got giant short that night thinking the Market's going to crash the next day we opened lock limit up the next day after all everything was televised the night before we opened lock limit up that 50 lot of calls paid for everything else no no it paid for like the whole year and and it was insane because I

43:03 didn't want that trade I would have given it to you for like like like a $10,000 loss but I couldn't find anybody to take it from me and that that whole trade was like probably the best single trade I've ever made why do you think that it went up when everyone thought it was going to go down because nobody ever knows anything it's the beauty of markets the greatest thing about what we do is that absolutely I don't care how long you've been doing this if I've been doing this for 4 40 some OD years and somebody had never looked at the market before and you said what's XYZ going to do tomorrow I have no better chance than that person does of knowing what it's going to do you don't think so no you couldn't tell me let's say somebody doesn't even know what Nvidia is which I actually met somebody recently who told me what's Nvidia and I had a like remember that we're all just in a big Echo chamber um but you don't think that you've got a little bit more knowledge

43:48 than they do today's episode is brought to you by domain money I love talking about money but I'm not a financial professional so I don't offer one-on-one coaching or advising but in order to get ahead you need someone with expertise to work with you oneon-one and provide personalized advice the decisions you're making now will significantly impact the rest of your life the more time you waste not taking the steps to get a plan for your money the harder you make it to achieve your goals that's why I've partnered with domain money to pair our community with flat fee certified financial planners that's right they are cfps they can actually give you advice and they can help you level up your money gain don't get left behind and head over to domain money.com pomp to book your free strategy session to help you get started that's domain

44:33 money.com pomp to get started with a cfp now go check them out and just like any other major financial decision it's important you understand what the service is and if it's right for you so make sure to go see the important disclaimers at domain money.com Leal that's what the lawyers told me to say now go check them out domain money.com pom oh I have more knowledge about like things about the market but I don't think I can tell you any better than they can what inv down tomorrow up or down tomorrow yeah I really don't I mean if you were right that's pretty important detail for people to know but but God knows I'm going to try you know every freaking day like that's what I do I'm gonna try now you tell me your best trade what's your worst

45:20 um MoneyWise yeah like you know just you mean in one day my best and worst trades in one day are probably you know seven figures okay but like what was like the worst oh just being short s smps and it just ripping and just ripping yeah I had one day in I think 200 14 or 2013 I think it's 2014 because I kind of remember every trade where I was just short snps and bonds thinking they they're you know they're not they're inversely correlated right s smps and bonds S&S go up bonds go down you same thing so and they both moved together bonds I think were up two and a half points and S smps were up like a 100 and I was short them both big yeah that was a bad day and what do you do

46:07 like you're like okay that that sucked you just like go home and cry or like do you go home and just drink go to sleep I forget about it you get really mad you get really mad but it's all part of the you know I real the only thing that kills you in this business is size M like if you get if you control the one thing I've learned in the last 20 years is just like just have fun like I love trading so I just try to have fun with it I I just keep your size small like that's the whole key the only way like the average uh portfolio size for a trade you have 100 positions so what is it like 1% each or half a percent yeah it depends but 1% would be for undefined risk it'd be a little higher than 1% for defined risk it'd be less than like a half a percent so undefined risk you know for me would be between like one

46:52 and three one and 2% MH do you have anyone that like checks your trades or are you doing this all yourself no I do it myself okay so like right now if I ask you you probably couldn't name all 100 positions that you have like You' have to like go look or could you I'm not going to ask you to do it but like could you name all 100 you think no I couldn't but I could I could I mean if I if I just look at my portfolio you know very quickly sure of course now I look at my positions like multiple times a day I was going to say uh one time I looked at my phone and uh there's screen time which people pay attention to uh but there's also something about like I think it's like wake or notifications or something like it can tell you basically how many times did your phone light up even if you don't pick it up I don't know that I mine was like 750 oh no and I just like went and I was like I immediately had to start shutting off notifications I was

47:38 like oh my God this is like not good cuz you just take like how many minutes in a day right divided by oh um and so uh how many times do you think you check check my phone per day like your positions a phone or a computer um I don't want to act like a complete psychopath but uh sociopath but um 100 no but a lot maybe like every 10 minutes every yeah okay is are you okay like like I mean I'm kind of like that with Twitter like I you know I check a lot so uh sometimes should stop I abandon Twitter strictly for I I only the only social media Rabbit Hole I go down is Tik Tok oh wow

48:24 okay that's like I know Twitter on steroid I know it's bad it Tik Tok is really bad what kind of content like trading content like whatever crazy video or whatever no anything but trading I don't want to be down a trading Rabbit Hole um but Tik Tok Whoever thought of that was evil yeah yeah maybe more ways than one no listen it's it's freaking genius it's genius I wish I invested in it because it's absolutely genius but it's evil yeah um this is going to be a really weird question sure I know uh two brothers from Chicago trade options uh they see them on TV sometimes Nigerians yeah of course uh they got nice hair you got nice hair what's up with guys in Chicago Trad option a nice hair you know the funny thing is that John and I actually started um I mean

49:12 we're all friends yeah of course you know we go back we started like the same time in like you elbowing each other in the pit no no no he was an equity Trader okay but we've been friends for 40 years I guess you know I mean not close friends like we don't call but I I mean I had you go to conferences you're like you have nice hair I have nice hair bow from Chicago well we have dinner when we run into each other like you know last time I saw him I think he had kind of moved to Puerto Rico so I was kind of like we had dinner in Puerto Rico I was there for doing a conference I do a lot of traveling I speak all over the world so I'm I saw him there we had dinner together you know these guys you know we're friends yeah we go we have the same background yeah well what about the hair like same shampoo too or yeah probably probably I never asked him you know scary we don't talk hair yeah that's that's fine you're busy you got to check your phone 100 times but by the

49:59 way your life is not that much different than mine it's just that you're checking like moving numbers I'm checking like moving words on Twitter so there you go pretty much the same thing uh some some people would say actually uh things like Twitter now are moving markets do you worry about that um do I worry about it no absolutely I I like things that move markets I am a true efficient market theorist I don't I want like I want everybody to trade I want politicians to trade I want everybody in Congress I want every Senate I want everybody to trade do whatever the hell you want to do cuz I don't think anybody has any Edge I want everybody to trade you don't think Nancy Pelos is no I do not not even for a second what if like she gets some information I good trade on it I hope they I hope you know it's so crazy

50:47 that people think that that anybody especially n phos people think that people have any AG I I Nancy Pelosi will never vote against anything that's going to hurt Traders that's all I care about the re we have so many horrible politicians that don't understand how free markets work you know the whole reason are you making an argument that Nancy Pelosi is a free market uh Trader of course I mean you're kind of not wrong but yeah go ahead I here's my issue I'm scared that we're going to end up with the Gary genders of the world in in Mass I'm scared that we're going to have a lot of politicians that vote for stupid things things like transaction tax and that vote you know look You' seen what's happening in crypto you know just all these all these restrictions all these

51:33 fences all these limitations and what I think as soon as people trade all that's off the table none of that stuff happens and so we need politicians that actually understand how markets work I also believe that the reason that the US is so powerful and has such Dynamic growth compared to everywhere else in the world is because we have created a system with the largest pool of liquidity where investors you can invest in something private Equity Venture whatever you want and there's a pool of liquidation that allows you to get out and which attracts money which nobody else in the world has which is why no money flows anywhere else and all the money flows here and is and if we blow that because of some idiot politicians that don't understand how markets work that's why I don't care if Nancy Pelosi makes an extra you know

52:19 $100,000 or million I could keep I don't give 100 million allegedly 100 million I don't care what they make I don't care is there is there a number that if they made you'd be like all right that's egregious like what if politicians were making a billion dollars a year trading on inside information they are you're they are so stupid that if that if there was even a chance if two of them tried to do the same thing here I'll tell you this if you this would be the bet I would make with you I don't care if you tell every politician like if you could tell them who is going to win the election who's going to win this year's presidential election or any single election or vote on anything that comes off for a vote and you tell them if you tell ask the FED Governors what's going to happen if you lower you know um lower by 50 basis points or 25 or 75 what it is nobody would know what to do and they

53:06 would all do 50% of people do one thing and 50% of people do that thing nobody knows what to do even if they had the information I got one more story for on this I was at a conference once and Bernan was talking and um so banki is doing this talking and it was sponsored by Citadel okay he I think they paid him like $5 million for one year and he gave one speech comes out he tells us a couple stories and then they they say anybody in the audience can ask Baki a question but like anonymously um anonymously or you can just they give us tablets okay and on the tablet there was some kind of software that you could you could ask questions and the moderator would read it off to PRI so they they picked my question which was essentially

53:53 you know if you could hear would you buy bonds you know just trying to get an idea of like what he thought interest rates were going to do this is like 10 years ago and his response was to this day was like was he said well I have no idea what bonds are going to do that's why I leave it to my meril Lynch adviser and I'm thinking okay if banki can't answer the question who in the world can like if he's the one making the decision and he's the chairman of the fed and he's leaving it to a meril Lynch advisor that he's been friends with since he was in high school or college it's such a ridiculous thing that anybody else thinks they know what's going to happen to the market and I do think that uh a good recent example of this is the 50 basis point rate cut

54:39 in September at you know people 25 to 50 they do the jumbo cut and uh everything trades down and I had a friend who texts me he goes uh I don't get it like you know they cut the rides why did it go down and I said to him I said look you know who knows but uh he kind of talked it down in the press conference so maybe that's what it is and nobody ever knows even well even in hindsight you don't know exactly that's my whole point so tell everybody everything don't let them do whatever they want to do they'll have no idea and they'll all do opposite stuff do you think we should just get rid of insider trading laws not Material nonpublic information for you know because I think like if you know the sales numbers of a company before The Earnie reporter right or you're you know you're the CEO there there sh there's there needs in general some of The Insider stuff is ridiculous but if you're talking about if you're if you're a true Insider and you're and you're um

55:26 you have access to material non-public information like you're doing a deal or something like that you shouldn't be able to try that mhm yeah like if you know that an acquisition is coming can't yeah yeah okay um what are you most excited about in finance going forward I think all the different things we're going to get into like I I I sense that we're on the verge for me digital assets was a new frontier that I think opened the door just to crack and and it is going to somebody's going to push their way through so this means we're going to get into um event-based you know politics markets are going to there'll be exchange markets on politics I think you you'll see Sports sooner than later and I think you'll see

56:13 tokenization you know to complement I think you'll also see a much broader um I think you'll see a lot more digitas that's come back into play interesting which I think all of that's good by the way probably yeah I mean it makes sense um are you worried about anything um I I'm not worried about anything except somebody that gets in the way of like I what bothers me the most is when people try to take things backwards so so anything that slows up the technology anything that puts like regulatory rings around things bothers me but um I think in order for our

56:59 dollar and in order for our economy to stay super strong compared to the rest of the world we have to you know remain kind of the center of liquidity and I don't like when people mess with that it's like messing with Mother Nature I don't like it yeah well it's U manipulating the market to a degree yeah or it's not trusting the market really it's it's it's not about manipulation as much as it's just about not trusting it it works I agree with that definitely agree with that um where can we send people to find you on the internet um every morning I'm on tasty.com for 3 hours in the afternoon um on Market's Clos for half hour and then if you pretty much Google Tom sof you'll find maybe more stuff than you want to know um my email is just Tom at Tasty live too I'm an email junkie if uh somebody

57:45 watches tasty live what what should they expect are you funny are you serious are you giving out like hot stock tips definitely not giving out hotk stock tips you're going to hear a lot of stuff about maybe my favorite restaurant um our personal lives you know we're about 5050 um about personal crap like we just you know have fun with each other fun stuff yeah it's a little bit like a locker room um and the kind of the stuff you can't do on normal um Financial networks and then 50% hardcore research like I said we're a think tank so we do 60 hours of research a day to which which we boil down into probably four or five 15 team in a segments every single day it's hardcore mhm all right I'm

58:30 going to watch tomorrow morning you're going to be on yeah all right when I when I watch we're going to see if it funny serious hot stock tips whatever you got Oh They'll they'll make they'll make fun of me for the first 25 minutes and then we'll that that'll be the funny part all right well thank you so much for doing this I really appreciate it we'll definitely do it again love it that was great thanks what's up guys I hope you're enjoying this episode but I got a quick message for you I just released my very first book it's called how to live an extraordinary life life in this book there are 65 life lessons that I've picked up over the years these lessons will teach you about money investing relationships work health happiness and much more in this book I wrote letters to each one of my children and I tried to share those life lessons with them if you pick up this book there's three things that I can promise you the first is that it is very concise

59:17 the audio book is only 3 hours you can listen to it on a long drive or on a rainy afternoon the second thing is that

…