Smart Stock Investing with Jeffrey Kamys

nknown Speaker 0:00
Come on

Unknown Speaker 0:12
one level, this is George G. And the time is right to welcome. Today’s guest is strong, powerful. Jeffrey Caymus. Jeff, are you ready to do this? I am ready and excited to be here. Thanks for having me. excited to have you on. Jeffrey is the founder, creator and owner of Dr. Stats, fantasy sports. He’s the CEO of the inherent Wealth Fund and the host of the stock market, or the stock smart podcast. Rather, Jeff, tell us a little about your personal life more about your work and why you do what you do. Let’s see, I have two boys actually both live in your neck of the woods in Arizona, and they’re raised now they’re 21 and 22. They’re both doing a little bit of work for me and my businesses when I was used to play a lot of baseball, a lot of sports. And I really have kind of a natural inclination towards them. Like most people, I got into the analytical side of sports, and create a business when I stopped being able to play baseball because I got injured around 2324. And I created one of the very first fantasy sports sites, which is called Doctor stats, fantasy sports. Now that no longer exists, I ran it for like 1617 years. But it really got me tuned in to kind of the analytical side of what’s really happening. And a little bit when when I was doing that what was kind of fun, actually, is that I actually wrote with a lot of the people who were featured in the movie Moneyball, which I’m sure many people have seen. It was all based on the concepts we were kind of the original. We weren’t the original bill James would have been like the analytical founder of this kind of thing. And many sabermetrics players and people who really dove into analytics deeply got involved. But we were writing articles all the day all day about, you know why this player was maybe going to have a breakout year, why 2017 was the career year for most baseball players and why, you know, he was gonna fail in the second half of the season, much like what I do now, which is valuation of stocks. So I ran that for a number of years, I’m kind of a serial entrepreneur, I love being involved in business. But most of the businesses are about my passions, things that I really love doing. And when you do something you love, it’s not really work, right? So I went from that business, I had an agency based business which my ex wife ran. And that was a, essentially a marketing and branding shop, we did a lot of web work, I love technology. And we ran that together I still own that’s called inherent. And then later I got into financial services. I always loved the analytics that I found in like sports, baseball, and football. And I got into the business that I run called baseline investments. And then during COVID, when we were all kind of sitting there with ideas, and plenty of time on our hands, not able to do things I thought, you know, I wanted to get into this exchange traded fund space. It was a growing business growing kind of industry. And a lot of retail investors, what you’ll see now in the marketplace is that about 30% of all the investors in the in the you know, in the scope of investing are retail investors, which means that average everyday people are now investing. And what they like is they like to be invested in and this would be if you went to Buffett he would say invest in things, you know, invest in things you like. And so these niche ETFs are really booming, whether they’re if you want to be in a sports team, or whatever, they’re really booming. So I started came up with the idea that I would do a sports betting and gaming ETF because it was such a big part of my life. And so I started and launched during COVID. I when I came up the idea I started launched the sports betting and gaming ETF, I bet IBT. And that’s kind of a growing industry. Now we’re really, if you go to Europe, Europe’s had legalized gambling for many more years, you know, we’ve had it mostly in Las Vegas and a little bit of Atlantic City. But sports betting like throughout the United States, which will probably be here except for maybe Utah, will happen probably within the next two or three years. We’re at 30 Plus states now, on most, most governments, state governor states have ballot initiatives if they’re not getting ready to pass or not passed, or already, we may never see Utah because of the Mormon heritage that’s there. But we’re going to probably get 49 states. So I’m very passionate about it. I love investing. I love trying to find ways to make money in the market for my clients, for myself, for my family. And for any investor who’s involved in my fun. Nice. I appreciate you sharing that is a that is quite a story. You do you as you’re looking at a new opportunity, do you find yourself just without any fear or hesitancy or how do you how do you deal with the with with with emotions around making a new pivot? That’s a great question. Actually. I really appreciate that question. It’s very thoughtful. And it’s it’s one of the things I think that happens to new investors. I think taking emotions out of this is what you need to do. But I think it’s very hard to and I was I just did a podcast today myself, called stock smart and we had a question about options and how you want to play like an option. Now options are dangerous for most investors. You have to be very careful with what you get into because they can move really

Unknown Speaker 5:00
Fast against you or for you. But what the idea was is, is, don’t be greedy, kind of invest in what you know, maybe dip a toe, and be really careful. And I would say you have to have discipline when investing. So you have to look at a bunch of different things. You can’t just have a instinct and say, like, I think this is gonna go up today. That’s not really how the market is. But there are things that are triggers. For the markets. One of the things that I really look at when I invest, or I get a client into position is I look at relative strength.

Unknown Speaker 5:29
Most recently in the market, we’ve had a big bout of things being oversold, especially in technology, the triple Q’s, which are a technology index, if you will, essentially dropped since November about 25% or more, some stocks have dropped 50%, something like Shopify, we were talking about today, which is interesting stop a Canadian based company, which helps entrepreneurs launch businesses, which did increasingly well. And you can see why during COVID It’s kind of been shot a little bit, and you know, the stocks drop third two thirds of its value. So that, to me is like an opportunity. I’m looking for it. And I look at something like relative strength index to see when it’s oversold, based on, you know, technical indicators, which shows that stocks oversold, it might be a good chance to get into it. So you have to look into things. And I think, you know, one of the a famous investor named Ray Dalio wrote a book called discipline. And that’s what really investing is about you can’t, you have to be respectful of the market, knowing that there’s always market things that can happen. And you have to understand that you’re not going to know when that is going to happen.

Unknown Speaker 6:34
I appreciate that. Yeah. Back to that. Invest in what you know, or what you’re interested in, is that because you’ll probably have a tendency to want to do more research into it. And to better understand it. I think that,

Unknown Speaker 6:49
yeah, I think that it’s passionate. I, when I started my first fantasy sports businesses, they didn’t make any money for a year or two. And I was just going about it like, and I still loved it. You know, I was still having fun. I was running leagues, I really didn’t know how I was going to make money or what the opportunity was going to be. But I kept going. And eventually, I started a news business where I was essentially creating content for the people who would, you know, subscribe to or maybe play in my league, and I thought it might be fun, maybe I’ll make an extra 10 or 15,000. Well, that actually became the whole business. The whole business was news. And so I had, I was putting out like a subscription based model, online for whatever it was $35 for the season, if you bought both football and baseball, it’d be like 60 or something. And people loved it. And I was like, overnight, I made after struggling for two years, I was an overnight success all of a sudden, and that’s, and that’s what people need to remember. It doesn’t work the way you think it does. Because we have these fictionalized ideas of things for movies. You know, it’s like where people are like, hey, overnight success after two years, all of a sudden, but that’s how it happens. Because you you grind through a lot of times and then you get there. And you don’t know why sometimes, but it just happens. And if you’re doing it passionately, you don’t care half the time, which is great. I mean, no one wants to go broke. But it still helps because everyone’s struggling. So when you when you do get there, you know at least you’ll have enjoyed the experience of it. Yeah, yeah. I appreciate that. Alright, so

Unknown Speaker 8:14
when you are helping people to to better understand and value stocks. You mentioned that you said relative strength. Are there certain other things that you really like to look at, or HMI. Speaking of Ray Dalio, he has also he wrote

Unknown Speaker 8:34
principles, right. And this amazing book where he has all these key has all these principles, this massive book full of them, what, what else? Do you help people or really encourage people to to to look at as they’re evaluating?

Unknown Speaker 8:50
Well, I think it’s challenging, I think the marketplace changes. So like in the, and it’s ever evolving, right now we’re in a high interest rate kind of environment, where people don’t want to pay out where you don’t want to be in these high priced earning stocks, where you want to be in companies that are actually making money, because you know, you realize, if a company has to borrow money into the future, we don’t know how much that’s gonna cost and how they’re going to be able to realize those profits down the road when they’re not making any money yet. So I think currently, in the current environment, we have interest rates rising. And we have this inflation and we know that interest rates are going to go up probably another way, if we have six more interest rates based on what the Feds saying, we’re going to get at least a 1.50 Bump, which means that we’re going to get actual normalcy in the interest rates. So the 10 year will be 3%, which it should be. But so when you’re investing now, you probably want to be in things like financials. So I think you have to be able to evolve. You know you in most investors, you can’t be in growth the way you used to be right now you have to be more balanced, and discipline. But then but there’s also the other idea that when if you’re a young investor, this is a big thing when you’re doing it as an advisor is you’re talking about time

Unknown Speaker 10:00
Horizon, my mom’s 85. Well, my mom’s been very smart about her money, she doesn’t necessarily need to make any money on the stock market. And she’d rather have risk. Now she’s probably an anomaly for her age. Other individuals that are older, probably want to dry, you know, get income every year, maybe they want to take a normal, if you’re an allocation for so you don’t, you know, do away or erode your wealth will be 5%, I’d say any more than that you’re getting into risk, because you’re going to have years when the market does return 15. But you’re going to have years where the market like this year, we’re still negative, I think we’re about 5%, down in the s&p 500. So if you have a down year, if you made 15, the last year yet negative five this year, you’re at 10% for two years, that’s about 5%. So then you don’t get the erosion principle. So I would say that a lot of a lot of what we go in what goes into what we do, and what we decide for investors has to do with what’s going on in the current market. And then what’s their time horizon for investing? I don’t know if that answered your question. But that’s kind of the way that I look at it. Yeah, I appreciate that. Yeah, I find that that the financial industry has a hard time helping people to really understand what their risk tolerance is, because it is so subjective. And some of these big companies are dealing with just millions of people. Right, right. So here’s your risk tolerance profile. Thanks a lot, check the boxes. They do, I think, I think you’re right. And I think it’s a hard time, they have a hard time individually planning. And we have a small advisory, but 70 clients that we kind of talked to, besides my inherent wealth ambitions, which is the ETF, which I don’t really know them, that’s it, those are my the retail customers, or the an institutional that I don’t meet, and I don’t know. But as an advisory business, where I have actual clients where I’m managing their personal wealth, you do know them. And I think what happens is a lot of those firms get really large. And I don’t want to say that people don’t spend as much time with a client that has 200,000, that they do with a client that has 2 million, but that probably does happen. And so a lot of times, you’re not getting great advice, my mom who was a teacher was in a certain company, and she was in mutual funds for a long time.

Unknown Speaker 12:03
My mom didn’t know, because I took over her account, she didn’t know that she was paying two basis points, you know, for the or 200, I should say, for those ETFs, which is 2%. Plus, on top of that a management fee of another 1%. For years. So you’re talking about 3%, eking out of your return for 15 or 20 years. And that’s a lot of money. And people don’t realize, you know, you’re seeing a big move in the industry into ETFs, because people are starting to understand the cost of the funds themselves. And in ETFs, you don’t have the other problem that mutual funds generally have, which is the expensive load fees. And some of those could be, you know, the average investor and I, you know, when I do my podcast, I have a question and I and it’s dropped button, it goes the average investor, because the average investor doesn’t understand what their cost is. They don’t understand what the like there was this Bitcoin ETF that was out of

Unknown Speaker 12:52
Canada, it was the first one that came out. But I don’t think investors knew that the that was being run at 200 basis points, which is very expensive. So that means if you had a 10% return over one year, your real return would be 8%. So it’s a very expensive fund. And I don’t think that people understand that there’s a, there’s a there’s a charge for these funds. They just buy them and without, you know, thinking they’re stocks, they’re not the same as thoughts. Exactly. Because there’s a management fee to run them. And I think mutual funds for the years, you know, is the same thing. And they’re much more expensive than an ETF I mean, sometimes you get a 6% load fee, plus 2% annual charge to run it, that’s very expensive. So you put $100,000 in a mutual fund day one, it’s worth 94,000. So those are a lot of things. I don’t think I think I think what Wall Street did a good job on and I’m part of it, so I shouldn’t criticize it in the same way. But is is and that’s why I do podcasts, to be honest, is that I want to try to explain the language that is confusing to most people. Because the language of the market calls and puts. People don’t know what that is shorting. They don’t understand what that is borrowing stock, they don’t understand any of these concepts. They don’t understand the you know, what the percentage is that it costs to to buy a fun, a lot of the really simple things that make up the market that we take for granted. They don’t understand. And it’s almost as if there’s been a new language created. And I think, you know, industries do that from time to time.

Unknown Speaker 14:14
Yeah, I certainly agree. I agree. It’s, it’s it’s a problem. It strikes me that it’s gotten better. And financial products have gotten more efficient to your point between actively managed mutual fund and today’s ETF. And the new financial instruments or accounts or whatever they are this Bitcoin ETF that’s as a 2% expense on it, or fee, or whatever it was, that definitely eats away at things. So if we don’t know that we don’t know. So I appreciate you doing the education and letting people know, hey, you need to pay a little closer attention. And I imagine, Jeff, that if people haven’t looked at their account, and it’s been five years or more, which I bet is common, that there’s just a ton of expenses that are eating away at any potential return.

Unknown Speaker 15:00
It is it is really common because people don’t want to know. You know, they’ll have their annual meeting with their advisor, but they don’t really want to know the day to day is. And I have a friend who actually invested in when we had this big drop from November till and there I have friends that are intact because I have a lot of friends who are in the tech industry, I have a lot of tech background myself. And they didn’t look you know, these are people who actually know what’s in their account, but they don’t want to see that they lost, you know, Exxon Tesla, or Exxon, Google or Exxon Amazon for the past six months, because it becomes like sickening it creates, it’s unnerving, right, because you start doubting your future. Because people spend more money in the stock, when they’re making money in the stock market, then they go out and they spend more money. When they’re not, they’re not. And when we see these different rushes at different times, it affects the general market place because people don’t feel as comfortable. I know myself, I was on a trip where I went golfing, I took about five days off, and the market just eroded. This was like, in February, before we had the rebound, which started like second week in March. And I was looking at my prelim, like, wow, this is a bad day, I don’t want to look at it anymore, just my own my own holdings. And so it affects it affects everybody. And I’m someone I’m experienced veteran seeing it, but everybody’s affected. So you see why people don’t want to look, I don’t think my mom ever looked at her. She had she had three mutual funds in this one portfolio for years and never really looked at it never understood that she was essentially being charged 3%. So when you look at her annual return, she was returning something like 6% in markets that were making like nine and 10. So that’s not great. Yeah. And that’s, and that’s a teacher, right. And a lot of my clientele, because just I think it’s because what’s that’s innate to me. And my mom was a teacher, my aunt was this year, my brother and sister were teachers, I never wanted to be a teacher, because I saw the tax returns, I was like, you don’t make enough money.

Unknown Speaker 16:42
And so, but we have a lot of teacher clients in in my other business called baseline. And it’s because I do, a lot of people don’t want to don’t think they have enough money. But they’re very frugal, actually, a lot of teachers are really smart with money, they understand how to budget things, because they’re planners in their daily practice. And they actually have nice accounts. And it’s nice to be able to help them because they’ve been the teachers and leaders for so many other people who couldn’t afford it as well, my mom taught and ESL English as second language school for 30 years. So it’s nice to give back and you know, help them and really walk through them. And it may be like begrudgingly some days, you’re like they’re in and you’re like on your fourth call. And it’s like another hour and a half on the phone because you’re trying to explain a concept, but they’re smart people who can kind of get it when they’re interested. So, you know, it’s it’s it’s good work, it’s actually fulfilling in that way, too. Yeah, I love it. My mom was a teacher also. So I certainly appreciate, appreciate the work and like, like you said, taking the time to actually educate and to listen and to point out the things that maybe they that they really ought to be paying attention to. And if they’re not going to work with you directly great, but at least they’ll be empowered to be able to ask the questions that they need to have their current person or to just to look, even though they’ve been scared to. So

Unknown Speaker 17:59
Right? Well, you know, I always there’s funny things about the industry to where advisors have to have certain holdings, like we all have to have apple. It’s just because they all want to see apple in there. And then you always have to have Disney because people love Disney. And there’s good reasons for that, you know. And then there’s this, I had an industry conversation with someone who was a trader on the floor for city for many years. And we were just talking about how were, you know, you set up these accounts because you you don’t want to you essentially manage, so you don’t want to look bad to the s&p 500. Because that’s the only way you really lose a client. So it’s just kind of an interesting space, you know, where you, you want to make alpha for your clients. But then, you know, the client doesn’t even understand what that means. And so, and not to be disrespectful to the client. I’m just saying if the business is set up in a way where they want to just they get hit the benchmarks. Yeah, you know, which isn’t terrible, right?

Unknown Speaker 18:53
Well, Jeff Barr did give it a lot of people are ready for that difference making tip, what do you have for them?

Unknown Speaker 18:59
Well, I think I kind of already did it, because I think the the key to my life really has been just to be involved in what you really love. And I would tell you from a perspective to have, like, you know, just doing things that you love, even if when they’re not making money is great. Like I love playing guitar, but I know I’m never gonna make money doing it, but I still love doing it. So if you can find a business where you’re playing the guitar all day, and not making any money and you maybe will make the money one day that love comes through and people feel your energy, I don’t know from a spiritual viewpoint. But people feel the energy of real love when they’re when you’re doing something and it shines through just like the person you meet. When you go visit a an office and you meet this receptionist who’s so friendly and warm and gracious. You can feel their energy they usually get hired for bigger jobs because people like that. So I think do what you love, and it’ll come to you naturally. Well, I think that that is great stuff that definitely gets come. Jeff, thank you so much for coming on. Where can people learn more about you? How can they engage it’s baseline and then stock smart podcast.

Unknown Speaker 19:56
Right and when the You can reach me to also if you look up the

Unknown Speaker 20:00
I bet ETF which is the I bet sports betting and gaming ETF, you can Google that. Or Jeffrey Caymus or inherent wealth fund and you can find out more information about us there. Excellent. Well, if you enjoyed as much as I did show Jeff your appreciation and share today’s show with a friend who also appreciates good ideas. Check out the I bet ETF the inherit wealth fund, and you can just find Jeffrey by Googling, searching for it Jeffrey Caymus je FF R ey KYKMY S. Thanks. Good, Jeff. Thanks so much. And until next time, keep fighting the good fight. We’re all in this together.

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