Smattering Podcast 62: Becoming Brian Feroldi

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[00:00:00] Jason Hall: Hey, everybody. Welcome back to The Smattering, where we ask the hard questions about investing. I'm Jason Hall. And unfortunately, I'm not joined by Jeff Santoro, the voice of the people right here, at least not in this introduction. The good news is that he is going to be in the rest of the podcast. Last week, Jeff and I were lucky enough to sit down and have a great conversation with one of my favorite people in FinTwit and in the investing world and just in general, and that's Brian for oldie of Long Term Mindset. So stay tuned for that coming up next. I hope you really enjoy it. We'll see you on the other side.

[00:00:42] Jason Hall: Brian Feroldi. Buddy. I am so happy to have you on the podcast with us. Welcome.

[00:00:47] Brian Feroldi: Thank you. I've been listening for quite some time now. I've enjoyed many of your episodes. So fun to be on this side of the microphone.

[00:00:53] Jason Hall: Yeah, it's good, good to have you on that side too. That's for sure. So here's the way that I want to structure this.

[00:00:58] Jason Hall: So, you know, I've had [00:01:00] the, the fortune to know you as a colleague and know a little bit of your history. And I don't know- a lot of people that know you as Brian Ferolid of Long Term Mindset the courses that you guys do, the book you wrote, Why Does the Stock Market Go Up, like all of, all of those things.

[00:01:18] Jason Hall: I don't know if people really know all of the story. And as a starting point, I would kind of like to go back there. So even before, you and I've done some work together for The Motley Fool. That's how you and I got to know each other. I want to go before that though, Brian, and let's talk about how you got from there, how, how did you get from being just a regular person that's not investing -that's not an expert in this stuff, getting into the industry to writing and to now doing what you're doing to help so many people?

[00:01:51] Brian Feroldi: Sure. Yep. So I was when I graduated from college in 2004, I had no interest in investing, no interest in anything that I'm doing now. [00:02:00] And I think a big reason why is I was never exposed to it in any meaningful way.

[00:02:05] Brian Feroldi: I had no clue how the stock market worked. I knew that it went up and down. I knew that some people talked about it sometimes. I knew that it was the boring part of the news, but I didn't know much about it at all. The way that I got into the stock market was through the, the catalyst was Rich Dad, Poor Dad.

[00:02:21] Brian Feroldi: I read that book in 2004 after I graduated from from college. And it was the first book I ever read that introduced concepts to me, like everyone's in business for themselves. Your house isn't an asset, it's a liability, the rich think about money differently, the rich can build wealth in one generation, and all these concepts that are, in hindsight, simple, and almost, almost obvious. But they crystallized this idea that I'd never had before about, about money.

[00:02:55] Brian Feroldi: Prior to that, money to me was something you worked for, and then something you spent, and that [00:03:00] was money. And the whole idea of using your money to build wealth was a complete foreign concept to me. And I say that as someone that graduated with a business degree, right? Business degree.

[00:03:14] Brian Feroldi: So when I started, if you read Rich Dad Poor Dad or that book at all, and by the way, many things I disagree with that book now. But it was the catalyst that, that got me interested that just kickstarted a love affair with everything personal finance, everything investing. And I started looking at real estate. Quickly was like, Nope, not for me. That's just not my asset class. I looked at gold and commodities and I kind of settled on the stock market. Read The Motley Fool Investment Guide back in like 2005, started reading articles on Fool. com and just slowly, but surely became super interested in the stock market and just have felt ever since then the stock market is the asset class that most attracts me.

[00:03:59] Jason Hall: [00:04:00] Well, I think that's really important because obviously people watching this podcast are going to feel some affinity for what you're saying. And they're going to, they're going to agree with a lot of that. But I think the point that I really want to stress here is the reason that's the case.

[00:04:14] Jason Hall: You mentioned real estate, that's an asset class. That's not necessarily very attainable by most people. Most people can't just go buy another property or buy an office building or something like that. They just don't have the resources to be able to do it financial or expertise to do it. But the nice thing about stocks is whatever disposable income you have, it's enough, right?

[00:04:37] Jason Hall: What, how, however small that number is, it's, it's enough. And that opportunity to participate in capitalism, I think is such a, a powerful thing. But let's talk about that transition to starting to help other people invest better, the Motley Fool's tagline for a long time. And moving from that, to seeing other opportunities [00:05:00] beyond just contributing to The Fool, but things that you can do to have a, I guess you could say almost more of a direct Impact.

[00:05:08] Jason Hall: What was that transition look like? How did you go from just writing articles for Fool.com and going on the live stream and being really engaged on social media to deciding to write a book?

[00:05:20] Brian Feroldi: Well, I actually think the transition from doing what I was doing previous to being a writer for the Motley Fool was far bigger than going from a writer to Motley Fool to actually to writing a book.

[00:05:30] Brian Feroldi: So my career started, I spent 10 years in medical device sales and marketing. And when you establish a career of any kind, it's damn hard to switch to an entirely different industry. When I, when I started writing for the Motley Fool, it was 20, 2015, and at the time I had a mortgage. I had three kids, right? I had a really good income from my prior life, [00:06:00] but it wasn't what I was interested in.

[00:06:01] Brian Feroldi: What I discovered about myself is I was interested in writing about and talking about and making money somehow from the stock market. So the way that I got a job with the Motley Fool was the way I think that many people get a job with the Motley Fool is you contribute on the boards and be an active member of the community for years. Which I did.

[00:06:22] Brian Feroldi: And many of the people that they, they hire to be writers started out as that path. So they, they saw, well, clearly this guy is super interested and passionate about this stuff. He's been writing for us for free for years on the discussion boards. So I was able to make the hop to being a writer. And that was a massive, massive transition.

[00:06:44] Brian Feroldi: From there, it was just a matter of volume. I wrote for The Motley Fool for six years? From 2015 to pretty much 2020, geez, 2022, I would say was when I really stopped writing for them in a big way.

[00:06:58] Brian Feroldi: But I to answer your question about [00:07:00] the book I never thought of myself as a writer ever. Like I was bad at English. Bad at grammar. I weep for my very first editors at the Motley Fool. Cause I'm sure they were like laughing at like what I would send them. I know what kind of editor you are, Jason.

[00:07:17] Jason Hall: One of my favorite little, little kind of anecdotes about you, Brian, is that your username on the Motley Fool boards was actually typo misspelled.

[00:07:27] Brian Feroldi: Misspelled. Yeah. Yeah. It's very apropos.

[00:07:30] Jason Hall: Absolutely glorious. But I think one of the things that, that has kind of helped your success. And I want to mention this because this was important to me too, because you and I actually have a pretty similar history, right?

[00:07:40] Jason Hall: Starting out as really, really- Jeff, you too, starting out as really hyper interested amateurs. And leveraging other things that we were experts in and for yourself coming from the, the medical industry, medical device industry, you leverage that subject matter expertise that you had to focus on that in your writing career. [00:08:00] And I was able to leverage some of the things that I knew from my prior career in a similar way.

[00:08:05] Jason Hall: And I, but I think there's an important lesson there is because people find things in their life that they're really interested in, and that maybe give them more satisfaction than what they're doing now that's just the paycheck. But there's that fear of making the jump because of everything you talked about. All those responsibilities you have. Walking away from the known, and a very comfortable known to jump into something that can be really scary for you. And I think you think it's scary for you, it can be even more scary for your spouse because they're not remotely interested in it.

[00:08:35] Jason Hall: My wife has no interest in stock picking. But she knows I was making really good money before. What the hell are you doing to our family? going through that.

[00:08:42] Jason Hall: But I wanted to mention that Brian, because I think it's important that I don't think you and I are necessarily outliers and Jeff to a lesser degree, cause you're smart enough to stay with a job that gives you fulfillment and that, you know, you create value and keep this as a really fun side hustle.

[00:08:57] Jason Hall: But, but I think that- [00:09:00] I think more people should lean into leveraging something that they're really good at that can help them generate an income and doing something that maybe they're more interested in. Maybe it's more in Jeff style of doing it, right, where you start off doing it on the side, doing it because it's fun and you can still focus on the thing that you love them or the thing that pays you the most and focusing in a different way on the thing that you love the most.

[00:09:25] Jeff Santoro: Yeah, I'll just jump in real quick because my, we all have a very similar sort of path to where we are now in the sense that it started through writing on the boards of the Motley Fool.

[00:09:36] Jeff Santoro: But for me, it was just , I guess the lesson I would take away from all of this, I think probably all for all three of us is like, jump in and do the things, and then typically more opportunities come your way just because you're in the right place at the right time and, , people see your passion and things like that.

[00:09:50] Jeff Santoro: So I think that's applicable to anything. You know, if you find something you like, that's outside your career path, , take the time to invest in it. And I think more often than not, opportunities [00:10:00] arise from those chances you take. Even if you don't leave your career and switch careers and that kind of stuff.

[00:10:05] Brian Feroldi: We all love investing in companies with optionality, right? Those that have a core thing and they experiment on the side. I mean, that's same principle applies to your career.

[00:10:14] Jason Hall: Yeah. Create some optionality for yourself. I love that. I love that. All right. Back to the, back to the book.

[00:10:20] Brian Feroldi: Sure. So never fancied myself to be a writer. If you were to tell me my graduating self from high school, you're going to write a book one day, I would have laughed in your face. Cause I hated English class more than any other class in school. And I still find the writing process to be, I don't feel like, I'm not drawn to writing this, the way that many people are, are just naturally drawn to writing.

[00:10:41] Brian Feroldi: So why the heck did I write a book? Well, I had in my head, I had this question in my head for, for years. , I love investing books. I've read maybe a hundred at this point. I just absolutely love them. Many of them say the exact same thing, right? Save money, [00:11:00] dollar cost average into index funds. The market goes up 10% per year. You'll have a big smile on your face at the end. The end, right? That's the gist of many great in, in investing books.

[00:11:14] Brian Feroldi: The question that I had as a beginner was, I understand that the market has gone up. I never understood why that happened. Nobody, no book I read ever explained that concept to me.

[00:11:31] Brian Feroldi: And I remember reading one saying like, even the mindset, yes, the market falls. It happens all the time, but it always comes back was never explained to me why. Why does the market come back? I understand- people I think, get why the market falls. It was, it never made sense to me why the market recovered from a fall and I just wondered for years, why didn't, why didn't any book exist that explained why the market goes up and why the market always [00:12:00] historically has recovered from falls, right?

[00:12:03] Brian Feroldi: Just decided one day, well, maybe I'm the person that's supposed to write the damn thing. So I pitched a couple of friends of mine, the owners of the Choose FI podcast, they have a little publishing company and they said, great, let's do it. And this was also during COVID. So it was a good time to spend some time. I had the time to actually write that.

[00:12:23] Jason Hall: Right. Right. Well, again, the name of the book, Why Does the Stock Market Go Up? There's more to the name, but that's all I'm going to share. If you go in the show notes, we'll have the link there to it on Amazon. I'm pretty sure it's available in Kindle and paperback and probably hardcover too, right?

[00:12:38] Brian Feroldi: Yep. And and audio book. Yep. It is. Yep. And it was designed to be it's at the fifth grade reading level and, and below I designed it to be super easy to read. In fact, some of the negative comments I've gotten about it is it was over too fast. Like, I was like, well, that was by design. So you're welcome.

[00:12:56] Jeff Santoro: Hey, Jason, Jason, I'll help you with it.

[00:12:58] Jason Hall: I'll help you with it. Jeff. [00:13:00] Yeah.

[00:13:02] Jason Hall: All right. So let's, let's pivot a little bit because you've, you know, you've evolved even further with Long Term Mindset, which is what you're doing now. And of course, a lot of us that know what you're doing, have a lot of fun at the expense of yourself and your two colleagues that are working on this.

[00:13:22] Jason Hall: The three Brians, of course yourself, Brian Feroldi, Brian Stoffel, who's been working with you on it for a while. And more recently joined you, somebody you and I both have known for a very long time, that's Brian Withers.

[00:13:34] Jason Hall: Let's talk about how you transitioned and what drove you to make the decision that you wanted to build something of your own that you were focusing on with Long Term Mindset.

[00:13:45] Brian Feroldi: Yep. So it would be the exact same way that I became a writer for The Fool. It was an accident and a more of a side project that kind of took on a life of its own. I didn't have a master plan a couple of years ago.

[00:13:57] Brian Feroldi: The way that it worked Jason, you'll, you'll know this [00:14:00] well. When the pandemic happened, the Motley Fool wisely launched Motley Fool Live. And that was actually pretty nerve wracking at the time, the idea that we'd be on video, and we'd be doing audio, because it's a completely different skill set, a completely different feel to be talking and being on camera than it is to be typing, right?

[00:14:18] Brian Feroldi: Even if the same number of people on the end are the same, it just feels differently to be, to be in an audio or video format.

[00:14:26] Jason Hall: It's a lot easier to be witty and clever as a writer with editors.

[00:14:29] Brian Feroldi: And you can think about it and edit yourself ahead of time, yes. Yes. So that was a, that was a good transition.

[00:14:36] Brian Feroldi: I ended up at one point I was doing like 20 hours a week of live streaming for them in the teeth of the pandemic. And that was wonderful training. And when it first started, they were, they were like, well, I think it's like it started at 8 AM and it went till like 8 p. m. So they literally had like 12 hours of content of video content that they were making per day.

[00:14:58] Brian Feroldi: So when it first started and they were figuring [00:15:00] things out, they were hungry for ideas. So if you had an idea for, Hey, we could do this, they just said, sure, let's do it. Here's your, here's your time slot.

[00:15:07] Brian Feroldi: Well, one of the ideas that me and Brian Stofel came up with was what we called stocks from scratch. Which was we took a company we did not know and over the course of an hour showed you the process of how we would research that company from scratch. And the goal was, beginning hour, we know absolutely nothing about the company. By the end, we can at least form a thesis or an opinion on the company based on reading SEC filings, looking at the investor presentations, looking at the inside ownership, judging management, et cetera.

[00:15:39] Brian Feroldi: I thought it was one of the best things on Fool Live. If, when I, if I was a new investor, that's exactly what I would want to see, like, show me how to do the research. Cause I don't know how to even click the buttons, let alone like interpret what you see on the screen.

[00:15:53] Jason Hall: Well, the, the old, the old adage from the Bible, right? You know, give, give someone a fish or teach them how to fish. And you're talking about [00:16:00] teaching people how to fish.

[00:16:01] Brian Feroldi: Exactly. Exactly. So I loved that, and it became more than anything an excuse to talk to Brian Stoffel every week, like just, just flat out. It became an excuse to do that. Well, over time that evolved and they, changed the formatting and essentially we got canceled , is the easy way of saying it and we said, well, we just want an excuse to talk to each other.

[00:16:23] Brian Feroldi: So, we're going to take this thing that we're doing and we're just going to take it to YouTube. And that was the start of what we were doing. So we just started doing it on YouTube and it was still in the teeth of the pandemic. So, the channel grew fairly quickly right out of the gate and the growth was good and we had sponsors reaching out to us to be like, Hey, can we sponsor your show? And we're like, have no idea how to do any of that. But suddenly this like side hobby was actually generating revenue for us. And at the same time, I was putting a lot of effort into growing my Twitter account because I was writing the book.

[00:16:58] Brian Feroldi: So, I was growing an audience [00:17:00] because I needed an audience to, to be interested in the book on the tail end of it. And it's kind of accidentally along that way of growing an audience that I discovered that you can actually generate an income once you have an audience if you do these things. And over the last three years, it just been discovering different ways to develop, to trade income from, from an audience while continuing to grow the audience.

[00:17:22] Brian Feroldi: So it was totally an accident, essentially, what my career has become.

[00:17:28] Jeff Santoro: I want to just jump in because it's so funny, like, I joined The Motley Fool as a member in May of 2020. I got in, I got obsessed with investing during the pandemic, like that was my hobby . Like all the reading that you did, Brian, I did in 2020 trying to, as I became interested in it.

[00:17:46] Jeff Santoro: But all those early, you know, whatever you wanna call them, shows on Motley Fool Live like the one, the, the stocks from scratch that you and Brian Stoffel did and all of the ones that were geared towards either learning how to learn about companies or just diving into specific [00:18:00] companies as like a new investor and a new member were super helpful.

[00:18:04] Jeff Santoro: And I, ate all that up and watched a ton of it as much as I could. And I, I actually think looking back, like, that's probably the genesis of like, why I reached out to Jason to start the podcast too, because like you were saying, I got to do some of the live stream at the tail end of it the last couple of years before it really got pared down to just a few hours.

[00:18:24] Jeff Santoro: And it really was good training, but it was also, it got my creative juices going too. I think like you were saying of like, this is something that I want to keep doing and keep sharing with people and helping people and that kind of a thing. So it was really helpful to me. I just wanted to tell you that.

[00:18:39] Jeff Santoro: So I'm glad you guys are still doing it.

[00:18:40] Brian Feroldi: What you're saying is I'm one of the co founders of The Smattering. Is that what you're saying? You can send me my royalty checks for-

[00:18:47] Jason Hall: you're what we call a pre co founder. Yeah. Yeah.

[00:18:52] Jeff Santoro: Don't hold your breath for the royalty checks, Brian. They're not-

[00:18:54] Jason Hall: I'm also saying that without saying that.

[00:18:58] Jason Hall: But I want a second with [00:19:00] Jeff said, I, I agree. But, and I think a big part of it is, and this is part of, of what the value that you're creating, and I do want to share with, with folks a little bit about what Long Term Mindset really is, but it's- our, you know, our, kind of our tagline is, we ask the hard questions about investing and we give our answers, but it's up to the people that are listening to us or reading us, reading our newsletter, watching the videos, people have got to find their own answers for those things. And we're trying to give people the tools to figure out the questions to ask, to come up with their own answers.

[00:19:31] Jason Hall: So let's talk about with Long Term Mindset, all of the different things that you're, that you are doing for your subscribers.

[00:19:39] Brian Feroldi: So if you, I mean, there's a number of different business models that you can take if you want to be in the investing content business. I can't tell you how many times I've received direct messages from people asking me if I would start my own stock picking service or in, or something like that. That's one business model that you can do. It's never appealed to [00:20:00] me to be paid to make, to make recommendations, but-

[00:20:03] Jason Hall: there's some really, there's some really good shops that are already doing that. Why compete with them?

[00:20:08] Brian Feroldi: That's, that's one reason why I feel that way. And another way, I don't want to, and I, who knows what could happen in the future, but that, that doesn't, that doesn't appeal to me right now. But to what you said before, I'm, I think I'm a natural teacher. Like I just really like teaching and the idea of starting a company that focuses on the teaching you how to fish teaching you how to invest is something that really appeals, appeals to me.

[00:20:36] Brian Feroldi: So what, what what the company is, is essentially it's a financial education company focused for right now, at least on teaching people how to invest in individual stocks. So we have developed a couple of courses that we do live cohort based courses that teach people a couple of specific areas of how to, how to invest.

[00:20:56] Brian Feroldi: The first one we did that we created is called Financial Statements Explained [00:21:00] Simply. And we teach people how to find, read, and interpret financial statements. Which is obviously a critical skill if you're going to be an investor.

[00:21:10] Brian Feroldi: But financial statements can also be very confusing. They, they change from company to company. The terms are, are not the same. The definitions are not the same. And we started a, it's a three week course where we go over all the financial statements, we do lots of examples and we pick up real world companies and dissect, show, teach people how to dissect financial statements in real time.

[00:21:32] Brian Feroldi: And that's been something that's been tremendously beneficial for both people that have taken it as well, as well as us.

[00:21:37] Brian Feroldi: At the end of that course, one thing we do is we say, what other content are you interested in us in learning about? And the second, the number one most requested thing was how to value a company. And about valuation. So we've created a second course that teaches people the various ways, the various methods that people can use to value businesses, as well as the, the pros and cons of, of [00:22:00] each methodology, as well as how to even think about about about valuation.

[00:22:04] Brian Feroldi: And we have another one in the works. But we were very interested in basically helping people to understand the research and investment process.

[00:22:14] Jason Hall: So let's talk a little bit about those things that you do. And you talked about, these are things that, you feel you're a natural teacher. These are things that you enjoy doing, but what is the one aspect of all of the various things that you do whether it's the behind the scenes things, the things that you do directly with your subscribers or your followers, what is the thing that you really just absolutely get the most out of?

[00:22:38] Brian Feroldi: Well, it sounds like you're asking me for my personal mission statement, which has changed a little bit, but essentially boiled down-

[00:22:44] Jason Hall: They should change. They should I think.

[00:22:45] Brian Feroldi: It has evolved. It's, it's to demystify the stock market is essentially what I'm, what the North Star is for all the content that I create both the free content and the paid content. It's demystifying the stock market so that if you have an interest in, in learning about it you [00:23:00] can, you can, you can essentially get the information that's in my brain, which I've learned the hard way over the last 20 years far faster than it took me to get it.

[00:23:09] Jason Hall: Yeah, learn from other people's mistakes. That is my, my best of advice.

[00:23:14] Jeff Santoro: Speaking of that, Brian, this is one thing I've been wondering as I was thinking about this interview. One thing I've noticed in doing this, the podcast with Jason just over the past almost a year now is you know, we talk so much about the challenges and the hard questions about investing. And then like on the side, I'm still figuring myself out as an investor because I didn't buy my first stock, well, individual stock until 2020. So I'm still new.

[00:23:38] Jeff Santoro: So I'm curious, like as you've over the course of everything you've done, like getting into investing as I knew you made a lot of mistakes as like a beginner, beginner, I've read about those on social media and stuff. But just in the past couple of years, right, as you've transitioned from contributor at the Motley Fool, to book author, to business owner, to course, course operator for, for teaching other [00:24:00] people. What things have changed in your own personal investing, if anything, over the course of that time?

[00:24:07] Brian Feroldi: So the philosophy and the strategies that I use were, I would say, really crystalized to use a word, in about 2016. At that point, I've been investing for about 10 years, but I didn't have a process that was fully formed. I didn't have a checklist that was fully formed. I didn't have an asset allocation strategy that was fully formed until about that point. However, one thing that I, that I've done ever since I essentially started earning a real paycheck was I, I've, I've always been the type of person that's kept my personal finances as conservative as they possibly could be.

[00:24:47] Brian Feroldi: I've, I have zero debt to my name. I have a six plus month emergency fund. At this point, my, my household has always had multiple sources of income. My household has always had a high, a high [00:25:00] savings rate.

[00:25:01] Brian Feroldi: And though I think that is actually the bedrock of my of my investing a strategy simply because my, my personal financial situation is so ridiculously conservative that I can take, I can essentially be a hundred percent equities all the time and the volatility that I experience in the stock market, which as you guys know, has been something else over the last, over the last couple of years I can withstand that emotionally and financially in part because I don't use leverage, I avoid options, I avoid all the big mistakes that people made, but more importantly, if my portfolio fell 50% tomorrow, it would suck, but it would in no way impact my day to day life because my personal financial situation is so ridiculously conservative.

[00:25:52] Brian Feroldi: So I would say that's, that's actually a core principle that I've had this entire time, even if my investing principles and philosophy has, has evolved [00:26:00] over time.

[00:26:00] Jason Hall: I want to, I want to Charlie Munger inversion principle that Brian, because I think there's another side of it too. Because you talked about how if your portfolio got smacked it wouldn't affect your personal life.

[00:26:13] Jason Hall: But I think there's another part of it too, and that's if something happened in your real world life, it wouldn't affect your portfolio. I think that is massively important because so many people do put themselves in a situation where they, they're over-leveraged to a single income. They haven't built up a personal savings for emergencies and then they have credit card, like all those things.

[00:26:36] Jason Hall: And then, and then all it takes is one point of failure, right? One point of failure and you lose your job, right? And guess what? You lost your job and there's also a recession and the market's down and you don't have spare cash. And now you have to sell, $10,000 from your 401k. And six months ago, it would have been $20,000.

[00:26:55] Jason Hall: And, oh, it's also income this year and, oh, you also have to pay a 20% penalty [00:27:00] on top of that. And it compounds and compounds and compounds, right?

[00:27:03] Jason Hall: So I'm really glad you said that Brian, because that holistic idea of, of like the foundation of your financial life is something that I don't think enough people get exposed to as investors. For all of the resources out there to help you pick great stocks and all of the mind stuff to help you like, think about like the realities of the market being volatility, and even your book that tries to explain some of the ideas of why the market does what it does. They don't matter if you don't have a couple months of savings and you have some sort of like anti fragility in your sources of income. Because you're going to end up getting exposed, right? It's, it's inevitable. It's, it's going to happen. So I'm glad you, I'm glad you brought that up.

[00:27:52] Brian Feroldi: I really liked the way that you phrased it, how it works in reverse too. Hadn't thought about that, but that was surprisingly poignant. Jason, well [00:28:00] done. But yeah.

[00:28:00] Jason Hall: Occasionally, occasionally I can even sound clever as a speaker,

[00:28:04] Jeff Santoro: Surprisingly poignant is is a good way to describe Jason generally.

[00:28:08] Jason Hall: If I was in a band, that would be the name of my band.

[00:28:11] Jeff Santoro: Surprisingly poignant. I like that.

[00:28:13] Jason Hall: . Brian, you might not know, but Jeff, Jeff has a collection on his phone of when he hears a phrase, that's going to be a good band name that, and I'm guessing surprisingly poignant. It's going to go on that list. That's pretty good.

[00:28:23] Brian Feroldi: Excellent. Please add it. When you look at like content creators in general, especially people that are interested in stocks, like we, like we are, I don't think they'd zoom out enough to be like, how, how does this fit into your life? Your financial life?

[00:28:36] Brian Feroldi: I have a financial order of operations that I created that I post regularly on, on Twitter. And to me, I, I love stocks. I love. Investing in my taxable brokerage account.

[00:28:45] Brian Feroldi: That's step 13 on my financial wellness financial wellness order of operations.

[00:28:51] Brian Feroldi: And to me, what that presupposes is that you've knocked out 1 through 12. But 1 through 12 are actually hard. There's a lot of work a lot of work to do there.

[00:28:59] Brian Feroldi: So [00:29:00] if somebody comes to me and says, What stock should I buy? I think the correct answer is, well, do you have a monthly budget? Do you know your net worth? Do you have insurance coverage? ? Have you have you, you have an emergency fund? Those things come much more important questions than what do you think of Netflix after earnings?

[00:29:19] Jeff Santoro: Yeah, it's I've seen you post that before and I think that's that's great. It's also it's what I like about what what you guys are doing is it's a nice intersection I think between personal finance and investing. And I don't know that we often enough talk about how those two things have to be interrelated, or you will blow yourself up at some point.

[00:29:40] Jeff Santoro: So yeah, I think that's super, super helpful for people. Maybe we can remember to link that in our show notes to that specifically.

[00:29:46] Brian Feroldi: And the two of them are tied at the hip, right? I, I think that they, they're, your financial life is your financial life. Investing is something that we all love, but it's a part of your financial life.

[00:29:57] Brian Feroldi: It isn't the only thing the only thing that matters. [00:30:00]

[00:30:01] Jason Hall: Let's talk a little bit about again, drawing the kind of drawing the circle between going back 15 years, almost 20 years ago now, at this point, when you first picked up Rich Dad, Poor Dad to now and everything that's changed.

[00:30:15] Jason Hall: So what's, good and bad, maybe we'll start with the bad. What, in your observations, what do you see that's changed since you first started as an investor to the, to the bad?

[00:30:27] Brian Feroldi: So it's, it's going to be a good, but it's going to have a bad side effect. And that is when I started investing the broker that I, that I picked was the low cost broker. It was ScottTrade.

[00:30:38] Jeff Santoro: I know what you're going to say.

[00:30:39] Brian Feroldi: And it was $7 per trade. And that was by far the cheapest thing on the markets. It's the reason that I went with them. And $7 doesn't sound like a lot of money, but when you're playing with $500, like I was in the beginning, $7 is quite a bit to buy or sell anything. If you're [00:31:00] buying in a hundred dollars increments, right, you got a 14% drag that you have to overcome just to break even let alone taxes or anything like that.

[00:31:11] Brian Feroldi: In 2012, I switched brokers from Scott trade to Interactive Brokers because Interactive Brokers at the time was $1 per trade. And I was like, well, that's a hell of a lot better. That's a huge difference.

[00:31:25] Brian Feroldi: And of course, with the rise of Robin hood, that number has been taken all the way down to zero. So that is an absolute blessing. It's an amazing amount of money that has been transferred from Wall Street to individual investors with the collapse in brokerage fees.

[00:31:38] Brian Feroldi: But there's a downside is, as you guys know when things get, when things get easier and when things are free, they get used a hell of a lot more and it becomes no big deal or very, very easy and you can justify trading to yourself because there's, there's much less friction to, to doing so.

[00:31:56] Brian Feroldi: When you combine that with the rise of TikTok, [00:32:00] YouTube, Twitter, I would say it's harder now to be a long term investor than it has been historically, if you pay attention to those things.

[00:32:08] Brian Feroldi: So like anything with, with any, any good, there's also a bad. In fact, it's been floated, if somebody said, I'm going to start a broker and charge a hundred dollars per trade, and that's going to be the key feature of the broker it's like, that's actually not a bad idea. You would get zero customers, but the customers that you did have would do very well.

[00:32:26] Jason Hall: Well, directionally, it's, it's, you're, you're spot on and I want to tie something to that too. And that's, and that's a fractional investing, the ability to invest $1 into a stock or $10 into a stock. It doesn't matter what the stock price trades for.

[00:32:40] Jason Hall: But I agree. It's, it's definitely some good and some unintended consequences and something Jeff and I, we've, we've talked about this a lot again, is thinking about frameworks and how healthy it is to take effort to build the, the word that you used, to build friction into your process. Because if you're investing [00:33:00] success with a stock comes down to minutes, days or minutes, hours, or even days as to when you execute the trade, man, you're, you're working way too hard and you're probably costing yourself a lot more in wasted time.

[00:33:18] Jason Hall: And then all of the other things we talk about with tax inefficiency, et cetera, et cetera, et cetera. All of, all of those things that add up that just don't pan out for regular retail down the street, regular Joe and Josephine investors. I think you're a hundred percent right.

[00:33:33] Jason Hall: Now here's my question for you about both of those things. I'm curious your opinion. Do you think in the aggregate, do you think those two things combined are a net benefit for, for the average investor?

[00:33:45] Brian Feroldi: Oh yes. Massively. It's not even close.

[00:33:48] Jason Hall: Just because of accessibility, right?

[00:33:49] Brian Feroldi: Yeah, you can, you can go on almost any big broker now and you can invest $5 per month into a broad based index fund for essentially [00:34:00] $0 and get exposure to the stock market in a way that would be unimaginable 30 years ago. In addition to that, you can go on your favorite social media platform. Any of them. And if you do a little bit of work, you can find super knowledgeable, high quality people that expound good information on a regular basis. And you can go deep to your heart's desire and learn an incredible amount about, about, about any, about any topic that relates to investing.

[00:34:33] Brian Feroldi: Those are just such massive, massive advantages. I mean, think about this, Jason. When I first started investing, it was like. How would I listen to a conference call? I don't know. I have no idea how I would do it.

[00:34:49] Jason Hall: The internet, the internet wasn't littered with, wasn't littered with transcripts the way it isnow.

[00:34:53] Brian Feroldi: Right. And now for free, I can read a transcript within a couple of hours of that call being [00:35:00] completed and have all the same information that was hidden from hidden from individual investors view not that long ago. Right?

[00:35:09] Brian Feroldi: So investors have never had it better than it is today. But that convenience does come with other negatives, but the net net is overwhelmingly positive.

[00:35:20] Jeff Santoro: Yeah, I want to, I want to echo that as someone who started buying stocks right when trading went to zero and also right when fractional shares became pretty widely available.

[00:35:31] Jeff Santoro: My first- in February of 2020, I opened a Robin hood account with $50 and I spent about two months just obsessively opening the stupid app and watching all the numbers change. And I know people say you shouldn't do that. I actually think it's, I disagree with that. I think you could and can do that when you're a beginner as long as you're not doing it with like tens of thousands of dollars, and but like I had so I had zero commissions on Robin Hood, but they didn't have fractional shares [00:36:00] yet so I was kind of forced to buy penny stocks essentially because I had like 50 in total and I couldn't buy Apple. I couldn't buy-

[00:36:07] Jeff Santoro: You

[00:36:07] Jason Hall: chose to buy that crap, Jeff.

[00:36:08] Jeff Santoro: No, because I didn't, I really I couldn't. I had- It was like I wasn't going to put all $50 in one thing because I was so brand new, but that ability to like screw around with almost zero actual risk to my life, like, okay, I can, I'm a middle aged man with a full time job. I can lose 50 bucks, you know? So like I could really play around and like try this and sell that and see what happens.

[00:36:29] Jeff Santoro: I learned a lot really quickly. Now, thank God I found good advice after that to sort of figure out all the things I was doing wrong and I didn't, I didn't get overconfident and start putting more money in and penny trade, trading penny stocks.

[00:36:42] Jeff Santoro: I can't imagine how I would have approached this in like that- cause I work in education. I know how learning works. You, the best way to learn is to do So if I couldn't have done it, if I was just, if I logged on and it was a $7 trade and I wouldn't have wanted to put a lot of money in at first and I didn't have fractional shares, I probably just been [00:37:00] like, nah, I'm out. That would have been the end of it. So yeah, I agree. It's, it's a net net positive probably.

[00:37:07] Jason Hall: Let's talk about, let's talk about social media and investing.

[00:37:09] Jason Hall: Cause that's something again, Brian, you know, that's basically, you know, 2004, 2005, 2006, that was like the birth of social media was just beginning. And you think about social media for us and what we do again on the other side of the screen on the other side of the keyboard, so to speak, is critically important. I think it's how we've all built our audiences. My guess is that the majority of the people that are listening to this podcast, they found us on Twitter, Brian, Long Term Mindset, you built it largely on social media.

[00:37:45] Jason Hall: So, I'd love to hear your thoughts about social media and kind of the pros and cons for, for investors. For people that are trying to figure out, answer these financial questions, how do you think about it and trying to temper it with how valuable and important it is to the business that you've built, [00:38:00] think about it from somebody that's on the other side that's trying to leverage it as a consumer.

[00:38:04] Brian Feroldi: I mostly think it's, I mostly think it's a positive. I think it's, it's a net positive. There are certainly downsides to, to any technology and social media is, is no different. But I'll ask you this did, do you think that the Motley Fool's discussion boards were positive to your life or negative to your life?

[00:38:19] Jason Hall: Oh, life changing. You and I can both say that, right? Because that's what's led us down the path.

[00:38:23] Brian Feroldi: Life changing. Life changing. It's life changing experience to be on a platform that allows you to connect with and talk to other investors that are as interested in the same subject as you are.

[00:38:37] Brian Feroldi: I view Twitter as essentially a public version of the Motley Fool's discussion boards. And the, the upside is it's free. But the downside to it being free is that the good and the bad.

[00:38:50] Jason Hall: You get what you pay for.

[00:38:52] Brian Feroldi: Exactly. One massive benefit to being to it being a paid service as it was for the Motley Fool's discussion boards is that there's no trolling, there's no [00:39:00] negativity. Everyone was there to, to help each other. It was a very positive community.

[00:39:04] Brian Feroldi: A free platform like, like Twitter or YouTube or any of the social media platforms. They don't have that same filter.

[00:39:10] Jason Hall: Are you on threads? Are you on threads? Blue Sky?

[00:39:12] Brian Feroldi: Yeah, I'm on threads. I've posted four times so far.

[00:39:15] Jason Hall: There you go. That's, that's three more than me. Two more than me. I'm up to two. I'm up to two. Well, I want to ask you one more question about, again, hindsight and then looking forward, what, what hasn't changed or maybe hasn't changed enough the youth that you would like to see change more or maybe in a different direction.

[00:39:33] Brian Feroldi: Human nature. Human nature doesn't change. It's, it's so predictable. I often get requests to come on podcasts and do interviews and things like that. And despite all the content that I produce being about long term this, long term that I still get asked about, what do you think about fill in the blank stock after earnings? What do you think about this CPI or what do you think about this jobs number or what do you think about that.

[00:39:57] Brian Feroldi: To me, that's all, it's all noise. It's [00:40:00] all noise. The internet is filled, 99% of his noise, it's temporary things that get headlines and is interesting to talk about and it gets clicks, but it's not signal. It's not signal and I'm, I'm trying my best to focus on signal.

[00:40:16] Brian Feroldi: I don't care what's happened to Tesla's stock over the last 30 days. I care what's happened to Tesla's revenue over the last five years. That's what I'm focused on. But I totally understand why so many people are just so focused on the noise because it's, it's everywhere and you think that it has, has meaning.

[00:40:35] Brian Feroldi: So I don't pay attention much to the Fed. I don't pay attention to the economic data that that comes out. To me in the long run, that stuff all washes out and means zero. But I do, I do pay attention to the earnings reports of the companies that I own. And that, that to me is the purest form of signal. And I try and focus on that.

[00:40:54] Brian Feroldi: But I don't see that changing ever because it's human nature to focus on [00:41:00] the noise because in investing in particular, the noise seems important.

[00:41:05] Jason Hall: Jeff, I think it was Peter Lynch that said this. Maybe you'll know for sure. Wrote it in, I think One Up On Wall Street. If you've spent, if you spend 15 seconds studying or maybe you spend 30 seconds studying the latest economic data, you've spent 15 seconds too long or something like that, right?

[00:41:17] Jeff Santoro: Yeah. I was gonna say it boils down to nobody wants to get rich slowly, like, I think that's why all the noise is appealing because everyone, especially the last couple of years when, I mean, if you're being honest in 2020 and 2021, you could get rich pretty quick. Unfortunately didn't last.

[00:41:33] Jeff Santoro: But I, that, that to me is what it is. It's everyone's looking for the trade to make right now that they can brag about in three months. And that's not how this works over the long term.

[00:41:44] Jason Hall: Brian, you mentioned signal and noise, and I want to pitch one of my favorite books that I think is really useful in this context. And that's Nate Silver's The Signal and the Noise, which talks so much about this, particularly in the age of the Internet and also [00:42:00] with media and pundits and people making predictions that I think is really useful to help people kind of contextualize that stuff. And know how to take, take it with a grain of salt when you have somebody that's giving their answer to that, well, after earnings for Acme company, what are you thinking?

[00:42:17] Jason Hall: And it's, it's the old, the old saws, pundits don't make predictions because they know. They make them because they were asked.

[00:42:23] Brian Feroldi: Yep.

[00:42:24] Jason Hall: That's the key. Well, let's, let's do this. We've got just a few more minutes here, Brian. So as a starting point, I want to spend a couple of minutes talking about what you're focused on the most right now with Long Term Mindset and that's with your courses.

[00:42:38] Jason Hall: So what's, what's going on right now that you really want to make sure people know about?

[00:42:41] Brian Feroldi: So the thing that we have launching in a couple of weeks here is we have cohort two of our course Valuation Explained Simply. That's when we go through the various valuation methods that investors use to come up with the valuation of business. We do lots of practice. We do lots of examples. We have templates, homework, worksheets, that kind of stuff. So if people are interested in [00:43:00] it, that's the next thing that we are rolling out and talking about.

[00:43:02] Brian Feroldi: But we have, 99% of the content that that that we create is free. It's on YouTube, it's on Twitter, it's on Instagram, it's on, it's on LinkedIn.

[00:43:12] Brian Feroldi: So you can absolutely get all the information in basically, from free but one thing that I will say cohort cohort based courses do that free content doesn't is they provide accountability. They provide Q&A, they provide community. And those things really, really help to accelerate learning, the learning process.

[00:43:32] Brian Feroldi: So if that interests you you can follow me on Twitter to find more information about that.

[00:43:37] Jason Hall: So, Brian, we'll put it, we'll put it in the show notes for, for people and in our transcripts as well. We'll put links of these things throughout the transcript, but what are the best ways for people to find you to find Long Term Mindset and to find your content?

[00:43:50] Brian Feroldi: Yep. So again, follow me on Twitter. And if you want to go a little bit deeper, we have a once a week we have a newsletter. Where we send out five, six pieces of, of timeless content. So there's an investing story in [00:44:00] there as well as links to some kind of historic content. Most of it's more than a year old on the internet that we think has a timeless lesson or investing principle or something like that shared. So you can just sign up for that at BrianFeroldi.com/newsletter.

[00:44:14] Jason Hall: All right. That's fantastic. Brian Feroldi once again, I want to thank you for coming on. This has been a lot of fun. Look forward to having you on again sometime soon.

[00:44:22] Brian Feroldi: Sounds like a plan. Congrats on making it more than a year. That's no small feat.

[00:44:26] Jason Hall: We're not quite a year yet.

[00:44:28] Brian Feroldi: (laughs) Congrats. I'm making it to almost a year. That's no small feat.

[00:44:31] Jason Hall: (laughs) Nice. Nice. Thank you for that. Appreciate it.

Hey, Jeff, buddy. We did it.

[00:44:37] Jeff Santoro: We did it.

[00:44:39] Jason Hall: All right, friends. As always, we'd love to give our answers to these hard investing questions, have people like Brian Feroldi on to give their answers too. But it is up to you to find your answers to those questions. I believe in you. You can do it. All right, Jeff. We'll see you next time.

[00:44:55] Jeff Santoro: See you next time.

Note: We do not provide individual investing advice. Make your own decisions.

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