In this episode, we welcome Jake Larmour back to the podcast. Jake is a trader, investor, and public speaker. Listen in as Matt and Tim discuss how he’s approaching the markets, what he’s learned through the process and more.

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Video Transcription

Tim: Without further ado, let’s actually bring in Jake kind of formally here. I don’t think we’ve ever had Jake on the podcast. Jack, if you have you done one episode maybe on Bitcoin way back in the day.

Jake:  I actually had been on a few times. I’ll just scan my memory, Matt. I mean, it’s been a while though. It’s been 200 episodes or so. I was on one 79 and 200. Okay. Quite a while.

Tim:  So do I get any kind of past that it was more than two years ago, Matt, or should I be remembered? I should have remembered. All right, Jake, it’s always a pleasure to talk to you about markets. Uh, I have known you now for what, four and a half years. And uh, you first met Matt in a ballroom and came into trading because of, uh, you know, your desire to learn about markets and all that kind of stuff. Uh, Matt meeting Jake is a young man. I’m sure you’re pretty amazed at his growth curve that he’s had developed over the years. Let’s start with you, Matt. What have you seen from this young man since you first met him walking into your classroom five years ago, till today?

Matt: Well, when I first met Jake, you know, Jake, I think you were like 21, 22, maybe 20. You were 

Jake: 20. 

Matt: That’s right. Um, he, he, but he looked like he was five years old, like you just like baby face. Um, but I’ll tell you from the very second I met Jake, I was extremely impressed by how he carried himself, what his goals were. Uh, you know, it just, it was something that, you know, I, I just believed, you know, I just had such a belief in him because he had the, he had the right why he had the desire. He knew there was going to be, you know, time to learn this and who’s willing to give it the time necessary. Um, you know, and he just, he just struck me as somebody who just knew that, you know, the, how to get to where he wanted to go. He needed education and he knew he had to put in the work. And, you know, I’m not, I’m not surprised by his success in any capacity because of who that young man is and, and, and what his why was in the effort that he has, uh, he has put in. And I’m so happy to, uh, to uh, you know, uh, to let the community know that Jake is going to be, you know, a little bit more active over there and tackle trading, helping other new traders along the way as well.

Tim: Jake is a beginner. Did you have any idea what you were getting into five years ago? You know, now looking back at it, you’ve got it, the hindsight of 2020, you know, how to trade, uh, you’ve seen ups and downs in the market’s ups and downs, I’m sure in your personal trading and accounts in life just like anyone would in a five year period. Uh, first of all, you’re glad you did it. Are you excited about the future and could you have even guessed what this journey was going to be like?

Jake: You know, that’s a really good question to him. I don’t think I really truly knew what I was getting myself into, how much effort and energy it was going to take and, and, but also what it could be, you know. Um, all I knew is I wanted what Matt, it seemed like he had control over finance, control over life, uh, control over his time. And for me, I was studying, uh, engineering and the school, not because I liked it, cause I was told this we should do to make money. And I was kinda lining up to go to that job just to get dollars to pay for a life that I was told I needed. And I wasn’t really happy with all those moves. And I saw this guy up there saying, Hey, you know, you can just sit at home, click buttons, make money.I was like, damn, okay, I need to be, I need, I need me some of that. Uh, and, and it did take some time. It did take some effort and energy and I’m really glad that I put in not only the time, but the capital to stick with it. You know, it’s really easy. I meet people all the time, you know, traveling and, and teaching new traders of, Oh, I tried this and I, I did that. You know, I think it really takes some time to be l  around markets, seeing different market conditions, you know, like even I’m learning every single day. Even this week is a new learning environment for me as a trader. Uh, and, and taking that long term approach. You know, all of my, all of my young students that I ever teach, somebody that was in my boat, I always give them the advice that I wish I knew. And that was to look a little bit more longterm. You know, I got into this just to make a quick buck so that I could pay for my life, you know, not have to be beholden to a job, but I’m really staying for the fun and the thrill of investing, you know? And I, I really, uh, thank you Tim for that. You know, it got me off the short term mindset into the long term, but this is something that you’re going to do the rest of your life. You know, you have dollars in your life, you’re going to have money in a 401k or an IRA. You know, the peace of mind that I have right now in these volatile markets. I mean, I don’t, I don’t think I could put a price on that.

Matt: Jake, how long did it take you before you felt real comfortable with the ARDA, you know, not, not necessarily investing, um, but trading, you know, swing trading, day trading, understanding, you know, those, uh, the, the cycle that happens on a 24 hour basis and, and, and just how long did it take before you felt real comfortable with it?

Jake: You know, I’m probably a couple months. You know, I think it took me maybe six months to really understand all the products and all the timeframes. You know, the difference between position trading, swing trading, day, trading futures, Forex options, how I wanted to use them, and probably just over a year to get truly proficient with it. Right. You know, figuring out what works for me and how I tick. You know, I like to scalp Forex and swing trade Forex at night when I can’t sleep. You know, and figuring out how I want to run my business took a little bit, but man, one year of my life to build a skill set that I can use the rest of it, it was a small price to pay.

Matt: And now out of those products, you know, understanding all the products futures for us modernities you know, us stocks, you know, all the different options, strategies, buying, spelling, day trading, swing trading, position trading. What products after, you know, five years of doing this are your GoTo products. Uh, in an environment like this where we’re seeing a lot of volatility and a lot of good day trading techniques

Jake: in these markets. Right now all I’m doing is day trading futures. That’s it. I am sticking to cash at night. I honestly sometimes don’t even feel like I know if it’s going up or down the next day and starting off the day clean and having the leverage of the futures market so that you can really get a good bang for your buck. Uh, I, I do like a lot of position trading of options in any one of my students knows that the majority of the time that’s the bulk of how I trade. But in this type of market I’ve transitioned completely to the futures market and practically only day trading besides my longterm holds. Uh, just to take advantage and scoop up the profits while the while the getting is good.

Matt: No, that’s an old market maker type mentality of you’ll go into a cash position for the end of the close and reopen it the following day. And uh, you know, Jake you said is sometimes you don’t know if the market’s going to go up or down the following the day. I think that’s pretty much par for the course with everybody right now. You know, last week, you know, we had what, 4,000 point days? Two up, two down. You know, we open, the doubt opens up today down 2000 points. Um, tomorrow could just go right back. And you know, I remember I was on halftime port last week and I said, it does Mark, it really does remind me a little bit of what happened in the European debt market of August up to August, September of 2011 where, you know, back then the Dow was running 400 points up 400 points down, 400 points, set up 400 points down because the market did not know how to price in the risk to the European debt, uh, debt explosion. And I think you’re seeing a little bit of that right now given the fact that we’re, you know, in the middle of it, I think one of the things wall street was really struggling with is figuring out how to price in the true risk to the Corona situation because there’s just so many unknowns, right? And one of those unknowns is, you know, what is the government going to do? What is the central bank going to do? What are corporations going to do? And so I think they’re having a very hard time on a day to day basis price again. What, what the true risk, uh, from an economic and a market perspective is to Corona. Cause I, I just don’t think anybody knows right now.

Tim: Yeah, I think that’s exactly right Matt. I mean how can you know? Because we don’t know what it’s going to do to consumption, to spending to consumer confidence and all those kinds of things. So and obviously the market’s moving a thousand points a day is crazy. But today guys, almost 2000 points down like you said Matt, I think that might be the record if it ended up closing down there. We only got a few more minutes here in today’s day. Yup.

Matt: It will be the record from a point perspective. Not from a percentage perspective, but from a point perspective. Yeah, absolutely.

Tim: Jake, as you’ve gone through this five year window here, a, you’re still a young man, dude. You’re still a kid and you still look like you’re five by the way. Matt, I [inaudible] maybe he looked a lot younger when you first met him. I still think he could pass for about 15 if he wanted to

Matt: 45 years and still going to get a card and to buy a pair.

Tim: Right. And why do young people, uh, not like it when you tell them they look young? I mean every old guy would like to look young.

Matt: Wait, just wait 10 years. Jake, you’ll appreciate it.

Tim: Yeah, for sure. What’s one mistake you made, Jake, that you feel like, man, that was just me messing up. I could have avoided it. I was trained to, to do it differently. What’s cause we can all learn from our max loss lessons and all that kind of stuff. What’s something that you really messed up on in your first a few years of trading?

Jake: Well, I don’t know if it’s messed up but missed opportunity. Opportunity cost is, I remember the conversations on the S and P 500 when it was bouncing between 2020 100 and you know, I didn’t actually become an investor or believe in longterm mindset until literally last year. And, and really talking with you, Tim, you know, there were points in my life where 95% of my liquid net worth was found in my trading account. And I was trying to use the argument of capital efficiency and getting the most yield per dollar. And you know, you really brought into the conversation for me, you know, well what happens if you go crazy right? Or if you have a bad mental spot, you know, investing longterm is something else that you need to do. And I really embrace that. You know, last year, and I’m kind of kicking myself that I started buying into the S and P, you know, 2,800 3000 when I saw it at 2000

Tim: and this goes back to a core philosophy I have. And I, you know, Matt, I think you could probably share it as well. Trading is a vehicle to, to finance your longterm investments. You know, you’re supposed to use the trading markets to build your accounts for sure. But at some point you take the money from trading and you go do other things with it. Like start a business. I invest in real estate or property or buy stocks longterm. And I know Mark disagrees with this point of mine, uh, not necessarily, you know, for everybody but just for himself personally. It’s why I believe in separating accounts, you know, the account you day trade in I don’t think should be the account that you invest for the next 20, 30 years in for your retirement and that, what are your thoughts on all that?

Matt: couple of things don’t run. You can run them in one account, you can run them in multiple accounts. It just depends on you as the individual and how you process data. Um, some people, you know, if they’re running, if they’re running their active trading account within there, you know, longterm accounts, sometimes they’ll drive them a little bit crazy cause they’re looking at too many data points. So I understand both sides of that equation. But what Jay said is very, very important because you should never have everything on one time frame, right? Because what if you’re wrong on that time frame, right? What if something goes wrong, you get over leveraged and massive market volatility is, for example, let’s say you’re your, your, your analysis is coming out of last week that it was an overreaction to the, to you know, OPEC and you were longer what and your long oil and in a futures contract you have more risks than what then than what you put into that trade. You can blow up an account with something that, uh, that happened in oil today. I guarantee there are hedge funds that literally will cease to exist following today because a massive margin calls regarding the oil market. So what if you’re wrong? Well, that just goes to the heart of diversification for me. So when you’re talking about diversification, you can’t think about diversification that way. Wall street pitches diversification within a 401k or longterm IRA because they think mutual funds are diversified because they have multiple different stocks in them, right? Uh, but, but there’s nothing diversified. If you own Facebook, Apple, Netflix, Google, uh, Microsoft, that, that’s not diversification. To me, diversification is three things. Number one is diversification amongst timeframe. If you have your longterm investments dialed in, short term trading becomes a heck of a lot easier. So having multiple different timeframes within your portfolio is important. Number two, diversification. Most asset classes, you should not just be into the stock market, you should have commodities, you should have currency, you shouldn’t have diversification to most of the asset classes. You should have some bonds. You should have diversification because if all you do is invest in stock, what happens when the market goes haywire like it’s doing in the last week? Well you’re probably, you’re probably down more than the market is. That’s, that’s the simple reality. If you, if you own stock and the market goes down 10% you’re probably down 12 1314 15% and especially when these types of fear happens, almost everything goes down. Initially it’s about what recovers fasteners is that secondary conversation. So you should have diversification amongst asset classes and you should have diversification a month strategy, strategy selection. You shouldn’t have just be a net buyer. Every portfolio should have some hedges, some, some bearish type action that can offset some of those long positions. And so that’s what kind of sparked my mind, what Jake was talking about, having multiple timeframes and what he learned from you last year. And I’m willing to bet, having that conversation last year with you and getting those long-terms kind of settled in, it really kind of allowed him to do what he’s done over the last week where he’s at his best trading week that he’s ever had.

Tim: Yeah, I hope so. I mean, and by the way, young man, I do want to give you a moment of caution. Sometimes you can have these big, big weeks. Uh, let the hubris, the Eagle get involved. Uh, keep a cool hand. You know what I mean? You know, uh, try to, to, to make sure you stay rule-based. I expect you to, you’re a pretty disciplined trader, Jake.

Matt: Let’s see. The simple reality is if you don’t stay humble as a trader, the market is going to teach you some very valuable lessons that will humble you very quickly.

Tim: Max loss will become, and that’s exactly right. Uh, Jake, do you pretty much follow your rules? I mean, are you, uh, are you the kind of trader that stays disciplined? Stays rule-based, doesn’t really break him too often.

Jake: I, I do my best, but I also have a trading partner for a reason. You know, Emily’s there to call me out on my BS when I get in my head and I’m the first person to tell her. I mean, even today I was getting a little bit too over leveraged. I would say I started adding a little bit more contracts than I, then I tell myself I’m allowed to. Uh, and it worked out positively, but I, I had to report myself. I’m like, Hey, Em just so, you know, you ever see that? Call me out on my BS. Uh, because it’s easy to get a little, like you said, hubris in this moment where capital’s flying and it’s flying in the positive direction. Uh, so most of the time I’m pretty good, but I have people in my life to keep me on track even when my brain tries to pull me off.

Tim: And one more followup on that. In your day trading the way you’re approaching it. Do you prefer the morning pre-market open? You? Do you prefer the market open middle of the night? You said you were watching it in the middle of the night last night. Uh, what’s your favorite time of day?

Jake: Aye. So over the last couple of years I’ve really been a mid market, morning reversal type person, right. As soon as the Euro markets are closing, you’re looking for that 11 1130 Eastern kind of slowing down of Europe. Picking up in the afternoon has been kind of my bread and butter of what I look to trade through the clothes. I’m just not a really a morning person, but with these markets it’s, I’m willing to wake up for this movement. Let’s say that. So I, I was up till two 3:00 AM treating crude oil, but then I set my alarm to make sure I saw the open. So in these markets I’ll, I’ll, I’ll wake up,

Tim: you know, there was many a ballroom, Matt, Jake was walking in the last second, try not to be late when we were teaching. So if he’s waking up for these markets as telling you a lot right there. Uh, cause I know the young man doesn’t enjoy his sleep. Is that fair Jake?

Jake: It’s fair. You know, I think everybody’s a little different. I’m a person that I think just needs a little bit more sleep than the average person. And that’s okay.

Tim: Yeah. Yeah. My wife would want to listen to this by the way. She’ll be like, yes, Jake is my dude. There’s no doubt about it. Uh, what are your goals moving forward? Kid? You want to just keep day trading and picking up? I mean, you’re hitting them right now, obviously a great week right now, but what are your big goals, uh, as, as a trader investor moving into, into the future?

Jake: I’m really excited about setting myself up for the next decade, you know, so we started 20, 20. Right? We’re starting a whole new decade and I, I’ve never had the, uh, the kind of the experience of making such a longterm plan and really last year of switching my mindset of not all short term, but thinking long term. You know, I’m 24, I want to have a plan to 35 the next 10 years. How to take advantage of these markets most effectively and right now where my brain’s going as interest rates go lower, you know, how can I borrow more capital? Right? You know, there’s opportunities right now that you can maybe borrow at a cost lower than that of inflation opportunities abundant. How can I leverage those type of opportunities that I might not ever get again or might not be as abundant as they are right now to set myself up for the future? That’s really where my head’s at.

Tim: I love it. I love it. Matt. Uh, this young young kid is pretty amazing. You know, there’s no question about it. What do you think is a top talents are? I’ve seen him interact with people. I’ve seen him be the empathetic, uh, he’s an incredible trader, credible investor. But you met him, uh, as a younger man five years ago before he had started all of this journey. I mean, what can you say last about Jake here?

Matt: Jake is going to have an absolutely wonderful life and as a great investor and not just in the stock market, but in other asset classes. And I just excited as, as, as you know what, just to just to be a part of that journey, to watch his development over the course of the last five years has been truly extraordinary to be honest with you. Um, there’s a reason a lot of us, uh, are like, okay, Jake, we’re going to be, we’re going to, uh, we’re going to have an old school wedding here. You’re, you’re going to marry one of my daughters. Um, but, uh, you know, in all reality it’s, it’s, it’s been an absolute honor just to be a part of his journey and to, you don’t meet this young man in five years ago and to watch him grow as a trader, to watch him grow as an investor. Uh, and, and for me anyways, what I get most excited about is to watch him grow as an educator, to be able to pass on this degree of knowledge too, you know, uh, to, to his generation and the generations that will come and come after him. And, you know, I said this, the other dad said to our team, you know, it’s, it’s our responsibility to train those next amazing educators that will help other people out. And, you know, obviously I was thinking about Jake Jake when I said it because is a wonderful trader. He’s a wonderful investor. He’s a wonderful human being, but he is, he is becoming quickly an amazing educator as well. And you know, I look at Jake and I look at his generation that, you know, honestly, Jake, your generation has never seen what is transpiring today and there’s going to be a lot of lessons, Lawrence from what is happening, both good and bad. And as long as we can learn from those good and bad, you know, that generation is going to be set up to, uh, the, uh, either future generation of investors. So I’m excited for that as well, but it’s all due to, to his desire, his why his hard work and uh, his infectious personality just, and whenever you meet Jake, you just want it. You just want to sit there and just talk to him and listen to him and just, you know, see what he’s working on. Cause his mind never really stops except when he sleeps 14 hours a day. But outside of that, his mind is constantly working. What can I do better? And even though like, even though you know, Tim, he’s had to his best trading week he’s ever had in the last week. The first thing that he was talking to me about when I was talking to him the other day, it was what, what, what can I learn to get better now? what are the lessons I can or what can I, what adjustments can I make? He wasn’t patting himself on the back, he wasn’t showing hubris. He wasn’t saying, look at me, look at me. I’m, I’m a, I’m a God of a trader. He was thinking, okay, what, what are those lessons I can learn in this environment [inaudible] to even get better in the future? And I think that’s what, that’s the Mark of a great capitalist, a great entrepreneur and a great investor is not only to look at those moments where you have wins, but to look at those moments and, and, and have an honest reflection of what did I do, what can, what can I improve? What can I do better? What lessons are to be learned in this environment? Because sometimes, you know, as a trader, so some of it was just Rob luck. Some of it’s good timing, some of it’s bad timing. Uh, but to be able to learn in that environment is very important. And that was very impressive with him as well.

Tim: Yeah. Jake, you’re a rock star kid, you know, is it been easy to get your family excited about what you’re doing and have they started to come along over the last couple of years? I know originally they weren’t all the way there. And also maybe people of your generation, your buddies or guys you grew up with, are they all just like, Hey Jake, I want to know what you want to do and they come to your office and sit down and try to learn or ask you for hot tips? Yeah,

Jake: actually there’s a lot less asking than I’d, I’d imagine surprisingly, uh, I drip on people and I’ll mention certain things like, Hey, I was able to do this this week or a slender, a little screenshot of what I did to some of my friends. Uh, but there aren’t as many conversations as I think there could be or maybe even should be. And I think that’s where a lot of people maybe get ego involved when it comes to money and don’t want to have the conversations. You know, one, one thing that I always try to do is realize that, you know, as much as I know, I know so little and everybody I meet can teach me something. So whether it’s somebody I met in one of my ballrooms, you know, teaching them and they’ve been investing for 30 years or talking with you and Matt and Mark or, or anybody that I meet, I’m, I’m, I’m always saying, you know, what can I gain from their experience or through their information and I wish more people were maybe like that. Cause I have a lot of information to show some of the things I’ve learned. And I’ll be the first to admit I don’t know everything. But the cool part about the last couple of years is that I’ve built a really good network of people that when I don’t have the answer, I usually have somebody on speed dial that does

Tim: love it. Love it, Jake. Thank you.

Matt: Those questions happen when the markets go down, buddy.

Tim: You get a few more of them, don’t you Matt? Yeah. You sure do. All right guys, that Jake’s going to be back with us during our game here in just a minute, but first a live read from coach.

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