AAR28 - Confident Investing w/ Sean Tepper

0:00The other night I'm online shopping for Printer Inc. Yes, I still use a printer, I know. And I'm getting ready to check out when I suddenly realize, yet again, I cannot remember my stupid password. But that's when I noticed they've recently added, at the top of the screen, that purple Shop Pay button. One click, and my name, done. Address, done. Card info, done. Checkout, done. Honestly, it's one of the best things in online shopping right now. That button is Shopify. And if you're running an online business or thinking of starting one, Shopify makes the transaction just as easy on your side. They give you inventory tracking, payment processing, analytics, marketing, and much, much more all in one place.

0:38No jumping between platforms, no chaos. And if you get stuck, they have 24 hour support that genuinely is the best. See, less carts go abandoned and more sales go with Shopify and their shop pay button. Sign up for your$1 per month trial at shopify.com slash beginners. Go to shopify.com slash beginners. That's shopify.com slash beginners. This show is sponsored by Liquid IV. Summer is here and let me tell you I could not be more excited from running down to the lake for an early morning fishing trip before work or running my favorite trails or even yard work you name it I just love being outdoors when he heats up but with that heat comes dehydration and sometimes I feel like water just doesn't cut it.

1:23That's exactly why I started throwing Liquid IV's hydration multiplier sugar-free in my bag every day. One stick, 16 ounces of water, and you're hydrating faster than water alone. And the best part is it holds up to four hours, powered by their LIV HydroScience formula with electrolytes and essential vitamins. Science-backed, clinically researched, and honestly, you can just feel it working. Currently, white peach and rainbow sherbet are my favorites. You just tear them open, you pour them in simple as that you're done get moving with superior hydration from liquid iv tear pour live more go to liquidiv.com and get 20 off your first purchase with code investing and checkout that's 20 off your first purchase with code investing at liquidiv.com of the 3 000 billionaires in the world give or take how many of them do you think are investors and how many you think are traders?

2:16Just take a guess. Oh, man, I'm going to guess that maybe 100 of them are traders. You're close, actually. Some people give a percentage, but there are actually zero billionaire traders. And the billionaire investors in the world are a combination of stock investors, real estate investors, and then entrepreneurs, people investing in themselves. So, yeah, we are focused on investing because value investing, as you know.

2:54good morning everyone and welcome back to at any rate my name is evan ray and we are here as always to help you make sustainable financial changes without breaking a sweat and today please join me in welcoming sean tepper who is the ceo and founder of ticker a platform that helps people simplifies stock analysis, has fantastic education for beginners, and has a really unique business model that I think helps people in very unique ways, which is the best way to go about things. How are you doing today, Sean? Evan, good to be here. Thanks for the invite. Beautiful. Absolutely. As always, anytime.

3:26I want to start off with a question that we ask all of our guests that I think gets to the root of a lot of financial mindsets behind things. And I definitely think you'll have an interesting answer to this, which is, when was your financial awakening? When do you feel like you maybe not necessarily woke up one day, but all of a sudden you realize I need to start caring about finances, you know, investing, personal finance, budgeting, this stuff really matters. When do you think you made that pivot? Yeah. So I've always had an entrepreneurial mindset, created my first business shortly after college.

3:56It was like 2006 through 2010. And that was a company, it was an agency building software and websites for small and mid-sized businesses and it was really around 2008 the market crash when I'm like oh boy I created a very not scalable business if somebody has an agency and they like building software for you know small and mid-sized businesses fine but like I was like oh gosh I only can serve a handful of clients at once and you can't scale the business and therefore can't make a significant amount of revenue. Fortunately, I went through a merger in 2010, and there was no check in that situation because, again, it's not a scalable business, but it was all debts and liabilities wiped clean.

4:39But that was it. 2010, that was the aha moment where I'm like, I have to stop working for money and find a way to get money to work for me. So that's when I started looking at the stock market, and that's how I got into investing. Okay, that's fantastic. That's fantastic. So obviously that whole process led you eventually to found Ticker. Could you just explain to people what Ticker is, what makes it special, and how it helps people in general? Yeah, Ticker is a platform that helps people buy and sell stocks with confidence. We're an analytics and educational tool. So we're not a replacement for your broker.

5:13We're actually a complement for your broker. So I use Schwab, and we're connected today to like 25 brokers. Long story short, you can look up stocks, no matter what your stock is. Our system, what really makes it unique is it's inspired by the traffic light. My background is about 20 years in tech, a lot of experience at Kohler in GE, which is a very process engineering culture. And the rule is in process engineering, if nobody knows, and I don't want to bore anybody to death, but the rule is you want to take all the complexity. complexity. Let's say you got 100 data points. You can't present that to others and try to make a decision.

5:53What you have to do is roll it up to a binary decision, which is a yes or no, or traffic light. So I'm like, I'm going to do the same thing with a platform for ticker. And yeah, our stocks are either on sale, watch overpriced, that's green, gray, or red. It makes it super easy to make a decision and only 15 % of stocks make it to on sale. We've got a few other layers of confidence in there, but that's kind of like the starting point. It's like the easy button. So there's one way we're different. And then the other way is our calculations are open source. So anybody that's kind of a math nerd like myself, you can see the math behind ticker.

6:32And we tell people you can go create your own version of ticker. We're not going to stop you. And to this day, nobody has tried that, but they'd rather just, oh, instead of recreate the wheel, let's just use the tool. So those are a few ways we're different than anybody else out there. And the big thing is that brokers really like us is when customers use Ticker, they have a lot more confidence to make better decisions in the market, which means they're investing more capital, they're building their wealth faster. And we let the numbers speak for themselves, but over our competitors, we do have some of the best transaction rate, as well as account sizes, the increases on both those numbers so anyway no that's that's absolutely fascinating and i definitely love the idea of the traffic light system because as anybody knows if they've ever even tried to dip their toes into investing in stocks the second you open open a brokerage account and tap onto a stock even if all you're trying to do is just buy an overall index fund or something like that the second you tap into it you are seeing dozens of different statistics which is obviously fantastic if that's what you're looking to get into but if that's not what you're looking for and all you're doing is, hey, I heard I should be investing.

7:41Let me try to start doing this. You immediately feel overwhelmed and you think, well, are these good numbers good or bad? What does this all mean? And that just gives you decision fatigue, like analysis paralysis, and you're not going to do anything about it. And the choice between doing something and doing nothing, doing something in this case is infinitely better. Yeah. You nailed it. That was my frustration. So I give you this little segment of my backstory. So between 2010 and 2015, I was that beginner investor joining other platforms with like, you know, like you just said, there's a hundred indicators and I have no idea what to do.

8:16And I found myself like going over to YouTube and going over to Twitter and then reading this blog post and going into this platform. And it was analysis paralysis. I did that for like four or five years, maybe keeping up with S &P 500. But then I stopped and I'm like, this is not sustainable. I'm going to get into a stock here, I'm going to lose my shirt. This is stupid. So I told myself, I got to figure out what Warren Buffett and Charlie Munger are doing because those guys were able to consistently beat the market. In fact, Warren Buffett has stated he could make 50 % per year if he was managing$10 million or less.

8:51And I was like, whoa, that's quite a statement. 50 % versus the S &P, which is about six to eight, maybe 10 % on average. so yeah I was able to reverse engineer what they're doing thanks to help from a guy by the name of Phil Town he wrote a few books do you know Phil Town I haven't I don't recognize that name I don't believe he's an ex-hedge fund guy and he's got his brand now which is called rule one but he's wrote a few books one is called rule one and the other is called payback time he he wrote a third book called invested with his daughter Danielle I'm sure it's great I haven't read it But he provided some of the calculus in those books.

9:29So when I started creating this Excel sheet, was the first version of Ticker, I took some of the calculus, moved it over, added my own flavor to it, and then the traffic light system. But it would take me 10 minutes to analyze one stock. In a half hour, I could analyze three stocks by copying and pasting from the income statement, cash flow statement, and balance sheet over to this Excel sheet. and then it would output whatever the rating is. And I did that for like four or five years making returns between 15 and 50%. But to be honest with you, the win for me was like, I gotta create a software because it would like a half hour every morning, like three stocks.

10:11I'm like, I could literally have this done automatically for thousands of stocks. So anyway, that's a lot of information, but it gives good context on why Ticker came to be. It saves time, compliments your broker, helps you as a retail investor make more confident decisions. Yeah, that's absolutely fascinating. I especially definitely love the background because as somebody who is definitely a math nerd myself, loves Excel, loves Google Sheets, loves all that sort of stuff, think they're fantastic tools. But for most people, even basic tools, plugging in a few values, getting an output, whatever it might be, sometimes that can be overwhelming in and of itself.

10:45Some people just don't work in spreadsheets. They're not used to doing it. And so even a very basic one is overwhelming, let alone copying values from different places. but saving all that time is definitely worth it. The traffic signals, and you mentioned retail investors, individual investors, of course. Is the traffic light system meant for all individual investors? Is it meant for maybe people who are only looking for long-term investments, people who are only trying to make short-term trades, somewhere in between, or all of them at once? Yeah, so we are focused on value investing. However, we really have a few use cases here in how people use Ticker.

11:20The great majority of people that use Ticker are investors. And we teach people, there's an article like for context, when you join Ticker, you get a new investing tip over like 30 days. Now, you don't have to wait all 30 days. You can read them in one go on our blog and those emails direct you to the blog. But one of the first posts or one of the first emails is what is the difference between investing and trading? Well, investing, so you know, you can make very consistent returns with those traders. The statistics are there. It's like 99 % of traders actually lose money. So we do tell the traders out there, you know, if you're going to use our platform, we're going to help you kind of create a short list.

11:59You take 100 ideas and narrow it down to like 10 solid stocks is kind of the use case with traders. And I would say maybe 5 % of Ticker's customers are traders. And we love serving them because we kind of like we give them a tool that provides safer opportunities and even motivate some of them to get into investing. because at the end of the day, investing makes significantly more money, especially consistently. I'm going to ask you a question here. This is kind of a fun one. Of the 3 ,000 billionaires in the world, give or take, how many of them do you think are investors and how many do you think are traders?

12:38Let's take a guess. Oh, man, I'm going to guess that maybe 100 of them are traders. You're close, actually. Some people give a percentage, but there are actually zero billionaire traders. And the billionaire investors in the world are a combination of stock investors, real estate investors, and then entrepreneurs, people investing in themselves. So, yeah, we are focused on investing because value investing, as you know, you're going to be buying and holding a stock for some cases months, some cases years. but it's not just the buying it's the buying and then buying more because we've got case study after case study people are making really low wages but building multi-million dollar portfolios because they're investing every single month they're not skipping a month and we we get a game at ticker we we play with people it's their era we put them on a path and we're gonna have a feature and ticker that's called the hundred dollar a week club i'm gonna have you take a guess here.

13:39If you start with$5 ,000 and you invest$100 a week, how many years do you think it'll take you to become a millionaire if you're investing in the S &P 500? We'll start there. That's the benchmark. How many years do you think it'll take? I'm excited to share our friends over at the Plink app released a major upgrade featuring a sleek new look, real-time insights, smoother trades, and tools that help you feel more confident with every move. Here's the bonus I think you'll love. They also released the Dividend Match, where they'll match 25 % of all the dividends you earn up to$250 a year. You can track the match along with estimated dividend payouts all within the income hub on the app.

14:14More great features are on the horizon to go along with some of their other user favorites like expert ratings, real-time news insights, and simulated trading. Whether you're just starting out in your investment journey or looking to enhance your knowledge, Plink meets you where you are and helps you grow into the investor you want to be. If you've been curious about trying Plink, now could be the time to make the move. Head to the link in the show description to download Plink today. Max dividend bonus is$250 per year. Payouts made monthly. No opt-in required. Other terms apply. Simulated trading tools for informational purposes only.

14:44Investing involves risk, including risk of loss. Opinions expressed on this podcast are not necessarily those of Digital Brokerage Services, LLC. Member FINRA, SIPC. I've been thinking a lot about heart health lately. Not because something felt wrong, but because I got my results back and saw markers I'd never even heard of that were out of range. What caught me off guard is how much can be happening quietly with markers most people have never even had tested. Here's the thing about feeling healthy. Feeling fine and being fine are not the same thing. Most of us track the basics, maybe cholesterol, maybe blood pressure, and assume that that covers it.

15:14But there are markers that paint a much more specific picture of what's going on inside your body. For example, your omega-3 index, because your body can't make those fatty acids, and most people are deficient without even knowing it. And amylase, which reflects how well your pancreas is handling the job it does every single time you eat. These aren't obscure numbers. They're just ones that most standard physicals skip entirely, and they're ones I'm glad I know about thanks to Function. That's why I use Function. 160 plus lab tests a year, including the cardiovascular markers that actually tell a more complete story.

15:42Not a guess, not a maybe, a real look at where things stand. That's why taking your heart health seriously actually looks like. I use this, and you should too. Check your health the way I do. Function provides 160 plus lab tests for$1 a day in member pricing on MRI and CT scans. Join at functionhealth.com slash beginners or use gift code beginners25 for a$25 credit towards your membership. What's the best way to get started in the market? Download my ebook for free at stockmarketpdf.com. Starting at$5 ,000, investing$100 a week? Yep. Man, I'm going to guess six and a half years. To become a millionaire?

16:21That's going to be my starting guess. Okay, final answer? Final answer. the answer there in the SMP 500, which again is getting like eight to 10%, that'll take you about 35 years. Now in ticker, we've got an analytics feature that shows what our customers are averaging, which is somewhere around not eight to 10. It's closer to a 20. In fact, it's over 20%. Now with that number in mind, if you're just one of the average customers in ticker, how long? It's not 35 years. It's closer to, I have to take a guess here. i'm gonna i'm gonna say and based on the other one like 15 17 years 17 years there we go yeah so it shows you yeah compound interest i mean a hundred dollars a week most people can find a way if you got to cut your netflix subscription out of the equation for a while your spotify or your hbo or stop those you know five dollar lattes at starbucks you can find a way to treat your investment account is a mandatory, I'd hate to say expense, but it's like our rent or mortgage is a mandatory payment.

17:31Same thing with our energy bill or cell phone bill. You can't skip it. Well, you got to treat your investments like that. And if you do just a hundred dollars a week, it doesn't take long become a millionaire. It's crazy. Yeah. That, that is insane. My bad mental math aside, mental guessing and everything, um, cutting, cutting that timeline, cutting that timeline into into less than half is is absolutely bonkers and and i think it's it's also easy to skip the context of the amounts of money that we're talking about here these are amounts of money like you said the the hundred hundred dollars a week is something that the vast majority of people could afford again like i am definitely i would not be apologetic at all about seeing something like investing as a bill seeing it as something that you do you have to pay it's something that you decided up front is important to you it's important to you to have a car it's important to you to have this apartment.

18:20It's important to you, you know, for subscriptions or food, whatever these things you prioritize above other things. Cause you see them as important. And I see no issue at all in prioritizing investing as something that's very high up on, on your list of importances, maybe below rent, but above a lot of other things. And, and it will solidify your future in a reasonable amount of time. Yeah. Yeah. Amen. You're my spokes guy for that. I tell people like, I mean rent mortgage right up top food right but like really close investing and then again down the list I'm looking at Netflix the low-hanging fruit things like gosh I love my Netflix subscription but do I need it no I do not no and 15 years from now you're gonna look back and be much more glad that you chose one thing over the other that's that's an absolute guarantee not that you missed a couple episodes of a show yeah exactly yeah or maybe turn it down from 4k to 1080p or something like that right like come on there are options out there there are options out there so let's say that somebody wants to get started investing and they're scared of all the risks about things they're scared that even if they go about they go on ticker and all they do is buy stocks that are green on traffic light and and show is good all around or something like that how do people that are just focused on avoiding risk as much as possible, how do they use a platform like Ticker to set themselves up for the most prosperous, prosperous long-term future possible?

19:49Well, fortunately, that traffic light system does reduce a lot of the risk automatically. Again, only 15 % of stocks make it to on sale. We also have another tool on top of it you can layer on called the 4M Confidence Booster. This is really inspired by Phil Town, Warren Buffett and the late Charlie Munger but the four Ms are first the math part then the second M is the meaning that's the business model how does it make money how many revenue streams does the business have the more revenue streams it has the better the third M is the moat how does it compare to other businesses in the same sector and industry and then the last M is the management well doing homework on all four if you're an analyst on Wall Street that could take you hours if not days of research.

20:31We reduce it down to seconds thanks to OpenAI. That feature took probably six months of prompt engineering to get right with a lot of rigor built in. But that's like, if you can get an on-sale stock and then you get a 4M score out of 100, let's say you get 80 or higher, that is like, okay, now you've moved from the top 15 % stocks to the top 1%, which is, I mean, now we've got a strong batch of stocks. And if you want another layer of confidence on that, we have a feature called the seven. It's like the seven critical steps, which factors in that whole traffic light rating, the 4M plus it looks at where the last three earnings reports, did they beat their earnings?

21:15So you got three quarters in a row. And are they increasing their EPS three quarters in a row? Long story short, their EPS earnings per share. If you want a really solid stock and you just want to not use ticker and you want to eyeball it, go to Yahoo Finance. And you can look at literally the EPS because that's the number one most important line on the financial statements. That's what institutions care about most. if that EPS is increasing quarter over quarter for three quarters, that's essentially the profits are increasing. That's really hard to do, but it's doing that. It's like, all right, we're already off to a good start here, but this seven feature factors that in, and then it factors a few of the little things.

21:55But give you context there to get a seven out of seven out of the 50 ,000 stocks in the platform, 50 ,000 plus, only about 20 of them make it to the seven. And their returns historically are just ridiculous. Yeah. I mean, they're blowing the S &P 500 away. So the risk is there. Now, to go a step further, you ask a really good question. And the two questions people ask most are, hey, when do I buy and when do I sell? So the buying moment we teach people is on sale and that 4M score of 80. And then people are like, all right, how do I reduce the risk? I don't want to watch the stock go to zero. And then typically they don't.

22:33But you don't want to see it drop below your cost basis or average buy price. But the key point of selling, unfortunately, Ticker notifies you automatically when this happens. But if that on-sale stock switches to watch over price, that's that gray or red, and that 4M score drops to 59 or lower on that 4M, you've got yourself a selling opportunity. So I, for example, I've held stocks for years, but there have been circumstances when I'll get an automatic notification. This stock just flipped and I'm like, OK, financials are slipping, which means institutions are probably going to sell off soon.

23:13I'm going to sell now before the rest of the world does. So I take my profit and most people are going to be left hanging. So so that's those those ratings are all really automated for you. All you have to do is add your stocks to a watch list and they're in the queue. It's all automated thereafter. I call it the set it and forget it feature. A lot of people love that about Ticker. Yeah, I absolutely love a feature like that. I'm definitely somebody that, based on, like I said, seeing investments as a bill, something that you just have to put money into whether you really want to at the time or not, having some sort of automation set up, some sort of automatic watch list like that that's continuing to track the stocks that you're invested in, knows what you're invested in, is looking in a lot of factors all at once.

23:57That's the absolute dream to protect you. And you bring up the S &P 500 a lot, of course, as a comparison. And I think I already know the answer to this, but I'm going to ask it anyways. What is your view of individual stocks versus something like index funds? Index funds are definitely something that a lot of us tend to talk a lot about because they're very easy to get into, accessible, more predictable and stable than some other stocks out there. But how do you feel about the pros and cons between them? yeah so here's another fun question for you warren buffett built his or made his first million investing in how many stocks just take a guess or how many you think he invested in at the time he hit a million yeah man i'm like i'm i i would think like 30 or something like that 10 10 yeah and now berkshire hathaway owns about 40 stocks so it shows you in give context here we'll we'll go a layer deeper.

24:52So most people out there, when they're investing in index ETFs, mutual funds, some of those funds alone can hold 50, 100, 500 stocks. Most people don't even know, but they're way over diversified. So in ticker, we teach people, this is one of the first tips that goes out, you know, you get the investing versus trading, but then there's the whole wealth building versus wealth protection. Wealth building is when, and I'll break this down a bit, is when you are five years out or more to retirement. In that case, you should be in about 10 to 15 stocks. And that is it. Be focused. Find those on-sale stocks and ticker because that's where you're going to build your wealth.

25:32One of the case studies we share is a janitor. Again, this one blows me away. And he wasn't using ticker. He has since passed a while ago. But this guy was a janitor making close to minimum wage and he built up an$8 million portfolio. You can look him up. Ronald Reed. There's an article on CNBC. But the secret? Owning about 10 to 15 stocks. He was owning through the 70s and 80s, maybe part of the 90s. It was like GE and Dow Chemical. Walgreens, I think, was on the list. I mean, Johnson & Johnson. A few of these blue chip stocks with multiple streams of revenue that consistently beat the S &P 500 in those days.

26:12And he just did that month over month. Well, we teach people, again, wealth building 10 to 15 stocks. Now, you want to switch to wealth protection mode when you're five years out or less and then start considering switching to index funds, ETFs, and maybe mutual funds. And for your audience, you may know this, but a mutual fund is essentially the same product. It's just more expensive. Instead of the expense ratio of like 0.2 % on an index fund or ETF, that's per year, it's more like 2%. So quite a bit more expensive for the same product. So that's why most of our customers that are nearing retirement are like, Sean, I'm going into ETFs or index funds, essentially the same product.

26:52The difference there, I'll keep this short and sweet, is an index fund you can buy, let's say, at 1 p.m. on a Tuesday. You're not going to get the price at 1 p.m. You're going to wait to the end of the day, whereas an ETF, you can buy it middle of the day. You're going to get the exact price. Should you even care? No. It's just a fund, right? I mean, you pick one and you commit. But as we tell people, if you're in wealth protection mode, maybe pick like two or three index funds or ETFs and just let them run in retirement. Another sound strategy for retirement, a lot of our wealth managers that use Ticker put a lot of customers into dividend paying stocks.

27:31So let's say you have like 10, 20, 30. And Warren Buffett and Charlie Munger said you kind of don't want to own more than 30 stocks. It's kind of an upper limit, even though Berkshire is 40. but still let's say you get 30 dividend paying stocks you don't have to sell shares in retirement to enjoy your hobbies to go traveling or play golf or whatever right you want to just hold those and just get paid a dividend so that's a really sound strategy for retirement but again i hope hope that gives clarity on like if you're younger and you're working you want to be focused on stocks again born buffett made his first million investing in 10 about 10 individual businesses no that's obviously that's a very good goal to aim for is to end up anywhere near the success he's had so that's that's pretty cool because you know when i at least i feel the connotation when you think of an investor or even a trader both of them you picture them just just analyzing hundreds and hundreds of stocks and purchasing hundreds and hundreds of stocks just making decisions all the time about different things to invest turning over rocks and finding diamonds every other day because that's what you need to see that kind of success but when you really dig into things that's just not the truth of it at all no there's no secret sauce and it's not a lot of hard work it one of my favorite quotes from warren buffett is there is some innate characteristic with human beings that likes to make easy things complicated and the thing there is people are trying to over engineer things and i see this too much in finance which is part of the reason why i'm like am i the only one complaining about the complexity in the world of finance, it's like, it's not that hard.