Market Outlook: The podcast discusses the current market environment where stocks are taking a breather after a significant run, with a focus on the historical volatility and poor returns typically seen in September and October.
Economic Insights: There is a discussion on the potential for stagflation, with inflation concerns and a softening employment situation, although the economy is generally performing well.
Interest Rates: The impact of recent Federal Reserve interest rate reductions is explored, noting the paradoxical rise in mortgage and long bond rates, and the overall upward movement of the yield curve.
Company Practices: The podcast highlights concerns about circular and vendor financing practices among major tech companies like Oracle, OpenAI, Microsoft, and Tesla, which may inflate revenue figures without real economic value.
Investment Risks: The potential risks of misleading investors through inflated revenues and growth figures due to financial engineering are emphasized, drawing parallels to past financial crises.
Trading Education: Andrew Wilkinson from Interactive Brokers discusses the importance of trading education, particularly in options trading, and the resources available through the IBKR campus to help investors become more knowledgeable and successful.
Advanced Tools: Interactive Brokers' use of advanced data analytics and AI in training and portfolio analysis is highlighted, offering clients tools for better financial decision-making and risk management.
Advisory Perspective: The podcast underscores the value of financial advisors in providing perspective and guidance, especially in managing complex investment strategies and life events.
Transcript
[Music] The Disciplined Investor is all about you, your money, and the markets. Sit back and get ready for this edition of the Disciplined Investor podcast. This episode of The Disciplined Investor is sponsored by Horowits & Company. If you're looking for a portfolio manager, look no further. Horowits & Company. From seed through harvest, cultivating financial success. [Music] [Applause] Stocks taking a breather after a huge run. Economists talking out of both sides of their mouths again. Circular financing and vendor financing is all the rage. And our guest today is Andrew Wilkinson, director of trading education at Interactive Brokers. All this and much more on episode number 940 of the Disciplined Investor podcast. [Music] [Music] Hey, it's Andrew Horowitz and welcome to the discipline investor podcast. It is the end of just about the end of September 2025 and we had a pretty good run in stocks taking a little bit of a breather last week on a few days. Nothing major, but there was definitely some profit taking being had. And this is one of those times of the year when we look at that seasonality where there's often times more selling than buying. And I know of course you have to have for a seller a buyer has to equal. I'm talking about the concept of that there is more selling activity downdrafts in the market. September and October are two of the I would say two of the months that have some of the greatest historical volatility and probably some of the worst overall returns. if you take the totality of all that. So, we're entering into October. Is everybody freaking out? No, not really. There's a lot of good headwinds, uh, excuse me, tailwinds, not headwinds yet. We'll get to the headwinds in a second. There's a lot of good tailwinds that are still there. The opportunity for the, uh, continuation of earnings that are doing very well. Estimates are somewhere in the 9 to 10% next quarterly earnings. We're seeing that generally speaking that the economy is doing okay. last year's last last week's numbers of 218,000 on the employment for the initial claims was pretty good and um that was actually a surprise. They thought was that the near-term situation with employment was getting a lot worse especially after we saw those big revisions. We saw some economists talking about how inflation is kicking up and the employment situation is starting to get a little bit softer. And that of course if you take that and it really expand that to its fullest potential that's what stagflation is all about. Are we at that yet? It takes a pretty special situation to create true stagflation. Are we there whether we have inflation and incredibly uh significant situation brewing in the jobs market? I don't I don't think so. But it's more there than it has been. That's I think what we could say. The the the tendency to have a potential stagflation is much more heightened right now than it has been in a very long long long long time. So with that, we have to start thinking about markets and how they react and why it is that when we saw the interest rate reduction by the Fed, mortgage rates went up, long bonds rates went up and overall the total yield curve moved a bit higher. And that's something we're going to talk about a lot over the next few weeks, I think, with some of our guests, particularly with Barry Iiken Green, who's coming on next week, professor over at UC Berkeley. He has some very interesting commentary and writings and papers about what's going on with the dollar and what's happening with interest rates. And I think we'll really dig down and talk about it with him in a in a significant manner today. Before we get to our guest, I want to talk about the this phenomena that's going on. What you know, what have we seen over the last few weeks? We saw things like Oracle and Open AI and Microsoft and even Tesla X to a degree and we've seen Nvidia and Intel. Now what what do all these companies have in common? All of them have been part of this vendor financing and circular financing that I've been seeing that is very concerning. And let's talk about what some of this is because both of these things can be structured in ways that essentially inflate the appearance of revenues activity and and even the I go so far as saying the financial health of a company. This can happen even when underlying fundamentals are weak. So let's start with some definitions and talk a little bit about what this is because I think it's something we need to be aware of because when we look at circular financing and in some cases what is this money moving in loops between related entities for example we have company A you can stick whatever name you want on that that lends money to company B. We have company A that buys into uses equity or cash to buy into equity of another company or maybe even just infuses money very simply to get back an ownership amount and that is then questioned. Then company C pays company A for services or equity. So you see how the circularity of this is going on right? We have A lends money to company B. B uses the funds to buy maybe company C. Uh, company C then buys or pays company A for service or equity and what what just happened, right? It was just like, "Hi, Bob. Here's $100. Thank you. Give it to Joe. Joe gets it. Thank you. Joe gives it back to me. I just made $100 somehow." I mean, that that's as simplistic of a case you can get in this whole idea of circular financing. And it can create this illusion of revenue, of investment, of growth. And it's it's essentially just recycling capital without generating any real economic value. It can actually, I think, mislead a lot of investors. It's like eating your own arm and trying to believe that long-term sustainability of your diet is intact and you're not doing any damage. That that is actually something that is nutritious. This is what we're seeing with some of the announcements this week. companies again like Intel and Tesla XAI where they're gonna you know Musk is talking about putting the companies together and maybe there's going to be an infusion from Tesla into XAI and maybe SpaceX will come together all these different things we're seeing now we have to add that to this next part because I think when we take both of these both the circular financing and vendor financing there's where our problem is. So, it's something we need to really look at. And now we have to take a moment and say, well, what's vendor financing? This is when a company basically sells its products to a company, but finances the product and purchases or whatever the service is by themselves. So, the sale is booked as revenue even though the cash hasn't been received potentially or it is part of another deal with equity or debt. So, okay, haven't we heard a lot about that this week, too? Haven't we heard about things like uh well historically we heard that Microsoft was saying okay we're giving money to this company but that company is going to actually buy cloud services for for us and they're going to guarantee over the next 5 years x amount of so what happened there we talked about this a hundred times in the past the idea of utilizing your balance sheet assets and somehow converting them into the income statement that is what has gone on for a while now how long is that sustainable only as long as the companies that you actually infuse the money to become profitable. If they don't, that's that and you're going to see a significant tail off of earnings. Now, the problem he has again is if if you're your customer that you utilize for this, right? If I lend money to Bob and Bob then says, you know, I'm going to use that money to buy services from you and the hope is that over time the money that I give you is enough to help you build that business so that you continue utilizing my services. But what happens if that other company defaults? What if Bob defaults? If Bob defaults, the whole thing is off. What this does is has the ability to inflate the topline revenues and that's what we've been seeing pretty substantially on top of the inflation numbers that we're seeing and that makes the business look stronger than it really is. And if it's done aggressively without proper risk controls, it could lead to balance sheet stress regulatory scrutiny. But here we are in an environment where it's been going on for years, particularly in the tech space. not something new, but the announcement by Open AI this week in the last couple of weeks with hundreds of billions of dollars in promises over the next few years with them having massive losses predicted over that time, it's like what are you what how what is that happening? Makes you kind of wonder. So why does it all matter? My concern is that a lot of investors are being misled by inflated revenues and growth figures. How do you know? How do you actually know? Well, we don't know until a few years from now when some of the companies that were given money to generate back to the uh providing company are no longer able to sustain the buying patterns that they have. Therefore, the revenues will drop. Now you also have the concern that some regulators haha right in the regulatory environment that we have now really okay but maybe some regulators may flag these practices if they if they I guess if they are really obscuring the true picture. I mean you may see that with auditors too. So what is actually happening is that some companies are propping up others through some pretty fancy financial engineering. Again, nothing new here except they're helping other companies help themselves back. And in my opinion, with the lack regulatory oversight that we have now, it's only going to get worse. Nobody gets in trouble for any of this. It's only the suckers that fall for all this nonsense. And the I think the Oracle deal that we saw, well, the Oracle announcements that we saw over the last several weeks has a lot of people very concerned. They missed earnings. Their outlook on the other hand was spectacular because they utilized that infusion of open AI uh in it was incredible incredible promises over the next five years or so in the hundreds of billions dollars and that's how much space they would utilize. But is that really going to happen? What if open your eyes says you know what we don't have that much need now they could also say let's go to the other side you could be like Andrew but wait why not be more positive who knows maybe they have a much greater need but the buildouts that they're doing on the hopes that build it and they will come and that the idea that the advanced AI not the AI that we have now no not the AI we have now the advanced Ed AI, the inference, the next level of of real thinking, a real decision making that will help industry and create profitability for that industry. Whereas they'll keep on pouring money into the various companies that are the players in this industry. And Nvidia push money into Intel 5 billion. We saw that in the hopes that they're going to be a partnership. They're going to build. going to do. Nvidia is funding all these other places as well with some of the money that's being funded. So, we have a a domino effect. If any of these situations don't don't come to fruition and the funding found uh the funding company is finding out that they're not doing as well with uh this strategy and they pull back a little. Can you imagine because of the I was I don't want to call it leverage but the magnitude of the money that's being used and how it is being stacked upon by company after company after company and thought about. Boy, could that be problematic? Now, am I blowing the alarm here? H I'm not exactly sure yet. It's very difficult to discern whether or not this is something that we really need to be concerned about to a point that we're like, "Okay, short the industry. We're out. This AI thing is going to explode." There is and are a lot of similarities between this and what happened with the internet and the companies that we know of that didn't last, the companies that weren't supposed to last that somehow figured it out. Allah Amazon, right? Amazon was one of those companies. Amazon was like, "How is a book seller gonna make it in this world or maybe even something like a Netflix, very different, but yet pivoted Amazon with their AWS, that's where the real money came in for a very long period of time to help them build the rest of their infrastructure. Netflix pivoted from a red label disc mailing and returning service uh into a a a full studio, a streaming studio, you know, a real life studio. So, the pivots and what's gone on and the changes for those companies that weren't supposed to be around, right, that were supposed to fail to meet to be the powerhouse they are today. But there are a lot of companies that we could probably go through as well that just aren't even around anymore. LOS, remember them? Peepod, Web Van, uh, Alta Vista. We can go through a lot of names that you may or may not remember. The original social media, MySpace, maybe still here, but not what it was. Didn't reach its potential, whatever that was. This is what happens during these kinds of major events in life where we see an industry bloom, grow, get established. There's winners and there's losers. But in this case, I I find it to almost be to a degree, just bear with me, to a degree similar to the multiple mortgages that we saw on housing back in 2008 where it just took a little problem, the tide to go out slightly for things to get messy. We're not going to see that as quickly here because a lot of funds to mask all the problems. And if interest rates come down, it's better and it's good and will continue to do so. Interest rates go up on the other hand, money becomes tight, a slowdown in any of these factors happen. That's that's what we have to be aware of right now. Again, now I'm really not there yet, but we're on alert. We're watching. We're being careful. Something to think about. Let's get to our guest. And our guest today is Andrew Wilkinson and he's the director of trading education at Interactive Brokers. He joined Interactive Brokers back in 2007, way back when, as a matter of fact, that's about the time this podcast started. His background um he had a background in interest rate and derivative trading in the city of London during the 90s. and he joined the brokers uh of Interactive Brokers to create market commentary about stocks, options, forex, and bonds for the website before helping create the IBKR campus, which covers traders insights, traders academy, webinars, podcasts, and a variety of other financial training for all investors at all levels. Now, um what's interesting is that we've talked about this before, but I wanted to really get to the hor's mouth this time about who really is is working this, creating it, and and what things are available. So, Andrew, welcome aboard. first time on the discipline investor. Thanks for coming. >> Lovely. Thank you very much for having me, Andrew. It's it's a pleasure to be here. >> So, let's talk a little bit about um so well I think you know we want to can I start with something? Can I start with some of the highlights of things that are really cool happening at Interactive Brokers? >> So, you've seen huge number of Well, I'm going to use the word darts. You know what that means, but for everybody else, you've seen a a big number in transaction uh growth of last year, huh? >> Yeah. I think our Darts are up uh in August about 29% over uh year one year. Um Dart's daily average revenue trades at about 3.488 million um trans transactions. You know the these are big numbers but but Andrew it speaks testimony to the type of client that Interactive Brokers attracts. You know people who trade professionally for a living and they are active. they they embrace volatility. They love the options market and of course those zero uh days to expiration options have become extremely popular. So we've done very very well out of that. I think um aum nowadays is over 700 billion 713.2 2 billion >> uh which again is up more than by a precisely a third over uh a year ago >> actually that's sorry it's 38% higher and then the number of customers you you mentioned earlier that I started here in um 2007 just before the IPO and we had I think 89,000 clients today fast forward 18 years we're up to 4 million client accounts that's that's 32% higher than a year ago So a just a lot of trading going on, a lot of in and out of volat volatile markets and different asset classes around the world. >> You know, I think that uh we started not too far after using interactive brokers for our clients something about 2010. So we were I guess one of the first not the first but we were you know in the growth phase in the beginnings of of the growth growth phase because you know back then even even back then you know we're talking a lifetime of technology right since now to back then >> back then you still had great technology. >> Yeah. >> Which which is what was the drawing facing features of that. So that's pretty cool. You know you recently joined the S&P 500 uh back in August which congratulations to that by the way. That's awesome. Um what what drew you personally to a career in the area of uh trading and and specifically financial education? >> Well, it it followed a career of trading which I really embraced back in London. I I think I started um trading in 1989 on the sterling desk at Fuji Bank back in London and I just couldn't get enough of markets particularly the futures markets and then as I progressed I came over to America to go to business school and I was just heavily involved in writing and writing specifically about financial markets and then out of the blue interactive brokers approached me 2006 I'd come up for an interview I was down in Florida at the time came up to Greenwich and I I I just I just really enjoyed explaining how markets work. I'm kind of a a mentor to any investor who wants to understand um all about trading. And I think we've we've done a very very good job. I built up a great team here um to help create videos and podcasts and and conduct webinars and so on. So it's all about, you know, providing something for nothing for people to help them understand because we want good traders. people to uh last so that that our um uh our customer base not only expands but becomes more uh wealthier. >> It's a partnership. That's the bottom line. It's a good good for everybody, right? And and the funny thing is >> I know a lot of um well, when I say a lot, you know, you know, stories, right? And they just want to get people in with $2,000 to trade. And most people that don't get training, uh what do they end up doing? They blow up. You know, they're 2,000, they're 5,000, they get sucked in. you know, they get some kind of two bit crazy theories on a few trades, they get hooked, and then they kind of um get in over their skis and then they blow up. And that's not good. That's not good for you. >> No, we we've you know, something I was taught um when I joined this company is that is that people eventually hear about Interactive Brokers because of the low prices. they become good at trading stocks and then they decide well we we're paying too much in commission and this this is going back when the when there were commissions and um that that's exactly what we want people who are going to become active traders uh to to to benefit from the the strength in technology the low prices and that global access to market so you can trade pretty much anywhere around the world with with the interactive brokers um platform >> so you're you're you're kind of at the you're in the boot camp and in the training but also post that where people have success and they come back to let's call it initial training education to mentorship right that whole range is where you cover now here's my question >> what are some of the most common gaps the things that investors you know have this area of knowledge that just they they they need filled right and and what do they come at you with maybe in the early stages stages. Let's do let's break this up into two parts. The early stages of when they come to you this gap they have in terms of their understanding uh of investing and then kind of later on um there's probably some gaps as well. So let's can you cover both of those and how you how you really address this those as a financial uh trainer educator. >> That's a really good question Andrew. The um the real hole in anyone's education is is is options. I I think um as I said earlier, people used to come to Interactive Brokers realizing that commissions were lower and that they were doing something more actively and in terms of trading stocks. Once they understand the stock market, how prices move not just up but also down, they start to learn about volatility. And when they learn about volatility, they realize that there's something very very clinical that can be used uh to lever positions and to take advantage of market movements and to also hedge and speculate. And that is the world of options. And and options are not easy unless you're actually trading them day in day out to to try and understand what will the price of an option be in the event that this stock price goes where I believe it's going to go. uh and if I'm long of a stock, you know, how am I going to uh protect myself in the event that that there is some news event that drives the market down or the stock that I'm holding down? So, we've we've gone to special efforts over the years, and I know the industry has done this, too. But, we've gone to great efforts to talk about options. That's kind of bread and butter for a lot of our um a lot of our traders here. Um and and what something that we've done more recently, you know, having made many many videos and we've had webinar guests uh from the industry and from the exchanges come in and talk about options education. We recently built um a new interactive options trading tool which is free at the IBKR campus and it allows people to interact with the screen and it's going to um it's going to take you through options fundamentals. It'll help you solve real problems. Uh the the interface allows you to you know drag words into sentences to help you understand the definition of a call. the definition of a put and other related things. Um, it's going to teach you the basics about calls and puts, but it also walks you through at your own pace to advanced strategies. So, we started off with an introduction to options, an introduction to Greeks, and then we moved into basic call buying, where are the break even so on uh and then moved on to vertical spreads. And there's even a challenge mode which I think is really really cool for somebody who's sitting for example the series 7 exams um where you just you know if you if you're not in that market every day trading options learning about them on paper is hard. So the ability to actually drag uh the the tools across the screen to try help you understand where a break even is, what the premium of an option is, what the why the strike price is important. This tool is is is really really cool. We've even created this challenge mode which allows you to say I need to strengthen my understanding of um you know specific spreads so that I can understand how break evens work because I've got a test coming up soon for series 7. So that that's kind of the biggest area of um uh the biggest challenge I'd say in in creating education >> in terms of uh I get that you know and options are challenging and and in the world of and this is what I know. Tell me what you think. In the world of investing, they say the smartest of all smart people uh trade bonds, right? That's what they say. The bond market, generally speaking, I should say that, right? But clearly, in my opinion, um you know, it's one thing to buy a stock based on fundamentals or a chart, uh sell it, sell short. It's another thing entirely to not only look at the options market because the options market takes all of that adds a ton of different other items uh you know black shaws uh calculations and as you mentioned volatility and the Greeks but it also then turns it upside down backwards where you can kind of sell you be on both sides or utilize a a combination of it to create some kind of we'll call it spread trade of sorts. That that's get that gets complicated. >> It does. But as I say, once you understand it, you really understand it. The the analogy I would make is learning a language. You're only going to really understand that language like French if you go and spend time in Paris or anywhere in France and speak it to people. You've got to be in the thick of it. Same with options. um you know looking at what options do in terms of allowing you to speculate on a market you must understand what the Greeks are there for how they all relate to the price of the underlying and how the you know how to pick a strike price how to pick the expiration date across time but yeah it's I I think I think I think an options trader will probably um out outplace uh um a bond trader in my opinion. Um but if if you can trade bond options too, that probably puts you king of the hill, doesn't it? >> And then options on futures. Let's get crazy now. >> I mean, talk about volatility. That that's that's fun. The the thing the thing about um uh of the options is also one of the things I think people like about it today more than anything is they have a very diff first of all, it could be short-term, it could be exciting, it could be exhilarating. It could be exhilarating. I mean, I've had options. what we do for either personally for clients that I mean zoom on the numbers are like how much is it up today you know that kind of thing u and we know all the stories about like GameStop for example and how that guy uh roaring kitty played the GameStop market now that now by the way Reddit is all a flurry now with the idea of options and warrants once again on squeeze plays it's it's starting to pop up again never really died off but it's really starting to come up again the um the thing about options It's what's interesting is um the the training that you can get on you know various places on ibeare campus and all that you you've actually decided that that's kind of an open door for anybody haven't you >> the options world yeah >> no no to get to get the training to get the the the IB campus training >> yeah and the education >> absolutely absolutely um we we as I said earlier we we we believe that a a good client is an educated client. That's probably the best way to put it. But yeah, you just make all of this available for free to the world and you just keep telling people about it and uh allow them to find it. You send emails to clients and to to non-clients and and and let them see if if this is the quality of the work that we do for free on the campus and when we tell you all about of you know low commissions and strength in technology then there's got to be something behind it, right? So that's that's just it's just simple business. >> Well, you made it also approachable. That's the difference. There's a lot of training modules out there. There's a lot of ways to find things. I have platforms that I use uh in my business and um not trading. So I'm not saying that this separate entirely. Forget the whole trading, forget the brokerage. I'm talking about different platforms for management of client accounts or >> and and they have a lot of training and all. It is not approachable. It's like I don't understand why is this not like the newest of first or why can't I search this or I don't understand but you've made it very the thing that I think you've done very successfully is made it very approachable very easy and and not um cumbersome to deal with that that's I think a very you know what it is reminds me of do you remember do you know why you know this but why did Apple win the iPod race the first the first iPod the first MP3 music player by the way it's what I have one. I actually have the MP3 player that was the first one out in my drawer. Okay. It was the Diamond Rio uh 64 megabyte. >> The problem was it did fine. And I'm sure if I charge that little bugger up right now, it'll light right up. Okay. Put a battery in, it will light right up. And God knows actually I should do that one day and see what songs are on there. But the problem was there was no way to get the information on and off easily or to download. Of course, we had Napster and all that kind of stuff. remember Lime Wire, all these crazy things where we do this weird sharing of stuff to get the music, but trying to get that back and forth on because there's only a certain amount was very difficult. So, the idea was great. Everybody loved the idea, but was impossible until Apple iTunes came around, right? And they were able to create a platform to manage all this. And of course, they they benefited, but and then to have it easily exchange and update your iPod at the time. That's kind of what you did. You made this whole education thing really easy for people, approachable, and accessible. So, great job on that. >> Thank you. And and I think I used to speak to a lot of um you know, we have a lot of contributors here at the um at the campus. They either uh submit articles for for daily posting or we get we take podcasts and videos. We we we work with people to provide webinars and then we have the traders academy which is teaches people how to use any of our platforms. And the more I explained this to a potential contributor the more the easier it seemed in my mind that this is exactly how we need to show people uh to showcase the platform to explain to them how to trade a different asset class what's behind it why they should consider looking at it. So it became um it became very kind of formulaic I would say um particularly with the traders academy videos because we we you know it's a video it has a script which doubles up as study notes and then we have a quiz for it. So if you can fit into that mindset then you're welcome to come to interactive brokers and be a contributor to do that. So it everything just um ultimately seemed to fit together and if I do a webinar with a contributor I I offer them the the opportunity to come in and do a podcast with me as well. So much content this these days and managing it is one of the challenges but I've got a fantastic team around me who who help with all of that. >> Let's uh let's talk about something two things. Um, first I want to talk about the the idea of of common mistakes because I think that's really important because I once so I always taken the view that if I can get rid of the negative part of the discussion in other words what could go wrong. If I can figure out what could go wrong then there on the other side is just what can go right. So if I can delineate exactly what my downside is on anything or the negatives of something and I can figure that out. Now if I can't well then it's insurmountable and I can't either invest or make that decision or go that direction. But >> what's one of the most common you've been doing this for years. So what's one of the most common mistakes you would see investors make new investors making and how can they avoid them? >> I think it always always comes back to risk management. what you just described there was was risk minimization. If you're doing any kind of a process um then if if you think about what could go wrong um you're minimizing the the outlay whatever it is you're doing if it's you know my dad used to be very good at planning holidays and you know getting even packing the the the trunk of the car uh perfectly. So if you do that then you're not going to you're not going to like have to leave a child at home because the back seat back seat has is accommodating a suitcase. So I I think the the biggest mistake people make is not planning the trade. They become too eager to to buy that company shares in a particular company without really thinking about where should I get in. So you should learn all about different um well first of all some having some approach to a fundamental analysis not just you know the world is full of opportunities. So just because you missed um the dip in Nvidia to like $98 whatever it was last time it fell and it's it's you know it's pretty much doubled since then. There's always going to be a chance to get back in at something. There's always you know what's that expression? Life's a bowl of cherries, right? You're always going to get a second uh a second chance. And you mentioned also those meme stocks. Um, you know, right now continuing to squeeze as we're at all-time highs. We're not going to be at all-time market highs forever. There's always going to be a correction. So, I think patience and having a plan for your trade, knowing where you want to get in, what objectively you want to do, what's your time frame? You are you trading this this week or for a for a month? You think it's the stock price is going to go up $10? Think about that. Think about what you might want to how you might want to augment the play using options. You know, if you're able to sell a secured put in order to get into the trade if the stock price comes down and if it doesn't come down, you don't have you don't get assigned. Um, then you're going to keep the premium you made on on on rating the put. When are you going to start selling call options against that call position? um how many option how many shares do you need in in order for you to be able to write a covered call against um against that position? Can you actually you know even do that? So knowing where you're going with the trade from the outset is always a good thing to do. >> Yeah, I mean I I agree with that. And then and having a plan I mean I think it's the point you just made there, right? So that you don't have like you know the whole family scream screaming where's Kevin? Where's Kevin? Um right we left Kevin again. um which which um I hope that really hasn't happened in your family. It sounds like somebody could have been left behind uh if it wasn't for dad. But nonetheless, the um the the the the plan the the game plan I think is always important. I think as an as an investor trading your own account, trading a stock, maybe not entirely trading account, but but but playing that side, oftentimes we look at, you know, what's the great opportunity here, but but but don't want to really focus in on the downside, right? Yeah, >> again if if you if you think about what could go wrong. I think it's also really important to understand the company that you're dealing with. You know, I recently got involved in an IPO name >> and I didn't really know that much about it, but I was excited about the sector and um you know, I'm I'm sitting on a loss at this point. Wish I'd done my research beforehand. You know, the interactive brokers platform allows allows investors to look at fundamentals on any stocks. We have a new tool um a new a new research tool called connections and we you know part of that is the investment themes. So the the connections tool helps you to identify relationships between companies and economic indicators and then other financial instruments. So it can enhance your decision- making. If I'd have looked more through the lens of the connections tool, I might have come up with a different company that actually had earnings ahead of it rather than, you know, like many IPO names have potent potentially have losses for for the first few years while while they're out there. So, I might have been able to uh find a better alternative in the same space. um you know if if you if you want to own retail shares in a in a Walmart or uh you know Kohl's or Ross or any of those names um you know are there other tools that you can use what e economic indicators should you be looking at something that's become quite popular these days is is um uh event contracts and we we we launched this maybe a year maybe 18 months ago um and it allows you to take one of those retail names and the the software will look at um what economic data is available to potentially allow you to hedge. So keep an eye on economic indicators such as retail sales or maybe employment. Um, and you and you could, you know, if if if the if you decide that the retail sales might be slowing down, but you don't want to get rid of the stock, you might be able to take a yes or a no position on one of those economic indicators to help potentially hedge uh some of the uh decision- making you've you've got in play there. >> Good stuff. The uh so so for example, let's just kind of stay on this for one more second. Um you make a bad decision. So let's say for example one of those IPOs was I don't know Figma or maybe it was Circle who knows um but uh let's say you have one of those right so now what so how do you now manage that position without maybe you just get out I don't know maybe write some options on I don't know uh maybe you buy in maybe I don't know uh what what do you do now that let's kind of flush this out you have you have a position that went against you like oh I'm not sure that you know I maybe could done better research and all that fine you do some more research now what's the next steps >> I think part and parcel of what you need to do at the outset is is set a financial stop and I I I've seen this so many times where people rather than they'll say I'll give it another day I'll give it another day I'll wait till this report's out no you should always just set a stop in advance it's it just becomes very very mechanical you need to know where you're going to get out how much you can afford to lose and stick to it because as As I said earlier, there's always an opportunity to get back in. Um, you could also in advance look at which um put options, if you're long of a stock, which put option, which expiration, which strike price um to consider buying to help protect. Um you could also again make sure that you're educated well enough in the option space because you could you could put on a less costly um uh vertical spread which might allow you to buy a put option and sell a put option at a different strike. So that that's a that's a vertical spread um that that is a less costly >> insurance like insurance stock. Oh to a point. >> Yeah. So, let me ask you about this uh this this um option strategy that I've uh that I've used for many years. >> Whatever option that I'm going to get into and let's say it's a call just uh for the discussion here. uh I will look at the the the the level that I want where I think the stock is going the time where I think it's going to get there and no matter what I do I always go at least a month out more because it's always somehow never seems to make it on the date that I put it at and I always got to go out a little bit further and that seems to I don't know why that seems to work there there's nothing magical there I'm just saying >> well stock markets tend to go up over time, you know, maybe you're just very good at timing the market there, Andrew, in terms of um getting in. I mean, I always try and use a limit price. So, I think, okay, the options trading at a dollar now, but I'd really only rather pay 60 cents for this. So, again, it's being patient and if I miss the boat, I miss the boat. There's always another contract coming along later. Um because options are vehicles that that will erode o over time if you if if you're not right. the the the the trick to getting it right with options is um you know if it's not going right then either take a loss or roll out to give you buy yourself some more time uh and that will rather than watching your option go from you know a dollar or 50 cents down to zero you might still have some some um uh exttrinsic value in there which will allow you to roll into a different contract. >> Yeah. Let me switch gears here and let's ask a question that um I'm seeing a little bit uh interest in the growth I think once again in investment clubs um and I know that you guys do something with that in terms of collaborative investing right >> not so much not that I'm aware of um >> I know that I I deal with it it is people have been coming to me and says hey we're getting a bunch of friends together and uh they want to open an account so that they can kind of see the kind of trading meeting we do and watch us and monitor us probably steal some of the ideas we have but that's fine and then there's investment I don't know I just I just thought I saw something about that coming up it's all right we can >> yeah this yes I I recently recorded a podcast in in the UK with um Jerry Perez who's the CEO over there I think there have been some uh rule changes in the United Kingdom surrounding investment clubs who can do what and who can't do something and I think a lot of the local brokers are potentially um not permitting that kind of um club anymore. They're getting rid of certain uh clients or making the rules harder. So, I know Jerry was very keen to discuss that because I think it's it's you know, we we have the type of account that allows >> uh investment clubs to um to come on board. I I wouldn't be surprised if it happens so much uh in in in the United States too. We have a friends and family type account. So this is kind of a precursor to becoming an advisor on the interactive brokers platform. If if you have over X clients, I think it's 25 or maybe so many AUum. Um you have to ultimately become an adviser. But what what you can do in the first place, you can look after friends and family's money because you're good at trading and you you can you know if you have a personal account with us and you could or you can just come to interactive brokers and open up um friends and family account and um within you know I think the the money's segregated so you have different accounts for everybody and there's certain drop downs in the platform um and you know hopefully you end up making money for your family, your friends and uh and for yourself, >> right? Exactly. Uh, and there is that and I've seen that over the years people use that and um, you know, they have for one reason or the other makes it very easy. >> Yeah. >> I got to ask the question. >> I think it also gives you time um as that as that investor on behalf of people. It gives you time to get your ducks in a row in order to create that uh the framework for a financial ad. >> And I know I know and I've known people that have done that. you know, they say, "Hey, look, uh, I think I can trade, you know, you have five friends, you pick up, you know, $500,000 each or 250,000 or whatever the number is, right?" And they and they run that until they get to the point that they're required to, uh, register with the state or, you know, federal depending on where they are. Uh, and, you know, formalize the actual advisory relationship. >> Yeah. >> So, that's something >> I'm I'm always I'm always astounded. you know, you go out for dinner with some friends and they're not in financial services, but they tend to know a ton about a specific, you know, they've got a hobby and they they don't know how to invest, but but but they know an awful lot about that sector. And it's it's it's people like that you have conversations with and you go, "Yeah, well, you know what, my friend's a good trader, and you you might want to consider investing with him and sharing some of your knowledge." >> Exactly. Let's talk about the I think a big thing a big thing we haven't even touched on. we haven't even gotten anywhere near and it's the idea of advanced data analytics and AI which I know that you are building things are but particularly how to util how you you are using that not not necessarily the broad brush interactive brokers I'm talking about training and how you're leveraging some of that to help with the training curve >> yeah so several people on my team do use AI. we you know it's sometimes it's easier to write the script for a new narrative on a particular sector or uh even in house we have um you know we have the ability to to uh use ibot as we call it to bring in information about all of our trading platforms and everything that we're hooked into in order to create uh a a well curated synthesis about uh about the tool uh that that will serve the customer. Well, you know, we we we can create infographics uh on top of scripts uh as as well as for our glossery. We can come up with good definitions of terms that don't plagiarize from from the internet. So, there's there's plenty of ways of of um of doing that. I think this connections um the the integrated research tool I mentioned earlier you know that's that's strongly driven with AI in order to help investors analyze connected instruments and strategies in in a single view. So it's it's moving at quite a pace here. The other thing that's interesting is well for advisors you have the AI I know that is the um the the the review of a portfolio uh which is cool but also um you have things that for individuals well I guess advisor could use it too but let's talk about individuals like portfolio analyst as an example now there's nothing quite like having an understanding unbiased unbiased okay understanding of exactly what's going on in your portfolio and I think there is some things inside of portfolio analyst that can give you a little bit of an awakening awakening and kind of a nudge into maybe some things that are going on in your portfolio, right? How they how they connect with each other, how they work together. Um and and but but tell me more about that because I think that's a really cool thing that gets underplayed. >> Okay. >> Yeah, we've we've we've come up with a with several tools this year to help people with taxes, with budgeting, and with retirement. um that that allow them to take a take a big overview of of what's happening in their portfolio. It allows them to um you know bring in a partner's income um in order to track investment incomes across all accounts throughout the year. So that you know the tax planner allows you to create a tax profile and um and then configure values and it will help you estimate year-end taxes so there's no surprises at the end of the year. You you're able to view realized and unrealized gains and losses for example and dividends and the interest that you collected on each account. So you you you can see very very clinically what your obligations to the uh IRS will will will be. Um, something that I'm not fantastic at, uh, at at home is budgeting. You know, um, you're now able to track and categorize spending to help budget more effectively. And, um, >> but you have plugins there. It's not like you just have to enter everything on your own. What do you have? Like, I think a Plaid plug-in integration to bring in your other accounts, right? >> That's right. That's right. You can you can you can connect to your bank accounts. You can connect to other brokerage accounts. Um, you can you can even put in a value for, you know, you you can put in your home address in in Zillow and it will tell you the the the the estimated worth of of the house and then you can also connect to your mortgage lender's account. Um, so that it will it will look at both the asset value and the liability incurred on it. So you get an overall sense of your liquid well of of your net worth. Um so so there's there's there's there there's plenty of things that the uh the portfolio analyst will do. We've also created uh a retirement outlook in in the portfolio analyst too and it looks at uh your current assets, expenses and then the projected asset growth uh and again consolidates all that information from interactive brokers, external brokers and uh bank accounts uh and and all of your other assets including real estates and and allow you to incorporate your retirement preferences in terms of when you might be thinking about retiring. It'll allow you to do some scenario analysis so that you can say, well, I'm going to what if what if I retired at 65 or change that to 68? Um, and and what if I have, you know, I'll allow for $1,000 from um working at uh you know, working at Walmart when I retire as a greeter or whatever. So, um any any future employment expectations is what I'm saying. And then your monthly expenses and more. So this is a really cool tool and we've done videos for all of these items in across the the campus in traders academy. So so many different um kind of ways of extending the personal finance aspect uh for for in our clients. >> You know it's interesting because all these things can be used by the client but then pushed up to the adviser. So I I have a um >> I have a a a thought on this. So while everybody could learn to trade and may do so well uh where you can learn to understand more about your retirement and the internal workings of your of your portfolio and all these different things put together. The fact is that sometimes it's a matter of perspective. I always tell people you know why is it that some people should have an adviser? And I say well it's it's like this. You know I can cut my hair. I can use a scissor. I can kind of just put it between my fingers grow to the hair. Snip snip snip and I'm cutting hair right? I'm functionally cutting hair. However, when it comes to the back of my head, I can't see it so well. Now, I can put some mirrors there and hopefully uh go upside down and backwards in my thinking and cut. But it's a matter of perspective. Why do I use a hair stylist? Why do I use a barber? Because a matter of perspective. And sometimes, while these tools give a lot of information, I still think that there's something to be said about bringing in your advisor to work with you on that output to put it all together. What to say you on that? >> I I couldn't agree more. Um there's there's there there's things that I don't know about financial markets. There's thing I I've just put my twin daughters into college up in New York and Massachusetts and um I I wasn't nearly well enough educated on um you know, college spending loans and planning and all the rest of it. So, I'm I'm just kind of winging that at this point. And um yeah, it's the sort of thing that an adviser will do for you. It'll make you realize that you have certain life events that you need to be prepared for or or or be putting money aside for particularly when it comes to retirement. You know, this this this is student student debt is probably going to add to my career. >> Yeah. >> And and and defer my retirement um you know, at this point. So, so yeah, like the the services of a of an adviser are probably, you know, very useful. Um, particularly when it comes to I'd say as you mature, you get older and you you you don't realize that you you you probably need to tone down the risk appetite that you have. You shouldn't be investing all of your money in IPO names or very risky tech stocks. um and that you should be looking for potentially more cash flow from dividends and that kind of things and and like yeah, we can all go away and do that research, but if you don't have time for it or you just not don't feel comfortable enough doing that, I'd say that's that's really where the adviser comes in. >> Yeah, good stuff. Andrew Wilkerson, IBKR, Interactive Brokers, director of trading education, uh and and and doing a great job at it. Thanks for joining me. First time on the show. I appreciate it. >> It's brilliant. And I'm really delighted to be here, Andrew. Thank you very much for the opportunity. >> We'll talk soon. Thanks. >> All right. Bye for now. >> That's going to wrap it up for this episode of the Disciplined Investor podcast entering into October. Some spooky times. We got well Halloween of course, but nonetheless, we have some great other uh guests coming on. Some great education. We'll continue talking about this vendor financing issue, this circular financing. And I think a lot of this you can get um to know when you start watching the news and seeing some of the things that are talked about and when they talk about multiple companies putting money into others. Start putting your antennas up a little bit to understand well what does that actually mean? And a lot of the education you get in this area is of course that was just talked about with our guest Andrew Andrew W. I'm Andrew Leech. Thanks for joining me this week at every week. I'll see you again real soon. This podcast is intended forformational purposes only and does not constitute personalized investment advice. Investing involves risk, including the possible loss of principle and past performance is not indicative of future results. The views and opinions expressed are those of the host and any guests and may not necessarily reflect those of Horowits Company, Inc., an investment adviser registered with the US Securities and Exchange Commission. Registration with the SEC does not imply a certain level of training or skill. Advisory services are only offered to a client or prospective clients where Horowits a company is properly registered or is excluded from registration requirements. Any mention of third party companies, products or services, is provided for informationational purposes only and does not constitute an endorsement. Hypothetical scenarios or forward-looking statements are for illustrated purposes and should not be viewed as guarantees. Content is intended for US residents only and may not be applicable in other jurisdictions. Listeners should consult a qualified financial advisor before making any investment decisions. Please visit our website for additional information disclosures as well as a copy of our form CS. Advertisements are not related to the host or affiliates and are not considered recommendations by the host of the show or any affiliates or [Music]
TDI Podcast: Traders’ Campus (#940)
Summary
Transcript
[Music] The Disciplined Investor is all about you, your money, and the markets. Sit back and get ready for this edition of the Disciplined Investor podcast. This episode of The Disciplined Investor is sponsored by Horowits & Company. If you're looking for a portfolio manager, look no further. Horowits & Company. From seed through harvest, cultivating financial success. [Music] [Applause] Stocks taking a breather after a huge run. Economists talking out of both sides of their mouths again. Circular financing and vendor financing is all the rage. And our guest today is Andrew Wilkinson, director of trading education at Interactive Brokers. All this and much more on episode number 940 of the Disciplined Investor podcast. [Music] [Music] Hey, it's Andrew Horowitz and welcome to the discipline investor podcast. It is the end of just about the end of September 2025 and we had a pretty good run in stocks taking a little bit of a breather last week on a few days. Nothing major, but there was definitely some profit taking being had. And this is one of those times of the year when we look at that seasonality where there's often times more selling than buying. And I know of course you have to have for a seller a buyer has to equal. I'm talking about the concept of that there is more selling activity downdrafts in the market. September and October are two of the I would say two of the months that have some of the greatest historical volatility and probably some of the worst overall returns. if you take the totality of all that. So, we're entering into October. Is everybody freaking out? No, not really. There's a lot of good headwinds, uh, excuse me, tailwinds, not headwinds yet. We'll get to the headwinds in a second. There's a lot of good tailwinds that are still there. The opportunity for the, uh, continuation of earnings that are doing very well. Estimates are somewhere in the 9 to 10% next quarterly earnings. We're seeing that generally speaking that the economy is doing okay. last year's last last week's numbers of 218,000 on the employment for the initial claims was pretty good and um that was actually a surprise. They thought was that the near-term situation with employment was getting a lot worse especially after we saw those big revisions. We saw some economists talking about how inflation is kicking up and the employment situation is starting to get a little bit softer. And that of course if you take that and it really expand that to its fullest potential that's what stagflation is all about. Are we at that yet? It takes a pretty special situation to create true stagflation. Are we there whether we have inflation and incredibly uh significant situation brewing in the jobs market? I don't I don't think so. But it's more there than it has been. That's I think what we could say. The the the tendency to have a potential stagflation is much more heightened right now than it has been in a very long long long long time. So with that, we have to start thinking about markets and how they react and why it is that when we saw the interest rate reduction by the Fed, mortgage rates went up, long bonds rates went up and overall the total yield curve moved a bit higher. And that's something we're going to talk about a lot over the next few weeks, I think, with some of our guests, particularly with Barry Iiken Green, who's coming on next week, professor over at UC Berkeley. He has some very interesting commentary and writings and papers about what's going on with the dollar and what's happening with interest rates. And I think we'll really dig down and talk about it with him in a in a significant manner today. Before we get to our guest, I want to talk about the this phenomena that's going on. What you know, what have we seen over the last few weeks? We saw things like Oracle and Open AI and Microsoft and even Tesla X to a degree and we've seen Nvidia and Intel. Now what what do all these companies have in common? All of them have been part of this vendor financing and circular financing that I've been seeing that is very concerning. And let's talk about what some of this is because both of these things can be structured in ways that essentially inflate the appearance of revenues activity and and even the I go so far as saying the financial health of a company. This can happen even when underlying fundamentals are weak. So let's start with some definitions and talk a little bit about what this is because I think it's something we need to be aware of because when we look at circular financing and in some cases what is this money moving in loops between related entities for example we have company A you can stick whatever name you want on that that lends money to company B. We have company A that buys into uses equity or cash to buy into equity of another company or maybe even just infuses money very simply to get back an ownership amount and that is then questioned. Then company C pays company A for services or equity. So you see how the circularity of this is going on right? We have A lends money to company B. B uses the funds to buy maybe company C. Uh, company C then buys or pays company A for service or equity and what what just happened, right? It was just like, "Hi, Bob. Here's $100. Thank you. Give it to Joe. Joe gets it. Thank you. Joe gives it back to me. I just made $100 somehow." I mean, that that's as simplistic of a case you can get in this whole idea of circular financing. And it can create this illusion of revenue, of investment, of growth. And it's it's essentially just recycling capital without generating any real economic value. It can actually, I think, mislead a lot of investors. It's like eating your own arm and trying to believe that long-term sustainability of your diet is intact and you're not doing any damage. That that is actually something that is nutritious. This is what we're seeing with some of the announcements this week. companies again like Intel and Tesla XAI where they're gonna you know Musk is talking about putting the companies together and maybe there's going to be an infusion from Tesla into XAI and maybe SpaceX will come together all these different things we're seeing now we have to add that to this next part because I think when we take both of these both the circular financing and vendor financing there's where our problem is. So, it's something we need to really look at. And now we have to take a moment and say, well, what's vendor financing? This is when a company basically sells its products to a company, but finances the product and purchases or whatever the service is by themselves. So, the sale is booked as revenue even though the cash hasn't been received potentially or it is part of another deal with equity or debt. So, okay, haven't we heard a lot about that this week, too? Haven't we heard about things like uh well historically we heard that Microsoft was saying okay we're giving money to this company but that company is going to actually buy cloud services for for us and they're going to guarantee over the next 5 years x amount of so what happened there we talked about this a hundred times in the past the idea of utilizing your balance sheet assets and somehow converting them into the income statement that is what has gone on for a while now how long is that sustainable only as long as the companies that you actually infuse the money to become profitable. If they don't, that's that and you're going to see a significant tail off of earnings. Now, the problem he has again is if if you're your customer that you utilize for this, right? If I lend money to Bob and Bob then says, you know, I'm going to use that money to buy services from you and the hope is that over time the money that I give you is enough to help you build that business so that you continue utilizing my services. But what happens if that other company defaults? What if Bob defaults? If Bob defaults, the whole thing is off. What this does is has the ability to inflate the topline revenues and that's what we've been seeing pretty substantially on top of the inflation numbers that we're seeing and that makes the business look stronger than it really is. And if it's done aggressively without proper risk controls, it could lead to balance sheet stress regulatory scrutiny. But here we are in an environment where it's been going on for years, particularly in the tech space. not something new, but the announcement by Open AI this week in the last couple of weeks with hundreds of billions of dollars in promises over the next few years with them having massive losses predicted over that time, it's like what are you what how what is that happening? Makes you kind of wonder. So why does it all matter? My concern is that a lot of investors are being misled by inflated revenues and growth figures. How do you know? How do you actually know? Well, we don't know until a few years from now when some of the companies that were given money to generate back to the uh providing company are no longer able to sustain the buying patterns that they have. Therefore, the revenues will drop. Now you also have the concern that some regulators haha right in the regulatory environment that we have now really okay but maybe some regulators may flag these practices if they if they I guess if they are really obscuring the true picture. I mean you may see that with auditors too. So what is actually happening is that some companies are propping up others through some pretty fancy financial engineering. Again, nothing new here except they're helping other companies help themselves back. And in my opinion, with the lack regulatory oversight that we have now, it's only going to get worse. Nobody gets in trouble for any of this. It's only the suckers that fall for all this nonsense. And the I think the Oracle deal that we saw, well, the Oracle announcements that we saw over the last several weeks has a lot of people very concerned. They missed earnings. Their outlook on the other hand was spectacular because they utilized that infusion of open AI uh in it was incredible incredible promises over the next five years or so in the hundreds of billions dollars and that's how much space they would utilize. But is that really going to happen? What if open your eyes says you know what we don't have that much need now they could also say let's go to the other side you could be like Andrew but wait why not be more positive who knows maybe they have a much greater need but the buildouts that they're doing on the hopes that build it and they will come and that the idea that the advanced AI not the AI that we have now no not the AI we have now the advanced Ed AI, the inference, the next level of of real thinking, a real decision making that will help industry and create profitability for that industry. Whereas they'll keep on pouring money into the various companies that are the players in this industry. And Nvidia push money into Intel 5 billion. We saw that in the hopes that they're going to be a partnership. They're going to build. going to do. Nvidia is funding all these other places as well with some of the money that's being funded. So, we have a a domino effect. If any of these situations don't don't come to fruition and the funding found uh the funding company is finding out that they're not doing as well with uh this strategy and they pull back a little. Can you imagine because of the I was I don't want to call it leverage but the magnitude of the money that's being used and how it is being stacked upon by company after company after company and thought about. Boy, could that be problematic? Now, am I blowing the alarm here? H I'm not exactly sure yet. It's very difficult to discern whether or not this is something that we really need to be concerned about to a point that we're like, "Okay, short the industry. We're out. This AI thing is going to explode." There is and are a lot of similarities between this and what happened with the internet and the companies that we know of that didn't last, the companies that weren't supposed to last that somehow figured it out. Allah Amazon, right? Amazon was one of those companies. Amazon was like, "How is a book seller gonna make it in this world or maybe even something like a Netflix, very different, but yet pivoted Amazon with their AWS, that's where the real money came in for a very long period of time to help them build the rest of their infrastructure. Netflix pivoted from a red label disc mailing and returning service uh into a a a full studio, a streaming studio, you know, a real life studio. So, the pivots and what's gone on and the changes for those companies that weren't supposed to be around, right, that were supposed to fail to meet to be the powerhouse they are today. But there are a lot of companies that we could probably go through as well that just aren't even around anymore. LOS, remember them? Peepod, Web Van, uh, Alta Vista. We can go through a lot of names that you may or may not remember. The original social media, MySpace, maybe still here, but not what it was. Didn't reach its potential, whatever that was. This is what happens during these kinds of major events in life where we see an industry bloom, grow, get established. There's winners and there's losers. But in this case, I I find it to almost be to a degree, just bear with me, to a degree similar to the multiple mortgages that we saw on housing back in 2008 where it just took a little problem, the tide to go out slightly for things to get messy. We're not going to see that as quickly here because a lot of funds to mask all the problems. And if interest rates come down, it's better and it's good and will continue to do so. Interest rates go up on the other hand, money becomes tight, a slowdown in any of these factors happen. That's that's what we have to be aware of right now. Again, now I'm really not there yet, but we're on alert. We're watching. We're being careful. Something to think about. Let's get to our guest. And our guest today is Andrew Wilkinson and he's the director of trading education at Interactive Brokers. He joined Interactive Brokers back in 2007, way back when, as a matter of fact, that's about the time this podcast started. His background um he had a background in interest rate and derivative trading in the city of London during the 90s. and he joined the brokers uh of Interactive Brokers to create market commentary about stocks, options, forex, and bonds for the website before helping create the IBKR campus, which covers traders insights, traders academy, webinars, podcasts, and a variety of other financial training for all investors at all levels. Now, um what's interesting is that we've talked about this before, but I wanted to really get to the hor's mouth this time about who really is is working this, creating it, and and what things are available. So, Andrew, welcome aboard. first time on the discipline investor. Thanks for coming. >> Lovely. Thank you very much for having me, Andrew. It's it's a pleasure to be here. >> So, let's talk a little bit about um so well I think you know we want to can I start with something? Can I start with some of the highlights of things that are really cool happening at Interactive Brokers? >> So, you've seen huge number of Well, I'm going to use the word darts. You know what that means, but for everybody else, you've seen a a big number in transaction uh growth of last year, huh? >> Yeah. I think our Darts are up uh in August about 29% over uh year one year. Um Dart's daily average revenue trades at about 3.488 million um trans transactions. You know the these are big numbers but but Andrew it speaks testimony to the type of client that Interactive Brokers attracts. You know people who trade professionally for a living and they are active. they they embrace volatility. They love the options market and of course those zero uh days to expiration options have become extremely popular. So we've done very very well out of that. I think um aum nowadays is over 700 billion 713.2 2 billion >> uh which again is up more than by a precisely a third over uh a year ago >> actually that's sorry it's 38% higher and then the number of customers you you mentioned earlier that I started here in um 2007 just before the IPO and we had I think 89,000 clients today fast forward 18 years we're up to 4 million client accounts that's that's 32% higher than a year ago So a just a lot of trading going on, a lot of in and out of volat volatile markets and different asset classes around the world. >> You know, I think that uh we started not too far after using interactive brokers for our clients something about 2010. So we were I guess one of the first not the first but we were you know in the growth phase in the beginnings of of the growth growth phase because you know back then even even back then you know we're talking a lifetime of technology right since now to back then >> back then you still had great technology. >> Yeah. >> Which which is what was the drawing facing features of that. So that's pretty cool. You know you recently joined the S&P 500 uh back in August which congratulations to that by the way. That's awesome. Um what what drew you personally to a career in the area of uh trading and and specifically financial education? >> Well, it it followed a career of trading which I really embraced back in London. I I think I started um trading in 1989 on the sterling desk at Fuji Bank back in London and I just couldn't get enough of markets particularly the futures markets and then as I progressed I came over to America to go to business school and I was just heavily involved in writing and writing specifically about financial markets and then out of the blue interactive brokers approached me 2006 I'd come up for an interview I was down in Florida at the time came up to Greenwich and I I I just I just really enjoyed explaining how markets work. I'm kind of a a mentor to any investor who wants to understand um all about trading. And I think we've we've done a very very good job. I built up a great team here um to help create videos and podcasts and and conduct webinars and so on. So it's all about, you know, providing something for nothing for people to help them understand because we want good traders. people to uh last so that that our um uh our customer base not only expands but becomes more uh wealthier. >> It's a partnership. That's the bottom line. It's a good good for everybody, right? And and the funny thing is >> I know a lot of um well, when I say a lot, you know, you know, stories, right? And they just want to get people in with $2,000 to trade. And most people that don't get training, uh what do they end up doing? They blow up. You know, they're 2,000, they're 5,000, they get sucked in. you know, they get some kind of two bit crazy theories on a few trades, they get hooked, and then they kind of um get in over their skis and then they blow up. And that's not good. That's not good for you. >> No, we we've you know, something I was taught um when I joined this company is that is that people eventually hear about Interactive Brokers because of the low prices. they become good at trading stocks and then they decide well we we're paying too much in commission and this this is going back when the when there were commissions and um that that's exactly what we want people who are going to become active traders uh to to to benefit from the the strength in technology the low prices and that global access to market so you can trade pretty much anywhere around the world with with the interactive brokers um platform >> so you're you're you're kind of at the you're in the boot camp and in the training but also post that where people have success and they come back to let's call it initial training education to mentorship right that whole range is where you cover now here's my question >> what are some of the most common gaps the things that investors you know have this area of knowledge that just they they they need filled right and and what do they come at you with maybe in the early stages stages. Let's do let's break this up into two parts. The early stages of when they come to you this gap they have in terms of their understanding uh of investing and then kind of later on um there's probably some gaps as well. So let's can you cover both of those and how you how you really address this those as a financial uh trainer educator. >> That's a really good question Andrew. The um the real hole in anyone's education is is is options. I I think um as I said earlier, people used to come to Interactive Brokers realizing that commissions were lower and that they were doing something more actively and in terms of trading stocks. Once they understand the stock market, how prices move not just up but also down, they start to learn about volatility. And when they learn about volatility, they realize that there's something very very clinical that can be used uh to lever positions and to take advantage of market movements and to also hedge and speculate. And that is the world of options. And and options are not easy unless you're actually trading them day in day out to to try and understand what will the price of an option be in the event that this stock price goes where I believe it's going to go. uh and if I'm long of a stock, you know, how am I going to uh protect myself in the event that that there is some news event that drives the market down or the stock that I'm holding down? So, we've we've gone to special efforts over the years, and I know the industry has done this, too. But, we've gone to great efforts to talk about options. That's kind of bread and butter for a lot of our um a lot of our traders here. Um and and what something that we've done more recently, you know, having made many many videos and we've had webinar guests uh from the industry and from the exchanges come in and talk about options education. We recently built um a new interactive options trading tool which is free at the IBKR campus and it allows people to interact with the screen and it's going to um it's going to take you through options fundamentals. It'll help you solve real problems. Uh the the interface allows you to you know drag words into sentences to help you understand the definition of a call. the definition of a put and other related things. Um, it's going to teach you the basics about calls and puts, but it also walks you through at your own pace to advanced strategies. So, we started off with an introduction to options, an introduction to Greeks, and then we moved into basic call buying, where are the break even so on uh and then moved on to vertical spreads. And there's even a challenge mode which I think is really really cool for somebody who's sitting for example the series 7 exams um where you just you know if you if you're not in that market every day trading options learning about them on paper is hard. So the ability to actually drag uh the the tools across the screen to try help you understand where a break even is, what the premium of an option is, what the why the strike price is important. This tool is is is really really cool. We've even created this challenge mode which allows you to say I need to strengthen my understanding of um you know specific spreads so that I can understand how break evens work because I've got a test coming up soon for series 7. So that that's kind of the biggest area of um uh the biggest challenge I'd say in in creating education >> in terms of uh I get that you know and options are challenging and and in the world of and this is what I know. Tell me what you think. In the world of investing, they say the smartest of all smart people uh trade bonds, right? That's what they say. The bond market, generally speaking, I should say that, right? But clearly, in my opinion, um you know, it's one thing to buy a stock based on fundamentals or a chart, uh sell it, sell short. It's another thing entirely to not only look at the options market because the options market takes all of that adds a ton of different other items uh you know black shaws uh calculations and as you mentioned volatility and the Greeks but it also then turns it upside down backwards where you can kind of sell you be on both sides or utilize a a combination of it to create some kind of we'll call it spread trade of sorts. That that's get that gets complicated. >> It does. But as I say, once you understand it, you really understand it. The the analogy I would make is learning a language. You're only going to really understand that language like French if you go and spend time in Paris or anywhere in France and speak it to people. You've got to be in the thick of it. Same with options. um you know looking at what options do in terms of allowing you to speculate on a market you must understand what the Greeks are there for how they all relate to the price of the underlying and how the you know how to pick a strike price how to pick the expiration date across time but yeah it's I I think I think I think an options trader will probably um out outplace uh um a bond trader in my opinion. Um but if if you can trade bond options too, that probably puts you king of the hill, doesn't it? >> And then options on futures. Let's get crazy now. >> I mean, talk about volatility. That that's that's fun. The the thing the thing about um uh of the options is also one of the things I think people like about it today more than anything is they have a very diff first of all, it could be short-term, it could be exciting, it could be exhilarating. It could be exhilarating. I mean, I've had options. what we do for either personally for clients that I mean zoom on the numbers are like how much is it up today you know that kind of thing u and we know all the stories about like GameStop for example and how that guy uh roaring kitty played the GameStop market now that now by the way Reddit is all a flurry now with the idea of options and warrants once again on squeeze plays it's it's starting to pop up again never really died off but it's really starting to come up again the um the thing about options It's what's interesting is um the the training that you can get on you know various places on ibeare campus and all that you you've actually decided that that's kind of an open door for anybody haven't you >> the options world yeah >> no no to get to get the training to get the the the IB campus training >> yeah and the education >> absolutely absolutely um we we as I said earlier we we we believe that a a good client is an educated client. That's probably the best way to put it. But yeah, you just make all of this available for free to the world and you just keep telling people about it and uh allow them to find it. You send emails to clients and to to non-clients and and and let them see if if this is the quality of the work that we do for free on the campus and when we tell you all about of you know low commissions and strength in technology then there's got to be something behind it, right? So that's that's just it's just simple business. >> Well, you made it also approachable. That's the difference. There's a lot of training modules out there. There's a lot of ways to find things. I have platforms that I use uh in my business and um not trading. So I'm not saying that this separate entirely. Forget the whole trading, forget the brokerage. I'm talking about different platforms for management of client accounts or >> and and they have a lot of training and all. It is not approachable. It's like I don't understand why is this not like the newest of first or why can't I search this or I don't understand but you've made it very the thing that I think you've done very successfully is made it very approachable very easy and and not um cumbersome to deal with that that's I think a very you know what it is reminds me of do you remember do you know why you know this but why did Apple win the iPod race the first the first iPod the first MP3 music player by the way it's what I have one. I actually have the MP3 player that was the first one out in my drawer. Okay. It was the Diamond Rio uh 64 megabyte. >> The problem was it did fine. And I'm sure if I charge that little bugger up right now, it'll light right up. Okay. Put a battery in, it will light right up. And God knows actually I should do that one day and see what songs are on there. But the problem was there was no way to get the information on and off easily or to download. Of course, we had Napster and all that kind of stuff. remember Lime Wire, all these crazy things where we do this weird sharing of stuff to get the music, but trying to get that back and forth on because there's only a certain amount was very difficult. So, the idea was great. Everybody loved the idea, but was impossible until Apple iTunes came around, right? And they were able to create a platform to manage all this. And of course, they they benefited, but and then to have it easily exchange and update your iPod at the time. That's kind of what you did. You made this whole education thing really easy for people, approachable, and accessible. So, great job on that. >> Thank you. And and I think I used to speak to a lot of um you know, we have a lot of contributors here at the um at the campus. They either uh submit articles for for daily posting or we get we take podcasts and videos. We we we work with people to provide webinars and then we have the traders academy which is teaches people how to use any of our platforms. And the more I explained this to a potential contributor the more the easier it seemed in my mind that this is exactly how we need to show people uh to showcase the platform to explain to them how to trade a different asset class what's behind it why they should consider looking at it. So it became um it became very kind of formulaic I would say um particularly with the traders academy videos because we we you know it's a video it has a script which doubles up as study notes and then we have a quiz for it. So if you can fit into that mindset then you're welcome to come to interactive brokers and be a contributor to do that. So it everything just um ultimately seemed to fit together and if I do a webinar with a contributor I I offer them the the opportunity to come in and do a podcast with me as well. So much content this these days and managing it is one of the challenges but I've got a fantastic team around me who who help with all of that. >> Let's uh let's talk about something two things. Um, first I want to talk about the the idea of of common mistakes because I think that's really important because I once so I always taken the view that if I can get rid of the negative part of the discussion in other words what could go wrong. If I can figure out what could go wrong then there on the other side is just what can go right. So if I can delineate exactly what my downside is on anything or the negatives of something and I can figure that out. Now if I can't well then it's insurmountable and I can't either invest or make that decision or go that direction. But >> what's one of the most common you've been doing this for years. So what's one of the most common mistakes you would see investors make new investors making and how can they avoid them? >> I think it always always comes back to risk management. what you just described there was was risk minimization. If you're doing any kind of a process um then if if you think about what could go wrong um you're minimizing the the outlay whatever it is you're doing if it's you know my dad used to be very good at planning holidays and you know getting even packing the the the trunk of the car uh perfectly. So if you do that then you're not going to you're not going to like have to leave a child at home because the back seat back seat has is accommodating a suitcase. So I I think the the biggest mistake people make is not planning the trade. They become too eager to to buy that company shares in a particular company without really thinking about where should I get in. So you should learn all about different um well first of all some having some approach to a fundamental analysis not just you know the world is full of opportunities. So just because you missed um the dip in Nvidia to like $98 whatever it was last time it fell and it's it's you know it's pretty much doubled since then. There's always going to be a chance to get back in at something. There's always you know what's that expression? Life's a bowl of cherries, right? You're always going to get a second uh a second chance. And you mentioned also those meme stocks. Um, you know, right now continuing to squeeze as we're at all-time highs. We're not going to be at all-time market highs forever. There's always going to be a correction. So, I think patience and having a plan for your trade, knowing where you want to get in, what objectively you want to do, what's your time frame? You are you trading this this week or for a for a month? You think it's the stock price is going to go up $10? Think about that. Think about what you might want to how you might want to augment the play using options. You know, if you're able to sell a secured put in order to get into the trade if the stock price comes down and if it doesn't come down, you don't have you don't get assigned. Um, then you're going to keep the premium you made on on on rating the put. When are you going to start selling call options against that call position? um how many option how many shares do you need in in order for you to be able to write a covered call against um against that position? Can you actually you know even do that? So knowing where you're going with the trade from the outset is always a good thing to do. >> Yeah, I mean I I agree with that. And then and having a plan I mean I think it's the point you just made there, right? So that you don't have like you know the whole family scream screaming where's Kevin? Where's Kevin? Um right we left Kevin again. um which which um I hope that really hasn't happened in your family. It sounds like somebody could have been left behind uh if it wasn't for dad. But nonetheless, the um the the the the plan the the game plan I think is always important. I think as an as an investor trading your own account, trading a stock, maybe not entirely trading account, but but but playing that side, oftentimes we look at, you know, what's the great opportunity here, but but but don't want to really focus in on the downside, right? Yeah, >> again if if you if you think about what could go wrong. I think it's also really important to understand the company that you're dealing with. You know, I recently got involved in an IPO name >> and I didn't really know that much about it, but I was excited about the sector and um you know, I'm I'm sitting on a loss at this point. Wish I'd done my research beforehand. You know, the interactive brokers platform allows allows investors to look at fundamentals on any stocks. We have a new tool um a new a new research tool called connections and we you know part of that is the investment themes. So the the connections tool helps you to identify relationships between companies and economic indicators and then other financial instruments. So it can enhance your decision- making. If I'd have looked more through the lens of the connections tool, I might have come up with a different company that actually had earnings ahead of it rather than, you know, like many IPO names have potent potentially have losses for for the first few years while while they're out there. So, I might have been able to uh find a better alternative in the same space. um you know if if you if you want to own retail shares in a in a Walmart or uh you know Kohl's or Ross or any of those names um you know are there other tools that you can use what e economic indicators should you be looking at something that's become quite popular these days is is um uh event contracts and we we we launched this maybe a year maybe 18 months ago um and it allows you to take one of those retail names and the the software will look at um what economic data is available to potentially allow you to hedge. So keep an eye on economic indicators such as retail sales or maybe employment. Um, and you and you could, you know, if if if the if you decide that the retail sales might be slowing down, but you don't want to get rid of the stock, you might be able to take a yes or a no position on one of those economic indicators to help potentially hedge uh some of the uh decision- making you've you've got in play there. >> Good stuff. The uh so so for example, let's just kind of stay on this for one more second. Um you make a bad decision. So let's say for example one of those IPOs was I don't know Figma or maybe it was Circle who knows um but uh let's say you have one of those right so now what so how do you now manage that position without maybe you just get out I don't know maybe write some options on I don't know uh maybe you buy in maybe I don't know uh what what do you do now that let's kind of flush this out you have you have a position that went against you like oh I'm not sure that you know I maybe could done better research and all that fine you do some more research now what's the next steps >> I think part and parcel of what you need to do at the outset is is set a financial stop and I I I've seen this so many times where people rather than they'll say I'll give it another day I'll give it another day I'll wait till this report's out no you should always just set a stop in advance it's it just becomes very very mechanical you need to know where you're going to get out how much you can afford to lose and stick to it because as As I said earlier, there's always an opportunity to get back in. Um, you could also in advance look at which um put options, if you're long of a stock, which put option, which expiration, which strike price um to consider buying to help protect. Um you could also again make sure that you're educated well enough in the option space because you could you could put on a less costly um uh vertical spread which might allow you to buy a put option and sell a put option at a different strike. So that that's a that's a vertical spread um that that is a less costly >> insurance like insurance stock. Oh to a point. >> Yeah. So, let me ask you about this uh this this um option strategy that I've uh that I've used for many years. >> Whatever option that I'm going to get into and let's say it's a call just uh for the discussion here. uh I will look at the the the the level that I want where I think the stock is going the time where I think it's going to get there and no matter what I do I always go at least a month out more because it's always somehow never seems to make it on the date that I put it at and I always got to go out a little bit further and that seems to I don't know why that seems to work there there's nothing magical there I'm just saying >> well stock markets tend to go up over time, you know, maybe you're just very good at timing the market there, Andrew, in terms of um getting in. I mean, I always try and use a limit price. So, I think, okay, the options trading at a dollar now, but I'd really only rather pay 60 cents for this. So, again, it's being patient and if I miss the boat, I miss the boat. There's always another contract coming along later. Um because options are vehicles that that will erode o over time if you if if you're not right. the the the the trick to getting it right with options is um you know if it's not going right then either take a loss or roll out to give you buy yourself some more time uh and that will rather than watching your option go from you know a dollar or 50 cents down to zero you might still have some some um uh exttrinsic value in there which will allow you to roll into a different contract. >> Yeah. Let me switch gears here and let's ask a question that um I'm seeing a little bit uh interest in the growth I think once again in investment clubs um and I know that you guys do something with that in terms of collaborative investing right >> not so much not that I'm aware of um >> I know that I I deal with it it is people have been coming to me and says hey we're getting a bunch of friends together and uh they want to open an account so that they can kind of see the kind of trading meeting we do and watch us and monitor us probably steal some of the ideas we have but that's fine and then there's investment I don't know I just I just thought I saw something about that coming up it's all right we can >> yeah this yes I I recently recorded a podcast in in the UK with um Jerry Perez who's the CEO over there I think there have been some uh rule changes in the United Kingdom surrounding investment clubs who can do what and who can't do something and I think a lot of the local brokers are potentially um not permitting that kind of um club anymore. They're getting rid of certain uh clients or making the rules harder. So, I know Jerry was very keen to discuss that because I think it's it's you know, we we have the type of account that allows >> uh investment clubs to um to come on board. I I wouldn't be surprised if it happens so much uh in in in the United States too. We have a friends and family type account. So this is kind of a precursor to becoming an advisor on the interactive brokers platform. If if you have over X clients, I think it's 25 or maybe so many AUum. Um you have to ultimately become an adviser. But what what you can do in the first place, you can look after friends and family's money because you're good at trading and you you can you know if you have a personal account with us and you could or you can just come to interactive brokers and open up um friends and family account and um within you know I think the the money's segregated so you have different accounts for everybody and there's certain drop downs in the platform um and you know hopefully you end up making money for your family, your friends and uh and for yourself, >> right? Exactly. Uh, and there is that and I've seen that over the years people use that and um, you know, they have for one reason or the other makes it very easy. >> Yeah. >> I got to ask the question. >> I think it also gives you time um as that as that investor on behalf of people. It gives you time to get your ducks in a row in order to create that uh the framework for a financial ad. >> And I know I know and I've known people that have done that. you know, they say, "Hey, look, uh, I think I can trade, you know, you have five friends, you pick up, you know, $500,000 each or 250,000 or whatever the number is, right?" And they and they run that until they get to the point that they're required to, uh, register with the state or, you know, federal depending on where they are. Uh, and, you know, formalize the actual advisory relationship. >> Yeah. >> So, that's something >> I'm I'm always I'm always astounded. you know, you go out for dinner with some friends and they're not in financial services, but they tend to know a ton about a specific, you know, they've got a hobby and they they don't know how to invest, but but but they know an awful lot about that sector. And it's it's it's people like that you have conversations with and you go, "Yeah, well, you know what, my friend's a good trader, and you you might want to consider investing with him and sharing some of your knowledge." >> Exactly. Let's talk about the I think a big thing a big thing we haven't even touched on. we haven't even gotten anywhere near and it's the idea of advanced data analytics and AI which I know that you are building things are but particularly how to util how you you are using that not not necessarily the broad brush interactive brokers I'm talking about training and how you're leveraging some of that to help with the training curve >> yeah so several people on my team do use AI. we you know it's sometimes it's easier to write the script for a new narrative on a particular sector or uh even in house we have um you know we have the ability to to uh use ibot as we call it to bring in information about all of our trading platforms and everything that we're hooked into in order to create uh a a well curated synthesis about uh about the tool uh that that will serve the customer. Well, you know, we we we can create infographics uh on top of scripts uh as as well as for our glossery. We can come up with good definitions of terms that don't plagiarize from from the internet. So, there's there's plenty of ways of of um of doing that. I think this connections um the the integrated research tool I mentioned earlier you know that's that's strongly driven with AI in order to help investors analyze connected instruments and strategies in in a single view. So it's it's moving at quite a pace here. The other thing that's interesting is well for advisors you have the AI I know that is the um the the the review of a portfolio uh which is cool but also um you have things that for individuals well I guess advisor could use it too but let's talk about individuals like portfolio analyst as an example now there's nothing quite like having an understanding unbiased unbiased okay understanding of exactly what's going on in your portfolio and I think there is some things inside of portfolio analyst that can give you a little bit of an awakening awakening and kind of a nudge into maybe some things that are going on in your portfolio, right? How they how they connect with each other, how they work together. Um and and but but tell me more about that because I think that's a really cool thing that gets underplayed. >> Okay. >> Yeah, we've we've we've come up with a with several tools this year to help people with taxes, with budgeting, and with retirement. um that that allow them to take a take a big overview of of what's happening in their portfolio. It allows them to um you know bring in a partner's income um in order to track investment incomes across all accounts throughout the year. So that you know the tax planner allows you to create a tax profile and um and then configure values and it will help you estimate year-end taxes so there's no surprises at the end of the year. You you're able to view realized and unrealized gains and losses for example and dividends and the interest that you collected on each account. So you you you can see very very clinically what your obligations to the uh IRS will will will be. Um, something that I'm not fantastic at, uh, at at home is budgeting. You know, um, you're now able to track and categorize spending to help budget more effectively. And, um, >> but you have plugins there. It's not like you just have to enter everything on your own. What do you have? Like, I think a Plaid plug-in integration to bring in your other accounts, right? >> That's right. That's right. You can you can you can connect to your bank accounts. You can connect to other brokerage accounts. Um, you can you can even put in a value for, you know, you you can put in your home address in in Zillow and it will tell you the the the the estimated worth of of the house and then you can also connect to your mortgage lender's account. Um, so that it will it will look at both the asset value and the liability incurred on it. So you get an overall sense of your liquid well of of your net worth. Um so so there's there's there's there there's plenty of things that the uh the portfolio analyst will do. We've also created uh a retirement outlook in in the portfolio analyst too and it looks at uh your current assets, expenses and then the projected asset growth uh and again consolidates all that information from interactive brokers, external brokers and uh bank accounts uh and and all of your other assets including real estates and and allow you to incorporate your retirement preferences in terms of when you might be thinking about retiring. It'll allow you to do some scenario analysis so that you can say, well, I'm going to what if what if I retired at 65 or change that to 68? Um, and and what if I have, you know, I'll allow for $1,000 from um working at uh you know, working at Walmart when I retire as a greeter or whatever. So, um any any future employment expectations is what I'm saying. And then your monthly expenses and more. So this is a really cool tool and we've done videos for all of these items in across the the campus in traders academy. So so many different um kind of ways of extending the personal finance aspect uh for for in our clients. >> You know it's interesting because all these things can be used by the client but then pushed up to the adviser. So I I have a um >> I have a a a thought on this. So while everybody could learn to trade and may do so well uh where you can learn to understand more about your retirement and the internal workings of your of your portfolio and all these different things put together. The fact is that sometimes it's a matter of perspective. I always tell people you know why is it that some people should have an adviser? And I say well it's it's like this. You know I can cut my hair. I can use a scissor. I can kind of just put it between my fingers grow to the hair. Snip snip snip and I'm cutting hair right? I'm functionally cutting hair. However, when it comes to the back of my head, I can't see it so well. Now, I can put some mirrors there and hopefully uh go upside down and backwards in my thinking and cut. But it's a matter of perspective. Why do I use a hair stylist? Why do I use a barber? Because a matter of perspective. And sometimes, while these tools give a lot of information, I still think that there's something to be said about bringing in your advisor to work with you on that output to put it all together. What to say you on that? >> I I couldn't agree more. Um there's there's there there's things that I don't know about financial markets. There's thing I I've just put my twin daughters into college up in New York and Massachusetts and um I I wasn't nearly well enough educated on um you know, college spending loans and planning and all the rest of it. So, I'm I'm just kind of winging that at this point. And um yeah, it's the sort of thing that an adviser will do for you. It'll make you realize that you have certain life events that you need to be prepared for or or or be putting money aside for particularly when it comes to retirement. You know, this this this is student student debt is probably going to add to my career. >> Yeah. >> And and and defer my retirement um you know, at this point. So, so yeah, like the the services of a of an adviser are probably, you know, very useful. Um, particularly when it comes to I'd say as you mature, you get older and you you you don't realize that you you you probably need to tone down the risk appetite that you have. You shouldn't be investing all of your money in IPO names or very risky tech stocks. um and that you should be looking for potentially more cash flow from dividends and that kind of things and and like yeah, we can all go away and do that research, but if you don't have time for it or you just not don't feel comfortable enough doing that, I'd say that's that's really where the adviser comes in. >> Yeah, good stuff. Andrew Wilkerson, IBKR, Interactive Brokers, director of trading education, uh and and and doing a great job at it. Thanks for joining me. First time on the show. I appreciate it. >> It's brilliant. And I'm really delighted to be here, Andrew. Thank you very much for the opportunity. >> We'll talk soon. Thanks. >> All right. Bye for now. >> That's going to wrap it up for this episode of the Disciplined Investor podcast entering into October. Some spooky times. We got well Halloween of course, but nonetheless, we have some great other uh guests coming on. Some great education. We'll continue talking about this vendor financing issue, this circular financing. And I think a lot of this you can get um to know when you start watching the news and seeing some of the things that are talked about and when they talk about multiple companies putting money into others. Start putting your antennas up a little bit to understand well what does that actually mean? And a lot of the education you get in this area is of course that was just talked about with our guest Andrew Andrew W. I'm Andrew Leech. Thanks for joining me this week at every week. I'll see you again real soon. This podcast is intended forformational purposes only and does not constitute personalized investment advice. Investing involves risk, including the possible loss of principle and past performance is not indicative of future results. 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