Tesla’s Overbought Reversal: What Traders Must Know | Ricky Gutierrez DSH #1109

Summary

Digital Social Hour: Tesla’s Overbought Reversal – What Traders Must Know | Ricky Gutierrez DSH #1109

Host: Sean Kelly
Guest: Ricky Gutierrez
Release Date: January 16, 2025

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1. Market Overview and Overbought Conditions

Ricky Gutierrez opens the discussion by addressing the current market sentiments, emphasizing that many believe the markets are perpetually ascending. He challenges this notion by highlighting the importance of recognizing overbought conditions and anticipating potential reversals.

"Some people think that markets are going even higher. And that's really a conversation that I'm excited to kind of talk a little bit more about today."
— Ricky Gutierrez [00:34]

Ricky explains his trading philosophy, which focuses on long-term investments in blue-chip stocks rather than low-cap stocks. He specifically targets overbought and oversold reversals, which he describes as more methodical and less volatile trading strategies.

2. Tesla's Overbought Reversal

A significant portion of the episode centers on Tesla's recent stock performance. Ricky notes that Tesla surged by 54% over 16 trading days, primarily influenced by Elon Musk's involvement with the Trump administration—a unique and unprecedented catalyst.

"Tesla gapped up 54% in the past, like, 16 trading days. Obviously, the only catalyst when it came down to that was that he's part of the Trump administration."
— Ricky Gutierrez [01:08]

Despite the initial enthusiasm, Ricky points out that Tesla's earnings and guidance had previously dampened investor excitement. The sudden positive sentiment shift due to Musk's political ties led to an overbought scenario, resulting in a subsequent correction.

"We let it shoot up. And the overbought reversal in this sense was, we don't know how high it's going to go... once it begins to curl on over, it tends to correct itself because the hype ends up fading."
— Ricky Gutierrez [02:14]

Ricky predicts that Tesla's stock may continue to decrease to the $260-$315 range in the short term, despite his long-term optimism for the company's growth.

"I think that it's going even lower. I think that it can go down to 260 to 315."
— Ricky Gutierrez [01:41]

3. Trading Strategies and Risk Management

Ricky delves into his approach to trading reversals, emphasizing the importance of waiting for clear signs of a peak before initiating a sell-off. He shares his recent short position on Tesla, which yielded a 13-14% correction.

"Once it begins to actually indicate signs of a reversal... we're able to... correct ourselves."
— Ricky Gutierrez [04:00]

He underscores the necessity of disciplined trading, referencing the volatility seen in crypto and meme stocks as parallels to Tesla's situation. Ricky advises traders to set dollar amounts they can tolerate and to avoid emotional decision-making.

"Don't put yourself in a position in which you cannot tolerate. And also, if you cannot tolerate the time that it might take for it to recover..."
— Ricky Gutierrez [10:48]

4. Insights on the Cryptocurrency Market

Although Ricky doesn't primarily focus on cryptocurrencies, he offers valuable perspectives on the current crypto landscape. He expresses caution regarding the high valuations of Bitcoin and other cryptocurrencies, suggesting that the risk-to-reward ratio is unfavorable at current levels.

"What's the downside? Risk. Risk to reward just doesn't make sense there."
— Ricky Gutierrez [10:48]

Ricky advises against chasing trends without a solid understanding, highlighting the significant risks associated with overvalued crypto assets.

"What's the downside? Risk. I feel like risk to reward just doesn't make sense... The downside risk is so much greater."
— Ricky Gutierrez [10:55]

5. Shorting Stocks and Market Volatility

Ricky discusses his strategies around shorting stocks, particularly those influenced by hype or political events. He shares his experience shorting DJT, a stock tied to political sentiments, explaining how he capitalized on its volatility.

"I was like, I do believe that if Trump does win, why couldn't it go to $100 per share?... So I just didn't want to take."
— Ricky Gutierrez [26:39]

He emphasizes the importance of recognizing when a stock is labeled as "hard to borrow," indicating potential liquidity issues and increased risks in short positions.

"That's just showing you how risky that stock is. Or if that stock is labeled as a hard to borrow, there's a reason that it's hard to borrow."
— Ricky Gutierrez [27:16]

6. Trading Psychology and Techniques

To mitigate emotional trading, Ricky introduces the concept of the "blind trading challenge," where traders close their profit/loss panels and make decisions solely based on chart analysis. This method helps in maintaining objectivity and adhering to predefined trading plans.

"You close your panel and you trade solely off of the charts. So you should have an entry, exit, stop, loss."
— Ricky Gutierrez [28:38]

He recounts his disciplined approach during live trading sessions, sharing how he manages positions without becoming fixated on specific dollar targets.

"Trade the charts if you're going to be actually trading not the dollar amount that you actually want to hit."
— Ricky Gutierrez [29:49]

7. Real Estate Flipping Amid Market Fluctuations

Transitioning to real estate, Ricky discusses his ventures in house flipping alongside his business partner, Nick Palladino. They adopt a conservative strategy, ensuring that each project meets specific cash-on-cash return criteria to minimize losses.

"We don't have huge flips like that that yield that great of a return, but two or three or four of them a year, that's more than enough."
— Ricky Gutierrez [20:21]

He shares success stories, including a significant flip in Paradise Valley that yielded an $800,000 profit, demonstrating the effectiveness of their calculated approach.

"We do a rep split. I kept 80%, and then 20% went to the person that presented me the deal."
— Ricky Gutierrez [19:26]

8. Airline Industry Challenges

Towards the end of the episode, Ricky and Sean discuss the struggles of budget airlines like Spirit and Frontier. Ricky shares his personal experiences flying with these carriers, noting that despite their reputations, some of their planes are newer than those of more established airlines.

"Some of them are even newer than what I see from America."
— Ricky Gutierrez [23:16]

He expresses concern over Frontier's halted acquisition of Spirit and the potential implications for the airline industry, including financial instability and operational challenges.

"No way. Frontier backed out of their acquisition... I don't know how that whole restructure or who takes the hit or how it falls."
— Ricky Gutierrez [24:27]

9. Political Influence on Financial Markets

Ricky emphasizes the significant impact politicians have on financial markets, particularly through trading activities. He critiques the lack of accountability among politicians who engage in stock trading, questioning the fairness of regulations that allow them to profit from their positions of power.

"Why are these politicians creating laws and regulating companies that they're able to invest in? It just does not seem like a fair playing field."
— Ricky Gutierrez [31:30]

He advocates for more stringent measures to hold politicians accountable for their trading actions, aligning with Warren Buffett's stance on deficit reduction and fiscal responsibility.

"That's how we win more during those bull rallies, but then how much do you tolerate in loss and potential downturns?"
— Ricky Gutierrez [22:31]

10. Addressing National Debt and Economic Policies

The conversation shifts to the broader economic challenges facing the United States, particularly the national debt nearing $36 trillion. Ricky critiques both major political parties for failing to implement effective fiscal policies, which he believes exacerbate economic disparities and negatively impact the average American.

"We're nearly $36 trillion in debt and there is no change that is happening in how we are wasting our money."
— Ricky Gutierrez [31:30]

He stresses the urgency of addressing the deficit to ensure economic stability and prevent the burden of debt from falling on future generations.

"If we do not change the way that we are spending our money, that is something that 100% of the US population will be affected by."
— Ricky Gutierrez [33:09]

11. Closing Remarks and Follow-Up

In concluding the episode, Ricky encourages listeners to follow his trading activities on Instagram and YouTube, where he shares live trading sessions and insights on both the stock and real estate markets.

"You can follow me on Instagram or I'm also on YouTube. I have 1.2 million subscribers there."
— Ricky Gutierrez [39:42]

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Key Takeaways:

• Overbought Markets: Recognize when stocks or markets are overextended to anticipate possible corrections.
• Tesla's Volatility: Elon Musk's political ties have significantly influenced Tesla's stock performance, leading to overbought conditions and subsequent corrections.
• Risk Management: Employ disciplined trading strategies, such as setting acceptable loss limits and avoiding emotional trading.
• Crypto Caution: At current valuations, the risk-to-reward ratio in cryptocurrencies like Bitcoin may not justify further investment.
• Short Selling: Be aware of the risks and liquidity issues when shorting stocks, especially those influenced by hype or political events.
• Real Estate Strategy: Adopt a conservative approach to house flipping, focusing on projects with solid cash-on-cash returns to minimize losses.
• Political Impact: Advocate for greater accountability in politicians' trading activities to ensure a fair financial playing field.
• Economic Responsibility: Highlight the critical need to address the national debt and implement sustainable fiscal policies.

Follow Ricky Gutierrez:

• Instagram: @ricky_gutierrez
• YouTube: Ricky Gutierrez Channel

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This episode offers insightful perspectives on trading strategies, market analysis, and the interplay between politics and financial markets. Ricky Gutierrez provides valuable advice for both seasoned traders and those new to the investment landscape.

Transcript

[A]

A lot of the planes that you see from Frontier and from Spirit, now, don't get me wrong, I don't really fly like JetBlue or the nicer airlines, and those are really nice now with the family, I take that into consideration. It's called, like the Savers club. I think it used to be like 69.

[B]

I get the first class on Spirit and it's not bad. I'm not gonna lie.

[A]

There's no first class or whatever it is. The first two business class.

[B]

My bad.

[A]

I got it once.

[B]

You got lectured.

[A]

Yeah. No.

[B]

Yeah. Thanks for coming on. Ricky. What have you been up to, man? A lot happened in the past two weeks, so.

[A]

Yeah, so. Well, when it comes down to markets, we've been trying to do our part in keeping up with, you know, our markets overbought. Some people think that markets are going even higher. And that's really a conversation that I'm excited to kind of talk a little bit more about today because.

[B]

And you've always been like, long term trader, right?

[A]

Yeah, I have long term account. But also when it comes down to trading, I don't really focus on lower cap stocks. I focus more on blue chip stocks. But I like to trade overbought and oversold reversals. So not. Not as exciting, a little bit more on the boring side.

[B]

But I don't even know what reversals are, to be honest.

[A]

They're just setups. So, like, right now, Tesla gapped up, right? Gapped up 54% in the past, like, 16 trading days. Obviously, the only catalyst when it came down to that was that he's part of the Trump administration, which is super exciting, don't get me wrong. I mean, there's never been one time in history that I can recall, at least in my adult life, that anything like that has ever happened. So, you know, I think this is why a lot of people got the euphoria of like, oh, man, Tesla's going to 400, 500. And although that's really exciting, I mean, literally a week beforehand, Tesla reported earnings and there was a robo tax event. Tesla went from 275 all the way back down to 230. There was no excitement for the guidance of 2025. Now all of a sudden, this sentiment changes just because he's part of the Trump administration. So we let it shoot up. And the overbought reversal in this sense was, we don't know how high it's going to go. We don't know if it's going to actually run to 400, but we wait for signs and indication of it peaking. And once it begins to curl on over, just as it quick, just as quick as it rallies, it tends to correct itself because the hype ends up fading. Just like what we've seen with crypto. Right. Or the whole meme stock movement. We don't know when the peak is, but when we know one thing, when the peak does present itself, there's always a correction. And that's what we're doing right now. As Tesla begins to correct itself, I think it hit highs of like 360. It's already corrected itself, I think 13 to 14%. And in my opinion, I think that it's going even lower. I think that it can go down to 260 to 15. On the short term, I think Tesla, I love Elon, I'm one of the biggest Elon fanboys, but I think it's really important for an investor to not just have a short term perspective of the market, but also know long term and macro understanding of Tesla. I really hope to see Tesla be worth 5 to 10x of what it's worth now. And supposedly Elon thinks that he can get it there with that optimus robot, but maybe that's a conversation.

[B]

Oh, is he bundling that robot into Tesla?

[A]

Yes.

[B]

The one that was serving alcohol at that party?

[A]

Yeah, I think that was part of his like, package that he renegotiated with Tesla shareholders where he wanted to get more equity and ownership of Tesla, if not that he was going to take his AI developments and the robotics possibly elsewhere. So they did renegotiated. And as Tesla began to skyrocket, a lot of, you know, advisors are now suggesting that maybe it's not the worst thing for Tesla to do, to maybe liquidate some shares, to have some cash on the balance sheet just to be able to tolerate one of those pullbacks that could potentially happen. Because at the end of the day, we can't predict the future. Right. We don't know 100% if Tesla's going to correct itself. But again, there's no question that if one or two weeks prior to this thing skyrocketing, if Tesla was retracing and the only reason that there was a positive reaction was because of his connection to the Trump administration. We know that just like any catalyst, eventually that hype does end up fading and that's where the corrections tend to happen.

[B]

That makes sense. When did you identify the correction on this one?

[A]

Well, it was just this in the past three days that Tesla actually began to correct itself. So all I do is I wait, you can't predict the top. I really don't know how high Tesla is going to go. All I knew was that it was extremely overbought within the short term. So once it begins to actually indicate signs of a reversal normally like on the one hour, on the four hour timeframe, you begin to see that there's lack of progress on the upside. And then again you wait for that price action to follow. On the downside, once you get that correction of the price action and the selling pressure follow like today itself, I think it sold 5 or 6%. That's pretty significant. We're talking about a trillion dollar company it losing 6%. It's not just an average day. And just because, I mean when Tesla begins to fall now the rest of big tech is also falling, not just because of Tesla, but everything skyrocketed due to again now there being a Republican President elect, a Republican House and a Republican House of Representative. Supposedly this should be great for the economy because of the tariffs, which I'm super excited for because I'm a big believer that there needs to be change.

[C]

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[B]

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[A]

Approach to Hiring our administration. No question about that, because the route that we're currently taking does not seem like a sustainable route. The head of the Federal Reserve, Jerome Powell, always states that, which I completely agree with. But it's funny to me that all of a sudden everyone's like, yes, we're going higher, but yet they're not even in effect yet. It's not until, what, January 20th that I believe he takes office. And even when he does take office, that takes time. Yeah. To put these policies in effect in the short term, inflation should be picking up because the CPI data report that's released every single month tracks inflation is going up or down. What do you think is going to happen when the cost of goods sold based off of these import taxes. Right. Because that's what they are. These taxes that are being charged to importers, they always. And any form of tariff or increase in these taxes will get passed down to the consumer. Right. I think that's just really important to note where I still believe the route that they are choosing to take in implementing these tariffs. I'm willing to try it out because I'm sure you've seen all the different articles in the news where they say, oh, you know, for the average family, it's going to cost an additional four to six thousand dollars a year in groceries for the cost of goods. And that is true. And that might really hurt the lower income, you know, the lower income bracket for America. But I think the thing to take into consideration is that the whole point of implementing this is to get rid of the federal income tax, which is, you know, if you make $55,000 a year plus you're already not even seen, what is it, 18 to $20,000 a year.

[B]

Yeah.

[A]

So a $4,000 to $6,000 increase doesn't seem like much of a hit when you're experiencing, you know, an additional 18 to $20,000 that you actually have to work with. I would rather have full control of my money and spend it on more expensive goods if that's what I choose to do, rather than just to give it to the government that continues to mismanage our funds.

[B]

Absolutely. What's Trump's take on tax on stocks? Because I know with crypto US Based companies, he wants to remove those gains if you buy US Based crypto.

[A]

I did not know that.

[B]

He announced that, I think yesterday. Okay, so Ripple and there's a few others that started.

[A]

We saw another upswing, right? 93, I think ripple's up a lot.

[B]

Bitcoin in 93, dude.

[A]

Yeah, 93. 4.

[B]

Crazy. Doge is at like 60 cents.

[A]

I wanted to ask you, what is your take on that? Obviously, you're incredibly bullish in crypto. I'm not someone that focuses too much on crypto at all. All I try to pay attention to is the big picture. And to me, in the big picture, people that are buy now, I think they're going to get burned. My question is not can they make money? I think anyone can make. I think the idea of can it hit 100,000, I think that's very likely. Momentum's there. You know, hype is there. I think it's very possible. But we all know one thing. From 93,000 to 100,000, let's say that's the pretty number 7,000 of potential profit. Right. What is that, less than 10%?

[B]

Yeah.

[A]

What's the downside? Risk. I feel like risk to reward just doesn't make sense there where it's the whole OBJ thing all over again. Where.

[B]

No, I would agree with that.

[A]

Where the downside risk is so much greater. Where like how you said you've liquidated and locked in profits. It's. You just have to accept that you've missed this rally. You anticipate and wait for the next pullback. And you do it with a dollar amount in which you can tolerate. Right. So when it does begin to recover, you can lock in profits early. Yet you still made actually more money than anyone buying at 80, $90,000 at least. For me that makes no, I agree.

[B]

The risk to reward right now, I would say is not worth it. Especially on bitcoin. Yeah, it's already 93. So like you might 2x at best, but the odds of you losing is.

[A]

Pretty high, pretty significant.

[B]

So yeah, the time to buy was maybe a year or two ago.

[A]

Yeah.

[B]

So you're buying now with the hopes of making like a 2 to 5x off Bitcoin. It's pretty unlikely.

[A]

I agree.

[B]

Solana though, could, could hit that.

[A]

So explain to me what, for someone that understands nothing about crypto in that sense, like what's the difference from Solana and the use of it versus Bitcoin?

[B]

It's just a different chain. So applications are run off these chains.

[A]

Okay.

[B]

So there's a lot of different ecosystems within Solana, within Ethereum and Bitcoin.

[A]

To my understanding, Doge has like a now 15 trillion dollar market cap. Right. It's almost not considered. I don't want to call it a meme coin. To me it is because I feel like the whole concept behind it, the only reason it's been legitimized is because of Elon. Right. But now even this whole Doge administration, but when it comes down to Solana, do you know what that market cap is?

[B]

It's the third highest coin. So it's even higher than Doge shit. I believe.

[A]

So then technically, if it's what has it gone through three bear markets? So Salon is probably here.

[B]

Just there, two or three. Yeah, it's up there. And bitcoin just became the six most valuable thing in the world, I believe.

[A]

I think it surpassed gold surpass gold. Yeah.

[B]

And I think one of them, or no, it surpassed silver last week and gold this week or something like that. Isn't that crazy?

[A]

Dude, I see all the headlines when I see that. I mean even for me and I've, I've been in this industry for over 10 years and paying attention to these, to these currencies and even when I see those milestones I'm like, I get fomo. And I think that's okay to admit of, like, man, like, maybe I should have held in a little bit longer.

[B]

Oh, so you had some.

[A]

Yeah, yeah, yeah. I bought at 22,000 and then I sold that 55,000.

[B]

So you made two and a half?

[A]

Yeah. Yep.

[B]

And you can't even be too mad about.

[A]

No, anytime it pulls on back, I'll buy one. That's all I do. Again, I do it with a dollar amount in which I can tolerate. I always say this one thing. Don't put yourself in a position in which you cannot tolerate. And also, if you cannot tolerate the time that it might take for it to recover, I think that's one of the best positions to be in where, you know, if you can really only afford $1,000 and live without it, and sure, you might not make a million dollars out of it, but you really think you're going to make a million dollars when it's at 90,000 already and expect it to go to 100? At that point, you're just putting yourself, in my opinion, in more of a position to fill because you have to go through that roller coaster of the phases it goes through. Right. It rallies and it might continue to skyrocket. 100, maybe 110, maybe 130. What's the downside? Just like we saw in the last bear market. Not only did we see a significant pullback from like, what, 65, 67,000, all the way down to 16, maybe 14,000, something like that. Bunch of brokerages went under, everyone got margin, called overly leveraged, and it's just a terrible position to be in now. We can't predict that. There's no way that you're going to know where the bottom is that. I think that's why it's just really important that when you do see those bear markets present themselves, just ask yourself, if you were to buy one or two, what would make the most sense to, you know, take advantage of right now? I think that's a great position that if you want to be a part of history, that's a very tasteful one, being able to do it.

[B]

Absolutely, yeah. Crypto, so volatile. People are asking me what to buy right now, and I. I just don't even feel comfortable giving overwhelming, to be honest.

[A]

Yeah.

[B]

Because you get that too.

[A]

Right? Yeah. And they asked me about, especially because of crypto, and it's obviously very trendy to talk about it. Right. But I don't even like to talk about when it's down just because I feel like that is the most common, like, currency that if anyone ever makes a fake account, they always ask you to, like, pay for it and that. So I was like, I always just say, I don't trade crypto. I was like, because I'll never message you and I'll never ask. Yeah.

[B]

So you probably get impersonators, right, offering.

[A]

Your stock courses and not even that. They do, like, offer to trade for other people. Oh, wow. Yeah.

[B]

Which is illegal, right?

[A]

Not only just that, but they also offer for, like, signals and stuff like that. So I don't do any of that. My thing is I trade live every morning, so people tune on in. It's just a raw live session. And you get to see all of my good trades, all of my batteries. Like today I shorted Tesla. And by the time that the live trading session was done, they saw me make 4k.

[B]

Wow.

[A]

I trade with over 250,000. So it's not that impressive when it comes down to percent return. But to me, it's a very successful day. And they got to see every entry, every. Every exit, every thought process. And on Fridays are like my worst days. And if I have a bad day and they see what led to that, I think that's also very important for beginner to be able to see. Right. Because you get to learn not only from your mistakes, but also someone that you are learning from.

[B]

Right.

[A]

I think it's very important for sure.

[B]

Why are Fridays your worst days?

[A]

Fuck, dude. I didn't know. Statistically speaking, that's a curse, dude. I literally make a joke about it on my Instagram. You have fun with it because it is what it is. So now on Fridays, I just size down. If I do take a trade, I just reduce my position size. I'm not afraid to take advantage of a trade, but just in case I do, I just have less exposure to risk. So. And Tuesdays are my best performing days.

[B]

Are Fridays like more trading volume or something and more volatile?

[A]

No, I like to go short. And normally on Fridays are when a lot of people like to close out their options. I don't trade options myself, so to what I've understood is, especially with current market conditions, there's been a lot more rallies, which. That's an uptick in the market on Fridays.

[B]

Got it.

[A]

And if I like to trade reversals, when I expect the market to sell off and it continues to rally, I fight the trend, I take losses. And again, it's just. I think it's just important to look at the data, look at the stats and then be able to pick up, you know, areas of opportunity. For me, I just have learned Fridays used to be one of my most successful days. We used to have a thing called party mode that if within my live trading session, if I were to hit over $25,000 in the green, I'd turn on music and I'd turn on my strobe.

[B]

I love that.

[A]

Haven't had a party mode in a while. Oh yeah, Yeah.

[B]

I love the honesty. Well, it was a tough market the past few years, right?

[A]

Yeah. 2022 to 2023. It was for, as, as in, for growth in that sense. I loved it. I loved the idea of. I think it really showcases seasoned traders and seasoned investors.

[B]

Yeah.

[A]

Where during a downturn when markets are selling off is can you still either hedge the loss that you know your long term portfolio is taking or able to put yourself in a position where you're able to capitalize on market selling off either by shorting or going into inverse ETFs.

[B]

Right.

[A]

So that's something that I personally love to cover and being able to trade, you know, on the uptrend, but also on the downtrend. I think when people ask the question of how long does it take to learn how to trade, I don't think so much about the learning part, but I think it's also very important to be well seasoned enough in, in bull cycles and bear cycles, all these different cycles that the market might present where, you know, I, since I started following you and I saw you talk about crypto even back then and now it's like I respect that more than someone that only talks about it during the uptick fact. There's also another guy named Robert Croak and he's just like, he's like, it's his bread and butter. He loves crypto. I think it's, I think seeing people like that, where they're just so passionate about it and they obsess about it regardless if they're right or wrong or I don't care too much about the details. It's like, you know that they're doing everything in their ability to be well versed, to be informed and try to put themselves in the best position to be entering bull and bear markets and. Right. I think that's very respectful.

[B]

And that goes for anything. Right. When you're learning from a coach in.

[A]

Real estate stocks, crypto during the 2022 downturn for real estate, everyone was a house flipper. In 2020, 2021, where'd they all go?

[B]

Facts.

[A]

Right. That that was. I think it made it, you know, easier for me to understand those that have a good working system and those that don't. I actively flip houses with my business partner, Nick Palladino. But we're super conservative in the house houses that we choose to take advantage of. It's all based off of a. I don't want to call it a formula. It's just if the numbers make sense is what we like to say. There's specific cash on cash return that we expect per. Per property. And even if things do go south, the biggest loss that we took on any flip, even during we took two losses, were right around $4,000.

[B]

That's it.

[A]

We saw people taking $4,000 per flip.

[B]

But still, that's not bad at all.

[A]

Nothing, right? We have flips that, you know, we did a Paradise Valley flip during this up uptick, and we made a little bit over $800,000. I was the person that funded it. The deal was presented to me. We purchased it, I think for 2.2 or 2.3 million, and we ended up selling it for 3.1. But then with the money that went into it, overall profit was like 800,000. And then we did a rep split. I kept 80%, and then 20% went to the person that presented me the deal. And then you have home runs like that. It was the only home run I ever had in the multiple six figures. We've had like three houses this year that yielded over a hundred thousand dollars in return. And again, like, I don't normally do huge flips like that that, you know, yield that great of a return, but two or three or four of them a year, that's more than enough.

[B]

Yeah, well done. That's impressive. With the interest rates of the market right now, I. I know a lot of people stop flipping, like, in general.

[A]

Well, that's because people borrow money. So everything that we take on, I fund it myself. So that is our big thing where, again, it's understanding the, the, the different moving parts. And obviously, during a downturn, when you have this overhead cost or, you know, this hard money loan that might be charging you at the low end, 8 or 7% at the high end now probably 14 to 15%. It is very expensive because of borrowing costs, but you don't have that borrowing cost. It's just now opportunity costs. Where do we want to utilize our working capital in this flip? You know, does do the margins and the numbers make sense? So those are the conversations that Nick and I have where people are presenting us different deals. And I might have, like, you know, my last $500,000 to work with. Might be one solid deal. Right. We normally purchase properties in the 3 to $400,000 range and given ourselves about 50 to 100k in cushion to be able to renovate it. That's the question that we ask ourselves is what is the cash on cash return for going to make 15 or 20k? Maybe not, but if it yields a little bit over 50,000, closer to the 100,000 mark, then again, I would rather wait for something like that, stay more patient, rather than do two or three flips at 10 to 15K. And if anything goes wrong, AC goes out, roof needs to be repaired. Now we're in the red.

[B]

Smart. Yeah. You've always been really disciplined with your money. I notice.

[A]

We try to be calculated. I think that's the best thing that we can do is understand the risk. Everyone likes to talk about the potential for profit or how much money we could potentially make. I like to be very realistic in that sense, where Nick and I really hold ourselves to a standard, where we try not to jump into the hype. We not to get. Try not to get ahead of ourselves, where sometimes it does bite us in the butt. Because in 2020, 2021, we're like, how long is this going to last? And we missed out on a lot of opportunities where we weren't being super aggressive. There was a lot of house flippers that were making way more than us because they were super aggressive. And I think it just comes down to your risk level, right? Yeah, definitely. So you win more during those bull rallies, but then how much do you tolerate in loss and potential downturns?

[B]

That makes sense. You bought a jet, right?

[A]

I did. Old one. It's like a 1980 Honda Civic jet.

[B]

Okay.

[A]

Yeah, it's Cessna Citation 501.

[B]

Nice.

[A]

Yeah.

[B]

Yeah. I just had JR Garage on, and he's bought a few.

[A]

The jet that I bought, they are the ones that presented to me. They're actually buying that jet for me.

[B]

Oh, small world. Yeah, but that kid is funny, man. He flew Spirit Airlines to the podcast.

[A]

Dude, I'm a. I'm a Spirit member myself.

[B]

Yeah, I was.

[A]

That. They're filing for bankruptcy now, so. They are. Yeah, they just. They just submitted their. Their extension for their quarterly filings because Frontier just backed out of their acquisition. No way.

[B]

Now there, I flew Spirit for the first time ever last month, and now I'm like, dude, I don't notice that much of a difference. I'm just going to fly Spirit more To be honest, I've.

[A]

I fly Spirit. I fly Frontier all the time.

[B]

Well, they have that negative stigma of like older plane and stuff, but.

[A]

No, not at all. They're, they're budget planes, so the seats are not as comfortable. They don't have all the bells and whistles. But a lot of the planes that you see from Frontier and from Spirit, some of them are even newer than what I see from America. Now, don't get me wrong, I don't really fly like JetBlue or the nicer airlines. And those are really nice. Like, you know, if it's a specific, like long travel plane, plane, I would now with the family, I take that into consideration. But dude, if I'm flying to California, it's a 45 minute flight. It's. It's called like the Savers Club. I think it used to be like 69. I kid you not. I was a member for like three or four years. Wow. Yeah, I used to get flights for $9.

[B]

Damn. Yeah, I didn't know that was a thing. Oh, yeah, I get the first class on Spirit and it's not bad. I'm not gonna lie.

[A]

There's no first class or whatever it is. Business class.

[B]

My bad.

[A]

I. I got it once.

[B]

You got lectured.

[A]

Yeah, no, during, during. I think it might have been through Frontier. I don't know what it was, but we went to Cabo and that was the flight. And I was like, I'm going to, I told my girl I'm going to upgrade us to business classes. A $50 upgrade. She thought it was cool. And then she sells Frontier, Spirit. Damn.

[B]

So what's going to happen if they're going under? Who's going to buy all the planes and everything?

[A]

Well, that's the thing that, like, I don't know about that whole situation. The US blocked the acquisition that was originally going to happen with JetBlue. And then now Frontier supposedly asked Spirit to restructure their debt for this potential acquisition and Frontier backed up. So I don't if now the government will step in and try to subsidize them so they don't go under, but they're not catching a break. Also, you know, they recently took a flight from I think like Fort Lauderdale to Haiti and their plane got shot up.

[B]

Oh, that was Spirit.

[A]

Yeah, I saw that. Yeah. Terrible. Wow. Yeah. So I don't know how that whole restructure or who takes the hit or how it falls, but that stock went from. It was already down like 98%. Went from $3 and 20 cents, like $1.15 lost 61% when it did that extension because it's showing that not only are we not reporting our quarterly earnings, which is expected from these companies, but on top of that, Frontier backed up from, you know, acquiring us. So.

[B]

Wow. Did you catch that one on the way down?

[A]

No, I. I was shorting it the week before and I closed it out at $100,000 short. I had a conversation with my team yesterday. What could have. Should have.

[B]

You would have crushed that.

[A]

Would have not been saying that. If they said the Frontier acquisition went through and then it shoots up 100%, which is also, you know, very likely. So I just didn't want to take.

[B]

You can't predict news like that at all.

[A]

Yeah.

[B]

You were staying disciplined with the charts, I'd assume.

[A]

Yeah.

[B]

You did short the DJT one, though, right?

[A]

I did. I don't really like to ride those pumpers up just because of, like. Yeah, when they end up turning against you, it could be very dangerous, especially like the whole AMC and GME movement. But DJT was something that I was very adamant about is anytime any movement like that is happening or any hype has been present on my YouTube channel, I just like to bring awareness of the downside. So I was like, I don't know how high DJT will go. I thought that. I was like, yeah, I do believe that if Trump does win, why couldn't it go to $100 per share? Sure. I was like, all I know is one thing, that hype will fade. Fundamentally, this is a really shitty company. This is just the only reason that it's bullish and reacting in the way that it is is a way to be able to dictate or determine, you know, if Trump is winning the polls. Once he got announced the day after it dumped, I shorted it.

[B]

Wow.

[A]

Actually wrote it up and held that position overnight. It was like, 250 shares is a very light position. I went live for it because it's a very significant thing. Then the day after, right in my live session, I closed out my long and then went short and then sold off 20% that day. So. But with those, depending on what brokerage you use, they don't even let you use your full cash balance. That should be a huge red flag to any trader that uses a platform that if they're not allowing you to use your full cash balance on a stock, that's just showing you how risky that stock is. Or if that stock is labeled as a hard to borrow, there's a reason that it's hard to borrow. So when you see those red flags, it's just, you know, your job as a trader to respect them.

[B]

Interesting. Is that because there's not enough liquidity, it could be.

[A]

But also to be able to mitigate risk because if you do go short and all of a sudden it begins to skyrocket, they're going to margin call you and they don't want to put you in a position in which that you literally not maybe can't even tolerate, but maybe can't afford.

[B]

Right. I remember Robinhood did this a few times, right?

[A]

Yeah.

[B]

To GameStop and AMC.

[A]

Yep.

[B]

That was a big deal. I remember.

[A]

Oh, that was. That was halting. I've never seen that. That's different.

[B]

Oh, that's different.

[A]

They didn't even allow you to buy. Supposedly they were in a position where they had to cover their own margin. It was like three or four billion dollars and they didn't have enough capital so they had to close it out. And I think that was through their like a citadel, like clearing firm. It's like an apex clean firm that's on the back end or something like that. I've never seen anything like that. But I also have never seen anything like AMC or gme, so. And when that whole movement got re sparked this year in 2024, when he supposedly came back with like over $100 million or something, I saw that he tweeted it. Right? Yep. Just again, all the hype, we let it ride up. Shorted it.

[B]

I was just going to ask if you shorted that.

[A]

I don't like to short normally risky stocks. Right. But when things like that present themselves, I view them as catalyst based events that are super unique. You know, there's nothing fundamental about it. It's just, you know, there's a lot of hype. They're one off opportunities. One off, you know, catalyst that skyrocket for whatever the reason might be. We all know one thing. If you can just wait and stay patient and you wait for that indication of a sell off, you're able to. I'm able to get my little piece of that pie of as it sells off, it might sell off 50%. If I catch 10 or 15%, I'll be happy with it.

[B]

You're really good at taking the emotion out of it. Because a lot of people want to ride these hype trains and they fall for like the marketing behind it.

[A]

Definitely. I think that's just how we're wired as humans. You want to catch the perfect entry and the perfect exit. And I'M like that as well. There's, there's many times where, you know, there's a specific dollar amount that I'm trying to hit for the day and you become obsessed about, well, I was at it, but then I took another position. Now I'm down. Now I'm going to hold this position until I'm back up. And you go through this like rabbit hole of very poor habits. So one thing that we implemented into our trading is called blind trading challenge where you don't look at how much you're up or down, you close your panel and you trade solely off of the charts. So you should have an entry, exit, stop, loss. It doesn't matter how much you're up, doesn't matter how much you're down. You should be locking in profits based off of, you know, if there's lack of progress based off of price action or if there's a break of pattern, respect it and just close it out there. Doesn't matter how much you're up or down, it's insignificant to the actual trade opportunity.

[B]

Wow, that's cool. So can you even see the name of the stock you're trading?

[A]

Yeah, you could say you can see that. You just don't see how much you're up or down.

[B]

Got it?

[A]

Yeah. And then like we did it today when I shorted Tesla, I close it out, open up my short and trade goes according to plan. I know roughly because I can do the math in my head of how many shares I have, you know, the dollar per share that I made. So I know roughly how much it is that I'm up or down. But it's just so you don't obsess about it because it does become a very psychological and emotional thing where you add these like extra barriers of like error that you could make. Because you want to make $100 today, who cares that you want to make a hundred dollars, that the trade opportunity, this publicly traded stock owes you nothing. So you wanting to hit a specific milestone of a hundred dollars or a thousand dollars, it's completely irrelevant to the actual trade opportunity itself. So trade the charts if you're going to be actually trading not the dollar amount that you actually want to hit.

[B]

I love that. Have you ever copied Nancy Pelosi's trades?

[A]

Now we track them. So yeah, have I ever copied her trades? No. There's a 45 day, you know, delay when it comes down to these politicians.

[B]

Oh really? Yeah, because there's a bot that copies the trades. I don't know if you've seen it.

[A]

Yeah. Autopilot or something like that.

[B]

Yeah.

[A]

Pilot. Right.

[B]

So they're 45 days late on her, everyone.

[A]

Because they have up to 45 days to submit their trades. But a lot of these politicians are. I went off of these applications that track them themselves because I wanted to look more into when were they traded and when, when were they actually traded, when were they submitted? There's a lot of these politicians that submit their trades 200, 300 days after. You wanted to guess what the penalty is for these politicians that if they file late, guess 5200 bucks. No. For their first infraction. When it comes down to this, and there's no public record of any of them actually ever paying for it. That's the part that just baffles me. Is that like it's so unfair? Yeah.

[B]

I mean, she's what, 70 years old and she made 100 million or whatever.

[A]

7. It's, it's her husband. Right. So because of him being a hedge fund manager. But yeah, to my understanding, she's been this year. Her being back in the house is her 20th year to represent San Francisco and I, I just think it's absolutely insane where I'm really excited to now see with Elon and Vivek supposedly coming in as the doge directors of government efficiency, if they really begin to reduce our wasteful spending. I think having these wasteful politicians in the way that all they do is there's a line of like, you know, lining their pockets when they're, you know, supposed to be creating laws and regulations that are in our benefit, but yet they continue to invest in companies that they regulate. You know, if, if a baseball player, professional athlete is not allowed to bet in games that they partake in, why are these, you know, political figures creating laws and regulating companies that they're able to invest in? It just does not seem like a fair playing field. So yeah, there's a 45 minute, a 45 day delay when it comes down to their ability to actually report. Nancy Pelosi actually does a really good job in reporting them. She does.

[B]

Hats off to her.

[A]

And she's not actually the best one out of all of them.

[B]

Right.

[A]

And you know, she's just the most popular because of her net worth because she was the House, the Speaker of the House. But overall it's, you know, I think she was like seventh last year in 2023. For the best trader in the House.

[B]

Is that based off percentage gains or.

[A]

Based off of percentage gains? But she has one of the highest dollar amounts she takes like 11 to maybe 15 trades a year. So there's some people, some politicians that take 200 plus and they're constantly following, but they do it with maybe a few hundred thousand. Overall. Nancy Pelosi is trading with millions, right? So therefore she doesn't have to make as as many trades, but her trades are more of quality where you know, she has or is notorious for selling and liquidating some Visa shares. You know, a day before they were being investigated by the DOJ or you know, one month before Nvidia actually announced a partnership with the US government, she was able to invest in Nvidia.

[B]

That was the big one.

[A]

I was able, yeah, that's, it's, it's more of the like, wow, you know, that is very unique timing. Or maybe if it happens once, okay, twice, maybe a coincidence, dude, we're like on the fourth or fifth time and it just continues to happen. So I think it's just good to be self aware where I really hope as Vivek and Elon come into their positions, I think that is my biggest focus. You can say that you're pro Trump, you could say that you're pro Biden or Kamala or whatever the case, I don't care. I think our biggest focus right now for the American people is that everyone continues to talk about policies that might affect 5 or 10 or 15% of the US population. One thing that will affect all of us is our deficit. We're nearly $36 trillion in debt and, and there is no change that is happening in how we are wasting our money. I just really hope that with these two in power that supposedly are some of the greatest minds of our generation can really implement a change to take us down a different course that actually do not continue to get the lower income people and the higher, the wealthy class to continue to point the finger. If it's your fault, it's our fault. It's, you know, it's these people that continue to manage our funds, right? Our taxpaying dollars that continue to manage it. However it is that they see to be fit with this wasteful spending and then when they don't have any of it or we continue to add more into our, our deficit, they blame us. Like, hey, you guys actually just need to pay more. Well, just like if I'm a manager for you, let's say I'm an investment manager for you, if I continue to lose your money, you're not going to want to continue to invest your money. It's not your fault, it's Mine, I'm the one managing it. So why is it any different for our politician? Even Warren Buffett's notorious for saying a quote where I have a way to be able to fix our deficit problem. He says if the overall GDP has a deficit of more than 3%, none of the House of Representatives or anyone that's part of the Congress is able or eligible for reelection. It's literally holding our politicians accountable. That's all we ever have asked for. I don't care what color you care to dye your hair. I don't care who you want to be. I don't care about any of those things. It's. If we do not change the way that we are spending our money, that is something that 100% of the US population will be affected by. And to me, that is a more urgent matter than anything else.

[B]

Absolutely. It's like hot potato with the debt, right? We just keep passing it on to.

[A]

Our kids and inflating it.

[B]

It's crazy. And I just found out we'll be out of Social Security money in like nine years. So he can't even retire now, supposedly.

[A]

Yeah, I mean, yeah.

[B]

I mean, that's scary. I mean, we'll be fine. People like us, but like just the general person not being able to retire.

[A]

That's the thing. It's. People like us most likely will always figure out a way. Right. But it's the average person where they continue to say that our economy is thriving. And if you look at the stock market, you might think of it to be. Because markets are at all time highs. What is it? I think it's less than 50% of the US population isn't even invested in the stock market. So how can we even consider that to be a metric of, you know, American success? It's. I think the top 10% of income earners own 89% of publicly, you know, or household shares in the stock market. It's just, it's really important to understand that when they present these numbers that they're always favored in a way to make it look like we're doing extremely well. If I were to ask you a really simple question of, you know, do you know what our inflation rate is? Do you, do you know that? I mean, it's come down right? It's come down right?

[B]

Yeah, it's.

[A]

As of right now, the most recent filing was just this week. I think it was Tuesday or Wednesday of this week. It's 2.6%. Sounds relatively really low, right?

[B]

Yeah.

[A]

But it's because the CPI data report which is the Consumer Price Index report is calculated in the last 12 months. It takes the last 12 months into consideration. What we pay, we're comparing to what we paid four years ago, eight years ago. And if you were to take that into consideration, we're paying nearly 50 to 60% more for these cost of goods. So I feel like it's not a lie technically based off of how it's calculated, because according to the Bureau of Labor Statistics, that's how our inflation report is calculated. But if you actually look at what the American people want, they just want to be able to afford food. They just want to be able to afford housing. And right now it costs more to own a house than it does to rent a house. Right now, it costs more, 50% more to be able to provide food on the table. And I think that's why we saw such a landslide where we continue to try to feed the American people of supposedly what problems they should care about. Where all the American people want to do right now is be able to provide for their families. I think that is the most important thing and making sure that the people that we have in power are actually implementing and putting policies into play that are actually in favor for the American people not to line their pockets.

[B]

Facts. And you saw none of that being said on the Democratic side?

[A]

Definitely not.

[B]

Which was crazy to me.

[A]

Yeah.

[B]

Like, she wouldn't even address it.

[A]

Yeah. And I mean, yeah, obviously I'm. I'm. I'm more for one side. I'm a huge Elon fanboy, so I obviously want to see Elon do great things, but I just really hope that there wasn't just all this hype to, you know, r a bunch of people up and then nothing gets done in the next four years. I really hope that they walk the talk that they've, you know, showcased and that they implement a change where I want to see everyone win. I want to see the lower class, the middle class, upper middle class. I want to see everyone invested in whatever it is that they want to do. And I want to see this just very. Just like, nasty world that we live in. When it comes down to, like, well, I, you know, I voted for this person. Or it's. It's so divisive. It's. I don't care who you vote for. I don't like your. Your political preference shouldn't define you as a person. It's. We just want to do well and we want to provide for those that we love. You know, I don't feel like that's too much to ask.

[B]

Facts. Well said, man. Well, Ricky, where could people watch you trade and keep up with you, man?

[A]

Yep. So I'm on Instagram, and that's where pretty much I post my most active content. So anything when it comes down to trading the market, running, buying and selling houses, all that stuff, and posting pictures and videos of my little girl, daughter, you guys can follow me on Instagram or I'm also on YouTube. I have 1.2 million subscribers there. So you ever want to tune into our live sessions, you can say that you saw me in Sean's podcast and I'll hook you up with your life.

[B]

No, I appreciate that. Thank you. We'll link it below. Thanks for coming on.

[A]

Appreciate it, man.

[B]

Yup. See you guys.