B (3:08)

One of the biggest mistakes that, that I made is I started looking for deals before I started looking for people. And if people have heard me share this story before, I apologize, but it's instructive. I'll give you an example. So my wife and I, we read the book Rich Dad, Poor Dad. We're newly married, you know, not quite newlyweds, but pretty close. And a friend of mine gives me this book, Rich Dad, Poor Dad. And I started reading it, and immediately I knew I wanted to share this with my wife. So I bought another copy. And as my wife and I do, we do everything together. I said, hey, would you like to read this with me? I'll read a paragraph, you'd read a paragraph, and let's go through this journey together. So we finished the book and the mistakes that we made started is we were going to be real estate investors and we failed miserably. I'll bet we looked at a hundred houses. We didn't buy one. Not one. And it's because we just thought that book was about assets and liabilities. We didn't understand what that book was. My wife found it, in fact, she said, let's read it again. You know, he failed, didn't buy anything, no progress. And she said, let's read it again, see what we missed. I go, we missed anything. We read every page. She goes, let's just read it again. And I'm not kidding. We go to approach the book for the second time, and she says, I got it. I know what our first mistake was. I go, haven't you opened it yet? She goes, look at the COVID She goes, this isn't a book on assets and liabilities. This is a book on mentorship. Rich dad, Poor Dad. We already have poor dad. So we're halfway there, man. And we made a shift. We made a shift where we stopped looking for deals. In other words, we stopped looking to just do a deal or find a deal to do. And we started looking for people that could teach Us how to get things done. And that shift in focus from people just want to invest. And what happened is we made a shift from the culture of advice to the culture of education. So let me talk about the mistake, if I could, because I think it's a great thing that I learned, and if someone can learn it, I think it'll help them. So Wall street is this culture of advice. And the question I get more than any other is, andy, if you only had $10,000, what would you buy? Or, andy, what do you think of bit? Andy, what do you think of real estate? Or what do you think of this AI stock? Or, you know, they're asking advice. You know, if you were to say, andy, should I buy gold? If I said yes, or if I said no, would you know anything more about gold than you do before? And if the market changes, then how do you know when to change? So when people say, what do you think about gold? I says, what do you know about gold? If they say, nothing, this is probably not your best asset. So we shifted from this culture of advice, of trying to figure out what to buy, to a real culture of education to learn how to buy it. And it was amazing. I was at a gathering within probably a month. And what you focus on expands. What you look for, you will find. Instead of looking for deals, I'm looking for people. And I'm at this party, and an old basketball buddy of mine from a few years ago named Greg, hadn't seen him in a few years. And I says, what are you up to? He goes, well, I'm a real estate investor. Really. So now I became kind of a stalker. And I said, you know, I want to come to your office and watch you do this. Watch you, Watch you do. He says, what? And he says, really not that interesting. He goes, interesting to me. I go, I've been trying to buy real estate for six months. I haven't bought one. I just want to see how it's done. And with a little convincing and some bribery, he said, okay, you and your wife, you'd be in my office. 9am By Wednesday, we had our first property. So that shift from just trying to find an asset to really finding a person that could help me. I think that's one lesson. One mistake that you make is if you try to go it alone, very few people I think, can stand and win entrepreneur of the year and say, oh, yeah, I did this all by myself. And, you know, this was easy to do. So one mistake is trying to do things on your own. It's a team sport.

A (7:30)

I'm curious, when you look at that first deal that you did, what was the thing that shadowing Greg showed you that you were not able to figure out on your own?

B (7:43)

Well, first of all, I would look at a deal with no education, and there was a fog of concern that would come in. We looked at a lot of deals, but I'd say there were just details to it. I'd say, well, why are they offering for this price? It seems like a good price, but maybe it's not. I didn't feel comfortable in pulling the trigger. And what if the renters baked crystal meth in the basement? And right now it's summer, but what if there's a leak in the roof and I can't see and I don't know construction and all these questions that I didn't know. The thing I learned from Greg is he had a system and he had a checklist that he would go through. And he says, here's how you check these things from financing to. He had people. He had connections with mortgage brokers, he had connections with agents. He had money lenders. Another thing I learned was, is he said, you know how to use the debt, right? And that you could use private money instead of your. I mean, there's so many of those things. So the details. The biggest thing I learned from Greg is there was a system and he invested based on criteria. He had a very specific criteria, and if it matched it, it was a deal. If it didn't match it, it wasn't a deal. And he just. It was actually quite simple from. From that point on.

A (9:03)

Hey, everyone, Scott here. I just want to take a second and say thanks for listening to the podcast over the past couple years. Obviously this wouldn't be possible without each and every one of you. I have a favor to ask, so I would love to get some more information about you and why you listen to the PO and why you listen to the show and why you tune in every week. And I have put together a short survey and we are using this to help us sort of inform what type of content we want to create and the direction of the podcast going forward. This information is not shared with anyone else, so this is just for us internally and I put together a link so scottdclary.com survey where you can go and you can fill in some information so we can know what kind of content you love. Also, for the first 100 people that respond to the survey, you will be entered into a draw for a hundred dollars Amazon gift card. So we'll be giving out one of those to the first people that respond. It should not take more than two minutes of your time to fill out the whole survey. It's really not that long and it will help you shape the future of the podcast. So I really appreciate each and every one of you and thank you for listening. Lingoda is a partner of Success Story. Look, I'll be real with you. My French used to be solid. I learned it in school. I even had decent pronunciat. But when I booked trip to France last year, it was a total blank. I could barely order a croissant without sounding like a tourist. So I jumped into the Lingoda Sprint challenge and man, it changed everything. I'd take live classes late at night after podcasting. Only five students max. Real teachers, real conversations. And in just two months I went from bonjour to holding full conversations at a Paris cafe. Confidence unlocked. Now here's the play 30 or 60 classes in 60 days and if you finish them all you get 50% cash back. That's basically €4 or $5 per class. That's insane value. Go to try.lingoda.com success_ sprint and then use my code Scott Sprint for an extra €20 off on top of their current deal. Registration closes May 5th. Classes start May 12th. Let's get fluent. I just want to take a second and thank Cornbread Hemp for supporting today's episode. Now, Cornbread Hemp CBD gummies have been this really nice addition to my wellness toolkit. I don't use them every day, just when I want to unwind after those extra busy weeks, but they're perfect for those moments when you want to take the edge off and just find your balance. Really just shut off from work. And what makes them special is how Cornbread Hemp crafts them. They only use a flower of USDA organic hemp plants. That's the best part for the purest, most potent experience. No fillers, no artificial fluff, just clean full spectrum goodness and delicious watermelon, berry and peach flavor. I keep them in my nightstand for those moments when I just need a little extra help relaxing. And I love how transparent they are too. Every batch is third party lab tested so you know exactly what you're getting. And they put together a special offer for all Success Story podcast listeners. All listeners can save 30% off their first order. Just head to cornbreadhemp.com success and use code success at checkout. That's cornbreadhemp.com success code success for 30% off your first order of these amazing gummies. Outside of having a checklist or a system, we actually just spoke on another podcast a lot about mindset. So I think checklist system is very important. What are some fundamental mindset shifts that you went through and you think other people have to go through to be successful investors?

B (12:53)

I'll revert back and maybe hit that nail one more time at the risk of pounding running it too far. I've taught for 30 years now. It is so hard for people to go from the advice mindset to the education mindset. That is so tough. And the reason is the advice mindset is lazy. You think about. I have so many people say this, well, I don't want to learn anything. Just tell me what to buy. In other words, I don't want to do any work. I don't want any growth, I don't want any knowledge. Just tell it. It's like they want free money. Well, just if you just tell me what to do, I'll do this and I'll get free money. And there's no effort that. And that's how Wall street gets rich, by the way, is they take that mindset and they charge fees under the guise that they could do it better than you, and they get rich because of it. So I would say, above all, making that shift from the advice culture and listening to other people telling you what to do to the education culture where you don't need advice, you know what to do. So I would say that's a mindset that is really, really important. And then you and I spoke about this one is I have, you know, I have four. Four main areas of study. When people say, all right, education boy, you know, what should I learn? I say, well, you should learn four things. And the most important of those four by far is risk management. The mindset of understanding risk. Not from a tolerance. You certainly have to have some tolerance. But understanding risk, I would say mechanically, maybe might be a word to say it, to take that concept of risk and make it measurable and understand what those metrics mean and understand the relationship between risk control and sizing and all of the different tools we have for risk. I think the mindset of understanding risk, that's a huge one to have. If a person can't deal with risk, forget about it. It's over before it starts.

A (15:08)

So those four pillars, so you have fundamental analysis where you understand the numbers. You have technical analysis where you read trends and patterns. You have position for strategic placement of cash flow. Then you have the risk management Talk to me about how these sort of four pillars, they all work together. Because you mentioned risk is sort of the first one that you need people to understand, but then there's three more that are also very important.

B (15:32)

Yeah, I'd say risk is number one in terms of importance, but it's really the last but not least. It's the last thing you do before you pull the trigger is you evaluate risk. So I start with impressive that you know those four. We, we, we start with fundamental analysis and the word fundamental. If, if you don't mind a long form podcast. This is nice because I get to talk about a little bit.

A (15:55)

You do. We have, we have no time limit.

B (15:59)

Yeah, we can edit. We can always edit. You know, I'm the guy asked me a ten cent question, I'll give you a five dollar answer. So fundamentals is an important idea. What is, what is fundamentals? What does that jargon mean? Well, everyone knows what fundamentals are. They're the important things. They're the things that are basic. If you're going to be a basketball player, you got to dribble, pass and shoot or you're going to struggle. The fundamentals of marriage are listing communication, love, unselfishness. Right? There's just certain fundamental things. Well, in every business, in every entity, whether it's a household, a church, a non profit, a school, a nation like Venezuela or the us Everyone has a financial statement. Everyone does. They have income, they have expenses, they have assets, they have liabilities, they have a statement of cash flow. And a person can look at those as a start. And there's just certain things that should be there fundamentally. You should have cash flow, you should have earnings and run a surplus, not a deficit. That's fundamental. You should have value. You give to other people. You know, all a business is, if it has earnings, all that means is that there's some value that they're giving to the world and they're able to deliver that value with certain efficiencies that allow for profit. That's all it is to me. So when you invest, you're really a business owner. So if it were a stock, for example, or even a real estate deal, for example, we'd say, look, are these fundamental boxes? We mentioned criteria. Can we check those boxes? Warren Buffett says, is there a moat? You know, he talks about Coca Cola selling 2 billion drinks a day. That's a castle that you can have a Cola war in the 80s and you're not going to win that thing. I mean their moat is solid because the Value they deliver on such grand scale and such efficiencies. So the first two fundamentals and technicals are information gathering. And the first fundamentals tells me there's just, are things running the way they should? Are they checking the fundamental boxes of a business? That makes sense. And generally those are valuations. It helps you know what you're buying. If price is what I pay and value is what I receive, fundamentals gives me the lighting to know what I'm getting. So for example, you're in the VC world, you've had a lot of experience in, you know, accredited investors. So if I get a ppm from you and you say, here, invest in my deal, you know, the longer the brochure, the worse the deal. Usually because they're having to flower this thing up and put lipstick on the pig with this big long brochure. Just show me the fundamentals and I'll know. Show me the fundamental analysis. Show me those basic things and that they're in order and then maybe we risk some capital. The second pillar you mentioned, which is technical analysis, is studying markets and sentiment. And that's important for more than stock investors. That's actually really important for options investors because the difference is, is, you know, when you buy a stock, you own a company, there's no expiration date. So you're always going to invest in a stock, but you're always going to trade an option because they expire. And that expiration date has a lot to do with where the price is. So we need, if we're going to add the, the option element to that, we need to understand how to get metrics and take emotions of market and put it into data that we can interpret. So once I have an understanding of the business and then I have an understanding of the emotions of the market, I can take those two things and it's just information gathering. I can't change fundamentals, I can't change market sentiment, but I can take that information. And then I go to the third one you mentioned, which is cash flow, how am I going to position myself to share and contribute and share in those profits? How am I going to put myself in the way of that success and share in that opportunity? And then of course, the last one you mentioned is, okay, when that's all over, what's your plan B? And you mentioned earlier, what's the difference between gambler and investor? Gamblers don't have a plan B, they bet on red. And once the wheel starts turning, what's your plan B? If it misses you don't have one. But investors, they have exit strategies, they have hedges, they have insurance, they have, you know, sizing. They have lots of strategies for adjustment. They can pivot, you know, while the wheel's still spinning. You mentioned KPIs key performance indicators. If those start to get ugly, you can pivot and move and influence. So those are some of the. So those are the four pillars of investing. And that's usually where I start with a new investor is saying, let's learn those four because they transcend language. I mean, show me any company in the world, income, expenses, asset liabilities, it doesn't matter where. Which might be why Warren Buffett, you know, he's investing in Japan a lot now. It's the same game, same thing.

A (21:17)

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