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Ralphs. Fresh for everyone. ♪ Happy Monday, Radicals. It's a brand new week. What do you say we make it a good one? Let's kick it off with an in-depth interview with Nick O'Kelley, author of Live on the Margin. And let's talk about how you can design and live a life of adventure.

♪ Welcome to the Radical Personal Finance Podcast. My name is Joshua Sheets, and today is Monday, February 2, 2015. Welcome to the show. Today, let's talk about not living the deferred life plan, but rather how you can design and build a life where everything is integrated together and you can enjoy some pretty cool adventures long before 65.

♪ Nick is a very cool dude, and this is a very cool interview. It's pretty hardcore. We talk a little bit about, well, a lot about financial planning. We talk a little bit about how to fund financial planning. We talk a little bit about trading. Nick and his co-author, Patrick Schulte, wrote in the book Live on the Margin and developed this very strange cocktail of personal life advice and trading advice.

It's a really interesting book, and I recommend it. I definitely recommend it. It's a really fun book, but it's this very strange mixture of stock charts and options trades. Now they all work, combined with life advice, advising you to sell your house and sell all your junk and move to a tropical island somewhere.

It's quite good. It's quite fun. I'll mention a little bit more on it at the end of the interview if you care to go and buy the book and check it out. I was really thankful that Nick came on the show. I first got in touch with him after I interviewed his co-author, Pat Schulte.

If you haven't heard that episode, it's actually episode 50 of the show. It was entitled From an $8 an hour job after college to financial independence at the age of 30 to 10 plus years of global travel with family. You can find that at radicalpersonalfinance.com/50. This interview with Nick covers a number of different areas.

What I was fascinated to hear is since I wasn't familiar with Nick's story prior to the interview, I was fascinated to pull out of him just some of the twists and turns of his life. As you'll hear in the interview, it's been a very interesting life. Nick is a sailor.

He's a pilot. He's an entrepreneur. He's done all kinds of interesting things. You're going to enjoy his thoughts on how to integrate those with finance. We even get a little touchy-feely during the middle of the interview, touchy-feely in the sense of a little bit emotional, a little bit of self-help.

Be forewarned. Enjoy the interview. I'll be back at the end to wrap things up. Here we go. Nick, welcome to the Radical Personal Finance Podcast. I appreciate you being with me today. Are you kidding me? Thank you for having me. This is an honor. I appreciate it. I'm looking forward to this conversation because we're going to talk a little bit about some of my favorite topics, which is in essence, some down to its own, to the essence of the subject, is how to create an ideal lifestyle at a reasonable age.

Not necessarily pushing things off until the age of 80 to really live, but how do we create our ideal lifestyle at an earlier age? You and your family, you've been able to do a lot of that. I'd love for you to share as a beginning introduction, I'd love for you to share a little bit about your story and your progression from where you came from as a young person through till today.

Wow. I feel like we're on a first date and it's the get to know you question. It is a little bit that way. I'll be back at all in just a couple minutes without boring people. I was a poor child, which came, no. I was raised by hippie parents in the forest in poor towns in Washington.

We literally cut down a patch of trees and my dad built a house. I don't want to say we were poor, maybe financially we didn't have much money growing up. Money was never really a focus for me. I was much more of a free spirited child and really only started thinking about what money really meant for my lifestyle later in life.

I was really free to pursue my passions. I originally wanted to be a pilot. Actually, I am a pilot. I went and got the licenses and was headed down a commercial track. I spent a summer up in Valdez, Alaska. I didn't have the hours to actually fly the bush plane.

I was basically a glorified baggage boy and gas man. Getting to know those pilots, I came to realize that even the most exciting flying in the world still got really boring. I was maybe a little lost for a couple years getting into college. I found that I had become fascinated with meteorology, with weather.

I got done with my undergraduate and went off and got my masters in atmospheric and oceanic sciences. This is where I really came into my own in terms of what took me into the trading world and what is, I guess, set the stage for some of my financial, I don't want to say success, but some of the skills that I learned that allowed me to head off traveling.

In meteorology, atmospheric and oceanic sciences, I was interested in forecasting, which is predicting the future basically. It's about, well, it's about a couple of things. First of all, it's about pattern recognition. Then it's also about some fairly high-level mathematics, geophysical fluid dynamics, and statistical analysis, and that sort of thing.

I just found that I had this talent for predicting the future. I worked as a meteorologist on television for, gosh, I think it came out to be 10, 12, 13 years in the San Francisco Bay Area. This was at the-- when I first came to the Bay Area, it was the height of the dot-com bubble.

What I thought was a great salary, working on television, forecasting the weather, it turned out to be not so great because there was a lot of guys, a lot of people my age, relatively young, my mid to late 20s, that just seemed to be killing it. They had all these stock options.

I basically came to trading as a retail investor, just a total noob, just watching CNBC and open up an E-Trade account. I just started trading. My trading was not sophisticated at all. I mean, it's laughable now. I would basically watch the hot stocks, buy them. As soon as people started bad-mouthing them, I'd sell.

A year later, I don't remember the exact percentages, but I think I turned my, I don't know, a few thousand bucks, maybe it was eight, ten grand into like 20. I was like, "Wow, this is pretty easy, man." I wasn't trading options. I wasn't trading any derivatives or anything.

I was just buying securities and selling them when they didn't look hot anymore. You were just doing straight long calls. You weren't selling short or anything? Oh, right. I didn't even know what that meant. There was a transition. Nothing in life is ever very simple. I finally had enough cash in the bank and got a promotion to work.

I started thinking about, "Oh, I want to buy a house." We were living in a pool house in the Saratoga Hills, which was awesome. It was gorgeous. We were in a 400-square-foot pool house, and I still aspired to more. We sold out stock. That was coupled with this realization that all those people that I'd meet that had these crazy stock options, they were now on their second and third gig, and they were looking for the new thing.

This is roundabout 2000. We're creeping up on it. I basically accidentally sold all my high-tech stock at the height of the bubble. We bought this crummy house. I'm trying not to use foul language. I appreciate it. Crummy house in a so-so part of San Francisco. We started pouring all of our money and blood, sweat, and tears into this junkie house.

Everybody around us was doing the exact same thing. I started to notice a pattern. I was like, "Gosh, if you follow the herd a little bit, but you stay ahead of them, you can make some coin here." As my neighborhood was improving and everybody was sprucing up the yards and stuff, we finished all the renovations we wanted to do.

Literally, somebody knocked on the door and said, "You want to sell?" We're like, "Okay." We happened to sell basically at the height of the first—people don't really remember this—but the first housing bubble, at least in the Bay Area, around about 2002. This is where we entered the world of travel.

I come from a family of sailors, my aunts and uncles. I have a big family, big into sailing, big trans-oceanic sailors. I've always had that dream. My wife and I bought a big boat, turned out to be way too big, and moved on board and sold everything and headed out for an adventure.

Hopefully, my phone's going off. Sorry about that. Hopefully, I'm not getting too boring here. When I headed off sailing, I initially thought, "Okay, not having an income, quitting my job would be fine," but I really felt this need to continue to generate income. Got back into trading and got a little bit more sophisticated about it, and slowly dipped my toes into options trading and learned along the way without any real formal training.

That adventure lasted for a couple years. Then we came back, and I went back into television and then felt this need to try my hand at entrepreneurial pursuits. I have this fire. I think from listening to you, you have it as well, this need to build my own thing.

I don't know. It's like an inner rebel or something like that. It's not that I am anti-authority, per se, but it's just I have this need to make this thing of my own. It's kind of an adventure. You feel like you can create something. I think many entrepreneurs, money is nice, freedom is nice, but many entrepreneurs, it's almost a creative outlet to be able to build something that does something that you feel is important and be able to stand back and look and say, "There's the work of my hands." I'm really glad you said that because having been through a couple entrepreneurial pursuits now, I feel that money is a barometer, it's a measuring stick.

The successful entrepreneurs that I know, they don't go out and start buying a bunch of cool stuff. They are proud of what they've created, and they dig the fact that they created it. That's definitely what I came to realize. I started this company. It was difficult. I didn't make as much money as I had made in television, but I certainly learned a lot about myself and about business.

I was lucky enough to sell the company in early 2009. This happened to coincide with basically some divestiture I had accomplished in 2008, which again, happened to time the market very well. You're like the golden boy of market timing. I'm coming from the Mark Cuban school of thought. A lot of, especially fund managers, will say, "Stick your money with me.

You can't time the market." I'm like, "No way, man. That's what it's all about." If you're paying attention, you absolutely can time the market. It's just realizing that the market means different things in different sectors. You can't just say, "The market's going up," or, "The market's going down." It's like some parts of the market are going up, some are coming down.

It just so happened that in 2008, I saw a lot of indicators that told me, "It's time to absolutely pull the ripcord on real estate." We had a huge house at the time. I said, "We got to get out of this." My wife was in agreement. We initially listed for, I can't remember what it was.

This was the realtors advising. He said, "I think we'll initially list it for 1.1." After 30 days, nada, nothing. I was like, "We got to get aggressive." We dropped it like 100K. I think we had two or three buyers come through. This is a fantastic house. It's gorgeous. I said, "No, we got to get more aggressive." I can't remember what the next cut was, but we bailed out of it.

Still a huge profit. When you see that things have turned, don't get hesitant. When you see the writing on the wall, you've got to move. I was divesting partially because I wanted to put money into my business and partially because I could see the market was turning. I sold that business.

We went off for another long sale, bought another boat, and headed off sailing. Since then, since 2009, we have been what I'd call part-time adventurers. We usually take two or three long, I wouldn't even say vacations, but trips per year, six, eight weeks. My wife and I are working.

I'd say nine months a year, 10 months a year, sometimes eight months, other years. Then we're going off and seeing the world. That's how we do it. When we're traveling, I'm much more actively trading. I'm indeed living on the margin, making money while we're on the road. Are you primarily taking sailing trips?

In the last year and a half, we have a dog. We don't have children. We have a dog that we love to death. She is getting older. A year ago, we realized that she was not liking the boat so much. We bought another small RV. We've had a couple RVs.

The last few trips have been on the road. Again, I think we talked to OffAir about this. We're getting ready for a sailing adventure for this spring. We're going to head north from Portland and head up to southeast Alaska or almost to southeast Alaska. We're both going by boat and by land.

That's neat. What was the timeline? How old are you now? I am 41. The timeline, if we go back, you're looking essentially at 10 to 13 years. Was your first major trip at about the age of 30 after you worked as a meteorologist? I think it was like 28.

We took off at 28. I won't get specifically into dollar figures, but we were not wealthy. We weren't retirement wealthy. I think our net worth was probably $300, something like that. We had been fortunate with what we had made on the house. I had worked hard. I was making a great salary on television.

My wife was working in high tech. That's what we initially took off with. Our free cash, though, was definitely less than $100. We put way too much into the boat. We bought a really expensive boat. You don't have to do that. You can go off and have sailing adventures on a $10,000 boat.

You don't need these big luxuries. I thought we needed everything. The boat had a couple of refrigeration systems, scuba compressor, just absolutely everything. It had a washer and dryer. Wow. You thought you needed a washer and dryer, but the reality is you could probably wear a bathing suit depending on what ocean you're sailing, I guess.

You don't need many other clothes. No, no, no. My heart was in the right place. I had my wife, and I talked about this at length in my first book, Get Her On Board. My wife was definitely resistant, as are many wives whose husbands want to go sail the great oceans.

I wanted to recreate the lifestyle we had on land in a boat. I wanted extreme comfort. I wanted really big, at a 50-foot boat, 35,000 pounds, just loaded to the gills. I thought the more comfortable she was, the happier we would be. The irony is that a boat that's-- I can back up and say any lifestyle that you want to create, an alternative lifestyle, if you make it really big and complicated, it's going to wear you down in terms of how much time and energy and money that you have to put into maintaining it.

This big boat that we had, and this complicated plan to sail around the world, man, I was working on this thing all the time. It was a heavy load. We came back to land-based life. I got an opportunity that I couldn't resist in Denver to come back to television, another fast salary and doing weather in a very exciting meteorological place.

Denver, you have thunderstorms, big snows, big cold, it's hot in the summer, which it was fantastic. We came back to land-based life. We've been in and out of this adventure mode almost continuously since then. That's basically the lifestyle that we like. We're not full-time adventurers. So, I wish I'd interviewed your wife separately.

Actually, the audience has asked me, they said, "You don't have enough women on the show." I've put out a call. I said, "Hey, bring it on. If you can help me find some guests, I'll do that." I want to talk about your book, Get Her On Board, in a few minutes and just see what you've learned.

Probably what I should have done was talk to her first to see what you did well and what you didn't. I'm curious, was this part of a grand plan? You went off sailing around the world in your late 20s. Was this part of a grand plan for adventure or was this more of a, "This sounds fun.

Let's do it," type of approach? I would say, to be honest, it was a mixture of the two. What got us out the door was a grand plan. What we realized right away was that doesn't work. Having a grand plan, you're just going to set yourself up for disappointment or hurry along too fast or whatever.

Initially, it was this big grand plan to go sail around the world. We did not sail around the world. We sailed down to Mexico and spent a season down in the Sea of Cortez and then decided we'd take a break. Initially, it was like, "Okay, this is what we're going to do.

This is year one. Then we're going to be in the South Pacific and then New Zealand." We came to realize, "Man, that's too much pressure." Our lifestyle now is we just take off and often on a whim without really—we'll know which direction we're going, like north or south, but we really find a lot more fun and opportunity when we're just open to who we might meet.

We're always meeting the most fascinating people. Some of those, by the way, have turned into trading opportunities. I've met people who—they're not giving me insider information but have given me insights into industries I never would have thought of that turned into very profitable trades. We treat the whole thing with much more loosey-goosey attitude than we used to.

It's kind of a shift. I wonder if it's something due to our U.S. American culture or whether it's due to—I don't know what the factor is, but it certainly seems, at least of the travel logs that I've read of people who have gone out for extended travel and my own personal observation, it seems that we're wired to pursue, at least as U.S.

Americans, we're wired to build these grand plans and we're all about checking things off the list. Got to go to every country in the world, got to visit every continent, got to sail around the world, make a complete circle of navigation. We're prone to just checking these things off.

You read the lifestyle and it's like we're just work, work, work, work, work. Got to go, got to go, got to go, got to go, got to get to the next thing. Whereas over time, it seems that travelers, especially if they're doing extended travel, seem to mellow a bit and not worry so much about getting to the next country, the next state, doing the next thousand miles, but checking the next box, but just simply slowing down and enjoying the day a little bit more.

I think you're so right. That's the major benefit that I see in travel, period, is just taking yourself out of your surroundings and being open to what's around you and really noticing things. You come back and just everything seems so much more rich and you just see things that you never would have seen before.

I've noticed the same thing. I was, I think, a big fan of the travel blogs, but in general, I don't really read them much anymore because I do get this feeling like we're just following a script. First, we went there and then we went to the next place. They all tend to read somewhat the same with the exception of a couple.

My co-author, Pat Schulte, he's one of the few travel writers that I read often just because I don't get that sense of go, go, go. He's much more taking his time. His photography's beautiful. He makes observations about what he's seeing that helps to put me where he is. That's the sort of travel writing that I like to read.

I most definitely don't try and do that myself. I've found that when I try and travelogue or write blogs about my travels that I end up experiencing less. I'm always thinking about, "Oh, this is a good photo opportunity," or, "This is something I could write down." It takes me out of being there in the moment, so I don't do that much.

I've transitioned in that way myself, both from following the guidebook. It's useful to get a guidebook so you can have some general idea of what bus line you need to take and where you can find a hotel or a hostel to stay at if you need one. I prefer not to go out and see the list of sites in general.

I prefer my favorite thing to do when I travel and I'm in another country is just simply walk out of the hotel or hostel and go and try to get lost and just see what happens. When you get lost, tuck a business card for your hostel or hotel in your pocket.

If you can't figure out a way to get back, then hail a taxi and give them the card, and you'll usually wind up back there. It's so exhausting to try to check the list of all of the sites and the tours. It's tiring. Interestingly also, I've made a similar decision even with things like photography.

It's so convenient now to have a beautiful cell phone camera in your pocket and take a few snapshots here and there. I marvel now, and I used to do it. I'm not one to tell other people how they should live their life or record their adventures, but I marvel sometimes when you're at a beautiful place, whether it's a beautiful natural view and vista or whether it's a famous monument or edifice of some kind.

If you just stop and look, it's almost as though many of the tourists roll up and they just immediately are looking through the camera viewfinder or screen. The entire experience of the destination is through the camera, making sure that we document that we were here instead of soaking it in.

I feel a little bit snobby. I feel a little bit like I've become a travel snob, and I don't mean to be. It's almost like I just don't understand how I used to do it or why I used to do it the way I did it. Yeah, I don't know.

I don't know if it's conditioning, or maybe it's just the initial thrill when you're first traveling. You're just like, "Oh my goodness, I can't believe we're doing this. I need to get proof so that everybody can see." I'll tell you a couple of stories that maybe confirm what both you and I agree on.

We were in Costa Rica last year, and we didn't know Costa Rica. I prefer not to read the guidebooks myself, and I just like to show up and see what happens. We didn't want to roll into San Jose and then just not know where we were going. You're going to be tired.

It's a day-long trip. Anyway, we booked this place through Airbnb. It's gorgeous, Playa Flamingo. It's on the Nicoya Peninsula. It's beautiful, of course. It's gorgeous beaches, and we got a gorgeous place. It was fantastic and all. We really like to get to know a place through meeting the people who live there.

We started talking with a couple who own this absolutely beautiful, I don't want to call it a resort. It's kind of like a castle perched on a cliff. You can kind of picture it looking out across the beach. These guys, they're Americans, husband and wife. We started talking to them, and they started slamming American politics and politicians and talking about Obamacare and all this stuff.

We were like, "Gosh, are you guys even here? We don't want to talk about that. We're in Costa Rica. Let's hear about that." Then we take off. We had rented this car, and we purposely stayed off what they would call their highways. They don't really have highways in Costa Rica, but we stayed on the dirt roads, the washboard stuff that takes you 20 miles per hour and five hours to go 50 miles sort of thing.

Rolled into Samara, I'm not sure how it's pronounced, and didn't have a place to stay. We stop off at the organic grocery, and they're just in line. Everybody's getting their orders. They've made orders, and stuff got shipped in, and people are picking stuff up. The guy next to me in line, I'm just like, "Hey, how you doing?" I just kind of introduced myself.

Obviously, I didn't do the tourist thing like, "Where should we go? Where are the best sites? Where's the best beach?" I was more like, "Hey, we don't have any place to stay. Do you guys know any cool places to stay?" He's like, "Gosh, it's the holidays. Everything's booked up, but you guys can stay with us." We take this long road out of town, washboard, had to cross a couple rivers, which we later found out one was filled with crocodiles.

We roll up to this gated house. They're Americans, and they're expats, and got their story, but got the total inside scoop on what it's like to move down to Costa Rica and keep a place down there. We learned so much about the place, the lifestyle, just from these people that were out there doing it.

They were doing this off-the-grid lifestyle. It never would have happened if we had a place that was booked. I can give you a hundred examples of how that serendipity has led to adventures. That's the way we like to go now, without much of a plan. >> There's a concept.

I haven't figured out what to name it. I've never really heard or read anyone else talk about it, but it's just an observation I've made in life. Again, maybe you and I can come up with a name for it. Basically, I think that if you're willing to accept some of the potentially poor outcomes, you get to experience more of the potentially amazing outcomes.

I see this applied many times in life and travel. If you're willing to do something where you're not exactly sure where you're going to stay, but your standards are flexible. If worse comes to worse, all the hotels are booked, and I'm staying at some scuzzy, flea-bag place with uncomfortable beds, it's okay.

I'm going to be okay with it. We'll have an adventure. We'll be able to tell something. The reality is, I might actually happen upon a beautiful, amazing place to stay that's at a rock-bottom price because it was a last-minute deal. I see this applied throughout life. For example, I often think about this with regard to financial planning.

One of the biggest challenges as a formal technical financial planner, especially in a discipline such as retirement planning, is if a client is unwilling to accept a potential negative outcome, then you have to build a lot of safety into their financial plan. If they say, "I'm never willing to have my income dip below this amount," well, then that's a constraint that gets put onto the financial plan that I've got to account for.

As such, I've got to adjust the portfolio to a more conservative, predictable portfolio. On the flip side, if a client were willing to accept a lower amount for a temporary period, and they'd be willing or able to restrict their spending for a period of a few years, then we can tilt the portfolio in a direction where there's potentially a much higher lifestyle throughout retirement and much higher residue of the portfolio at death.

But the constraint that the client places of, "I'm not willing to go below this," just like if you're traveling and you say, "I'm never willing to go below a three-star," well, if I'm a tour guide, I'm going to book all those three-star, four-star hotels in advance. But if you're willing to go with a one-star, on the happenstance that we just can't find something else, you might have a five-star experience on a two-star price.

Yeah. I think you're delving into deep waters here. There's so much to talk about with regard to what you just said. I think what I will attack it with is this idea of personal responsibility. I don't want to put words into your mouth or make criticisms about the financial planning industry.

I have great respect for it. But I do think that one of the functions that a financial planner has is to assuage or help lessen anxiety about money. So your function is to decrease the anxiety through the tools that you have and the knowledge that you have. Well, they could also do that themselves by learning more about the financial markets or doing a better job of managing their own finances.

That doesn't mean that your function is any less valuable. But the same thing happens with trading. The same thing happens with travel, is that people have perhaps a level of anxiety about these things that could probably be diminished by learning more or letting go of more. Of saying, "Okay, just like you said, I will forgo the guarantee of three stars for the potential of five stars or one star." And being okay with the fact that either one of those outcomes could happen.

I'm going to use my resources and my knowledge to try and get the five stars as much as possible. But I'm going to take personal responsibility for it. I think a lot of people aren't willing to take personal responsibility. Even if they think they are, they make choices to allay their fears rather than diminish risks.

Because fear and risk are completely different things. Right. You're absolutely correct. And it's certainly, you're absolutely correct. What's so challenging in how to negotiate these waters with regard to finance, because there's so many facets of the conversation. And there are so many, there's such a broad, diverse range of clients and potential clients.

And it's difficult as a planner, having been in that position where I am responsible for another person's outcomes. It's very difficult, I find, for at least me in my personal character and moral code. It's very difficult to be personally responsible for somebody else's potential negative outcomes. Totally. And I remember probably the most pointed example of this was I read the story, I read the book called "The Big Short" and part of that profile, I forget the hedge fund trader's name.

I'm not sure if you remember the guy in California. He was running a private fund and he has autism and he was running this investment fund. It was a stock fund. And then early in the mid 2000s, when he sniffed out the problems in the subprime market, he made just these massive bets against subprimes.

And he wound up in profiting immensely for his fund. But what happened is it actually drove him out of the hedge fund business. He shuttered his hedge fund after the fact because he got into a battle with his investors where he knew what he was doing and he was willing.

He didn't know the timing as to when his trade would come to fruition, but he had so much of a margin of safety and he'd put everything into this trade. And he had tilted the portfolio from being a relatively mainstream value stock investment perspective to being completely invested in buying insurance contracts.

And he'd negotiated all these things. Just a brilliant move. But his investors were bailing on him when it looked like when he was paying billions of dollars of interest to keep his trade alive as he waited for it to come out. And he actually had put his fund into lockup and he refused to return any funds to his investors while he was waiting for his trade to come out.

His trade came out, but he got out. And my point in telling the story, it's a fascinating story. I highly recommend the book if anyone is interested. But my point is he couldn't deal with the emotion of having to be accountable to other people for losing other people. And that's one of the things that I've experienced.

I don't think I could ever manage an investment fund for other people because I may be willing to take the risk with myself. And I may be willing to live on beans and rice and live in a shack while I'm waiting for a trade to work out. Or if I screw something up big time, I may be willing to take that downside risk.

But it would destroy me to see a client have to downsize their home or have to adjust their lifestyle because of decisions that I made. And there's all these weird psychological issues surrounding money and the money management business. There's ethical issues, there's psychological issues. It's just a maelstrom of arguments and debates.

I don't want to say publicity, but this book that Pat and I wrote was pretty well received. We get good reviews on it. A lot of things have come of it for us. A lot of offers have come. And one was to start a hedge fund. This fund manager, actually, I can't remember his name, but he's published actually quite a few papers and he's pretty well respected.

But he wanted us to start a fund. And initially, I was kind of tempted, but then I was like, I can't handle that kind of pressure. I can't take responsibility for other people's money. The trades I make, man, I'll take flyers a lot, you know, and those sometimes pay off big.

Sometimes, well, most of the time they don't. And that's just the nature of how I trade. But I could never be responsible for somebody else's money. And frequently, when I'm talking with people about the book or just in casual conversation, people want a pick. What are you trading? What do you like?

What are you in? What are you not like? And I just don't even answer those questions anymore. I can't do that. It's not because I don't feel confident in my own strategies. It's more that I feel like if they really want to help themselves, they'll learn how to trade for themselves.

And our strategies are all about getting to know a core group of stocks, products, services, companies that you use, that you watch, that you understand, and not looking for the hot stock. Don't make small trades on things you don't know much about. Make big trades about things you're confident in.

That's where you win. So I think the personal responsibility thing is a huge one for me. And I think that it unlocks a lot of freedom for you in terms of your lifestyle or your entrepreneurial pursuits or your trading or whatever, if you can truly take the good with the bad, if you can take responsibility.

And I think there's a lot of value in backing yourself into a corner, fighting your way out, not having a fallback. I was standing in that grocery line in Costa Rica. I didn't have any fallback. I didn't have a place to go. The entire town was booked. So it was like, I got to talk to this guy.

I mean, I enjoy meeting new people. So that's a benny. But you know what? There was no other choice. I had to ask this guy next to me where I could stay. And it worked out fabulously. Are you aware of anything different in your background that has led you to be able to take that kind of approach that you do?

Because that's not I don't know. I don't know what the what the percentages would be, but that's not a mainstream approach. You are more comfortable with risk than many people. Was it growing up and on an off the grid hippie back to the land movement environment or maybe was there something about your background that you've identified that has led you to be more comfortable with risk?

I don't know. I mean, I guess I could go on and on and on and bore people to tears. But I think maybe partially, yeah, what you're saying. I mean, we moved to Portland, Oregon. My family did in the early 80s. And my we didn't have any money. I mean, we had to be really poor, like as in our church was giving us a box of food.

So I know what it's like to be really poor. Well, maybe not really poor, they're much less fortunate people than we were really poor in the US American context. Yeah, yeah. I know what it's like to have holes in my jeans, you know, and have kids make fun of me because of it and that sort of thing.

So maybe that's partially it. I think also I've throughout my professional career, you know, I'm not a particularly super duper outgoing person. But, you know, I started teaching in grad school and my first day teaching in front of 250 kids, college students, my fly was unzipped. You know, it was incredibly embarrassing, but I, you know, I, I made some sort of joke.

I remember what I said and, you know, and they erupted with laughter and I zipped it up and it kept going. And, you know, I, as a not super outgoing person, I worked on television for years and years and years. And I've just seen over and over again, how much your psychology is moldable.

I mean, your emotions are completely your decision. You can, you can change your outlook on the flip of a switch, you know, and who you think you are, the shy person or the non risk taker. That's completely in your head. I mean, just take a small risk, talk to the person in the grocery line next to you, you know, smile at a stranger, just the little itty bitty things, you know, build up to taking much bigger risks.

You'll have a lot more confidence. So I don't know. I wouldn't say I'm the biggest risk taker in the world. I, as I've gotten older, I'm 41 now, I'd say that I've become more conservative over time financially in terms of my business decisions. But still, I'm astounded how people paint themselves into a little box, define themselves, and then they don't, they don't leave the prison of their own making.

It's especially sad when they're unhappy about it. You know, they're unhappy with the life they've chosen. But it's, you know, it's all in your head. Right. Yeah, I'm interested in just personal development and have been for many years. And I've experienced two things, like two of those types of experiences.

I'm, personally, I'm an introvert and by nature. And yet I learned in high school that I would, that it didn't seem like the introverts were getting the results that other people did. So I learned to pretend to be an extrovert until I became comfortable with it. And to this day, I'm more comfortable alone.

But I can, you know, I've learned to turn it on. And it's powerful once you realize that you can change something about yourself. And then I think one of the most transformative experiences when I went into sales as a financial advisor, then, you know, I was, I had read people and said, if you learn to be an effective salesperson, that'll go with you for the rest of your life.

And learning to, learning to deal with rejection, learning to deal with the challenges and learning to deal with people saying no to you and learning to build tenacity and dogged persistence, which are required for success, especially success in financial services, was one of the most valuable, transformative experiences I've ever been through.

And it's, it seems like all the good stuff is after the tough stuff. And the most important thing is that you are able to become a different person through challenging processes. Well, yeah, I mean, I'm not even sure you become a different person, but it's just, you know, the way that you operate in your life, you see a lot less limits.

I mean, going back to fear and risk, you know, as a salesperson, you know, what's the bigger risk, making the sales call or not making the sales call? Right. You know, Not making. Yeah, that's the bigger risk by far. I mean, businesses are made or broken on sales. And, you know, if you get so entwined with fear, you're going to, you know, you're going to take risks that you shouldn't take.

Yeah, you know, I've become more interested in, in personal development in the last few years. When we sat down and wrote this book, Pat and I have been friends for a long time, and we basically just wanted to do a project together. And the question we asked ourselves was, what can we do?

How can we help people go out and have adventures? What's the excuse that they give, you know, for why they can't go do what they really want to do? And we saw this money, you know, people think they don't have enough money. Well, we wrote a book about not only how to change your lifestyle to get you ready to go have that adventure, but to make money while you're having the adventure.

But what I'm coming to realize, you know, after the fact, we wrote this book, what, two years ago, three years ago, something like that. You know, the, the psychology of change is maybe even more important than this question of dollars. What, what is it about people and the way that they think?

Why are some people successful? Why are some people not successful? I'm not sure it comes down to whether you're outgoing or not, or would you say introverted or extroverted? I don't think it comes down to that. I think, I think it's much more complex. If, if you'll indulge some, some theorizing, this is not founded on anybody else's philosophy or anything, but I think that there are really three people that, that live within us, three personas.

The first is, I think what I'll call like an effigy. It's like what we think we should be, and that can be influenced by culture, by our upbringing, by school, by parents. Of course, as we see on TV, there's this effigy, there's this standard that we hold ourselves to somewhere.

There's this thing we think we should be. Then there's the person or persona that we think we are. We think that we're introverted or extroverted, rich or poor, smart, dumb. I don't know, choose your adjective. And then the third thing is who we really are. The third persona is who we really are.

This is what we know to be true. And I think that people don't spend enough time getting to know who they really are, where their strengths really are, where their power comes from. And I think that the more time you can spend ruminating and deciding that you are an incredibly capable, powerful person, the more able you're going to be to take risks, to take responsibility, know that you can fight your way out of situations, and ultimately, the more successful you'll be.

So don't spend so much time measuring up against other people, bloggers who travel around the world, or traders who say that they're making tens of thousands of dollars per day, or people who have washboard abs. Think more about what's inside. And I think that forms a foundation for success.

It just does, because you'll go off and you'll have the confidence to know that your real self can't be bruised, can't be hurt by not finding that three-star hotel tonight. You know what I mean? Right. It takes time to learn that. I feel I'm almost 30, but I feel like I'm only just a child.

The older I get, the more I feel of how little I know and how little I've experienced and how much I have yet to learn. And I'm thankful to be learning. But I guess maybe it was naive, but I always thought that as I got older, I would feel more and more confident.

And what I knew I find is, I get older, I feel less and less confident in what I know. Can I tell you a little story about you? So I initially found out about you and your podcast from your interview with Pat Schulte, my co-author on the book. And of course, I thought to myself, "This is an earnest guy.

This is a guy who is putting himself out there and doing something that I'm actually interested in doing, which is podcasting." And I listened to a few of the episodes. And I'm actually fairly busy, so I don't listen to podcasts all the time. And I got behind on your episodes.

And it invited me to come on generously, and I had not scheduled anything. And I listened to a couple of your podcasts. And one, I can't remember which episode it was, but one in which you went to some sort of conference and you stayed in your car. You lived out of your car.

And that touched a chord with me, because I think that people focus so much on this endgame, this result, this trip around the world, they don't pay attention to what they're willing to suffer for, what they're willing to put themselves through in order to learn something really true and genuine.

Because you can read things in books. You can listen to podcasts and hear enlightening things or trading secrets or whatever. But learning about yourself is putting yourself in uncomfortable situations. And you stayed in your car. That's radical personal finance right there. That's going further than somebody else normally would.

And hearing your thoughts on what you learned from doing that, I thought was really cool. And I think that resonated with me when I first decided I wanted to go sailing. Man, my financial world was so... I mean, I didn't know one thing from another. This is even when I started trading.

I thought when I bought a boat, I could get a loan for 100 grand and pay off $1,000 a month, and it would be paid off in 100 months. That's how sad it was. But I decided to minimize costs wherever I could, because I wanted to dedicate myself to this dream of sailing away.

And so I started riding my bike. And I was doing morning weather at the time in San Francisco. So morning weather man gets to work at 3 a.m. So to ride my bicycle, even when I had the car that was paid off, just to save that extra $10 in gas money and to go out and freeze my tail off to do it, that was me proving to myself my dedication to a philosophy.

And that philosophy was low economic impact. It was being green, not burning fossil fuels. I was committing myself to values that were as much a part of the sailing dream as actually hoisting those sails and taking off. And so when I heard that you had decided to, we'll just use the word, suffer or sacrifice in the name of something that truly is radical personal finance, i.e.

living in a car instead of paying for a hotel, that really struck a chord with me. I appreciate that. It was hard for me to decide to talk about things like that on the show, because the way that it seems that everybody in our society operates is very much about, and I like your three people illustration, because what happens is most people we try to project the number two, the persona that we think we are, that we think that society wants us to be.

Maybe a combination of the effigy and the persona. So in things like business or in things like finance especially, especially money, if you're not a guru, if you're not saying, "Look, I've got this all figured out. Here, I've made these millions. Let me tell you how to do it." It's almost like, "Well, what do I have to offer?" But I realized in time, when I was a financial advisor, I was committed to being frugal.

I've been committed to trying to build my wealth. And so for the first few years of being actually a practicing financial advisor, I was driving the car that I had bought in college, a 1993 Honda Accord, and I sold it with over 300,000 miles on it. And the car was worth $2,000, and here I would be pulling up in people's driveways with my $2,000 car to go in and tell them what to do with their money.

And people are asking about it. I said, "Listen, I know the financial situation of some other financial advisors, and I'm so sick and tired of the guy that walks in with an $800 a month BMW lease payment, and he can't even afford that, doesn't have a dime, but he's gonna tell you how to be rich.

Don't you see through this? Don't you see that my entire industry is... It seems like the majority of the people in my industry are lying to you on a daily basis, and it's all about perception, trying to affect your perception bias. Wouldn't you rather work with somebody who actually does have some money versus somebody who looks like they have some money?

And wouldn't you like it if someone were authentic?" And it took me, however, years to become comfortable... It's easy now for me to do that, to become comfortable with that. But it took a lot for me to be to the point where I wasn't ashamed. I wasn't ashamed to park my car around the side.

And I feel as though that's one of the beautiful things about the internet is that it allows us... Or just about communications, it allows us to kind of pull some of those walls down. And what I realized that I appreciate is when people are transparent and authentic, because I spent a lot of time listening to people who were so-called gurus, and I always felt there was something wrong with me 'cause I couldn't do what they did.

My to-do list is never done. My email inbox gets to zero messages about once every two months. I'm not perfect. I've made a lot of mistakes. Even starting this business, I was a dumb-dumb and I thought I needed to put all my money in retirement accounts. And then when I wanted to start a business and I bought an expensive house, then I didn't have as much money as I needed available 'cause I have it all in home equity and retirement accounts, which doesn't help me today.

And so, I realized that if we can just deal with not having to stroke our ego... And for me, that was... Maybe for some people they can summon up the personal will of... Maybe some people can just do it on their own, but for me it was a real spiritual transformation in my life where I became a little bit more conscious of who I was on a spiritual level and realized that I didn't need to try to tell...

I didn't need to try to portray anything. All I needed to do was simply be me and that's okay. It sounds like a self-help show here. But there are so many people that are trapped in ways of saying... Trapped in ways of living. And I think when you get to the point where you say, "No matter what I'm gonna do this," like with radical personal finance, I can't tell someone how necessarily to be a millionaire except for the academic theory.

I'm not a millionaire yet. But I can teach how to apply financial planning concepts. I can't teach trading like you do. I'm not an effective trader. I don't have any knowledge so I purposefully avoid talking about that except from the academic side and send people off to learn their own.

But what I can do is I can show a path to entrepreneurship because I came to the conclusion that if I need to rent out my house and I'm not planning on it, but if I need to cash out my IRA, I would rather do that and not waste a decade of my life hoping that someday I can fix this need.

I'm tired of waiting and I feel like so much of my life I lived it under the impression that... Under that effigy, what we think we should be, the path that I think you should take. And I realized that, "You know what? That's simply not the case. There's only one person that I'm responsible to and that's God.

And beyond that, I don't have to keep other people happy by following society's plan." And I know it is super self-introspective or whatever, but it's a reality that I think... Maybe it's a transforming into an adult and maybe I wasn't before, but you realize I had a conversation with my wife and with this I'll stop talking.

And I've had conversations with some of my friends that society has laid out this script for you. And essentially the script is, "Go to high school, make sure you graduate from high school so that you can go to college. Go to college, make sure you graduate from college. In order to be successful, you need to have a job, you need to buy a house, you need to get married, you need to get a dog and you need to get a kid." And I've done all those things, not necessarily because society said so, but I've done all those things.

And I always had operating in the back because I was always the responsible one. So, I always had that script running in the back of my head that I need to be responsible. People like me don't drop out of college. People like me don't get bad grades. People like me don't do this stuff.

And you finally wake up and you say, "You know what? I like the house I live in. I love my wife. I'm thrilled with my kids. I love my dogs." But the reality is that stuff, at this point, I could give it all up and I could walk away without a college degree.

Forget the high school diploma. Get rid of the house. Get rid of the car. Get rid of the job. Get rid of those things. Don't even matter to me. There's something different. And maybe it's just realizing that there's more than just checking the boxes. And I see that real passion with my generation.

And people write about it. They write about the millennials. They talk about it. But it really is... I'm not sure where I'm going, so I'll shut up. But I appreciate the kind comments. It's been a growth process for me. Well, I think it comes to, for a word, for me, the word is earnestness.

It's an honest, genuine pursuit. And I think it's a lifelong process. I think your 30s are a really important time where you do become centered. You do give up trying to impress... well, not everybody, but some people give up trying to impress others quite as much. And you get to know yourself a little bit more.

So yeah, I think that's one of the benefits of aging. I mean, you get the aches and the pains. Those only get worse. But you do get to know yourself quite a bit more. I think that's what you're describing. And the more you do that introspection, the more you come to realize that there isn't a dollar figure.

There isn't a particular job title. There isn't a particular situation even. There isn't a particular country to visit that will lead to the type of fulfillment that you're talking about. It's definitely an inner journey. And to bring it back to something else you said about authenticity and being honest, I'll tell you as a business person, I work with very large companies and I work with entrepreneurs.

I will tell you that authenticity and honesty are in such low supply, often, that when you come across people who are authentic, who are honest, and you know what they're saying to be, not just a snow job, you hang on to those people. You do business with them. You go back to them.

You pay more for their services than you would from somebody else. You have loyalty to those people. Being an honest person about whether your company is actually thriving or whether it's in turmoil, being honest with other business partners about your fears, I think that that will put you ahead in the long run.

And if people that you're working with disrespect you because of that honesty, those aren't the types of people that you want to do business with. The business people that I've had experience with who are extremely successful have a talent for seeing the world as it really is. I don't know whether that's seeing themselves as they really are, but seeing the world as it really is, identifying opportunities that really are there that aren't just hyped up by some blog or some technical article or something like that.

They see opportunities that are really there. Having that ability to cut through the, well, you don't have to use your bleeper, but the BS, having the ability to cut through that BS is what sets the top CEOs from the guys who end up pushing paper in some mid-levels. So I think the more that we can be honest with ourselves, the more that we can be honest with our business partners and I guess this online community that continues to develop these podcast communities, you can see the people who are thriving in these emerging arenas.

And a lot of them have this ability to be honest, to be forthright. So I think that's really important. It comes back to responsibility. It comes back to being honest. It comes back to being transparent. So yeah, I think there's a lot of power in that. And I don't know if it's too much self-help woo-woo for one podcast or what, but that's definitely how I operate.

When I'm doing business, I definitely hang on to those people who I feel are honest. I appreciate the encouragement. It is encouraging. I'd like to explore, and hopefully it's not too much self-help stuff, but that's the stuff that matters. It really does. I mean, if you really, really do want to change your situation, if you really, really do want to change your life, this is the stuff that matters, guys.

It's not that trade, that single trade or that trip to Bali. That's not it. You're going to be the same person when you get there. I guarantee it. And even with business, even with trading, one of the things I did observe, which finally gave me the courage to say, "Forget it.

I can figure it out as I go," is I recognize that I have a tendency to judge. I personally probably think that some things are not recoverable, but when you actually study the research, I can't remember the statistics on the top of my head, but a majority of millionaires have been bankrupt or close to bankrupt on more than one occasion.

And you realize that it's a mental construct. It's a mental fabrication. And the idea, and I'm very much a planner. That's why I'm a financial planner. And so I think, "Well, I have to have it all figured out." And I realize, I don't. I can enjoy the journey. And I'll tell you, I love it.

I am enjoying the journey that I'm doing, even though I'm working like a crazy man and I do these wacky ways of taking trips, like I did, and being able to save the money. I had savings. I could have spent the money, but it was part of test on the hotel rooms.

But I just thought, "What a waste of money," first of all. And it was part of me testing it. You know, am I willing? You can indeed, you don't have to have it all. I could indeed be happy and be in dire straits. Well, I think it comes down to, I don't want to get too deep or philosophical because I'm not.

We've already gone to this point, so feel free. Go ahead. I think there's a part of us that are somewhat masochistic. I think that we do like to suffer for the things that we love or the things that we value. I think we're willing to suffer for the things, the people, the pursuits that we adore.

And I think part of that is testing ourselves, seeing how far we can go. I ran a marathon this fall. I'm not a naturally gifted runner. I'm top heavy, and I'm just a big person. I'm not a good runner. But I wanted to see if I could do it.

I wanted to try something that I thought was a good chance I could fail at, because I wanted to see how far I could go. It's that whole, who's quote, is it T.S. Eliot? You don't know. Only those who try to go too far know how far they can go or something like that.

I think we have to know what we're willing to suffer for. I'm willing to suffer for things that teach me about myself. I don't know if that's masochism, but I feel like I learn new things about myself, and I'm able to push even further. That's what I'd like to tell people who have the passion to travel but don't feel like they can.

Take that first step. Book an uncomfortable hotel room or sleep in your car. You don't have to go travel around the world. Go sleep in your car. Test those assumptions about whether or not you really will be so embarrassed because you're sleeping in your car and everybody else is in a four-star hotel.

Test yourself. Test your assumptions. Figure out what you're willing to suffer for. Right. Absolutely. The reason is, even just when you curtail your spending, I always think about how far a dollar can go in other parts of the world. I say, "I'd rather not spend the 20 here because that 20 bucks on this expenditure at home, $30 thoughtlessly spent on a meal out because I was too lazy to plan ahead to have food available at home, that $30 can take me an extra day on the road.

I'd rather be an extra day on the road than just have this trip down to TGI Fridays because we were too lazy to plan ahead." It's so funny. My wife and I were at the grocery store the other day, Whole Foods. Do you guys have Whole Foods out there?

Yes. I'm in hippie, crunchy, affluent people who shop it. Within a mile of my house, I've got Whole Foods, Trader Joe's, and two local gourmet markets that are all- Yuppieville. Exactly. I'm in Yuppieville where I live. Yeah. We're in Food Nation here in Portland, Oregon. My wife and I are at Whole Foods.

We want to get some fish. We're all up to the counter. Halibut is like, I love halibut. I love fish in general, but halibut's 30 bucks a pound. I'm like, "Holy smokes, 30 bucks a pound is going to cost us 50 bucks to get a good dinner." You forgo that expensive fish, but you're really willing to go out to the sushi restaurant and drop 70.

You know what I mean? Right. It's like you could go have a fabulous, fabulous halibut steak dinner for less money than you're going to spend at a restaurant. I catch myself in those quandaries all the time. To drop back into living on the margin and traveling and spending less and financial independence, people are, I think, frequently amazed at how far a dollar will go outside of the U.S.

Shopping at Whole Foods, Whole Paycheck, it's silly. It's a $100 bag of groceries, and you could live for a week or more eating out all the time in Mexico or Indonesia. It's incredible how much we waste just because of inattention. Absolutely is. I'd like to explore three topics, and we can hit these either quick hits or we can dive into them.

We're not necessarily on a time limit, but there are three things that I've mentioned that are more connected to personal finance. I'm going to start with the concept of distributed retirement and the advantages and disadvantages of that. I want to talk a little bit about timing the market and then finish up with your ideas and thoughts.

I know you've written the book, which I highly recommend, Live on the Margin, about it, but essentially how to learn trading in today's context. Let's start with distributed retirement. This is, or at least, the idea of don't wait until you're rich and can retire at 65, but be willing when you're 28 or 38 or whatever to take a year or three months, as the case may be, and go, even though you don't have enough money for the rest of your life to be financially independent.

One of the big fears that people have is that if they do that, they'll be set back. They'll be set back in their career. They'll go backwards. Has your experience with your life so far with doing this, going, taking a trip, doing that, would you say it's been a net positive on your overall career and financial prospects, neutral or negative?

Negative. Expand. How do you mean? Well, I mean, I made quite a bit of money doing television. If I dedicated myself to full-time trading, I would make quite a bit more money. I don't think we've talked about it, but my company, I do industrial voiceover. It's not glamorous, but it pays the bills.

It's not necessarily convenient for my clients for me to disappear for two or three months. So I lose income from taking trips. So strictly from a financial perspective, I would have more in the bank if I spent more time just generating cash. So that's not even disputable. If I wanted to go back to television, I'd probably have to start off in a smaller market than I left.

I left the fifth largest market and probably, I don't know, I'd probably be in South Bend, Indiana or I don't know, Charlotte or something like that. So there's no doubt that I would be further "ahead" if I dedicated all my time to making money. But those are not my priorities.

I'm not putting all my eggs in one basket for something that may or may not happen, which is retirement at 65 or 58 and a half or whatever you want. Do you second guess yourself sometimes? To be perfectly honest, yes. It's hard not to. Even if you are traveling, you're still inundated with imagery and stories from other people who are either financially ahead of you or on par with you.

It's hard not to be drawn towards that effigy we were talking about, this ideal of who you think you could be. But I would say that I am not consumed with it. The type of traveling lifestyle that we lead is traveling part of the year and so I'm never all the way off the grid.

Do you know what I mean? So I never feel completely disconnected. And also, financially, we're in very good shape. Part of that has to do with the fact that we don't have children. Children are very expensive. Let's switch to timing the market. There's this major debate in finance circles around timing the market.

And essentially people argue you can, you can't. The academic research, much of what's done will say, "Well, you can't predict in advance who's going to be able to time the market." So it's academically unsound. And yet there are many people who say, "You're a fool if you think you can't time the market.

Look, I have. Look at these certain things." Have you developed a way to integrate, and maybe those are straw men, maybe they're real, but have you developed a philosophy that integrates the realities on either side of that issue? Well, first of all, let me preface this by saying that trying to time the market as a casual investor or somebody who works full-time at something else is pure folly.

If you don't have the time to pay attention, you're going to be at the emotional whims of the media. I pulled up CNN this morning, and one of the stories was like, "The world's economy is in worse condition than we thought." You're going to try and make decisions based on limited information.

If you're a much more involved investor, somebody who's selective about the securities that they buy, I think that there's -- well, the investments that you make, not just securities -- I think that you absolutely can time the market. I brought up the example of the house that we sold in Colorado before the subprime crisis hit.

I could see that it was already starting to happen in some of the fastest-growing markets. In Florida, it had already become a disaster by, let's say, late 2007. By mid-2008, before anybody really understood what credit default swaps were, I could see that the economic engine that had been producing most of the income for households, which was the appreciation of their primary residents, was about to fall flat on its face.

I didn't need to know all the mechanics ahead of time. I could see that it was happening. It was happening in some markets first. There was no doubt in my mind I needed a rapid exit. Did I time the market perfectly? No, I didn't. I didn't get back in in 2009 until after I had sold my company.

I was late in the recovery. I missed out on some of that. But I did get in when the news was still really bad. I think a lot of this has to do with just paying attention to what's happening. A lot of my greatest investments have come from people that I've met in industries I haven't previously thought about or understood, but had told me things about what they were doing in their businesses that led me to believe that I could make a move.

This is not insider information at all. This is just them talking about what's going on in their business. I sat next to a guy on a plane to San Diego. I was going down to visit Boat. He worked for a very well-known cloud computing software security company. "Hey, what are you doing?

What are you going down here for?" He says, "Oh, we're having an all-hands meeting with the lead of our sales team." "Oh, really? What's going on?" He says, "Oh, it's just been a brutal quarter." "Oh, really? Okay. What's going on?" "Just, you know, companies aren't investing the way they should.

There's new players on the field. Competition's steep." So I went back and I looked at this company, and I actually looked at their technical, their fundamental numbers. "Oh, okay. There hasn't been much movement here. Earnings, two weeks away. What's going on? News looks pretty good." Earnings came out. It was horrendous.

It was terrible. I had bought puts way out of the money. I don't know if we talked much about options trading, but I basically shorted this company, this issue. It was one of my best trades of the year. It just happened to be something that I wasn't necessarily watching.

It's not like I had some sort of insider trading information. It's just asking somebody about how their business was doing, asking why. Asking why is a huge, huge tool for figuring out whether or not you can time something. So when there isn't enough information, don't make a trade. Don't make a move.

But when there is information that piques your interest, ask why. Ask if it's reasonable. Ask if you can lead the pack. Get ahead of the game. Don't invest in the hot thing. Invest in the thing that's not so hot. Or when it's super hot, you think there might be a reason why it's going to crash, really delve into that.

Figure out if there's some evidence for what you think may be happening. So I don't know if that really answers your timing the market question. Can you always time the market? No. But you can certainly time it here and there. I can bring up another example from real estate.

In the book, we actually talked about how you probably shouldn't invest in real estate. Returns aren't high enough. We wrote this in 2011, 2012. I didn't see much movement in prices. But by the time we were publishing, we were living in Del Mar, California. I was looking around. Gosh, interest rates sure are low.

And there's nothing on the market. There's nothing to buy down here. The inventory is really, really low. I started looking around San Diego in general. Not much inventory. Interest rates super low. Why isn't there much movement? And I thought, well, it's because banks haven't eased their guidelines yet. You can't get a mortgage without your 20% down.

Lending standards have, for good reason, gotten very, very tight. So when I looked at what part of the real estate market might grow fastest, so I'd become certain that we were going to see a recovery in housing. I looked at what sectors might be fastest to recover and appreciate the most.

I initially thought, well, we'll go low end. We'll buy something on the lower end of the market, something cheap. Well, lending standards aren't easing that much. I think they're going to stay pretty tight for a while. So I thought, what are the fastest appreciating markets? Portland, Oregon was already appreciating fastest on the West Coast, aside from San Francisco, which I didn't want to get into.

Let's look for something that's not at the low end of the market in Portland. There's a lot of press, a lot of buzz about Portland. This is two years ago. Bought something at the high end of a middle class neighborhood. Found a good opportunity where the people who move to this neighborhood don't necessarily have super tight finances.

They can move into a $600,000, $700,000, $800,000 house without a bust to the bank. So we bought an ugly duckling and have seen, if you look at just the return on our down, if we cashed out today, very conservative numbers, an annualized return of about 45%, 50%. So is that time in the market?

I think it is. Will I call this a home and stay here forever? Probably not. And I don't want to prognosticate, but I won't be in real estate forever, I'll tell you that. I could do hour and two hour shows on this. And maybe it's on my list of things, maybe I'll explore more.

But for me, there were some major breakthroughs for me on the timing the market question when I understood that there were multiple versions of the efficient market hypothesis. When I understood, when somebody finally taught me that the efficient market hypothesis wasn't simply that all markets are always efficient all the time, but that there was the strong form, the weak form, and the semi-strong form.

And I realized that, then it made all the sense in the world and helped me to understand that, yes, most markets are going to be fairly efficient. There's a reason why, if you go down a street, most of the gasoline prices on most of the gas stations on the street are about in the same.

So you can't expect a lot of variation on if there were four gas stations within a mile, you can't expect a ton of variation. That's an efficiently priced market. There are exceptions, but that doesn't mean that there aren't macro trends that anybody can smell. And that doesn't mean that the herd, when people are simply following the herd, that you can't just simply find it.

That you can't smell those things out. And I realized that all of us actually make bets and take trade positions based upon our outlooks on a market. And some ones that I've used come from personal finance side, not from the trading side, but from the personal finance side, of doing something like selecting a career or choosing to make a choice to go into college.

If we make a choice to go to college or not go to college, or to send our children to college and pay the bill or to not, we're doing that based upon a bet that the market is going to pay off for that exchange. Now you see that changing.

And you see people that made foolish bets and their $300,000 in debt for a humanities degree that's not a marketable commodity. And you say, "Huh, that trade didn't work out very well." Is that surprising to you, by the way? Right. Or you look at it with regard to the careers that we choose.

The reason that people choose careers often has to do with their personal proclivity in one direction or another, but also based upon this is an industry that is growing. There are more people choosing to go into computer science now than there are choosing to go into, my mind fails me for a suitable metaphor, but into industries that are in decline.

And so we're always looking at these things on a macro basis. And then if you actually look at real life, you can drive through a neighborhood and you can get an idea, is this a neighborhood that's in decline or in advance? It's not even like you have to really ruminate.

Right. I mean, it's so obvious. You can drive through. And you can tell what's happening with an industry. You can get an indication of what's going on with a company if you actually sit down and read their annual reports. And if you actually sit down and follow the news of a company, you can tell, is this company in general doing well?

But markets have become so abstract to most of us. And because it's not something that we follow, I have no idea what the Dow Jones Industrial Average is going to do on any random day. I don't. But I do know what's happening in my industry. And I take bets on the things that are close to me.

So I don't find it easy to explain. But a lot of the academic research that you look at, you look at it and say, man, there's holes in this a mile wide. And yes, I get that when you're comparing mutual fund managers of a public open-ended mutual fund based upon these criteria, yeah, I understand that.

But that doesn't necessarily mean that I as an individual can't identify a trend. After all, there's a reason why I started this podcast at the time that I did. I said, I can't sit by for another two years to get all of my ducks in a row, to be sitting fat and happy on $150,000 in my checking account to cash flow me for four years.

Like this is the time. And I need to be in front of this trend. And I need to build the skills that I need so that as this grows and grows and grows, that my offering is there able to compete in the open market. Like we can't, you can time things if you know the industry, you can get the idea is, you know, are the, is Detroit growing or falling?

Anyone who lives in Detroit should have been able to smell that one a long time ago. Yeah. Yeah. I think what we didn't anticipate, and I certainly didn't, were the bankruptcies. So, you know, in American Automotive, I never thought that they would let GM, you know, fail. You know what I mean?

It's like, what's going on here? So I think in certain sectors, you can, you can still underestimate the downside. But then again, I've never been, you know, invested in auto. I think stick to what, you know, is, is a good, good way to go, but also don't limit yourself to what you know, get to know the things, you know, but, but remember what you know, and remember that there's so much hype out there.

There's so, you know, so-and-so, you know, there's an upgrade or downgrade. It's now a B minus. It was a C plus, you know, our price target is 45 instead of 50. You know, that's all just BS. You know, that's just a guy, you know, saying, okay, well, we, we have to say something here.

What are we going to say? Okay, let's say, and then you see the market react. And if you know that company, you know, what's going on with them. You can look at that with, you know, some distance. Oh my goodness. That's such BS. You see an upgrade, you see a big spike for two or three days and you go, is that really warranted?

You can short it, man. You can make some, no, I mean, you, you can just trust yourself. I've, I've seen it happen over and over again. You can fade things. You know, you see, you see a security go down, you know, a couple percent, couple, 3%. And you're like, why, what was there just some bulk sale, bulk selling today?

What's the deal? You can buy these little dips and, and, you know, don't necessarily have to rely on making all your income off one trade, but you can make some. So yeah, get to know, get to know small pieces of the market and, and leave the rest to the fools because most of them are fools.

Do you have any formal way of tracking your returns in an academically rigorous way? Or do you have a gut instinct on years that you've, that you've done well, years that you haven't done well? Do you have any personal data that you're willing to share? Yes, I do track everything.

No, I'm not willing to share everything. I would say that I outperform, how, how you want to slice and dice my portfolio is, you know, you know, changes those numbers. Right now I I'm invested in real estate. And so those numbers are just estimates, you know, based on a return.

If I liquidate, you know, next month, but that to me, because I don't just see the home as, or the house as a home, I see it as an investment. Those matter to my overall portfolio. If you look at my total portfolio, I'm something on the order of, let's just say 18 to 25% annually.

I have traded options, you know, very lightly in the last year because I've basically been invested. I've let the market do everything for me. I've been long. So if you look at the return on my options plays, it's meager, it's small, it's, you know, probably 8%, 10% last year.

But in 2013, it was definitely double digits, maybe close to 20%. So it really depends how you slice and dice it. But I'm happy enough with my returns that I just don't stick everything into an index fund and let it ride. Although I recognize that, you know, I may be putting more work into this than needs to be, you know, I, you know, especially as the market's been in the last three plus years, you know, I could have been in any fund and done probably just about as well with my hands off approach.

But I like the control. I like the responsibility. I like the ability to make moves, you know, on a whim. I think it's interesting in the field of advice, the people that I always say, here's the general advice. And if you're the kind of person who ignores the general advice, you're the kind of person who probably should ignore the general advice.

So should most people probably go and put their money in an index fund and go and focus on something that's different, like making a lot of money in their career or going and doing something to do. Yes. But if you're the kind of person that ignores that advice, you're probably the kind of person that's willing to do what's necessary to actually, you know, to do something different.

Yeah. Yeah. You know, and as we're getting ready for our first sailing trip, we had never met with a financial advisor before. And we had a really good idea of where our assets were, gave you an idea of what we're what our net worth was. But we still visited with a financial advisor, Brad Elman out of the Bay Area.

He's a he's a great guy. And we just put everything down on paper and he gave us an idea of where we stood compared to other people at our stage of life. And it gave us some confidence. So. I don't think that just your average Joe should be out there managing their own money, I think, you know, if they're interested, they should certainly learn how to trade.

I think most people probably should learn how to trade. But is it essential if you're focusing on other things? Now, if you want to go travel, you've got and you're not insanely wealthy. Can you make enough money to support travel habit? Depending on your initial trading night? I think so.

So, again, I would direct them towards any of the introductory trading books like options, option volatility and pricing. That's by Nietenberg. Or, you know, pick up our book. Our book is definitely introductory material. If you're interested in trading options or just trading on the road. Another book that I would recommend.

And this is somewhat newer ideas is something by Nassim Taleb. Are you familiar with him? I am. Yeah. Nicholas Taleb, Anti-Fragile. If you want to look at how non-linearity can be extremely profitable, I would pick that book up. Again, that's Anti-Fragile or Google Nassim Taleb on the Internet. You're going to find some really interesting stuff, new ways to look at old ideas.

And I found it very enlightening. But yeah, I think, you know, you can you can manage your own money and probably outperform most of the active funds. But it does take time and education and experience and you can expect to lose along the way. So there's a huge, huge caveat there is, you know, if you've if you're really risk averse, man, just just to get the fund.

Right. Right. Any other resources in addition to those four, or excuse me, those three that you mentioned, option, volatility and pricing? You're in your and Patrick's book Live on the Margin and then Anti-Fragile. Any other resources that would be useful to help somebody start to learn about trading? I would say, you know, I can't remember who wrote it, but there's a book called The Options Playbook.

And I feel like it's a really good, simple playbook that shows you a bunch of strategies because, you know, there's buying and selling, writing calls, puts, covered options, naked options. But there's there's endless variations of iron this and condor that. And there's a lot of different ways to play with options.

I think options are a great way to to make your money go further. They're certainly much more risky. But as soon as you understand what they are, you'll see that you're probably already using options in other parts of your life. Like a mortgage on your home is in a way an option.

You don't actually own the house that you have a mortgage on. The bank does. And you have the option, really. And you pay them your interest rate for the option on your house. So I would definitely take a look at options if you're interested in upping your exposure to risk.

I think one of the truest things in life is, you know, the higher the risk, the higher the reward. So, yeah, you can play it safe. But if you are hungry for more in your life, I'd say take the risks. You'll be fine no matter what. Do you have any last question?

Do you have any, I guess, do you have a sniff test that you've developed over the years? Anything that because especially when you start into the option world, man, is there a lot of junk out there? Do you have any like a smell test that you develop that would help somebody to make wise choices and avoid being swindled out of their money?

Specifically with regard to trading education is what I'm asking about. You know, to be perfectly honest with you, I don't have enough familiarity with other educators. I think that options look very complicated on the surface and there's a million different ways. I think there's even an options trading for dummies book out there.

You can get mechanics down by reading any of these introductory books. I don't know who to trust in terms of trading advice. I generally don't give trading advice myself. So I don't know what to look out for. But I would say anybody who promises huge returns, if you follow this simple strategy or anybody who wants a lot of money up front for some sort of hand holding, I would be wary of that.

So I don't know. Does that answer your question? No, well, it's good enough. It's just an interesting, I know it's a challenging jungle for people to navigate and it's always good to have a guide when you're going someplace unfamiliar for the first time. So yeah, I was looking for those resources for people.

You know, Pat and I have, you know, we've had lots of requests to further develop Live on the Margin into a course or forum or a podcast or something like that. And I'm not sure exactly what form that will take. Pat Schulte, and people should definitely Google Pat Schulte or bumfuzzle.com to hear more about his story.

Pat is really a master trader. And I think he has talked about actually mentoring some people. You'd want to contact him about that. But, you know, I don't think that you want to go out and look for somebody who's going to do everything for you. I think you want to learn how to do it for yourself.

So again, anybody who's like pointing you towards a particular penny stock or something like that, just run. But somebody who's actually going to explain, you know, why should you buy out of the money in this particular case, out of the money being options trading term. You know, that's what you want.

You want somebody who can answer your questions, not somebody who's going to point you in a particular direction. Right. Well, I'll look forward to seeing what you guys come up with. Nick, I thank you so much for taking your time to come on. I've really enjoyed this. And I think this will be a useful, useful resource for people with a little bit of inspiration, a little bit of education to go out and have fun with their own adventures.

Yeah. Thanks so much, man. I really appreciate your time and I appreciate what you're doing and keep at it. And I think you're changing people's lives. I think that's just about all we can force people. I appreciate that. Pretty cool to think of all the things that you can accomplish.

I just get so inspired talking with guys like Nick, talking like guys with guys like Patrick when I interviewed him, Pat, his co-author. I just I love having my own, I guess, vision expanded. Super fun just to hear of the things that are possible. I hope that was useful to you.

If you'd like more, I'll put links to Nick's blog. He doesn't really write much online. Most of his thoughts, I know he wrote a book called Get Her On Board, which is all about how to get your spouse to go sailing with you. I meant in the interview to ask him more about that and I completely forgot.

But he also wrote the book Live on the Margin and it's quite good. You can pick up the Kindle version. I'll post a link in the show notes. It's very good. It's really fun. And if you want to get just a hardcore slap in the face about spending too much money, about why you're spending too much money and why you're allowing yourself to live a crazy lifestyle and how you can quickly free yourself a little bit, then check it out.

One of the things that I most enjoyed from Live on the Margin was actually Nick and Pat's discussion of risk. They talk a lot about that and risk is one of those things that we all have to think about. We all have to look at our own levels of what we're comfortable with.

But coming from two traders, they apply essentially a trading mentality to the idea of risk, especially with other things, other aspects of life and life risk. And it's well worth reading for that alone. I'm not sure that you're going to pick it up. I am sure that you're not going to pick it up and be able to go out and make massive percentages, rates of return on your own trading plan from it.

But I know they worked hard to get together and write a good intro to trading. So hopefully it could be useful to some of you, at least to wet your toes in the water. But like I said in the beginning, it's a very interesting mashup of stock trading and life advice.

So check it out. I'll put a link in the notes. That's it for today. I thank you so much for listening. I will be back with you tomorrow. I might be back with you with an interview or if I can, if I can get everything done, I'll be back with you to tell you about the future of the financial support for the show and ask for your support even more.

Talk to you tomorrow. Thank you for listening to today's show. If you'd like to contact me personally, my email address is joshua@radicalpersonalfinance.com. You can also connect with the show on Twitter @radicalpf and at facebook.com/radicalpersonalfinance. This show is intended to provide entertainment, education, and financial enlightenment. But your situation is unique, and I cannot deliver any actionable advice without knowing anything about you.

Please, develop a team of professional advisors who you find to be caring, competent, and trustworthy, and consult them because they are the ones who can understand your specific needs, your specific goals, and provide specific answers to your questions. I've done my absolute best to be clear and accurate in today's show, but I'm one person and I make mistakes.

If you spot a mistake in something I've said, please help me by coming to the show page and commenting so we can all learn together. Until tomorrow, thanks for being here. Unwrap the holiday savings at Citadel Outlets. Shop the early access Black Friday sales for the best deals of the season.

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