Rebel Traders 050 : Unicorn Hunting

In what is being called a tech bubble larger than the Dot-Com crash era, the Rebel Traders are loading up for Unicorns... They are pulling apart the market, looking at the underlying foundations and giving you the inside scoop...

With a ton of hype about the tech sector and every pundit looking to make his bones with crazy predictions, Sean and Phil cut to the chase and give you the real deal. With the HUGE tech sector and new IPO's seemingly launching every single day in the space, they take a specific look at the mythical Unicorn's and have them squarely set in the sniper sights.

It's time to go huntin' with the Rebel Traders and see if all this myth, noise and confusion if there are opportunities to be had for the smarter Rebel Trader...

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Sean Donahoe: It's time to load up and go unicorn hunting. Ready to rock? Let's do it.
Automated: Rebel Traders takes you inside the world of two underground master traders who take an entertaining and contrarian look at the market to cut through the noise of Wall Street and help you navigate the trading minefield. Together, Sean Donahoe and Phil Newton are on a mission to give you the unfair advantage or a rebel trader. And now, here are your hosts, Sean Donahoe and Mr. Phil Newton.
Sean Donahoe: Hey, hey, hey, this is Sean Donahoe and welcome to the Rebel Traders podcast. I am joined by partner-in-podcasting, the man with a plan and his fingers in and on most things in the trading markets, Mr. Phil Newton. How you doing, sir?
Phil Newton: Well, I have my fingers on donuts this morning, gonna be honest. Surprisingly, it was Krispy Kremes. I'm not trading them, they are literally Krispy Kremes.
Sean Donahoe: You know, I've gotta say, I was more up north, I used to be in the Boston area and between Dunkin Donuts, which was right around the corner from where I was, there was also not far from me a Krispy, well, from near my girlfriend at the time. She lived very close to a Krispy Kreme factory. And oh my lord-
Phil Newton: You've got a very sweet tooth like me, haven't you, Sean? So it's-
Sean Donahoe: I do, indeed. Krispy Kremes were my secret addiction.
Phil Newton: Hi, my name's Phile. I'm a sugaholic.
Sean Donahoe: Yes, indeed, but yes, now I have Type 2 diabetes, so I'm not allowed any of that crap which is bollocks because it's my birthday
Phil Newton: I know
Sean Donahoe: and that means I gotta be careful.
Phil Newton: You can't do it, why not?
Sean Donahoe: Abso-damn-lutely. You know, who needs that leg?
Phil Newton: Yeah. You're gonna be in a sugar coma
Sean Donahoe: It's funny, actually, got the Type 2 diabetes pretty much under control, my numbers are absolutely fantastic, but I'll tell you what. It was a bloody, a wee bit of a health scare little while ago. But yes, it was, especially when I had the double bout of pneumonia, that was a pretty, pretty scary wee time. But, no, it's good now. Thankfully my numbers are way down, my A1Cs are all way down, so I'm fit as a bloody fiddle. So that's my story going into today as a birthday and cakes and candy galore and everything else, which everyone-
Phil Newton: Well, if you can't at least be temporary self-indulgent on a day like today-
Sean Donahoe: Abso-bloody-lutely. But yes, you're all invited to the birthday bash. Just bring party hats, kazoos, and you're all ready to rock.
But yeah. Today we are going to be discussing unicorns. And we're not talking about the pointy-headed horses, we are talking about basically what is considered to be one of the largest tech bubbles ever. I mean, considering a lot of people are considering this a bigger tech bubble than 2000. We're gonna be discussing that in a lot more detail but we're gonna be talking specifically-
Phil Newton: And that was pretty big at the time, everyone was going tech.
Sean Donahoe: Abso-bloody-lutely. So we're gonna be pulling apart the market, looking at the underlying foundations and giving you the inside scoop to see if all this myth, hyper-noise and confusion are in amongst all of that where the possible opportunities are had for the smarter rebel .
Phil Newton: Yeah, we've also got the , but by the sounds of it, it's also birthday party.
Sean Donahoe: There you go, maybe.
Phil Newton: Then we've got your trading questions are answered. Sean's gonna open his birthday cards to see if there's any folding notes of interest.
Sean Donahoe: Or funny white powders, you know, it could be a little bit of anthrax in there, who knows?
Phil Newton:
Congratulations, you've won anthrax. We've also got the bullshit that we the hive, the hive shenanigans, the nonsense, the nuisance, and all the usual stuff.
Sean Donahoe: And we got some porkers today.
Phil Newton: One core question, the quality, quality. Yeah, and amongst all of that we're gonna try and find the core question of where is the trade. Well, we know where the question is, we're gonna-
Sean Donahoe: That would be a good start.
So, let's jump right in. Now, we're talking about the fabled unicorn here. Let's establish, first of all, what exactly is a unicorn in its definition. Well, in the venture capital industry a-
Phil Newton: Not a mythical beast. Not the mythical beast.
Sean Donahoe: Yes, we're not talking Harry Potter here in the Forbidden Forest or some sort of little, My Little Pony reference.
Phil Newton: I was gonna try to be upper class about the whole thing and start quoting Greek mythology or something.
Sean Donahoe: Yeah, you see-
Phil Newton: Pegasus or something.
Sean Donahoe: That was the flying horse, yes.
Phil Newton: I've relegated myself to the dunce cap in the corner there.
Sean Donahoe: That's it. I actually made a joke earlier on to my wife saying that unicorns are just dumb horses with a dunce cap, so.
But there you go. But yeah, we're talking about the tech sector here and it's a venture capital term, I can't remember the gentleman who coined it back in 2013, but it basically refers to any tech startup company that reaches at least a one billion dollar market valuation determined by private or public investment.
Now, some examples of unicorns could be like-
Phil Newton: So, to put that into perspective for the poor farm boy in the room, insert expletive, huge.
Sean Donahoe: Yes, yeah, basically, basically.
Phil Newton: Big.
Sean Donahoe: Well-
Phil Newton: That's a big company. Cause, to be fair, to put it in perspective, numbers like this, since the financial crash where billions and trillions get touted around on a daily basis, as an individual company, that's pretty big.
Sean Donahoe: Mm-hmm (affirmative). And here's the thing: it doesn't necessarily mean, and this is one of the biggest misnomers, it doesn't mean they have a billion dollars. It means they've been valued-
Phil Newton: Valuation.
Sean Donahoe: I give you an example. Canva is-
Phil Newton: Like a antique option. One person thinks that this lovely little Chinese vase is worth ten billion dollars.
Sean Donahoe: Indeed.
Phil Newton: But everyone else thinks it's, normalized, it's only worth cause they were mass produced.
Sean Donahoe: There you go. Well it's also how much-
Phil Newton: That's an example, that's an example.
Sean Donahoe: Give you a more
Phil Newton: The general consensus is everyone agrees that its worth obscene amounts of money.
Sean Donahoe: Yeah, and it's down to how much money they've raised. Like Canva, prime example, just cause it's the example I have in front of me. Canva is an Australian company that buys graphic designers with a pretty slick little platform for quick graphic design. It was founded in 2012. They've raised through, we'll talk about and funding rounds in a moment, but they've raised a total of ninety-six million dollars. Now, they've raised that much through venture capital. That's nowhere near a billion dollars, but they've bought a percentage of the company basically with that investment so that they can proceed to do business. Now, the percentage of that company, by raising ninety-six million, has given okay, well that means the rest of the company, by the same measure of how much that ninety-six million actually purchased has then given them a valuation of one billion dollars. So, again, it's always a little bit of a misnomer when you hear "oh, this is a unicorn, it's worth a billion dollars." No, that just means how much they've given away in exchange for that funding.
Phil Newton: gonna be high in the valuation.
Sean Donahoe: Yeah, and-
Phil Newton: Yeah, I think what you're getting to-
Sean Donahoe: Yeah-
Phil Newton: Is that the one, Canva's the one that the bought, isn't it?
Sean Donahoe: Mr. Miyagi, who're you talking about?
Phil Newton: Sounds like a Japanese motorbike. I can never remember how to pronounce his name. Kawasaki, no, that was
Sean Donahoe: Guy Kawasaki, you're talking about.
Phil Newton: I've been intentionally stupid, it's the guy who wrote Rich Dad Poor Dad.
Sean Donahoe: Oh, Kawasaki, oh, Robert Kiyosaki.
Phil Newton: That's the one, yeah. I can never pronounce his name, so I just call him Mr. Miyagi.
Sean Donahoe: I was like, no, the guy who played Mr. Miyagi's dead, where's he going with this.
Phil Newton: No, no, no, no, no.
Sean Donahoe: Oh, dear mate. Yeah, but I don't know if Kiyosaki's involved with this. But there's a lot of different companies out there that have these insane valuations but, at the end of the day, they've only raised a certain amount of money, but it's the perceived valuation of the company. Another good example is Uber, which we're gonna talk about in a minute.
Phil Newton: This makes my eyes roll, but I know you've given a very, we're being flippant, or I'm being flippant about what is a very accurate definition and the venture capitalist people take this very seriously. But as soon as I hear words like perceived value, it just makes my eyes roll. It really does.
Sean Donahoe: It does. And the funny thing is I do, I work a lot with different venture capital firms and I'm trying to-
Phil Newton:






I know you've got your fingers in these pies and when I hear those corporate-sounding words it just makes me- So you've all sat in a room together and you've all decided that this is the number and that's the perceived value. Oh, really, so are you making anything? Is there a product on the production line? This was kinda the thing with the tech bubble, wasn't it? It was this perceived value. But it wasn't, unlike in the tech bubble, there was no substance behind it. It was just a hope and a prayer that it was gonna do something on the off chance cause it had a .com in the name. Like, in today's version, if it's got in the name, everyone thinks it's gonna be worth millions.
Sean Donahoe: Well, here's the thing, at the end of the day, let's kinda back up to the venture capital, kinda give a little bit of a foundation here. Venture capital investors hire people like me to do evaluations of companies and are they solid, are they worth investing in, are they meeting their goals and they've got the right foundation.
Phil Newton: Is there something tangible, which is kinda what I was
Sean Donahoe: Yeah
Phil Newton: Compared to 2000-
Sean Donahoe: Oh my lord.
Phil Newton: -and the tech bubble, there was nothing tangible
Sean Donahoe: Yeah
Phil Newton: There was nothing tangible. It's got .com in the name, okay, here's a few billion dollars.
Sean Donahoe: Well that's pretty much it. I mean, back then it was if you've got a .com, it was basically pipe dreams. Pipe dreams with a .com on the end. That was the whole thing and it was basically people investing in ideas because of this thing called the interwebs that had just came out. Venture, and back then money was cheap.
Phil Newton: But today there's trying to be something tangible, so part, to put it into . From a trading perspective, one element might be that if the retail investor was looking for opportunities, we might evaluate a net asset value. So, is the company worth it from a physical, tangible viewpoints that if, and making something, if they had to sell everything to do whatever it is they might sell everything tomorrow for, there's a certain valuation based on the fixtures and fittings. And then there's a certain valuation based on the current cost amount and the current order flow. So, add all of those elements up and you get a tangible, real-world value. That's the type of thing just, again, to keep it nice and simple, that you would be hired to do and if that valuation is big enough, large enough in size, in the billions, then usually gets the label this is a unicorn because it's of an larger than normal start. Would that be a fair-?
Sean Donahoe: Kinda sorta. I mean, the-
Phil Newton: Kind of. Again, I'm trying to keep it simple here, Sean, cause, hey, you know what, you've gotta come down to the lowest common denominator, which is always the farm boy in the room, aka me.
Sean Donahoe: Well, yeah, there's a lot of that goes on. We look at everything from not only market share, potential market share, projections, and the problem is that, with a lot of companies, honestly, they make a lot of shit up as they go along. I mean, they say "oh, we can secure x number of units" or "we can hit, this is our goal for target for user acquisition, this is our projected cost per user and revenue per user" and with a lot of tech-
Phil Newton: Retention and share and all the other popular stuff.
Sean Donahoe: Yeah, and you're like, "well how are you gonna get there?" "Oh, we have no idea." Okay, well that's not really a, that's just you drawing a line on a table and saying "hey, this is reality." That's not is. But we get a lot of that as, certainly as I'm doing evaluations of these companies, but we also look at the tech IP, intellectual property what have they got? If they've got a very good algorithm, or if that algorithm could be applied to multiple verticals beyond what they're looking at-
Phil Newton: Like what we're talking about last week, can we merge industries and cross-pollinate technology to find new opportunities.
Sean Donahoe: Exactly.
Phil Newton: So that's more at the future growth prospect and you know, can you scale the business beyond the original intention of the idea.
Sean Donahoe: Yeah, and tell you right now, venture capital first.
Phil Newton: And that can be, although it's an intangible essentially, it can have an accurate valuation based on that because you've got maybe a certain order flow in this industry and maybe you can do some comparison type of analysis to project at least a benchmark expectation of what could happen should you enter a different market with a different perspective.
Sean Donahoe: Abso-bloody-lutely. I mean, that's a good nutshell, that's a more accurate nutshell. So we look at all sorts of different things. Back in the early 2000, and '99 and everything else and running up to that, oh my lord-
Phil Newton: I'd just like to pause here, I'm looking at the camera and raising my eyebrow.
Sean Donahoe: Yeah, I mean, basically-
Phil Newton: Just arching the eyebrow.
Sean Donahoe: Yeah, basically just everyone was opening their wallets and throwing ridiculous money at everyone because it was the wild west. I mean, the internet was the wild west. The problem was that, again, these companies just disappeared
Phil Newton: No one knew any difference
Sean Donahoe: -a lot of money and a lot of people, the problem was a lot of retail and institutional investors were jumping on board as well as everything was-
Phil Newton: Everyone was clueless.
Sean Donahoe: Yeah.
Phil Newton: Everyone was clueless.
Sean Donahoe: And then it blew up in everyone's face.
Phil Newton: And look at Sam, cryptocurrency, again I'm not trying to bash it, it's just the most recent example of what, the exactly the same thing that happened with the tech company because it's got crypto-something or blockchain in the name, that's creating a frenzy. Now, it's been stamped out a little bit quicker than what happened with the tech bubble, but we saw the same thing happen, if you want real-world example to understand what happened back in 2000s. I personally think that's what's happening right now with the crypto-space.
Sean Donahoe: Well, pretty much. And when a Scottish hospital has to come out with a hospital rehab unit. I was just, this could've been the bs of the week, but I just put it in here cause we're talking about it. There's actually a Scottish hospital has launched a rehab clinic to treat cryptocurrency addiction. I mean, it's a good- It's funny as hell.
Phil Newton: No way.
Sean Donahoe: But anyway, there's a lot going on. I mean, back in the original .com era, it was the whole tech sector crashed, just because all the money dried up real sudden and fast and far faster, which means a lot of companies, a lot of different things happening in and around that that caused everyone to become disillusioned, everyone jumping out of tech and it was literally a chain reaction of a nightmare there.
But here's the thing. This is why we're talking about unicorns today and specifically this kind of new tech bubble. In Q-just to give you some facts and kind of, we've laid the groundwork, but here's the thing. This is where it's of big concern to me and I think this could be the rumblings and the initial, keep an eye on this one. This is one of those awareness-raising situations for everyone.
In Q1 of this year, nearly sixteen billion dollars was raised by forty-four companies, okay, that were going in and around IPOs. Okay. Now, ten of those were tech companies, which, yeah, that's about a quarter of them. Not unsurprising. However, tech raised forty percent of the total of proceeds of that first quarter. Nearly twice as much as every other industry. So, again, a lot of money and a lot of tech companies are raising insane amounts of money through IPOs, through private investment, and one of the things that has really fueled this is things like the jobs act, which is not, doesn't mean employment, which is one of the things most people have, you know, don't realize, it's not-
Phil Newton: A misinterpretation-
Sean Donahoe: It is. It's the jumpstart our business startups-
Phil Newton: The name's misleading.
Sean Donahoe: It's jumpstart our business startups act. And it was intended to encourage basically the funding of small businesses in the US by easing many of the security regulations that were around that. One of them which is very important in the startup industry, again, got my fingers in a lot of different startups and I'm involved with a lot of startups, is basically crowdfunding act. And it allows companies to use crowdfunding to issue securities, something that was not previously permitted. Now this allows a lot of companies to basically avoid IPOs if they wanted to and not go public and thus be under the scrutiny of the market.
Phil Newton: I was just gonna say that, just to draw a differentiator, they can have a private sale, essentially instead of a public sale, which is what the IPO is.
Sean Donahoe: Yeah. And that's why you see things like Indiegogo, Kickstarter and everything else. Allowing them to basically raise money without giving away a portion of their company to investment banks and everything else because when you're working with IPOs and, again, going that round, you are suddenly beholden to all the investment banks. If you're the CEO, the founder, or the creator of the business, you may not be allowed to sell your shares because that's then seen as oh, well you're not confident in the business and then that shakes the market and everything else so you end up having your stock locked when you go IPO. And basically you suddenly have a, it can really distract, this is one of the biggest things with startups-
Phil Newton: Those little restrictions, yeah, those little restrictions.
Sean Donahoe: Yeah, well, not only that, from the leadership. It distracts them from running, growing, and building the business because now they've gotta focus on the specifics of trying
Phil Newton: Exactly, yeah. Trying to keep the investors happy.
Sean Donahoe: Exactly. So-
Phil Newton: Instead of trying to focus on the customers, which is why they're in business in the first place.
Sean Donahoe: And the funny thing is that the environment now is vastly different than '99. So while we're seeing a lot of unicorns, and we're gonna talk about some specifically in a second here that still to this day crack me up, but the end of the day, it's a very different environment, strategically. A lot more people are very conscious of the .com crash.
We're also very conscious and still has a lot of ramifications from the housing mortgage-backed securities crisis from 2007, 2008 because we have had, that was a serious kick in the balls, it's still in recent memory for a lot people. So even though there is a lot of problems with a lot of these, and I put them in quotes, air quotes, unicorns here, we do have a much more cautious environment.
But when we're looking at companies and like venture capital, a lot startups, a lot of unicorns go through multiple rounds of funding. They go through the seed round, which is where company insiders provide startup capital, usually the founders or they get some friends and family or investors who are getting right in. Then you've got the angel round which is early outside investors by common start. And then you've got your series A, B, C, etc. which is generally a progression of price stock at these rounds, there's an indication that the company is progressing as expected, so you go for your series A, which is you set certain targets. If you hit those targets then okay, you can go for series B, etc. But if you raise too much money, here's one of the things, if you go too many rounds, that's usually considered a sign of delayed progress or a problem cause, okay, well you didn't succeed with your series A and B, you need series C. Why hasn't those initial rounds sorted you out? You should've expected what you needed from those first few rounds, so the further down the progression scale you go, you're like "hmm, okay, that could be a little bit of a problem. What's going on there?" So, again, a lot of these-
Phil Newton: be highlights, there's actually been a lot of studies about when people go from the developmental stage and raising capital and investments to IPO. And if they're too soon or too late, they miss that kind of opportunity to take a big chunk of market share.
Sean Donahoe: So that's pretty much it. And the whole deal with investment banks is they're not really just investment banks, they're like a PR firm. I mean, if you look at a lot of these IPOs, suddenly they're all over the news, they're all over, way in advances because they've got massive PR wings talking them up, talking and basically they go on a little investor roadshow. And this is, I mean, that sounds stupid but that's actually what happens, is they will go around the country marketing a IPO in advance to institutional investors and the qualified investors, highly qualified investors as "hey, would you like to get in on this before it goes public?" And, you know, get these-
Phil Newton: Think Shark Tank for an institutional level, they go round and, like you just said, do the tour. It's almost like Shark Tank, we've done this, we've done that. And we're looking for more investments and can we count on you?
Sean Donahoe: Basically, do you, yeah, do you want preferred before it goes public access? Kind of private, and this is one of the things with a lot of IPOs, one of the big problems we can talk about is, you know, basically, if you're an institutional early bird, you're getting a preferential price.
Phil Newton: It's legal
Sean Donahoe: It really is. And, I mean, personally, if I have an opportunity to do that with a company that I can be, let's just say I have some-
Phil Newton: Involvement.
Sean Donahoe: I have some vested interest in, I'm gonna put it very politically correct here, because it is one hundred percent legal, if I know the company, if I'm looking at a company and I want a chunk of that, then that's not insider investing, that's more smart investing because I know the company, I know the company well, I know the fundamentals, I've done all my research like any good stock analyst because I'm literally in there before the public even knows about it.
Phil Newton: Similarly, any other investor that wanted that information, that wanted a piece of that could get the same information which is why it's not insider trading.
Sean Donahoe: That too, that too. It's just the fact that I'm there on the ground, looking at it.
Phil Newton: It's just that most people aren't, you know, gonna go look into this information, which is why it always seems a little bit underhanded. So just to draw a clarification, it's that insider trader is where you're getting the early bird scoop before the general information. Now this information that you're privy to, it's available so it's not inside trading.
Sean Donahoe: Well it's also a, and this is the main thing and also a differential, at this stage it's a private company. Which means it's not insider trading because it's not being traded, you know.
Phil Newton: Yeah, exactly.
Sean Donahoe: So I'm getting, investing in a private company.
Phil Newton: When you've exclusive access, might be a better way of saying it.
Sean Donahoe: Yes.
Phil Newton: And I'm just trying to draw the distinction so that you can stay at this-
Sean Donahoe: Well, I'm also staying out of jail as well, which is.
So, I get early bird access to information and everything else to a private company and then, later on, it wants to go public, then, if I was doing stuff that they didn't know about and everything else, that would be insider trading. At that stage that's naughty. But, you know, getting obviously, with a private company this is completely different bloody scenario. So, again, a lot of the institutional early birds getting in under the radar, so to speak, before it's going public and getting preferential pricing on a stock that then goes public at a much higher rate, with the expectation with all the hype train that's surrounding that they have built up by the investment banks that are bringing it to market could be like a Charles, I'm sorry, JP Morgan or, you know, any of the other big investment houses, then, again, it's put out to the market. You know, it could be Goldman Sachs or something like that. And then they put the, they set the price-
Phil Newton: But I suppose for the average layperson this isn't normally stuff that we could be involved in.
Sean Donahoe: No, that's exactly it.
Phil Newton: How these pre-IPO rounds are dealt with might give us clues as to investment opportunity on the IPO.
Sean Donahoe: Yeah, I mean if we-
Phil Newton: I'm guessing which is why
Sean Donahoe: Yes. Now here's the thing: we never trade IPOs. And there's a reason for that and I wanna kinda define that before we get into a couple of the specific unicorns here. But we don't trade IPOs unless I have the opportunity to be in early-
Phil Newton: Most of our decisions are chart-based, which is kind of the very loose way, at least that's my reason for not doing it so I can't make a decision because there's not enough history. Now, for you, Sean, though, different story. You know, you do take an interest in these sorts of things from time to time. Personally, I can't be bothered. But an IPO, if we were offered an opportunity and you had access to the information and I had access to the information, I know I'm not gonna read that information, whereas you would read it. So it would make more sense that, out of the two of us, you would have the opportunity. But then that still comes with a but. It's not my business-
Sean Donahoe: Well, exactly and the thing is there's two differences. We don't trade them but I do invest-
Phil Newton: That's the distinction I was trying to draw, yeah.
Sean Donahoe: And that's the big thing. Now, again, only if I'm in early and everything else. And here's the thing: I look to cash out immediately.
Phil Newton: Which is the whole purpose of being in early with the IPO.
Sean Donahoe: Exactly, cause when it, you know, a prime example. Let me take one, actually, I'll pull it up here, I mean DropBox. Actually, no, let me take one that is doing well and I had it up here, where the hell is it? I'm looking at DocuSign. If you look at the stock symbol and you can pull it up if you wan to, Mr. Newton.
Phil Newton: DOCU, DocuSign, there you go.
Sean Donahoe: And you could see that is one that, right now, is doing pretty bloody well out the gate.
Phil Newton: Out the gate, it's going well, yeah.
Sean Donahoe: Now that's only been available for a very short time, I mean, I'm gonna talk about-
Phil Newton: Couple of weeks as we're doing this.
Sean Donahoe: Yeah, exactly, as we're recording this one. And, at the end of the day, it's doing well. Now, I mean, it's gone from, it was, initial offering price was $38 and right now it's trading at $48, so-
Phil Newton: And I've gotta admit, it didn't dip much below the initial offering.
Sean Donahoe: No, which is-
Phil Newton: Which, in this environment, I've gotta admit, seems a little bit of a rarity. Cause normally, the last couple of IPOs we have touched on in this show and that we've spoken about, have taken a swan dive very quickly.
Sean Donahoe: Indeed.
Phil Newton: And that would be quite normal.
Sean Donahoe: And what happens is, and this is for people like me who are in really, really early. We'd look for that initial one day pop or if we think it's gonna keep on going, might hold it a little longer. But we look for that first pop and what you will always see, and I would say most of the time, there's a point where all of the people who got in early cash out. Now, even with DocuSign, you can see it very clearly around the forty-six, or the forty-five, forty-six. That's where everything slowed down, people that "mmm, okay, now's the time to get out." And you can see, everyone was kinda getting out. People were still buying, but then they dropped out. Now, I wasn't involved with this one, I just, full disclosure, but it's very clear. You can always see where the people who had it early cashed out for the initial pop cause that's all they're in for. They're not in because they really, you know, a lot of the early people like that, they just want that quick pop as it gets open to the public and this is kinda part of the IPO, the IPO bites you in the ass.
Phil Newton: I was just gonna say that the people who usually, hundreds of millions involved with the pre-IPO to IPO. We're not talking a hundred shares or equivalents.
Sean Donahoe: Exactly, exactly.
Phil Newton: So, taking that quick pop, you know, might give them, you know, a couple of percentage points' return in what is effectively a very short space of time. And again, we're talking hundreds of millions here, and that's why it's worthwhile for them. Most of the time, there is, I'm not gonna say guaranteed results, but there's a high expectation of some results.
Sean Donahoe: Exactly. So they look for that quick cashout unless, and this has happened with people who have been, you know, what they call a stock lock, which is one of the big problems, is if you're in really, really early, like you are one of the angel or series A investors, or you are one of the founders of the company, sometimes they put a stock lock on you, which means you cannot dump your shares in a company even if it's going down because it would be seen as a sign of bad confidence in that, we were kinda talking about the restrictions that it places on you.
Phil Newton: Makes sense.
Sean Donahoe: And it's good, it's a good thing, but sometimes those really, really, really early investors get screwed because, again, they just watch their valuation evaporate. And a prime example of that, one that we talked about actually in the very first show that we ever did, almost a year ago now, we're actually coming up on the one-year anniversary,
Phil Newton: Wow, was that a year ago?
Sean Donahoe: Was Snapchat, prime example. Let's pull that chart up real quick, and if you wanna follow along at home. If you look here, oh god, I did, I just pulled a-
Phil Newton: You did that, you just did it. Here's what we prepared earlier. What would be the US equivalent of that?
Sean Donahoe: I have, don't really have one over here to be honest.
Phil Newton: Oh, there must be, there must have been something.
Sean Donahoe: Maybe, but it was before my time over here.
But, yeah. But if you look, first two days, nice, wee pop and then boom. Dumped. All the way back to-
Phil Newton: And then dive. Diiiive.
Sean Donahoe: The actual, below the initial public offering price. Now the problem with that was that was a oh, shit moment for everyone that was involved with that. Again, I wasn't, I mocked this one because it, company- I don't believe in their business model.
Phil Newton: As I recall, we spoke about it at the time, they had an audience but no serious way to monetize it, which makes it a problem
Sean Donahoe: And that problem-
Phil Newton: There's no revenue model.
Sean Donahoe: Yeah, exactly. And at the end of the day-
Phil Newton: Well, there was, but it was a let's just do what everyone else is doing type of business model.
Sean Donahoe: Indeed.
Phil Newton: But that seemed
Sean Donahoe: And the product really had nothing-
Phil Newton: As evidenced by the stock charts as I'm looking at them.
Sean Donahoe: Well, exactly, I mean, you could say that they took a serious swan dive, went range-bound, had a wee pop on earnings, a lot of hype train, and then, yeah, they went back below. People realized it was all bullshit and it ended up, right now, I mean, the IPO price was 23, $24-
Phil Newton: Did they have an offering? I can't remember if they did or they didn't now, pre-IPO, there could have been a private buyout or something like that. I think if one of the bigger companies than Snap offers an ancillary or subsidiary
Sean Donahoe: I think there was
Phil Newton: That probably would have been better for them, like Facebook did with Instagram, for example, you know, that would've probably been a better, a better outcome for a company like Snap.
Sean Donahoe: Indeed, I mean, if you look at it, there was basically, I think they were in talks with, if my memory's right, Facebook, but, at the end of the day, I think there was a little argy bargy. So what did Facebook do? Well they came out with stories and they created their own-
Phil Newton: They created their own platform instead of integrating
Sean Donahoe: Exactly, so-
Phil Newton: Yeah, now I remember, yeah.
Sean Donahoe: Now the only thing with Snapchat is, honestly, they excel in augmented reality. But who effin cares? At the end of the day, and that why they've gone, their IPO price was $24 and now they're trading around the $10, 10, $11 and that's it. I mean, basically their evaluation got burnt.
Phil Newton: I think they also reduced their launch valuation as well, which is never a good sign.
Sean Donahoe: I don't think it was them, I think that was actually-
Phil Newton: Oh, was that Blue Apron?
Sean Donahoe: Blue Apron that cut their initial IPO price in half, which was really terrible, but we'll get into that in a second.
We'll remind everyone about that one if they don't wanna go back and watch or listen to the first show. But yeah, when the stock lock came off of Snapchat, which is about three months later, and you can see, I think it was April, May, June, July, you can see in July it just, that really accelerated .
Phil Newton: Rats from a sinking ship.
Sean Donahoe: It was, when that stock lock came off. And that's the problem, it's like "oh, I need to get out of this, I need to cash something out. And it was just very clear that this IPO was going nowhere. But here's the thing: if you didn't, if you believed the hype train, and this is one of the things I always caution about, we caution about, we talk about, is look at the numbers, look at the track history. The problem with IPOs is there isn't one. At least, if you looked at this chart right now, a year on, which is where we are, just over a year ago, no one's interested.
Phil Newton: No one's interested in that stock.
Sean Donahoe: And you would not be involved with this now you've got track history to look at.
Phil Newton: Yeah, you wouldn't be interested in it from a directional . You know, there are opportunities to trade-
Sean Donahoe: Oh, absolutely.
Phil Newton: You know, from the stock in a company point of view, it's dead fish in the water. And that you can, I think that the point is, which is what we were both skirting around, was now that there is some information on price behavior, and why that's important is this is groups of individuals with money who are saying what they want or what they expect to happen. Cause if there was more of a group of people who were interested in buying the stock, then the stock would rise. And similarly, you know, the opposite would be true. If there's more people the stock as it were, then the stock would sell, the stock would move lower. Now, honestly, is that there's probably less interest, there's a blend of both buyers and sellers. And that's causing this oscillating, sideways price movement. Now, I can get excited about this because I can see that behavior in the price charts. I can understand what the flavor of this stock is because we've got the history, we've got enough information to say "well, it looks like there's an equal blend of both buyers and sellers and that's causing this, you know, lack of interest, this dead fish in the water that we were just talking about." But I can make that evaluation.
But pre-IPO, or on the day of IPO, I can't make that decision. I'm going off what are we doing, we're shooting from the hip. I think it's going higher? Maybe? I don't believe in, you know, it's just opinionated investment or trading, well, draw a distinction. It's opinionated trading. It might be, you know, a valid opinion if you're investing based on the information that you might have access to, as we were just talking about. But, you know, there the opportunity is, but know that you've got information, that makes it interesting things to evaluate. You know, can I participate? Is it relevant to my portfolio? Blah, blah, blah and all the rest of it. But I've got the information to make a sensible trading choice.
Sean Donahoe: Absolutely. And that's it. Always look at the numbers, not the hype machine that goes behind it. Marketing is great. I'm a marketer. I run marketing businesses. That's one of the things that I'm following enough outside of what we're doing here, it's
Phil Newton: -your chosen, specialized subject.
Sean Donahoe: It is one of my specialized subjects. But again, marketing to convince you to do something based on what I want you to do, not necessarily what you want to do. And-
Phil Newton: Everything's in price. No one's doing anything stock, nothing and that's really what the chart, price chart allows us to see.
Sean Donahoe: Exactly. So, again, there's a lot of different things to consider with unicorns, where we are, these IPOs, and everything else. And what's going on under the hood? But, again, it's a vastly different environment now. We've got, as opposed to the .com era, we now have social networks, cloud tech, AI, machine learning, blockchain. It's a very, very different thing but a lot of the startup investing now is closed door, velvet rope until it goes IPO. And again, this is one of the big things here, back in the, you know, '99, it was everyone and their brother was open to invest and you could get in on the ground floor of this amazing opportunity for Betamax video recorders, . There's a reference to something Phile said in last week's show. But, you know, it's-
Phil Newton: fax machines if you want.
Sean Donahoe: Abso-damn-lutely.
Phil Newton: Ground floor opportunity, Sean. No one knows they exist. We're gonna flood the market with fax machines.
Sean Donahoe: Next time the show, we'll be billionaires, yes indeed.
So, yeah, the problem is that now it's a lot different. You have to come in from a much more qualified investor standpoint. There's a lot more private deals going on and not so many companies are needing to go IPO, although those that do, honestly a lot of them now, it's cloud tech. It's cloud tech that is going mostly IPO. We've got DocuSign and everything else, we've got DropBox that just went IPO and everything else. It's very interest that these are the ones that are, the ones that are making waves. Spotify recently went IPO. And, again, Spotify, DropBox, honestly not really going anywhere. DocuSign is one of the few that I've seen that have just taken off like a rocket, but is that gonna continue? We don't know. Because we haven't got the price history yet and everything else. We could do a lot of evaluations about the company under the hood, but, again-
Phil Newton: It's harder to see what the money is doing. Follow the money.
Sean Donahoe: That's one of the things we talked about.
Phil Newton: You know, that's the old adage that is, you know, set in stone, and I'm sure it was the eleventh commandment at some point. I'm sure I've offended someone, but I don't care. And it was the eleventh commandment, it was follow the money. You know, and that's what looking at some sort of price history allows us to do. Yes, it might be a good investment, but what's the money doing? If the money is doing, and that will be translated into the price actually on the chart, that's why we focus on it so much.
Sean Donahoe: Yes, and one of the things that, again, I am obsessed with is reading financial statements. It's probably the most boring bloody thing on the planet, but it's something-
Phil Newton: And I made that decision a long time ago, to not-
Sean Donahoe: Yeah. So there's this
Phil Newton: -for that very reason.
Sean Donahoe: And this is a good distinction between me and Phile, because I come from two sides of the, you know, I do both sides of the coin. But also, I'm a nerd.
Phil Newton: I had a very serious conversation with myself many years, I remember it vividly. It was about Blockbuster, the story that was telling about, part of that story is how I sat thinking, "I need to, I'm at a junction. I need to make this new life, focus my time and attention on patterns and charting, which is the choice was making then. Or do I wanna sit through and trudge through company reports and account statements and balance sheets, which is essentially fundamental in charting. And I made the decision to look at the charts. And I know, I'm well aware of, I understand the importance of fundamentals, but I just choose not to do it, and I'm very happy with that decision.
Sean Donahoe: You know what, it's a lot easier as well. I'll be quite honest, it's a lot easier.
Phil Newton: Well, I thought that as well. I thought I was making the easy decision back then.
Sean Donahoe: And it really, it really is.
Phil Newton: It's just as hard as it turns out.
Sean Donahoe: Well, it can be if you're not doing it right, that's for sure. And it can be very costly.
Phil Newton: Well, when you're learning, yes. When you're learning it's just, it's difficult. Everything's difficult. It's all new, you know. But now I know what I'm doing, it's pretty straightforward.
Sean Donahoe: It is. And we actually simplify it a lot, so, you know, again.
Phil Newton: Again, more for the poor farm boy in the room more than anything.
Sean Donahoe: Absolutely, there you go. If you wanna see how easy it is, again, or how easy we make it, we've got some training, I just through it in there cause we're talking about it.
Phil Newton: Well, I'll tell you how easy it is. While we're recording this, I've put three trades on, Sean, and I've even updated my spreadsheet while we've been talking.
Sean Donahoe: Well, there you go, exactly. I mean, we do make it very simple. But you can-
Phil Newton: That's how easy it is. It's like, I know what I'm gonna do before the markets open. Oh, it's doing what I expect it to do to meet the meet the entry trigger. Click, click, send, done. Update spr-, the hardest part is updating the spreadsheet cause I've gotta type some numbers in.
Sean Donahoe: Well, ladies and gentlemen, if you wanna go check out that training and kinda get an insight in what we do, go to tradecanyon.com/ondemand. And you can see some on-demand training
Phil Newton: And if you wanna know what
Sean Donahoe: Sideways kind of insert that because it's relevant. But the, you know, one of the things, like this is one thing that recently discovered about Uber. Now, Uber, again, massive unicorn-
Phil Newton: Uber. I like the sound of that name. Uber.
Sean Donahoe: It does, it's a great name.
Phil Newton: It's like the word moist, isn't it? It's a nice name, Uber.
Sean Donahoe: But-
Phil Newton: Moist.
Sean Donahoe: I, where the hell are you going with that? I have no idea and I'm gonna steer you away from that conversation really bloody quick.
Phil Newton: Allegedly, all the best businesses have one name. Google. Amazon. Uber. I might just start a business called Moist. It's one of those words that sounds, it's a comedy word, Sean.
Sean Donahoe: Yeah, it also sounds dirty so that's why I'm steering you away from it very quickly.
Anyway. So, Uber, for example, has basically last year, lost 4.5 billion dollars after posting 2.8 billion dollars in loss in 2016. Now, is that a market share play? What are they doing to lose that much money? I mean, here's the thing. How do you lose 4.5 billion dollars?
Phil Newton: Certainly is not on the back of the cow , Sean.
Sean Donahoe: It's the back of the car seat here, if you think about it. I was, dear me.
Phil Newton: Oh, where is it? Creative accounting. Oh, look, oh, it's over there. The decimal place should have been over there instead of over here.
Sean Donahoe: Now Uber is an ultra-aggressive company. I mean, in terms- even little Bill found that one funny, I like that.
Phil Newton: Little Bill's finding that funny, yeah, he's chirping away.
Sean Donahoe: So, one of the things with Uber is they are ultra-aggressive. They are playing a very aggressive, global market share game because they started off in the headline, the whole ride share thing, but at the end of the day, they have lots of competition snapping at their heels. So, to dominate-and also they've got a lot of controversy and a lot of resistance from taxis and everything else and regular cabs.
Phil Newton: They've disrupted an industry, but not to the point where, it from my is, but they've disrupted it in a way because of this aggressiveness that you were describing, I believe to create backlash as opposed to, to the point where certain countries are actually blocking them from use.
Sean Donahoe: Yeah.
Phil Newton: Versus allowing that free market spirit to say "Well, we better get our act together." Cause I've gotta admit, in the UK, in London and various big cities around it, companies are well, we need to get our act together and we need to operate in a more efficient way. And you can get, like, the apps, the phones, and the same type of service from the local companies now, versus someone like, a country like France where they banned Uber for the way that they operate business, cause they didn't like the disruption cause they were getting backlash from the competition. And it, competition should be healthy, rather than, so perhaps the way that they went around their business, this aggressive marketing and all the other things going along with it, they could've done it a little bit better. And maybe the impression of the company wouldn't be as negative. And, from a business point of view, from a user point of view, but from my , people think it's wonderful.
Sean Donahoe: Yeah, and I get it, I use
Phil Newton: -and you get a taxi to where you're standing, not to an address. Click a button, five minutes, bish, bash, bosh, here's some
Sean Donahoe: Well, that's the whole thing.
Phil Newton: Business point of view.
Sean Donahoe: Yeah.
Phil Newton: Yeah, business point of view-
Sean Donahoe: Now, I wouldn't, me personally, I don't, I think a lot of the, in my personal opinion, again, I've gotta put the disclaimer in there, is I don't like some of the ways they approach business. They're very hostile. But, again, I've gotta understand-
Phil Newton: Under constant backlash because of that.
Sean Donahoe: Yeah, I've got to also acknowledge they need to be aggressive for the market share with all the competition.
So this reminds me a lot of Amazon, back in the day. I mean, Jeff Bezos did amazing job of keeping investors happy because, for year after year in their early years, they were losing money hand over fist. But, they were gaining market share, they were reinvesting in the company, they were just growing it and growing it and growing it to attain that market share and literally plow into what is now the world's largest retailer, for the most part.
Phil Newton: It's the model for online business for, you know, depends on your perspective. I think the good thing about that, they did what you touched on earlier. They've got technology and they're getting it right in one vertical.
Sean Donahoe: And the other funny thing is they've done a lot of things wrong
Phil Newton: And then they can
Sean Donahoe: But the one thing about Amazon which
Phil Newton: Yeah, exactly. But then they can clone and copy and replicate another vertical. So they started off with the book industry, and then, when they got that right and they were seen as well, actually, maybe we should take this a bit more seriously. And then, now look at them. I can have groceries delivered in the hour.
Sean Donahoe: Oh, yes. Absolutely. And I mean-
Phil Newton: And, for me personally, I've gotta admit, I'm coming more and more around. Who can do this for me?
Sean Donahoe: Exactly.
Phil Newton: I don't want to take my car to the, I'm frustrated about to take my car for an MOT. I wanna be able to push a button and have someone come to my house, take it to the MOT, deal with the nonsense that goes on there, pay the man, and then bring it back to me.
Sean Donahoe: And that is the way-
Phil Newton: That's what I was thinking
Sean Donahoe: Everything's going.
Phil Newton: And that's what I want. I want that and maybe, maybe there's a car service that will give me a loaner while someone else sorts that out. That would be a great service for a garage. You know, it's that concierge experience. Cause that's really what we're talking of. People don't, I, personally I'm coming around to the view that I don't wanna waste my time doing things that I don't enjoy. I don't enjoy taking the car to the garage.
Sean Donahoe: We need to create an app for that because that is actually a brilliant business idea. Right there.
Phil Newton: I suppose the other thing is, kinda touch on the same thing, is Tyres on the Drive, is a company in the UK that does it. There's probably many similar in the US. But it's that, you need your tires fixed, every so many miles, you're gonna get thin treads, and you work one vertical is the point we're coming to, and this is what pays off. Got one thing right, got the technology at least working, maybe not perfect, but it worked, it did the job. And then they clone and copied in literally, not just verticals, but products. And now they've got the opportunity to see what other people are selling by opening a marketplace and say "well, this product over here sells really well. Why don't we create our own?"
Sean Donahoe: Mm-hmm (affirmative)
Phil Newton: And I would imagine that they didn't originally sit down and think that was the vision of where they are now into the future. It would've been a lot of course corrections along the way I would've imagined to get where they are today. But, originally, it starts with that one problem, one solution, one person. People who want books and don't wanna go to the bookstore.
Sean Donahoe: Yeah. And the thing is that they have tried lots of different things and lots of them have failed. But they've reinvested and kept on going.
Phil Newton: Yeah.
Sean Donahoe: And done amazing bloody things. But the problem is, and this is kinda tying it back to the unicorn hunting that we're talking about right now, this is one of the big problems, is that there really is a lot of overvaluations right now. This is where I think a lot of the problem's gonna be. This is why we're kinda talking about this today and saying that this could be the big tech bubble. Again, is there could be the potential for massive losses coming in, the venture capital funded startups that are, in many cases, and this is, I'm kinda paraphrasing Keith Wright here, professor at the Villanova School of Business, who was saying massive losses are coming in the venture capital-funded startups that are, in many cases, overvalued by at least fifty percent. And he cited Buzzfeed and Vice Media as examples of unicorns that recently launched that missed their year-end revenue targets again and that they are underperforming based on expectations and things, again, these valuations that we were talking about-
Phil Newton: Are you trying to tell me that they've been overvalued, Sean?
Sean Donahoe: I believe so. So, tying it back to the very beginning here-
Phil Newton: Really?
Sean Donahoe: -when we're talking about some of these crazy valuations.
Phil Newton: People sit in a room.
Sean Donahoe: And the creative accounting and the creative projections and, at the end of it, like "well, you know what, it's actually worth sweet fuck all at the end of the day." So, again, some of these companies aren't going anywhere, they're missing their targets. In other words, they're not doing what they said on the TIM, as far as the investors are concerned. Now they're gonna get pressure from all sorts of other areas for these, again, a lot of the modern investor, and certainly from the venture capital side and all the investment houses, we're very result-driven. We're not seeing results, we're gonna take our money from here and we're gonna put it somewhere it's gonna generate results.













And the thing is that this is gonna, I think, cause a ripple effect, and I really feel this very strongly, that this could be one of the aspects, if we suddenly see a chain reaction of this, that could cause the bear market in the long term. Cause here's the thing, and this is another little-considered aspect. Think about this. We're seeing continued, I mean, we've been in a historic low interest rates, which means interest rates are continued to rise through 2018, 2019, 2020 is what the fed's been talking about, which will also apply pressure to both unicorns and venture capital firms alike and will likely accelerate the unicorns' slowdown because, again, money is getting more expensive. Interest rates are going up. Again, this could have a big impact across the board and this is one of the things I see as a potential problem, especially considering the percentage of tech that actually makes up the market. When you think about other major industries, and as we're kinda wrapping up this discussion. I mean, Apple and other companies are on most indexes. So, if there's a big,
Phil Newton: They're all making up the same pie.
Sean Donahoe: Exactly. If you see a big smack in the mouth in the NASDAQ, you're gonna see a ripple effect on the DOW and you're gonna see a ripple effect in the S&P 500 because pretty much all the leaders in each one are the same.
Phil Newton: Interrelated, yeah.
Sean Donahoe: So it could drag the others down. Now, I mean, is this going to happen and cause the bear market? No. Do I think it could be a contributing factor? Quite likely. I think there could be a carcophony or a perfect storm as there's a point where one, basically a cascade effect.
Phil Newton: It's a trigger, isn't it and it causes that cascade that you just mentioned. That's really all we're waiting for. We know that hey, this bonfire's being built, but we're just waiting for someone to strike the match. We don't know what the trigger's gonna be that would cause it. Maybe it's this.
Sean Donahoe: Yeah, so for me-
Phil Newton: Because, to be fair, if they're all pulling money out, money's getting expensive, they're gonna maybe sit on less cash because it's expensive for them to borrow money. And maybe they're gonna try and be smarter with the investments. Cause right now they can throw, they can throw spaghetti at the wall and see what sticks because of this. Cash is cheap to borrow, we're in a nine-year bull market, it doesn't look like it's gonna stop. It's certainly slowing down but it doesn't look like it's stopping anytime soon. It's cheap for them to "yeah, let's just see what happens."
Sean Donahoe: Yeah, so from-
Phil Newton: And it's, you know, when we're talking about millions and billions, it could be an expensive "yeah, let's see what happens" but the rewards when it works out, if you get the unicorn, which is the whole purpose of what we're talking about here, the rewards are phenomenal. Absolutely phenomenal.
Sean Donahoe: If you get it right.
Phil Newton: Exactly, and that's why people do it.
Sean Donahoe: Yeah.
Phil Newton: They're looking, I mean, this is what we might talk about or have talked about on the institution investor and home run. Like, if you can land the unicorn.
Sean Donahoe: Now, the thing is, and this is the other obvious flip side of this, is I'm not going to be investing in any unicorns in the-. I might trade some, if I have the track history. If the opportunity presents itself as part of my regular daily trading activity. From an investment side, right now I'm steering clear of any of the unicorns just because I see that as a potential problem.
Phil Newton: Alleged. Alleged unicorns might be a good way to say it.
Sean Donahoe: Alleged unicorns.
Phil Newton: And I think, just thinking about trading opportunities and Snapchat, for example.
Sean Donahoe: Oh dear.
Phil Newton: That has not done what people expect it to do. It's not rising in its share price. Investors are probably disappointed with performance, to say the least. However, it's not going down yet, so the current rising tide that we're seeing, it's not lifting this ship up with it. So, when the turn starts to happen, these underperforming and anticipated unicorn-type stocks, "hey, we think this is gonna be a good one," but it turns out to be a dead duck. Maybe they're the ones that are gonna start to kinda roll down the hill before everyone else does. And maybe it's worth keeping an eye on these unicorns that turned out not to be unicorns and see what they're doing because when they stop floating on the surface, to stick with the fish and dead fish in water type examples, is when it stops drifting, meandering sideways, and it starts to roll down the hill and starts to sell off. Maybe that's the clue. Maybe that's the opportunity, but it might just tip the balance to give you a little hat tip and say "hey, something's going on here. Something's changing, the wind is changed." And that's
Sean Donahoe: Awareness. Absolutely.
Phil Newton: Yeah, exactly. So, you know, why did we talk about all this? It's a long, winding conversation, maybe you're interested, maybe you're not interested. But what is the objective is to look for the opportunity. Now that you've got an awareness of what goes on and why these things and why people think that they're important, then that can highlight an opportunity for you, either as an investor or as a trader, depending on which side of the fence that you like to sit upon. For me, I would keep an eye on these underperforming unicorns, to coin a phrase, and when they start to tip over and something new starts to develop with them, maybe in a negative way, maybe even in a positive way, maybe that just says to us that the wind is changed, the tide is turned, however you wanna phrase it, and maybe we're looking for the next opportunity. And that's what I'm interested in. What's next? Not what's happening now or what happened yesterday, but what's next. And these might be our weather vanes to highlight that.
Sean Donahoe: Abso-damn-lutely. So there you go. Unicorn hunting. Duck season, wabbit season. Who cares? Keep up. Have the awareness . There you go. So anyway, with that being said, let's rock on.
Automated: And now, it's time for the Rebel Trader Tip of the Week, brought to you by tradecanyon.com. Ready to take your trading game to the next level? Discover where smarter traders come to get coached by the best and learning to trade to just got way easier. Trade Canyon: smarter traders live here.
Sean Donahoe: Okay, so Rebel Trader tip of the week is: your sole focus should be on consistency. Now, here's the thing. We talk about this a lot. We're not looking for home runs. We're not point to the outfield. We've talked about this, we bang that drum occasionally.
Phil Newton: We just mentioned it, actually.
Sean Donahoe: Yeah, exactly. But one of our things is we're looking for consistent returns. We're looking for stable and almost predictable returns on our capital. We're conservative, but we want to make sure our money is working. We are result-driven. We're not looking for home runs and grand slams with every single trade. It's impossible.
Phil Newton: If it happens, if it happens, great. But I'm not looking for it.
Sean Donahoe: Exactly. If I can hit one out the park just because it's the perfect setup and bang, that's great. But that's not gonna be my sole focus every time I trade. We're looking for consistent returns to stockpile, to compound and generate longterm gains. So keep your mindset in focus: consistency, consistency, consistency. What would you say in regards to that?
Phil Newton: Consistency, Sean. I've just gotta agree with you. Think about it like a production line.
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: It's the how you get products off the end of your production line to sell is through consistency. Finding a, or having a methodical method to replicate a process. And, in business, it's called automation. In trading, we call it a system or an algorithm. You know, and that's all we're doing. We're just being efficient with our knowledge, with something that works, and you systematize the process so that you can replicate and repeat and achieve that consistency. And that's the success with any business. It's this is what works. Do more of what works.
Sean Donahoe: Abso-damn-lutely.
Phil Newton: That's it. That's all you've gotta do.
Sean Donahoe: It's not rocket science.
Phil Newton: But the magic, exactly, the magic happens is when you start to do that consistent thing more frequently. And that's where the production line comes in. So, we always advocate one trade a day as an absolute minimum when, with 20 position in a month, on average, little bit more, little bit less sometimes. But it's that I've got a portfolio at the end of every month, a rolling portfolio. And the magic happens when you start pushing things down the production line and into your portfolio and you're looking for on average profits, just like every other business. And that all happens by being consistent with your preferred methodology.
Sean Donahoe: That's exactly it. Now, again, one thing that I wanna kinda add to that is I see a lot of people who, they're all over the fence. They're all over the place, they're running around, their heads on fire, trying to look for that-
Phil Newton: Day trade, today maybe I'll look for investments. Oh, no, I'll swing trade this week.
Sean Donahoe: Exactly. And it's like you-
Phil Newton: Maybe I'll use different indicators. Ooh, moving average works. Oh, I was just reading that these settings are perfect. Heard it all before. Heard it all before.
Sean Donahoe: Yeah.
Phil Newton: Pick one thing. It truly doesn't matter. Whichever one you prefer.
Sean Donahoe: Exactly. So, again, keep it in mind that, again, you're compounding. As you stay consistent, your average position size, just like we talk about a lot, percentage of your overall capital, that percentage as you grow your portfolio becomes bigger and bigger, which means your results are consistently getting larger and larger. And that is one of the things that is very, very essential. But don't be all over the fence. Don't be all over the place. Don't, stick with one thing, make it work, be consistent, and you will see your portfolio consistently grow.
Phil Newton: Boom.
Sean Donahoe: And at the end of the day, that's what we want.
So.
Phil Newton: I've got another comparison, Sean.
Sean Donahoe: Go ahead.
Phil Newton: Just because I just thought of it. You know I like to use my comparisons to the real business and the real world and my fantasy shoe shop on the high streets.
Sean Donahoe: Oh, he's got that shoe fetish again.
Phil Newton: Imagine I've gotta say it every, I've gotta get it in there somewhere every week. Imagine, for a moment, you've got an imaginary shoe shop on the high streets and you sell all the fancy shoes. Lack of consistency would just be opening up the shop any time you want. But consistency, to make sure that you should profit and you can pay your employees and you can turn a profit would be opening hours. You open at nine, you close at five. And you open at nine and close at five every single day. And because of that, your customers know when your business operations.
And because of that, they'll come in when you're open. They're not trying to come and buy shoes off you at nine o'clock at night because you sometimes open there and you're wondering why there's no customers. They don't know you open at nine o'clock at night. So it's real-world consistency, you've got business operating hours. The business is open from nine am to five am. Most businesses in the world operate that way. Therefore, we know that during business hours, hence the phrase, we can probably go to any business we want and get any service we want because of consistency.
Sean Donahoe: And I'll give you another example with your fantasy fetish shoe shop.
Phil Newton: It's just real-world examples. Yeah.
Sean Donahoe: Imagine if you got your shoe shop and you're open at nine to five, but this week you're selling three-hundred dollar female pumps. Next week you're selling ten-dollar sneakers. That's not consistent.
Phil Newton: Yeah.
Sean Donahoe: And your customers are going "well, what the hell is he selling this week? Oh my god, that's not what I want." Again, you have a consistent-
Phil Newton: You want those nice-
Sean Donahoe: Consistent pricing, consistent shoes-
Phil Newton: Nice consistency with products.
Sean Donahoe: You might have everything in between and if you consistently have it, your customers also know what you want and what they want, and you've got it.
Phil Newton: You want the high-end sneakers, you need to go to Phile's Fancy Footwear.
Sean Donahoe: There you go.
Phil Newton: I mean, the name of it, this business idea has taken off. Phile's Fancy Footwear on the high street.
Sean Donahoe: Absolutely. If you want those clear, stripping heels-
Phil Newton: If you want your own fancy footwear-
Sean Donahoe: Yes, you know where to go.
Anyway. So, with that being said I think we'll swiftly move on-
Phil Newton: Move on very swiftly.
Sean Donahoe: -before he gets into his thigh highs, let's rock on.
Automated: If you've got questions, they've got answers. Sean and Phile dive into the virtual mailbag for this week's Rebel Traders Quickfire Round.
Sean Donahoe: Outside of that craziness, let's dive into the mailbag. And I got the first one here for you. It's a question we get every now and then because it's kinda like a mindset question, but-
Phil Newton: It's a common question.
Sean Donahoe: It's a common question. If I started off with 10K today, how fast can I turn that into $100,000 or more, realistically? Now, there's a couple of answers to this. I know Phile is itching to answer this one.
Phil Newton: Well, I got as far as, not quite itching, go on, I'll let you, you've got a kind of precursor to the answer, haven't you?
Sean Donahoe: Well, I'm gonna let you answer it because I know that you're running a case study right now. That's kinda why I was kind of thinking you might wanna tackle this one. But, again, you've just gotta get started. You've gotta understand that, if you're just starting-
Phil Newton: Trying to give a serious answer. Yeah, trying to give a serious answer. No, I'm not being, cause it's a common question and it's a major concern for most people who are just starting out with their lower funds. Typically, you're gonna see the results that, you're gonna see results at whatever pace that you get.
Sean Donahoe: Yes.
Phil Newton: You can't guarantee what's gonna happen. That's the only thing that is uncertain in any business, is will a customer come in and buy something from me? Again, in trading context, I don't know what's gonna happen next. I truly do not know. And I've never bullshitted anyone into thinking any differently. I'm not going to say that "yes, you will make a profit this week." Because this week might be the week that my system doesn't work. You know, and it
Sean Donahoe: -don't know the person involved and their skill level and everything else.
Phil Newton: Yeah, and
Sean Donahoe: -and experience.
Phil Newton: Even that aside, before you even think about experience, you need learning, you're gonna make mistakes, you're gonna press the wrong button. Maybe you've just moved brokerages and it's not quite the same as what you're used to and the buttons are all in different places and oh, bollocks, I've pressed the wrong button again, and suddenly you've flushed a bit of cash down the toilet unnecessarily. But there's lots of reasons why everyone's gonna have a different experience. Yes, if you follow our systematic approach, you can see consistent results. But you've got to apply our systematic approach. Outside of that, there's also external factors like you were explaining, Sean. The learning curve that's involved, your experience level, your confidence level.
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: I can't make you push the button on the order. I know I'm gonna push the button on every order. Maybe two or three times a day. I know I'm gonna do that cause I've got the confidence, the knowledge, and the experience to know that 65% of the time, I'll win on average. I just don't know which 65%, which is why I've gotta do the numbers. I've gotta put the trades on, I've gotta do at least one a day, on average, for it to unfold.
Now, what I do know is I've taken a thousand pounds. Tell you what, I'll use it in dollars just so that it transfers, most of in dollars. But I've taken a thousand dollars and taken that up to ninety-two-and-a-half-thousand and change in eight months. I know I've done that. And I was at the very early stage of my career.
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: And it was actually the very first year of my full-time trading career. But I, looking back on it, having coached and trained many traders over the last 20 years, I consider myself an anomaly.
Sean Donahoe: That is an outlier result.
Phil Newton: I am, in that regard, I do consider myself a unicorn. Now, I don't believe that I'm any better, or a better trader or a worse trader than anyone else. I don't believe that. I just didn't have a choice. I had to make it work because my situation and my scenario was I was housebound, I had no choice, I couldn't go and work. I had to keep the lights on, I had to put food on the table. I made it work and it was a very stressful time. Particularly the first couple of months, it was intense, to say the least. But when I got the ball rolling, when the trades were going. And , two, three trades a day, Sean.
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: Surprisingly, nothing much has changed back then. That's just the way it worked out. But I know I can do that and that's an anomaly. I'm running a case study again, as you mentioned, to take a thousand pounds, a thousand dollars, again, and I wanna see if I can make a hundred thousand in twelve months. And it can be done, but the progress is slow initially and then it goes like .
Sean Donahoe: It's compounded, it's compounded, yeah.
Phil Newton: Yes, that's how it works. So yes, you can make that. How fast you can do it is as an individual, I don't know. I don't know how long it's gonna take. Now I've gotta admit, compared to the case study I'm doing now, compared to what I did many years, just a few years ago, Sean. Back in 2000, 2001 it was, just for reference. But back, whatchamacallit, lost my train of thought. Oh, yeah. The speed of growth is different and the reason why it is is because my concept of risk is very different to what it was then.
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: I needed, I had a monetary goal, whereas now I've got a consistency goal.
Sean Donahoe: That's exactly it. You know, I would say my own personal experience is very different from what I was doing back in the day. Now it's very risk-averse, it's very consistent, and I'll tell you right now, a lot of the growth in one of my experiments right now, very much the same kind of deal, got a strategy that I am literally live-testing right now, but it's the same thing. It's the consistency. I don't wanna have a giant swings unexpectedly. I'm focusing on that consistent growth. And I'll tell you what, the curve of growth is a lot more of a straight line than it was in the early days.
Phil Newton: Yeah, you would sit through the drawdown or you would hit a drawdown quite quickly. But then you're back up or equally quite quickly because the risk per trade was not conductive to low blood pressure.
Sean Donahoe: Oh, yes, indeed. It's a lot more defined as well, which is one of the things as well, so, rather than-
Phil Newton: And I've got to admit, the growth is steady. I can't deny that, the growth is steady. It's not where it was this time the first time around, but for different reasons. But, you're gonna see steady growth. And it's gonna be slow, slow, slow, slow and then it's gonna get a bit faster, bit faster, bit faster. And then, at a certain point, it's gonna go bucking quick. And because of this compounding effect. So, if you can get faster, but I'd imagine it's just the same as any business because, again, it's a new business. If you've got a small account or a small business startup investment, the growth that you're gonna see is initially gonna be slower because you're on a
Sean Donahoe: Exactly.
Phil Newton: Essentially. And you've got the same expenses, you're gonna make mistakes, you're gonna make some bad decisions. And if look at it again, if we look at it in the real world, with, again, Phile's Fetish Footwear on the High Street. And-
Sean Donahoe: You know I'm gonna use that in our webinars and training from now on.
Phil Newton: Phile's Fetish Footlocker.
Sean Donahoe: Dear me.
Phil Newton: Anyway. But, if we have, can't remember where I was going with it now. But if we have that shoe shop on the high street, you're gonna have the same experience. You've got low investment, you're gonna make bad decisions, you're gonna over-order stock. You're gonna under-order stock, you're gonna make all silly little decisions that you probably shouldn't've made or could've deferred making. And trading's gonna be the same thing. You're gonna make bad decisions, you're gonna press the wrong button, you're gonna see that slow growth. Oh, that's where I was gonna go with it. With a real-world business, they normally expect the breaking point from a time point of view, whether you're gonna make it or what I need to go back to, what . And that is usually three years.
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: That's normally what they say and trading is probably the same. Yes, you can make money, yes you can make profits, but to consistently do it day-in, day-out, week-in, week-out, this month, next year, five or ten years down the line. When you've been doing it two to three years, you know you've kind of made it because you weathered the storm as it were, you're past the beginner's luck type of thing.
Sean Donahoe: Plus also divided your experiences as well.
Phil Newton: Exactly, yes.
Sean Donahoe: You've got that under your belt. And that's one of the things-
Phil Newton: Yeah.
Sean Donahoe: You're used to the day-to-day operations and-
Phil Newton: Yeah, and to be fair, you might make money from day one. In that regard, you might make money from day one. But then that's just like any other business, you might make money from day one. But you, equally, you might struggle from day one whether you're a trader or Phile's shoe shop. It's the same experience. I think all I'm trying to highlight here, Sean, is that, in lots of different ways, is the experience no different from what you might know about the real world of business. When I say the real world, like the shop on the high street is real we say. But it's no different, we're just doing the financial trading equivalent of having a business on the high street.
Sean Donahoe: One thing I'd also say, which is something that I see a lot of people do, especially earlier on in their careers is try not to dip into your capital to take it out and put it in your pocket, unless you just have no choice. Let it stay in there because, as you're compounding and you're growing, obviously the more you've got in there, the more you leave it in there, the greater your compounding will be. And you're gonna get to target quicker.
Phil Newton: Exactly, yes.
Sean Donahoe: I see a lot of people, they go in with a small amount but they need that money, so they're trading basically with money they can't afford to invest.
Phil Newton: Can't afford, yes.
Sean Donahoe: And that is .
Phil Newton: With that sort of size of account, ten grand, you wanna be able to leave it in for at least twelve months, just so you can nurture it, you can build it up, you can make some mistakes, it's not consequential to keeping the electricity on. That would be the very bare minimum. If you wanted to make it a business and take withdrawings, I think you're gonna be, your start-off point's gonna be definitely around the hundred thousand dollar level, just to kind of, so you could take quarterly withdrawings and pay the bills and keep the lights on, you've got that possibility without dipping into capital reserves.
Sean Donahoe: Also, one thing obviously, as soon as you take money out of a brokerage account, put it in your pocket? You owe tax on it. Keep that in mind.
Phil Newton: Taxable, yeah.
Sean Donahoe: And again, we're not financial advisors, but again, speak to your .
Phil Newton: Please speak to someone more informed and educated than us in that regard.
Sean Donahoe: Indeed, indeed with that. I'm not authorized to give tax advice or anything else but speak to your CPA or financial advisor in regards to that. But, again, there are tax mitigation strategies and things you can do to make sure that you keep more of your cash, which I will not discuss here because, it again, that needs to be-
Phil Newton: It's not an easy question
Sean Donahoe: Yeah.
Phil Newton: It seems simple on face value, but I always struggle to answer that question, the how fast, what can I expect in returns. It's such a difficult question and it really is a simply phrased question. But to actually answer it? I can't give a straight answer.
Sean Donahoe: Well, it's-
Phil Newton: I really and truly
Sean Donahoe: It's one you wanna give a foundation of understanding. And it's like, yeah, let's change the understanding of what the motivation is, why you need to get there, and let me give you the reality check. And that's really what the answer is, it's a reality check. There's a lot of different things to consider that might change the question itself if you know how-
Phil Newton: And the real question's probably will it work for me.
Sean Donahoe: And that's one of the biggest things that we have to deal with. Will it work for me? That's gonna depend on you, and yeah, for the most part it works for most people we talk to. But again, we don't know a lot of the people. Until we have an understanding of who you are, what you are, what drives you and what your discipline is and everything else, it's basically how long's a piece of string?
Phil Newton: And it's such a difficult question. And I've been asked the same question many different ways, in many different forms, but I think "will it work for me," I think that's what it is. I mean, the short answer's yeah, probably. And that's the best we can say, it'll probably work. Because personality, it's like we always kinda say that, if you're asking me about day trading, will day trading work for you, well, do you have time to day trade? No. Well, day trading probably won't work for you then.
Sean Donahoe: Exactly.
Phil Newton: Cause you don't have time to do it. Think about what you want from trading. Imagine yourself in the situation of you doing the trading activity and what does that look like? How do you envisage doing it? Me, I want my feet up, reading the paper, smoking a pipe, not really, I'm being joking. But I wanna do as minimum, a little time as possible
Sean Donahoe: In his fetish footwear shop, yeah.
Phil Newton: So I can do other things, like write this business plan out for Phile's Fetish Footlocker.
Sean Donahoe: Indeed.
Now, again, the one thing to say is-
Phil Newton: Cause this business idea's taking shape over the weeks that we talk. It's taken form.
Sean Donahoe: It is, it is. He's gonna come to me in a couple of weeks and say, "Sean, do you wanna invest in my Fetish Footwear?"
Phil Newton: And the fun little spinoff, philesfetishgimpsuits.com.
Sean Donahoe: Yes, indeed. Yes, oh my god, he's gonna be Jeff Bezos of fetish footwear, yes.
Phil Newton: Look out, Bezos, I'm gunning for you.
But think about the objective more than anything. How do you see yourself trading? And then that's gonna filter out what may or may not work. Cause in that scenario, day trading, while I spent twelve years doing it, it won't work for me now, simply because I do not want to do it. And that is it, period. Yes, I can do it. I did it very well, I did it very successfully and most of my wealth came from day trading. But would I do it today? It gives me a heart attack. I've got anxiety thinking about it. Cause I don't trade that way anymore. I did it very well for a long period of time. So that's what we mean. So that was probably a better question. And then you can start to say "will this strategy, with this expectation help me take a small account to a large account?" And that's probably-
Sean Donahoe: A more refined question.
Phil Newton: Exactly, yes, because it's more about your situation. And you will be able to answer that question yourself.
Sean Donahoe: That's one of the things I wanted to get to is again, we know what we do works because it works for us. It works for many of our students who have found that again, this is a good program for them based on their individual situation. But when you have the understanding and the underpinnings of the ramifications of what we talk about and everything else, you can can answer yourself, yes this will work for me. Okay, good.
Phil Newton: Perfect.
Sean Donahoe: Done. Rock on.
Phil Newton: Cause you're digging deeper and answering smarter questions. I like that, I think we've answered that question.
Sean Donahoe: I think so indeed. So what's the next one?
Phil Newton: I think we've got there. Next one: a stock I own, not mentioning which one, was recently discussed on the television as a hold. I'm gonna guess it was some crazy guy beginning with C and ending in -anker. Don't say it, but you can guess.
Sean Donahoe: It might have been, but I don't know.
Phil Newton: It might've been. Just a wild stab in the dark there, Sean, but I'm gonna guess some crazy, with all the fancy button to push on-
Anyway. A stock that I own was discussed on the television as a hold. But someone else said, on a different section of the show, said to sell. What should you do?
Sean Donahoe: Turn off the television.
Phil Newton: I've got a flippant answer to this.
Sean Donahoe: My answer is turn off the television. Here's the thing. This is what drives me nuts about a lot of financial networks.
Phil Newton: I'm getting my soapbox ready, here, Sean. After you've stepped down from your soapbox, I'm gonna step right up after you.
Sean Donahoe: I'll give you the loudhailer afterwards. So, okay, yeah, I see this a lot. A lot of financial networks, they'll have two people on discussing stocks and they'll say "oh, I think this one's a hold." "Oh, I think this one's a buy." "I think this one's a sell." And you get no clear answers. What you get is opinions. We don't trade opinions, we trade behavior, we trade facts, we trade numbers. So turn off the bloody television, go look at the charts. What is the chart telling you? What are the numbers telling you? What is the behavior of that stock telling you? That's the real deal right there. Don't make your decisions based on other people's opinions that are on there to get ratings, not necessarily your best interest. Who has your best interest at heart? You. So, I would say, again, just focus on that. Now, again, I'm gonna get off my soapbox, I've said my parts. Phile? It's all yours.
Phil Newton: No, I agree. I think just to kinda steal your line for a moment, use them to raise your awareness of possibilities, as opposed to think "well, one says hold, one says sell." They've got different objectives and agendas. You don't know their methodology, their system. One could be a trend trader. One could be a counter-trend trader. So, of course they're gonna have polarizing viewpoints looking at the same information.
I think that's always worth keeping that kind of critique in mind. So, okay. One says sell. Question it. Okay, validate it. They say sell, so you own a stock, presumably you've bought it and you want the stock to rise. So it says hold, that means that they're in favor of obviously holding it. Someone says sell, why? Question it. Why? Why do they say that? Do they think there's gonna be a reversal? They think there's gonna be trend change? Maybe you can start to look at it in the context, through the lens of your strategy and see if the thing's you should be concerned about. I think that's what I would do with that information. Not an automatic sell because someone on TV said, maybe I would just go and take a look at my position and reevaluate it and say "Is there any action I need to take? Have I overlooked anything?" And all you're doing is crossing the Ts and dotting the Is with your strategy. That's all I would do with that information.
And this really is the whole reason why I don't watch stuff like this. I don't read information about the market, I don't care what other people are doing. Certainly not on television. They're there for entertainment more than anything. They're there to sell advertising slots. They're there to get your attention so that they can put an advert in front of you. That the network's objective and agenda. So I've always got the skeptical viewpoint whenever I see something, but if I do catch something about a particular stock that I might be involved in, I usually just go and reevaluate it through a fresh set of eyes. Is there anything for me to be concerned about? Yes or no? Has it met or is it close to meeting a take profit criteria? Oh, well, this guy's made me aware that I'd overlooked something in my own strategy. And if it doesn't meet my usual criteria, then nothing to worry about.
Sean Donahoe: Exactly.
Phil Newton: It doesn't meet my usual, I would be taking no action so no
Sean Donahoe: Yeah. I don't directly trade on someone's opinion of hold, buy, or sell.
Phil Newton: Yeah.
Sean Donahoe: Like Phile said,
Phil Newton: Use it as a maybe I'll just reevaluate it.
Sean Donahoe: Yes, if it's an awareness-raiser that's fine, that's great. That might give me extra information to take into my considerations. But if it's not affecting my overall viewpoint or if it's not something that is, again, relative to my style of trading, then okay, rock on, kiddie. That's just the way it's gonna be.
So, okay. Next question for you, sir. Can you explain a phrase I heard you use recently in a previous show, levels of interest? What does that mean?
Phil Newton: It's a phrase and I use it interchangeably with logical stopping points. But it's a phrase that I use to try and keep my biases unbiased.
Sean Donahoe: Mm-hmm (affirmative). This is one of the things that we do that I think is very, very important. And I actually picked this up, full credit to Phile on this one, because it was a really kind of game-changing way of thinking about what's traditionally taught. I'm gonna let Phile explain.
Phil Newton: Yeah. It's a way that I view the market by trying to keep, and if you always notice, I'm very fussy with the way that certain things are said and I always kinda pick on you. I'm trying to qualify and clarify certain things and it's because of this. The mind and the psychology is truly the only hurdles overcome in anything. In the trading world, it's gonna keep me trading today, tomorrow, next week, next month, next year, and twenty years later, I'm still doing it because of the psychology, because of the mind, because of the longevity of being able to do the same thing in a consistent basis every day.
Now, what I'm trying to do is to stay unbiased. What I mean by that is, the example I usually give is that the textbooks, when you read about charting and technical analysis, they describe support and resistance. Now, from the textbook's point of view, they've got to describe them that way because it helps you understand what's going on. If price was to rise by ten dollars and then sell off ten dollars and it stopped, that might be considered a support level because price is being supported, it's not going below it.
Now, what that means. So, it helps you understand the concept is all I'm trying to say. Are you still with me so far?
Sean Donahoe: Absolutely, yeah.
Phil Newton: I know you know what that means, but I've not confused
Sean Donahoe: No, I think that was pretty simple.
Phil Newton: Okay, cool. So that's, traditionally what support might mean. However, if I started looking at things as supports and prices at supports, then the textbooks further tell us that we should be a buyer at supports. And I will never, ever consider selling the break of supports, which they rarely talk about.
Sean Donahoe: Yeah.
Phil Newton: In fact, so they're only ever talking about being a buyer at supports, but they are never tell you what to do if support breaks or how to evaluate if support breaks or what to do next. They just say "buy support, sell resistance." And that means that you're biased towards being a buyer at support. And I've got to admit, there has been a lot of times over the years where I've been a seller at supports.
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: And I would never have considered being a seller at support and profiting on those positions if I had called it exactly-
Sean Donahoe: It just unchange your mind and your perception.
Phil Newton: It keeps me open to the possibility of an opportunity. And again, these are phrases that we've used, and you probably start to understand the way that I describe certain things. Be aware of the opportunity. Again, we literally just talked about, in the previous question.
Sean Donahoe: But it's a self-fulfilling prophecy in a lot of ways, because what happens is when the masses see something coming towards a support point,
Phil Newton: Support level, in this case, yeah
Sean Donahoe: And so what happens is that means the bias is automatically on the other side of it so, because of the way it's being taught and a lot of people have the preconceived bias, it becomes that self-fulfilling prophecy, unless they're wrong and then it punches through and they're like "oh, well crap, I was wrong."
Phil Newton: But that's the point.
Sean Donahoe: Exactly.
Phil Newton: Exactly, that's the point. If support doesn't hold or do what you think it's gonna do and it keeps selling off, and it gone through that support level, you will continue to be a buyer at supports. Even though support might technically broken. Because the author hasn't explained well what happens if that doesn't work.
Sean Donahoe: Exactly.
Phil Newton: And it's not fault to the author.
Sean Donahoe: Because it's in their education
Phil Newton: Exactly, yes. They're just, they're not telling you how to trade support, they're just telling you what support is and what you're expecting to happen. But you'll continue to be a buyer at support as it sells off. In the phrase that gets used quite a lot is trying to catch a fallen nun.
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: Buy the dip, and you keep buying the dip, and you end up well, "I'm losing money, I'm losing money." And we've seen this in the bitcoin thing. It was at 20,000, then it was at 19, 18, 17, 16, 15, 14. People kept buying the dip, 14, 13, 12, 11. Got down to ten dollars. It's taken a swan dive and people are still trying to buy the dip in bitcoin. And that's because they've not recognized that hey, something's changed. Support has broken.
But if I'm thinking of it, to bring it on back to the question, if I'm thinking of it as a level of interest. Okay, I'm now open to the possibility, okay, it's an important level. Prices stopped here previously. Is it looking like it's doing it again? And in that case, then yes, I would probably, treat it like it is a support level to be treated in the traditional sense. But if it's not looking like it's behaving as you would expect at support or, in my case, I call it a level of interest, I'm now open to the possibility of, if price moves past that level, I can do something else. And that's what's important for me. It gives me the opportunity to do something else if something different happens.
Sean Donahoe: Absolutely. No, I think that's perfect. And that basically nails it in a nutshell, is to maintain an open mind and remove the biases that might stop you looking at other potential opportunities and be on the wrong side. So, again, I love that and that's one of the reasons why I said this kinda a game-changing concept for a lot of people, is just to call it support resistance, just interchange it with level of interest. Good thing, good thing. Good stuff.
Okay, with that being said, let's rock on.
Automated: Don't forget, if you have a question you want to ask Sean and Phile, just go to tradecanyon.com/rtquestions and your question may be featured on a future show.
Uh oh. What's that smell? It's time to call out the Wall Street shenanigans, mainstream confusion, and outright hijinks and hokum of so-called experts. Yep, it's time for Bullshit of the Week.
Sean Donahoe: Okay, so Bullshit of the Week. We have had, honestly, a couple of weeks where there's not been a lot of BS around. It's been a couple little things here, couple little things there, but nothing significant. However, as of when we're recording this show, this show was actually recorded on Wednesday, the 30th, we had a little bit of interesting BS from yesterday. And we're gonna come down to blaming the Italians. It's the Italian job, and I have to do my Michael Caine impression, you're only supposed to blow the bloody doors off. Which is from get the Italian joke.
Phil Newton: A that never really happened from the movie, but yeah, I think it's from a joke around the movie, but yeah. Famous quote that wasn't a quote.
Sean Donahoe: There you go, yeah. So, gotta watch the original classic, 1960s.
Phil Newton: Blow the bloody doors off.
Sean Donahoe: Yeah, so you gotta watch that movie.
But, anyway. So, markets had a little bit of selloff.
Phil Newton: -Break into song.
Sean Donahoe: Yeah
Phil Newton: Had a bit of a hiccup yesterday.
Sean Donahoe: Yeah, a little bit.
Phil Newton: And if you've not gathered, it was certain people were to blame.
Sean Donahoe: Yes. So here's the thing. The market's had a little bit of a selloff.
Phil Newton: It was Roseanne.
Sean Donahoe: That was my joke yesterday is
So yeah, the future's market sold off, okay, and there was a lot of people saying "Oh, what's going on? What's going on?" First thing they were point fingers at was some bullshit going off in Italy. I made the joke that's actually cause they canceled Roseanne, that's what it was, because of the stupid tweet. But here's the thing. There's been- here's what we were talking about a previous show. The ripple effect. Something happened in the future's markets. Okay, let's scramble to look what could've caused this, what could've caused this. Oh, well there's a little bit of drama in Italy. That's the obvious reason! It's nothing to do with the oil selloff,
Phil Newton: Of course that was it.
Sean Donahoe: It's nothing to do with the tariff announcements that caused a little bit of unpredictability. And I love-
Phil Newton: Nothing to do with the spike in bonds or interest rates or Venezuela. Any of multitude of world events
Sean Donahoe: Yes.
Phil Newton: That's going on exactly the same time.
Sean Donahoe: So here's the thing.
Phil Newton: Maybe it's a combination of all
Sean Donahoe: I'm gonna quote this headline from CNBC. "Here's why the markets are scared of the latest Italian political drama." Honestly, a lot of the people didn't give a rat's ass in Italy about Italy, or were even freaking aware of it.
Phil Newton: I didn't know. No one cared. I live in Europe. No one cares.
Sean Donahoe: I actually spoke to a few people who are, let's just say, the professional trading cycle, and they're like "What?" It's got sweet FA to do with it.
Phil Newton: No one knew it happened
Sean Donahoe: But I've got to say. The three bullet points, the lede, you know what they always say in journalism, don't bury the lede, put it right up front. So this is the three bullet points which summarize the entire main point of the story. So, here they are. So the three things, this is why the markets are so scared. "Stocks sold off and investors ran to safety in treasuries and the US dollar as investors feared political uncertainty in Italy could spill into the global economy." That's bullet point number one. Really, said fuck all, okay?
Phil Newton: Well to be fair, that's just a statement of something that we already knew
Sean Donahoe: Yes.
Phil Newton: So why, there's always political uncertainty in Italy, for a start.
Sean Donahoe: Well, here's the thing.
Phil Newton: And there's certainly known political uncertainty in Europe generally, mostly spearheaded by Brexit, who's gonna be next, will we actually the European Union. So that's not really telling me anything. There's nothing new there whatsoever.
Sean Donahoe: So here's bullet number two. "Strategists," and I always love this in quotes, "said the turbulence and concerns about Italy may be enough to slow down federal reserves' rate hikes this year,"
Phil Newton: I don't think so
Sean Donahoe: "despite an improved ." They don't give a flying rat's monkey butt
Phil Newton: So is Italy dictating US policy now? Is that what they're trying to say.
Sean Donahoe: Exactly. Bullshit, okay. And then here's Italy: "Italy's president over the weekend stopped the formation of a coalition government that may have sought to leave Euro."
Phil Newton: That's him scrambling for power, that's nothing to do with the US market.
Sean Donahoe: Exactly.
Phil Newton: And, to be fair, any political body would have tried to do that. They're just trying to hold on to their last piece of the pie before they're eventually booted out.
Sean Donahoe: Exactly.
Phil Newton: To be fair, that's smart practice. Let's form a committee to see if we can turn this ship around.
Sean Donahoe: So, yeah, but at the end of the day, none of that has any freaking relevance
Phil Newton: That's why it
Sean Donahoe: To the US market. And here's the proof in the pudding. This morning, the headlines everywhere, and I had a really great article here, again, from CNBC: "US futures point to a rebound after Italy's political woes fuel global selloff." Now here's the thing. And they're saying "oh, Italy's having a big ripple across the world because the Asia markets-
Phil Newton: Clearly it was such a big fear and such a big ripple-
Sean Donahoe: Yeah.
Phil Newton: That it's not having any further effect.
Sean Donahoe: Where the people realized, okay, what happened was there's a couple of other things happening in the futures markets that, again, triggered a people to say "oh, you know what, cash it."
Phil Newton: Might have had an impact.
Sean Donahoe: "Let's cash out. Let's take some money off the table. Oh, well, that-"
Phil Newton: What was interesting about this is it was essentially the blue chips that had this spazmatic, immediate reaction, especially cause I was watching it at the time yesterday and wondering what was going on and looking for an opportunity-
Sean Donahoe: Well, we were talking about this in our private group. It's just like "What the hell is this bullshit?"
Phil Newton: I didn't once look at the conversation of the people trying to figure out why it was happening cause it's of no consequence to me whatsoever. I was looking at price, so it was going on, that was all that was interesting to me. But the DOW, the top thirty stocks had a very violent, knee-jerk reaction a little bit before the S&P. The NASDAQ, the didn't really respond
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: And the Russell, the IWM, as I was looking at it, didn't really have that much, and it's not really moved that much all this week. And I've just gotta think, the Russell once again-
Sean Donahoe: Leading the way?
Phil Newton: Exactly. We've said this for many years in private, haven't we Sean? We've said it a few times. The Russell 2000, 2000 stocks, I see this as a representation of the economy. It's 2000 stocks, it's not gonna be put out of joint with, say, Apple just doing something crazy, which can throw off the NASDAQ or it can throw off the DOW.
Sean Donahoe: Mm-hmm (affirmative). I love looking at the small caps as the leading indicator of what the others are doing.
Phil Newton: Exactly. It's a representation of middle America, as far as I'm concerned, and I think it's a good weather gauge for is this bullshit or, hence the section, is this bullshit or is there really something going on here that we should be worried about. And I've gotta admit, by comparison, the Russell, while it did react in a very small way, again that rising tide or sinking tide, in this case pulling it down, it was unsubstantiated. It was only a little bit of the sold off. It actually recovered the same day, if you were looking at it.
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: And the rest of them are just literally knee-jerk reactions, panic, panic, panic. So IWM, for me, was making me think "hey, nothing's going on. Nothing to see here, boys, move along. Move along."
Sean Donahoe: Yeah, and the interesting thing is, though, if you look at the S&P 500 and the DOW, I mean, they were sideways for, yeah, a good week or so. And yeah, they kinda've helping holding their breath.
Phil Newton: Which I'd just like to point out is normal around a holiday or long holiday weekend.
Sean Donahoe: Yep, and there was-
Phil Newton: At the end of last week, everyone's winding down for a long holiday and they're thinking "oh, I don't really wanna do anything, I've got my bonuses, and it's the end of the month, my end-of-month bonuses are secure." Again if you imagine the office environments. Even if you imagine The Office, the TV program. That's what goes on inside of offices. I don't think I'm gonna do anything because of the long holiday weekend and prices might jump around when the market opens but the reality is not a lot happens before and after long holidays. So what we've seen is normal market behavior around long holiday weekends and there's been a little bit of a spazmatic knee-jerk reaction when they've come back up, better do some work. And if you imagine it, oh, Italy's taken a dive, oh, best do something here just to keep the boss happy. That's what's going on. That's what's happening in the markets. And the reality is that well, I can buy them back now, maybe I've got a good average price here. My viewpoint's not changed. And the big guns, the big boys and girls, they're not doing anything about it. But if you just picture what's going on in the office and read the chart as if it's a ticket tape to what's going on inside the office or the stock market. If you paint that picture and you say it in that context, and then we look at IWM, nothing was going on. No one was worried. But the big boys, the boss is putting pressure on me, I'd best do something. I'd best look busy, I'd best walk round with a bit of paper before I get nabbed by the manager. That's how the market reacted. It was just better do something just for the sake of doing something.
Sean Donahoe: It's ridiculous. It's ridiculous.
Phil Newton: But, yeah, the true picture, I think what we're trying to get onto is that you could see that it was nothing to worry about by the way that the average of 2000 stocks was behaving. Nothing more than a hiccup.
Sean Donahoe: Yeah.
Phil Newton: Bit of indigestion and oh, nope, turned out to be wind. I'm fine.
Sean Donahoe: Oh dear me.
Oh yeah, so I'm looking at the Russell futures right now. And again, I use them as one of my And again, seeing all-time highs right now. Again.
Phil Newton: Yeah, it just popped it again literally as we talked right this moment.
Sean Donahoe: Exactly. So again-
Phil Newton: NASDAQ might be following short,
Sean Donahoe: There you go.
Phil Newton: Well, not new highs, but it looks like new high for the week.
Sean Donahoe: Well the futures have set new highs. The IWM I guess maybe just hollowing in as as well.
Phil Newton: No,
Sean Donahoe: No worries. But yeah, it's interesting to see-
Phil Newton: It's interesting.
Sean Donahoe: It is an interesting little lesson in don't listen to the news, look at the numbers, look at what's really going on and make up your own mind. The DOW futures and the S&P futures pretty much tickling the fifty-day moving average and using that as a point of interest and then, again, by the dip, moment, perfect.
Phil Newton: Surprise!
Sean Donahoe: I had a nice-
Phil Newton: The stock market only goes so-
Sean Donahoe:
Phil Newton: Andrew is probably high-fiving people in the streets about this.
Sean Donahoe: Yeah, probably. Probably.
Phil Newton: This is the sort of volatility
Sean Donahoe: And again, just a beautiful thing. But yeah, the thing is it had a ripple effect all over the world. Not because of Italy, it was because the US reacted in a knee-jerk and thus, when the US sneezes, everyone catches a cold.
Phil Newton: It was not- Well, if they're doing something, we'd better do something.
Sean Donahoe: Yeah. So-
Phil Newton: Better look busy, boys.
Sean Donahoe: Oh, it's not, it's all Italy's fault. It's caused this shock wave across the world. No, no, it's because all the market hype and the bullshit and you pointed there because it fits a political agenda or some other thing. It's not really, no one really gives a rat's-
Phil Newton: Sensationalist headline.
Sean Donahoe: Yeah, no one gives a rat's ass because straight away it's like "oh, the market's rebounded immediately after we realized that we were full of shit.
Phil Newton: What a bullshit headline.
Sean Donahoe: Indeed, so yeah, there you go. That's the bullshit of the week.
Phil Newton: But again, tied into the mailbag question. Just turn the damn thing off.
Sean Donahoe: Absolutely.
Phil Newton: Don't look at the news.
Sean Donahoe: Absolutely.
Phil Newton: I didn't know what was going on, but I knew something was happening, but it was very clearly evident that it was nothing to panic about.
Sean Donahoe: Absolutely. So there you go.
Phil Newton: Because it's all in .
Sean Donahoe: Absolutely. Turn it off, turn it off. There's no need. Just look at what's going on with the real deal, the facts, the numbers. And, again, raise awareness but, yeah, don't believe everything that's being told to you, that's for sure.
Anyway, so with that being said, that's it for this week's show. Hope you enjoyed it and, again, we mentioned earlier on but I'll mention it again. If you wanna go see how we trade, what we trade, why we trade it, and what we do, you can go to tradecanyon.com/ondemand, but please remember that this show is not free. It will cost you a five-star review and if you go to tradecanyon.com/rebeltraders you can see an archive of all of our previous shows plus you can listen and subscribe, review on your favorite way to listen to the show. We'd love to hear from you and, again, it helps us reach out to as many traders and investors just like you as humanly possible.
Phil Newton: You can also connect with us on Facebook and Twitter, but clearly not Snapchat.
Sean Donahoe: Yeah, we're not on Snapchat.
Phil Newton: And you can get to us, I know it's a dead fish in the water. You can get to us at the same link, tradecanyon.com/rebeltraders and, what've we got coming up in next week's show, Sean?
Sean Donahoe: Well, we are-
Phil Newton: Still a tongue twister that, I always struggle
Sean Donahoe: Yeah, but you've mastered it. It's only took you a year but you've mastered it now.
Phil Newton: , yeah. I have to practice. It's like one of those tongue twisters. Red lorry yellow lorry.
Sean Donahoe: Don't get me started on that one, that one has always screwed me up.
Phil Newton: Seashells on the seashore.
Sean Donahoe: Yes, indeed. So, anyway, next week's show we're gonna be banging on that drum all day and I have the song stuck in my head.
Phil Newton: Is it banging drum?
Sean Donahoe: We are. And we're basically gonna be talking, kinda summarizing what we feel are the most important aspects of trading that you need to focus on to be successful in the market. So we're basically gonna take a lot of the things that we talk about in many different shows, little tidbits here and there, we're gonna bring them all together into one big show. It's like bang that drum really bloody loud so that you hear it wherever you are in the trading world.
Phil Newton: It shall be percussion assisted.
Sean Donahoe: Abso-damn-lutely. We'll have that double-kick and we'll be rocking and rolling like a Metallica solo. So, with that being said, rock on. We'll see you next time. Take care for now.
Phil Newton: Bye for now.
Automated: For more cutting edge trading advice and a free trader workshop to help you build a personalized trading plan and make smarter trading decisions, go to tradecanyon.com now.
Automated: Futures. Options on futures. Stock and stock options trading involves a substantial degree of risk and may not be suitable for all investors. Past performance is not necessarily indicative of future results. Trade Canyon, Incorporated provides only training and educational information. If you actually understood and listened to this, then that means you are awesome. Congratulations and well done. Notice: this product may contain nuts.

(Click the time stamp to jump directly to that point in the episode.)

[00:06] Show Introduction

[02:19] Sean: Today, we are going to be discussing unicorns, we’re not talking about the pointy-headed horses. We are talking about what is considered to be one of the largest tech bubbles ever.

[04:25] Sean: It’s a venture capital term refers to any tech startup company that reaches at least a one billion dollar market valuation determined by private or public investment.

[04:44] Phil: To put it in perspective, numbers like this since the financial crash where billions and trillions get touted around on a daily basis, as an individual company that’s pretty big.

[05:11] Sean: It doesn’t mean they have a billion dollars, it means they’ve been valued.

[05:43] Sean: It’s down to how much money they’ve raised. Like Canva, prime example founded in 2012, they’ve raised a total of ninety-six millions dollars through venture capital. They’ve bought a percentage of the company with that investment.

[06:46] Phil: There’s a formula behind the valuation.

[07:56] Phil: As soon as I hear words like perceived value, it just makes my eyes roll. This is the kind of the thing with the tech bubble, there was this perceived value bit there was no substance behind it.

[08:53] Sean: Venture capital investors hire people like me to do valuations of companies, are they solid, are the worth investing in, are they meeting their goals?

[09:05] Phil: Is there something tangible?

[09:46] Phil: From a trading perspective, one element might be, is the retail investor was looking for opportunities. If that valuation is big enough in size, in the billions, it usually gets the label ‘this is a unicorn’. Would that be fair?

[10:40] Sean: Kind of. We look at everything, not only market share, potential market share, projections. We also look at the tech, intellectual property, have they got a really good algorithm?

[11:45] Phil: Like what we were talking about last week, can we merge industries to find new opportunities so that’s more future growth prospecting. It can have an accurate valuation, maybe you can do some comparison type analysis to project, at least, a benchmark expectation of what could happen.

[12:32] Sean: Back in the early 2000s and running up to that, everyone was opening their wallets. The problem was these companies disappeared, a lot of retail and institutional investors, and then it blew up.

[17:40] Sean: While we’re seeing a lot of unicorns, it’s a very different environment strategically. A lot more people are more conscious of the dotcom crash.

[18:28] A lot of startups go through multiple rounds of funding. The seed round, you’ve got the angel round, then you’ve got your series A, B, C, etc. which is generally a progression of price stock at these rounds that’s an indication the company is progressing as expected. If you go too many rounds, that’s usually a sign of delayed progress or a problem.

[23:10] Sean: A lot of the institutional early-birds are getting in under the radar and are getting preferential pricing on a stock that then goes public at a much higher rate.

[23:56] Phil: How these rounds pre-IPOs rounds are dealt with might give us clues as to investment opportunity on the IPO.

[24:11] Sean: We never trade IPOs unless I have the opportunity to be in early.

[24:26] Phil: Both of our decisions are chart-based, I can’t make a decision because there’s not enough history.

[25:04] Sean: We don’t trade them but I do invest. Only if I’m in early and I look to cash out immediately.

[26:42] Sean: Most of the time, there’s a point where all of the people who got in early, cash out.

[34:19] Phil: Pre-IPO or on the day of IPO I can’t make that decision. It’s just opinionated trading, it might be a valid opinion if you’re investing based on the information you might have access to.

[34:59] Sean: Always look at the numbers, not the hype machine behind it.

[35:42] Sean: As opposed to the dotcom era, we now have social networks, cloud tech, matching learning, blockchain.

[37:52] Phil: Follow the money. That’s what looking at price history allows us to do, that will be translated into the price action on the chart. What’s the money doing?

[38:08] Sean: I am obsessed with reading financial statements.

[39:30] Sean: If you want to see how easy we make it., we’ve got some training.

[39:36] Phil: I’ll tell you, while we’ve been recording this, I’ve put three trades on. I know what I’m doing before the markets open. The hardest part is updating the spreadsheet.

[39:58] Sean: Ladies and gentlemen, if you want to check out that training and get an insight into what we do, go to www.tradecanyon.com/ondemand

[40:54] Sean: Uber, last year lost $4.5 after posting $2.8 loss in 2016. What are they doing to lose that much money. They are playing a very aggressive market share game but they have a lot of competition and also a lot of controversy and a lot of resistance from regular cabs.

[42:08] Phil: They’ve disrupted an industry to the point where some countries have blocked them from use versus allowing that free-market spirit. In London, you can get the same type of service from local companies now versus somewhere like France where they banned it.

[44:04] Sean: This reminds me a lot of Amazon back in the day. For year after year they were losing money but they were gaining market share and reinvesting in the company.

[44:34] Phil: It’s the model for online business. They’ve got technology and they’re getting it right and then they can replicate in other verticals.

[48:47] Sean: A lot of the modern investors, certainly from the venture capital side and all the investment houses, we’re very result-driven. If we’re not seeing results, we’re going to take our money and put it somewhere it’s going generate results.

[52:06] Sean: I’m not going to be investing in any unicorns. I might trade some if I have the track history if the opportunity presents itself as part of my regular daily trading activity.

[54:05] Phil: I would keep an eye on these under-performing unicorns and maybe we’re looking for the next opportunity. That’s what I’m interested in, what’s happening next.

[54:40] Sean: Absolutely, have the awareness.

[54:52] Rebel Trader Tip of the Week

[55:08] Sean: Okay, tip of the week - your sole focus should be on consistency. We're always looking for consistent, stable and almost predictable returns on our capital. We are results-driven. We're looking for those consistent returns to stockpile, compound and generate long-term gains.

[56:15] Phil: I’ve just got to agree with you. Do more of what works.

[59:12] Phil: Lack of consistency would just be opening up the shop any time you want. Consistency would be opening hours because of that your customers know when you have your business operations.

[1:00:04] Sean:I’ll give you another example, consistent pricing too. You have to be consistent.

[1:01:13] Quickfire Round

[1:01:30] Sean: If I started today with $10k how fast can I turn that in to $100k or more realistically?

[1:01:58] Sean: You’ve got to get started.

[1:02:09] Phil: It’s a major concern for most people who are just starting out with lower funds. Typically, you’re going to see results at whatever pace you can get. It’s the only thing that is uncertain in any business is will a customer come in and buy something from me.

[1:04:03] Phil: I’ve taken $1,000 and taken it up to $92,500 in eight months and that was in the very early stages of my career. Looking back on it, I consider myself an anomaly.

[1:04:28] Sean: That is an outlier result.

[1:04:38] Phil: I just didn’t have a choice, I had to make it work. It was a very stressful time.

[1:05:34] Phil: Yes, you can make that, how fast you can do that as an individual I don’t know. I had a monetary goal whereas now I have a consistency goal.

[1:06:12] Sean: My own personal experience is very different from what I was doing back in the day. Now, it’s very risk-averse, it’s very consistent.

[1:15:45] Phil: A stock I own (Not mentioning which one) was recently discussed on the TV as a "HOLD," but another guy on the same show said to "SELL" - What should I do?

[1:16:25] Sean: Turn off the television. You get no clear answers, you get opinions. We don’t trade opinions, we trade behavior, facts, numbers.

[1:17:37] Phil: I agree, use them to raise your awareness of possibilities. You don’t know their methodology, their systems, one could be a trend trader, one could be a counter-trend trader so of curse they’re going to have polarizing view points looking at the same information.

[1:20:35] Sean: Can you explain a phrase I heard you use recently in a previous show - "Levels of Interest?"

[1:20:43] Phil: It’s a phrase that I use to try and keep my biases unbiased.

[1:21:00] Sean: This was a really game-changing way of thinking about what was taught.

[1:21:11] Phil: It’s a way that I view the markets. The mind of the psychology is truly the only thing to overcome. It’s going to keep me trading because of the mind, the longevity of being able to do the same thing, consistently every day.

[1:26:18] Sean: That nails it, in a nutshell, to maintain an open mind and remove the biases that might stop you looking at other potential opportunities.

[1:26:59] Bulls**t of the Week

[1:27:41] Sean: We’re going to come down to blaming the Italians. Markets had a little bit of a sell-off and there were people asking ‘what’s going on?’ Here’s the ripple effect, there’s a little bit of drama in Italy, it’s the obvious reason.

[1:29:10] Phil: Oh it’s not any of other of the multitude of world events.

[1:33:38] Sean: I love looking at the small caps of a leading indicator of what the others are doing.

[1:33:46] Phil: It’s a good weather gauge, is there really something going on here that we should be worried about.

[1:35:17] Phil: What we’ve seen is normal is normal market behavior around long holiday weekends.

[1:38:53] Sean: Just look at what’s going on. Don’t believe everything that’s been told to you. Okay, that's it for this week’ show.Thank you for listening to the show!Please remember that this show is not free, it will cost you a five-star review. If you go to tradecanyon.com/rebeltraders, you can see an archive of all our previous shows and you can listen, subscribe and review us on your favorite way to hear the show.This helps us reach more traders and investors just like you.

[1:39:40] Phil: You can also connect with us on Facebook and Twitter also attradecanyon.com/rebeltraders. And what do we have coming up in next week’s show?

[1:40:15] Sean: Next week's show is we’re going to be banging on that drum all day long summarizing what we feel are the most important aspects of trading that you need to focus on to be successful in the markets.

[1:41:00] Sean: We’ll see you next time. Take care for now.

[1:41:02] Phil: Bye for now.

Resources & Links Mentioned in This Week's Show

3 Key Takeaways From This Show

  • There could be a looming issue with overvalued unicorns struggling to stay afloat if they don't produce results
  • Large tech companies make up most of the major indexes and a big shift in the tech sector can have massive ripples across all markets
  • Q1 of this year - Nearly $16 billion raised by 44 companies, 10 of which were tech companies. Tech raised 40% of the total proceeds in the first quarter, twice as much as any other industry.

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