Ep304: Chris Tate – Time Is Precious, Invest It

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Guest profile

Chris Tate is one of the first people to ever release a share trading book in Australia. He is the best-selling author of The Art of Trading and The Art of Options Trading in Australia. He’s been running the 6-month repeat-for-free Mentor Program since the year 2000, and he’s also the founder of the Talking Trading podcast, a free weekly trading podcast.

With a background as an immunologist and his previous work as a bouncer, Chris’s life experiences will amaze you. When he’s not hanging out with his traders, he can be seen lifting weights at the gym, enjoying yoga, and trying to get a personal best time on his rowing machine in his garage.

 

“Time is more important than money because money can be replaced; time cannot.”

Chris Tate

 

Worst investment ever

Chris began his career as an immunologist and had a profession in academia mapped out for himself. However, he started to trade in the 80s bull market in Australia.

Chris made the mistake of thinking that because everything he bought succeeded, he was somewhat a genius. When his luck stopped, Chris thought he should learn about trading. He figured stockbrokers know best about stocks.

Joining a broking firm

Chris conned his way into a broking firm based on the fact that his background is reasonably quantitative. Derivatives were beginning to take off in Australia, and he seemed to have an affinity for understanding them.

Stockbrokers know squat about trading

As soon as Chris joined the broking firm, he learned that stockbrokers knew nothing about trading. He found out the person sitting opposite him had been selling shoes two weeks beforehand, and the person sitting next to him had been selling carpets.

Chris quickly learned that broking was a sales profession and not of analysis and execution.

Making the best of what he had learned

Now that Chris had realized that brokers would never teach him how to trade, he had to make the most of his situation. He was still working for a brokerage anyway.

Chris noted that being in a dealing room gave him access to information he did not have before. It also gave him access to a trading floor that helped him understand ebbs and flows very quickly. Chris also got to understand the cyclical nature of emotion that drives price. And so he thought he could marry his access to information and the trading floor together. Chris spent many years as a broker taking the opportunities presented to him to hone his skills.

There was an easy and quick way to learn about trading

In hindsight, working in the brokerage for so long was his worst investment ever because he just burned time, not knowing that time is precious. He now realizes that he did not think through the problem well.

Chris’s problem was his desire to learn how to trade, and instead of going back to school and take a degree in Finance, he went to work for a brokerage. A Master’s degree would have taken him between 18 months and two years, and it would have given him different connections within the industry.

Lessons learned

Time is precious invest it wisely

Time, unlike money, cannot be replaced. Therefore invest your time wisely. You can make more money should you lose it, but once your time is gone, that is it. There are many opportunities to make money. But no option or scheme grants you time.

Take risks when you are young

It is best to take risks and make mistakes when you are young because you still have time to recover and learn from your mistakes.

Andrew’s takeaways

If you want to learn about trading, go to a trader, not a broker

Brokers are simply salespeople who package ideas for clients in a way they think they would like them. If you want to learn about trading, go to a trader. If you desire to learn sales in the financial world, go to a broker.

Money is not hard to access. What you need is a solid idea

Money may be hard to make, but nowadays, if you have a good idea and are good at convincing people, you can make money if you execute your plan well.

Actionable advice

Don’t be impulsive when making decisions. Instead, take time to sit and think about your problem instead of just rushing to a solution.

No. 1 goal for the next 12 months

Chris’s number one goal for the next 12 months is to get on an airplane and go somewhere.

Parting words

 

“Pack your ego.”

Chris Tate

Read full transcript

Andrew Stotz 00:03
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community we know that winning investing you must take risk but to win big, you've got to reduce it. This episode is sponsored by a dance academy which offers online courses to help investors, aspiring professionals, business leaders and even beginners to improve the finances of their lives. And their businesses go to my worst investment ever.com right now to claim your discount on the course that excites you the most fellow risk takers This is your worst podcast host Andrew Stotz and I'm here with featured guest, Chris Tate. Chris, are you ready to rock

Chris Tate 00:45
on good to go.

Andrew Stotz 00:47
I'm gonna introduce you to the audience. And in particular, ladies and gentlemen, listen to the last sentence of this because I think we've got a discussion coming. Chris Tate is one of the first people to ever release a share trading book in Australia. He is the best selling author of The Art of trading and the art of options trading in Australia. He's been running the six months repeat for free, www dot trading game.com.au mentor program since the year 2000. And he's also the founder of www dot talking trading.com.au a free weekly trading podcasts. With a background as an immunologist, and his previous work as a bouncer. Chris's life experiences will amaze you. When he's not hanging out with his traders. He can be seen lifting weights at the gym, enjoying yoga, and trying to get a personal best time on his rowing machine in his garage. Chris, take a minute and Philly further tidbits about your life,

Chris Tate 01:56
about my life. I'm currently enjoying the end of almost seven months of locked down here in Victoria. So I've had the rare experience this morning, of going out for breakfast and sitting outside being surrounded by other grownups. As opposed to sitting my own kitchen thinking, will I make it a big day and go out into the backyard? Or will I save that little pleasure to this afternoon? So I'm just enjoying some sort of return to normality?

Andrew Stotz 02:27
Ah, yes, the freedoms our governments grant us

Chris Tate 02:32
by the this sort of divine right, yeah. And it's so nebulous. But we are lucky Australia is almost completely free of COVID At present, fantastic. However, it is the joy of being an island. Yes. Because when you're an island, you can just pull up the drawbridge and say look, sorry,

02:50
huh?

Chris Tate 02:51
Yeah, you know, we're not advertising at this point in time, all positions are full. we'll contact you in the future.

Andrew Stotz 02:59
Now, I had a question about your bio. And it is that last sentence, you know, I've had back pan like a lot of people listening in, one of the things that I started doing was rowing, I found that, you know, using light resistance, and kind of that body motion and allowing myself if I really felt much better after doing that, and starting to get into it. But of course, as I saw the turn up the resistance, and I started to increase the time, it started to get hard.

Chris Tate 03:33
If I actually think if the North Koreans were ever going to invent a torture machine, it would look something like an indoor rower.

Andrew Stotz 03:41
You'd be strapped to it,

Chris Tate 03:44
you'd be strapped to it. And that would be the end of it, simply because it's extremely difficult to go slow. It's not like when you go for a run, you can stop and walk. When you row you can slow down to a point. But it doesn't seem to make much of a difference. And it uses every single muscle in the body. And it requires coordination. So when you become tired, it actually gets harder because your coordination disappears from you. And so instead of being this wonderfully smooth little thing that you see people do, you do tend to look a little bit like an octopus falling out of a tree. And it is just it's a brutal, awful machine, but in terms of bang for buck, and I have the same problem either bad back as well. There's a saying in sports therapy, that motion is lotion. And just moving is a thing. That moving is the thing that helps back injuries. And I must admit it every morning when I have a writing session planned like hitting out to the gym is let's just say I'm I don't greet it with the greatest agreement. Soozee Azzam I don't get dressed up rush out there and go fabulous. I'm gonna roll for two k this morning. It's a matter of a cup of tea probably need something to eat beforehand because it's hard. And I haven't, I

Andrew Stotz 05:11
haven't cleaned out my closet recently,

Chris Tate 05:13
and the row is standing up and it's a bit dusty, I might need to clean it first. It's you make this sort of very long circling approach as you're trying to con yourself into believing yourself silly. for however many minutes it is, and then you fall off and lay down and think well of it. That was so much fun. Let's do it. Not anytime soon, though.

Andrew Stotz 05:35
And how would you describe the benefits that you've gained from your battles with the rowing machine.

Chris Tate 05:41
They are primarily because of always played sport. They are the relic is one of those things. That is not a physical thing. It's a mental thing. It is you've got to get yourself to a point where you accept that you are accepting of the pain that is about to come. And you have to accept the pain. It's like a lot of things in life. people avoid doing things because there is a cost attached. The cost might be financial, emotional, might be time might be whatever. But because there is a physical cost, a time cost to financial one, an emotional cost, they avoid it. And I actually find the fact that I hate the rower to be enormously beneficial. Because you overcome that you sit down, the earbuds go in, music goes on, you start and end, it's a friend of mine, I have a Jewish friend and my Jewish friends are full of wonderful statements. And one of one of the favorites is and this too shall pass. And it does. And you have to be accepting of the fact that it will pass. But you just have to get to that point first. And it's very, it's very much a life lesson. We have a club down here in Melbourne, Melbourne sits at the bottom of Australia. And winters are really quite what they used to be really quite cold. And there is a swing club that swims it's an open water club that swims throughout winter, in our Bay. Now our Bay gets down to about 12 degrees Celsius, which is getting close enough to be almost dangerous for you to be in for a prolonged period of time. And they call themselves the ice burgers. And intriguingly, I read a profile of the Muse ago, the majority of them are self made millionaires. And people wonder about the connection. Well, the connections obvious. They're willing to do the things that bring them pain that are uncomfortable, might also mention that they do this in the dark. So and swimming in the ocean in the dark is one of my I don't like it at all

07:57
terrifying.

Chris Tate 07:58
It is. I mean, it's been the best of times in Australia, because the country is full of things that skin bite, want to eat you god knows what else. Any of us that connection. People who go further do hard things. Yep, it's just it's just the way it is. Humans had this desire for this homeostatic balance to do the least to get by. It's just the way humans are in all endeavors.

Andrew Stotz 08:28
So ladies and gentlemen, get on that rowing machine. I quit. Now it's time to share your worst investment ever. And since no one ever goes into their worst investment thinking it will be. Tell us a bit about the circumstances leading up to it then tell us your story.

Chris Tate 08:45
That's an enormously powerful question. I actually wish more people would ask that. Because whenever I do these podcasts, generally this sort of question is what trade has made you the most money. And you go well, I can't really remember. And strangely enough, I can't really remember the trade that has cost me the most money in terms of functional trade. My background, as mentioned in the intro is not in finance. I don't have a finance background. I originally began my career as an immunologist. My gig was the study of the human immune system. And I had a career in academia sort of mapped out for myself, but began to trade in the 80s bull market here in Australia. And I made the mistake of thinking the fact that because everything I bought went up, I was somewhat of a genius. I didn't realize that it was the beginning stages of this extraordinary bull market that we had that ran through to 87. And when the music stopped, as it did, I thought well I need to learn about trading. Who knows about trading stock brokers. And he comes my worst investment ever. And it's one of time. It's one of time and not time experience and not thinking the problem through. I thought that stockbrokers knew something about trading. And so I managed to con my way into a broking firm. And I did so simply on the basis of the fact that my background is reasonably quantitative. And so I had one of those restraints, Hewlett Packard calculators with no equals button, which they thought was black magic, that they thought was something wrong with the calculator that I bought it dad, and derivatives were just beginning to take off here in Australia, and I seem to have an affinity for understanding them. And so I joined this broking firm. And I was quickly sort of dissuaded that stockbrokers knew anything about trading. When I found out the person sitting opposite me had been selling shoes two weeks beforehand, and the person sitting next to me had been selling carpet. Neither of them had any experience in the market whatsoever. And the thing I quickly learned was that broking was a sales profession. It's not a profession of analysis and execution, you're effectively selling secondhand goods. And so my, my sort of approach to this when it occurred, was to think Well, I've caught that up completely. Had, how do I make the best of it. And I quickly realized that being in a dealing room, God gave me access to a few things. It gave me access to information, which I didn't have before. Because while whilst we're all, you know, 2020, you can pick up your mobile phone, you can find any market in the world, and you can trade it. Back then, particularly here in Australia, it was almost impossible to buy equities overseas, it only worked really well when Australian brokers had an office in the US or London. And we did, effectively an exchange effectively what we would now call a contract for difference. So it gave me access to the information, it also gave me access to a trading floor, which I didn't have. And one of the things that people it's not that they don't understand or don't have the experience, the experience of a trading floor is you get to understand ebbs and flows and emotion very, very quickly. You get to see when things are occurring, and when they're not. And you get to understand that cyclical nature of emotion that drives price. And so I thought, well, I can marry these two together. And I can put up with the absolute decades I worked with, because it should you'd be aware that the sales side of broking is how should we put it? Not the most morally motivated profession on God's green earth. And so I spent many years as a broker taking the opportunities that were presented in terms of honing my skills. Now the question becomes, why was it the worst investment ever? I think it was the worst investment ever simply because it burned time. But it also highlighted in me a flaw I had of not thinking the problem through properly, not sitting down and going, Okay. Here's the problem I am faced with. The problem I'm faced with is I thought I was a genius in the bull market, the bull market ended. I'm not as clever as I thought I was. How could that possibly be? All right, and how do I fill the gaps? And the instead of thinking, Okay, perhaps the way to fill the gap is to change my educational status. Now, people with my sort of background are readily accepted in the finance industry because we're quantitative. We're actually sought after my business partner son has just finished his final High School exam Tuesday. And he's moving on to university. He wants to do an accelerated maths physics program. He's the ideal candidate for hedge funds for broking firms, quantitative analysis, he's the sort of person they look for now. Back in the day, they would look at people with that sort of background with my background and go

Andrew Stotz 14:46
and do much with that here.

Chris Tate 14:47
What do you do with that? I can actually solve really complex problems. Okay, what sort of problems problems you're not smart enough to think of me to solve yet so it's so it became circular. And it was That notion of time. And I, in hindsight, in hindsight, I should have gone back and done a master's in finance. Because that would have taken 18 months, two years. And it would have given me different connections within the industry itself, connections that were removed from the sales side, and more towards the analytical quantitative side. And so it would have taken less time. Now admittedly, I made a great deal of money as a broker. Because back in the day before deregulation, it was difficult not to. It's, it's, it's just one of those things. I mean, when I first started trading, the minimum brokerage here in Australia I was paying per order was $125, per order stamp duty of government tax and a $15 order fee. So it didn't matter what the size of the order was, you could still end up losing 810 12% of the ordering costs. Now, the orders I used to put through is, when I moved into institutional dealing for their reduced rate, you get now as a private investor for a greater amount, brokerage now that through various groups is it's almost frictionless. So it was hard not to make money. So there was that. But for me, time is more important than money. Because money can be replaced time cart. For all of us, now we get to an age where the road ahead is shorter than the road behind. And so if you've wasted time at the beginning, then that time is gone. And no, it will never come back. That money comes back people so that money is hard to make. Look, I will agree in certain circumstances. And in certain arenas yesterday's. But when you're in countries like Australia, where we have, you know, we've got universal education, universal health care, university now costs, but we have mechanisms for dealing with that we don't have a loan scheme like the US, we have a government tech scheme. There are still opportunities. But there is no opportunity or scheme that grants you time. They don't tack on 20 years at the end and say, Look, you completely buggered that up. Here's another 20 just just to get better. And so I always fret when I see people wasting time, because it reminds me of my own mistake. Now granted, everybody says, If only I knew at 20 what I know now, right? But I think that's a different thing. Hmm, I think that's a completely different thing. That's supposed to be off. It's not mine. It's a completely different thing. And that's the problem. It's that you can't put an old head on young shoulders, but you can direct a young head. And I think part of the problem and it's a problem I have had is in some degrees, impulsiveness. My trading has always been aggressive. When I used to compete, what part of my sporting background is in full contact martial arts, I was aggressive. It's, it's part of the way I am. I have an electric mountain bike. I'm aggressive, right. But the problem with that is it's impulsive. And when you're impulsive, you don't pause. And one of the great things about yoga is pause. It forces you to take time to sit. And again, it's that thing of if all those years ago, I had paused and thought about the problem. After all in the scientist. I should think about the problem instead of just rushing. But when you're young, you do stupid things, which is why they call it young and stupid.

Andrew Stotz 19:26
Exactly the confidence of use.

Chris Tate 19:30
It is it's that hubris, that pride you think? What the hell, I got this? Yeah, what could possibly go bad? No. Yeah. Which is why when you look at YouTube, and all the stupid things that people film are generally all young men. They're not young women. They're young men, because that's just the way we are hardwired. Yeah, ultimately.

Andrew Stotz 19:58
So let me share a couple things that I take away from that. I mean, the first one is, I started as a broker in 1993, in Thailand, and I was on the research side. And you mentioned about, you know, that ultimately a salesperson in a brokerage is selling secondhand information. Second, knowledge, secondhand ideas, I always said that the sales aspect of a broker was a repeating business, they repeated ideas that they heard, and they packaged them for clients the way they thought that client would like it. And what I always told my analysts, when I was head of research is that the job of research is to be an originator of idea, which is very hard, very hard. And I think the lesson from this that I've learned over the years now is that, to go back to what you said, If you want to learn trading, go to a trader, yes, you know, if you want to learn sales, go to a broker, but if you didn't know the difference, you know, then you get stuck. But the other thing is, you know, go to brokers for execution. Yes, that's really what a broker does best. And I think the other thing, there's two other points that I take from what you said, back in 1993, information was value added. If you could come up with a prospectus of a particular company's bond issue in an emerging market as an example, you'd be one of the few people that had access to them. And so that is no longer the case. And it gets, you know, much tougher. And the only the last thing I would say is you were talking about money, and you know, getting access to money. And what I would say is that money is not hard to access, it may be hard to make, like nowadays, if you've got a good idea, and a good way of saying convincing people that you can execute on that idea, then you can access money. And that that is you know, something that I would say is very true these days, anything you add to those

Chris Tate 22:12
are quite I think the sort of the PowerPoint, there is the notion of idea generation. And it is it because it reminds me of we used to get literally a script from the analysts. Each morning, you'd get the morning report, the morning rundown, you have a morning meeting to be ideas for the day, and the analysts would present effectively a script. And brokers always thought that the best ideas were the ones that had the word switch, because you picked up to lots of commission, the notion of simply getting someone to buy or sell something was what was was simply a single action transaction, a switch of buying what you have in your sorry, selling what you have in your portfolio here and buying something else to replace it. You picked up both sides. And it's very, very difficult. One of the things that people I don't think understand as traders is that you will have each year very, very few good ideas. Even with the capacity to trade every single market in the world over every single timeframe from your phone, you still have very few good ideas. And it's that mythology that people have in their head of what trading is they think that you just shotgun the market and blasted when in actual fact, you're more like a sniper. And you work on a few setups that give you an age. And you may have a year where those setups only occur a few times. And if you're not Johnny on the spot, and ready emotionally, financially, whatever, you missed them and they're gone. They're gone for the year. And this is one of those things, for example, I mister trading elementium during the mid part of this year, and now limini has just been on a tear and I just missed it. For whatever reason, I you know, I was dawdling around, I was staring at the window, the portfolio might not have had room at the time for it. And I look at it now and go. I go, you look at that. But the good thing is in markets, that cyclical pattern repeats, there will be another one. But you don't know when it will be. And you just have to make certain that you are awake at that time for that idea. And it's not this, by everything, blast everything that you see on Twitter that, you know, these people on Twitter say I'm making 1,000% a month and you go Okay, I've got to reply to this because it's just too much fun. So if we start with a million dollars in 12 months, will you be richer then a Elon Musk? Be Bill Gates, see Jeff Bezos? Or will you be richer than all of them combined? And it never gets an answer because it's a stupid question to a stupid post. Yep. And that that's the problem with I feel sorry for young traders now. Because social media pollutes their thinking. They have all these idiots popping up, they're going, I'm making so much money. And you get these fools who photograph themselves in a car yard with a Lamborghini, pretending it's theirs, or trying on fleet, particular watchers, saying it's theirs. And so I feel somewhat sorry for them that they getting this as their message. But again, we come back to the problem I encountered. You can be young and stupid. It's a rite of passage for all of us. And any if they have to trade their time getting through that, that is their equivalent of my trading time as a broker getting through what I did. in attendance, repeat history tends to repeat itself.

Andrew Stotz 26:26
All right, last question. What's your number one goal for the next 12 months?

Chris Tate 26:29
Number one, the goal for the next 12 months? is strangely enough, not a financial one. That kind of is. It's to actually get on an aeroplane and go somewhere. I had lunch yesterday with a friend who had caught the first plane out of Melbourne to Sydney because how state borders had been shot. What on Monday, and I said, So did you remember how planes worked? And she went, No, I rocked up at the airport and had no idea what I was doing. Because it had been a year. I'm actually looking forward to getting on an aeroplane and going somewhere.

Andrew Stotz 27:07
Well, exciting, exciting. listeners. There you have it. Another story of loss to keep you winning. Remember to go to my worst investment ever.com to claim your discount on the course that excites you the most. Now, as we wrap up, I want to thank you, Chris, for coming on the show. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Jeb any parting words for the audience? Thanks, Andrew.

Chris Tate 27:41
It's been brilliant. One thing that I would say to everyone I wish someone said this to me as young men pack your ego

27:53
beautiful.

Andrew Stotz 27:55
Park, your ego and that's a wrap on another great story to help us create grow and most importantly protect our well fellow risk takers. This is your worst podcast hosts Andrew Stotz saying. I'll see you on the upside.

 

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About the author, Andrew

Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company that provides institutional and high net worth investors with ready-to-invest stock portfolios that aim to beat the benchmark through superior stock selection.

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