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The Option Genius Podcast: Options Trading For Income and Growth

Jul 19, 2019

People literally ask me this one question ALL THE TIME… “Allen, how did come up with such a lucrative, safe, and easy way to trade?” I explain it all in my new book Passive Trading, get your free book here!

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Okay. So Wayne, I see that you have a book that you have written about trading in the stock market. And the title of the book is "Beating Wall Street with Common Sense", which is an interesting title by itself, but then it goes on. It says, "How I Achieved a 400 percent Return from My Dorm Room". And so I saw that book, and I was like, "Hey, that's really cool". I bought it. I read the thing, and I looked you up and it turns out that you are actually a writer as well.

Wayne: Yep.

Allen: Yeah, so, I mean-

Wayne: Yeah, I'm a journalist.

Allen: The funny thing about the book was that, I think it was the first line of your book, or the first sentence is, "I am not a writer".

Wayne: I know, it's ironic, because at the time I wasn't. But the book kind of jump started my whole different change in career for me. So I can't use that line again if I write another book.

Allen: So why don't you tell us about that. How'd you get 400 percent and how'd you get into the whole stock market game?

Wayne: Well, I talk about this a little bit in my book, which is that growing up I've always been kind of a numbers person. I was a big baseball fan, I was hardcore into baseball statistics, and I always had a fascination with the stock market, but I didn't really know much about it. And then when I went to college, I majored in brain and cognitive science, which is essentially a combination of psychology and neuroscience. So I didn't really take any finance courses or anything like that. And, as we all do in college, you have some boring classes sometimes, and I was actually in graduate level courses in 2008 when anyone that was investing at the time knows, because it was obviously a lot going on in 2008, so I actually started reading up and learning about the stock market for the first time, and decided I wanted to dip my toes in and invest. And, like any new investor, I obviously made a lot of mistakes, I tried to learn from those mistakes, and I was fortunate enough to where I timed a good entry point. I like to think I had some decent insights into some good stocks to buy, and fortunately it really worked out for me.

Wayne: And I talk about all this in the book, and one of the things I wanted to do with the book is make sure that I don't hide my mistakes, even my embarrassing ones. Because I think that's important, I think it's... everybody's going to make dumb mistakes when the start out, and you shouldn't be ashamed of that, you should just make sure you understand why you make them and try to learn from that.

Wayne: So with the book... writing a book was always on my life bucket list, so I wrote the book, I actually tried to get it published through a publisher, but I had no experience writing as I said in the book, and that was one of the things I consistently heard from publishers was that, we really like the book but we're looking for authors that already have an audience built. So they were like, you should start a blog, you should try to get some freelance work, and maybe the next time you write a book we'll be more open to the idea of publishing it, and so I kind of started writing for Motley Fool, Seeking Alpha, websites like that. I had some success there, and I ultimately kind of ended up changing career paths. Now I write full time for and I contribute for US News and World Report and Investor Place.

Allen: Cool. So I definitely want to ask you about the mistakes that you mention. But before we do that, how did you get 400 percent, and over what time frame?

Wayne: I think it was over about... well first of all, I can't take full credit for it. Because the first stock I ever bought was in December 2008, so that was a pretty darn good time to start buying stocks. So obviously if you bought just about anything in December 2008 you would have done pretty well over the next few years. I think the time frame... I don't remember exact, I think the book I wrote in 2011, so I think over about three years I generated more than a 400 percent return. Which I think is pretty good, nothing crazy, but I mostly took the approach of trying to identify high quality stocks that got slaughtered during the downturn and that I thought got unjustly punished and I think my largest profits came off of buying big bank stocks.

Allen: Yeah, they were beaten down a lot. Most of them were like...

Wayne: Yeah, I think I got Bank of America in early 2009 at point during my trades, I think I bought it at two dollars and 75 cents a share or something like that.

Allen: So basically, it was really really good timing.

Wayne: Yeah. And I like to think that wasn't an accident.

Allen: Did you trade options at all? Or was it all stocks?

Wayne: Initially I didn't. I think my first big option win came in 2011, and at the time I was just wanting to learn about options, I didn't really have any experience but I was always interested in it, so much like trading stocks a couple years prior I sat down and researched and tried to teach myself about options. My option trading, I always did it purely as speculation. I was buying calls, inputs, which I know is opposite of what you recommend, and also for my experience, the opposite of the way you should approach options unless you're doing it the way I did which was pure speculation, fun, gambling, lottery ticket type stuff. Which is what I was doing at the time.

Allen: It says here that you did it when you were in college. So how did you get the money to start?

Wayne: I started small, which is another thing that I would recommend for anybody that's starting out. It was just some money that I had put away, and it wasn't a ton of money. I think when I first started I had maybe 2000 dollars or something like that. It wasn't anything big. I really just wanted to learn the ropes and I think it's... that's one of the pieces of advice I'd have for any new investor, is if you're in your 20s and you're thinking about stocks, but you think oh there's plenty of time to do this, I'll learn it whenever, I think it's good to get in when you're young, make your mistakes early, make your mistakes when you can afford to lose a little bit of money, and then, by the time you really have real money to work with, you kind of know the ropes and know what to do and what not to do.

Allen: That's well said. How old are you now, by the way?

Wayne: I'm 35.

Allen: 35. Oh man. You still got a lot of stuff to learn.

Wayne: Yeah, I feel like I'm fortunate that I started relatively young. Because again, even if I had lost everything at that point, I think when you're 26 years old, you got plenty of time to recover and you're not throwing away your retirement savings or anything like that. You're not derailing your financial future. So I always tell people, definitely start young.

Allen: You won't believe how many stories we hear from people that are in their 50s and 60s, and they come to us and they say, "Hey I just got started and I lost a bunch of money". Now it's not too late, but if you had started earlier or if you had been doing it a little bit safer, you would have been in such a better boat.

Wayne: Absolutely.

Allen: So Wayne, how have you been doing since then? So that was a few years ago, the market's been in a really nice bull trend. What do you do now, how do you invest now, how's it going?

Wayne: I've been doing so so lately. And to be honest, I have not been trading much lately. Once I started working full time doing financial journalism... I found that I had a lot more time on my hands when I was screwing around in school then I do when I'm working eight or nine or sometimes 10 hours a day with three different jobs. I've kind of... most of my money, honestly, is in CDs right now, but I have a couple of speculative investments, Alibaba is my biggest position and a couple oil services stocks that are pretty beaten down that I feel like have been unjustly punished. I really don't, I'm literally... my Merrill Lynch account is probably 90 percent cash or CDs at the moment.

Allen: That's really interesting, because you are in this market all the time. You're learning, you're hearing the noise, you're hearing, oh this stock went up and this stock went down instead of doing this instead of doing that, but you're not even inclined a little bit to jump in and say let me make a fortune off of this stuff.

Wayne: Well, I feel like it's always a good time to buy and hold an S&P index fund as long as your timeframe is 10, 20, 30 years, something like that, but I honestly don't see anything out there, or very few things, that just smack me in the face and that they're under-priced or look cheap or undervalued. If I did I'd buy, but I honestly don't see much out there. I also think it's kind of just a weird time, after at 10 year old bull market and interest rates are so historically low... there's just a lot of screwy things going on and I'm not inclined, I'm not a professional investor, so I'm not inclined to always have my money all in all the time to have food on the table. So I'm just kind of on the sidelines until I see another opportunity... probably another 2008s not going to come along anytime soon, hopefully not at least, but at least something where I say, "Okay this looks like a no brainer".

Allen: Okay. So you're totally value. You're into beaten down stuff like you said, and just wait until it comes back and you'll wait until it comes in.

Wayne: I'm mostly value. I talk about in my book, I'm a firm believer in exploiting the psychology of the market. So I'm kind of an investor sentiment, contrarian investor as well. So contrarian investors, when the market's great and everyone is saying stocks are great and everything, that's not the time contrarian's like to buy things. So these days, everything seems like it's on cruise control, I like to buy when there's blood in the streets. And there hasn't been much blood in the streets for nearly a decade.

Allen: Interesting. That's a different way of looking at it. Because a lot of people they always feel, yeah I have to be invested, I have to have my money in there, it goes up seven, eight percent a year, 10 percent a year so I need to take advantage of it. But you're saying that you don't need to do that.

Wayne: Like I said, if you're trying to trade for a living, then you need to be trying to profit. But if you're trying to do it for retirement or like I do kind of as a hobby more than a profession, yeah, I mean... if I go to the mall and I'm walking around and I see something on sale that I like, I'll buy it. But I'm not the type of person that goes to the mall with 100 dollars and leaves with zero dollars every time, no matter what's there. So, I got the cash, if I see a stock that looks cheap, I will jump in there. But if not, I don't feel the need to always be hunting down things to buy.

Allen: Interesting. So, now you mention investor sentiment, and psychology. Can you go into that a little bit? How would somebody find that out or how relevant have you found... obviously you rely on that, but how important is that?

Wayne: Well, it's one of the more popular contrarian indicators of how a stock performs. In my experience generally, if you're trying to beat the market then you can't be doing what everybody else is doing, because by definition if you're doing what everybody else is doing you're not going to beat them at that game. So you need to be doing something different, you need to either be seeing something before everybody else sees it, or you need to be seeing it differently than everybody else sees it. Nowadays, with high frequency trading, institutional investors, in my personal experience I feel like it's extremely difficult for an average retail investor like myself, to be faster than the market. It's very, very difficult.

Wayne: So I have to, my only window of opportunity, is identifying stocks where I see something differently than everybody else sees it. And it think one of the things that has tended to happen in this digital age is that people are impatient. So I think back in the day people would buy stocks, it would be common for people, even traders, to buy stocks and be willing to hold them for six weeks or six months or nine months or even a year or two, while their thesis plays out. But I think over time, just has society has sort of sped up and the digital age has sort of encouraged instant gratification, I think people don't even a lot of the time, they don't think nine months or 12 months down the road anymore. If something's not going to work today or tomorrow or next week, it's not even on their radar anymore.

Wayne: So I think those are time where... I'll use Alibaba as an example. If you look at the growth numbers that Alibaba's putting up, without any knowledge of this trade war that's going on, if you just think about the economic growth rate in China, the fact that they have the billions of people, the fact that the government basically restricts international competitors from coming into the Chinese market, that company's been absolutely tearing it up. And they're into all the high tech fields that Amazon is into the US. And yet, the stock has been stagnant for a while now, and it's because investors can't see past this trade war.

Wayne: And personally, I believe the trade war is coming to and end sooner rather than later, because it seems like it's hurting both the US and China, and I think Warren Buffet said this in his shareholder letter or an interview at the annual Berkshire investment meeting or something. But basically, when you have two rational actors, and there's a conclusion that's in the best interest of both of them, they're eventually going to make it there. And I don't know what the terms of the trade deal are going to be, and I don't know if it's coming next month or a year from now or whenever we get the election over with or whatever, but I believe a trade deal is coming at some point. And I'm personally hoping that completely shifts investor sentiment on Alibaba and that people start taking a closer look at those numbers.

Allen: Okay. That's a cool way to... do you sell options while you're waiting or no?

Wayne: I don't. And I figured you'd ask me about this, and I will say this, if I had more time on my hands slash wasn't so lazy, I definitely would be doing it. It's something where, after working a full week where I'm seven AM to five PM stocks and options and trading all day long, at the end of the work week I don't even want to look at my porfolio, I just want to relax. So yeah, if I lose my job at some point I'll definitely start selling options.

Allen: All right. So then, what were some of the mistakes you alluded to earlier, that you think that ordinary, common, everyday individuals are making that they shouldn't. Or that you can protect them from, just letting them know. What do they need to know?

Wayne: There's a lot. Maybe I should just answer just in terms of buying options. Because I think, and if you're preaching selling options then I like to think you'll probably be on board with all of this, but when I first started thinking about options and how if you buy options it basically gives you leverage where you can theoretically make really large returns on stocks that aren't super volatile, I thought well geeze this is the golden ticket and I thought that, well, I've had success buying stocks and holding and ultimately my thesis plays out and I've profited off of this. But, the time factor with options, the reason why it's smart to sell options and not buy them, is because you have to get two things right when you buy a stock - you have to get the stock right and you have to get the direction right. When you buy options, you have to get three things right - you have to get the stock right you have to get the direction right, and you have to get the timing right.

Wayne: And I think most people are predisposed due to their personalities either to be too early or too late when it comes to timing their investment thesis. I tend to be too early, I tend to think things are going to happen before they actually end up happening. So what I found early on in trading options is like, oh, I'll use Alibaba again as an example, oh, I believe a resolution to this trade war is going to happen. If you had asked me in December when I thought it was going to happen, I would have definitely said I thought it would have happened by now. By June, I definitely would have thought there would have been a trade deal.

Wayne: So maybe back in December, I would have thought, oh, there would have been a trade deal by June, I'll buy June call options out of the money on Alibaba and by the time June 15th rolls around I'll be good to go. Well, nothing's really changed about my thesis, I still think that a trade deal is going to be reached and Alibaba stock's going to go higher, but if I had bought those call options back in December I'd be out of luck. They would have been expired, completely worthless. So the shame in that is that your thesis can end up being right, but if you don't get the timing right, you're completely screwed and it doesn't even matter, it's as if your thesis was just completely wrong.

Wayne: So I think that's what I would say to anyone looking to consider buying options rather than selling them, is you're basically playing... the stock market goes up over time, historically. So if you're just buying generic stocks you at least have kind of of advantage in the sense that the economy is growing. But if you buy options, call options or put options, you're at a tremendous disadvantage in the sense that you need something to happen just to break even on your trade. You're starting off in the hole because of the time value decay and I think people overestimate, they tend to have too much confidence in their ability to predict timing, and I think a lot of people get burned on options like that.

Allen: It's like a ticking time bomb. It's just tick tick tick every day.

Wayne: Absolutely.

Allen: Cool, the one thing I wanted to mention to everybody watching your book, when I bought it I thought it was going to be basically your story. Which it is, it's your story. But I think that's about half of it. The other half is you actually talking about investing and all the jargon and what goes on in the stock market, basically from A to Z level. And I think that if somebody is new to trading or new to stocks or even options, if they pick it up and they read it they'll learn a lot more than normal.

Allen: Because the stuff that you are talking about, I know for me it took me several years of not only just trading but watching CNBC a lot to understand all of the ways, how everything works together and how does this react to this. There's no guide for that, it takes a long time to understand, okay fed's going to cut, what is doveish, what is hawkish, what is doveish, they keep mentioning these words I don't know what that means. But in your book it covers everything, and I was like oh man I wish I had this so much sooner, it would have made so much sense.

Wayne: It's, and I thought long and hard about how I wanted to approach the book at the time, because I feel like there is certainly a jargon to Wall Street, and it can be incredible intimidating if you're starting from scratch. And it was even to me. When you start out, it's like learning a new language. When you start out your first day of French class and people are speaking French, you're not going to know the first thing about what they're saying. So I tried to write the book that I would have wanted to read when I first started out. I remembered how intimidated I felt and I remembered how ignorant I was and I... obviously when you're first starting out trying to learn something new, you're going to be ignorant at first, everybody is. And you're going to make mistakes at first.

Wayne: And so, I tried to tell my story, like you said I tried to tell my story by also tried to work in things that I learned. And yeah - a lot of your listeners that are advanced enough to be selling options and making profits, maybe they'll learn a thing or two from my book, but maybe they got past that point a long time ago. But, maybe they would like to read about my story.

Wayne: But I think the perfect audience for that book is someone who is a bit intimidated to start out and they may not necessarily want to read a book written by someone who has 20 years of experience at a hedge fund. Maybe they just want to read a book about someone who was a random person, an average college student like they are or they were, and started from scratch the way they're starting from scratch, and know that like, yeah, it can work out. It won't be perfect, it'll be bumpy, but it can work out and here's the story that proves it.

Allen: Yeah. And then, the other thing that you talk about is common sense. So, that's the title of the book, "Beating Wall Street with Common Sense". And it's, you mention it and it should be common, but it's not as common as you think. And I think that's part of what makes a market, me and you could look at the same thing and I'll be like, "I want to buy!" And you're like, "No, I'm going to sell it". So how do you say common sense? What is common sense in the stock market?

Wayne: I think the best way to explain it is... and I've written about this for my job, is I think that unfortunately we are predisposed to... human nature has a lot of inherent biases, psychological biases, and when you're talking about hard earned money, your retirement savings or just a few thousand dollars that took you however many hours to earn, it's very emotional to see your account going up or down every day. And we have deep rooted, biological predispositions to avoid losing things that are valuable to us. So I think one of the most important lessons to learn for a new investor is to control your emotions. Because I guarantee you your emotions will almost always have you making the wrong decision in terms of trading, because you will be most fearful at the time you should be buying, and you will be most greedy at the time you should be selling.

Wayne: And so, I think the common sense part to me is, the market may seem random sometimes. But the market is just a collection of individuals and institutions run by individuals, and the decisions they're making, they're basing those decisions on human logic. And so, when a stock is going up or down, on any given day those movements may be random but on a longer time frame there's a reason why a stock is going down or up. It may not be logical, it may not necessarily be correct, but the reason that it's going up or down is because people have certain beliefs about that stock, and they're buying it or selling it in response to that.

Wayne: So if you kind of remove yourself from trying to think about why the stocks going up or down and you think more about why would somebody be buying or selling this stock right now, and think about it more from a psychological perspective, then that sort of gets you to where you can think, okay, well when is this person that's selling this stock... why is somebody selling Alibaba right now? Oh they're selling because they're worried about the trade war. Okay, that's why Alibaba stock is going down. Okay, well what can change that will make that person say, oh, well now I want to buy Alibaba stock? Then you think oh, well if the trade war comes to an end then that person may completely change their mind.

Wayne: So that's not... you can dig as deep as you want to into financial metrics and numbers, and as a value investor at heart I'm a big fan of value investing metrics. But I think in terms of how the market moves, the market doesn't necessarily move because of a stock's price to earnings ratio. It moves because people have certain feelings or thoughts about a stock, and they're buying or selling it in response. So you really need to, as much as it's good to understand all the metrics, I would advise people to take a step back and think, whether I agree or disagree with what's happening, why is it happening? What are people thinking about this stock and what will change their minds at some point in the future?

Allen: That's interesting you say that as a financial journalist, I want to go to that. Because one of my questions I was going to ask you is, as a journalist you have deadlines, and you have to write about certain stories, you have to put out a certain amount of content. And every day, the market might be up five points or might be up 15 point or oil drops one percent or two percent, there's always a headline. There's always an explanation, right? So how do these financial journalists come up with these thesises, of why something happened? Like you just said, we don't really know why it happened it could be some people think this way or some people that way, there's no survey, people are not telling everybody why they're doing things. But how do these journalists come up with these headlines and say, market moved, or this stock moved, or this happened because of this today.

Wayne: I would like to think that good journalists, they don't write definitively. They say well, the S&P was up one percent today, and then I'll reach out to traders and be like, what are you hearing what are people saying, why do people believe that the market is up today? Or a lot of times, I'll reach out to economists or analysts and I'll get their opinions, and then when I write my story I won't present it as my opinion of what's happening, I'll present it as this is what traders are saying is happening, this is what economists are saying is happening, this is what analysts are saying is happening. And then, I may or may not draw a conclusion, oftentimes I will, but I don't present it as, all right I'm god's gift to earth, I've come to save the day, this is my journalistic opinion of what's happening.

Wayne: I don't think that that's necessarily helpful to people, I think people want to know a collection of sources, or even just one source, if one analyst puts out a note saying this is what happened today, we may do a quick summary of that or whatever. But for Benzinga and US News, they don't so much care about my opinion. For a stock picking site like Motley Fool or Seeking Alpha, I mean they make that clear that that's more opinion, editorial pieces. But in terms of my journalist jobs, they actively don't want me putting my two cents in there. They want sources with expert experience that are going to be the root of all of our stories.

Allen: Okay, cool. That makes sense. Because a lot of the times I'll read something, it'll be like market was up six percent today and it's because the fed announced that they're going to do this and this and this. Or China said this and this. And then the next day, it's going to be like oh the market is down five percent or two percent today because China did this and this and this. Wait a minute, you just used that same excuse yesterday for the market going up. So it's really hard as an individual to figure out, okay what is happening really? So the next question is, how does an individual trader or someone at home, how do they use the news? What would you suggest in that?

Allen: So, a lot of the times, one of the things that we do is we teach people how to do backtesting, which is a piece of software where you go back in time and you only look at the chart, you only look at the stock. You don't know what's going on in their market, you don't know what the news is, you don't know the headlines or anything like that. So you don't have that noise basically, is what I call it, the noise of what's going on. You're only trading the chart, the stock, the numbers in front of you. And most of the time, people who do that, they actually do better with the backtesting than they do in real life trading, even though they're using the same plan or the same rules. So how would you suggest that we use the news or... and obviously you're not going to tell me never to listen to the news, because that's your job, but how do we take advantage of the news?

Wayne: Well, if you're day trading, I think you need to think of the news as... every headline is a catalyst in the short term. If you're investing for the long term which is more of what I do, you used a good word, I think the news is mostly noise. I think it's good if you're a longer term investor to make sure you always keep abreast of what's going on with the stocks you own, because you don't want something coming out of left field. You don't want to just not pay attention for a week and then you come back and all of a sudden a week ago, there was an SEC investigation into your stock and it's down 40 percent. I think you need to always keep up with the news, but someone that, if I was advising someone that's not trading in the short term but more investing for the long term, I would say read the news but don't lose sleep over it.

Wayne: If you read a headline that fundamentally changes your investment thesis, then you should think about maybe trading or adjusting your position. But some quarterly earnings report that wasn't very good but you still think the company has a great long term future ahead, that's just noise, honestly. Or the CEO steps down. Well, if the CEO is 88 years old with health problems, that's understandable, that doesn't change anything about your long term investing thesis. If the CEO steps down because he was was arrested by the Department of Justice or something, maybe that's a red flag.

Wayne: I think most of the day to day news, this is coming from a journalist, we want to write about stocks that people are reading about, but it may seem like a certain company is in the headlines all the time, but that doesn't necessarily mean that more stuff is going on at that company, it just means people care about that company and that's what people want to read about. So I think the news is important, I don't think it's the end all be all in terms of investing, especially if you're a long term investor. Just think of it as part entertainment and part information and don't stress out too much unless something major changes with the company.

Allen: Okay. And then, you mentioned that you do work, or you have done articles in the past for Motley Fool and Seeking Alpha. So I was wondering, you mentioned that you had just gotten out of college and you had started writing for those. What are the requirements for those? Because sometimes people read that and they take it as gospel or they take is as somebody who actually has done dozens and dozens of research, or years of research into something where their thesis is so airtight. Can anybody write for those or, how does that work?

Wayne: It's been a while since I've written for either, but honestly back in the day there wasn't too much of a screening process. I think at the time I think you submitted sample writing and the editors just read it and decided whether or not it made sense to them. So I would absolutely take everything you read online that is recommendations to buy or sell stocks or trade in any capacity, I would take it all with a certain degree of skepticism. In fact I wrote a story for US News less than a month ago specifically about cannabis stocks, and about how there's a lot of misinformation out there online specifically about cannabis stocks. So you need to always... when you read something online, always in the back of your head need to understand the credibility of the source.

Wayne: And people have their favorite news outlets and ones that they don't like. But regardless of which ones are your favorites, legitimate news outlets are not just going to straight up lie and deceive people, because they'll open themselves up to all kinds of lawsuits and whatnot. But, there are plenty of nefarious websites out there or message boards, or people who are self interested or even paid by the companies, that will straight up lie about what they believe about a company. And it may not even be that they're just straight up lying, it may be that they own shares of a stock and they're completely blind to a different way of looking at things because they're along that stock, so the company can do no wrong and everything's always rosy and obviously that's a very biased opinion.

Wayne: So anytime you read someone telling you buy this stock or sell this stock or option or whatever, you always need to remember, who is this person, why are they saying this, what are their qualifications? Because you don't want to be blindly following anybody regardless of their qualifications, but people... certified analysts, people who have backgrounds in finance or backgrounds in journalism or whatever, they at least have some degree of experience. You're right, I wrote that book about my experience in the market, and my first professional writing gig was with Motley Fool. They like to think of it I think as more just like a crowd-sourced... like my articles weren't Motley Fool's opinion of the stock I was writing about, I was just one of hundreds of writers they have writing. So it's more of a platform than I was writing, speaking on behalf of Motley Fool. But yeah, people should be careful out there for sure.

Allen: I mean I do remember, even during the dot com bubble, 1999 and 2000, at that point everybody was going gaga over, this time it's different, oh these dot coms are going to change the world. And a lot of the journalists were the ones that were banging on the drums the hardest. Yeah, everybody's got into this, you got to get into Lycos, you got to get into all these other sites, companies that went out of business, and all this stuff. It seems like those people that were those journalists, they disappeared for a while because nobody wanted to hear their things any more because everybody hated them. But now they're actually back, and I see them on the news and I see them on the different financial channels, and they're still giving advice as if they knew what they were talking about back then so now, why should I trust you now.

Allen: Then the other thing is on the TV shows, the guys who come on from the different hedge funds or the money management companies or the banks and whatnot, a lot of them are basically, they're talking their own book. If they're the market maker or they're the company or they're the bank that's taking a certain company public, there's no way they're going to say anything negative about that company on air, or even that whole industry. Just going to be saying good stuff. And that's the thing, when we're watching that as an individual, we don't know where their conflict of interest is, we don't know what's going on behind the scenes. So I really appreciate you saying that. As a journalist it takes guts to come out and say that.

Wayne: I'm... journalists... I feel like your title in life, your profession says something about your experience. But it doesn't make you infallible. Whether you're a journalist, a doctor, a lawyer, a teacher, everybody's just people. And people make mistakes. And in terms of accountability, I always thought this was crazy because I'm a big baseball fan, if I'm watching a baseball game on TV, if I'm watching the Red Sox and a batter comes up and steps in the batter's box and I don't know who that guy is, the first thing you show when you get in the batter's box is a line across the bottom of the screen showing all his statistics, how he's performed, what's his batting average, what's his on base percentage, how many home runs how many RBIs does he have. I don't understand how these people come on CNBC and all that shows up is their name or where they're from. And maybe they've been on CNBC 200 times, and they've made 200 stock picks, and they've gotten 190 of them wrong. You wouldn't know!

Wayne: And it seems to me it would be so super easy to keep up with these analysts and journalists and pundits that are on TV and what stocks they pick and how often they're right, how often they're wrong. Show their name, and show the percentage of times in the past they've been right or wrong. Because I don't know about you, but if somebody's only been right 15 percent of the time they've been on CNBC talking about stocks, I probably am not going to really care what they have to say, honestly.

Allen: Well you know the reason they don't do that is most of them are wrong a lot of the time, and nobody would watch it.

Wayne: I know, that's true. If they were good at picking stocks they wouldn't be on CNBC.

Allen: There are certain people like... I used to watch the show Fast Money. I still do, still record it and watch it from time to time, and they've had a couple guys on there that were regulars, that every time they say something it's like man, you have no clue what you're talking about, and I would go and say let me try and see if I can do the opposite of what that guy just said. Because he's such a...

Wayne: That's a real thing.

Allen: And yeah. A lot of people do that. Jim Cramer comes to mind, a lot of people are like I'm going to take the opposite side of him.

Wayne: People give Cramer a hard time.

Allen: It's tough for him to be him. But I do credit him in a sense, that there's a lot of time when the market is moving in big moves, and I really can't figure out why, I don't know what's going on. And the news doesn't help, the headlines don't help, but on his show, he actually gets into the meat of it sometimes because he's been in that world. So he'll be explaining it, "This happened and this happened so the hedge funds are thinking this and this, or that's why they're moving a lot of stock". Or "This happened overseas that was not reported and that's why such and such is happening", or something like that. And in the past he has helped me out in that sense, to make sense of what was going on.

Wayne: I'm actually a big fan of Jim Cramer, I know his stocking picking track record is questionable. But what I think he's great at is I think he's great at educating people, I think he's great at entertaining people. I read a couple of his books when I was first learning about the market. I don't remember which ones, but I thought they were incredibly helpful. I think in another life he may have been a great teacher, because I think he has a talent for breaking things down simplistically. And again, he's been wrong plenty of times, we all have. So I get the criticism. But I think his show is good, I think his audience, there's a lot of inexperienced investors and traders in his audience and I think he helps educate them. And I'm all for education in any respect.

Allen: I think part of it is his, he's set up for failure in a sense with his show. They want quick answers, if someone calls you up and says, "Okay Citi Bank, what do I do?" And if your only choices are buy or sell, you're probably going to be wrong. You can't go into a long term explanation and say, "Well they have this and this going on, so don't buy right, now wait for this to happen then you can buy, or sell if this happens", he doesn't get that chance to do that.

Wayne: And I feel like I would not want to make 25 stock picks a day and be expected to get all 25 correct every day. That's pretty crazy, so I agree he's got a tough gig. But I daresay he gets paid very handsomely for it, so I can only have so much sympathy for him.

Allen: So Wayne, what do you have going on right now for you? What's exciting you, what's happening in the future?

Wayne: I am actually really enjoying life. That's probably lame to say. But I'm really happy with where I'm at right now. I've been telling myself at some point I want to write another book in the future, because I think it's been eight or nine years since I wrote my first one. But like I said I've got a full slate, I'm a staff writer for, those guys there are all really great to work with, I'm a regular contributor for US News and World Report, which again, my editor's awesome, the team there is awesome, and I've been contributing to Investor Place, and once again no complaints. They all treat me well and when I started out to write that book, it was hobby. Investing was a hobby for me, the stock market was a hobby. And I had no plans on being a professional journalist or writer or anything else. So I feel lucky every day that I'm one of the few people that was somehow able to finagle my way into having my hobby be my career at least for as long as it lasts. So, I'm just trying to enjoy myself and yeah, I'm having a blast. I have a blast every day. I wake up and get to write about the market.

Allen: Do you go to the office, or you work from home?

Wayne: I work from home, one of the many things I love about my situation. I live in Tampa Florida, and I can some afternoons if I'm not on a deadline, I sneak out and write by the swimming pool in the beautiful weather. So in terms of what I got going on, I don't really have any major plans in terms of projects or anything I'm working on, I'm just enjoying life.

Allen: That's sweet. So if our listeners want to get a hold of you or ask you some questions, where can they reach you?

Wayne: Well I have a blog, it's And you can contact me through the blog, I try to be pretty good about getting back to people if you're patient for a day or two. My book is on Amazon, "Beating Wall Street with Common Sense". If you read it an it helps you or you were entertained or both, I'd love it if you drop me a review. I think it's only like two dollars or something, the book at this point. I just really want to get the message out there and yeah. I'm on US News and World Report, Benzinga, and Investor Place.

Allen: Awesome. Then your website is

Wayne: Yep.

Allen: Awesome, I appreciate you taking the time and it was informative to get behind the scenes with a real journalist and see how you guys think and how we should actually use that information. As well as common sense. So thank you so much.

Wayne: I appreciate you having me on, it was good talking to you.

Allen: Thank you Wayne.




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