KEVIN DAVIS | Investment Dojo

What's it like transition from the world of music to the high-stakes environment of Wall Street? In our latest podcast episode, we had the pleasure of speaking with Kevin Davis, a former rapper who found his calling as a stockbroker and financial coach. His story is not only inspiring but also filled with valuable insights for anyone interested in the stock market.

Kevin Davis grew up in Brooklyn, New York, where he was deeply influenced by the 1980s hip-hop craze. He was signed to Warner Bros. Records at the age of 23 and toured the world for five years. However, his life took an unexpected turn when he was inspired by the Eddie Murphy movie, Trading Places. This inspiration led him to pursue a career in stockbroking, eventually landing him at the infamous Stratton Oakmont, the firm featured in the movie Wolf of Wall Street.

In the podcast, Kevin shares what it was like working in a boiler room environment, where the noise and energy were palpable as brokers made endless phone calls pitching stocks. He describes how he transitioned from being an order taker to someone who could evaluate companies based on free cash flow and growth metrics. His journey wasn't easy, but it was filled with valuable lessons.

One of the most compelling parts of Kevin's story is his transition to becoming a financial coach. After retiring in 2019, he was encouraged by friends to share his investment knowledge. This led to the creation of his app, Investment Dojo, designed to make learning about stocks fun and engaging. The app features real-time stock market simulations, leaderboards, and a social trading environment that fosters learning through competition.

Kevin emphasizes the importance of understanding what you're investing in. He doesn't give out stock picks but teaches people how to research stocks so they can make informed decisions. His coaching is based on building long-term wealth, and he stresses the importance of having conviction in your investments to avoid emotional decision-making.

In a world where short-term gains are often glorified, Kevin believes in the power of long-term investing and aims to instill this mindset in his clients. His unique background and approach make him a standout figure in the financial coaching world.

If you're interested in learning more about Kevin Davis, his journey from hip-hop to Wall Street, and his innovative app, Investment Dojo, be sure to listen to the full episode. It's packed with insights that can help you on your own investment journey.

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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EPISODE TRANSCRIPT

Chloe: Shares for beginners. Phil Muscatello and Fin pods are authorized reps of Money Sherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

Kevin Davis: The problem is that if we can keep you thinking about Money and you'll forget and be distracted on what real life is about, and you won't have moments, you'll have minutes. So you'll always be on the clock. But the moments when you can stop, breathe, and realize it's like a great steak, right? I don't eat beef, but it's a sizzle, and you really enjoy the sizzle and the smell, right? The steak is just the after product of what tastes good to you, but the sizzle and the smell is the m moment. Like, man hits every sense.

Phil: Hi, and welcome back to shares for beginners. I'm Phil Muscatello. How do you go from being a rapper to the world of stockbroking? How can learning about the stock market be fun and accessible? My guest today is Kevin Davis, senior. Hi, Kevin.

Kevin Davis: Hey, how, uh, are you, sir? Hi, Phil.

Phil: Thank you very much for coming on and joining me.

Kevin Davis: Thank you for having me. Appreciate it.

Phil: Kevin Davis is a native of, uh, Brooklyn, New York, spending much of his childhood reciting original poems and rhymes. Influenced by the eighties hip hop craze. He was signed as a rapper to Warner Bros. Records at the age of 23. He had his first hit record, called Stomp, and toured the world for five years. Kevin became a stockbroker in 1995, inspired by the Eddie Murphy movie Trading Places. This led him into the jaws of the infamous Stratton Oakmont, featured in Wolf of Wall street, and after a short two years in a boiler room shop. But I'm going to stop there and let Kevin finish his own story. You need to do it yourself now.

Kevin Davis: Man, oh, man. Okay. What would you like me to start, is the question.

Phil: Well, I want to know what a, uh, boiler room shop is.

Kevin Davis: Okay, so a boiler room is where they always call it chop shop, right? It's where all about 400, 300 brokers get together, and all they do is make phone calls. They hit the phone all day. And it's a boiler room because if you were to go inside, all you hear is the noise, the vibration of just voices on the phone just pitching, pitching, pitching, pitching, pitching. And that all comes from the Lehman brothers method of, like, cold calling, because you just cold all day investors.

Phil: And what are you co calling about? Are you trying to get them to buy particular stocks or push particular strategies at that time?

Kevin Davis: Yeah, you would start with an opening stock. So, like, I think my first opening stock was Quaker oats from back in the days, oat, and then Apple computers, oddly enough, when it was $18 a share, I was recommending that.

Phil: And is that like what we see in the movie the Wolf of Wall street, where everyone's getting on the phone and, I mean, it sounded to me like the Wolf of Wall street was a little bit not on the full upper and up, as opposed to selling reasonable stocks like Apple.

Kevin Davis: You know, I got licensed in 95, and so January 13, to be exact. And when I entered Stratton, I was very unaware of the tactics, so I got licensed there. So what happens in their environment, they don't allow you to come in as a licensed rep. You have to get licensed there. And that's part of that brainwash. They want to be able to teach you their habit. Right. Well, if you're fresh off the block like I am, and I don't know any better, I'm going to go into that scenario thinking this is how Wall street works, if that makes any sense. And that's how I got there. Now, as far as recommending stocks, we recommend big companies, and then we would get them to send in Money to invest into the companies that went public that they made a market in. Right. Making a market means they brought the company public. They're making a market to keep the company whole or healthy with trading volume, that type of thing. And so that is pretty much what happens. So it's almost like bait and switch. You get a big company, and the next, you know, you're gonna buy their house stock. Right. And that's usually what happened. And they went out of business in 1996. I think it was December 6 of 1996. So I was there for almost two full years. Right. And so I wound up leaving there, and I went to a company by the name of HJ Myers, and they used to be a publicly traded company, national securities, another publicly traded company. And then I went to a research company, and that's where I really learned how to, you know, measure companies, uh, based on free cash flow. I mean, just growth in measurement was my thing, and I did very well there, like, because I was able to. I knew how to pick a stock. I know what made a stock work. So it's not how you start, it's how you finish. But,

00:05:00

Kevin Davis: you know, that's what happened.

Phil: Let's go back a little bit. How did you go from being a hip hop recording artist to deciding Wall street was where you wanted to go? Uh, you said in your bio that it was the Eddie Murphy movie trading places. But what steps did you actually have to take to make that move?

Phil: Hmm.

Kevin Davis: M that was like breaking all the bones in my body. Okay? So I was always one of these people that if I saw something, I said, I can do it. No matter what it was. If I really wanted to do it, I was gonna do it. I figure it out, right? So I was watching the movie trading places, and was like, that's really cool. And I had this vision of myself of, uh, walking around in a trench coat with a white collar and a big suitcase with a monogram shirt and, you know, nice tie dye shoes. And that was my. I don't know. That's a. Because you grew up with these pictures, right? And so that was my thing. So one day, I'm sitting in front of my grandmother's house in flushing, queens, and I'm reading the, uh. I don't know. Is it New York Times? Whatever. It was the classified. And I saw this. You could be a stockbroker at, you know, $50 to $100,000 in income. And I was like, you know, then it says, no degree required because I didn't graduate from college. So I was like, hmm hm. Okay. So then I get out the car. My neighbor was sitting on her step, and she was the admin for at Stratton. And she says, well, if that's what you want to do, I can take you there and see if they'll hire you. And she took me in, and my first interview was, like, first day at boot camp. The guy just. He, um, tried to tear into me. That didn't work because I was a little rough around the edges, so. But he did say, you know, what makes you think you could be a stockbroker? And I looked at him. What made you think you could be a stockbroker? And I was just a smart tail. And he goes after my answer. He liked me. Like, he liked my rough edges. And those rough edges needed to be smoothed out. And that's where the broken bones came in. Meaning it's almost like breaking all the bones in your body and having to heal. Because I had to learn a new language, because the language I was speaking was more from the street. And although I did some college, I had to, uh, leave college because my mother decided that at 17 years old, just like she was kicked out, you need to get out. So I couldn't finish, but I was a student teacher, and I was doing really, really well. My major was mathematics and computer science. So I was on my way. But the bottom line is, is that going there? It was like I saw all of these brokers and a lot of people that did not look like me. So. And I wasn't frightened. I wasn't scared. I looked at it like, this is a challenge, and I want it. And so I would walk around, right? And I would have a tape recorder in my pocket. No one liked to be taped, by the way, even though we were taped on the phones, but they didn't want to be taped. So I just stand around, and we would all gather around when people were pitching. So I'd stand around with the tape recorder, and I get everybody's lines. I'd had everybody stick, and it was so much fun. And then I'd go, I love fishing. In fact, I went fishing this weekend. I would go fishing and pitch the fishes, practice my presentation on the fish while I was pitching. What else better to do? I'm fishing. But anyway. And I became really, really good. But I remember when I passed my series seven, it took me a month to open up an account. I couldn't open up an account to save my life. And so you had to open up 20 accounts in order to become a broker on your own. And I was like, okay. And then it took me a month and a half, and then all of a sudden, I. It kicked in. Three weeks later, I opened up 22 accounts, gave my 20 accounts to my broker and took my two accounts, and I started my book.

Phil: You mentioned before that you went from being someone who would get on the phone to pitch stocks to someone who was able to understand the valuation of a company. What were some of those lessons you were learning? And tell us about that light bulb moment when it came on and says, well, there is something here to value in a company.

Kevin Davis: Well, at Stratton, you depict socks. They gave you what to buy, they told you what to buy, and they told you what to sell. You couldn't do anything on your own. No autonomy. When I went to the research firm, that firm, uh, taught me the measurement. And what do I mean? Well, uh, you can refinance all day, but if you don't know what Wall street is looking for from that company, it really is mute. Right? So, uh, there is certain sectors, like, there's eleven sectors in S and P 500. And so certain sectors get certain measurements, like banks, book value, net interest, income. Right. Then you have technology, growth, free cash flow.

00:10:00

Kevin Davis: If you're losing money, it's going to be comparable to the companies in that sector. Right. And then you got to do a little bit more work because it's not tangible. But then you want to look at a situation where, when will they be free cash flow positive? And so you got to dig a little deeper when you get into these growth companies. But I like liquid stocks. And when I say liquid, I mean institutional volume can get in and out without really causing a splash. Right. So I would pay attention to these different variances, and when I learned, wow, it's not what. Okay, give you an example. If I'm listening to an earnings call, first of all, most investors don't even listen to an earnings call, which I find kind of shocking. They're not investors. They're just buying what they hear, right? But if I'm listening to, uh, an investment call, an, uh, earnings report, I'm listening for a certain juxtapositioning. Here's what I mean. If the analysts are questioning, that's a problem. If the analysts are asking questions, that's good. Why? Because if I'm questioning, I don't like what I'm hearing. If I'm asking questions, I'm getting more information from my next quarter modeling, right? And so I would pay attention to these different nuances. So me being a little street city boy, I had different instincts than average people on Wall street, because the average person on Wall street came through the door different. I came through the door paying attention and not trusting. Right? So when I started to understand, I didn't trust what the analysts were saying, and I didn't trust what the company was saying. I had to prove it. So it becomes prove me wrong or prove me right. But I'm going to start off not liking you, because I understand you're going to tell me anything for me to like you to buy your stock. And that's sort of like what people do, right? They sell themselves when they speak, they're selling something to you. Right? So I started to pay attention to that, and I really wanted to figure out all of the measurements that led up to a successful investment. And that took me years. And now it's a different thing because I know what I'm looking at, if that makes sense.

Phil: It's interesting the way you put it at the beginning of that answer, that you said that you want to look at the measurements, but you also, uh, said you wanted to look at the measurements that Wall street is looking for. Is there a difference?

Kevin Davis: Oh, yes. You can get hot and bothered about a stock, but if no one wants to be bothered with the stock, then you're just hot and bothered alone. Right. So in order for that stock to move, Wall street has to be there. Volume, institutional interest, it has to be there because the stock is going nowhere. And if they're not there, guess who's there? Retail investors. And retail investors are not moving the stocks from, you know, like a $500 stock to 1200. They're not doing that. It's institutions. So that's where the measurement. You have to understand what they're looking for.

Phil: So you became a financial coach. Tell us about why you decided to become a coach and how that process took place.

Kevin Davis: Uh, that's going to be interesting. I didn't want to be a financial coach. I was good. I retired in 2019 just before COVID and I was done with people. That was it. And so my friends was like, hey, you're really good at this investment thing. You should teach some people. And I was like, no. And I kept saying no. And they said, why? I said, because I can't really write a course and have that tell you what's going to happen on the third week of the fourth quarter when the market goes haywire. It's only going to tell you what I'm thinking, but it's not going to give you real time help. So I don't want to do that. That's number one. And number two, I'm not licensed anymore, so I don't want to be responsible for anyone's gains. Right. And so they keep two of my buddies, or keep. Because I was putting stocks in a group. It was a group between my friends, like twelve, and they, like, nine out of eleven doubled and tripled and someone of ten x, and it was like, kevin, you should really do something with this. And I was like, uh, yeah. So then when Covid hit, I got bored. I said, okay. And then I started a group and I had 2000 people on my Facebook page. And I, uh, put a post that said, I'm starting an investment club or group. Would you like to be a part? If so, put your name and comment in the section. I will not be sending emails inviting aimless people. So 29 people joined, and from those 29, it turned into 2200 to 3000 to 4000. I don't think it's like, 6200 there. And it pretty much been around that number for the last few years. Right? Because the market kind of got a couple of people that gotcha. 2020 was great. 21, 22 people were really like, oh, my God. And then now 2024, everybody's back. But anyway, so me becoming a

00:15:00

Kevin Davis: financial coach, what I would do is my buddy said to me, listen, my buddy Gino, he goes, what you should do is hold contests. And I was like, hmm hm, I like that. It's a good idea. So I looked for a site, and I was using investopedia, and at first they were really good. Their site sucks now. Sorry, investopedia. But what would happen is we would have these contests and people would lose their mind. It was like, wow, this is so much fun. Because I didn't realize how people really love to learn. If it was entertaining, if it was fun, and I made it fun, and I taught them. And because they got a sense of who I was through the whole contest, because I moderated the contest, they realized that I knew what I was talking about. And then I kind of showed them a couple of things, and then they realized I was actually walking in the same words that I was giving. Right? So that really excited people. And then people would ask me, do you coach? And I'll be like, m. No, but, yeah, I guess. Right. So then what happened is that when I decided to do it, I got my wife to help me with my, uh, coaching site, and. But I also said, I'm not going to just take on anybody. You got to be qualified. So what were those qualifications? You had to have a relationship with me. I had to get to know you because I wasn't. It's like, if I do share responsibility, know your client well, that's part of my whole thing. Just because I've refunded people who went to my website to sign up because I didn't know him, it's like, m sorry, I have to know you. I have to be comfortable with you. Number two, you have to be coachable. That's a big one. And then number three, which is even equally as big, is you have to be suitable, right? You have to be able to afford your risk, and all of these things have to culminate, and I have to feel comfortable, which is the biggest thing. And so the exclusivity of that weeded out a lot of people. But I got some, uh, awesome people in my coaching team, and we've done extremely well over the last four years. I mean, extremely. So everybody's talking about Nvidia these days, and we've had Nvidia since 2020. My son's had it before then. He's five. Well, he's turning six this month, and he's had it for years. So he's done well in that as well. But that's not just it, you know, I think what it is is that people kind of pay attention to what they want to pay attention or what they hear a lot. But back to the question. I became a financial coach because of that and I created my app because of that. So before I go on, I'll let you get in the middle.

Phil: I just wanted to find out the way that you're talking about people and choosing people to be part of this coaching and your site is investment dojo. Does that mean that people have to leave their ego at the door?

Kevin Davis: Oh, boy. Oh, yeah. I deal with humility. You know, I look at it this way, I rather earn your respect and teach you respect because of earning your respect. It's a method of humility. But if I'm teaching respect, you've done something to get in trouble. So I look at it from a standpoint of if it's about Money and you have an ego towards Money, you don't need me because you make enough, don't you? And then when they find out that my son has more money in his account than most people have in their retirement, they go, oh, they kind of. Yeah. I said, yeah, you don't have to look like money in order to have it. And so you must understand that. And the ego in that is where people have. And I don't do that. So there's things that I don't deal with. Like I don't deal with people who want to use accounts to trade. I don't trade. I'm a long term investor. Even though I created a trading app, I do it as a method. But when it comes down to the investment, I'm long term. And that is very rewarding because the long term is definitely undefeated, you know, look, think about it. I mentioned Apple earlier, $18 a share. Well, I didn't buy it. I didn't know any better. I was an order taker there. Oh, boy. If I'd have just put $18,000 and I had, because I was making that type of money every month, 1000 shares of Apple would be over $5 million right now. But I probably wouldn't have kept it that long because I was short term thought process. I was a kid. Now, please, you got to make a reservation to sell it around me. So I'm going to keep it for a long term, for a long time.

Phil: So do you find that people come to a financial coach like yourself because they want to be told what to buy? How do you turn them around to realising that they actually have to understand what they buy?

Kevin Davis: Well, I don't give out stock picks. What happens is this, I teach people how to research stocks. It's different. So if you can understand the investment, you can make your own decision. Right? It's just that what happens is, while I can't tell you what to buy, give you advice, suggest or recommend, I can tell you what I'm buying from my son. But it's up to you and my daughter. It's

00:20:00

Kevin Davis: up to you to actually research it. Now, if you go and you buy something that you don't understand, guess what? You won't have conviction. You'll have emotion. And so emotion is like the ocean, and you need drama. Me, which is conviction, to calm it down. And if you don't understand that, you won't be in my coaching for long because you're going to be emotional. Now, I guess the best part about my coaching is that I don't have anyone that's emotional because they understand the investment and they understand the opportunity. They understand when they should be buying stocks and dollar cost averaging. And when they do have opportunities to get discounts, they know exactly what they're doing because we can't own them all. So we build them tall. That's just how it is.

Phil: Let's just interrupt this train of thought for a moment to talk about your book. Who's your daddy? Why did you write it and what's it about?

Kevin Davis: So, my son was born when I think I was 51. I'm 57 now, right. And so I was of the thought process, and still, is that what if something happens to me before he turns 18? Right. I need him to know who his father was. So let me write that in the book from start to finish. The good, the bad, the ugly. And I need him to know what I know. So when I came out, uh, I used to own an insurance business. That's what I retired off of in 2019. And I used to own a mortgage company for four or five years. And then I used to be a stockbroker. So all of these different vocations, I decided to teach him in a book, understand insurance, how to research stocks and, you know, just the whole environment of those ups and downs. And I wanted him to understand that, the temperament and what he should do if I'm not here.

Phil: Right.

Kevin Davis: And that's how the book came out. So who's your daddy? What every son needs to know.

Phil: And ah, what are some of those lessons that you're trying to impart so.

Kevin Davis: He doesn't start on zero like most families do? You know, most families start their next generation the same way they started with zero. And then the ones who have the next generation turns it into zero. So everyone goes, well, I don't want to leave money for my child. I say, well, that's the wrong thought process. How about you teach your child earlier the value of a table, a tool, a phone, and then guess what? They'll, uh, know Money is a tool. And they won't be out there going crazy like most of the other people who don't have a financial education. And so when I say financial education, I don't mean in college or high school. I'm talking about know about Money and what it's used for. If you make Money, your God, and guess what, then you know you're going to find that you're speaking on a pulpit to the devil all the time because it's always going to be a chase, right? But if you understand you don't really need money when you have it, you just want it. And why do you want it? So, if you know the guy that sits next to you wants to go buy a Maybach, he's not really buying the Maybach because of the car. He's buying it because he wants something, because he wants someone to be attracted to that car. It's an extension of his ego. And so that's fine, but what happens when you get married and that's not important to you anymore? Now, if you got a Maybach and you're out, well, you're trying to still attract the flies. You're not going to be married for long, so you lose that thought process, right? And then it becomes about your family, and it becomes about your children. And then you see why we used to make fun of the guy

00:25:00

Kevin Davis: with the Izod shirt and the khaki pants because he didn't have any style. But then you realize you don't care about clothes when you get to a certain level, because clothes are not important. We rather have outbuyen, more from my son and my daughter than I'll ever get for myself. Both of my wife is the same way. We don't care about things. We have what we need. We can get what we want. But we also understand that every choice is not a good choice unless you make the right choice for the family. So if it's not a choice for the family, it's not a choice for us.

Phil: Before we roll taped, we were having a chat about hip hop artists, and you were making the point about hip hop artists in the eighties were actually trying to talk about something to deal with social justice. Whereas now it seems to be all about Money. And that the pursuit of Money is for its own sake, doesn't actually bring you the things that you really need or want in life. Tell us about what we were discussing then.

Kevin Davis: No. Yeah, I was pretty much just saying, you know, I kind of feel like the old guy in the room now because we thought we had the best age and stage of hip hop, and we used to have more substance. We talked about things. You knew what was going on because you heard the music, right? Now you hear the music, you don't know what's going on. Right? It's always about the three different things. Money, sex, Money, Money, sex, Money, Money, women, right? So back then, we, you know, public enemy, fight the power, right? You have prop called quest. You had different segments of hip hop that all had a unified message, and it was, it was like the beacon of light, especially when you're kid, growing up in the ghetto, uh, and you don't have much, but you're dreaming about this thing and that thing, and it's someone's telling you or saying something that you absolutely identify with and feel right. You know, because everything is not about money. Like I said to you earlier, if I said, write down the most important things in your life and let's say, five or ten things. Money wouldn't make the list. It just wouldn't. Because you wouldn't take money over your father. If your father was gone, over your dad, over your mom, Money would not make the list. But the problem is, is that if we can keep you thinking about Money, then you'll forget and be distracted on what real life is about. And you won't have moments. You'll have minutes, so you'll always be on the clock. But the moments when you can stop, breathe, and realize. It's like a great steak, right? I don't eat beef, but it's a sizzle, and you really enjoy the sizzle and the smell, right? The steak is just the after product of what tastes good to you, but the sizzle and the smell is the moment. Like, man hits every sense, and so it's a different thing. And once you come to the realization, because I came to realization, I remember, you know, yes, people challenge you, and people seem to have a need for social proof. So I posted, like, you know, a million dollars in profit in one of my groups just to, uh, quiet, I guess, the waters. And then everybody's interested at this point, and I'm like, really, guys? Really? That doesn't matter to me because you'll never see me flash. I won't be flashy. It doesn't make sense to me. It's really about everything that I'm doing to build my company. That's why I created the app, because, you know, kind of segue into that for a moment. Uh, I found that people love competition. I found that people really wanted to learn, and I found that people were sick and tired of being sick and tired. So I said, okay. When I was doing the game, I discovered a few things. People really, really love to compete, so let's compete for the information. I also realized that people would be chatty patties in the group chat. It was just really funny. Memes would go off, and their little pictures, little comments. It was just the greatest things to watch. It was really like when you watch Snoop Dogg at the boxing event, and it was just joking back and forth. It was really good to see how people really enjoyed themselves, and they expressed it verbally, and I realized that the leaderboard was everything to them. When they saw that leaderboard and they realized they were behind or ahead, they either stepped on the gas or they stepped on the gas. It was the funniest thing, and they'd all be talking about it, and then we'd have these meetings, and everybody would be all happy. And it would just be the funniest thing. And then they would realize that, hey, I saw that stock in the game because we're playing with the real stock market. Um, you know, the APIs are attached to the New York, the NAsDaq, you know, so the composite. So that was it. So when I got to that point, I realized it took me, what, two years and eight months to do this because as I mentioned earlier, investopedia's site went left. They changed it, and it was horrible, the functionality. And so my friend said, why don't you just do it? You have

00:30:00

Kevin Davis: the funds. I was like, hmm hm. Okay, where do I start? So then I called up my friend who does this for companies and creates the wire framing and God rest her soul, but she created wireframing for me. And then my wife found the company out of India that, you know, that was trustworthy and did a lot of work for Google and ups and stuff like that. I was like, okay. And even though they told me it would be done in six months. Yeah, yeah, no, that didn't work. But I had to teach them everything about the stock market order for them to build this app. If I didn't know what, I knew it wasn't going to get built. And so it took two years and eight months. It's finally here. It's in Google Play. Investment Dojo is the name of the app. It's also an Apple, and it's also the website. You know, investment Dojo is a website. Everything is investment Dojo, actually. But it's a great way to learn, and we just have fun with it. But all of the things that I've been through kind of led to this moment.

Phil: Isn't it funny these days how memes have become not only a method of communication, but a way of imparting lessons as well? And you refer to memes and users in the investment Dojo app. Ah, are using them to express their own education, aren't they?

Kevin Davis: Yeah. Well, expressing the emotions of the fun, like, if they're behind, you'll see them find a Forrest Gump running. It's the most hilarious thing. You know, if they're unhappy about their results, they'll post a meme that reflects their emotions. So memes are really a method of expressing their emotions, you understand? So. And it works out because it's fun. It's also the camaraderie that everyone is going through the same thing. So you start to see everything that's there. And I also set the tone when I moderate these games because these are moderated games. So I make sure that the seeds that I plant on fertile ground give me the growth that I need. I don't want any negativity there, so we don't have it. And so it's always fun, it's always enlightening, it's always lifting.

Phil: How do you guard against people's natural tendency to be short term about their investment thinking, to then encourage them to think more long term, even in this game situation?

Kevin Davis: Well, there you go. The separation, you don't try to change people's minds. That's like you walking through life wanting to be light, right. And thinking everybody's gonna like you because you're nice to them. That's not gonna work. So again, I, uh, tell people, I'm a long term investor, and, you know, especially I don't know too many people who trade, that know millionaire traders, but I know a lot of long term investors that are millionaires. So when you think about it from that standpoint, it depends on what race you want to be in. Then I break it down, I'm gonna listen your short term. So you're not going to capture all the profit in that stock that it would take five years to get. You're only going to get x amount of dollars. It's going to be a short term gain. So if you make a hundred grand, if you get lucky, you didn't make a hundred grand. What do you mean? You're going to give 33 to 39, depending on your tax bracket away to your government, to taxes. So you made 70. But if I made 100 grandd and I sold it twelve months out, which is long term, over twelve months, it's 20%, so I'll make 80. But the reality behind is I'm not selling it and I'll probably keep it till I make four or 500,000 and it works out. I'm all right with giving up 20% to get 400 grand. Would you? Exactly. So the conversation changes. And so the kids today, and I say the kids today, they want to play options. You know, if you think about the option volume, I think it's somewhere around 25% of the, uh, retail investors buying option contracts. And I think it's like 41 million contracts around there that trade a day. And it's all the get rich quick. Well, here's the psychology behind it. Well, if I can keep you short term in society, well, you're gonna buy new cars, you're gonna buy a new tv, you're gonna get a new iPhone, you're gonna get the new new anything new that you can get, you're gonna get because it's fresh. Why? Why are you getting that? Because you want to be seen. The fresh car, the fresh clothing, the fresh shoes, the fresh sneaker, the fresh jacket, the fresh belt, the fresh purse. And you don't realize that all of those things actually add up. You're fresh out of cash, so you're not investing that money. So guess what? You find out about the stock market, and someone says you can make a lot of money if you invest in options. It's short term, but you can really work out. You can really get something for nothing. And then all of a sudden, they're playing these options. They go from playing, you know, three months to a month to weeklies to dailies, and they get

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Kevin Davis: their faces smashed. They don't really know how. They quite lost the money. And at the end of the day, they don't have the money to come back because they don't have streams of income. So that's why suitability is important. I don't want to deal with that mentality. That mentality is too short term. And if you want to buy Maybach in person, a car, okay, good. But you're not going to do that with me because you're going to call me when I don't want to be called. You're going to go outside the lines of our agreement, meaning don't call me when the market's closed. I'm closed. Weekends of my family. Afternoon evenings are with my family. We eat together. Right. So, uh, there's certain things there. So what happens is I wind up getting people who have children, married couples, people who have purpose. Not to say single people don't have purpose, because I have some single people with purpose. It's just that that's what's attracted to me. And it's very low beta, meaning very low volatility. Very low nothing. I don't get any issues when it comes down to how the market works because I teach. I teach them all the time how to understand. Again, conviction is the drama mean. It stops the emotion. Like the ocean. That's it.

Phil: And so you're moderating these games in investment dojo.

Kevin Davis: Mm hmm.

Phil: Wow. What are some of the mistakes that you see people making and how they can be corrected?

Kevin Davis: So the game is a simulator that we pay in 15 minutes delay. Right. So we can play it in real time as well, because you can play in a public room. Let me go over some of the features so you understand what I'm talking about. Let's just say, we're in this environment and you have 200 friends from your armada. Um, and you say, you know what? Let's play this game on, called investment Dojo. Create the game. Now, you're in this room with 200 of your friends, right? So you can see everybody on the leaderboard, everybody. If you go into the chat room, you can chat and send messages back and forth. You could direct message everyone. You have portfolio pages. You have the, uh, ranking boards. You have notifications. You can check your messages. You can send your friends messages. You can add friends. You can build your friends list, invite them to games as you create it. So it's a social trading app, right? And so when we're playing the game, we knew that people didn't really understand the stock market, so we weren't going to make it hard on them. So instead of playing with a real time game, you play with a 15 minutes delay, meaning that if Apple is trading in the stock market at 218, but on the app is trading at 210 in 15 minutes is delay, it's going to catch up. So all you got to do is stay patient and find yourself another stock that you can actually exploit the difference with. And people go, well, how do I learn there? Well, guess what? You see stocks going up, right? That the intelligent person will ask questions, how? Why, what, when? And, uh, these are the questions you answer. And as you start to answer this question with multiple stocks, you get an education. And then I'm pointing you to the information. So then I start teaching the macro environment, and then the micro environment. The macro is the economic data that surrounds the micro, which is the stock. So we understand that you can't have the macro without the micro. That's why I call it the Mac and cheese. So the reason you really understand those things, then you go, wait, wait a minute. So that means that the CPI and the PPI make a difference? Absolutely. Because shouldn't consumer producer price index make sense? And then the producers. So it's almost the funniest thing. A CPI comes out and it's right in line with inflation, but then a PPI comes out and is lower than expected, then the street sells it off. Why? Because margins are being affected. Because producers are producing less. But you have to understand how the macro works. If you don't understand how the macro works, and how could you really understand how the stocks work? So you have your fundamental analysis, but then you have your financial analysis, and you got to really look at it from that standpoint. And then there's the geopolitical, and there is the institutional movements in and out of the stock. So last week, people were talking about, there's a rotation from large caps to small caps. Yeah, okay, I understand the narrative, but let's think about it here. If you're an institution with billions of dollars, right, or trillions, like a, uh, blackrock, you're not buying small cap individual stocks in the first place. You're buying indexes. That's number one. Number two, it's not liquid enough for you to stay there with large pools of cash. So you have to return to the scene of the dime, which is the most liquid stocks. So as much as you like to say is a max seven over? No. Why? Because they sit with the biggest balance sheets on earth. So when you start to understand the top ten companies in s and P 500, and you understand Tesla, Nvidia, uh, Amazon, Berkshire Hathaway, Broadcom, all of these companies, and you go look at meta, and you see all these companies, $50 billion in cash, 169 over here, $189 billion in cash. It's like you can. Google can get Jim and I wrong.

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Kevin Davis: They have 135 billion reasons why they can hire the right people to get it right. So you have to understand liquidity rules. So if I can get in the institutions. Okay, go back. 95% of these fund managers can't beat the s and p 500. Let's get that straight. So they also window dress at the end of the quarter. What does that mean? I sell my losers. I buy the winners to pretend that I actually own the winners. And then I have to file my 13 f, and it says, ah, I'm a smart guy. I owned the stock during the quarter. No, you didn't. You sold it right after the quarter ends because you just wanted it on your balance sheet, on your blot, or your list. And so we understand that thought process. And because I've been on Wall street for a second, I could say with certainty, I see that institutional rotation, and then I look at the average 50 day moving average of most of the s and p 500, and I see the sector movements. I, uh, see what's paying, they're paying attention to. They have to have liquid stock. So therefore, when they're talking about small caps versus the large caps, you know it's going to be some sort of a rug pull. Here's what I mean. We know that they say the small caps will lead the, uh, large cap stocks into a bull market. We know that they want you to know that. So when they show it to you, you get happy. You go into these small stocks but if you think about it, the market always searches for liquidity. So if I'm shorting the stock, you gotta that you're long. You have it in your mind where I'm going to I want to get out of this thing, or hopefully it doesn't hit that number. And you probably put a stop loss there. The reality is, is that with that stop loss, well, you just create liquidity for the institutions, because if they're shorting it, they take you right out of that stop loss. And guess where the stock goes? It just goes in the other direction, which is direction you didn't want to go, which is back up. Right. On the upside, you know, the algorithm is going to kick in and there's going to be an influx of buying when it starts to break through resistance. And guess what? Those who owned it lower, which is typically going to be your institutional players, are going, you're going to create more liquidity there. So the retail and client become the retail client, or investor, I should say becomes the food on a plate. They just don't know that they're in the ocean with the big fishes. They think that a fisherman, but they're getting capsized every day. So you have to understand. So what I do is I teach the psychology of the market, the inner works of the market, the macro, the micro, and the fundamental analysis. And I can call the play, and I don't mean play is in plays, this is the play of the day. But I can call the day to day of what's happening and I can hear what they're not saying, which is weird. But I, you know, whenever I hear people talking about, well, we're doing this, I said, uh oh. I uh, see what they're doing because I never believe them. I go the other way and I realize what they're really doing because I look at the information that says the data is the only thing that matters. So it's a great place. I love it. It's my fishbowl. But it allows me, the game allows me to teach people, and if they qualify for coaching, they learn a lot more. Right. But when, during the game, it just allows me to give them the baby food start so they get the taste of it. And if they have the, you know, they can be consistent with taking care of their families, then that's what I want to do.

Phil: So, Kevin, remind listeners where they can find out more about where they can find the app and uh, website.

Kevin Davis: Sure. The website is investmentdojo.com, that you'll be able to find the game there. But, uh, the app, as you know, we play on apps these days. So the app is in the Apple Store, of course. And it's in the Google Play store, of course. The game is called investment Dojo. If you want to follow me around social media, you can follow me on TikTok. Investment Dojo. My Facebook is investment Dojo, my YouTube is investmentDojo, but my Instagram is the real Kyz Kyze because that's my personal one. I have investment 2.0, you know, investment Dojo 2.0, but I don't really post on that yet. So if you want to see who I really am, that's where you go.

Phil: Fantastic. Kevin, thank you very much. It's been a great pleasure chatting with you today.

Kevin Davis: You're very welcome. Thank you.

Chloe: Thanks for listening to shares for beginners. If you enjoy listening, please take a moment to rate or review in your podcast player or tell a friend who might want to learn more about investing for their future.

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