JF1580: Learning To Diversify Our Investing Portfolios With The Stock Market with Tyrone Jackson
As real estate investors, we love real estate! Tyrone had a different experience with real estate investing, not a good one. He fell in love with the stock market after that and never looked back. Now Tyrone not only helps his own portfolio and wallet, he helps others learn how to invest in the stock market, with a lot of real estate investor clients that just want to diversify. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Tyrone Jackson Background:
- Known as The Wealthy Investor, Tyrone is a stock market trader and best selling Amazon.com author, You Should be Rich by Now
- He has a unique ability to simplify stock trading and investing
- Has been trading and investing for 20 years and teaching others for 10 years
- Based in Los Angeles, CA
- Say hi to him at https://thewealthyinvestor.net/
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
First off, I hope you’re having a best ever weekend. Because today is Sunday, we’ve got a special segment called Skillset Sunday. Here’s a little wrinkle for you – we’re all real estate investors or aspiring real estate investors, depending on where you’re at, but what if you wanna diversify into the stock market? Well, we’re gonna be speaking today to an author about stock investing, as well as someone who’s known as The Wealthy Investor, who is a stock market trader… Who I’m talking about is Tyrone Jackson. How are you doing, Tyrone?
Tyrone Jackson: I’m thrilled to be here, thanks for having me.
Joe Fairless: My pleasure, and nice to have you on the show. A little bit about Tyrone – as I mentioned, he is a stock market trader, as well as an author of the book “You should be rich by now.” He has the ability to simplify stock trading and investing, and thank goodness for that, because that is not my area of expertise. He’s been trading and investing for 20 years, and teaching others for 10 years. Based in L.A.
With that being said, Tyrone, do you wanna give the Best Ever listeners a little bit of your background and what you’re focused on?
Tyrone Jackson: Sure. I love when you read my bio, it makes me sound really important… So thank you for that. My ego thanks you for that.
I started out making a living in radio and TV commercials about 30 years ago, and people used to say things to me like “Hey, you should invest that money that you’re making”, and I had no idea what that meant. Like a lot of people, I thought “Real estate – people need a place to live”, so I wound up buying my first piece of real estate. The only problem is I’m not really good at repairing things, like roofs, and piping, and electrical, and all of that. And it’s not that I hated real estate, it just wasn’t my thing.
My father, who’s no longer with us, said “Hey, you should really learn how to trade and invest in the stock market. If you’re gonna hold the real estate, you should probably know something about the stock market.” I was like, “Okay…”
He was living in senior citizen housing at the time, and he says “Next time you come and see me, I’m gonna have some books and tapes and I want you to learn how to invest in the stock market.” It changed my whole world, because I realized to be rich, particularly in the stock market, all you had to do was have the ability to count from one to ten. So I would say to people, “If you went to the fourth grade, you could be rich… Because your goal is to buy a stock that simply rises, and then you can sell that stock for a profit, instead of having to worry about tenants, credit reports, piping and roofs”, and I simply fell in love with the market.
Joe Fairless: So for someone who does not have experience investing in the stock market, what are some practical things, or what are some tips for getting started in investing? Because we hear about diversification, and we need to do diversification, and whether that is or isn’t good advice could be up for debate… But let’s assume we think that is good advice and we are currently all-in on real estate – what are some practical things we can do to get started in stock market investing?
Tyrone Jackson: Okay. First of all, the thing that you want to understand is stocks are assets, just like houses, just like hotels… But they’re assets that increase in value based on the company’s performance. When I started looking at patterns, I wanted to understand “How can I add stocks to my real estate portfolio?” and one of the things I realized – pattern number one – all of today’s billionaires were billionaires created from stocks, not from real estate. There are some billionaires created from real estate, but the barrier to entry in the stock market is much lower.
So if I wanted to start investing in the stock market, but yet I knew very little, here’s a tip – you wanna start investing small amounts of money, like $500-$600, in stocks that are members of something called the Dow Jones Industrial Average. Now, what that is – the Dow is an index of the top 30 stocks in the U.S. stock market; companies like VISA, Home Depot, or the Walt Disney company. So even if you know very little about the stock market, here’s what’s exciting – those stocks that are in the Dow have the greatest probability of going higher, and have gone higher over time, because Disney, VISA and Home Depot keep earning more, which we call top line revenue. If you just understand that little bit, you see how you could have bought VISA shares for $37 five years ago, and today they’re $149.
Joe Fairless: When we take a look at the method in which we do invest, where we go — okay, I’m with you on investing in the Dow Jones, but then who do I give my money to in order to do that? What’s some advice you have there?
Tyrone Jackson: Well, here’s the beauty of it – you don’t have to give your money to anyone. You can simply open an account at a place like TD Ameritrade, E Trade, Charles Schwab, Fidelity, and you can buy more of these shares in these Dow 30 companies as they’re rising. And if you do that, buy shares as they’re rising, you’d be known as an investor. However, if you want to trade stocks, like making money in real estate, you would become a covered call writer. Now, when you’re writing covered calls, you’re selling rights to other people to buy your shares away from you, and you get paid for that.
One of my students described writing covered calls in the stock market – it’s kind of like rental stock. The stock is the real estate, and you’re just willing to rent it to somebody else at a higher price, and you can gain income for that.
Most real estate investors want a return on the money they’ve put up in the real estate; it’s the same exact thing in the stock market. You want a return on the money that you’ve put in the stock, the only thing is you can trade and buy stocks all over the world; you’re not tied to one geographic location.
Joe Fairless: Switching gears a little bit – you’ve got the book called “You should be rich by now.” Why should we be rich by now?
Tyrone Jackson: Because we’re in a fantastic era where we all have the opportunity to participate in the companies that are having the largest growth on the planet. Companies like Amazon.com five years ago was trading at $200. At the time of this recording it’s just under $2,000. Imagine if you just owned ten shares of Amazon.com.
Facebook, when it went live as a publicly-traded company, $50/share. It’s been as high as $195/share. All this technology that is changing the world, when you’re a shareholder in these major companies – Google is another wonderful example – you have the ability to rise along as an investor, as these companies are innovating and changing the way that we live our lives, and that’s exciting.
Joe Fairless: How much should we bounce around and try to find the right companies, versus investing in the Dow Jones and just riding that out?
Tyrone Jackson: Well, that’s a great question. The next thing is if this sounds like something that could be good to you, like earning another form of passive income trading stocks in addition to real estate, then you wanna go about the business of getting a financial education. You wanna learn how the market works, you wanna learn what stories you are most attracted to… For example, many of my students really like Google, so they wanna own Google shares. Or they love Netflix, because everybody has Netflix, so they wanna own shares in Netflix. So above and beyond the Dow, you wanna invest in the companies whose stories you like. I have a saying, “You never buy the stock if you don’t understand the story.”
I’ve built my reputation keeping the idea of trading and investing extremely simple, so that you can be successful at it. Outside of the Dow, you wanna find the stories of the companies that you like, and just buy shares; when those shares start to rise, you’ll be amazed at how much you can learn about the company through press releases online etc. For most people, in addition to real estate, the stock market is just this whole other world that draws most investors into it, and you begin to gain that education further and further and further. So the whole idea in “You should be rich by now” is if you really knew how to buy shares in the up-and-coming companies, the value of those shares are exponentially rising and you’d be riding along.
Joe Fairless: What are some of the traits that up-and-coming companies have?
Tyrone Jackson: Okay, so initially, in the Wealthy Investor Program, I have a saying – we don’t marry stocks, we only date them. We never fall in love, we don’t put all of our money in one… We date a stock; we let the stock rise, we buy more shares.
Companies that are up-and-coming, these days, they’re usually doing something with technology, like for example PayPal. Now, we’re all using credit cards in the real world, but PayPal focuses on transactions that are worldwide, online, in the digital environment. For example, if you ever wanna buy something online, you know there’s no slot to put a $50 bill into your computer. You’re either gonna use PayPal, VISA, MasterCard, maybe American Express. Each one of those companies allows you to own shares in those companies. So if you like that story, it simply makes sense to own those stocks. I like stocks of up-and-coming technologies because you can watch their earnings – how much the companies are actually earning on a quarterly basis… And if you’ve ever been on a date with someone and they keep getting job promotions and you’re attracted to them, you’re probably gonna wind up in a relationship with them, right? Because their financial life is going well. It’s the same thing in the stock market – when a company’s financial life is going well, the shares tend to follow, and that gives you more wealth as a shareholder.
Joe Fairless: What’s a mistake of someone who is venturing into investing in stocks that you see?
Tyrone Jackson: I see this all the time – a lot of people think they’re gonna make money in something called penny stocks… Stocks that are $2, $3, $4, $5. They think they’re suddenly going to $500. Now, let me just help you out – that rarely happens. So if I’m on a date with a stock, and I wanna be owning shares of the company that the entire Wall Street community likes – and those, again, are companies that have established revenues, not some small company that’s in someone’s garage, and they’ve discovered the greatest thing and they’re looking for another round of financing… That’s called gambling.
When you’re investing or holding shares in companies that billion-dollar institutions are buying shares in, those stocks have the greatest, highest probability of going higher, not penny stocks that are $2 or $3.
Joe Fairless: But they’re so enticing…
Tyrone Jackson: They are. We call them those sexy stocks, and as you know, sexy isn’t always good.
Joe Fairless: That’s true, that’s true. Well, how can the Best Ever listeners learn more about what you’ve got going on?
Tyrone Jackson: The easiest thing — again, we talk about this notion of getting a financial education, right? So if you go to thewealthyinvestor.net, you can download my totally free eBook called Trading Stocks for Wealth. In that free eBook is where I begin to educate you about the market, how it consistently makes millionaires, and going on good dates with Dow stocks. That’s a great free way just to dip your toe in the water, if you will, with the Wealthy Investor approach.
Joe Fairless: Some practical tips for how to get started, and who doesn’t like a free eBook to educate them on a topic that they wanna go further into, so go check that out if this is something that you’re looking to do, Best Ever listeners.
Tyrone, thanks so much for being on the show. By the way, Best Ever listeners, this is the second time we’ve recorded the interview. The first time I totally messed up with some recording issue, and Tyrone was nice enough to hang out with us one more time… Tyrone, thanks for that, and your patience, as well as hanging out with us. Looking forward to staying in touch.
I hope you have a best ever weekend, and we’ll talk to you soon.
Tyrone Jackson: Thanks, my friend. My pleasure.