The Everyday Millionaire Show
The Everyday Millionaire Show
From Rap Star to Wall Street: Kevin Davis' Journey to Financial Mastery
Ever wondered how a world-traveling rapper could pivot to become a successful stockbroker? Join us on the Everyday Millionaire Show as we uncover Kevin Davis' remarkable story, from his chart-topping hit "Stomp" to his high-stakes career on Wall Street.
In this episode, Kevin opens up about his early days in hip-hop, the financial challenges that followed his initial success, and the pivotal moments that led him to a thriving career in finance. Get an insider's view of the high-pressure world of stock trading as Kevin shares his eye-opening experiences at Stratton Oakmont, the notorious firm from "The Wolf of Wall Street." This is a tale of resilience, reinvention, and the importance of financial literacy.
This episode is packed with insights and practical advice for both novice and seasoned investors, making it a treasure trove of information and inspiration.
Welcome to the Everyday Millionaire Show with Ryan Greenberg and Nick Kalkas. All right guys. Welcome back to another episode of the Everyday Millionaire Show. We are here with Kevin Davis. How you doing, kevin? I'm doing great. How are you guys doing? Oh, I'm pretty good, can't complain, can't complain. Besides, it's probably hotter here than it is there in Florida. It's been like 95, 100 degrees every day here, so that's been brutal.
Speaker 2:Yeah, that's every day. 98, 96 here right now. Oh goodness gracious I'm in the house.
Speaker 1:So, kevin, I read a little bit about your bio. So kind of a cool, you were a rapper. We could start there before all the finance stuff. We're a finance podcast, you know we talk about money and stuff, but um, so you were. You were a rapper that traveled the world. Can you tell us like a little bit about how that that happened?
Speaker 2:by accident, um, uh, okay. So I had a deal with warner brothers records 1989. I had a record called stomp and it came out. It was really big around the country. Um, but to take it back, the reason why I got into being a rapper is because when hip-hop started, they used to have what they have, what they call uh jams hip-hop jams in the park or park jams and so we'd go there every weekend. You'd hear the noise. It'd be like a half mile away. You had these big speakers and, um, I started rapping and having a lot of fun.
Speaker 2:Um, I was in my second year in college and um, I met rizza, which was, you know, from the wu-tang clan and you know we would rap every week. You know he would always have thisTang Clan and you know we would rap every week. You know he would always have this battle with me of how many rhymes he can write, and it was just really. It was different back then, but my mom decided that, hey, when she was 17, she got put out, you got to get out and I didn't, and that was a hobby, but it became real to me. So at that point I didn't know't know, 17 years old. I'm trying to figure it out. Maybe I could be a rapper.
Speaker 2:And my friend was like you should make a record. I was like, okay, what does that entail? So then I started that whole process and took me maybe maybe three to four years to get a record deal. And then, boom, you know, I traveled the world. I was making a ton of money. Well, for me, I mean almost a hundred grand a month for, uh, you know, 20 something year old, was really big and didn't know anything about money. No one pulled me aside and said, hey, you should do this, you should buy real estate, you should buy, you should invest in stocks. I don't have no clue. So, you know, I stayed in a studio apartment the whole ride, never thought about moving. I had a 1987 Toyota Corolla that opened up from the passenger side. We remember the hoopties, so you know that was it.
Speaker 1:So what did you? What did you do with the money?
Speaker 2:Spent five years. I didn't work and I just lived off of the money that I made and hung out and I think I partied for like uh, five days a week and you know was in the studio making records that would never come out. It was hilarious, um, but it was just. I don't know, I was just a kid, I was enjoying my, um, my youth. And what do you do when you're 21 years old and you're making money? You know it. You know you can get in a lot of trouble, yeah, yeah. So I'm happy I didn't get into that type of trouble. But you know, it was a good time. I can't. It was the best time of my life for that period and I totally enjoyed it. I'm happy.
Speaker 2:I lost it in a way, because it allowed me to become a stock broker. You know it pushed me to find something else to do to make money or that type of money. So I remember I was working for UPS and I was making what is it like $9 an hour and I was working this insane, what is it? 3 am to 9 am and you had to do 22 boxes a minute and I was union and the managers weren't. So it was always a clash and you just working your tail off for nothing. And it was. I know I had to find a way. And I remember I was on the phone in tears with my mom. She's like you cannot come home and I was like, okay, I'm not going to work for $5,000. You thousand hour, you'll see, and you know that's when, uh, the music took off nice.
Speaker 3:So how do you get a record deal? Did you have to approach them or did they find your music and listen to it and wanted to bring you on?
Speaker 2:um, it was a real route. Uh, okay, so you start by making a demo, so you have to find people to make beats for you, and then you know, so you had to make I don't know, it was the. I always tell people life is about dualism One person to the next. You can't exist by yourself, so someone you know can help me, that type of thing, and that's what happened. So I found these guys to make a beat for me, I recorded that beat and so I had that as a demo tape.
Speaker 2:Ironically, during the period of time that I was in house, music was becoming this thing and so I'd go to this club called the Garage and you know these hip hop clubs called Latin Quarters and Underground, the underground and things like that, and I start rhyming over these beats. I think it was how many months before. But I met. I started working and selling cars in New Jersey. I met a girl. She helped me get a job. I started working in a Bob Chisley Toyota and I was actually trying to figure it out.
Speaker 2:I played my demo tape for this guy who happened to be my manager's cousin. He heard the demo said listen, I want to meet this guy. I went to go see him. His name was Mike Cameron. I went to see him and he heard and he said hey, I really love your demo. Can you rap over this? Well, to go back to the clubs, the house clubs. I was writing a rhyme already and I wrote, and I said a rhyme over it, the beat that they gave me, and it took me five more minutes to write the rest of it and that turned out to be the hit record. That's how it happened nice.
Speaker 3:So in those scenarios, when you get um brought on to a record company, what and you said, you mentioned, you mentioned you have a manager. What is the like? Split that you have to give them out of the money that you receive.
Speaker 2:At that point I think it was 20% of the shows and the. They had a production deal. You know you always get the uh, the raw end of the deal when you first start. So the production deal meant I was signed to them.
Speaker 3:I wasn't signed directly to the label is that pretty consistent with what it is in today's um, you know, I guess, when there's managers and rappers and artists? Is it pretty similar nowadays, as far as you know?
Speaker 2:Oh, today is worse. You get a 360 deal and today they get a piece of your show, your digital, everything you do. You can breathe, you know, for the distribution network that they have.
Speaker 1:Yeah, it's, it's a racket, I'm happy, I'm not there anymore, so, yeah, now it's streaming and everything too. I imagine it's even tougher. So let's talk about the stockbroking thing.
Speaker 2:So you got into the stock market when in that kind of like timeline- so I was watching a movie called Trading Places we all know it, but Eddie Murphy and Dan Aykroyd and I was like this is crazy, I want to do that. I don't know what it was it was. It was actually commodities. I thought it was stocks, but I didn't know and so I don't know. Whatever you think about becomes reality, I guess.
Speaker 2:So one day I'm sitting in front of my grandmother's home in Flushing and reading a newspaper I think it was the Times. I was looking at the wanted ads, and my friend who was sitting in the steps worked at Stratton Oakmont. Stratton Oakmont was a notorious firm that Wolf of Wall Street was after. I didn't know. She's like I can get you a job. And so I was like, okay, I put on a suit the only one I had went in and they interviewed me. I think they just it wasn't even an interview.
Speaker 2:It was like they grilled the crap out of me and I was a street kid, so I was unfazed and they were shocked and they liked that weird and so they hired me and, um, you know, at this point in time my vernacular was a little bit different, a little unpleasant, but I sat there as a bunch of people who didn't look like me that took me in, and maybe family, and I learned they taught me and I I worked my tail up. I probably uh, I probably uh stood up from the time I got in there to time that I left. I was on my feet pitching stock all day and that wasn't really an investment firm or stock firm, that was a bucket shop. And I learned that after a while and went to a real firm, at least a real research firm. But that was my first entry into the stock market. I got like a 91.2 on my test, so it wasn't a smarts, it was just the opportunity. Huh.
Speaker 1:That's interesting, cause back then, yeah, you needed to like go out and push these things, where now it's like everything's so accessible with Robinhood, I mean you could go on your phone and buy, you know, anything you want. So when, when you're there, you're, you could go on your phone and buy anything you want. So when you're there, you're literally calling customers that you know have money in some way and trying to just get them to buy whatever it was. And it's the classic like Wolf of Wall Street, kind of like oh, we're going to get this commission for selling this shit, so let's just push this shit whatever it is.
Speaker 2:That's oddly enough. Oddly enough, and you're right, 100%, by the way. But oddly enough, they bought Steve Madden shoes public and everybody knows Steve Madden. They would get their hands on a good deal every now and then. It's just that their practices were about, for instance, let's say that I called you up, you were on the face card of a Dun Bradstreet lead, which is a top 500 corporate in America. I'd call you up, I'd pitch a stock to you. You decide to buy 10,000 shares of a $15 stock. You send me 150 grand. You would make a dollar per share at those firms. So that's $15,000 for about 15 minutes of work on a phone call. So the motivation to make money and the car row was absolutely real. It was the sickest thing you've ever seen. So they motivated you, they controlled your minds with the money you can make, the things you can buy. And you got on the phone. They told you what to buy, they told you what to do and you were just a soldier for it yeah, that's, that's interesting.
Speaker 1:That's a good. When I think of the wolf of wall street, that's like that's what it was, kind of it's cool yeah, it was.
Speaker 2:I mean, I remember I'll never forget this. I'm not at stratton but now I'm at the research firm, but I had the skill set, like I can open an account of some you know really good account opener. So so I get on the telephone. I never forget this. There was a lead on the floor, dr Templeton. I never forget his name, right, hope he doesn't listen to your podcast, just kidding. Anyway, he I said I had three cold callers. I was training them and I go listen, watch this. So I take the lead off the phone, off the floor, I dial the number and I call and I'm pitching them, pitching them, pitching them. I was pitching them sports authority right before they merged with Guard Sports, good company, and it actually did very well. You know, actually, I knew how to make money there, but the skill set helped me. He sent me fifty thousand dollars and never met me. I never sent him anything in the mail, it was just a name and a number me. I never sent him anything in the mail, it was just a name and a number and that was the skill set that they taught.
Speaker 2:What my takeaway was from it is that that's how America was won. You pick up the phone and you go after what you want. You just have to do it in a very wholesome way. You can't do it with the intentions to be bad. And so I got out of that and then got into research, and then that's the part that and then got into research, and then that's the part that really, like I always tell people that saved my life because I knew how to actually do research and you know future based on future cash flows, and just just I knew what that growth outlook on that company was and I was able to really dig deep into the actual financials. So it became like, wow, this is pretty cool. And so I, I don't know, and I was able to really dig deep into the actual financial. So it became like, wow, this is pretty cool. And so I, I don't know, I was like a numbers geek. I loved it, you know.
Speaker 2:So that's where the career really took off for me and I um, I remember I was buying, I had a ton of the sports authority because I think nine, 11 happened and uh, stock went down to three bucks. I was buying it at five and I had a lot, and I think it took about a year and a half or so, I'm not sure how long, but the guard sports actually purchased it. So they merged with it like 11 bucks, 12 bucks, somewhere around there. My clients were happy. I had Intuitive Surgical ISRG at $35. It ran to 75. At that time I thought I was a hero. That stock ran to $2,000.
Speaker 2:Jimboree, I had all these great companies and all of it because there was a structure to research that I found and I was also intuitive. So what I mean is in every business that I ever got involved with, I figured out a system that worked and, like I used to own an insurance company, so I was the number one referral in the nation. There's still no one that can give more referrals than me. I don't care who it is, because I realized it's about the buy-in. But if I teach you, not sell you. That's the honesty in the presentation.
Speaker 2:You know what I know now, and once you know what I know, you also know your deficiencies. And if I have the best product, guess what you're going to do. You're going to buy it and you're going to recommend it to everybody. But you have to kind of be funneled into the belief that you know I'd get your whole cell phone and I'd have you text everybody about this wonderful opportunity. This guy and I'd sit in your home and wait for you, wait for your phones to come back. And then I'd make phone calls because I realized you're not going to be rude to your friend's guest, are you? Oh no, so I can actually go crazy. And so I just make all the calls, set all the appointments and guess what? I knew that if I set the appointment in the house, it was 95% chance of a sale. If I saw him the same day, 80% the next day. So why not try to get 500, 800 referrals in a week and go crazy. And that's exactly what I did. That helped me retire in 2019.
Speaker 3:So, going back to the stock market, are there still, like over the phone, sales that happen nowadays, or is that kind of obsolete?
Speaker 2:No, I'm quite sure there's over the phones. Yeah, I'm sure.
Speaker 3:But are like people still like in Wall Street, just like in the office, just calling people like they were back in the day?
Speaker 2:I'm sure you know from and I'm disconnected from it. But you have two types of mindsets. You have the wire house firms, like the Merrill Lynch's of the world, you know, and they're setting meetings. They're still meeting with clients. And that type they're still cold calling. They have to. You're cold calling us how the world is built. Are they calling every day for clients? I don't know, I'm not there, but I could say that the lower firms that's how they get their business.
Speaker 2:If you're an investor, here's what happens. It's almost in any business. The lead is pretty much how you succeed. So, if I know, you have a half a million million dollars in the market. I know you're an accredited investor and I have a product. I'm going to call you and either you give me two minutes or you hang up the phone. But I'm not going to hang up the phone ever. You've got to hang up the phone on me. That's the deal and that's what the whole thought process back in the days was about. So I don't think. I still think that because you got to realize the bucket shop concept didn't come from the bucket shops, it came from the Lehman Brothers. Right, lehman Brothers was like the King Cole callers here's a book. Call them, so call the. What do they call that? The phone book back in the days? Right, that's a thing. Yeah, that was a real thing. What did they call that? The phone book?
Speaker 1:back in the days. Right, that's a weird thing. Yeah, that was a real thing, nice that's. It's funny to think about how, you know, things have changed but kind of still stayed the same. Because we're in the real estate space and you think about wholesaling, like cold callers hit us. You know, we own a bunch of houses so we get calls all the time for people trying to buy our house because they're trying to sell it to the next guy. So it is that's kind of still how it's going in that realm, you know. So it must be the same change with businesses as well.
Speaker 2:Yes, it's not going to change. I think you know capitalism. You know we got to make a phone call, like I got to call people all the time for the app. You know I got to make, I got to reach out. Now they have a lot of systems now, so things have changed. Well, you have systems where you can get in contact with people and it becomes a lot easier. And you know you're not asking them for money and actually when you're the one giving the money, it's easier to get people's attention Right. But it's, yeah, it's the same structure.
Speaker 3:So what are the next steps after you described a little bit how you worked at that company and then what? What were your next steps in your stock market journey after that?
Speaker 2:So I, when I went to work at the research firm let's just go back a little bit when the dot-com era happened and it blew up, I was there and I'll never forget it. Um, you know, I, I went through. I didn't even know it, but I went through a depression back then and it was like maybe six months I didn't even go to work. I would just call in and you didn't care. You're independent contractor, right? Um, but this is. It was like broker disneyland.
Speaker 2:At one point everything with dot-com was going crazy and you know we were making money hand over fist. I remember a guy had a first name, john, you know he had, um, he owned a suit, uh, an outfit uniform company and I made I took his account from a hundred grand to a million point one. So obviously he loved me. Qualcomm split four for one ran from like 400 to $700 a share. We bought it after this split as stock tanked. You know we got out of it. We lost a lot of money. He didn't lose any money technically, but we definitely got hurt. That period of time was really tough. But we had this thing on Wall Street. You tell bad news quick. You could take your time to tell good news. And so you know that whole process made me want to leave Wall Street, just the whole. You know I was getting tired of that process of new book, make another call, raise more money, blah, blah, blah, blah, so leaving, and this is at a different firm. So once I left that firm, I went to the research firm. I realized what I was doing wrong as far as in picking my stocks, and then I honed that skillset and then I left Wall Street.
Speaker 2:I moved to Florida. This is 2005. So in 2005, I still had my license, I was still working for a firm, but I just did it in Florida until 2000. And I want to go. I kept my license there until 2012. I had that since 2005 to 2008. When the market cracked From there that went out of business.
Speaker 2:I had to go to insurance because everybody that was making money was kind of leaving the trail. This is where you got to go next. This is where you got to go next. So I went to the insurance company where I dominated I mean absolutely dominated there, and because I was making like 70 grand a week something crazy at the mortgage company. So I couldn't make $2,000 and them guys celebrated and give out $50 bonuses and think that was awesome. So I said to them listen, where's the money at? They said well, you got to become an owner. How do I get there? You got to do X amount of dollars in a certain amount of time and we'll give you the opportunity. Be back, see you later. I came back. I'd be the guy walking with a box of swaps because you'd have to swap your clients. A box of swaps. I said nothing to anyone. I wasn't social.
Speaker 2:I was trying to get back the life that I created and and about it was 2010 December. I moved to Maryland, opened up my firm it was me and another fellow who lasted two weeks, so it's just me. So I'm in a what is it, what do they call those virtual space on. I forgot the offices executive suite and I hired a secretary and from there I took me from one to 56 agents in a year and kind of crushed that. And then, you know, I retired in 2000, into 2016,.
Speaker 2:Went to work for my buddy for two years because you have to. Your renewals will kick in after your debt is clear. So it took you two years to do that. Then I retired 2019, pandemic hits. My buddies are after me, like, man, you're really good at the stocks, you're really good at the stocks. So they started pushing me, pushing me, pushing me, and I'm like, leave me alone. I just retired, I want to spend time with my wife and my kid. So I have a five-year-old now, but he was a year old. So I was like, okay, no, january comes, no February, no, okay May.
Speaker 2:So all of a sudden I started doing these games and I would do like Investopedia had a simulator, stock simulator, and I had. I went from like they said, you create a group? I said, okay, from 30 people in the group they're like 6300, like virtually overnight, and so now we're doing all these games. And then what happened was something kind of cool. You know, people were asking me to coach them and I was like, okay, um, let me see how that works. So I figured out a whole system for that.
Speaker 2:And then all of a sudden, I do a game and I was signing up maybe I would say between 20 to 25% of the participants into coaching like 52 people that I coach, but 40 of them have been with me since I started the game. We have excellent percentages. But the bottom line is, what happened is. It took me two years until the site started. It is something wonky with the site and they changed it to the point where you couldn't even execute a trade and the system just really the UX is just unfriendly. So I created my own stock app and simulator, put some group chats in it, leaderboards. It's extremely fun and that's what I launched back in this year in April and that's how I got here.
Speaker 3:So back when people started asking you to coach them and you kind of, I guess, didn't know whether or not you wanted to do that, and then eventually you jumped into it, how did you know how to structure your coaching to make sense for the person who was going to be coached?
Speaker 2:So what I knew, you know, because I was a stockbroker, I knew I couldn't recommend anything to anyone. I can tell you what I'm buying for my son and my daughter. But I can also tell you listen what I'm doing for my son and my daughter. But I can also tell you listen what I'm doing for me is well-researched. You need to do your research. I'll tell you what I'm buying, but I'll teach you how to research it. That was the tenets. No, I can't suggest, I can't recommend, I can't advise. Understand this. I can teach you what I know. So this way, if someone comes up to you and they say I got a hot tip or an idea, you can break it down to the syllable and compound to the basics and you can tell whether this company is good for you or not. Right, because it's your money. Right, but you got to get your money, a job, you can't bankrupt your account. So I would teach people that the structure for me was okay, I have to make, I'm retired now, but at the same token I do not want a job. So I said okay, I'll do quarterly meetings. And I said why? Because earnings come out quarterly. I'll do monthly accountability meetings. Why? Because people do not perform without their coaches in the gym. The same routine, right? I'll do group chats on daily, on the daily perspective, so you understand how to think about the stock market, its manipulation, its participants, its institution, the macro and micro environment. I will also make sure that you know what I'm doing every day in my accounts. So this way, and don't make a move from my chat, please. It doesn't suit. One foot, one fits all. Send me a text and then we can discuss it, and that's what would happen. And then that structure stayed true to this day. You know, you have I learned some things along this journey, like, obviously, iq, eq is important, but MQ is probably twice as important. And what do I mean? So you might have the intelligence to research it's really about common sense, right but EQ you may not have the emotional elasticity it takes to stomach the gyrations in the stock market. I don't even call them Clyde, they're my friends now.
Speaker 2:But she bought two shares of Apple. I'll never forget this. It split four for one I think 2021. And she had it at like 135. It went down to like 110. She's like, ooh, she's a little nervous because this is the first time. It doesn't matter, it was only two shares. What it mattered is that she put X amount of dollars in and it was worth less than what she put in. So she sent me a text and it's like the first text of its kind I've ever gotten, because I'm pretty good with the emotional planting the seeds, because conviction is the pill that you take, like Dramamine. It stops all of the craziness, because once you know what you're doing, it's easier.
Speaker 2:But anyway, so I sat there and I talked to her and you know I said to her listen, let me ask you a question. She's like what do you eat out? Uh, eat lunch, or you, you bring your lunch. You know, I know I eat out. Uh, how much do you spend a day? She said about 10, 10 to 15 bucks. So I said what's that? About 50 to $75 a week. I said yes, cause at this point you got to realize she's down about 50 bucks. So I'm like let me ask you another question. Do you ever go around the commode looking for that? She started laughing, right, and I said exactly Right. So let me ask you another question If, what did you?
Speaker 2:An idea would be what if you bought two more shares there and instead of owning it at 135,. You owned it at 118. And when it went back to 135, you was in profit. What would that look like? Well, that'd be pretty cool. So what we do is that you get and these are just sayings, but you get bread when it's red. Green just means you did the right thing. You get rich when the market's up. You get wealthy when the market is down. So that was the whole mantra and thing that I taught my whole team. Now they understand discount dates are for shopping because bargains are in the basement, they're not on the roof. So she wanted to buy more. And she has a significant account right now because, once she got over the early steps of her beginning journey, now she understands the research. She understands that money has to get a job and then she puts it to work. She doesn't spend money on frivolous things.
Speaker 2:That day I was down about I don't know 287,000. I didn't tell her that until the end of the conversation. She said, oh God, I'm here talking about 50 bucks. I said it's okay because it's relative emotional elasticity. So if you got $10,000 to put in the market, you can't handle a 30% swing because you don't $3,000? What do you mean? You won't be able to understand it.
Speaker 2:So if your dollar cost averaging and let's say you're starting with about $500 and every month you put 500 in until there's a real opportunity, you might put a thousand in, but your dollar cost averaging or averaging down, you might put a thousand in, but your dollar cost averaging or averaging down, you get a chance to learn how the market works. Once you see opportunity and you're successful, then it kicks in. And then I got to put the reins on them to go relax a little bit, because it's called dollar cost averaging for a reason Over time you're not going to have all the money you want to invest this year. So if you got $500 a month, that's $6,000. Your dollar is stronger when it's longer, so that means you have to wait for opportunities. So that whole thought process is what happened. So we got guys.
Speaker 2:I would say my line of percentages over the last three years are between 80 and 200 and something, something like maybe 230, 240. My son has the best because he has me, but so I don't even mention him, but he's like 270, but no one cares about it. They love the fact that I'm in the lead. Obviously I'm up 300 something, but I'm supposed to be. I follow my own lead, but with the difference between the people on the lower end to the higher end of the spectrum is how you listen. So if you listen at the speed of coaching, you're OK. You research at the speed of light, you're OK. If you're a person that's kind of let life and everything is about what's happening, then you're going to have, you know, your account is going to pretty much suffer because you're not on that discipline, you're not on that consistency. So that's the whole thing, right there.
Speaker 3:So how many hours per day would you say you spend in the stock market, making trades or just?
Speaker 2:researching. Yeah, I was going to say I'm a long-term investor, so I don't do any trades, I'm just buying when I get my liquidity in. So as far as hours researching, I'm always looking at the market. I just started doing my research meeting, which takes about two months, because I always have a question to answer in that meeting and by the time I'm done it has to be fully understood by everybody so everybody understands what they need to do for the next two, three, four quarters, that type of thing. So I spent a lot of time doing research. Now the business is here. I don't think I sleep that much. I probably sleep maybe three and a half to four hours a night.
Speaker 3:And then, is there a certain amount that you like to invest, since you're more of a long term investor, as you mentioned. Is there a certain amount, like per month or a week, that you'd like to add into the stock market? All of it?
Speaker 1:Do you have a recommendation for somebody as a percentage of their income?
Speaker 2:So again, I can't recommend. But I would say this I you know there's two trains of thought. It depends on how liquid you are. So if you're just starting out, for every dollar you make, a third should go into the market like $0.33. $0.33 for you, $0.33 for your investments, 33% for your bills, because you've got to live your life too. You can't just be all word and play right, you know. But if you're someone like me, it's 95, 5. Because if you can live over 5% of your income, why are you holding on to 95%? Just to look at it, it ain't doing nothing. It's like they say cash is trash.
Speaker 1:So Nick and I are both real estate guys. We own a bunch of real estate. Are you doing any real estate investing as well, or are you just strictly on the market? I'm strictly on the market now.
Speaker 2:You know later on when I need I have an S-Corp, so unless I take the money I don't have that type of tax consequence. But later on I'm going to need to get into real estate just to get some of these. Like I pay a ton of money in taxes every year.
Speaker 1:So yeah, that's what we always find interesting about the guys that are in these like places market lending, whatever that's making a significant amount of cash and don't get into things like real estate where we have cost seg studies where, like, we can make a million dollars a year and we're not paying nearly anything. For a while at least, you could defer it, for God, until you die, almost you know. So, like, what keeps you out of buying real estate? Cause we're like that's, we're like you know, I would say, 90% real estate and 10% in the stocks, because we don't pay taxes, Like I don't want to say that. Like well, irs, come after you.
Speaker 2:No, they know the rules. They wrote the rules, so they understand. Yeah, I would say to you this there's two reasons. Right now, liquidity goes into the stock market and the business, so I have to build to my revenue base. I just started right. The other thing is that it's always been my wheelhouse. For instance, if you bought a house for a million and let's say you were not investors, because it's different, and let's say you bought a million-dollar home and you paid cash for it, what do you think that?
Speaker 1:house is worth in 20 years? What Three, four, yeah, I mean I figure if it's like two to two percent a year, right?
Speaker 2:confidence. So let's just call it three million to be safe. Three and a half right. That same money at 10 would be worth around 17 million, unless you sell it. You don't have any consequence. That's what long-term investing is 20. When you give up to the old government, I gladly give you 20%. Here you go, I'm still net. Net $14 million.
Speaker 1:Yeah, I guess our argument and Nick can probably weigh in on this as well is like yeah, we might have bought that million-dollar asset. From our perspective, we're only really putting down maximum 200K. We're controlling that asset at a million and in our situation there's other people paying the mortgage. So we got somebody paying the mortgage. We only put a fifth of it down and in some cases we don't put anything down. Well, we put something down in the beginning and then we refinance after we do the renovation and we have no money in the game and we own the asset. We have no money in the game and we own the asset, our tenants are paying the bill and we still get that two percent appreciation. So arguably, with the cash flow, the appreciation and the tax benefits, we're almost at the same number no, you, yeah, I get it.
Speaker 2:I, I totally get it and I don't disagree. That's why I said that's a for me. I got like okay. So when I owned a mortgage company, my buddy, jim Sullivan we became really good friends. I was his mortgage broker. This guy had a hundred properties and I was doing like two refinances for him a week and now he's my poker buddy and he's pretty well off at this point. But the whole deal was, he said, hey, you always need to get into real estate.
Speaker 2:But again, stocks were my thing. You know, like everybody talking about what stock right now? Nvidia, oh, nvidia, nvidia, nvidia, ai, ai. My son's had it for six years. You know this guy's got a quarter ticket in his account on that stock alone. He's five right. So what happens when he's 18? You understand.
Speaker 2:So if you think about time value on money, think like this my parents if they would have just bought $2,000 worth of McDonald's when it went public in the 60s it's $20, I think it went public at that they would have 74,000 shares today, which would be about $18 million over $2,000. This is the point I'm reaching. So, while it's, here's the other thing and I find it very interesting it's never me against you, stocks against real estate, it's both, because I'm sure if you knew how to do what I do, then you would. Yeah, you don't have to pay taxes on the money and you have long-term capital. You would never touch the money. Keep the liquid funds that you need to do your deals right Free. You got your tax shelters going on and you're making that money dance. See you later. Goodbye, and you're not thinking about it because I mentioned the word conviction. That stops emotional irrationality, that behavior, because if you know, it's like, let's say, your shoe size is a size 10. Someone comes to you and say you know you're a nine. It's silly for you to think you can tell me what size my shoe is. Sir, right, and they're arguing with you. It's almost like the argument between jordan and lebron lebron, but only sillier because you know you better than anyone knows you. They can't tell you nothing. So you have that type of conviction and the data sets to know this makes sense. It's like swing it to a macro conversation for two minutes.
Speaker 2:So pre-pandemic, there was about a little over $3 trillion on the Fed's balance sheet. Now it's 7.3. Well, there's still a lot of liquidity in the system, but the Democrats in just the market as a whole want lower interest rates. Obviously it's going to help the president. Let's get to the real deal.
Speaker 2:Lower interest rates creates liquidity and also can create inflation in this environment. You knowflation is when you have too much money chasing too few goods, so it doesn't make sense to lower interest rates, but they're on them anyway, right? So the way I look at it is, if you understand just where you're going, like, for instance, we're in a bull market. Bull markets typically last five years and change like 5.4 months that type of thing, right. A recession typically lasts like nine months. So I'm happy to get a recession because again you get wealthy. In down markets you get up and rich. But most people don't really understand it. But if we're going to start lowering interest rates now without all of this money coming out of the system, we're just going to end up raising them again. It's going to be a seesaw, right.
Speaker 2:And not to mention, no one's ever talking about balancing the budget. I think the last time the budget's been balanced was Bill Clinton was in office. He was the first or second president to do that. I think Lyndon Johnson was the first. So it's all of this. We have $34 trillion in debt. We have about $27, $28 trillion in GDP. We got about $1.2 trillion in deficit.
Speaker 2:How do you figure that out? And then you got to look at the market. How is the market, the market, the stock, is the fishbowl. You're sitting in that stock, but the fishbowl is the macro environment. How do you make money in this market? It's like you being in your area. You're a shape of city right now. Why? Because not enough supply. So you're king, right, that's just how it is, and interest rates are horrible right now, but the reality behind it is no supply. So in Florida, you saw a lot of people come in institutional money buying single family homes. It's a cash cow for them, right. So, but if you don't understand the macro and the micro environment, you shouldn't be investing in stocks. You shouldn't be investing in stocks. And so if you don't know this and don't have the time because you're busy, okay, s&p 500. Just leave it alone, just dump it into that.
Speaker 1:The Warren Buffett way? Yeah, just if you put it in there over time. That's what you do, right, that you just put it into the S&P, and time is your friend and that's what it is, that's it.
Speaker 2:It's 10.5% over the last 90 years.
Speaker 1:Yeah, so let's give me like a little pitch on investment, dojo, your app and kind of like that part what, what is, what is it? An elevator pitch on what it is and then how people can kind of get involved in and why should they?
Speaker 2:Okay. So it's a simulator, stock simulator. It is created so you can get your first entrance into the market. It's a moderated game by myself and my coaches and it's a lot of fun. It's edutainment, it's addictive and you learn a ton and if you qualify, you have an opportunity to get coaching so you could take that fake dollar real emotion and turn into real action.
Speaker 1:Okay, how about that for LLB to pitch? I like that. So it's funny. I'm going to do a quick.
Speaker 1:Like how we started is that I was a public school teacher at one time in my life and started investing in real estate and next thing you know, I didn't need to be a public school teacher anymore. But at the end of my journey teaching, teaching kids I was teaching a lot of inner city kids, I I at my last year I was making a lot more money in real estate than I was being a teacher, obviously Right. So that was my, my final kind of goodbye. I was teaching gym but I actually started teaching investments to these kids and why I'm not going to be teaching them next year and how much I made in the teaching world to how much I made in the real estate world. And I got with Nick because he was doing a YouTube channel kind of teaching how he scaled to zero to now like 100 properties that he owns in a short period of time and I was I wanted to always get into that's what led to the podcast is I wanted to get into financial education for kids and this is like the perfect kind of game, because it's like gamifying, something that kids don't learn in school.
Speaker 1:And I was saying, you know, a kid would ask me why don't the other teachers tell us about this? And I'm like you know. I want to say, well, it's because they're broke, because they don't have money to invest. That's why, and unfortunately, a lot of the kids that we taught their parents didn't know how to invest either, so they didn't have anywhere to learn from, and whether it's real estate, stocks, cds, anything, they didn't know anything. So this is like a perfect game. Is it anything? They didn't know anything, so this is like a perfect game. Is it all ages?
Speaker 2:anybody can come in and play, or I make it for this. It's 18 and above right now, but 13 year olds of supervision can get involved. Um, because there's a lot of social media. Um, you know components to it. You can group chat, so we don't want bullying and things like that. Kids are not as nice. Right, I can tell an adult, do it, I'll delete them, but you don't want to hurt a 13 year old's feelings, so so different. But my thought process is I teach the parents, because the apples don't fall from, you know, from the ground, they fall from the tree. So what we do is this, and this is the cool part about it Are you competitive? Both of you guys are probably extremely competitive. Yes, absolutely. So let's just say, we took your YouTube channel and we did a battle between you and him and, let's say, a thousand people joined. They're in the chat. It's the sickest environment ever Because, guess what, when you see emojis and memes, you see people's emotions and then, if they're losing or winning, they start texting and saying the craziest things.
Speaker 2:And then there's this leaderboard. And that leaderboard, yeah, we could make it every five minutes so it updates, but we don't. We make it update at 12 and at four. Why? Because we make you work for it. And then at 12, you see it, oh God, I'm ahead, oh God, I'm not there. And then guess what? The person who's ahead lays low the person that's down. They press.
Speaker 2:So what happens at four is that the person who thought they were in the head and they took their foot off the gas, now they're behind. So now you have a thousand people in this environment and then we're in there seeing the stock go crazy. So now here's the other deal. We gamified it because we play in a 15 minute window. Yeah, we have real time games, but we modify, we moderate, pardon me, the actual game, right, it's live. So what happens is it's a 15 minute window. If you see Apple trading in the stock market at $200, then it's trading on the app at $195. You better hurry up and get it. It's only going to be there for 15 minutes. So now everybody's trying to find that window of opportunity and find these stocks to run up the score. You see people with a billion dollars in like a day, something sick, right. So now they realize well, this is not. It's about the competition, the camaraderie, the whole thing. And you're pushing and you're pulling and it's just the craziest thing.
Speaker 2:And then on Saturdays I have a Zoom meeting. I'm celebrating the top, talking crap with them, having a good time teaching the middle. I'm bringing the bottom to the understanding, and we're doing this for three weeks straight. And so what happens in that second week? It's like clockwork. I don't even sell anything, I don't say anything. Hey, do you coach? Is there any way you can? And all of a sudden I give them an opportunity to get into coaching. But here's the deal I don't sell it and you can't qualify just by being there. You have to qualify by a couple of things Relationship, because I got a five-month-old now and I got a five-year-old and it's about bringing the right energy around my wife. So I want to make sure, because I'm on Zoom, right, you're still in my household, right? And my wife doesn't want me to be upset because someone thought they had enough money or more money than myself, and I never told them what I had. So my mindset is relationship, suitability, coachability, right. And then you have to be disciplined and you have to be consistent to get a result in anything. So why not here? Right, and if they're right, I got people here for four years. They pay me every single month. I'm doing something right, right, but it's just. Yeah, so it's just a matter of time.
Speaker 2:But that became my funnel. It was weird how it happened, but it was the most fun funnel ever happened. So I called it edutainment. So what we're doing now is like I'm doing, have a influencer has 800,000 followers and I'm talking to a whole bunch of influencers.
Speaker 2:And I came about this strategy because of a company that I own, elf Cosmetics. They have a lot of influencers and they sell out an eyeliner in like three seconds because they put it across their influencer network. It just goes like this. It's like a launchpad. So I said, hmm, and I know referral. So the best lead you can ever have is a referral. I mean the best right. Because the cold call or the guy who would say, yes, I want you to do my mortgage, he will sell you out for an eighth of a percent, right. But the person that said, hey, I got a good guy. He's going to take care of you. Don't go nowhere else, go to him. He's going to get the business be able to take care of it. So I thought about it. I was like you know what? Influencer marketing is the thing I'm going to use to put games on. So now I'm doing fraternities, sororities. I'm starting that process right now. We just launched so all these relationships are procured Signed my first influencer yesterday and we're just kind of making it happen. So it's a great, great business plan to get there.
Speaker 2:But from here, you know, a streaming platform comes on top of it, like a Twitch style streaming platform, and then an educational streaming platform. So, for instance, you know, a streaming platform comes on top of it like a Twitch style streaming platform, and then an educational streaming platform. So, for instance, you've probably heard of, or maybe not, let's go, pete and Jerry, and I always use them as an example. They do options. So let's say that I get to a certain point. I'm having select because I used to be in the music business, as you know. I have all these relationships and I go listen. I'm having a contest with let's go Fat Joe and I don't know LeBron, right, and you got hundreds of thousands of people on the app now.
Speaker 2:But we limit the game to 2,000 because we wanted to make it special and we want to make sure that people play the game. But guess what, if I have a Pete Najarian come on and say, listen, I put it out to 200,000 people. Pete Najarian is teaching an option class for $40 the first 10,000 people. Well, what's that? Nothing. 10,000 people, that's $400,000. Pete Najarian gets his thing and the platform makes its money and we keep moving. I mean it's a great business plan to get to and we're working towards that.
Speaker 2:But the bottom line is that the game itself is a ton of fun. It's purpose-filled and I pride myself on not doing things for money because it doesn't make sense to me anymore. When I was a kid I chased it all day, but I found a way to rope it a little bit. So now I realize it's not as sexy as it. It's good to have for the family, it's a great tool, but it's not as sexy as I thought it was when I was 38 years old, buying like $600 shirts and didn't think about what I was doing with money, if that makes sense.
Speaker 1:Yeah, that's a good message for people as well. Just keeping your means I mean, I wear $10 t-shirts. Yeah, exactly Most of my stuff is branded with my company's names on it or something. So, yeah, I'm in the same boat and I think that was really what helped just living below your means for a long time and then eventually it pays off. But, man, kevin, we appreciate all your insight today and it's awesome. I'm going to have to check out the Investment Dojo app so, for all the listeners out there, check out Kevin Davis. Are you on social media, kevin? Instagram, anywhere?
Speaker 2:I'm on my YouTube Investment Dojo, my Facebook group Investment Dojo, my Facebook group Investment Dojo. I have my personal Instagram. I don't even start doing my Instagram. I have an Investment Dojo 2.0, but the real K-Y-Z-E is my personal Instagram, which is really where I post. It's really where I post and then probably have some more things that I'm probably not thinking about right now because I've written a book. I got a couple of things happening, but to find the app, it's an Apple, it's in Google Play. If you want to take part in a contest, join my Facebook page. I will definitely post links there. So right now I'm just focusing on large contests, but if I get enough people into the Facebook group, I'll do it. You know it doesn't. You know 50, 60, a hundred people, If you know you, depending on your audience size, if you want to do a contest, we can have some fun.
Speaker 1:Basically, All right, that sounds awesome, Kevin. Well, we appreciate your time today and for all of our listeners out there, we have our next real estate meetup here in Baltimore on July 18th. I don't know if this will come out before then, but July 18th, CVPs in Towson six to nine. We look forward to seeing everybody there.
