S2E46 – James Woodall – From high risk trading to low risk long-term investing

Key Timecodes

• (01:08) – James Woodall’s background history
• (03:43) – The difference between day traders and investors
• (07:57) – When did he change his strategy?
• (09:33) – The importance of paying attention to taxes
• (11:24) – Is he investing in individual stocks?
• (13:39) –  His strategy with stocks investing
• (16:17) – How he Helps his clients minimize risks
• (17:57) – When was his last investment?
• (19:03) – How old is his practice with that business model?
• (19:28) – What percentage of his income he invests every month?
• (24:00) – What was his biggest investment success?
• (26:56) – What was his biggest investment mistake?
• (27:53) – What kind of services does he offer?
• (31:26) – The challenges with high-maintenance clients
• (37:07) – The worst business or investment advice he ever received
• (37:38) – The best business or investment advice he ever received
• (39:57) – Get in touch with James Woodall

Transcription

[00:00:03.390] – Intro

Payback Time is a podcast about building businesses wealth and financial freedom. We try to uncover the challenges our guests faced, the mistakes they made, and the steps they took to achieve their goals. The overall objective is to provide you with a roadmap that leads to your own success. Sean Tepper is your host. Are you ready? It’s payback time. A lot of new investors in the stock market can be tempted to go after the quick buck with trading, but the reality is 99% of traders lose money. My next guest shares a story of how he got started in the market, as well as how he transitioned to safe, long term investment strategies and even became a financial advisor. In this episode, we talk about what strategy he uses today, how he’s handling the current bear market, his biggest investment success, his biggest investment mistake, and how he helps his customers navigate uncertainty. Please welcome James Woodall. James, welcome to the show.  

[00:01:10.180] – James

Oh, thanks for having me on, Sean. Really glad to be here.  

[00:01:12.540] – Sean

Glad to have you here. So why don’t you kick us off and tell us about your background.  

[00:01:16.410] – James

Yeah, so that’s kind of interesting background from a point of view of wealth manager. So getting started in this originally I was actually in engineering in college and did all the fun classes like Cal Three, Physics Two, and realized I was terrible at them. So changed my major to International Economics and finance. And when I did that, I took a class, basically agriculture school of all places, about futures and commodities trading. And basically from there I learned how to trade the futures and commodities market from doing fundamental analysis to technical analysis, and I had no idea what I was doing. There’s a lot of guys in my class that are literally cotton farmers because I went to Texas Tech and love it, has all the cotton in the world. So I basically didn’t know what I was doing was trading cotton futures. But I started trading SP 500 futures and started kind of picking up on that first semester and did pretty well, made out of 300% return in about a month, which is great, but then I realized it was a real month, so I was kind of bumped to myself. But I used that knowledge and I started looking for a job as soon as I graduated, see what I could do.  

[00:02:23.650] – James

And I grew up in the oil field. Hey, let’s try this financial sector out for a bit, see what happens. And so I ended up taking a job basically working in the tax and cost basis department at a large firm. And it was kind of interesting with that job because I sat at the very end of the investment spectrum, where I saw what worked, what didn’t work, must have seen hundreds of thousands of accounts and saw people that are trying to day trade weren’t doing as well as to let the boring mutual funds that were actually just knocking out the park. That’s when I started working with the family office style of people, and it’s always a hard ask them questions and learn what they did. So from there, I moved on to a product development analyst role, where I kind of worked with advisors directly to see what they wanted to see on the tools. But also I was asking questions that I’m passionate about it. And then one day I said, hey, you know, I think I’d be an advisor myself, and there’s like, a light bulb went off stress away from my back, and then I went full throttle to being an advisor.  

[00:03:22.320] – James

So I’ve been doing this now for about seven years with about a decade of experience in the industry, just seeing what works, what doesn’t work, and been off to the races and started the firm recently. And we’re basically building family offices for individuals and families that may not have the $50 million minimum to have that. So we’re building it for the normal folks.  

[00:03:42.730] – Sean

Sure. Well, thank you for telling us about your background. I really loved a quick comment there on the day traders weren’t making money, but it was the people with the buy and hold strategy that were crushing it.  

[00:03:53.800] – James

Oh, absolutely. There was an individual, I’ll never forget this. It was he bought a dividend growth mutual fund in 1992, I think, and this is about 2012, and he was getting $30,000 dividends twice a year. Didn’t do anything but put $7,000 in and just got that exponential growth, not compound growth. That’s when I saw it physically with my own eyes. What? You hear Warren Buffett and, you know, all the guys are always quoted, you hear it, but when you physically see it, you kind of go, oh, no, I get it. And that changed my tires on the block.  

[00:04:28.260] – Sean

Nice. Yeah. Within our Tykr onboarding, that is one of the things we call out because there are people who are a little confused on the two. They can get them kind of intermingled. And we are all about investing, not trading. The statistics are there that most traders lose money. We’re all about the buy and hold strategy, and I know it’s not glamorous upfront because you’re putting a little bit of money away every month is the goal, obviously. But over a few years and then over a decade, that’s when you kind of you want to go back in time and thank your younger self or, hey, thanks for doing that because my life is a whole lot better right now.  

[00:05:04.140] – James

Exactly. It’s not exciting. And I think that’s that trend I’m trying to really knock down I believe you are. As well as what you’re seeing on TikTok and Reddit and other people saying, hey, I made X amount of percentage. Well, what about the people that lost all the money? You don’t hear from them. You really don’t hear about them. A lot. And that’s the one that you got to worry about a little bit. Yes.  

[00:05:23.800] – Sean

And the ones that do, you know, along their journey, they either had a really big loss they’re making up for or that big loss is right around the corner because of what is Old saying, pride comes before the fall. That moment is about to hit.  

[00:05:38.210] – James

Oh, yeah. This happened to me and I’ve seen it happen to others. Don’t be greedy. If you have an investment strategy, stick with it. That’s why it’s a strategy.  

[00:05:45.960] – Sean

Yeah, right on. Well, before we jump into your practice and how you help your customers, what I’d like to do is talk about your journey a little bit more. So it’s really good to know you worked as a professional in this space, commodities futures, when you got into an analyst type role. But let’s talk about specifically, when did you start investing in the stock market?  

[00:06:07.260] – James

So I want to say I started myself personally right out of college because then I finally had money to afford more than beer and groceries. And so I started trading the company I was at, and I started investing in being stupid because I had my four hundred and one K and I was putting money away and not letting the company get that taken care of. I was thinking, I’m a day trader, I can do this. I’m smarter than everybody else. I was trading penny stocks and got burned multiple times, but I was also buying good quality companies at the time. GE was a pretty good company, sure. But I realized I didn’t have enough money to truly invest. What I mean by that is I was putting in like $25 at a time. And while it’s a great place to start, especially now, I feel like the industry has really built out products that make that happen. I was buying a handful of shares, and it’s great that I made a 50% return, but it’s only $12. How much risk was I taking? Where is my money better spent to do something else? And honestly, the stress of the time, I was being distracted from my job, too busy looking at the market, trying to follow the technical analysis and make that quick extra buck.  

[00:07:16.710] – James

And honestly, I lost the money the entire time.  

[00:07:19.650] – Sean

Wow.  

[00:07:20.610] – James

So I got tired of doing it that way.  

[00:07:22.830] – Sean

What year was this around?  

[00:07:24.460] – James

I say it’s around 20 12. 20 13.  

[00:07:28.380] – Sean

Post recession. Got it.  

[00:07:29.860] – James

Yeah, definitely post recession. But it was because it’s trying to time the market. I said, I’m going to buy this and I think this news is coming out and reality is already probably priced in at that point. So that’s why I wasn’t buying good quality things. I was trying to follow momentum, follow those rates.  

[00:07:45.300] – Sean

Got you. So you started with penny stocks. Fun. Because there’s a lot of people that join Tykr that have been there, done that. Now they’re like, now I want to actually take this serious and make some real serious money over time. So when did you kind of change your strategy and what did that strategy kind of turn into?  

[00:08:02.890] – James

So that’s probably changed my strategy. After. I remember American Airlines. I worked in that Cost base department. That happened. Remember, that was a company that’s effectively bankrupt, that went into the S Amp P 500. And all of a sudden people are calling complaints that they made too much money and they face taxes on it. And I went, well, this is interesting. Why is this happening? So I started looking around, what’s going on? What am I missing? And I realized I wasn’t diversified enough. So I started looking at mutual funds and ETFs where I would dollar cost average in there a lot. And then I started learning more about the mutual fund. So everyone talks about the S Amp P 500, but then I learned about smaller companies in the small to mid cap range, particularly the ones that are values, so that those value based companies are typically underpriced good performers. So I started changing my investment strategy to see, OK, especially time the financial crisis was close enough, where the manager was typically the same, who was performing well, who was doing good. And that’s how I started changing my strategy. And I found mutual fund managers that were doing the same thing to where I could have them do it for me.  

[00:09:13.150] – James

Essentially why I focused on my career. And so effectively I can have more money continuing to grow my career, to invest more in the stock market and get that accounting return. And that’s really where I changed it. And then also continuing to try to max out my 401K. That was a huge part of it. That’s when I started learning about how taxes can eat to you live at the end of the day if you don’t really plan for it.  

[00:09:33.610] – Sean

Yeah, I love that strategy. There two great call outs. One is pay attention to taxes. There’s a lot of people that don’t think about that. And then two is the maximizing of the 401K. Especially there’s certain people out there in the market that will say, well, four, one K, I’m not going to do that because the fees or whatever issue they run into. And it’s like, hey, if you can get a company match that’s free money coming into your account, it’s substantial.  

[00:10:04.450] – James

I was doing the math for some of the other day, so we think about time and compounding interest. Like that guy was getting the $30,000 dividends. So I was doing this with a client where she’s 34 and we typically plan the age of death 94. She said, Well, I don’t really need the retirement money for me if I want to get to my kids. And she had issues with insurance. It’s like, well, here’s a cool story. So we said we put in $6,000 a year, and you get an 8% return, which is effectively we save the S Amp P 500. When you pass away, that’s about $7 million. Substantial sum of money. Well, if you think about even further, you have ten years on, because of the rules of retirement accounts, is you have to take the money out, ten years, and we tell your kids to plan out that you’re not going to touch that money for ten years. That $7 million becomes $17 million. How crazy is that?  

[00:10:52.920] – Sean

That’s compound interest at its best.  

[00:10:55.330] – James

Exactly. I was like, as the rules aren’t today, things may change 60, 70 years on the road, but that’s $17 million tax free for your kids. What’s that going to do with your life? Imagine getting a chunk of change. How does it change the trajectory of your life?  

[00:11:09.220] – Sean

Right. Beautiful. That particular client of yours in great position, long term horizon, really thinking ahead. Probably has a stable income, strong financial acumen, checking all the boxes.  

[00:11:24.190] – James

Exactly.  

[00:11:24.880] – Sean

I’m curious here because Tykr is all about investing in individual stocks. Do you invest in individual stocks yourself?  

[00:11:31.560] – James

Me personally, I don’t. And the reason why is that, honestly, I’m so busy where I put my time to be the best. Although I do have clients that have very large single stock positions.  

[00:11:43.210] – Sean

True.  

[00:11:43.480] – James

So I’ll do the research for them. Understand. What are we going to do, where are we at? Typically, these are folks that worked at these companies, so when it comes to single stock positions, it’s okay, where do we and a lot of our cases, because they’re older, how do we manage the risk? What happens if 50% of your portfolio is one company, and while they’re a great company and you’ve been with them for years, I don’t want you to live and die by them. So typically I’ll do a lot of research on them, understand where they’re at, and I’ll ask them, what’s your thoughts and feels on the company? What do you know? Because they’re going to be more intimate with it at that point while they’ve left. They know the culture of the company better than any recording can typically find. But that’s also the thing. And then we start looking at how we protect that by using options to protect the downside or anything like that. But I’m trying to look a little more into as well with individual companies. I just haven’t gotten to the time to do it yet, to be honest with you.  

[00:12:37.510] – Sean

Sure not to sell the platform, but Tykr will be a big time saver for you.  

[00:12:42.180] – James

I’m really curious about Tykr.  

[00:12:43.830] – Sean

I’m curious.  

[00:12:45.010] – James

I’m not even like, lying. I’m definitely going to be checking it out later today and see how we can incorporate it into my platform, because there’s a lot of different opportunities with individual companies. I’ve seen a lady, she had five or six companies. That was all she had in her portfolio for 30, 40 years. And it was actually kind of a challenge that we had because she bought very good, high quality companies like Apple. GE was one of them, I think. I think she got amazon was very uncomfortable. Yeah, but the challenge was right because she wasn’t rebalancing effectively or dollar cost averaging. It was, well, we need to sell one of these shares for you to fund your income. But the tax burden is so high, is how do we do this? Smart man. So it’s a different challenge 30 years down the road, 40 years down the road. So that’s why the rebalancing really does make sense and always have those additional lots.  

[00:13:40.500] – Sean

Before we move on to some of the other questions on your investment journey, let’s drill into that because there are people that they do have just a bundle of stocks. For example, with Tykr, I’d really take this advice from Warren Buffett and it’s worked out really well to keep a really focused portfolio, like about ten to 15 stocks. I hold about ten right now, but there’s people that have less, maybe a little more, and some of their holdings get big, like really big, like Amazon, for example, or Tesla. I’ve been in a few people there. Tesla has taken up so much of their weighted allocation. What do you do in those circumstances? So with this woman, can you walk us through? What did you do for her?  

[00:14:18.750] – James

So she had a unique situation. So if you’re looking for income, let’s say, let’s say a Tesla, for example, I have some friends at Tesla and they have the same situation. Well, I need income. Well, how do I start generating income? Do I sell these stocks and have a massive gain and pay taxes on that? Or you can also sell underlying options. So I like options, dividend, point of protection and income generating. So if you sell a call option, you’re making a premium on that payment, that’s going to be your income, especially for these large stock positions. And that’s a great way to generate income. And then if you randomly get assigned and it’s entirely random across the industry, there’s no if this or then you can generate income through there. If you get assigned, you give away your shares, you’re fine. Tax burden is usually pretty manageable. Another thing to do as well is to buy put options because you want to protect that downside risk. Because let’s say that a terrible example, but let’s say Elon Musk all of a sudden had stroke. He is Tesla, tesla is him. That’s a large risk factor.  

[00:15:21.450] – James

So you need to protect that downside by having those put options because once it goes down, you can buy it again. A couple of price and you protect you still keep your essentially asset level. That’s a big thing to do. It’s very common across the industry. I learned actually, the family office folks that I worked with early on, they didn’t lose money. And that was how they did not lose money, was by protecting I love it.  

[00:15:44.980] – Sean

Two points extract there real quick. The last one is Warren Buffett’s rule. Rule one, which Phil Town speaks to a lot. Rule one, don’t lose money. Rule two, don’t forget rule one.  

[00:15:55.910] – James

Exactly.  

[00:15:57.490] – Sean

One of my favorites, one of my.  

[00:15:59.320] – James

Favorite things about Warren Buffett Two was I heard this recently. I remember I read one of his books in college was I always say about Mr. Market. Have you ever heard that? I love Mr. Market. It was like, don’t get ahead of a crazy person. Just understand they have their good days and bad days. Yes, they’re pretty good. And they just find the ones that are really good for you.  

[00:16:15.820] – Sean

Yes. Nice. And thanks for pointing out your interest in options there. I do try to steer a lot of customers or customers away from a lot of options strategies, because there’s a lot of risk and you can lose money. But you did mention selling calls. You referring to covered calls, correct?  

[00:16:34.690] – James

Covered calls, yes.  

[00:16:36.340] – Sean

Love that strategy where you sell at a strike price. Just to summarize for the audience right here, if they don’t already know you sell at a strike price, let’s say a stock is at $100. The strike price is 105. If it never hits 105 over a duration of, let’s say, 30 days, you get paid a premium. In other words, you get paid money just to hold that stock. But on the other hand, if it goes from 100 to 105 and 30 days, your shares sell. In other words, you make money either way. It’s just the second way. When it sells, that’s when you’ll have a tax event to think about. Not a big deal, but it sounds like you and your customers, you do smaller contract sizes, so it sounds like the whole nesting, if you will.  

[00:17:19.410] – James

Exactly. Because what could happen, too, is depending on the volatility in the markets, like what we’re having now, those option premiums can almost be the point where if you’re selling, it’s pretty good, but if you’re buying, it’s almost like you’re spending so much money to protect against some downside risk that it’s not worth it. So that’s also the game you got to play to how much are you willing to watch drop? How much are you willing to protect the downside again, because the closer you are to that strike price with the current price and the more you’re going to pay that premium.  

[00:17:48.360] – Sean

Yeah, nice. That’s great. Definitely safer option strategy right there. Not some of the high risk stuff you hear about. Exactly. All right, so let’s keep moving on. Your next question is when was your last investment? Are you investing every month?  

[00:18:05.260] – James

Yes. So I still invest every month even though I’ll get the company started and a lot of investments on the business itself, I’m still a big believer in dollar cost averaging. So right now it’s a lot lower amount that simply just goes into a rock and a we’re putting it in there and just putting into the market. So I’ll look at the market today, we’re down one and a half percent. This is going to be a good day to say, hey, let’s go buy some things for cheap. But I would say there’s blood in the water. It’s a good time to buy. And everyone always looks back five to ten years on the road and go shop, right?  

[00:18:38.960] – Sean

Yeah, exactly. We’re big on that too. Right now is the best buying opportunity we’ve seen since 2008. Prior to that would have been the.com bust you could count. Like Covet had the short dip in 2020. Really short downturn, had to act. That was a good one too. But good to hear. You’re buying now with your stocks are buying now. You have a unique situation because you have a business. How old is your practice, your own business?  

[00:19:09.850] – James

So we’re about a year old.  

[00:19:11.460] – Sean

You are okay right there.  

[00:19:12.510] – James

Yeah. So firms very new which is great because it allows you the flexibility to do these things, do the podcasting, everything.  

[00:19:19.680] – Sean

Sure.  

[00:19:20.310] – James

So the firm’s definitely new. So certainly taking advantage of the tax point of view on that income. So that definitely helps.  

[00:19:27.360] – Sean

Got you. No that’s good to know. And even though you get a new business, a new service business, you are still investing. I’m curious here, what percentage of your income do you invest every month? Would you say 5%?  

[00:19:41.260] – James

It’s a lower amount for sure. Because let’s look at the real picture of it is it’s a new company so you have certainly cash flow and also you have crazy inflation right now. Still doesn’t mean you don’t need to be investing and still taking advantage of it because that’s how you build wealth is got to be disciplined. I do this with my clients where we have automatic drafts. Go in and automatically message the portfolios. Because once you make that one time excuse to not do it, they’re saying, well, it’s not the right time to do well, I don’t want to do it tomorrow. I think the market is too high now. You never know where it’s going to go. That’s why I got to stay disciplined.  

[00:20:18.090] – Sean

Stay disciplined. Keep it’s everything, keep on yeah, that’s the thing. Customers all here. They’re sitting on the sidelines. And I’ve talked to brokers actually, it’s a problem they face. There’s a lot of investors, they’ll join, they’ll put in between like $101,000, and they’ll sit and they’ll think, I’m going to jump in now. It’s like sitting or standing on the edge of a swimming pool. I’m going to do it now. And then they wait four weeks or six weeks. Okay, I’m going to do it. No, I’m going to wait. I’m going to wait another four weeks. And then three months, six months, twelve months goes by and they barely put in any money in this big opportunity cost of them sitting on the sideline and not getting in the game.  

[00:20:56.940] – James

The opportunity costs right there. And I think that’s something that people talk about enough is like we’re talking about earlier, right? The Roth IRA that time. Well, you’re still losing that time and maybe you’re buying things maybe a little bit too high, but no one’s good at timing the market. And the unfortunate thing is typically people south bottom, they start panicking. March of Burnt Kovan I don’t forget people is right near the bottom and people are panicking. They say, Turn off the news, turn off the news. You’re going to be okay. I promise you’re going to be okay. And those that stayed, thank you so much. Those that just cannot handle it, that were just two people, right. It happens to the best of us. We’re so ingrained into the end of the world. They sold everything and unfortunately then it became, well, now what do I buy back in? How do I be right twice? You might get lucky every once in a while, but unfortunately it doesn’t matter, right.  

[00:21:49.710] – Sean

Your best bet is situations like that. And we’ve done our homework, especially. I was looking back and I found an article, I think it was from either Forbes or CNN, but it talked about over the last 100 years, the last 19 major bear markets. Average length is about nine months. So that tells us like, just hang on, just ride the roller coaster down a little bit by what you can, but just understand this is not going to sustain to the end of time, right?  

[00:22:18.940] – James

Yeah. And that’s why I tell folks it’s like the number one biggest behavior states in the future because you’re investing, you’re not speculating or not gambling. You’re investing in good companies that are smart. These guys are smart, they are adaptable, they can adjust quickly. And then those that are very good companies will do well. I think after the average return on a bear market is about 20% for the next year or so after. So that’s where a lot of my folks are now doing Roth conversions because you still have the same amount of shares, taking less money over, being very efficient, and they get to enjoy that ride up. And now with the new law coming in, I think they’re going to try to raise up to 75 for your required minimum distribution. Your tax rate is going to shoot dramatically. You’re going to be losing more money overall because you have to pay tax.  

[00:23:05.130] – Sean

Right.  

[00:23:06.340] – James

Be smart and be and take advantage of these times you can, right?  

[00:23:10.030] – Sean

Let’s take a quick commercial break. Have you ever lost money in the stock markets? Maybe you heard or saw comments on YouTube, TikTok Reddit or another social platform, or maybe you just received bad advice from a friend. Yeah, I think we’ve all been there. Most people lose money in the stock market because they make decisions based on emotions. What if you could remove emotions from investing? What if you could make consistent returns in the stock market based solely on logic? And what if there’s a software that handled that logic for you? Introducing Tykr, a platform that helps you manage your own investments with confidence. Get started today with a free trial. Visit Tykr.com. That’s t y kr.com. Again. Tykr.com, can you share with us your biggest investment success over the years? Was it maybe an individual stock or a mutual fund or maybe your own business?  

[00:24:09.720] – James

It was actually my house, to be honest with you. I had two good ones. So I bought into a mutual fund in particular that shot up tripled in price within two years. Tesla is a big part of that. When Tesla was shooting up, then I sold it at the high just because, you know what, there’s too much risk. I don’t want to do risk. I got very lucky. I’ll be the first to say it, but I did very well in that. But also with my house, I knew looking at the fundamentals of where I was living, that everything was moving out west, that I had a property that had a larger yard in the neighborhood and effectively doubled the value of my house 40 years.  

[00:24:49.240] – Sean

Wow.  

[00:24:49.620] – James

So sold at that point, did okay on it. So that’s what’s helping fund the company and got moving from there. Also thinking about the 401 case, just honestly think about that, how much I put in there. Thankfully, the company mass huge and just really boring. Consistent investment in the first year, you don’t see anything. And then it’s the second third year you start looking back. Year five, you go, oh, this is kind of cool. And you get that snowball effect. Nothing to keep doing that. Those are probably been my best ones. I think some others that are not that surprising.  

[00:25:20.520] – Sean

Those are pretty good.  

[00:25:21.450] – James

Yeah, that’s pretty good ones.  

[00:25:22.780] – Sean

Worked out with the real estate one that’s I hear people all the time talk about, oh man, I should just sell my house right now. But the issue is wherever you re enter, that price is inflated as well. So what did you do in that circumstance? Did you go to like a rental situation or you just downsize your house or what did you do?  

[00:25:43.650] – James

Yes, I went and rented Lost. I kind of work out of it as well, because what I realized was when I bought the house, I went, okay, I’m paying so much money in rent that I got mad. I was actually kind of like kicking things off all grumpy and everything. So, okay, let’s go buy a house and end up being cheaper to buy a house. And I thought, okay, if I break even on the house, at least get my money back. So I did that. Start investing it or renovating it and then sold. It to. The question is, where do I go next? But I knew buying that house is an investment. It was not a home that I was buying, and that’s how I treated it. So I knew that, hey, I’m going to sell this to do something. I don’t know what. You have to do something and end up being starting my business. Right. And so that’s how I was finding everything and getting it going from there. And it’s a tough game because like I said, where do you go next? And that’s a very hard thing, especially here in Dallas.  

[00:26:35.290] – James

At the time when I sold my house, it must have had 30 offers on it within the day because there’s just nothing available. But now with the interest rates rising, it looked pretty good. Now it’s like, hey, where are we looking around next? There’s a lot more homes for sale, and people are really ready to get over the best liquid assets. Right.  

[00:26:53.400] – Sean

Right on on. Thanks for providing context there. Let’s flip that equation here. Those are some of your best investments. Can you share with us one of your biggest investment mistakes or something you aren’t so proud of but would be willing to share?  

[00:27:07.420] – James

Oh, absolutely. So I thought I was really smart and started buying triple leveraged ETFs. So I bought the S Amp P 500 triple leveraged ETF. There’s a handful of out there, so you all can kind of figure out which ones they are. Part of that was doing okay on it, and then I got greedy and having exit strategy up quite a bit, looking at the technical analysis and thinking, okay, maybe it’s time to sell. But I got greedy, and I probably lost all my gains and then some within two days.  

[00:27:38.760] – Sean

Wow.  

[00:27:39.480] – James

So that’s why I kind of learned, hey, don’t get greedy, kind of reiterated, don’t get greedy. And then also have an exit strategy, have a plan, no indicator costs because it can bite you.  

[00:27:51.010] – Sean

Right. Thanks for sharing that. Well, let’s talk about your practice a little bit. What kind of services do you offer? What do you do for your customers?  

[00:28:00.860] – James

We’re a full service financial firm. So what we do is basically here’s kind of story, how it works. I chat with clients and understand where they want to be. If it’s a business, generally speaking, we work through retirement plans, how we build retirement plan for your business, taking those gains out or any employee benefits. But when you’re an individual that happens to own one, what we do say, okay, let’s go build you a family office, and what does it start with? So it’s, what do you want out of life? So I always ask people three very difficult questions, and very quickly they are, if you win the lottery, what’s your life look like? Let’s say you win the lottery, but you have five or ten years to live. What’s that change? And let’s say you win the lottery, but the doctor missed something. You’ll have a day. What does that look like? Because I want to know the values that you are based on. And then once we understand your family values, once you run out of life, we start building a plan around that because there are times that happen where maybe you do want the house until you ride, but maybe you can’t afford it, but you want to be in the mountains.  

[00:28:59.370] – James

You want to be able to go spend time with your family. Where’s the next best option? So I built a plan around that and then from there it becomes, well, let’s go get the investments to match. What your risk tolerance is your time horizon. So building custom portfolios from there, as well as understanding how to get the rest of the family and building the estate plan. And then something that I’m really excited to start doing this year is having the family retroactive. So like software sales, right. So we’re doing agile planning. We reflect on the year, reflect on the Sprint. Same thing when we’re doing financial plan. And I kind of like the end of the year, thanksgiving and Christmas is reflect on time with the fans, what worked, what didn’t work, what do we need to change? And that’s a little bit more unique about what we’re doing because we’re living more focus on the family relationship and just trying to sell you a stock.  

[00:29:47.070] – Sean

Right. I love the screening questions right up front to understand the values, you know, who you’re working with, then that’s smart.  

[00:29:53.910] – James

It’s a fun when I did them last night, we had a late night conversation with some friends and everyone’s crying. I mean, you’re crying a lot. It can be very emotional. It’s very fascinating to see what happens as you kind of go through that process, because we’re people, we skip ahead. We think, okay, I’m going to win the lottery, I’m going to do this and this, but I’m going to go make a million dollars in my company. That’s awesome. But let’s walk through the steps of getting to that point first. And then once you kind of realize that you can really build a plan, they understand the values and what and maybe they reflect it too, because maybe they haven’t had that conversation.  

[00:30:28.270] – Sean

Sure, I know your business is relatively new, but have you ever gone through the screening questions and said, hey, I don’t think we’re going to be good working together?  

[00:30:37.460] – James

No. I tried to get there a little bit before that with a quick pre screening call. But what’s fascinating about this question is there’s a lot of similarities. So it comes down to I want to travel, I want to go see these great places. Some people are very specific down to the address of where they want to buy their house. But then you start reflecting time because I want to have some time with my family I want to get my kids taken care of. And then the last day’s always a fascinating one. It’s I want to get overs near me. I want to spend time and quality time with those folks. And then that’s when I feel the find with ages, people I really want to work with. Thanks. I’ve been very fortunate so far. Haven’t had that point where, like, get rid of these guys. You don’t want to go crazy. That doesn’t happen yet, but, hey, that’s what you want. I’m not going to judge you on that.  

[00:31:22.810] – Sean

Sure. No, I had asked. That can be an interesting situation, I imagine, but it sounds like you’re running into the right people in a service business. That’s one thing. Before I start a Tykr, this is going back many years as I had to make that choice. Like, do I want to use this Excel sheet pre Tykr and create, like, a family practice or my own wealth management firm? Or do I want to create a software business? And of course, being in software so long, I always dreamed of having a SaaS business. So it was an easy answer, but the thought did cross my mind for a minute. Let’s walk through that situation. I was actually walking myself through those conversations with some customers, and you run into people that maybe they’re high maintenance clients. In the world of tech, we’ll call them high maintenance employees, and they can make your life a nightmare. And I’m like, gosh, I got a client that I got to talk off edge every other day. It’s going to be a nightmare.  

[00:32:24.040] – James

Yeah, it’s interesting. When I worked at previous firms, we had some of those clients, and they meant well, they truly did. And I think it was just that for ever reason, watching the news, especially during code, it was definitely the most interesting. It was, okay, hey, why are we wanting to drop off the edge? That’s kind of a fun psychology piece, too, because you learn about their parents, their family, so it always asks or sometimes inappropriate, hey, tell me about your parents. Like, this happened to your parents. And then you start hearing these fascinating stories. There’s one guy who said, yeah, my parents sold out of everything during the financial crisis, and they can never get their money back. And I went, hey, you’re kind of doing the same thing whether you realize it or not, right? Yeah, it happens. We’re our parents, so whether you realize.  

[00:33:09.810] – Sean

It or not yes, that’s a good one. That’s interesting. They witnessed the pain, and they still were going down the same road to make the same mistake. Unbelievable.  

[00:33:18.880] – James

Yeah. Didn’t have the mental models or maybe have bad advice or maybe your parents, because your parents always want you to do the best, right? Maybe your parents are whispering in his ear, hey, you should sell out. I sold out and lose all my money. So, yeah, there’s a lot more psychology at play in wealth management that people truly realize because motions drive decisions, right?  

[00:33:37.610] – Sean

Well, thank you for giving us background on your background and investing, as well as what your practice does. And of course, at the end of the episode, you can share with the audience where they can reach you. But first, let’s jump into the rapid fire round. We got a few fun questions here.  

[00:33:50.380] – James

Excited.  

[00:33:51.000] – Sean

We’re going to find out who James really is. If you can, try to answer each question in 15 seconds or less. You ready?  

[00:33:58.390] – James

Absolutely.  

[00:33:59.250] – Sean

All right. What is your favorite podcast?  

[00:34:02.060] – James

Lately it’s been two bears, one cave.  

[00:34:04.200] – Sean

Never heard of it.  

[00:34:04.950] – James

With a burnt crystal and Tom Segura. It’s pretty funny. Check it out on YouTube. There’s some really good clips that will definitely get you laughing.  

[00:34:11.860] – Sean

Is this comedy focused, I imagine?  

[00:34:14.050] – James

Yep, definitely comedy focused. Sometimes it’s nice to take a breather. Yes.  

[00:34:18.210] – Sean

Shut the brain off for a moment. That’s great. What is a recent book you read and would recommend?  

[00:34:24.940] – James

This book. Sitting right next to me is this one wealth of Wisdom top 50 Questions That Wealthy Families Ask. That’s been amazing. It’s truly helped me better define my firm and what services we’re providing.  

[00:34:39.540] – Sean

Wealth of wisdom. I love it. I’m going to add that to my wish list right now.  

[00:34:45.110] – James

Definitely. I’ll even double down on that. Another good one is Tools Titans by Tim Ferriss.  

[00:34:49.740] – Sean

Love that book.  

[00:34:50.640] – James

Yeah, I think that’s the plan to see to get me started.  

[00:34:54.000] – Sean

Honestly, the interview I love the most out of that book was actually because I didn’t know who Jocko was. Jocko Willing.  

[00:35:00.220] – James

Yeah, I love Jocko.  

[00:35:02.140] – Sean

I was like, who is this guy?  

[00:35:04.410] – James

I remember I listened to that podcast and I was like, sweating listening to it. I’m like this guy like me in my ears. Like, who is this?  

[00:35:12.640] – Sean

He’s motivating.  

[00:35:14.220] – James

Oh, yeah. I wanted to go, like, run through a concrete wall.  

[00:35:16.750] – Sean

Right? What is that video? That really popular one that came out good. I think it’s called good.  

[00:35:24.600] – James

Yeah. I’m going to watch that today.  

[00:35:26.590] – Sean

Now, to the listeners out there, if you haven’t watched this, look up Jockey Willing. Good. And it’s really the way you position. No matter what happens to you, you miss a job interview or you don’t get that promotion or your business doesn’t work out good. Learn how to do it better. Everything happens for a reason, essentially. It’s really motivating.  

[00:35:48.040] – James

I’m getting goosebumps right now. I know about that. It’s not good, man. I get motivated. It’s the best. It is the best. We’re like, David Goggins will get you going too.  

[00:35:56.710] – Sean

Yeah, he’s another one. Here’s a good question. What is your favorite movie?  

[00:36:02.280] – James

Oh, my favorite movie sounds terrible, especially with what I do, but Wolf of Wall Street.  

[00:36:07.460] – Sean

Really?  

[00:36:08.460] – James

Yeah. It’s not about the money side. It’s a great film. I took film classes in college. I think it’s a very complete movie. And I think it’s hilarious because maybe I can probably relate to it more than others, but yeah, for the reason I love that movie.  

[00:36:24.820] – Sean

I’m so glad you mentioned that because a lot of people do. Look at the surface level. It’s a movie about money, but it’s not. It’s about people. This hustle fake guru society. And Jordan Belford, his story from what was it, the late 80s, early ninety s, I think, in Martin Scorsese. His track record is unbelievable.  

[00:36:47.360] – James

Yes, it’s a big thing. It’s not about the transaction thing. At least it’s not what we do. But it’s just a great complete film. It’s hilarious. Jonah Hill’s teeth and that baby were great.  

[00:36:58.760] – Sean

John Bernthaw, I love the character in that, too. Anyway, we could talk about that one. It is a great movie. Yes.  

[00:37:07.410] – James

Great movie.  

[00:37:08.250] – Sean

All right, we got some business questions here. First one is what is the worst business or investment advice you ever received?  

[00:37:15.880] – James

Oh, God. The worst advice I’ve ever received was don’t plan for retirement. That’s planning to fail. My reaction was just like yours. I went, what? Yeah, you should be successful. Start your business. I think there’s better ways to do that.  

[00:37:35.320] – Sean

Yeah, good call. I would have the same reaction. Wow. All right, we’ll flip the equation here. What is the best business or investment advice you ever received?  

[00:37:45.260] – James

The best advice you’ve ever received when thinking about the investments and business was do what you’re passionate about but also what you’re good at. Because you may be a passionate painter, but if you’re terrible at it, you’re not going to do well. You’re not going to live a fulfilled life.  

[00:38:02.060] – Sean

You’re not going to make a living.  

[00:38:04.240] – James

Exactly. And I think that was the best thing was the passion would be good at it too.  

[00:38:08.550] – Sean

Yes. That’s great. And last question here is a time machine question. If you could go back in time to give your younger self advice, what age would you visit and what would you say?  

[00:38:19.090] – James

I would say kind of ironic. I would say as soon as I started college, don’t go into engineering, you’re going to waste a year and a few summers of missing internships and start at Texas College of Financial Planning. Because on story about that, I tried to get into it. My GPA was zero one below. I told them kick rocks. And here I am doing financial planning.  

[00:38:45.710] – Sean

Unbelievable. Very similar. I’ll keep it really short here, but I originally went to school for architecture because I took architecture classes in college that were on computers. I get to college, realize there were no computer classes. You had to be good at model building and drawing. And then they said only the top percent will actually top 10% will find jobs. And I was like, I’m in the bottom 10% with drawing in model building.  

[00:39:14.200] – James

Oh, no.  

[00:39:15.000] – Sean

Fast forward. So I left that and I switched to Fine Arts because I actually wanted to go into movies and then got into tech. That’s a whole different story. But what’s interesting is one of my buddies, he’s an architect today. He’s been out of school for 15 years and he’s like, Sean, you know how many models and how many drawings I’ve done professionally? Zero.  

[00:39:39.940] – James

That’s a whole conversation about you listen to your teachers or the guys in the business. Like, whoever you listen to, that’s it, right?  

[00:39:47.810] – Sean

It all works out. But if I would have known that back then, I probably would have tried to stick it out. But I’m glad I chose the path I did. But that’s funny. Your story is very similar.  

[00:39:57.870] – James

Yeah.  

[00:39:58.620] – Sean

So anyway, where can the audience reach you?  

[00:40:01.740] – James

There’s a handful of ways to find me. My website is woodallwealthmanagement.com and it’s a mouthful. W-O-O-D-A-L-L-I tell people, hey, give me a call. I have no problem with my phone number out there. It’s 214-281-4496 I’m not going to sell you anything. Just like chat with people, meet some new folks I can do to help you out. Let me know. They got an Instagram page. Now what? All wealth management. So trying to figure out how to make that work. I’m still slowly learning the social media side for business.  

[00:40:34.780] – Sean

Sure. Well, thank you so much and we’ll make sure we get some of these links posted when we do promote your episode. But yeah, I really appreciate your backstory and your journey here in investing. It’s been a lot of fun. We’ll have to have you on again, for sure.  

[00:40:49.050] – James

Likewise. Can’t wait to come back on. It’s been an absolute pleasure. I’m really excited to see what comes with this.  

[00:40:54.630] – Sean

Awesome. Well, thanks, James. Good to you.  

[00:40:56.220] – James

Thanks, John.  

[00:41:01.540] – Sean

Hey, I just want to say thanks for checking out this podcast. I know your time is valuable and there’s a lot of other podcasts out there you could be listening to. So thanks for taking the time to listen to my guest story. If you did enjoy this podcast episode, could you head over to itunes and leave a five star review? That would be much appreciated. Thank you. And last but not least on this podcast, some episodes we do talk about stocks. And please keep in mind, this podcast is for entertainment purposes only. So if you did hear any buy or sell recommendations, please don’t make those decisions based solely on what you hear. Right, thanks a lot. See ya.