While, naturally, it may feel like the world is on pause in the middle of a public health crisis, it doesn’t mean that there’s no more future, that there’s nothing more to reckon with down the line. If you start trading now, it could be a fantastic start for your future after the crisis, so what better time to get started? Michael Silvers is joined by Randy Tate and Kelly Korshak, respectively, the CEO and CTO of iFlip. Randy and Kelly talk about why you should start trading as soon as possible, and what you get out of it in the long run. Are you ready to make your future?
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The Time To Start Trading With Randy Tate And Kelly Korshak
A lot is going on in the world. For those of you reading this years from now, you’ll think, “I remember when.” Take care of yourself and be safe. Lots of love to everyone out there. There was a famous scene from a Frasier episode, a comedy show way back when. Frasier got mad. He was doing an interview and the person had to delay it. Frasier said, “People, turn your radios off.” I’m not going to say, “Go ahead and turn your podcast off,” but when you listen to them, listen to them safely. When you’re driving a car, make sure you’re still focused on where you’re driving.
In this world and with what’s going on, podcasting is where you should be but I won’t say anything else. Turn your TVs off though. If you’re watching TV, watch an old Frasier or an old show. Watch Friends or Big Bang Theory. Put some comedy into your life and stop watching the constant feed of the negativity. We will be through this as usual. Our parents lived through this. Some of them lived through World War II, went through the Korean War or the nuclear crisis. There have been other pandemics around the world. We haven’t been hit as hard, so we say our prayers for them that have already gone through this. Do the best you can. Love the providers out there. Love the nurses, the doctors, the police, the fireman and everybody out there who’s helping the world. Everybody is essential. It makes a big difference.
It’s about the mindset and there’s a lot of fear around finances. There’s a lot of fear around what’s going on. “Do I even move? If I lost my job, is it time for me to educate and learn? What do I do from that front? Am I ever going to put my money back in the market? Am I ever going to invest? Am I ever going to be able to do that even if I make money to do that?” It’s having that mindset moving forward. You’ve got to change your mindset in your own life and that’s why you listen to all these podcasts and all these virtual shows that are going on. There are people I work with seven shows that are going on virtually. It’s big-time for that. With that, I want to introduce the two brilliant gentlemen on. We’ve got Kelly and Randy. I’m going to tell you a little bit about them and this just a snapshot.
Randy Tate is the CEO and Cofounder for iFlip, a consumer software expert. He’s the former VP at Infusionsoft, which we use a ton of. He was a school teacher turned entrepreneur and corporate executive. Kelly Korshak is a Cofounder and CTO of iFlip. He is a Wall Street veteran for many years, a former Risk Manager from Deutsche Bank, Salomon Brothers and Brevan Howard in London. He has advanced degrees in mathematics, statistics and finance. Without any further ado, let’s welcome Kelly and Randy.
Thanks, Michael, we appreciate it. We’re both happy to be here. I know the times have changed since we scheduled this so we’ve altered the topic a little bit to address what’s going on. Yet, still give us something that will be relevant for your library months and months down the road. I’m going to start out and I’m going to introduce Kelly formally. I’ll let him talk as well and talk a little bit about the times. We may not be hit as hard as everybody else, but to many people, this is the first biggest catastrophe or perceived catastrophe if you watch the news that we’ve ever seen. The world is in a state of negativity and problems.
One of the things I’ve been talking about a lot with a lot of these shows is when big problems like this come, they create a ripple effect. This doesn’t just create a problem with the people with the virus. This is a problem for the people that work in restaurants. This is a problem for the people that work in retail. This is a problem for the people who do about anything. I’ve heard different people coined this, “We’re entering a whole new age of entrepreneurs.” There are some big problems going on and the solutions aren’t going to come from the government. They’re not going to come from big corporate. What’s going to happen is you are going to move things around and you’ve heard this on every news station, things will be different going forward. We take that approach in everything that we do. Though we’re extremely sorry and we don’t wish bad on anybody ever for anything, we’re trying to see the good and the opportunities in what we can do from an industry perspective.
For most of you that don’t know my background, I am a school teacher turned entrepreneur, turned corporate executive. I was a school teacher for the first ten years of my career. I then moved into entrepreneur space, educating, training and teaching small business owners. I’ve been all over the world and coached thousands of companies in language, leadership, mindset. I became a Vice President at a company called Infusionsoft and ran their small business education division. Now, I’m the CEO and one of the cofounders with my partner, Kelly, at iFlip. It is a simple software company that’s changing the way the world does finance. We’re not going to spend a ton of time talking about iFlip here, but it’s important that you know that everything we’re talking about, we’re doing. We’re not just talking heads telling you about some cool things. We’re doing the things we’re telling you about.
We look at the world of finance and the stock market and we see what’s going on. My partner, Kelly Korshak is a renowned expert in this particular arena. He went to Stanford University’s Physics program when he was sixteen years old. He’s managed billions of dollars at any one time as the Risk Manager in a bank called Deutsche Bank and places like Salomon Brothers and Tudor Jones. He does it through the use of mathematics. I’m going to treat this conversation as letting him talk a little bit about the thing he’s an expert in and how it correlates to the world now. He’ll tell us how we’re doing it and how we’re avoiding some of these problems, but the idea here is for you to understand that the media is driving the world with fear. It’s not necessarily a time to be allowing fear to drive our decisions particularly around the stock market.
Every major catastrophe in history has always been followed by some sort of recovery. How long that recovery takes is another question. Click To TweetI invited Kelly because we switched topics around here. Kelly, tell us what happened in the stock market and why you would call it a crash. Explain to this group the difference in this event that’s happening in creating the results it created inside the stock market, and compare that to 9/11 or 2007, 2008 financial crisis or even in the 1987 flash crash type of thing. What’s unique about this particular happening and how did we get here? Give us a basic state of the union where you see it at.
Thanks for having me on the show. That’s a lot of question but I’m going to boil it down to compare and contrast the current events to historical ones. Before I get into that, I look at things from a statistical perspective. It’s easier for me to do that. Anybody could opine on what is causing any calamity in the world. At the end of the day, the one that we’re dealing with as we sit here is one that was caused by a virus. We’re all aware of it. One thing is for sure though. It’s that when you see these kinds of events that are world-changing and fearful, it’s not as if they haven’t happened before. My parents were Baby Boomers. They were born during World War II, so they never got to experience a real wartime lifestyle, which is what we’re experiencing when we have trouble going to a grocery store.
Given my career and what I did, what I see going on in the markets is unique. It can be compared to other events, but it is unique in one sense. It’s unique because what’s going on behind the scenes is something where people are locked up in their houses and frightened. It hits all of us in some way or another. It has an impact on the markets. That being said, it’s another statistical event. It’s another event that has caused the markets to decay rapidly. In that sense, it reminds me of 1987. There are many other events. There was the Russian ruble in 1998 and long-term capital management. Many people probably don’t know what that was, but that was an event as well. That was a fear that came out of Russia and the downturn of the ruble. There was the Gulf War. Right before it started, the market crashed as well. It didn’t feel like a crash back then, but it was an event that looks a lot like the one that we see these days.
The thing I notice about it though, and everybody should keep this in the back of their mind, is every major catastrophe has been followed by a recovery. How long that recovery takes is another question. I suspect this one is not going to occur quite as fast as the pundits might want it to. That being said, inside of these calamities, if you’re an entrepreneur, there is a lot of opportunity. There are people, and you could read about them, that have made a great deal of money in the market going down. It’s because they saw what was going on and they were able to capitalize on it. If I had to compare and contrast this, it reminds me mostly of 1987 where the market fell very quickly. It rebounded soon after that as we have, then it fell again to a further low in subsequent months. This seems to be following that, especially on longer-term patterns. The statistics work this way given the recovery periods, depending on the data sets you are looking at, which could be monthly, weekly or daily. You can see that this market is frightened and it needs time to recover. It is the end of the twelve-year bull run for sure, but that doesn’t mean that the market won’t recover. I suspect it will take at least six months for the market to recover to all-time highs.
Kelly, we hear it on the news all the time. The market is down with 30% plus, big numbers. People talk in terms of the market being down. What a lot of people aren’t aware of is that traditionally, since the Great Depression or since they invented and started creating things like mutual funds, we’ve all been taught that we diversify our portfolio into things like mutual funds in order to mitigate risk. If we spread it out nice and thin, no one thing can hurt us. Those people are the ones that got the most hurt. Can you talk a little bit about mathematical algorithmic types of risk versus diversifying with the intent to manage risk? I know you’ve been a risk manager and you are a half-glass empty guy. I can attest to that. From the risk manager’s perspective or a guy who has done these with billions of dollars at a time, why is one better than the other? Why is diversification truly not the best way to reduce risks?
The quick short answer is that diversification is something that is common sense to most people. If I divide my eggs in many different baskets, if I dropped one basket, I won’t lose all of my eggs. It’s intuitive to think like that. However, that is the capture point of how Wall Street goes about attracting the money of Main Street into its vehicles so that Wall Street can make money. I was on the Wall Street side of this, so I understood how a collection of account money occurred. I was never involved in it, but I understood that the general rule of thumb of collecting money is to offer something that is intuitive that it seems axiomatic like, “This must be the truth.” Sadly, that isn’t the truth. A diverse portfolio could be obtained by trading one single instrument including Apple, if you want it. As long as you had a way of creating many variants of Apple. I could trade options on Apple. I could trade stock futures on Apple. I could trade Apple stock against a bond and say that that’s the Apple spread against interest rates.
You can create different vehicles using one instrument. We believe and what I did for a career was creating something called derivatives. A derivative is simply a structure of various sets of instruments that create a behavior that is far more predictable to manage. On Wall Street, the vehicles could be like from the 2008 financial crash, you’ve heard of CDW or Credit Default Swap, things like this that were designed to manage in case the market went down. Many derivatives got created and that’s how some people became very wealthy in the 2008 financial crisis. They created a vehicle that they knew would respond in a certain way. That’s what we do to give our clients a level of investing that is safer than going to the Edward Jones down the street. That’s one aspect that although it may seem intuitive, diversification is not the best way to manage money and also manage your risk at the same time.
I want you to expand on that a little bit because we hear conversations all the time about professional people making decisions on things to buy or sell inside the stock market based on the news, based on what’s going on around the world or things that are happening. They have an opinion about it. They’re like, “Trump said this so that must go down or go up.” We take the statistics and mathematics is much smarter and better than the human, even if we’re talking about fund. Talk a little bit about how we can assert that it’s better to base your decisions in mathematics than in opinions.
The logic of diversification is if you divide your eggs among different baskets, if you dropped one basket, you won't lose all your eggs. Click To TweetWhen you want to make a bet on some direction, it’s best to have the odds in your favor. I’ll give an example. If someone wants to listen to Jim Cramer on CNBC after work, if you can bear it, he is a smart guy and there’s no doubt about that. He always feels that there’s a bull market somewhere. He pointed out that you can buy ExxonMobil and get a high dividend. You can buy many different stocks that are defensive in orientation. In other words, he is trying to create some reason to buy a stock with your money and with fewer dollars than you had. The problem with that and for all of his genius, he is one of those talking heads and he’s a very smart one, is that people have lost money. At the same time, it doesn’t mean that they want to change their investments. It’s like, “If I sell this to do what he said and then the market goes back up, I’m going to miss out on that opportunity. I’m going to be stuck in some dividend stock that may or may not even decide to pay the dividend given what’s going on.”
I don’t go in that direction because that means you’re reacting to an event and you’re reacting after you’ve been beaten up, which means you’re probably not going to be able to participate in the next fight as well because you’ve been hit over the head with a baseball bat. The right thing to do would be to say, “Statistically, what goes on after things like this?” This is for any entrepreneur. When you go into anything and you make a bet on anything, for example, you start that business and you think, “I can do this and this. I know I can have demand and I can make this much money.” I like that thinking and you need to have a deep belief that you can succeed in whatever your attempt to capture wealth and build wealth. However, my father was an accountant and I can’t get away from the fact that I also have to measure what is the risk of me being wrong. Let’s face it, we all know that many businesses, 95% of most businesses fail. They fail because of the unforeseen and they fail because maybe the demand wasn’t what they thought. Maybe the cost to build something wasn’t what they thought. Maybe it took longer than they thought. It is a host of reasons that can make something go bad. The best of ideas can fail with the simplest of events.
Look at what’s happened here. Imagine there are a lot of people that probably just opened up a restaurant and this is not a great way to start that. Those businesses will likely go out of business. This isn’t a good start. It’s over before it began. The better way and the way I think it should be done is you take a look historically at whatever you’re trying to do. In this case, it’s the market. What happened before when a market has done something like this? We experienced the worst first quarter in history of America. It was down 20% some odd or so, 23% I think. Let’s think about that. What happened the last time? In 1987, we lost 20% in one day. That was that Black Monday. I remembered it and what ended up happening is in the weeks after it, the market rebounded. That seems to be what has happened here. It was down 33% then it moved to be down only 18%. The market is falling off over. In 1987, the market did rebound very quickly within the next following few weeks, then it made a new low within the next three months. The pattern like that seems to be following. Keep in mind though, that other times, the markets are falling like this, that pattern hasn’t occurred. I only see that pattern one time since the 1950s at least. Seven different events have caused this 30% drop to happen within a span of few months. This has happened before.
There are only seven times this has happened and six of the seven times, 1987 being one of them. The market sadly did make new lows. If I was a betting man, I would say, “As much as I would like the market to go up and feel that we can recover from all of this, the odds are highly in favor of not being in the market for the short run.” There’s more to come and we can see it. We all know and we don’t want to look back and say, “I should have known it. More people were going to die. There are going to be food and supply shortages. There are going to be perhaps problems at grocery stores.” We saw them at first but that could happen again. People get afraid especially in this particular case. There’s no knowing, maybe this market has to correct a great deal more. The bottom line is out of seven similar events, only one of them had a recovery of any speed. It was 2018 that recovered with speed.
Part of what happens is there’s a mindset around this too because you have the investors who played the market with big money in, but you also have those who are sitting and thinking, “Where do I start?” Part of this is we know it’s going to go up and down. We know that’s the long-term and I don’t want to play long-term. Maybe I lost my job, but I have $25, $50 or $70. Does that mean anything? There are many that never do anything with the market because maybe they only have $150 or $200. It doesn’t mean anything. They don’t realize the education and everything they’re going to learn behind it and at the same time, even investing that small of an amount gets them over the hump psychologically. Can you both talk a little bit about that more?
That’s an excellent point. The way you have to look at these things is we all know that stocks have become a lot cheaper. For example, on our mobile app, you can open up an account and put $50 in. With $50, you can buy four shares of Carnival Cruise Line. For example, we have all heard of Carnival Cruise Line and the bet would be that you could lose the $48 that it would cost you to buy the four shares. The other side of that is Carnival Cruise Line was $40 a share, before all of this happened. You have a chance of betting and losing $48 if you think it would go out of business and you can make $40 x 4, $160 if it succeeds over the coming years to go back to where it was. I got a chance to bet $48 and make 200% of my money or I can lose 100% of my money if you think it will completely fail, which I don’t think that will happen but suppose it does, that’s a good bet, generally. The other thing that is pointed about that question is that it will force you to watch. You will watch it. You’ll pay attention to it because you own something. If you don’t do anything, then there’s nothing for you to participate in, which means that you will look at nothing else. You may look at other things, but you need to have some skin in the game to understand what you are doing and how it can work.
This is a great time, even for people with small amounts of money to take your first chance in the market if you’ve never been in it and do something like I just said. It’s not advice. It’s common sense and you will watch it. For example, our mobile app is free. You can put $50 in and you can buy the shares for free. Anytime you look at it, you’ll see what the value of those four shares are. By having some skin in the game, you will pay a lot of attention and you’ll learn how to play the game. The more you do it, the more you will understand the benefits of it. It will probably entice you to do it again.
Change your way of looking at the problem. Change the way you're looking at the world as if it's on fire. Put on your opportunity goggles. Click To TweetThe great thing about that too is that you’re doing something. There’s the doom and gloom. Whether this is learned now or ten years from now, you’re going into motion. You put it into action. As you move into action, you start to feel you have a little bit more control of what’s going on. Whether it’s going up or down, you’ve done something. I love that because you start with these for $48 and it could be $160. For some people, that could be a lot and it’s a great play. Before we continue, they’re going to give a text link for those who want the app. We’ve gone ahead and cut a deal with them to get it out to all of the audience. For those of you internationally, I don’t know if the text will work, but go ahead and private message me on Facebook or put it on the Facebook group, and I’ll get you a link for that too. Randy, how do they get the app?
If they want to download the free app and start playing with it, just text the word, mentor, to this number, (480) 418-0300. What will happen is you’ll get a text back with a download link to download the app. It will take you about ten minutes to set it up and you can start participating in the market with a very small amount of money. Start playing and get into the game. We didn’t get to the last piece so I was going to have Kelly talk about why we look at this as a very tradable bottom, even though we might have made on the all-time lows. The stocks that were trading at $40, $50, $60 and $80 are trading for $10, $20, $25 and these are a great S&P 500 robust companies that aren’t going anywhere. I tend to think of them as being on sale.
That’s a fair assessment. The bottom line is it’s empowering to do something, especially in a time like this. Let’s face it, the markets always have recovered. This is not the end of the world. This isn’t the end of the markets. If the markets are gone, I can tell you that there’s going to be a far greater price that our society has to pay. All the powers that be will prevent that from happening. The markets will resume. They will find order again and there will be shakeouts and losses. On the other hand, it is wise if there’s ever a time to participate and empower yourself in any way, this is it. There is a fire sale on a lot of great American companies. Pick Disney at $100. These are great companies to buy when you get them on sale. I can pretty much feel verified that in the years to come, you’ll look back and you’ll remember this moment if you do end up buying something and saying, “I wish I could have picked up more.” That will be the only complaint you’ll have.
I’m making a note on this too. It’s the kind of thing, too, that I love. It’s always that inaction and this is a time a lot of people have frozen but they haven’t. Take a look at what’s going on. Look at Zoom. How would you like to own Zoom? Wait until they go public. There’s so much going on and so much movement that it creates a huge foundation for all of us to do this together. These questions are coming in from our international group about the app in Canada and other places. I’ll let you address that because we have audience all around the world and what your plans are.
The mobile app is only available in the US. We are finishing up our beta group in Australia. We will be rolling out new countries chunk after chunk, but right now, that’s the only place it’s available. If you happen to have a US bank account and US credit, can they trade-in? Does the app work for the Canadians that have a US bank account, Kelly?
If the person is in Canada and they won’t be able to download it on the Canadian based IP addresses, and the way you fund your account is through an ACH, which is money between American banks. For Canadians out there, we’ve tried everything. Your country is very difficult to be able to maneuver within the financial space. They only believe it seems that only Canadian advisors and Canadian broker-dealers are valuable and the rest of the world be damned.
I joke about it. It was easier for us to set up accounts in Mongolia.
We could set up accounts in Hong Kong, Mongolia, and even to some extent parts of China, but Canada, our neighbor to the North, sorry.
Disclaimer for The Mentor Studio. If you’re Canadian, we love you dearly but you’ve got to call your representative. That would be awesome.
Exactly what Michael said.
Move? I don’t know, but it’s a great lifestyle in Canada. We’ve got nothing to say about that. It’s the kind of thing though. What everybody has to realize is what you’re teaching is worldwide because it’s still part of that mindset. What are you doing to get to that next level? I can’t wait to read this blog a year from now to see where we all are, but if you look at a pandemic, it’s everywhere. What are you doing to create that mindset to move forward? Here’s the thing too, for any Canadian or anybody outside of the US, if you know people in the US, why don’t you share this with them? Why don’t you let them know how to get started so they can start? You could do it on your own. That’s where it becomes a shared economy. That’s where we look at an abundance of, “It’s not about me, so I’m not interested.” What about all the other people you know on the planet and how are you willing to help them and do this as one planet? Any last thoughts? I’ll open this up for questions and then I’ll let you two go.
You’ve touched all over Michael. We’re in a time where fear is driving behavior. I challenge everybody to change the way you’re looking at the problem. Change the way you’re looking at the world as like the world is on fire. It’s terrible. Everything is dying. We’ve got some problems, there was a pandemic, there’s no doubt. However, put on a different pair of goggles. Put on your opportunity goggles. Put on your problem-solving goggles. Put on a way in which you can help more people recover faster. When we start making decisions from a place of learning and positivity, and what’s possible instead of from a position of fear, the outcomes will be much greater.
I’ll add one thing too. We all know that the market is driven by both fear and greed. There are plenty of reasons to be afraid, but I can tell you that in my experience, those with courage will always displace fear. If you were all locked in your homes, wherever we may be on lockdown, this is a great time to educate yourself about what opportunities exist in this environment. Frankly, the market does offer them despite all the fear that comes from it. Have courage and do some research and get involved in it. This is the best time to get involved in it. I think anybody reading this would agree with that.
I love that too. For anybody in this community, there are a couple of things. We’re going to do a follow-up episode because this has been very informative. We’re going to get into mindset on how you move forward. If you have any fear, if you decided you want to jump in, how that looks. We’re going to take a look again where the market is. It will be interesting to see what it’s done, the trends, and have you two look at that. That will be a great follow-up for this episode because we’re almost looking at trends at that point. It’s a short-term, I understand. For those of you who read the blog, you’re not seeing everything that’s going on. We are going to have a formalized website where you all come live on, which means that you can start joining that. It’s complimentary for you. You’ll have a page you can be part of and then you can join us in the bigger picture to join the calls and be active with the mentors we’re bringing on.
I wanted to thank you two for being on. For The Mentor Studio, it’s another great information time. We have a lot more people coming on. We have a lot of mentors coming on. We get on with Steve Hackett, who produced Genesis, Peter Gabriel and Yellow. His dad was the Stones producers. It was interesting to hear everything he had from his perspective. We’re going to have another episode with Randy and Kelly. We’re going to talk about mindset. We’re going to talk about LinkedIn and how to improve your profile on LinkedIn. We’re going to talk with a gentleman who’s gone from zero to almost $40,000. At the same time, as a podcast with over 700,000 downloads. You’re going to hear a lot about that. We’re also going to be talking not too far in the future to a gentleman who ran the AMC channel and still has the longest-running show on Hallmark. He’s produced and been a producer for most of his lifetime. He worked with Fred Silverman as his VP.
There’s a lot more coming to us for 2020, be it social media, entertainment, YouTube stars, finance and business. It’s mentoring but it’s all mindset. You’ve got to keep moving forward at that point. From myself, from everybody at The Mentor Studio, thank you so much for being on the show. It’s been great to have you all on. If you have any questions, you can contact us and I’ll let you know how to do that more. It’s been a great day, a great environment, whether it’s the morning, afternoon or evening. Thank you again. Randy and Kelly, you were awesome.
Important Links
About Randy Tate
After spending time as a college athlete, Randy channeled his passion to serve into his career as a high school teacher and athletics coach. Based on frustrations he faced as a coach in sourcing uniforms and equipment, Randy started athletic apparel company, Game Day Athletics, and as its CEO, grew revenues to $5M before selling the business to publicly traded sporting goods company, Sport Chalet.
Building on lessons learned as an educator, coach and entrepreneur, Randy has spent 10+ years on stages, in workshops and as a one-on-one coach teaching small business owners about sales, marketing, and the mindset of success. He captivates audiences by inviting them to envision the future of their dreams, while demonstrating how the business fundamentals of marketing, sales and leadership can be performed with a servant’s heart.
Randy served as VP of business training for customers and internal employee training at Infusionsoft during 2015-16. During that time developing the internal progression path for the Delight org and oversaw the expansion of the Elite Business Education curriculum and training.
Since Infusionsoft Randy has taken on the role of CEO for startup FLIP Investor Inc. a different type of robotic trading platform that allows the average individual to preserve, protect, and grow their wealth through technology. Adding the skills learned at Infusionsoft around SaaS he is leading the company in that model and from a customer first perspective. Currently the company s on pace to grow over 200% in 2018.
About Kelly Korshak
Architect and leader for institutional investing of algorithmic intelligent trading. My +27 years of expertise in the markets began with storing information in an accessible format so that statistical studies could be made on demand. Understanding data, markets and statistics created a new field of interpretation of the financial markets. This led to a career that over the years has evolved into a now commonly used approach to investment by most banks and large institutional money managers. Over the years this has allowed me to opportunity to meet and work with some truly inspiring people from which I have learned much.
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