The following is part 1 of a 4-part transcript of the “Equities – Risk Less, Make More” session at MTI’s Investment Leaders Summit event held on April 27, 2021. The session featured market experts Tyson Clayton and Chris Pulver, creators of the groundbreaking Equities on Demand training program. For more information, watch our Equities on Demand video.
Clayton: I want to talk about how there are always opportunities to make money in any direction or in a specific direction. Well, here’s the deal. Here’s what’s really interesting about the conditions we’re in right now in the stock market.
What direction are we going to move, Chris? You turn on CNBC right now and you hear all of the people that are concerned about putting in a [market] top. They’re being conservative to raising cash, which makes me actually say that I want to look the other way. I kind of think that we’re going to still continue to climb this wall of worry. But here’s the problem, I don’t know for sure.
And I don’t want you guys to think, “Well, Tyson, you’re the expert. Aren’t you supposed to know?” That’s the beautiful thing about stocks and options, Chris. We don’t need to know for sure. We just need some movement in the market and that’s the whole theme of what we do in the Equities on Demand course. We want to risk less to make more and we want to do it regardless of the market, whether it goes up, whether it goes down, whether it goes sideways.
“I can’t afford to have a bad month or a bad quarter because the market didn’t participate. It didn’t do what I thought it was going to do. So how do we solve those issues? I want to have that conversation today.”
I want a lot of you guys in the room to pay attention because this is what we’re talking about today.
Chris, I believe the market is something that impacts everybody. I’ll just say this real fast. My father-in-law’s a perfect example of somebody [who is not an active trader but yet] sees the importance of what we’re doing [with Equities on Demand.]
For example, I’m the developer and creator of Supply and Demand and Turning Point in the Money Flow Trading Room. But I don’t know if I would recommend my father-in-law to come to those trading rooms. Not because they’re not great, just because he’s not as dedicated and as passionate about the markets as I am.
I think you have to be more dedicated [to trading] to be a part of Money Flow or Turning Point Max. But I would and I have absolutely recommended my father-in-law to understand what we do in Equities on Demand.
And so that’s the big difference for me, Chris. I’m excited to be here, there’s so much opportunity right now. But it’s a lot of opportunity with a lot of questions also. What do you think?
Pulver: It’s funny. I know that we talked about this before with our webinars, but with my father-in-law it’s the same thing as yours.
I’ve talked to my father-in-law for years about trading. I’ve been married for 11 years now, together for 13 years. I’m a trader and I’m going to trade forever. I’ve talked to my father-in-law a ton about the markets, and it wasn’t until now that he’s gotten this excited, Tyson.
I’ve been a full-time Forex trader for 11 years and traded stocks for 20 years. I’ve always believed that it’s good to be investing, good to be participating in the market.
Good to be passive, but for long-term wealth. I’ve always had this long-term mindset in stocks. I wanted to say, Tyson. I have owned zero stocks since we started Equities on Demand and yet I’m up 10% in my portfolio. I love it. That’s a big portfolio. That’s no joke.
I have literally taken no assignment, no ownership, not owning a single stock. I’m up 10%. That is awesome because we’re talking about annualized gains. If you did what Warren Buffet says, which is just buy an index, reinvest your dividends and put money in every single year, then you’re looking at a 7.7% to 8% annualized return.
If you trade the S& P 500 or the Dow Jones or trade the NASDAQ — NASDAQ’s a little bit higher at around 10% to 12% — but you’re also taking all of the risk. If you look at last year’s 2020 sell-off in February and March, you’re talking about traders that watched their 401(k)s, watched their retirement plans, watched their stock accounts, watched everything go from the highest watermark (probably new highs for everybody going into 2020) and then drop about 30% to 40% in just weeks.
Of course, some people say, “Oh, just buy your way out of it.” Well, there’s only so many times we can financially engineer our way out of a mess. And so that’s why this narrative continues to plague us, which is, “Where’s the market top? Where’s the top?” I say that we continue to ride this thing up as long as we possibly can, as long as we need to. But in the back of our mind, we know that what we’re doing in this class is that we are going to be flexible and pivoting accordingly because we need to do that.
“It doesn’t matter if the market is bullish or bearish or sideways. We have trade opportunities to make money and we have strategies to make money.”
So I just want to put it out there to traders, if you’re wondering, “Well, I trade stocks. I own some stocks. Isn’t that enough?” Well, that’s great. But how about if you never had to own a single stock and you could make money every single week?
Clayton: Quick question, Chris. So you’re up 10% since we’ve started Equities on Demand, like what — six, seven, eight months ago, right? No, we started on April 9th. It was our first trading day, less than a month ago, 10% return. Here’s the other beautiful thing. I want to actually open this topic up to everybody in the room that’s maybe with us in Equities on Demand. What happens when, not if, but when the market falls again?
So we all know it. I think everybody in the room knows that we’re eventually going to have a sustained bear market. It’s going to happen. Whether that’s in three months or 10 years, it’s going to happen when that happens. Chris, I want you to answer this question. Are you worried about not making money?
Pulver: I’m not. In fact, I’m actually more excited to see how much money we can make. Last year, I know you and I were very prepared for this. Maybe it’s not going to be as clean. Maybe it’s not as obvious. Maybe this is going to be a long in the tooth type extension, where everyone’s getting exhausted by how bullish and ridiculous and irrational [the market] is.
But you know what? Tyson, we’ll ride it until the end. We’ll ride it until the time is now. So am I worried about it? I’m not worried about it at all. In fact, I’m not saying I know that what we can do, not everybody’s going to do with us. No.
Now, I will say that the group of traders that are with us are going to love the fact that they’re in Equities on Demand. Our traders are going to wish they could have other people, their friends, their family, people that they talk to, join them as well.
Like you said, this market is something that will affect everybody. And you don’t realize it, but the price of oil, the price of commodities right now is skyrocketing. We’ve got wheat, corn, and soybeans all going up in price. We’ve got grocery bills that are on the cusp of going crazy. We’ve got lumber prices at all-time highs. It’s at $1,300 for random-length lumber futures right now.
The futures market is insane, but the stock market keeps ticking higher. Right? The tenure notes, it’s like real estate at bubbles galore. You’ve got offers in cash with people buying bowing houses, sight unseen. There’s a lot of crazy stuff going on right now, but it’s okay.
Because what we do is we have a process. We have a formula. We have a plan of attack and it doesn’t matter what the market does. Here’s the worst case scenario. Let’s say the market doesn’t do anything. Let’s say the market doesn’t do anything anymore. Tyson, let’s say that we enter in the lost decade, right?
Pulver: “[Let’s pretend that] all of a sudden, the markets just go sideways on us for the next three to five years. Can we make money in that environment?”
Clayton: “Yes, I’m 100 percent certain we can.”
Pulver: So that’s the thing, as traders we can still make more gains whether the market goes up, down or sideways.
Clayton: The reason why Chris and I can do this, guys, is because the things we use [to trade] are dynamic, they adjust to recent environments.
So the things we use to sell credit spreads and do the option straights [adjust to market conditions]. If the environment’s really wild and volatility is going crazy, our systems adjust to that. If the volatility is tighter, our systems adjust that and they’re very fast to adjust to. So we’re going to be able to catch this. If we go sideways, we’re going to generate income.
If the market goes up, we’re going to generate income. [If] it goes down, we’re going to make money. That’s actually a beautiful thing, too. And I know we’re going to get into this more in a little bit. But one of the trades we have when we set this up last week is a trade in the Russell 2000 (IWM) that’ll make money regardless of where the market goes.
But I wanted to mention this though, Chris. Here’s some proof that by doing an earnings play we can [generate income]. We’re in an earnings season right now. We’re having a lot of fun with our earnings plays. We have 19 trades that we’ve closed out successfully. We’re up 300% and on a net basis, 320% if you add up all the returns, 320% returns, on 19 trades.
And here’s the deal. I think about half of our trades went up. Half of them went down. It hasn’t been all up. It’s been up, down, everywhere and even some sideways because we manage them correctly, Chris.
Pulver: Like Tyson said, we intentionally went into this [strategy] directionless. We knew that if we’re going to build some confidence in our program, that we’re going to need to show that the proof is in the pudding with how we traded Equities on Demand, so we don’t want to have a directional bias.
Could we have made more money? This is what’s crazy, 320% is a lot of cumulative profits, right? That’s a great percentage in three weeks of trading. Okay. But could we have made more money by actually having a directional bias? Sure. But then we have the earnings play and it’s kind of like a coin flip, right?
We’ve had some earnings that beat expectations but the price went down. We had earnings that were less than expectations but the price went up. So earnings is kind of a crap shoot. It’s kind of a flip of the coin, but guess what? We positioned ourselves to benefit from just the price movement.
And the best part is, Tyson, even if our Whirlpool trade this week doesn’t do anything, we’re going to figure out a way to lessen the blow, reduce the loss, or find a way to roll it into something that we can actually generate some income on.
So, and again, this all happened in exactly three weeks of trading, 320%. This isn’t just us trading and saying, “Hey, look at us. We’re awesome.” This is everybody that’s in the room trading with us today. In fact, today we closed out of UPS, which is a trade we set up on Monday together. And we close out today for full profit, $9.45 on a $6.85 fill.
It was well over a 30% to 40% [gain] for most traders, it’s ridiculous. So, the good thing is the list of wins goes on.