The Quest for Financial Literacy in a Volatile Market Landscape with Caleb Silver

Embark on a journey through the evolving world of finance with none other than Caleb Silver, the Editor-in-Chief of Investopedia, as your guide. You're in for an enlightening conversation that traverses Caleb’s illustrious career from Bloomberg to CNN, and his passionate advocacy for financial literacy. We tackle how the fast-paced nature of today's media impacts the integrity of business journalism and the challenges of sifting through vast data to uncover the genuine economic narratives. By the end of our chat, you'll have a deeper understanding of why positive economic indicators and public sentiment often don't align, and just how predictive Investopedia's search trends and Anxiety Index can be for the markets.

Feel the pulse of economic anxiety as it ebbs and flows with the tides of political discourse. Our discussion with Caleb reveals the intricate relationship between market fluctuations and our collective psyche, dissecting how political leanings can skew our economic perceptions. As we peel back the layers of media influence, question the motives behind the dramatization of financial news, and shine a light on the latest craze in options trading, we expose the raw nerves of investor behavior and market volatility. This episode paints a vivid picture of the current financial climate and the role media plays, extending beyond simple market updates to the very heart of personal finance concerns.

As we round off this comprehensive exploration of the financial landscape, we take a heartfelt look at the need for financial education, with Caleb sharing his evolution from TV producer to a champion of financial literacy. We delve into Investopedia's initiatives to make financial knowledge accessible, discussing the importance of ethical investing and the pitfalls ensnaring rookie traders. Witness the cultural shift towards zero-commission trading and its effects on investors' behaviors, and soak in the stories of market phenomena like AMC and GameStop. With this episode, your arsenal for navigating the financial markets responsibly will be significantly enhanced, and you'll be primed for our upcoming session with Sam Burns from Mill Street Research, promising to keep you at the forefront of financial acumen.

The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

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Transcript

Speaker 1: 0:08

My name is Michael Guy. I'd appreciate those that are watching this episode of Lead Lag Live. Special guest for the hour is Caleb Silver, who's been in the business for a while and I've had a few interactions with, but never actually formally spoken to one-on-one like this. So I'm excited for what he's going to share in terms of his knowledge, what he's done at Investopedia, what he thinks about the current markets all that good stuff. Do me a favor, folks like repost, comment. Do all that good stuff. I want to get the algos to notice this video as we're live and make sure you subscribe on YouTube at Lead Lag Report as well. Caleb, I mentioned you and I have interacted a few times, but we've never actually formally spoken in this kind of a venue or format. So introduce yourself. Who are you, what's your background, what have you done throughout your career? What are you doing now?

Speaker 2: 0:48

Yeah, thank you, and thanks for having me, and I feel like I know you because I read your research reports every single day. I've been following you for years and we bump into each other every now and then, but I'm glad we got to finally have this conversation. I'm Caleb Silver. I'm the editor-in-chief of Investopedia. If you don't know, investopedia we are the oldest and the biggest online finance and investing website. We have been around since 1999. So we're going to be 25 this year. I've been the editor for about eight and a half years.

Speaker 2: 1:14

I'm a lifelong career business journalist. Started my career at Bloomberg, bloomberg TV in the late 90s in the internet bubble, then moved on to CNN, spent 10 years there running CNN Money and as the director of business news and helped launch the Situation Room with Wolf Blitzer and had a great time there and had my own production company, and I've been here for eight and a half years. But business journalism has been my passion. But as the editor-in-chief of Investopedia, I have a very, very special job in that I get to be sort of the educator in chief, explainer in chief. I get to promote financial literacy and education as far and wide as we possibly can, and it's a real honor and it's an honor to be here on your show.

Speaker 1: 1:57

How has business journalism changed in the last two decades? I mean, I get the sense that 24-7 use cycle right, which everyone always criticizes as far as the emotion, the personalities, that it's not fact-driven, it's more, you know, editorial Tweet-driven. Yeah, right, exactly. Is that a similar dynamic you find over time, evolution-wise, when it comes to business journalism?

Speaker 2: 2:19

Yes and no. We have a lot more information. It moves a lot quicker. That more information, it moves a lot, uh, quicker. Um, that said, gumshoe reporting, digging into the financials you know smelling something fishy, uh, you know, getting really good sources, putting companies to the test, you know, challenging the power and the powerful. That never goes away and that's just been the legacy of business journalism. Had the great privilege recently of uh bestowing the distinguished achievement award for sabre, that's the Society for Advancing Business Editing and Writing on Bethany McLean, who is the author of Smartest Guys in the Room with Peter Elkine on the Enron thing. She's broken some of the biggest stories of our time. We still honor great business journalism that is fact-based, doing the digging, putting the microscope or the spotlight on people that don't really want it. That stuff always works. But the information travels a lot quicker right now and there's just a lot more to follow.

Speaker 1: 3:13

Yeah, and I would think it's in an era where everyone is just reacting, which goes back to speed right there becomes more of a focus on the latest breaking thing as opposed to sort of a longer term story arc when it comes to journalism.

Speaker 2: 3:29

Yeah, yeah, you definitely see that as well. But there's also some great business books that have come out in the last couple of years and they continue to come out with people from like Diana Enriquez she's a New York Times author Gretchen Morganson. These are like the giants of our industry that are still doing the long form marathon business journalism that said on the daily, whether it's financial media networks, where I frequently appear, or on X, where FinTwit is still, I think, the best use of Twitter ever. Things move really quickly and it's just it's snacks versus the whole meal, but there's something out there for everybody.

Speaker 1: 4:04

So we're going to get into the current market and retail investor sentiment. But I'm curious how the advent of large data has changed, maybe, the focus of business, journalists, of the media in general, because the reality is a lot of things go under the radar and are not focused on because there's no audience for it, even though it could end up being a big story once it's out there. And large data might get journalists to focus on what people want to look for, which means they're now diverting their attention towards things that may not be the real story.

Speaker 2: 4:35

Yeah, well, you bring up a great point. Think about inflation right now, right. Think about the state of the US economy, which, on the surface, the headline numbers are really strong. Low unemployment of the US economy, which, on the surface, the headline numbers are really strong. Low unemployment, right. Gdp is still growing we're going to get an estimate this week and we're still spending, so the economy is still growing. Headline numbers are good right now.

Speaker 2: 4:56

That said, people don't feel good. The real feel of the economy is very different from what we see in the headline numbers and the disconnect has always existed. I just think it's a little more exasperated than it's ever been. So big data can give you big picture. Big data can also obscure the picture of what's really happening on the ground. That's why I see people not that confident about the economy right now. We see it in the traffic on Investopedia. Stock market's still near all-time highs. What? 3%, 4% down from all-time highs? The wealth effect has been in effect for quite a while for homeowners and the shareholder class. But the real feel on the ground among consumers people getting by week to week, paycheck to paycheck not great.

Speaker 1: 5:32

Was there some moment in history that caused that shift from people that just have higher anxiety, independent of the value of their portfolios? I mean it's got to be more than just inflation. I get the sense that there's almost this undercurrent of frustration that's been building for many, many years, beyond what we've seen in the last several.

Speaker 2: 5:52

Yeah, every day we look at what terms people are looking for on our site every month, every year, and our term of the year for 2023 was the American dream. Why the American dream? We don't think people were looking up the American dream because they were like, oh, what is that notion again of me being able to live better than my parents and own a home and raise a family, send kids to school, have money for retirement? We know that it was a despondent search for people that feel like they've lost connection to it. They've lost the ability to attain a better life than their parents or to attain the life that they thought they were going to get by going to school, by going to college, by even taking on student debt to pay for the degree, to get the job, and just couldn't find themselves in an ability to afford what we think are reasonable expectations. We put a number on that dream and it's $3.4 million.

Speaker 2: 6:37

Now it's different for you, michael, than it is for me and for all your listeners. Everybody has a different number, but just to put a general number on the basics of what goes into that right Having a couple kids, sending them to college for just a couple of years, having six used vehicles over your lifetime, owning a home, putting away three quarters of a million dollars for retirement, having insurance, marrying people, burying people, the basics of living reasonably in this country $3.4 million. If you take the median income over a lifetime of earnings, that's about $2.3 million. There's that big disconnect. But also things got more expensive and if you weren't and aren't in the investor class, the shareholder class, or the home ownership class, the asset owning class, you feel like you have missed the opportunity for that dream.

Speaker 1: 7:22

Do you think the political views also have just kind of exacerbated that? I mean people, I assume, probably say they're more frustrated and angry if the president is not of their political party, even though it may have nothing to do with it, Of course.

Speaker 2: 7:36

Of course, it's always that way and economic dissatisfaction does split along party lines, as you can imagine, but that always happens. It's not just coming up with this election, it's every election and, as we know, some presidents have actually gotten to office by focusing on the economy Stupid, as you might remember. So it's always that and there's always a division, and it's just gotten worse because we're much more polarized as a country right now. So you feel it in the economy, you feel it in politics, you feel it in some of the other major issues that are out there. Everybody says the economy is the number one issue. It's the easy thing to say, michael, when you're coming out of the polling, when you're coming out of the election booth or when somebody's polling you. It's the easy thing to say because we focus on it Gas prices, grocery prices, not being able to get by, not being able to get out of debt. Other things we know are much more important, potentially in the way people actually vote, but the economy is what they say.

Speaker 1: 8:28

Since you mentioned, you're seeing search terms on Investopedia. That to me is actually really fascinating because it gives you a sense of where the psyche is at a moment in time I'm going to assume in 2021, there were all kinds of searches for AMC, GME, right the kind of meme stocks, short selling, naked shorting.

Speaker 2: 8:48

Naked shorting is popular again, of course, but all of those and also a ton of crypto interest coursed during that period as well.

Speaker 1: 8:56

Talk through that from a timeline perspective, meaning, were you seeing spikes in the searches after? With hindsight, those were the peaks, because I think that gets to be interesting, sort of as a almost like a chariot signal.

Speaker 2: 9:07

Yeah, no, the thing about Investopedia is that people don't just come to us to browse around. Maybe I'm the only one who browses Investopedia, but people come to us when they're searching for something, when something piques their interest. We have something on the site called an anxiety index that we developed post after the financial crisis because we wanted to track people's interests readers' interests in fear-based terms, things that make them look something up and then maybe potentially take action. And we have about 15 or 18 terms across markets personal finance and the economy and we can see when there's market volatility or people worried about a big sell-off, we could see spiking anxiety in the markets, part of that. So that's bear market, that's correction, right, dead cat bounce all of those terms Whether people are feeling anxious about their own personal finances, it is foreclosure, it is bankruptcy, it is personal loans, it is being indebted all of those things that people start to worry about.

Speaker 2: 10:05

So we see it instantly and then people take action. The anxiety index oftentimes precedes the VIX, because what do people do when they get scared? They come look something up, whether that's your health or whether that's your money. You know what is this weird rash on my arm? You're looking up on the health sites. What is you know? Is bank failure? What is forbearance? People look that up and then they take action.

Speaker 1: 10:30

So that's interesting that you're looking for certain keywords, right, as on the anxiety index side. Anxiety is the interesting thing in markets because, to your point, it happens when there's volatility, and I remember I think it was maybe 2011 or 2012. So Bloomberg used to have this show called Bloomberg Rewind, hosted by Matt Miller, and he used to always have these co-hosts, right, they come in for the hour. He was the primary host and every now and then I'd be invited, I'd talk about the day's news with him, about reaction, and I remember, during a commercial break, I asked Matt, while we were off mic, how are ratings in Bloomberg? And he said to me ratings correlate to the VIX.

Speaker 1: 11:14

And, of course, yeah, I knew exactly what he meant, of course, and I smiled and I said so does that mean that Bloomberg and other media organizations because they don't make money by investing, do they have an incentive to maybe create a little bit of fear, a little bit of anxiety, because it gets to the eyeballs and the eardrums? Oh, we're back here with Michael Guyad, right? So he didn't answer the question, but that was obviously the implication. I'm curious to hear your thoughts on that, because it's been my experience even when I used to write for markerwatchcom. Whenever you had a big update or a big down day, but more so on the down days, the page views would just skyrocket, yeah naturally, and that makes a ton of sense.

Speaker 2: 11:50

We see that all the time, of course, when there's volatility and volatility drives eyeballs whether it's to television, to the business news networks, or whether it's to websites like Investopedia, where people are just trying to get educated, or the yahoos and the market watches of the world, that's what happens, yes, and if you look at business programming, especially on tv, it is that breathlessness. Right, they treat it like a football game and I love business tv I grew up in it and I appear on business tv all the time but they do treat it with that breathlessness of the pre-game you know the kick, the opening bell, the halftime show, you know lunch money or whatever it is into, like the second and third quarter, closing bell, and then the analysis and then what to expect the next day. It is treated every day like it's a Super Bowl and you want things to make. You go breaking news and make headline banners so people will stop clicking or they'll pay attention. We know a lot of these networks are passively watched in gyms and in bars and in airports, but they're still looking for a reason to get you to pay attention. And I'm a business TV producer. I know what that game is all about. So, yes, you need volatility for eyeballs.

Speaker 2: 12:59

The thing about Investopedia that's cool is that it's not just about the stock market. So even when you have a dull, grinding bull market higher, like we had, you know, for the past 14, 16 months um, there is this inflation story, there is the interest rate story, there is the personal income fears story you know, am I going to be all right? Story. There's the macro story, there's insurance, there's all these things. So if it's not markets for us, it's going to be something on the macro side or the personal income side. So we see the pulse of the individual investor and the household consumer kind of coming through our site on the daily and I can tell you it's totally fascinating.

Speaker 1: 13:39

All right. So where are we on that anxiety level right now? I mean, we're doing this towards the end of April. There was a pretty nasty week last week. This is all very short term, obviously, but is that anxiety now at a level where it's like, okay, now it's time to really pay attention?

Speaker 2: 13:53

or is it just a flip, because we had some 2% down days which we haven't had in a long time. As you well know, you write about this all the time, but in general, the Manxiety Index is pretty chill on the market side of things. It is not on the personal finance side of things, so people are worried about their debt. There's a lot of searches for loans, best loans, credit consolidation, even a rise in people tapping their 401ks for hardship loans, which they can do, but still it's something to take note of when you see that happening while you're seeing near all-time highs in the stock market and headline numbers on the economy doing well, that's a little alarming.

Speaker 1: 14:37

I'm going to assume that that's a new all-time high meaning. As leverage has increased and credit card debt has increased, more people have that anxiety, more than the person on the other side, and they're hoping that their equity, or Nvidia in particular, will keep moving to help cool that off.

Speaker 2: 14:54

Absolutely, absolutely. But also keep in mind that most of our we have a lot of financial advisors who come to Investopedia to get smart and educate their clients. We know that. But most of the people are self-directed individual investors who are putting money to work either actively or passively A lot of them just passively through 401ks and retirement funds. They are not trading in and out of the market with that part of their portfolio, with that part of their investing accounts.

Speaker 2: 15:19

The active traders and we know who they are because we can see what they're looking at on the daily, whether it's options or whether they're looking up individual equities or ETFs and actually making moves with their money. That's different. That part of the anxiety is chill, but the other part is not. So just watching the behavior is fascinating. Individual investors as you know, we don't move chunks of our money in a 5% down market. Everybody's got their threshold, so we're not seeing any near signs of capitulation, not even close. And in fact, in our last investor sentiment survey we do this every two months with our newsletter readers We've got about 1.5 million of them. It was as high as it's been in 12 months. That was a month ago. We've had a little sell-off since then we're in the field with the new survey right now, so we'll see what that says.

Speaker 1: 16:44

People are feeling pretty good a month ago Because of the advent of zero DTE and all this options trading. I'm going to assume there's a lot of people that are looking for options ideas or options strategy or options education. Talk about that because that's also a fairly I think, relatively new phenomenon. If you were in a media company and you're putting stuff out and investing mostly stuff that's around investing is around ETFs, individual stocks buying, hold for the long-term, long-term investing.

Speaker 2: 17:12

Options are very different. I'll give a shout out to my friend, callie Cox, who said the VIX is kind of outdated given the fact that so much activity is happening on the zero DTE side single stocks and stuff like that that the VIX is kind of a lagging indicator in some cases right now because it's measuring a longer period of time and there's a lot more action on the daily. So we definitely feel that we know a lot of people are searching for that. We have a stock simulator that's one of the most popular parts of Investopedia where people learn to trade and build portfolios for the first time. You can also do options on that. That's getting a lot of activity. People want to learn this game and we see a lot of activity on that side of the market for people that want to get a little bit more promiscuous, especially in times where we have like a three, four or 5% pullback, like we've had All right.

Speaker 1: 18:00

So let's talk about that education side on Investopedia Because, listen, I've always used you guys more for like definitions, because it's an amazing Investopedia, right? I mean it's you know, it's you're an encyclopedia for investors. How has the education side evolved? Right for Investopedia as a company Meaning, obviously you're putting a lot more than just here's what a stock is, here's what bond is.

Speaker 2: 18:22

Yeah, absolutely. So. We've got about 15,000 or so financial definitions terms on the site and those range from everything you could think of in investing to a big crypto library, of course, but also small business stuff, personal finance. We have grown it over time. So I said the site was born in 1999. It was, and four Canadians, two by the name of Corey, founded Investopedia in Edmonton with this idea. To this was 1999, internet bubble, financial media networks were being launched, born, growing.

Speaker 2: 18:53

I was working at Bloomberg TV at the time and the language on financial television was obscure, and for good reason, right. So they said why don't we put a dictionary up, since there's so many retail traders now jumping into the market? What if we put the definitive dictionary up? And this company called Google, which is in Mountain View they're in some garage they're building a tool, a software, to index the whole internet. Maybe they'll point to it and then maybe we should put up some test prep for people getting their series exams so they can get into the brokerage industry. They had this really fabulous idea and that worked right and about five, six years later they sold it to Forbes. Forbes had it for several years and they added more to it more personal finance. They grew the site so it was beyond a learn to trade or invest in a dictionary in the test prep. That was a little bit more robust as a full service money site. They eventually Forbes eventually sold it to a company called Money Click, I think, and they had it for several years.

Speaker 2: 19:49

And then IAC, which is our grandparent company, bought Investopedia. This was going back about 10 years from now. I joined about a year and a half after that and since then we've grown it to be fully comprehensive around financial literacy and education writ large. We are known for our investing terms and our stock trading simulator and a lot of our FAQs, but we want to be full service to everybody.

Speaker 2: 20:11

So, like I said, small business, eight to 80, anybody that wants to learn about money. We have either really good articles we have journeys, content, journeys to really go deep on something, whether that is 401k or Roth IRA or how to learn how to trade options or whatever you want to learn, deep learning and also video-based learning and a lot of explainers. So we've made it a huge site with some 35,000 or so documents and videos and grown our audience pretty robustly. There's around 15 million people a month that come to Investopedia every month in search of something and everyone's got an individual reason. They call it personal finance for a reason. It's personal. People are coming for their own personal reason.

Speaker 1: 20:54

And I'm going to assume that the primary means of revenue generation is ads, as is the case with most entities 100%.

Speaker 2: 21:00

Our content is free, but we are ad-supported and we are part of now the DotDash Meredith family of websites. So within IAC there was DotDash, which is very well, and TripSavvy and a bunch of other brands Brides and others. We acquired Meredith Publisher about two and a half years ago and now we're the biggest publisher in North America. Investopedia is one of about 38 or 39 brands within dashmerit.

Speaker 1: 21:26

I'm always fascinated by this, but I think the ad game is a hard one and very cyclical, as you know, in terms of revenue and everyone's competing for ad dollars. I'm going to make the assumption that Investopedia, like most businesses, has had some incredible years and some really difficult years. All right, sure, and maybe some of those acquisitions were at more distressed levels, sometimes maybe not right Over the sort of progress of the company. Talk about that because I think that gets me interested. I don't know if people really understand how challenging being in the media side of the investment industry is from a survival perspective let alone thriving.

Speaker 2: 21:59

Yeah, no, it's a good question. Publishing industry is in some secular decline, as we all know. We still have magazines. We have People Magazine in our shop here. We have Food and Wine. We have Travel and Leisure. These are beautiful books. People know these brands and come to depend on them. We feel like we're in a good spot.

Speaker 2: 22:14

But in general, you're fighting the fact that A it was the internet that was the first shot at magazines and then the fact that people are just not getting them like they used to. Our brands, the ones that we still have here, are really healthy In that business. We still feel like there's something to it, but this is a business, broadly speaking, that won't look the same two years from now maybe not even six months from now just because we have to evolve the way audiences have evolved. The thing about Investopedia is that we've been here a long time, and the same goes for a lot of the brands in our family here. These are well-known brands that people trust and we feel like, even in a world that is more digital, more AI, even when there are bots that could give you an answer to a question you might ask in restopedia or a chat gpt or an open ai that could answer that question.

Speaker 2: 23:02

We feel that being a trusted brand with content written by experts, edited by experts, reviewed by experts, with real people that talk to you, is still important, and we've been able to continue to grow despite all these things. It's crazy to be 25 years old on the internet. It's like 250 real years, michael, but we feel like that's because of the trust in the brand. We feel that about ourselves and I know I speak for the whole company here. It's like real people care about real brands and real people giving them advice on how to live healthier, how to think about money, how to educate yourself about it right, how to cook right all the things that we try to do here.

Speaker 1: 23:41

So I'm glad you mentioned the AI thing, because I am, as you know, skeptical of a lot of the stuff that is out there in the popular narrative and there's this idea that, hey, you know what AI is going to replace the market watch of the world, the investopedias of the world, that it's just this sort of secular decline because AI will rise the challenge of people. Just to your point, do a prompt and that's it. I am very skeptical because of everything you just said, but are you using AI at all in some of the processes or some of the things at Investopedia? I'm curious to see how different companies are trying to integrate tools.

Speaker 2: 24:13

Yeah, so I can't speak to any specific projects, but just think about the way that we work. We have a massive library, I said 35,000 or so articles on the site, some 15,000 terms and definitions right, that's a lot of language to learn from. But, completely intended, we could apply LLMs to our content and especially to our traffic and our data to see what is the actual journey of a reader. Right, we get this question on InvestPD all the time. Michael, how should I invest $10,000, right, that comes in thousands of times a month. Right Now, the answer for you is different from the answer for me, is different from the answer from everybody watching us right now and everybody out there.

Speaker 2: 24:52

Okay, who are you? What situation are you in? This is a financial planning question as much as anything. Do you have debt? Are you retired? Uh, are you going to need that money for a short-term purchase? Are you looking to invest for the long term? Like, a lot of questions follow that question. So, applying llms to that question and then guiding the reader on the actual path that they want to go down, which is unique to all of us, that's a way that we can use this technology to enhance the learner, the reader experience and that's why I expect us to do it, because, ultimately, people want to make a decision. It starts with a question, it always does, but they want to make a decision and do something put money to work, pay something off, buy something, invest, trade whatever. We want to help them get further down that path, because they're actually seeking something at the end of it.

Speaker 1: 25:43

Do you guys have an actual office or has it always been remote?

Speaker 2: 25:46

No, we have an office. We're here in New York City, battery Park. Like I said, we're part of the Dot Dash Meredith family of websites, so we're here with them and we went from kind of being a little company. We were here with them and we are. You know, we went from kind of being a little company. Investp, like I said, started in Edmonton in Alberta in 1999. Over the years has become, you know, we're a bigger company, now owned by a very big company, one of the largest publishers in North America. So we are. It's been an interesting journey for us. But at the core of it again is this name, this brand right. That I knew when I was growing up learning business news at Bloomberg and CNN that I depended on right. That's still there. That actually means something. I get the benefit, because I'm out there in public, of people coming up to me and thanking me in the street, thanking me at conferences for getting them through grad school, for getting them in through their first job, for helping them help their client if they're a financial advisor.

Speaker 1: 27:09

It's unbelievable but in that also is this responsibility to make sure that we have it right. How do you invest, or are you even allowed to invest? I know, with like CNBCs of the world, for example, right, it's just funds or it's through an advisor and it's an arm's length transaction.

Speaker 2: 27:27

Is it a similar dynamic for you? Yeah, I have a financial advisor because I'm not really good at this, which is crazy, and it's not that I'm not good. I want to be really good at what I do, so I can't be really good at that, and every time I've tried to get funky, frisky and do something on my own, it's usually been a pretty bad decision. So, with my financial advisor, it's mostly ETFs, but it's a strategy. There's equity positions, but they're in a strategy that is based on my family, my wife and our plan going forward, so I let them do that.

Speaker 2: 28:00

We've screened out areas we do not want to be invested in. My wife is a conservation biologist and an educator and passionate about protecting and preserving the planet, so you won't find oil and gas and things of that nature in our portfolio. On the personal side, where I do some stuff, it is all ETFs for me and for my kids. We have custodial accounts for them and my nephews and we pick stocks and ETFs together. But I make them pick them and defend their positions. But I try to be passive but active through my financial advisor, within the guardrails that we've set up.

Speaker 1: 28:34

All right, let's talk about this. You've been in this business for a while on the media side and content side, Career mistakes and career wins, right. So you and I are in the industry and the perspective of creating content right, I'm doing it on. You know, in the industry and the perspective, from the perspective of just creating content right, I'm doing it on a solo practitioner side with the lead lag stuff. You're doing it for a much larger entity. Obviously I'm trying to do my best to grow my own strategies in a cycle that is in favor of them, but still putting content out there to provide some education, perspective and context. Educate me on some of the things that didn't work for you and things that did work for you in terms of building that media presence.

Speaker 2: 29:12

Yeah Well, I was kind of like, you know, let out of the cage to become this media presence. I grew up as a TV producer in this business, in the media business, first at Bloomberg and then at CNN, and then I went on to become an editorial manager and executive as head of business news and the editor in chief. So I went from being on the content side on the storytelling side. I really started as a documentary filmmaker. That was kind of my passion coming out of college. I was also 12 years in the restaurant business to help pay for that passion, so I know both sides of it. But then becoming an editorial executive and then running a lot of people and having that responsibility for people's growth and development, and by and large I would say that one of the most satisfying things in my career are all the people that I have mentored or have worked for me or with me that have gone on to do amazing things or have been able to touch their careers. But I will also humbly say there's been a few people where that didn't work out right. I didn't have the emotional intelligence to deal with it correctly at that time. I made mistakes in judgment. I made mistakes in the way I handled and treated people in times of business stress as a leader. I had to learn from that right, and those really take their toll on you. If you've ever had to manage people, the sleepless nights you get are not because of something you did. It's because of something you did to somebody or how you affected somebody's life. So I had to learn a lot from that and I think I did.

Speaker 2: 30:40

I've been a manager for a long time. Now I am in this position where I am the spokesperson for Investopedia, the brand representative, the educator in chief-chief, the explainer-in-chief. I have media presence across networks including CNBC and MSNBC and Fox Biz occasionally, and Bloomberg. Like you, I go out there and I try to be this presence to earn media, to make sure that Investopedia is in this conversation and to help people with financial education and literacy, and I spend a lot of time in high schools now pushing free financial literacy curriculum and training into the public school system with a lot of other great partners. So that's kind of what my focus is. But I had to learn again the emotional intelligence of people management and that was probably the hardest thing for me.

Speaker 1: 31:27

I give you a lot of credit because I always rant on that. I'm blown away that the focus is more about chemistry than understanding how to manage finances, which you should learn about when you're middle school, high school. Most people don't realize or remember the periodic table, but they still have to pay bills, right?

Speaker 2: 31:43

Absolutely, it is interesting to me that Haven't used calculus in a while but I did have to make some big, important household financial decisions lately. I got kids in college.

Speaker 1: 31:54

Yeah, yeah, exactly. Let's talk about mistakes that you find these sort of novice investors tend to make, because a lot of these are going to be repeatable. They make the mistake and then they maybe try to self-educate, or they keep making the mistake. And if they self-educate over there on Investopedia, but go through, let's say, the top five big mistakes that you see individual investors make.

Speaker 2: 32:13

Well, some of the basics, and this is going to sound so white belt, but it is true. I speak to a lot of young people in client visits or just visits that come to Investopedia, grad school students, et cetera and I always say are you invested? Yeah, I have a Roth IRA or I have something through work. And I say, are you allocated? How are you allocated? And they're like what do you mean? I'm like, well, you have the account, but if you put the money to work, is it invested in something? Right? Oh, I just took whatever they said. I said, well, have you looked at what they put you in? Is it like a target fund? Are you down with that? Do you understand what that means?

Speaker 2: 32:56

So, not knowing what you own is primary right, that goes for individual investors and that also goes for experienced investors. Knowing what you own is number one. I always get this and family members do this to me all the time. But friends do it all the time because they think I know what I'm talking about. They say, well, you look at my portfolio and this may be their brokerage account or their Roth IRA or whatever it is, and they have 35 stocks in there. That got their attention at some point. But they have like two shares here and four shares here, maybe 10 shares here, and they're scattered all over the place, scattershot, with no thematic reasoning behind it. But they say what do you think about these positions? And I say I think the stocks are interesting, if you think that these stocks are good, but what you really need to do is find maybe 10 that you actually believe in and really build positions in those, because you're not going to generate wealth when this stock goes up 5%, 10%, 20% if you own two shares of it. So lean in but have a thesis behind what you're doing.

Speaker 2: 33:51

Also, the tap out number like what's your sleepless number, right? Burton Malkiel talks about it all the time. What's the number? You're just like I can't. I can't anymore. People don't have the thresholds either on the downside or on the upside, right. So at what number can you? Where can't you take the loss anymore? People haven't established that for themselves, put stops in, even made a note to themselves. On the upside, when are you going to take a profit? If you're going to take a profit, are you never going to trade the stock? When is enough enough? So those are some common ones that we see all the time you see them in with experienced investors. You see with traders too, but people not having the rules, rules-based investing right and reasons for why they do things, and then knowing what you own all of those things. Those are the basics and until you realize that you've got to kind of concentrate and if you want compounding to work, you got to give it the octane to work.

Speaker 1: 34:43

I love that term the tap out number, and it's always in dollar terms, right? It's like I find that investors tend to think about gains and percentages, but when they talk about losses, they're always thinking in terms of the actual dollar loss, which actually becomes problematic, right, because if you're a very high net worth investor and it's like, all right, I lost $50,000 today, yeah, that's a big number, but as a percentage it may not be. That's a percentage, right, right, so it's hard to can I give you one more?

Speaker 2: 35:11

mistake. This one gets me all the time. Yeah, every time the market goes down and financial media and whatever people just love saying this one Don't look at your 401k, don't look at your retirement account. It's like look at it, know what's going on, you don't have to do anything, but don't I don't look at this anything but don't like. I don't look at this. You can you can just be an index investor and go away for 10 years and get cast away and start talking to a volleyball, but I don't believe in never looking at it. I believe, even for passive investors that are just like I trust my market, I trust my long-term strategy. A quarterly check, please.

Speaker 1: 35:46

Yeah, I think the studies on that have merit, because people are tempted to trade and trade at the wrong time the more they look at something I always go back to these studies around investor returns for ETFs tend to actually be less than investor returns for mutual funds, because mutual funds are priced once a day. Etfs are second by second. So there's this temptation to trade based on noise and volatility, but I think there's a validity to that. You need to be aware, if anything, just to be aware of how much risk you're actually taking. The other part of this which is not talked about is, unless you have some kind of automatic rebalance, people may not realize that over time, their equity portions become their bigger amount of the total portfolio and then, as they near retirement, that becomes really risky.

Speaker 2: 36:26

Know what you own right. How often do you hear financial planners and advisors say that it's like you have to?

Speaker 1: 36:33

Okay. So on the behavioral economics finance side, I have my own thoughts on sort of rolling cycles of biases that tend to be at the forefront more often than not. Personally, I've never seen a cycle like this where recency bias is this strong. It's like if the market's up yesterday, people are going to assume the next several weeks it's up. If it's down yesterday, they think it's going to be down the next several weeks. Literally all recency bias. Let's start with some of the behavioral heuristics things that you see from the Investopedia side that people may be gravitating towards or looking towards, because I think that does inform how to be a legitimate, long-return, better investor.

Speaker 2: 37:13

Yeah, well, in our sentiment surveys, which we do every two months, as I said, we always ask for their top 10 holdings. And the top 10 holdings look like the S&P 500, where everybody is right. Herds like to run with herds, so they're very faithful to the home cooking mega cab big tech stocks. Loath to really do sector rotation, loath to do even intra-market trades that might be more beneficial, loath to necessarily move to more tax efficient products because they're passive and they're been told to not do anything. The market will take care of itself, and they've been right for a very long time. Has the dynamic changed now? I feel like it has changed a little bit. I feel like long-term investing, long-term index investing, is always going to work out. I believe that I'm going to be invested another 20 or 30 years and I'll probably still do that. But to really generate income and wealth you have to be a lot more tactical about it. So people do have the recency bias.

Speaker 2: 38:15

A lot of individual investors self-direct ones are paralyzed. It's like they want to make a move but they don't want to make the move. They can't bear the losses. They sometimes don't have the patience for the slowness of the gains, because it doesn't feel good to gain as bad as it does to lose, right. So they're kind of paralyzed within activity as well. So I'm not saying people need to get in there and aggressively manage and trade their 401k accounts. I'm just saying you got to have the awareness to make sure you are positioned in a way that's going to benefit you the most. This game works over the longterm, but you have to make sure everything is working on that train to make sure it's running smoothly.

Speaker 1: 38:54

So when I used to present across the country at different CFA chapters, I'd always make it a point that the best thing any self-directed investor can do is choose the highest commission broker to trade through. And the reasoning is very simple, right, if you have zero commission trading, again there's a temptation to get in and out, and we know that over-trading is by far and away the number one reason people underperform. Right, rules are based systematic, different, but when you're doing a discretionary basis, there's no question historically. Yeah, I'm curious to hear your thoughts on the state of the trading industry. If the ease with which people can access all this information, the ease with which people can do options, the ease with which they can get in and out and the frictionless aspect of it, if that's actually negative, right, because I think it's underappreciated.

Speaker 2: 39:45

Completely. We really saw that in 2021, right, the explosion of accounts on Robinhood, the explosion of accounts on Coinbase, the hyper-trading that was going on. Just leave the meme stocks alone. Just the trading, the activity, the churn, the portfolio churn that was generating short-term capital gains for people in some cases, or the mistiming of when and where to allocate. So we saw that a lot and I think it's a double-edged sword. We want to democratize access to the capital markets as much as possible. I think that's been achieved. Thank you very much.

Speaker 2: 40:20

Zero trade, you know. Zero commission trading, you know, is basically thrown it wide open so that you can make these decisions without thinking twice about it. You're not paying the toll necessarily. So I think it swung too far in one way. Right, but this is the history of financial markets as you and I know them and have studied them. We always swing too far in one way and have to be self-corrected a little bit. Think about that automobile right, we had no rules, we had no highways, there was no stop signs. Right, until there were rules, until there was a system, it was dangerous. It's still dangerous, but it all starts with the education, which is why I think we're going to be in business for a while, because people get in this just like any other thing. They get burned quickly.

Speaker 2: 41:00

It happened to me. I jumped in in 1998, 1999, started trading internet stocks. I thought I was Bill Miller and wiped myself out and I had no money. I was making 26,000 bucks a year and I thought that was it. I thought I was making a ton of money and I had no money. I lost it. I did it again the great financial crisis, trading the banks, thinking there was no way Lehman Brothers was going out of business. I traded that down to zero. I still keep it, michael, in my portfolio, so I can see the F on the end of that ticker To remind myself that that's why I let the pros do it for me, because I always think I'm smarter than everybody out there and I'm not and I realized that that's probably the biggest mistake I've made as an investor. I don't know what I don't know and I'm not smarter than anybody. I'm smart enough to pick smart people to make decisions for me and make sure I understand them.

Speaker 1: 41:52

In fairness, I think a lot of that just comes from youth. Oscar Wilde has this great quote it's I'm not young enough to know everything. And he was going backward.

Speaker 1: 42:00

Right and Gray was going backwards, right, I think it's just a wonderful quote. But I tell you I speak to a lot of. There's a lot of people that follow me that I reach to and I speak to them just one-on-one, just saying their propositive engagement through X and a lot of them had gotten started in 2020, 2021. And they all say the same thing largely made a ton of money, then blew up, but they use that as an opportunity to move beyond that one stock.

Speaker 2: 42:43

Absolutely. It brought an awareness about the capital markets that I think is necessary. Right, I speak to a lot of high school students. They're not investing, and I speak to a lot of them here in New York City in some disadvantaged neighborhoods and that's the last thing on their mind is investing, but they understand what's going on. They knew what was happening out there. They follow companies like Tesla, they follow cryptocurrency, they follow their favorite influencers who are potentially investing, trading or repping coins or stocks like that. So they know what's going on and I think that awareness is good and I always talk to them about the fact that, like, let me see the sneakers.

Speaker 2: 43:20

All right, you're wearing Nike Airs. You're a customer. You could be an owner If you own a piece of that company for the last 10 years. What would that look like today? Let's talk about the things that you're interacting in your daily life. You're not ready to invest now, but don't just be a customer crony, be an owner, like Jay-Z. It's like you got to get that mentality into people and I think that what happened there was a good opportunity for people to be like wait, amc is a movie theater company. What's it doing? Buying a gold mine? Who are the apes GameStop. I haven't been in a GameStop in forever, but this guy Roaring Kitty is fascinating. He's actually doing research. What is that research like? What is he into?

Speaker 1: 43:55

And if you've seen the movie Dumb Money, it's a great depiction of that it's a fun movie and if you listen closely, you'll hear a familiar voice at the end of it.

Speaker 2: 44:08

I didn't realize you were narrating a part of that.

Speaker 1: 44:10

No, they took a clip for me from CNBC. Okay, Did you know? Or was that just like you saw it? That's for permission. That's for permission. I was going to say, yeah, there's somebody that I know that it was a clip of him that was put on a John Oliver show and he didn't even know. A friend of his said oh you know, you're a John Oliver. He's like what are you talking about? And it was Vitaly Katzenelson who've had on some of these conversations.

Speaker 2: 44:29

My buddy is Ali. I have a buddy named Ali Velshi who's an anchor at MSNBC, who's a completely shaved head, and Jon Stewart once upon a time called him the hairless prophet of doom, and that has stuck with him for a decade. So you just got to be careful who's using your likeness.

Speaker 1: 44:43

Yeah, no, that's for sure. As we wrap up, Caleb, so big fan of Investopedia, I think everything you guys are doing is much needed, necessary in a world of nonsense noise. So I give you guys a lot of credit in terms of the company itself. But outside of Investopedia, what other ways should people try to self-educate? Because I have to tell you I know what you said in the beginning it's like FinEx social media. All that can be great. I am skeptical of using social media for self-education only because, personally, I think there's a lot of fraud out there. I think there's a lot of people that don't have skin in the game. I think there's a lot of people that reference things that don't actually work but make it seem like it works. So how do you think other investors should think through self-education in general?

Speaker 2: 45:27

It's a great question because there's a lot out there right now self-education in general. It's a great question because there's a lot out there right now and if you just follow, you know fin influencers writ large are going to get the same snake oil stuff that you always get in any mania or any time that there's a you know a new way to communicate to people and sell them things right. So you just got to be careful about who you follow. But you know what I do. I follow people like you and then I follow who you follow right. That gets me to really interesting places, right. If you look at the nexus of people that you know and respect and you feel like you know, have an intelligent point of view, and you see who their network and nexus is around them, you can go pretty far and learn a lot. So you know Investopedia is unique Again, 25 years of doing investing in money and financial education.

Speaker 2: 46:14

We are kind of on our own. But there's other places that do good education out there. Cfa Institute does some good stuff. Even some of the media networks have really good educational parts of their site, and so do the banks, and I think they take it really seriously. Now you got to make sure it's right for you.

Speaker 2: 46:34

But there are so many people that are trying to educate you to get you to use a product, and you have to be really careful about that. If they're offering it to you for free, you are the product. Nothing is really for free If it's free trading, or if it's free. Take these online courses and then sign up for my subscription. You're the product ultimately.

Speaker 2: 46:52

So be careful about who you're selling yourself to, right, and then think about the scope of things you want to learn, right. If you just want to start investing and learn the fundamentals, well, we got that on Investopedia. There's a bunch of other sites that'll teach you that too. Fidelity will teach you that, schwab will teach you that, toro will teach you that right, the basics of it. But if it's like something very advanced, like options trading, or if it's intraday trading, or if it's crypto trading, these are highly, highly technical skills that you need to understand. Technical analysis, you need to understand the way securities work, the way markets work. You have to learn your risk-based approach to it. So I would go with people you respect and I would talk to people like you and others about who do you trust in this space.

Speaker 1: 47:38

I appreciate that, although you shouldn't trust my spelling because I had. The silver is of silver. Your name is Caleb Silver. I apologize for those that are watching the stream. I will edit that out in the actual version of this. Okay, great conversation. I would love to do this again. I think, like I said, everything you guys are doing is great. Everybody that's listening. Make sure you follow Caleb Silver on various social media platforms. Follow the Investopedia account. Check out investopediacom. Stay tuned because literally in about 10 minutes, I'm doing another one of these Sam Burns Mill Street research. Thank you, Caleb, Appreciate it. Thanks so much.