From Refugee to Stock Guru - The Terry Tran Story

About The Guest(s):
In this episode, Tyron Hyde interviews Terry Tran, founder of Freedom Trader, who shares his journey from being a child refugee to achieving financial freedom through share trading.

Summary:
Terry emphasises the importance of education and understanding stock fundamentals before investing. He discusses the mistakes traders often make, the value of diversification, and the significance of risk management. Terry also provides insights into undervalued companies and emerging economies, such as India and Vietnam.

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Tyron Hyde is the CEO of Washington Brown Quantity Surveyors

Chapters

• 0:38 Introducing Terry Tran
• 3:24 Is share trading gambling?
• 8:53 Three biggest mistakes traders make?
• 10:20 Q1: What's your best investment?
• 12:27 Q2: What's your worst investment?
• 21:00 Q3: Most valuable investment advice?
• 22:54 Q4: What’s your ideal portfolio mix?
• 30:21 Q5: Investing $20K as a 20-year-old?
• 32:08 Q6: Investing $500K as a 50-year-old?
• 33:12 Q7: Advice to your 20yr old self?
• 35:54 Q8: What legacy do you want to leave?
• 40:57 Q9: Definition of success?
• 43:02 Q10: Best strategy NOT to lose money?
• 46:35 Bonus Q: What would you buy now?

Transcript

(Tyron Hyde): Do you love property like I do, but want to play the stock market? 
Isn't share trading just like gambling, Terry?
(Terry Tran): Not at all.
(Tyron Hyde): Then you need to listen to Terry Tran.
(Terry Tran): Don't be stupid and don't leverage yourself. That's the first thing. Yeah, leverage kills you ultimately, in the end.
(Tyron Hyde): From child refugee to veteran investor.
(Terry Tran): Just seeing my mum work so hard, my main thing was I wanted to, I guess, look after my mum in.
(Tyron Hyde): He now teaches investors how to take the guesswork out of share trading.
(Terry Tran): For me, preservation of capital is number one and then making money is number two.
(Tyron Hyde): It's all coming up on Ten with Ty.

(Tyron Hyde): Hi, I'm Tyron Hyde, the CEO of Washington Brown, the property depreciation expert. Now, I'm a qualified quantity surveyor and also a bestselling author who's helped hundreds of thousands of property investors over the years pay less tax through depreciation. 

I'm also an avid investor, which is why I created the podcast series Ten with Ty, where I ask the smartest people I know the same ten questions to unlock the keys to their success and hopefully leave a playbook for my family and your family too. About investing. 

Now, this podcast is general in nature and not specific to your financial circumstances. We always recommend you sit down with an accountant or financial planner before making any investment decisions.

(Tyron Hyde): Now let's get on with the show. Hello and welcome to Ten with Ty. Today we're talking wealth creation with an inspiring individual who started life as a refugee from Vietnam. He watched his mother work two jobs and struggle financially to survive, then nearly worked himself to death in the corporate world before embarking on a path to financial freedom through share trading. He now helps others to do the same safely. Welcome to the show. Terry Tran.

(Terry Tran): Thanks, Tyron. Lovely to be here.

(Tyron Hyde): Thank you. It's great to have someone on the show who's done a talk about shares. My second love.

(Terry Tran): Not just property for once. That's good to hear.

(Tyron Hyde): Your father died when you were young and your mother worked two jobs, how did that shape your views in relation to work and wealth?

(Terry Tran): I think that changed me a lot because, just seeing my mum work so hard, my main thing was I wanted to, I guess, look after my mum and just seeing, even when I was a child, when she was doing the second job, even the first job, I was actually brought along because her first job was in a factory, a metals factory, and I'd be seeing her work and at most times I would be hiding in this. There was a part of a female toilet that was actually far cooler because in summer especially, it was very hot.

(Terry Tran): So I would pretty much just do colouring books and play Lego in the female toilet and just waiting for her to come in and say hello. And then she'd take me home and then have a meal. And then literally we were off again on a train and then heading off to see her wash dishes in Parramatta, in Sydney at an Indian restaurant. And then I'd be hanging around and back in the old days, I guess it was quite safe. I was running around the car park in the dark and just waiting for her for the next three or 4 hours.

(Tyron Hyde): Must be pretty proud of seeing what you're doing.

(Terry Tran): Yeah, she is. She saw me on stage once and seen a lot of the videos. In a way, I don't think she totally understands what I totally do, but I think she does know that I help educate people. So it did change me in terms of the financial sense where I wanted to make sure that I was able to look after her financially and get her off, basically get off the two job thing and then down a track, basically be able to retire a bit earlier as well.

(Tyron Hyde): Fantastic. Very inspiring. Okay, now let's talk shares. I want to read your quote. "A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts," said the American economist Burton Malkial. Now, isn't share trading just like gambling, Terry?

(Terry Tran): Not at all. I mean, I've heard of that quote as well. I would say that a lot of the big fund managers, they can't even beat, I would say beat the so-called index. And that is actually a true fact. But however, I believe that a carefully chosen share portfolio, whether you're trading or investing, will do far better. And in a way, when you do it that way, it's not like gambling for me, just like property. You could buy any property on the street, but if you overpay for it, you'll also likely lose money. Or if you're also just trusting tips from family and friends and you're not also doing the research properly on property itself, there's no difference between shares as well. You do need to do the research. Make sure you do also know what you're buying most importantly, and paying at the right price as well.

(Terry Tran): So the two asset classes, which I personally, people think I'm a share trader or a share investor, and I don't like property. I do believe in a well-diversified portfolio, and therefore, I do believe that if you put in a bit of effort, you can definitely get far higher returns than a so-called blind monkey.

(Tyron Hyde): What's funny that you talk about the amount of times that the active fund managers don't beat the index, right? That's actually, I found that quote because I googled one of the percentages and then it came up with this quote. Funnily enough.

(Terry Tran): Actually Tyrone, I want to add that the reason why individuals can potentially outperform most of the fund managers is because those guys, they've got a big disadvantage. It's because they are way bigger really. It's their size, they're not as nimble. So for them to get in and out of a position they're having to sell 50-100 million dollars. Either get in, go and get out, they've got a very sizable position and they literally move the markets. Whereas for us as individuals, we're far more nimble because of our size, we can get in and get out far more quickly as well.

(Tyron Hyde): Does that then enable your investors to get into more liquid stocks rather than the big phone majors, thus being able to get to trade when they want to trade rather than having to do the $50 million plus trades?

(Terry Tran): That's definitely a true statement for sure. But however, even for myself, I'm more about risk management. So even on for myself, I generally don't like liquid stocks. I tend to go to the big area of town where the big fund managers are because money can still be made there, but be done in much safer ways. Well, so the likes of Apple, Microsoft, I actually like those type of stocks so I'd still go there. Whereas because of the risk management, I really avoid those liquid-type stocks as well.

(Tyron Hyde): Tell me about Freedom Trader. Are you giving people the tools to work out which stocks to buy or are you telling them which stocks to want to?

(Terry Tran): My first and foremost is to actually educate. So for me I actually want to educate them, but I'll also show them where I guess there's a lot of free tools out there as well. And those tools I personally use, I just want to share with them where you can get those tools. And at the same time I've also built tools that I provide them to be used as well. And we do also show, not primarily recommend them what to buy or sell because I do believe that action speaks out in the word. So what I do is I actually share with them what I'm doing myself because I think that just gives people a lot more confidence to show them where I'm putting my own family's wealth as well. So I'm literally sometimes buying at the same time and in the same stocks with them as well.

(Tyron Hyde): Right. And are they watching you, what you buy?

(Terry Tran): Yes they are. I think it gives them confidence because even though I teach a lot, I guess people, it's because they're new to the game, so they're still quite nervous, even though I've taught them what to do and the tools to use. But by them then finding their own stocks or their own investments and then seeing it on, say, reports that I'm also buying those stocks or selling those stocks, and it matches what they've also found. It just then gives them that confidence to therefore click on the button.

So I don't want them to ever just blindly copy what Terry does because that's the last thing I want them to do. But to be educated in their own decision-making. And by doing so, it just gives them a lot more confidence to scale as well. Because you can start off small, but as you scale over time, it's far more important to know what you are doing, being in control, and therefore having that confidence to scale up your portfolio beyond six figures and eventually over seven figures as well.

(Tyron Hyde): I like that they can see what you're doing. I don't know if you remember Renee Rifkin.
(Terry Tran): Yes, I do.
(Tyron Hyde): And the Rivkin report. And he was recommending people to buy these stocks, but previously he'd already bought these penny stocks. He then put out a recommendation that, hey, you should buy this stock. And he was the one selling. And then what they had to do, they had to change the disclaimers on everyone that was giving stock tips that you had to disclose what your actual stocks that you held at the time of giving a tip. So it's good that you're giving that information out.

(Terry Tran): Yeah, no, we even give that in advance saying that, guys, I'm getting ready to buy this stock. So make sure you check this out. And we are going to be buying at the same time because I've taught them the tools to use to see when to actually get in. And I'll be getting in the same day as them as well. So literally, we are getting in at the same time. And when we get out, I also give them an advanced notice that, guys, it's overvalued or it's time to actually get out. I'm not comfortable with this. And in time, based on, I guess, the information that we've got, we'll be getting in and out at the same time as well. Fair enough.

(Tyron Hyde): All right, one final question before we get into Ten with Ty, what are the three biggest mistakes you see traders make?

(Terry Tran): One, following the hype, following the trend of what's hot in the market. Two, is blindly just copying what people do as well, taking a tip from a family or friend or even at a barbecue and then thirdly is taking on board leverage, in fact. So as you know, leverage is a double-edged short sword based both in stocks but also property, but with stock leverage far more dangerous because there's a thing called margin calls. With margin lending and even with things like derivatives like CFDs, at any point in time you get margin called. Unlike property which is the banks are unlikely to give you basically a margin call. So that just doesn't happen. So a lot of people take on board the leverage thinking that everything's going well but then when things change they get caught up with too much leverage as well.

(Tyron Hyde): Happened twice to me, once in the tech crash and the GFC. I had too much gearing and it snowballed and literally I had to put in a shitload of money or sell stocks and I chose luckily to sell the stocks. It pretty much wiped out my share portfolio twice. But I'm glad I did that rather than having to get equity from my house or from my business. I decided no, I can't do that. So that's when I wish I learned more about stop losses. Back then I didn't really have much of it but maybe we'll talk about that when it comes to your worst investments and how we can limit those worst investments we talk about stop losses.

(Tyron Hyde): All right, let's play Ten with Ty. You ready? I've got a button here I'm going to press Terry before we get started. Makes me laugh every time. 
All right Terry, what has been your best investment?

(Terry Tran): I would say informal education. So I know we all get educated in Australia, we've got a great education system but, however, there's nothing about finance and investing and how to make I guess a financially free life afterwards. So definitely a lot of informal education, some good, some bad but overall just that education across all boards whether I actually started off with more on mindset side so the likes of Tony Robbins, things like that. I actually went in that when I was quite young at 17, 18. So that was my first I guess foray into education, informed education and then afterwards every program that was under the sun literally I just went to those investment whether for property as well as stocks as well, I did them all and I think I would consider that as the best education ever because you learn about all the different asset classes and knowing what to do going forward as well.

(Tyron Hyde): Yeah, it's been an overwhelming theme. Investing in yourself and knowledge has been one of the overwhelming themes when it comes to that answer.
But what has been one stock that you've been. God, I got that one right.
(Terry Tran): It would be actually Apple.
(Tyron Hyde): Okay.
(Terry Tran): Yeah, it would be Apple. Because the fundamentals, when Jobs came back in, the fundamentals were great. But then when Warren Buffett initiated his very first purchase, we could see that. And when knowing Warren Buffett, he's not a trader, he's a long-term value investor, so he could see value in Apple. And then that made me very confident that he's seeing something that I'm seeing undervaluation. And then over time, knowing that he was going to accumulate as well, and I was accumulating at the same time with him.

(Tyron Hyde): Yeah, I saw that too. And I wish I kicked myself that I didn't. I've actually kicked myself more when I was actually at a pub and a guy said to me, who worked for a telecommunications company said, and Apple just relaunched their phone, and Steve Jobs done it. And it was like, what, 20? Ridiculously low? And he said, you should buy this it's really good. Yeah, I wish I did. 
Anyway, question number two, Terry, what has been your worst investment?

(Terry Tran): I've actually had so many.
(Tyron Hyde): Can't choose your best one?
(Terry Tran): I have had a lot as well. I don't call them as, I guess, mistakes, because you learn from them. And that's what I try to teach our members, to not do what I've done as well. So there's many, I guess, mistakes, so to speak. We usually get eight to nine out of ten investments, right. So that's not the issue, but it's more of what I did structurally. So back in the old days, I believed in all that get-rich-quick as a young guy, writing options, I think, would be with leverage, was probably one of the worst. And I was probably seduced into the fact that I was getting very good, getting good returns of that 1-3% per month, and I was getting month in, month out. And I did that for a whole two years. So you can imagine 2-3%, 20 odd, 30% return income year in, year out. And it happened actually for a whole two years. But then when the market turned, it just wiped the entire two years of profit out, plus more. And at that time, it was a quarter of a million dollars overnight. At least. And that would, I would say, is the worst in so-called investment as a young 21, 22 year old ever. 

(Tyron Hyde): How do you teach your members to limit their loss? Are you teaching a stop-loss strategy or a trailing stop-loss strategy?

(Terry Tran): Yeah. So first and foremost, whether you're investing or trading, our first thing is that to understand what the world is and where it's going through at this point in time. So we understand the macro side. So that limits, I guess, the world blowing up, so to speak. So when, for example, GFCs coronaviruses, those type of crashes happen, they don't happen overnight. There's always data showing up to say there's a problem brewing. So when we see that, we actually are very cautious. So we start actually liquidating to make sure that we have a lot of cash back in our accounts.

(Tyron Hyde): How do you see that?
(Terry Tran): There are actually quite a few, a lot of free tools out there that you can see the liquidity of banks, the liquidity of the financial system, and also the fear and greed of what the public actually is at this point in time. So there's actually quite a few. There's six tools in total. So they're actually there. So I just show the members what they are, but also how to read them. So that's one. The other thing too is fundamentally analysis of whether you get into a stock short term or long term, it is important that you know what you're buying into. So they're not companies that even though you're trading, you're buying to them. All of a sudden you hear bad news that they're going to go bankrupt the next day. So fundamentally, those stocks need to be also very strong at the same time. And then finally, the other thing too is you talked about stop losses if they are trades, to also have stop losses in place as well. So have basically a percentage level where, you know, things have gone wrong according to where it should be, and therefore it just automatically liquidates you that position. Anyway, it's just two things.

(Tyron Hyde): So firstly, is it a case then of sometimes it's better to do nothing, get out of the market and sit out and wait because the risk is higher than being in the.

(Terry Tran): So for example, I'll just give an example of real-life case studies. GFC we saw the market back then. I was still managing funds and we saw the market three and a half months. There were signs that there was something wrong. I didn't know what was happening, but we could see that the markets, our tools were breaking. And it wasn't just one tool breaking, it was actually one by one. They were all ducks lined up that were just breaking one by one. And we could see that something was wrong. And I'm not just to say that I could predict that day there will be a market crash. I can't do that. No one can if someone says that they're BS-ing. But however, we could see things breaking. So I was actually quite early, too early, in fact, that I started getting out and liquidating a lot of our overvalued positions. And by the end of it, by the time it actually happened, we had about 80% cash. Still, 20% of. I didn't liquidate everything, but 20% of our portfolio was still invested with undervalued stocks, and we kept that.

(Terry Tran): So that was one. And then the other one was, for example, even Corona, we could see things breaking. It was telling us that the system was breaking. Liquidity of banks were drying up. Again, I didn't know that was going to be coronavirus, but we could see things happening. And that one was a little bit shorter, about two months. So we were, again early. But when it happened this time, I was now teaching. So not only myself, but as a whole group, hundreds of students, we were actually quite happy that the market crashed because it went down by about 30 plus per cent, and we had all this cash ready to deploy again and buying undervalued assets.

(Tyron Hyde): When all the markets crash for an external source that no one sees, it's when it's in the papers that, oh, this is coming, this is coming. It doesn't generally occur. Like the mortgage cliff of the last few months doesn't seem to have had a major effect on the property market.

(Terry Tran): Right, right. I think sometimes for us, I just see headlines as already either too late, so they're just headlines, that they make the news. But for me, I would rather have data let us know what is really happening behind the scenes rather than the actual headlines itself. The headlines is great for one reason, is that just to see the psychology of where the market actually is, or whether it's property market or the stock market, because ultimately, in the end, it's still the wealth effect. So just seeing the psychology of the general public, to know where they're at. But in terms of to take action, we use data rather than just the headlines itself.

(Tyron Hyde): I think I should briefly explain to people what a stop loss is. So, for instance, if you buy $100 worth of stop of stocks, you can tell the broker that if it goes down 15%, an automatic trade kicks in and sells it at $85, you can also have a trailing stop loss that if you say, okay, I still want the 15% difference to go up, but say that stock goes to $200. It would need to come back down 15% from the $200 to kick in. That's right, Terry.

(Terry Tran): Yeah, that's correct. And one thing that is important if you do stop losses is to be hidden from the market, because if you just do a simple stop loss out there, the entire market can actually see you. So what we would rather do is what they call a conditional stop loss. So therefore, the order is hidden until a certain condition is met, and then the market literally comes in and then the stop loss is taken out. So nobody has seen the order literally, until that point in time.

(Tyron Hyde): Didn't know that. Learned something today. Good, great. Probably learned a lot today. One, do you have a recommendation of a stop loss percentage or is it depending upon the stock?

(Terry Tran): Sure. For me, I've just gone back in data again. I'm very data-driven. So I looked back in time of all my history of 25 plus years, and where have the biggest mistakes have occurred, and I've just found that roughly between that seven to 8% mark as a stop loss, that are knowing that that's a mistake and that's it. Yeah. And then sometimes what they call like gapping, which means that the stock, even though you've put a stop loss at a certain per cent, a certain price, then some bad news, earnings announcement, it actually gaps below that. So that also can happen. So I just want to make sure that people do understand that even though you put a stop loss, it's not guaranteed that you're going to get it at that price. If it gaps down with a big gap, as in the price, just the market opens and the price goes below your stop loss, it will execute, of course, but at that price. So that 78% will be breached. But that's very rare. It's generally that 78% because it slowly goes down.

(Tyron Hyde): I guess I can go both ways. If you have shorting and then a company gets taken over overnight after market and opens up, you can be in a bit of trouble there.

(Terry Tran): Yeah. Correct. And since you've mentioned shorting, too, Tyron, I didn't want to mention earlier because I didn't want to confuse the audience, but during the GFC, we actually shorted, because I said that there was still 20% of the portfolio still in the market. So what we did was we actually shorted the market to that 20% level. So ultimately, in the end, during GFC and during COVID while the market was obviously down, our 20% portfolio that we still held was dropping as well. But however, we had the shorter positions that allowed us to therefore hedge ourselves. So ultimately, in the end, we lost no money. It was actually neutral, even though we still had a 20% portfolio.

(Tyron Hyde): Do you want to briefly explain shorting?

(Terry Tran): Sure. When you go what they call go long, your bank is basically thinking that the stock is going to go upwards. So you buy low and you sell high. Shorting is basically the reversal, almost like a mirror image. So now what you're doing is if you believe that either the market or the stock is going to go down, you sell high and then you buy back low to close that position. So it's just a total opposite position compared to the normal stock buying.

(Tyron Hyde): Yeah. Cool. All right, thanks for that. That was one of the best answers to the worst investment because I think we actually learned a bit as well. 

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(Tyron Hyde): Question number three. What's been the most valuable investment advice you've ever received?

(Terry Tran): Terry, I think, importantly, that you get educated by someone who's actually done it, not someone who's just out there peddling their course and has actually never done it, and probably watched a few YouTube videos and decided that now they're an expert and I'll put up a course and sell it for thousands. So for me, my education was after I had all those losses at the beginning when I was young, 19 to 21, that was a very bad experience. I realized I actually knew nothing. So what I did was I went back to the Oracle Omaha, read through his Berkshire Hathaway, the letters, and just realized, wow, now this is the way to go value investing. And then by also contact, going out there and contacting as many fund managers, super fund guys that were running big funds, and of course, these guys do know what they're doing because they're running our super industry. For example, retirement funds. And then did I get a lot of rejections? Definitely. I did get quite a few rejections that, no waste of time. But there were quite a few that didn't. Just saw the, I think, the enthusiasm. So they had coffees and lunches with me over time, and then that's how I learned what they were doing as well. So I was learning literally from the people who manage people's money. So I think it's important that you get knowledge and education from people who have actually done it.

(Tyron Hyde): I agree. I don't know exactly what it's like in your industry, but in the property industry. It's the amount of people that have bought one or two properties and then become property experts is quite sounding in my Facebook feed, let me tell you.

(Terry Tran): Yeah, and I think it's the same thing with a few people who hit it on, say, AI stocks and they make a bundle just purely the right timing and all of a sudden they just become an overnight expert as.

(Tyron Hyde): Yeah, great. All right, number four, what's your ideal portfolio mix? I know you're not into Bitcoin because I saw you on a YouTube channel. So you don't do Bitcoin, but what's your ideal portfolio mix? 

(Terry Tran): I think this is going to be different to everyone depending on your risk tolerance and also your age as well. I'm in my late 40s now, so for me, I've still got a lot of time until retirement and I just go for the growth side. So therefore, for me it's 80% more towards 70% to 80% stocks, and then the other 20% to 30% on the property side. The reason why I like stocks more is because it's liquid, it's unleveraged, and in terms of, I guess what you're making, and then the other side, which I still like as well, the property, is because of obviously the banks giving you that leverage as well, and it is much safer leverage compared to stocks. So having sort of both of them, but more towards the, which is where I'm strong at anyway, towards the stock side, having that grow without leverage, basically return on assets, return on equity is the same thing because without the leverage side, but then the property side, you're getting that extra leverage side, so you're getting a higher return on the ROE, basically return on equity.

(Tyron Hyde): Well, for me, I have about 40% of my stock portfolio in banks because they never lose money, about 40% in mid caps. And I generally like ones that pay dividends. Some of their shareholders are buying and buybacks are on. So I kind of like those kind of stocks. Find them and then I have about 20% in a mixture of REITs, real estate investment trusts, and about five in that 20%, about 10% REITs and playthings, I call them, or the fund stocks. Right. Low caps. What about you in your portfolio of stocks, do you have a market weight of each?

(Terry Tran): Yeah. So this will be a surprise to a lot of people. I don't, simply because unlike the fund managers, there's no, I guess, rulebook that I need to follow. So for me, what I do is I generally try to have 50% over time growing a 50% long-term portfolio and also a 50% shorter-term income type portfolio. What that means is on the longer-term portfolio and both short-term portfolio, there's no percentage wise where I say, oh, I need to have this such and such in real estate investment trust, such and such in banks, such and such in technology stocks. I don't have that. The reason being is that I allow the markets give me the opportunities. So when the market is on sale, I see what industry and what stocks are on the most sale, and if they're on the most sale, they are also the lowest risk. So we will slowly add positions there and it naturally just diversifies, but also naturally lets your portfolio, I guess, in terms of percentage-wise, diversify to whatever percentage it actually is based on what's on sale at that point in time. So if that makes sense.

(Tyron Hyde): Yeah, I guess a bit more of an active trader. Are there any stocks that you've held for like ten years or constantly rolling over?

(Terry Tran): Yeah, for sure. So 50% of the portfolio is definitely more longer term. So they're not active traders, they're more where I'm going to be behind buying them and holding them for a long time. Because I always say that there are some stocks that should be held long term and there are also stocks that should never be held long term. And the ones that are held long term, generally they've got a global presence, the likes of the googles of the world, the apples of the world, they've just got a global audience that they serve 8 billion people. Whereas even though I live in Australia, I generally more trade our Australian stocks. I love our banks, not because of the dividends, I love trading them twice a year. And I trade up the likes of Telstra, don't like their financials, because ultimately these companies, their profitability is capped. They're so-called blue chip just means that they're big, but they don't necessarily mean that they're very extremely, they are profitable, don't get me wrong, but ultimately their profit margins and profitability is always capped to that 26, 27 million people with migration coming through. So I'd like to trade them a couple of times a year because it's like a wave, they come down undervalued. I buy them overvalued, I sell them undervalued, and then I just take that money and I'll go somewhere else. On the long-term side, though, generally they're global companies and I know that they've got this global audience. They finish, for example, like Apple, done with China. Now they're moving their factories and also their new clientele into India. So that's another one, half billion people to serve. So therefore they're the longer-term investments because I know over time their profitability will keep on going up and up and up.

(Tyron Hyde): Someone told me once, just buy four stocks, big, rather large stocks, or just trade them for the rest of your life.

(Terry Tran): Again, Tyron. That's why I generally go into the large cap, because to trade them way safer, but also much more liquid. So there's no need to go into the spec side, the mining stocks, stuff like that. For me, preservation of capital is number one and then making money is number two.

(Tyron Hyde): Interesting. What about charting? How do you get charting involved or do you at all involved that initial?

(Terry Tran): I actually don't do charting at all. So all these trend lines and I used to be a day trader using charts, so I learned all that. I spent probably at least $50,000 learning charting, but I did it for about a year and then I realized that I made money. I lost money at the end of sort of 18 months, I made no money. So through ego I was a day trader. But in the end, did it make a difference in my life? No, it didn't. It got me excited and, and spend a lot of time staring at the screen. So what we do is though, what they call technical analysis, actually quite simple. You've just boiled it down to two things. Stocks are just like commodities and property for that matter. They're determined by, the price is ultimately determined by supply and demand. And with stocks very different, unlike property, the demand and supply is actually ultimately, in the end, not you or I. We are very tiny players in the market. The ones who control the supply and demand are the institutions, the big fund managers, super funds, pension funds. So when these guys are buying, creates demand, pushes prices up. When they're selling 50-100 million at a time, they push prices down. And because we're value investors, we also invest very similar to them, finding the right stocks. And if we like the stock that they like, we wait till they buy and we buy with them. And if we are trading it and we see them start selling in a big scale, we sell with them because the price will also drop over time, because these guys are selling hundreds of millions at a time as well. So if you boil it down, charting is just a couple of, I guess, volume type tools that just see the volume of these guys coming in and they're not mums and dads volume, they're volume from the institutions. And that's it literally the only thing.

(Tyron Hyde): I like about incorporating a little bit of charting into my trading is that charts don't lie. People do.

(Terry Tran): Yeah, correct there is that charting, but it's more on the indicator side. So we look at the stock charts, but we look at more on the indicator side of seeing fund managers come in and go out. And then that just gives you far more accuracy. Because the thing, I don't know if you've drawn trend lines before for charting when you're optimistic, sometimes both you and I can, we go through the same course and sometimes we're literally drawing even trend lines at the same, different angles, for example, and we see different things. So it's very subjective. So I'd rather have something that's very black and white, nothing gray, where you go, oh, should I? Shouldn't I? It's either yes or no. So I prefer that. So what that means is that then you become an emotional investor and trader in the long run. And that's the thing that I think trips people up is that psychology bit that they don't have.

(Tyron Hyde): Excellent. All right, number five, Terry.
(Terry Tran): Yes.
(Tyron Hyde): How would you invest $20,000 as a 20-year-old? If you were 20 today and you saved up and had 20 grand, how would you invest it today?

(Terry Tran): I actually could diversify with a cheap wholesale broker, so I would actually start trading rather than long-term investing, because long-term investing without leverage does take a long time. So when you start trading that properly and being able to achieve that sort of 10,15, 20, 25% per annum and doing it in a safe manner, then that would pretty much every couple of years it will double your money. So therefore, that compounding effect. And then once you get to above 50 to 100,000, that's when you can introduce, I guess, the long-term investing into that portfolio as well.

(Tyron Hyde): I like that. Do you have many 20-year-olds in your group or is it all middle-aged people?

(Terry Tran): Well, I do have a lot of teenagers. It's only because they're children of my members and they've learned it from their parents. So we do have teenagers as well. And one actually left me a review and also a comment last two months ago. I mean, the market did, I think, seven, 8%. But she had year to date, 36% return. So she actually commented that, which is incredible for her. She's 19 now. She started when she was 17. But in the public side, generally, the young 20-year-olds don't get attracted to me because I'm so called too slow and uncool. They like crypto. And I've actually been on stage and someone came down and asked me what's expected return. I said, generally that 15% to 20% mark is where I'm comfortable at. And they just go, oh, why are you so slow? Someone else down the road promised me 50%. I said, I don't like risk that. Yeah. So they ended up not coming over to me. They ended up going to them. So I think what ends up happening is a lot of the young ones need to burn themselves, get that lesson, then, over time, in their 30s, they end up coming back over time.

(Tyron Hyde): Fantastic. All right, question number six. The flip side. There's got to be a massive transfer of wealth soon from the baby boomers to the 50-year-olds. So, yes, if you were 50 years old, had no money and just inherited 500 grand, how would you invest it?

(Terry Tran): If I was 50? Firstly, it depends if I already own my own home.
(Tyron Hyde): You got no money, you got no money.
(Terry Tran): I've got no money? Okay. So if I could, I would take that money and time it rough course, see what's an undervalued property and have that as a home. I would buy that first. If I didn't have had no money and had no home, I would do that first and get myself off the rent cycle. And obviously something that's affordable and not over leveraged, where you sort of kill yourself with mortgage as well, and then have that, at least I've established my home. And then once I have that established affordable, then I'll use debt recycle and then use some of the leverage over time to therefore leverage over into the stock side as well. So then you get the best of both worlds. Interesting.

(Tyron Hyde): The share expert telling people to buy property, bit of independence there is great. Fantastic. All right, number seven, Terry.
(Terry Tran): Yes.
(Tyron Hyde): If you could fly back in time, getting the Tardis and you could see your 20-year-old self, what would you tell your 20-year-old self about investing that you've learned over, what, 25 years of investing now? I think I saw somewhere, yeah.

(Terry Tran): Don't be stupid and don't leverage yourself. That's the first thing. Yeah. Leverage kills you ultimately, in the end. So I would say, don't ever think about margin. I've done leverage when I was 19 because I believed in the get-rich-quick and did the CFDs leveraged 20-30 times, did the forex trading leveraged as well? Did the options trading leveraged. Did margin lending with stocks also leveraged and that ultimately burned the hole. So I would say be unleveraged with stocks. And if you do want to leverage, then do it with the property equity instead. That's far safer, because I would say that when you're 20, you've got enough time, compounding time, there's no need to rush, have that patience and build wealth the proper way, because by the time, if you do it properly and without leverage, and just do it safely, by the time you're 30, you'd actually be. Yeah, you do very well without that.

(Tyron Hyde): I tried CFDs, you want to explain? CFD is a contract for difference? I'll let you explain it in a second. But I had a go at it for about a month and I saw how much leverage you could get and I ran. It's just.

(Terry Tran): Right, yeah, yeah. But people think that when you buy CFDs, you own the, it's what they call a derivative, so the price is derived from a share, but it's just a synthetic contract that is priced to a share. But the thing is that they give you a lot of leverage and depending on which provider, in the old days they used to give you 10, 20 times, but then these days I believe they go up to 50 times. Well, and what that means though is, let's say you had 100,000 and they gave you 50,000 leverage. So what that means is you literally only need 2000 to have 100,000 leverage, or $100,000 portfolio, and for the portfolio to drop 2%, which means that your 2000, from 100 down to 98, you've lost your 2000. So you're wiped out, pretty much. So that's what see if the power of CFD and average actually can do. But of course, on the flip side, if things do go well, you'll do well from your little tiny $2,000 account. But then generally in the stock market, you don't want to take that risk as well.

(Tyron Hyde): I just thought it just was like highly leveraged gambling to me.

(Terry Tran): Yes, it is very highly leveraged. And I think when I see advertisements, they show, I guess, what's possible of the upright, but they never show you people on the streets without a home on the down. So there's never, of course, never advertisements about that, which a lot of people actually suffer from that, but it's never seen, it's always in the background.

(Tyron Hyde): Ten with Ty is brought to you by Washington Brown, the property depreciation experts. 

(Tyron Hyde): Question number eight, Terry. What legacy do I leave your family or your community?

(Terry Tran): I think firstly, I want to be known as a great son to my mom, a great brother to my siblings, and also a great, I guess, friend to my friends and family and also a great mentor to people who actually want to learn this properly. So that's fast. And first and foremost, being able to, whoever wants to learn, being able to go out there and just help as many business owners, and in particular farmers as well, create that off business wealth so they don't rely on that volatile earnings of their business. If things go bad, I. E. Coronavirus, they've got another off-business portfolio that supports them during volatile times and being able to survive and thrive during both good and bad times. Yeah. So that's what I want to be able to help people do. And hopefully that becomes sort of my legacy and showing what can go wrong and but more importantly, what can be made with enough time as well in terms of portfolios.

(Tyron Hyde): That's where I saw on your YouTube channel, there were a lot of farmers. How did that come about? There were a lot of farmers in your course.

(Terry Tran): Yeah, no, I'm actually funny enough now I've become the biggest farming educator in the country now for stocks.
(Tyron Hyde): Really?
(Terry Tran): Literally, we've got over 400 Aussie farming families with us now across the land. And it started with one, and this was going back six years ago when I was introduced to a farmer. And I actually wasn't sure whether I could help the farmer because, like, farming the numbers, but farmers are actually very obviously to run a farm properly and survive. They are very smart people, so it's just that they've never been introduced or had that education. So that one farmer, I would also say farmers, because of that one farmer, I could see how farmers could become very good stock investors. And they actually are, because they've got patience, because they're so used to that sort of the seeding and then the harvesting cycle. So they're willing to wait that sort of a cycle, which is like the stock market as well. So they've got that patience. And when things don't go always 100% right, they're also very persistent. So then that one farmer did very well, I believe he did his first year, he did about 15, just over 15%.

And then I was invited to a farming conference association and he was there. So I asked him, would you mind going up on stage with me and sharing your portfolio on the big screen, on the Excel spreadsheet? And in literally put up on the big screen. And we just went through his journey and there was about almost 100 farmers in the room. And then they saw that in them and it was from there that the whole thing started and then over time word of mouth became what it is today.

(Tyron Hyde): Have they got enough time to trade or are they up so early then they got all day to trade?

(Terry Tran): What I teach, it's a systemised process where it actually doesn't take long. And we've got a lot of interviews actually showing you how farmers only on average, it depends on the market, usually on average between 15,20 to 30 minutes a day. So yes they do have time, provided they make that time. And really everybody's got that if they really want it. So it's not staring, unlike the day trading, you're staring at screen, you're not. When you're systemized and you're process-driven with a checklist, you're literally just following a checklist. And then if it's great, you take it.

(Terry Tran): If it's not good or the market's not the right timing, you switch off the PC and just enjoy life, or enjoy life on the farm. There's no point in trying to stare at the screen and trying to find something because there's no low-hanging fruit. So we go for low-hanging fruit instead. And if there's no low-hanging fruit, we just enjoy life, literally.

(Tyron Hyde): And are they trading Aussie stocks or Nasdaq or what is the majority of your both?

(Terry Tran): So I would say 80% to 90% of our investing is in the US market because all the global companies are there. The liquidity is there, the S&P, of course 500 Fortune are there as well. The Aussie stocks, like I said, a lot of them are not for long-term investments, more on the trading side. So when the opportunities do happen, we do trade and invest in the Aussie market as well. But one good thing about the US market is people go oh, don't you have to wake up, know, stay at night, late at night type thing. But the US market is in fact because we put our orders at the end of the market because the liquidity is there. The most liquidity. The reason why is that the fund managers, whether they're trading the portfolios or investing the portfolio, they generally don't like overnight risk. So they close out their portfolio at the end of the day. So generally when the New York Stock Exchange closes at pretty much 04:00 p.m. Their time, it's also early in the morning, our time at the moment I'm in Sydney so it's 08:00 a.m. So a lot of times we just put our order in the last 15 minutes of the day, put our orders and then that's it, because we do our research off market. We know what we want to buy or sell, and all we are doing in the market is literally checking the final indicator. Fund managers, are they coming in or getting out? For example, if we aren't buying, we would just want to see the fund managers coming in. And if they are, we take on that order, takes about a minute, and then that's it.

(Tyron Hyde): Are you talking about that 30-minute window after the market closes?
(Terry Tran): No. 15 to 30 minutes before the market actually closes beforehand? Yeah.
(Tyron Hyde): Right.
(Terry Tran): And could you do it aftermarket? Yes, you could put limit orders with outside market hours. If you missed the market, you could do that as well. And generally, 90% of the time, you actually get that order taken as well. Cool.

(Tyron Hyde): All right. Now, you've had an interesting upbringing, but what does success look like to you? You look pretty successful. Now, what does success look like to you, Terry?

(Terry Tran): I think for me, it's obviously having love in your life, having people care about you, you caring about people. So that's one thing. The other thing, too is definitely health, because I want to stay healthy, because as we get older, people forget that health is pretty much what they have. You can have all this money, but if there's no health, there's no point. The other thing, too, is what I call total freedom, where money free from finances, not having to worry about the bills coming through. So having that freedom for money, monetary, but also freedom for time, being able to be wherever you are around the world, being able to do whatever you want with whoever you want, so you can choose being control. And then the third one is experiences. I love travel. You'll see me running around the world, all different countries, experiencing the cultures and doing adventurous things, and that's just me. So I think those three money time experiences, and if you have all three, plus health and family, then, yeah, that's for me. And a very successful life. And of course, everybody's different. I think everybody will rank depending on where they are in life, different things on different scales. But I think if you have those sort of three to five things, your life is pretty successful.

(Tyron Hyde): I guess the Freedom Trader is one of the best things about trading, is the right?

(Terry Tran): Yes, yes. And you'll be surprised at where what, you know, wireless connection is available. I mean, I was going on overnight training through Vietnam. I was touring through Vietnam, my home country, and I thought that there is no way there's going to be wireless communication here because I need to buy one of the pharmaceutical stocks and literally logged on. Wow. Their wireless was actually way faster. It was global roaming with Telstra, but it was way faster than even Australia, the best Telstra connection I can get at home. So that were about 200 to 250 download speed, megabytes per second.

(Tyron Hyde): Fantastic.
(Terry Tran): Which is incredible on an overnight train. And I could actually put on my order and then enjoy the day.

(Tyron Hyde): So question number ten is a good one for you. You would know this. Warren's Buffett's rule number one is never to lose money. And rule number two, never forget rule number one. How do we as an investor, not lose money?

(Terry Tran): Terry, I actually would like to add another quote, on top of which is also Buffett's quote as well, which know, price is what you pay, value is what you get. So a lot of people just don't understand that. They think price and value are the same, so they just go in there and they just buy something. So to not lose money, the biggest, safest way is, in fact, firstly, knowing what you're buying fundamentally, is the stock sound? Even if it's a property, is the property sound structurally, in the right area, et cetera. So you need to know what you're buying and then, secondly, paying the right price. So if you don't know what you're paying for and all of a sudden there's a hype, let's say, even say property. I always compare it to property where you see it all the time. There's options, and the house clearly is worth, say, a million dollars, but because of emotion, they end up paying, say, overbidding and paying, say, 1.5 million. They've overpaid for quite a fair sum. So, yes, they will probably make money, but it's going to take them time down a track to eventually for the properties to catch up that price.

Stocks, is no different. If you overpay for it, you could make money, but you're risking that now. The downside is there that it comes back to what it's actually valued at. So you've got now risk as well. So you need to know what you're buying and paying the right price, and if you're patient enough to do that, then you'll do quite well over time.

(Tyron Hyde): But with stocks, every day, in essence, it's an auction for those. For that stock price, right?
(Terry Tran): Yes.
(Tyron Hyde): So isn't every day. Isn't that a market value or every day of that stock?
(Terry Tran): No, it's the market price, but not the market value, because the market value is based on what its earnings are and what its assets are. So that's why I show our members how to actually fundamentally evaluate a stock and value the stock. So fundamentally it needs to be strong. It's making profits, its return on equities. Right. It's return on assets. Right. It's making good money, net profit margins. So all those numbers meet?

(Terry Tran): All those, I guess, the ten criteria that I talk about, they are important. So that's fundamentally a great stock. But then now is the price cheap enough, even though if we like the stock, if it's not at the right price, we still don't want to buy it or hold back until it eventually drops that price, because it actually does over time.

(Tyron Hyde): How can a mum and dad investor value a stock better than, say, an active fund manager?

(Terry Tran): Active fund managers. What they do is there's two models. What active fund managers, and I don't want to get into too much detail because it'll confuse people, but what a lot of people do is they use what they call the discounted cash flow model. And if you look at the formula, it's very based on a lot of guesswork of not what the earnings have been, but what the earnings of a company is going to be. The cash flows basically over time. And really, in the end, they'll have a good idea of the part based on the past. But really, nobody has a crystal ball to say, oh, in five years time, this company is going to earn this amount. And that's why the fund managers and the analysts that do this full-time, they're always guessing about what the earnings are. And I don't like using that model because that guessing is always wrong. So I use another model which is based on really, what's the path, what has it done? It's a much more conservative model, so you will miss out on some investments and trades, but I would prefer to go onto the lower-risk side and use that model to do the valuation without the guesswork as well. So that's why we generally far more cautious, not to say that we are smarter than them. By far, we are not. But however, they also get it wrong, because in the end, they're also humans.

(Tyron Hyde): All right, there's one thing I didn't tell you, Terry. There is a surprise question that I ask for every guest, and it's relevant to their expertise. And funnily enough, yours is about shares. So the ten-year horizon, what would be one theme you'd invest in, whether because there's so many different ETFs now, you can buy ones relevant to health and AI and electric vehicles, et cetera. I'm not going to ask you for one specific stock, but one theme that you can see being a good investment over the next ten years?

(Terry Tran): I would probably say, another one just came up to me. I think there's two themes. One is definitely, everybody's been hearing it now, AI, artificial intelligence, the revolution, and I think it's going to be a game changer. And there are a lot of companies, stocks that do deal with that industry, but not of them. All of them are equal. So there's a lot of semiconductor companies coming into that sector, prioritizing the chips that make that go into that industry, et cetera, of course, the electric vehicles, et cetera as well. So all that is going towards there. But however, still the underlying theme, no matter what, is. Yes, that's a great theme and trend, but in the end, you still need to pay the right price because you can go into that sector, but if you overpay for it, you're putting on board an extra risk that you shouldn't have. But if you pay the right price, and there are plenty of stocks that are part of that AI revolution, but they are not valued correctly yet. So they'll get there, but they are actually undervalued. So you're actually better off buying those companies first. They probably won't have explosive growth as some of the others that already have, but the risk is far lower as well. 

(Terry Tran): So that's one thing. The other theme that I'm seeing is that the changeover from where everything was made from, China, et cetera, back in the last couple of decades. And plus also the market as well. There's a lot of other emerging economies that are coming out into the world as well. And also not even just that, but also the production. A lot of these companies, global companies, they're seeing risk in China. So therefore they're actually pulling back a lot of their, or diversifying their manufacturing base across to other countries as well, like India and also Vietnam, my home country where I was born. So those countries are probably going to be the biggest beneficiaries over the next decade as well.

(Tyron Hyde): Fantastic. Yeah, I agree with you on AI. I bought into the ETF Roblox, which has a lot of stocks around that space. Now, Terry, how do people get in touch with you? Well, firstly, tell me about your model. Is it a subscription-based or do you tell me about how freedom trader works?

(Terry Tran): Okay, firstly, I know that for a fact that I'm not for everybody, but however, what we do have, we have a lot of free resources and even a free master class. So on our website, there's that free which I spoke about, the free checklist. So if you've got a share portfolio, just download that free checklist. It's free, there is no cost to it. And literally they're the ten numbers that I run through for every company that we are looking at buying or currently own. So if you're looking at buying something that someone gave you a tip on, run through those criteria, because those criteria are quite strict and they'll easily eliminate maybe the idea that you've been given or in the markets, you'll eliminate more than 98% to 99% of all the so-called great stocks out there. Those stocks will be gone. So you just focus on those one or 2%. So that's the checklist. And the other thing that I do run is the master class as well. So there's a free masterclass to come in, get educated for almost 2 hours. And if you find that what I've shown you actually gels with you, then definitely then we can have a chat. But if not, then I might not be the right person as well.

(Tyron Hyde): Is that an online master class?
(Terry Tran): Yes, it is. Yeah. But it is live, so I do jump on live. So I've got the farmers one and also the business owners one. So it is quite regular. So yeah, jump on and you'll see me live. I'll be teaching. And at the same time we've also got Q A at the end and ask me any question you've got because I want to help as many people as I can.

(Tyron Hyde): Fantastic. What's the website, Terry?
(Terry Tran): Thefreedomtrader.com. All one word. And for the checklist, I believe it's just go into that site because you'll see the checklist pop up.

(Tyron Hyde): Actually, I think I'm going to join a masterclass, Terry.
(Terry Tran): No problems.
(Tyron Hyde): Well, thanks so much for coming on. I've learned a heaps. It's been unreal. Yeah. Thanks again, Terry.
(Terry Tran): No worries. Yeah, a pleasure being here and hope that I've been able to serve.

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