Site Update and Robert Kiyosaki’s Cashflow Quadrant

Greetings fellow aspiring bosses and investors!

It has been a long while since any articles were published and so I wanted to take a moment to give an update on the site, the name change and share the inspiration behind the change.

As those of you who have been around since the start of this community you would know that Boss and Investor was previously named the Canadian Stock Trading Academy. This site, was created as the online platform to complement the local Meetup Group based out of Calgary, Alberta, Canada called the Calgary Stock Trading Academy (or CSTA). The meetup was formed in order to bring together people from the Calgary area interested in trading and investing stocks. The online website’s objective, was to provide tools for interaction (such as our forums and chatrooms) as well as content from the CSTA Blog and Knowledge Base area.

Late last year, as I am fond of taking long walks around the Calgary Bow River, I started looking for audiobooks to listen to while on the walks. My research led me to discovering Robert Kiyosaki, and his books on financial education and wealth building. His most famous book is entitled Rich Dad, Poor Dad. In the book, Kiyosaki describes the differences in their approach to money management between his “poor dad” (who was a scholarly, highly educated academic and his real father) who never managed to achieve financial wealth, and his “rich dad” (an entrepreneur and his childhood friend’s dad) who achieved wealth and taught financial education to his son and to Kiyosaki.

I went on to read also another of Kiyosaki’s books entitled Rich Dad’s Cashflow Quadrant. The cashflow quadrant is at the core of Kiyosaki’s message on achieving financial wealth. This simple yet elegant idea is what inspired me to change the CSTA website from one solely dedicated to stock trading and investing, to one that also encompasses the “B” quadrant, or “business owner” quadrant. Boss and Investor (or B&I for short) was thus born, with the overall mission to be a community of like-minded people who wish to transition from the left side to the right side of the cashflow quadrant, leaving behind the E (Employee) and S (self-employed) and working on entering the B (Business Owner) and/or I (Investor) quadrants.

Now lets delve deeper into the cashflow quadrant by taking a look at the below graphic:

The Cashflow Quadrant is divided primarily into the left and right sides. The left side, which Kiyosaki states represents 95% of the population, is governed by the principle where a person exchanges their time for money and that income is not leveraged (because you can only work say 20 hours a day, you cannot possibly work more than that and your income is on a $/hour basis). When that person stops working, the income comes to a halt as well. This is the fundamental principle that defines the left side of the quadrant. On the other hand, the right side of the quadrant represents the opposite. On this side, a person exchanges money for money, but more importantly, income is leveraged by either money or people. In the case of the B quadrant, income is leverage by people. The more people who work for you, the greater the leverage. In the I Quadrant, income is leveraged by money. The more money is invested, the greater the leverage. The defining characteristic of the right side quadrant is that both of these income systems do not depend on your time. People and money will both work for you even when you sleep.

For the differences between each quadrant, here is a summary:

E – You work for someone else, exchange time for money. When you stop working, your income stops.

S – You work for yourself, you exchange time for money. When you stop working, your income stops.

B – People work for you. You exchange money and/or time initially to start or acquire the business, but eventually the business runs itself and generates income for you regardless of whether you put in more money or time. Optionally, more money or time can help grow the business and increase the income generated from it.

I – Money works for you. You exchange money and/or time initially to acquire the investment, but as soon as it is acquired, the investment starts (hopefully) generating income for you regardless of whether you put in more money or time. Optionally, more money or time can help generate higher returns on investment.

To better describe each quadrant, let’s use the example of the restaurant business. It’s not a perfect example, or even an ideal business system, however it is one of the most common businesses in our economy, so everyone can relate quite easily. A restaurant business model exchanges food and good service for money. Restaurants generally employ waiters/waitresses, chefs and managers as the primary human resources. Starting a restaurant requires investor money, and growing the restaurant to a multi-restaurant, multi-region chain requires generally a corporate structure and most typically this is in the form of a franchise system.

Someone in the E or Employee quadrant in the restaurant business would exchange time for money and work for someone else, at various degrees of rank, from a waiter all the way to the CFO of a large franchise. Even the CFO exchanges time for money and works for the owners of the business (unless they are owners themselves). A waiter may make $15/hour and a CFO may make $400/hour, but they are both in the E quadrant. This person would stop making any income if they did not show up to work on any given day.

S – Someone in the S quadrant would be someone who exchanges time for money, however, they work for themselves and not for others. In the example of a restaurant business, an S might be the owner of the restaurant who also acts as the Manager and works 7 days a week at the restaurant because they cannot afford to pay a Manager to work for them, or, they don’t like to give up control. This person would not make any income if they did not show up to work. The effect might not be as immediate as an E quadrant employee, as the business may still rung without them for a while (for example, a waitress may step up and try to manage the restaurant while the owner is absent) but due to the lack of experience, the business would eventually degrade and start losing money in the long run.

B – Someone in the B quadrant would be a person who owns a restaurant (or several of them) but never steps foot in it. This person may simply meet once a month with his restaurant managers and his accountants to review financial statements and other reports and give general high level directions. Depending on how well he chose his managers, this person may only meet with them once a year. In this scenario, the B quadrant person would earn incoming throughout the year without ever having to exchange any time or money for this income.

I – Someone in the I quadrant would be a person who purchases shares in a company in the restaurant business (shareholder), or alternatively lends money to someone who wishes to start a restaurant business (angel investors). This person is not involved, even remotely with the management of the business. However, depending on the degree of ownership, the person may exert full authority over the management of the business and supervise the people managing the business at the highest levels. For example, they may vote to remove Board Directors from a Corporation, or remove the CEO of a private company and replace him with someone else. This person generally earns income over time without any exchange of money or time, even less so than someone in the B quadrant.

Now that we have understood the definition of each Quadrant, let’s take a look at how to move from one quadrant to another. If one wishes to have the most diversified set of assets and skills, then they should start from E, go through S and B before ending at I.

Going from E -> S -> B -> I in sequential order is not essential. And investing a large amount of time or money in every quadrant is also no necessary. The basic principle is that the more high income skills and assets you gain, the higher your income. How much one wants to devote to self development and acquiring of assets depends entirely on themselves.

For example, someone may remain in the S quadrant for decades, as a professional working for someone else (e.g. an accountant, a doctor, an engineer or an airline pilot). However, on the side, these E quadrant folk may create a side business or invest their money in the financial markets and earn multiple streams of income from each quadrant. Of course, Robert Kiyosaki teaches that the most efficient quadrants to earn income are the B and I quadrants, because they provide leverage and freedom. So, the more income that comes from the right side, the better. Ideally, a person’s entire income should derive from the right side, but if this were easy and quick, everybody would be a multi-millionaire. So, how is one supposed to move from the left to the right side quadrants? The answer is self improvement and investing.

Self improvement encompasses the learning and improvement of high-income skills and knowledge. These are the type of skills and knowledge that enable a person to start, run and own a business system (even with other people’s investment capital). Investing encompasses the skills and knowledge to make sophisticated investments with your own money that yield large returns.

Examples of high income skills include:
– Accounting and ability to read financial statements
– Management skills
– Understanding of business and tax laws
– Understanding and ability to trade the financial markets
– Understanding of human resource systems and management
– Understanding of marketing, sales and business development
– Networking

These are some of the core skills that would enable a person to start, acquire and manage a business or an investment. The more time and money one spends on developing these skills, gaining the knowledge and gaining the experience from applying it the more income they are likely to generate form the right side of the quadrant. Going back to our restaurant business model, a waitress would not be required to have any knowledge of accounting, financial statements or legal matters. They would only be required to know the basics of customer service. A restaurant manager on the other hand, would need to know about accounting and human resource management in order to manage these aspects of the business. A restaurant owner would need to know, in addition to all the above, matters related to real estate, legal issues, marketing, and business development. An owner of a national restaurant franchise would need to know about regional logistics, understand restaurant market trends, and about all the previously mentioned skills at a higher level of complexity. A franchise owner would require the skills to manage 1000 employees, where as a single restaurant owner would require the skills to manage only 10 employees.

So the answer on how to move from the E and S quadrants to the B and I quadrants is continued self improvement and re-investment of earned money. While the left side is governed by instant rewards, low risk, and steady effort over time for a fixed income, the right side of the quadrant is governed by delayed rewards, high risk, high effort at the start which continually lowers to the point of no effort whatsoever, while income keeps increasing due to growth of the business and the accumulation of capital that is then re-invested to generate additional passive income.

So, if you have not read Kiyosaki’s books, i highly recommend them.

Rich Dad, Poor Dad

Rich Dad’s Cashflow Quadrant

What are your thoughts on Kiyosaki’s Cashflow Quadrant principle?
Leave a comment below or join the discussion on the B&I Forums.

Posted in Uncategorized | 3 Comments

Is this every traders dream lifestyle? Trade HARD. Live BIG with Cameron Fous!

How To Live Like A King As a Digital Nomad ; Day trading!

Trade Hard and Live Big with Cameron Fous

http://fousalerts.com/

Posted in Uncategorized | Leave a comment

Successful Traders Spotlight: Kyle Dennis from biotechbreakouts.com

Kyle Dennis is a 27 year old multi-millionaire stock trader. He graudated from UCLA and landed a job that was paying him $35,000 a year. He started trading part time and was student of Jason Bond. The first year he made $37,000, second year he made $55,000. Once his trading profits exceeded his regular job salary in 2015, he quit his job and started trading full time. In 2015 he made $850,000, in 2016 he made $1.1MM, and in 2017 he is up $952,000. Kyle started with a $15,000 portfolio and is about to break $3MM in trading profits. Kyle is the type of trader we all aspire to become. He is a very intelligent individual, of friendly demeanour and a great teacher. Kyle started his own service teaching stocks in October 2016. He specializes in biotech stocks, and has two primary trading strategies. 1-4 week swing trades and fast moving momentum stocks that he holds 1-3 days.

For more information, visit biotechbreakouts.com 

 

Posted in Uncategorized | Leave a comment

Successful Traders Spotlight: Jason Bond from Jasonbondpicks.com

Jason Bond is a multi-millionaire stock trader who left his career as a New York Public School teacher after 10 years, taught himself trading and has been teaching trading to others for the past 5+ years. Jason is a small cap trader (market cap under 2 billion, stock prices under $10). His strategy revolves around short term swing trading (typically 1-4 day holds) to capture stock price moves for a 5-20% profit in 1-4 days. He primarily trades 3 patterns which he teaches. He also trades momentum stocks especially during poor market conditions and likes to trade Fibonacci Retracement plays.

Jason is a very energetic individual who loves trading and helping others improve their trading. He starts with $100,000 every year. He is up +125% or $125,000 in 2017, he was +330% or +$330,000 in 2016 and +155% or +$145,00 in 2015.

To learn more, check out his service at Jasonbondpicks.com 

Jason’s 7 Step Swing Trading Strategy

Jason’s Oversold Chart Pattern

Jason’s Continuation Pattern

Posted in Uncategorized | Leave a comment

$583 to 100k in 44 days – The power of day trading when done right!

The Dow Jones Industrial average gain is estimated at 10.4% per year in the 20th’s century (100 years). The S&P 500, since it’s inception in 1926 through to 2011, gained about 11.69% per year over 85 years.
Ross, from Warrior Trading, gained 17052% in 44 DAYS! If you consider about 252 trading days in a year, that’s a 97,661% gain per year! Ok ok, enough with the crazy numbers. The point is, Mr. Ross managed to prove a point. That you do need to have a large sum of money to make money on the stock markets. All you need is knowledge, skill and the correct mental attitude.

Ross is still trading his 100k challenge portfolio, and is up to $60,000 after having withdrawn $70,000. So he would have been at about $130,000 today having started with $583 on January 1st this year. There are four lessons to learn from this incredible feat.

1. You do not need a large sum of money to be successful in the stock market. Anyone, even with a minimum wage job, can save $583 and with the proper trading education and paper money training be able to make profits.

2. Day trading is extremely volatile and dangerous. This is why, the majority of trading experts advise those just getting started in trading to stay away from day trading. In day trading, everything happens at lightning speeds, since to make the most out of day trading one needs to trade volatile high volume stocks. If you day traded Apple or Amazon, you’d need a huge portfolio in order to make any gains, as you’d be lucky to get a 3 or 4% gain in a day. Where as small cap stocks can jump over 100% in a matter of hours or even minutes. But at the same time, they can fall just as quickly and wipe out trading accounts instantly if one does not know what they are dealing with.

3. The name of the game is consistency and the proper mental attitude. Ross has had quite a few “Red Days” as he calls them. He’s had many days where he’s lost between $5000 to $8000. Days like those can be very hard on the psyche of a trader, and the difference between successful traders and those that quit are the ones who know that losing is part of trading, and the sooner one comes to term with it the better.

4. Day trading has a limit on earning potential. Stocks that jump 100% are normally penny stocks where you would have a hard time buying more than say $20-40,000 worth of shares. If you want to go bigger in position size, you’d have to move to mid and large caps but those never make 100% moves. So trading is generally a trade-off between Large short term % gains with small positions vs Small short term % gains with large position sizes. Alternatively, one would have to increase the trade period to medium and long term with large position size in order to have large % gains and large position sizes. But in such instances you are locking up your capital on a single trade for what could be weeks or months. A long term trader could get a 120% move over a year on 1,000,000 (a 1.2 million gain) for example if someone had invested in NVDA last year. A day trader on the other hand, could make on average a 10% move, 5 days a week, for a year on a daily $50,000 position (or 100% on 1 x $5000 position)(for $5000 daily profits) and also make $1.2 million over a year. You get the idea 🙂

So the day trader and long term trader both achieve $1.2 million in profits, the difference being that the day trader risks say 20% of $50,000 every day (say roughly $10,000 if things went really bad), while the long term trader risks say 1% of his 1 million position of a slow moving stock in any given day (or $10,000).

So check out Ross’s Day 44 of the challenge video below (and check out his other videos). Also, if you are curious about the details of the challenge, and his strategy and goals, visit his 100k challenge page.

Ross made $222,244 from day trading in 2016. His best month was a gain of $35,000.

 

Posted in Uncategorized | Leave a comment

Trading Oil ETFs and Inverse ETFs

Working in the oil and gas industry, I have always had an attraction to trading oil. In the Canadian market, I trade HOU.TO (Horizon Crude Oil Bull Plus ETF) and HOD.TO, its inverse brother. Both of these are 2x leveraged ETFs.
In the US market, I used to trade UWTI and DWTI, but these were delisted in December 2016 by Credit Swiss. However, good news was, Janus Capital, the brokers behind UWTI and DWTI listed a new Velocityshares 3x bear/bull tied to WTI crude oil and named them VelocityShares 3X Long Cruide ETN (UWT) and VelocitySHares 3X Short Crude ETN (DWT). As opposed to HOU.TO and HOD.TO, as their name imply, these ETFs are 3x leveraged.

Looking at the UWT chart from inception to date, oil was moving sideways between $23 and $27 from right up to end of February 2017. It then had a massive drop to $16 and started a downtrend with wild swings that took it up to $23.50, then back down to $13.70, then back up to $19.40, to finally hit rock bottom at $10 on June 21st. A swing trader could have made massive gains both on the upswings and downswings during this period. Since June 21st however, oil has started to form an ascending wedge pattern and today UWT broke 2 major resistance levels. It broke $14.25 horizontal resistance, and $14.25 upper trendline of the downtrend with above average volume of about 10M shares traded. All indications show that oil is turning bullish and possibly starting a new uptrend. Next resistances are at $16 and $19.50, but knowing how volatile oil is and its susceptibility to bad news, I do not expect it to be a smooth ride upward. I expect seriour retracements and even sideways movements. The next few days will show if this was a real breakout or if a false one, thus resuming the downtrend. Either way, the potential for massive profits exists when holding on this these ETFs for 4-8 weeks. They demonstrated to be having major 4-8 week swings for the past 4 months.
The beauty of ETFs is that one only need to buy at pivot points and trade in the direction of the oil market. By buying UWT on upswings and uptrends, and then selling and buying DWT on down swings and downtrends, one could in theory be making major profits continuously.
Take a look at DWT chart


If one had bought at the low pivot on May 25th at $26 and sold at the third consecutive red candle and sign of weakness on June 23rd at $42 could have made a 61% gain. On a $10,000 dollar position, that’s an easy $6000 in your pocket in a matter of 4 weeks…and then buying at $10, with a little patience, by today could have made another 40% or $6400 profit on the upswing. $12,400 or 124% gain on your position in 8 weeks sound pretty darn good to me!
So let’s see what happens in the next few days. 16% gain in 2 days, I expect retracement and profit taking coming soon…

Posted in Uncategorized | Leave a comment