Todd Stottlemayre – game owner. Todd is best known as the former Major League Baseball jug.. but, he quickly becomes equally well known for his professional success as an investor and trader.
Todd points out three critical keys to success: never give up; never stop learning; And, lay down, that you can achieve anything within your set of talent. Todd – incredible example of, how a keen desire to learn can empower dreams. Todd meticulously scrutinized his opponents on the baseball field, but my humble work ethic, as the trader may be his greatest accomplishment yet.
In a few days, Todd will partner with friend and professional financier Joe Donohu., to start a new hedge fund called Desert Coastal Capital. Despite challenging times in private action, Todd is ready to take responsibility for his investors. Besides, as his family legacy in Major League Baseball, Todd wants to build a legacy in finance, which may one day be continued by his children.
Damian Offman: Todd, tell me a little about your high school experience. Were you really an athlete?? Intellectual? Or, student athlete?
Todd: I was definitely a student athlete. When you are in high school, You always look ahead, "Human, I can't wait, to graduate and move on. ” But when you look back at high school, they – big days, growing. I had great friends and sports activities. I look back at commands, which I played on - whether it was a baseball team or a basketball team - with fond memories. Those were great times. Regardless of whether, where do you live or where do you go to high school, where do you grow, At home. And home is always a part of you.
Damian: Although I was also a student athlete in high school, I was more of an athlete, until i got to college. Then I became more interested in intellectual pursuit, because I was not an athlete. I felt, that I developed the abandoned side of me. How did you balance being a great athlete as well as a smart guy, interested in things outside of sports?
Todd: there are definitely different groups in the school. But I went to a really diverse school, that set me up for life. We've had many different cultures and races. For example, Your skin color didn't matter. Whether we studied or participated in the fields or in gymnastics, we were only children, being children.
People were not classified in, “he is on the basketball team,"" She is on the cheer command,”Or“ you – calm children. " I am very lucky to say that, were you a singer or a school play, i visited school, which was really tied very tightly. That experience was very cool. So, i didn't just hung out with smart kids or kids on baseball and basketball teams. I hung out with people in a cooking class, also. I hung out with people in a photography class. I grew up in a small town. So maybe they were small city roots, who did it that way.
Damian: Since you have never been classified as a “Todd baseball player” or “Todd is a student,”, when you moved through your baseball career to college and arguments “behind”, you always had an eye for something, what you will do, when your playing career is over?
Todd: I would like to say yes, but i didn't. Until I was a senior in high school, i only participated in sports and was a kid. Then, when i was a senior in high school, my baseball career, which is clicked. For the first time i thought, "Maybe I can play for the biggest stage ever ...", arrived that day, when I signed my first professional Major League Baseball contract with the Toronto Blue Jays. A very close friend of mine used to babysit me in New York, when my dad played for the Yankees - a guy named Frank Eyello. Frank worked on Wall Street. When I signed up with the Blue Jays and got some bonus money, Frank ran it. Frank helped me manage my money during my entire career.
First stock, which we have ever bought, was Pepsi. It rose from 30 to 100 and split three for one that year. I thought, "Wow! How it happened? I want to understand this!” [Both laughs] return was not a problem, because we only had a few shares. It was a game on my own.
So, I started to study the market. It was an absentee education For me. I didn't advertise it - I just did it. I studied the analysis of securities, Books Graham and Dodd, Warren Buffett, Peter Lynch, and Jesse Livermore. I studied the Magic Books of the Market and wanted to understand that, what the traders were looking at. I wanted to know the difference between an investor investor and a trader. So, i kept reading business book after business book and wall street book after wall street book. Since I made more money during my baseball career, I became more active in the market - whatever it is.
You can read all the books, You want and do all the learning, which you want, but you won't really learn, what means of discipline, until you are physically trading and investing. This – then, when will you find out, how to invest or trade, to match your personality. This – then, when you are accepted to be successful.
There are many different ways to trade and invest. but, i say this all the time: If you watch a Major League Baseball pitcher every night, the general movement is different. Is it slightly or dramatically different, it is different. Everybody throws a different type of quick ball, different type of feint. No two sliders are the same from one guy to the next. but, You can take two guys and get similar results, even if they throw with different hands or varying speeds. The same thing in the markets. You can have strategies from A to Z. You could be the push-off pole, Investor, technical merchant, or fundamental trader. All those people can be successful, using different strategies.
Success depends on discipline. You fit with your discipline? You cut your losses and write them down? At the end of the day it comes down, to discipline. I studied my discipline in the field of baseball. It took a long time.. In a manner, I found out, how to be a trader, to be a jug. As a pitcher I should have understood the preparation: Which attacker was I going to face? What were his powers? Where was his aggressive swing in the strike zone? What were my powers? Was I really willing to match my powers against his powers? The answers to your questions depend on the type of game, which you play. In trading, we look at various stocks, indices, and ETFs. We ask, “Where are they strong? When they are strong? When they are weak? When you need to be short? When you must be long?”The key to my success was preparation, Strategy, and discipline.
Damian: Todd, like a true wizard of the market, it seems, what do you always learn.
Todd: It's true. Let me tell you a story: I will never forget my last day in uniform. I knew, what was it on my last day. My hand was shot. My body was shot. I left everything on the field. It was a team on the last day for a year [2002], but i knew, that this on my last day played baseball for the rest of my life. It was extremely difficult to remove the uniform that day.. More importantly even, on which on the last day I was still learning about the game of baseball. Even after fifteen years, on the day I was going to take off my uniform for the last time, I still learned a thing or two about strikers, jugs, and games. That attitude just as transformed me as a merchant. I am now able to move into a role as hedge fund manager. And if I'm lucky enough to live twenty, fifty, or even sixty years from now, i can promise you on my last day, on my last trade, before my last breath, there will be something, to learn from the market.
The minute you think, that you have a game like a calculated athlete, market as a participant, calculated, or the world as a calculated president, which is the minute, You are surprised and something is bad, Happens. This – then, when you understand, that you didn’t find out all this.
It comes back, to discipline. If you're in love with something, then passion will guide the learning experience. I would say, that my goal to advance is, to become a better trader, which I can possibly be within my skill set and intelligence. If it means, that I could someday be the best merchant in the world, that is – my goal. Even if I became the best merchant in the world, how hard he would have to maintain that position? People make it to the major leagues and play Major League Baseball. It's hard to get there. But it's harder to stay there.
Damian: You said, that we are all different and must understand our powers. What Todd Exchanges Style And How Does It Relate Back To Strength, which you took from baseball?
Todd: I – probably a better trader than an investor. I – instant reward guy. So, I want to, to make my positions work fast. Based on this, it would be difficult for me to appreciate, invest capital, because strategic investors buy suppressed assets, that reflect value over long periods of time. I have no patience for this. So, today I am not interested in buying Citigroup as a value game. If Citigroup at three dollars a share – value game, maybe someday he trades by ten, fifteen, twenty dollars. But, it could take five, six, seven, eight years, to get there. This is not my style.
If I look at Citigroup, I'm looking for specific triggers - either on the long or short side. On the long side, breakout three months high. I will look in those diagrams and try to figure it out, what goes on in thirty minute time periods and hour time periods. I want to see supply and demand for those time periods. Then I storm the ground to the daily chart and look for the right triggers. If I get my go, trade goes. This – my strength as a merchant.
Damian: Would you ride something, while it moves in your favor? Or, part of you, who says, "The castle has arrived ... and the next thing."?
Todd: This – card game, right? Never grabbing a profit never means making money. If I like a certain area, where am i going to buy stock, i could measure it with a certain spread, which says, "ok, i will stop measuring it at twenty, and my goal of limiting the loss will be below that. ” There is also a scale, Approaching. I will advance mine aimed at limiting the loss on the stock, to make sure, that I never turn a win trade into a loser.
Damian: Couple a few years ago, Brian Shannon Taught Me The Value Of Calculating From Stocks.
Todd: i love brian shannon. I read his blog. I read his book [Technical Analysis on Multiple Periods]. Brian became a friend. Brian taught me, how to look in the daily chart and understanding deeper activities. Today I am talking about that skill as part of my strategy and discipline.. It wasn't something, what i learned ten years ago. This – something, what I raised from Brian last year. It might not help me buy the next stock, but it helps me with my risk management.
Damian: Brian also taught me the art of patience.. Since learning from it over the years, i stopped trying to make X number of trades in the afternoon and started just trading just, when my settings said, "Trade!”
Todd: Brian also helped me with the discipline of waiting for good setups.. Once upon a time the best trade is not trade at all. I have days, when i can't get a comfortable trade. I may not read the markets correctly. Or maybe I'm getting whipped. So, I'll fold my arms and become a spectator. I will go through all kinds of diagrams. If something pops up in me, trade could go.
I had days, when i get great feeling. I go back to reality aggressive in those days, because those – days, when you are in the zone. You are in your sweet spot. It's almost like, You see things before, what will they happen. They – very funny days. On the other hand, You can make many mistakes in days, when you are not feeling well - when you are not in the zone and trying to force something to happen.
Damian: Definitely. I can attest to this.
Todd: We all did it. We – whole person. Unless you take a good trading setup, You don't make money. If you call something, You are losing money. In those days you might say, “Why did I even do anything? I lost some money today, and that money shouldn't have been lost because the target entry price never hit. ” When you are losing money, Do you think, "Hey, which stinks. I really do not want to lose money!”In fact, I really don't want to lose at all. but, I have to understand that, if I – Correct 60 % time, which means, what i'm going to be wrong 40 % time. During 40 % time i'm wrong, discipline must play a role, to push the button and say, "I am missing." You must keep that capital.
Damian: Sometimes not wanting to lose can make people ride their losers.. How do you prevent your loss aversion or emotion from screwing you up?? How do you keep it from becoming your weakness and instead use it as a strength?
Todd: We all have a basic desire to be right. But being right can mean taking on a loss. This – Positive. It's like denial, because you only lost money. I had to lose a lot of money, to understand this. There were many times, when i entered the trade, and trade turned into investment. Minute trade turns into investment, this – loser. Unless you cut it free, it could be a big loser. Instead of, to lose one or two percent on that loser, You could be down eighteen or twenty percent before, than you can even breathe. To prevent that problem, I have a definite way out, where am i talking, what is this – all the pain, which I will take. Generally speaking, that pain threshold is based on looking at different charts. If I get long, I am looking for specific breakpoints where possible there is no support, or the support is too far under my cost. I don't want to take so much risk.
I am always looking for installations. I wish to lose one, to beat four. That would be a great risk reward ratio. It's not always alone – four. Sometimes it's alone – three, or one – two. But if the reward is risk – that one, that is, the best trade is somewhere else.
If you lose enough money many times on something downhill, then eventually you will be upset and take your loss. Unfortunately, sometimes the market tries to talk, You enter in reverse. Let's say, Your stop loss has been hit, and you are absent. Then stock changes and runs maintain, so you re-enter. Then, You are interrupted again. After that, how the market did it five or six times, You start to speak, "It's – there is no strategy. Let me expand my stops. ” But, moment, You start expanding your stops from your original stop price, You start to speak, “Maybe I should buy it here, because this is going to completely change. ” Then, a friend of mine, You bought yourself into a falling knife. Perhaps you are dropping by 30 % and your twice your original trade size. You got yourself involved in an ugly scenario.
It happened to me on my worst ever trade. I traded options. Then I flexed. Then I flexed again. Then I flexed again. I've been two or three days, facing expiration, and my options were worth nothing. I'm trying to sell them and nobody's buying. I had a huge loss. That day will stick with me for the rest of my life. Doubling down, thinking you are right, dangerously. You might believe, that the basic principles are correct, and you are right, but the market will tell you, "Assumption, what ... you are wrong!”And you will know, that you are wrong, because the price goes down.
Damian: We talked about trading, but you can support a little and walk me from time to time, You went off the embankment to that, when you became a recommended person on Stock Rebuke?
Todd: Confident. I retired from baseball in 2002. I was only 37 years. My goal was, to take off the year, but after six months, i was ready to do something new. Since I had an interest in the markets, I was thinking about setting up a hedge fund. But how many people were going to trust me with their money, since I didn't have a track record? I just got away from the field of baseball throw 3-2 sliders with loaded bases, right?
I am lucky to have financial stability, to do anything, what i wanted at the time. So, i wanted to do that, what i loved to do. My closest neighbor, Alan Fonner, was the director of Merrill Lynch, and he said, "Hey, we would like to have you, if you want to give her a shot. ” So I took a leap of faith and went to the training program at Merrill Lynch.. I became all licensed and started collecting assets. After a few years I have had success in introducing assets and have built a nice little team. I was getting bored, because I really wanted to trade.
Merrill Lynch has a great business model, and they – great institution. But it didn't match my passion. I wanted to make a decision. I'm used to being a jug. I decided, when to throw a quick ball, in, or slider. Because the broker only entered assets, diversified assets, and passed them on to established money managers. Then they make all decisions about trading money. I wanted to do this.
Damian: Is like going from pitch to ticket sales, when you are used to being in charge of the whole game on the field.
Todd: That's right. When you – jug, midfield, you have a huge responsibility. You have a huge responsibility to your teammates, Manager, serving coach, Coaches, and all, who bought the ticket that day, to support you. You are responsible for all those people on that particular day.. As a broker, I was responsible for the family, who gave me their money, but now I was passing responsibility to someone else. And those people get all the credit. Apparently those people have MBAs and CFAs. They went to work school, and they – really smart people. But for me personally, I'm not used to passing responsibility. So, after about four and a half years, I decided, that I wanted to be a merchant. I wasn't going to get a little better as a merchant, while i was a broker, so i walked out the door in favor with the people at Merrill. I have a lot of respect for them.
I could have picked a worse time than September 2007, to become a professional trader? [And laugh], You can look at it another way and say, “Woah, this – beautiful time." De-amplification phase created discipline, which I have today. During that time I met a gentleman by the name of Howard Lindson. I was in the process of introducing Howard to a private equity deal, and he introduced me to a private equity deal called Stock Reproaches. I thought, "Wow. This – great idea. I really would like to be involved. ” I made a small investment that day, Howard signed me on Twitter, and shortly thereafter, as sent to my industries.
I once noticed a guy on the system, which goes “UpsideTrader”. He – double-quick, dexterous, and a successful trader. When he took his losses, they were really hard losses. So I studied his background. He was a guy, who has been in the financial markets for twenty five years. He worked as an exchange retail brokerage firm, managed hedge fund, and was very successful. So I sent him, straight messaged said, "Hey, Joe. I would like to talk to you about your strategy. ”
About a week later, I picked up the phone, because he sent me his number. I said, "I'm going to call this guy and just start asking him questions." Every time I asked him a question, and he replied, he will enter, how does he look at trade. He explained his understanding of, what's going on from a macroglobal perspective, how it fits with different sectors, how those sectors correspond with different stocks, and how different types of charts break stocks. He's looking for breakouts and breakdowns, be short or long, and tries to understand the psychology of the market.
At first he advised, that i'm just starting eyeballing this process, which he took out for me. He said, “After a few days, cm., are you picking up on the winners. " I didn't actually trade for three or four days - I just watched and used the process. Then, when i started, I have chosen the winners. I named Joe, "Hey, Joe! Check this one out. ” He would make a few dollars on the trade, and he will call me back and say, "Big eyes. It was a big trade. Hey, I made eighty cents on this one. ” After doing this for several days, I thought, “The heck with this. I put real money in this!”So I started trading for real. Joe continues to mentor me. Every day we say.
Then I was listed as one of the top marketers on Twitter with Nobel Prize winners as [Nouriel] Roubini. There are all these famous traders and then this guy, who retired from the field of baseball and spent several years at Merrill Lynch. I was humiliated, to be named with these guys. It was awesome. But at the same time,, when there was a whole new pressure. I got there, all these new followers because of people said, “This guy is the main salesman. I will follow him. ” When I put on my trades and sent them, I wanted to make sure, that I could live up to expectations. It's like serving a big game, and a bright light goes on. If you're already thinking about your interview afterwords, You are finished. Actually, if you think anything past the next serve in that game, You are in trouble. But this – the animal in each of us.
Damian: So, how did you take, that newfound fame and is putting it on the line at the start of the new Coastal Desert Capital Foundation?
Todd: the conversation with Joe continued. We started trading together, shooting each other diagrams and installations. We made connections and friendships, looking for opportunities in the market. About six months after that, Which, Joe ran to Arizona and we talked about running the fund together. We had several reasons. Number one, we have been successful in very difficult markets. Number two, everywhere we turned, it was like an ongoing scam. People were getting taken for their hard-earned money.
Emotionally, it bothered me. This – one thing, to fail, managing an honest strategy and working just as hard, how can you. But only steal money – foam of the earth. So, i told joe, “If we go to do it, let's be transparent. Let's build a legacy, that we will work hard and have passion, to stand out in the markets. Let's do good, doing good for other people. ” If we stick to that discipline for our entire career, then we will succeed and never have, to worry about people, willing to give us. Honesty and hard work show up in our returns. We'll build something very special.
Damian: Where are you with the new fund?
Todd: We are going to start exchanging the fund on August 17th. We started raising some capital. This – very difficult circle of money. This – a family, friends, and people within our own circles, because there is no track record yet. Thus money, which we attracted, from people, who know us and believe, that we will work hard. I also feel very honored., to say, that I put my own money in this fund. There is a huge responsibility, because no matter, who puts money in this fund, every dollar and trade will be like, this – deposit. This – Great, Dynamic, when managers and investors have the same goals, because they – one and all. At Merrill Lynch I used to talk, “I don’t want to show any client anything, in which I do not have my own personal money. " I tried to live it as close, since i could. But in this case,, i have my money, his father's money, his brother's money, And we are – everyone in this is like family. Joe – the same way.
The fund will be a relatively very small fund, to begin. We'll build this thing one brick at a time. This is not a sprint. This is not a foundation, in which we are going to pursue a job for two years, in this way managers can get paid work, we are rich, sell the fund and move on. This – inheritance concept. My dad played Major League Baseball and thereafter, how he played Major League Baseball, he was a coach in Major League Baseball. He was probably in Major League Baseball for fifty – a few odd years. This – heritage. I am fortunate to follow in his steps as a player. My brother has followed in his footsteps and is now pitching coach for the Arizona Diamondbacks. This – baseball legacy.
I would like to leave a legacy of managing a fund and an investment company, what someday my kids say, what do they want to be a part of. So, this – the trip. 17-th August will be the first day of the rest of my life. This – actually the first time, when i had the same passion, excitement, and work ethics, which I had, when i played baseball game. Pressure enters the results registration form every month. Joe warned me, "Hey, this is every month. " I said, “It's calm. I used to transfer five games a month, and my results were sent once a week. So, if you are worried about me from the pressure of having other people's money management, I have no problem with that. ”
Our foundation will be very disciplined. Cash – position in our fund. Capital preservation is a priority. Capital growth is another priority. It doesn't happen quickly. It's not getting rich quick scheme. This – two man shows: me and joe. We are going to build infrastructure, since the money goes into the fund. If we have total problems with that, how much money is included, then we will create an organization, to handle them one person or woman at a time.
Damian: Todd, recently we have all seen in the media, that Lenny Dykstra went bankrupt after managing a fund and multiple investment-related firms. What would you say to a prospective investor, who has just heard of Dykstra and might be afraid of endowing the former athlete?
Todd: Firstly, I'm not up to speed with Lenny Dykstra's situation. I'm not sure, what happened there. But if you look back to last year, look at all the different money managers, who were wrong. I will never forget almost everyone calling, so that the crisis is over at the beginning 2008 – which was the worst part, inter alia. So a lot of people were very wrong. Unfortunately, Lenny was touched anyway. But I do not know, which side of the fence did he walk up to running money and doing all those things. I should certainly not judge anyone here. Now, as it concerns me? Obviously, who – what is going to say, “Here's another athlete, entering the world of finance. How long will it take for him, to explode?”
My goal is ten years from now during my introduction to business, meeting another person, would never believe, that i played baseball beforehand. Today people are going to see the name and say, "I think, that he played in big firms, right?”My goal is not going to happen quickly. I'm not going to earn the trust of an institution quickly. We must go out and find ourselves. I have no problem, including hard work and making this brick in one go, to be people, who may want to make investments.
There are always going to be people, taking shots. Trust me. When I took the mound, half of the people in the stadium liked me, and the other half didn't - even in my home soccer fields. I don't care if people like us. We must fulfill, preserve their capital, and earn trust. That trust isn't like the wind or the weather, which comes and goes. Building trust takes time. Today I spoke to my children about trust. I told them, when trust is broken from one person to another, takes a long time, to earn that trust again.
So, I do not look at me as only another athlete, entering the world of finance. I don't look at it like, Lenny Dykstra wore a baseball uniform, and Todd wore a baseball uniform, we must group ourselves. " Roger Stobak wore a uniform as well. Look at success, which Roger built in real estate. He became a leader for the company. Comparing me to Lenny is like saying, that every hedge fund manager – Ponzi Outline Artist as Madoff. I should not fight here with the demons of people's thoughts and thought processes. My focus is to build an inheritance one brick at a time.
Let me speak, that I wish Lenny all the best. I don't know then, what happened there. Lots of Presidents Have Lots of Wealth, tied up in their own stock, margined, what stock, and lost it all. Some very shiny guys did it. As we progress through this launch time, Show, how am i different from other guys. I hope, that someday I could be compared to some of the best traders in the world, not a lump – then, who took off his baseball uniform and entered the world of finance.
Damian: Based on trustworthy and successful people, who surrounded themselves with you, I'm sure, that you will be successful in your new foundation with Joe. With this said, what advice do you have for young student athletes such as, who is interested in finance, when they are done with sports?
Todd: Three things: never give up; never stop learning; And, Can you do anything, regardless of those, who speaks, what you can't. You can be the one, what you want, if you have passion, and will learn and never give up. I played baseball as a kid. Then I was lucky enough to play Major League Baseball. I am extremely fortunate to have a mother and father, who taught me about, to be responsible. My parents – the greatest parents in the world., If it weren't for them I wouldn't be able to do many things.. There was no such thing as rejection in our family, or can't. My parents taught me, what can i do anything, what I want, if i want to do the job. I am very grateful for that.
I've also done stupid things and made dumb mistakes. I made dumb statements, who caused sleepless nights. I had those sleepless nights, because I had a responsibility, which was given down from my parents. They told me, that I am responsible for, what i say and do. My dad used to say, “If you are going to dance, You have to pay off. If you throw, You sleep in this. ” [And laugh] I had many times, when i would call him and say, "Hey, Dad ... ”and he will answer, “You threw up again, is not it?"I would say" Yes. " And he would say “Okay, You must sleep in this now. ” He wanted to take responsibility for my actions.
I was saying to a young college kid the other day, that there were many times in high school, i couldn't wait, to go to college. When i was in college, i couldn't wait, to go pro. When I was in reason “behind”, i couldn't wait, to go to major leagues. When I retired from baseball and went to Merrill Lynch, i couldn't wait, to have my own foundation. Mostly, You can always look to the future, because there is always something. It's great to have goals and dreams., but doesn't forget to take care of today before, than you will look forward to tomorrow.
There are many bricks with our foundation, which should be laid by August 17th - and the 17th will be here soon enough. Right now I'm not referring to the 17th. Today I do that, what I should do, to set up our foundation for success. I always ask, “What can I do today?" Then, tomorrow i ask the same question. But I can't take care of nothing tomorrow, until I finish today's tasks. And when the foundation starts, he's going to stay one at a time. How can we make money every day? This will be the center. Concentration one day at a time leads to success.
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