SPEAKER_00 0:00

Hey, welcome everyone to another episode of Beyond the Case. This is a podcast where global leaders from Harvard Business School's OPM community join in a personal capacity to share the real lessons, life principles, and mental models that go behind building enduring companies. Today's guest is David Halibu. He just finished OPM Unit 1. He's from OPM 68. So welcome to the show, David. Thank you, Sohan.

SPEAKER_01 0:27

This is uh pretty uh excited to be here.

SPEAKER_00 0:30

Yeah. Could you introduce yourself, your background, what you do as well for the listeners?

SPEAKER_01 0:35

Yeah, my name is Dave Halibu, uh, originally from Michigan. I live in Miami now, uh married, three kids, 50 years old. Currently, I would classify myself more as like a private investor. I'm involved with a number of different businesses, mostly on the passive side. A couple of them, I sit in like a, I don't know if you want to call it a board or an ownership position where we usually have like an operator. And I'm currently the CEO of a publicly traded company, which was a portfolio company of a fund that I was a uh, you know, I was involved with. We spun out a division, um, which I'm currently running. Uh it's in the Nasdaq. So that's my kind of day job. It's a lot. Great man.

SPEAKER_00 1:15

Uh, how does it feel to to go from Michigan to New York? Did you envision that growing up? That hey, you're probably gonna start your career as a trader someday.

SPEAKER_01 1:26

I was always into finance. Truthfully, I was always good in numbers. I'm a nerd. I'm still a nerd, was a nerd, will always be a nerd. So growing up, I was kind of fascinated by, you know, the movie Wall Street and and trading places, believe it or not, and you know, being able to work with numbers and, you know, being fast. And I didn't really know what it was. My my parents are first generation, family of mostly doctors. So if you were smart, you were pushed into being a doctor. So I remember when I went away to college and I told everyone I want to work on Wall Street. Like my grandfather kind of like reamed me and was like, you're smart, you need to be a doctor. But you know, I when I originally graduated college, I got a job on a trading desk, and it was essentially like, you know, I'll give it a shot for a couple of years, and if it doesn't work, I'll go get an MBA and you know, go the traditional investment banking, you know, finance route. And I I I ended up staying as a trader for, you know, 14 years, running a desk, uh, moving to Florida, running the offices here, et cetera, et cetera. I had a pretty good, fun career as a trader.

SPEAKER_00 2:38

Trading means uh taking quick decisions, sometimes with limited information. How do you see yourself in uh in the face of pressure when you have to act on limited data but take decisions which could have severe consequences?

SPEAKER_01 2:53

So that's a good question. So I wouldn't consider myself the most emotional person and in trading and in business. You kind of want to remove the emotion out of a lot of decision making. In my this is my personal belief, at least when it comes to you know making decisions, monetary decisions, business decisions, obviously, family and other stuff are more emotional decisions. I was pretty good at separating that. Uh it you know, it takes a while to learn. Keep a cool head. I I read, I mean, I you can see I have books here. Every one of these books is probably a nonfiction book on business or trading or psychology related to business or leadership. It it but back in the trading days, and and I use a lot of those same principles in business now. It's it's really for me, it was removing the emotion. It was definitely quick decisions. You know, I think the math helped as a trader. Obviously, you don't need to be quick on your feet math-wise when you're making underwriting decisions on deals or businesses. I'm trying to think of of the other, you know, managing risk reward. I I would actually be always good with taking losses. That's a learned habit. Most people don't like to take losses and only like to win. And and that's a that's a habit that I think has held me also in business with certain transactions or deals, you know, not not getting too married to a situation where you can kind of cut the loss. I have a lot of trading sayings I can use on this podcast because they I think they apply to life a lot.

SPEAKER_00 4:28

Go for it.

SPEAKER_01 4:30

Yeah, like, you know, you gotta rise your winners and cut your losses. So that that there's a reason why people say that. If you get into a trade and you're like, oh, I'm willing to lose, making up a number of a thousand bucks, and you're down a thousand bucks, you you have to have the willpower to just say, I'm taking the loss and I'm gonna live to fight another day. I mean, and I did see a lot of guys who would make a lot of money and and they would have that one trade that would blow out their year. It's a great question. I mean, even when I do deals now, I always ask, what's the most I can lose, not what's the most I can make? Because risk management, singles and doubles, living to fight another day is is is very important in in trading and in business.

SPEAKER_00 5:11

If you would have a loss at any point on this particular position, what would your mindset be like while you're going through that loss? Would you be tempted to maybe average out your cost of the holding, or would you, you know, be comfortable?

SPEAKER_01 5:25

So, yeah, that's a great question. Um again, when you were a beginning trader and you you let's say you buy a stock at 20 bucks and it goes to 1950, and you're tempted to be like, oh, I know it's going to 21. I'm gonna buy more because this is a good price and this is a discount. The way that we traded was more short-term in nature. A lot of it was day trade, some of it was overnights, you know, max trade called two or three days. I would do a I kind of morphed my trading from a traditional quote-unquote day trader to let's call it arbitrage. So some of my positions would take a day or two and you would build into them. So a lot of it really depends on the type of transaction that you're doing. I don't want to sidestep the question, but let's say you get to like a max position. So in theory, let's say like you're willing to put a million dollars of risk on and you put 100,000. Well, in that situation, you're almost hoping for it to get to go against you. So you leg into the position, right? Especially with like merger arbitrage. You're kind of legging into the position. And then when it's going for you and you you have a target exit, you may want to add to it. Whether it's, and if it's going against you, you might give it some room where you can add to it. Now, if you're taking a directional risk trade, and let's say your mask position is a million bucks, and let's say you bought a million at 20, and you're saying, okay, I'm willing to risk half a point and it goes to 1950. Well, you have to have the the discipline to say, okay, I'm not doubling down at 1950. I'm just taking the loss, losing my 50,000 or, you know, whatever the 50. I don't know, I'm doing the math wrong because it's 20 bucks a share, but whatever that loss is going to be, and saying, okay, you know, here's it's like poker. I here's my stack. You know, I want to I want to make sure I maintain my stack. There's a lot of parallels between managing a book of business trading and and I don't want to say gambling, because gambling is when you bet against something where odds aren't in your favor, but where you're, you know, playing a game where you can tilt the odds in your favor if you have a mathematical edge. And that's what we felt like when we were trading up to a certain point.

SPEAKER_00 7:34

Did uh the wash scale rule or you know, short-term taxes, any of this come into your strategy at any point while you were day trading or you know, short-term taxes?

SPEAKER_01 7:43

No, it was just part of the just part of the part of the business. You just knew you were paying high taxes, ordinary income. We were called pattern day traders. So if you trade a certain amount and quantify yourself on your K1s, it was uh I think it was called the pattern day trading rule. I believe they eliminated it now, where you weren't a subject to the 30-day, you can't take the losses against your gains because that was like your career. And we were trading like a proprietary book, so it was more firm capital, and then you would get like a split as like a K1 or 1099 based on how you were trading and designated. Was that stressful? Such a fast-paced life. So full disclosure, it was it's a great life when you're young. You you know, I made more money than I ever thought I would make, especially as a 23 and 24, 25-year-old. But when you're a 35-year-old and you're still making great money, and and I still have a lot of friends that are still trading, I began to um, you know, I had three kids, I was still trading. I'd go on vacation, I'd trade the markets in the hotel, because your income is, you know, you eat what you kill, right? Your income is based in it. And if there was some volatility, you'd be indoors all day. And I'm not complaining, but it got to a point, especially after quantitative easing, after the great financial crisis in 08-09. Those are amazing years, crazy volatile, you know, very lucrative for guys that can manage, you know, cutting their losses and riding their winners both up and down. But after the financial crisis, there was quantitative easing. And believe it or not, like I said, I'm a total geek. I've started reading a lot of books on post-1980 Japan and what happened after they kind of had their boom and bust cycle and they lowered rates and they kept rates at zero. And one of the byproducts was like a lower volatility. So call it 2011, 2010, 2011. You began to see like much lower volatility in the market as the Fed and and the government kind of worked in conjunction to stabilize the markets, which obviously everyone's glad that they did it. And you you you've essentially seen the repercussions over the last 15 years of steady growth. We really haven't had a recession outside of COVID, if you think about it, since the great financial crisis. The market's obviously done amazing. But for volatility-wise, those years, you know, 2011, 2012, 2013, the writing was on the wall and you didn't have these big, big, crazy moves anymore. And that's just essentially when I kind of took the directional risk of I'm gonna leave the business and and go elsewhere so I could build something of value. I didn't own the trading firm. I was just trading my own account. I had some guys that worked with us that I mentored and and and you know, I was like the head trader, so I would get like an override for managing the book of business for the firm on that group. But you could see the PLs shrinking, guys slowly leaving the industry. Like I said, I read a lot about low volatility times, and I I kind of like eased out on the business and then and then just left entirely in 2012.

SPEAKER_00 11:02

Will you talk about the business you started and what kind of uh a model you had for that business?

SPEAKER_01 11:09

Yeah, so that's a great question. So I'll backtrack. In 2020 and 2008, I became an LP in a number of different funds, mostly real estate related. Some of them were equity and some of them were debt, essentially hard money lending. I don't know how much your viewers know about hard money, but you're in the business, so you could probably educate them a lot more. I was an LP. Financial crisis hits, my equity investments essentially went to zero. I lost a ton of money. That was that was my first experience losing money, big money as an LP, where I didn't have control. And, you know, we had leverage positions in real estate, and I kind of didn't really understand what that meant. What year was this at Rafi? 2007, 2008 is when I kind of put the money in. And then obviously during the crisis, everything got wiped. You know, stuff went into foreclosure. They were like we had like we had like commercial buildings in like in like Toledo, Ohio as an LP. They were cash flowing, we were getting distributions, and all of a sudden the distribution stopped, and all of a sudden it was like, hey, we gave the properties back to the bank. And then my buddy had started a hard money lending business, and I had given him money. And again, we were making, you know, 12%, 1% a month, he'd pay us every quarter, passive money, mailbox money. And then all of a sudden it was like, hey, like the guys that are doing the flips are underwater, and then it's like, hey, they're not paying us back. And then it's like, hey, we're gonna have to, we're gonna have to uh foreclose on these guys. And then, you know, call it like 2010-ish, 2011. He was like, hey, man, I'm foreclosing, but I'm gonna give you back like I'm making up a number. I think it was like 70 or 80 cents on the dollar. And I was like, you know what, dude? Like, we just went through this like freaking disaster, and you were in Detroit, which was like the epicenter of like literally a horror film, and you were able to get us like, you know, a good amount of the money back. Like, kudos to you. Around that time, me and another guy that I knew in Michigan started lending money on a principal basis to a couple guys we knew in our community in Michigan that were buying back their loans because banks needed liquidity. This was during TARP. I don't know if you remember these days, where banks would essentially take, I don't want to say pennies on the dollars, but like haircuts, and you could buy back your loan. So these guys own like hotels and commercial properties. So me, another buddy, and then and then a friend of mine in Michigan essentially pooled money together and started lending money at like 12 and 15%. And then in a year, so call it 2011, 2012-ish. Literally, these guys, I would see these guys and they would hug me and they'd be like, Dave, thank you so much. Like you saved us, our family, like we were able to save millions of dollars by the loans, and you don't understand how much you helped us. So in my head, I was like, you know, I got three kids, I'm killing myself trading. You know, I see you know the writing on the wall. Meanwhile, these guys are like hugging me for like charging them like 12 and 15% interest. So they must be making a lot more than 12 or 15% interest on my capital. I kind of want to know what they're doing. So I went to a couple note buying conferences, believe it or not, because I lived in Florida, even though I have a direct connection to Michigan and I still do a lot of deals there. And I met a guy at a note conference who was teaching guys how to do notes and knew nothing about the note business, like literally zero. I'm assuming, Shohan, you can teach a class on buying non-performing loans. And I just said to him, I'm like, dude, you know, I don't want to fix toilets, I don't want to rehab, I don't really have a construction guy. Kind of understand lending. I can do it in Michigan because my buddy's in the commercial space. If we take a property back, he'll essentially just be on the hook for it and then pay us back because that's how we did the loans. My buddy was a commercial real estate guy, but it wasn't unlimited. We'd get like a loan here, a loan here. It wasn't like a business, it was more of like a one-off deal. And then he like essentially taught us the NPL business, me and a buddy. So we bought two notes, we foreclosed, got the note, sold it. One of them, we did like crazy out yields. And I was like, dude, this is amazing. I'm like, all right, let's buy 10 notes. You know, we put out a couple million bucks, help us, I'll pay you a fee to just kind of guide us. We became friends with the guy. I'm still friends with the guy today. So we ended up doing NPLs, buying them from hedge funds, buying them from third-party groups, foreclosing them, short selling them, and then we got into fixing them, and then we got into flipping them, and then we got into hard money in South Florida because we started understanding, like, okay, well, if the NPL is this, we could lend the money at this, and and this is what we could do, and here's third-party companies that could do the fixing. And and then I kind of so, so sorry, I know I'm going around, but I was doing that very, very, very little towards the end of my training career. And then I just cut short. Said, okay, I'm just gonna go full-time effort. I'm gonna give this a shot. And and you know, our timing was good 2011, 2012, South Florida. You know, we ended up getting a bunch of assets. We kept some of them for rentals. We flipped a bunch of them. I hooked up with a couple wholesalers. They started bringing us deals. I started lending. I was back in their book of business. I started, I instantly essentially treated it like a day trading firm, uh, like my old firm, where I started going to guys who wanted to borrow money and I thought they were good borrowers. And I'd be like, hey, I'll give you 95% financing instead of 65%. But I want to be your partner. So you put up a little, you run the deal, I'll put up 95%, we become partners, you give me like a pref. So then they can. I mean, you know how it works, Shohan. Guys don't want to do one deal. They want to do two and three and four deals because they want to keep their crews working. Because if you don't have a job, you're gonna lose your crew, they're gonna go to the next job. And remember, this was South Florida 2012, 20, 2013, 2014. We saw like an opportunity. So we ended up fixing and flipping about 120 houses. We did like, you know, over a hundred apartment units, not buildings, but units on balance sheet, like for our for our own book, in addition to, you know, tens of millions of dollars of hard money loans. Um, we ended up getting a couple institutional partners where we would close the the hard money on balance sheet, sell it to them. You know, I was pretty active in the conferencing. I like to meet people, I like to think outside the box, I like to hustle. We had loans that failed, we had NPLs that we lost money on. You know, nothing, nothing is as good as it sounds, you know what I mean? But I'm like you, that's why I kind of agreed to do this. I learned more from losing money on a $100,000 hard thousand dollar hard money loan where the guy stiffs me on the first payment or a $50,000 NPL than I ever learned lending money to a guy who just pays me back a year later. Again, I apologize for rambling and hopefully it's helpful.

SPEAKER_00 18:22

It is very helpful. And uh, I think you got the timing right. You know, starting 2010, 11, the market's been uh uh doing very well for real estate since then.

SPEAKER_01 18:33

Yeah, we got very lucky. I mean, we really went like I don't say balls deep, deep, you know, 2012, 2013. Once we got a little comfortable, remember, I would do like a little do one deal, have a mentor, pay him, do another deal, mentor, okay, am I doing this right? And then it was like, okay, let me do four deals. And then once we got the hang of it, we were like, all right, you know, add to our winners, right? Trading style. And then the same thing with hard money, and then we would see guys that were doing it, and we're like, all right, if this guy fails, I could take it over. So let's let's push our chips in. Because at that time in South Florida, you could get a stabilized single family home and you're getting like an ACAP. So it was amazing. Like your worst case scenario was a seven ACAP. You know, we we picked certain areas that we, you know, I wasn't doing beachfront property, $20 million homes. We were doing $200,000 homes, which we would fix the flip to $375, and and and if all went bad, you could rent it out for you know $2,500, $3,000 a month, and you were, you know, you're getting the yield that you needed to carry it. So your worst case, we ended up keeping like 12 of them, and we ended up writing them and selling them into COVID. So that was, you know, that was a that was a huge slug, you know? Yeah, it's tough. Um but I sold too early in COVID, man. Big mistake.

SPEAKER_00 19:55

But still, I mean, 2010. We did great. That site was free.

SPEAKER_01 20:00

We did really well. Yeah, it was a very good pivot. And then we got involved in a bunch of other businesses. Like once I was free from the trading shackles, I mean, there were two years where I made almost no money, though. You gotta remember, like, instead of making money, I was putting money out and learning and buying notes. So there was a there was a cycle in life for me and my income where I was like, hey, you know, I'm I'm blessed. We've got a little bit of a of a you know a of a runway, but I wasn't unlimited. I wasn't like Bill Gates or anything. I was like, I was still like a early 30s guy with two kids just starting to go to schools. Like the like the school bills hadn't hit yet, and and you know, life hadn't really, you know, I was still, you know, early 30s, but I was like, you know, I'm gonna take this shot now. Worst case, I can always go back to trading and grind it out. But if this works, I'm this is like a simpler lifestyle. I mean, the the plan was to build a a book of lease rentals where I could get the the you know the mailbox money and then learn and then you know be flipping on the side, but also have like the steady money that kind of keeps the lights on in our house. Nothing, nothing extravagant, but enough to to do well. And then we got into other stuff and then it just took off, to be honest with you. My dad was a dentist. I mean, I can give you that whole story. We started aggregating dental offices in Michigan as an as another business where my dad and his partner were the operators, and I was essentially their hard money lender, but I would get like a you know a piece of the business for for lower debt, but some upside, and we ended up selling that group. So we were buying stuff in Detroit post-credit crisis. So you can imagine people were literally giving us offices and saying, just run it and pay the rent. Like, here's the office. I just need you to run it and pay the rent. And and my dad had got into some financial issues in the credit crisis, so his credit was completely shy. We ended up getting like 11 offices, selling it to a private equity fund, rolling a lot of equity with that private equity fund. Learning the medical roll up private equity game in doing the transaction. And then subsequently from then to today, we've probably done like six other medical-related roll-up transactions that we've either sold or partnered with private equity funds as like a separate vertical of kind of the real estate business that we built.

SPEAKER_00 22:20

I think your story sounds a lot easier than it might have been for two reasons. In Florida, flood is a major risk, uh, flooding of properties. Uh the fact that you started as a note buyer, which means a lender, and then took over properties, you might have had to inherit a lot of the liabilities which were associated with the properties, right? Insurance risk, etc. And so working through all of that and still coming out on top, I think is quite phenomenal. And even in Michigan, if you are buying vacant properties or you know, leasing them out, in in Detroit, there's there's a substantial amount of crime.

SPEAKER_01 22:56

Yeah, Detroit's, we we stayed away from downtown Detroit, to be honest with you. South Florida, we picked our spots, and you're completely correct. We ended up doing a note and a condo, not knowing the condo laws, where they can kind of, if you don't pay like your HOA fees, they can sunset and go in front of the mortgage. So we ended up like having these huge bills that we had to pay the HOAs and we had to negotiate with them. We did other states, believe it or not. We ended up doing judicial and non-judicial states. Obviously, the non-judicial states were much faster. It was like Georgia was like, I mean, in two months you're in and out of the note. You're just like, oh my God, this is like stealing. You know what I mean? It was crazy. But obviously, you're paying a premium for those notes. And in Florida, we were like, well, we live here. Like, if we get the paper back, I'll just, I'll just fix the property and rent it. Like, you would buy the note, let's say properties were 200,000, you'd pay, I don't know, 100 grand for the note, maybe 80 grand, 110, whatever, that depends on certain factors. You would think in your head, you're, oh, I just bought a piece of property for 100 grand. That's not true. You'd have back taxes, then you'd have like these violations from the city that you try to wipe out with the foreclosure. But if the lender works with you, you have to be cognizant of the violations. And sometimes the violations are like $800,000 because it's like $1,000 a day. I mean, you know, you know this part of the business. And then you're like, you're negotiating with the city. Like, we didn't know any of this stuff, man.

SPEAKER_00 24:20

And there's also the risk of securing and maintaining the current condition of the property because people bring 100%. 100%.

SPEAKER_01 24:27

You would almost prefer the guy living there, yeah, not paying than it being vacant. Because at least there was someone there that like was using the facilities and not stealing the copper.

unknown 24:39

Yeah.

SPEAKER_00 24:39

And if insurance expires and you're not aware of that.

SPEAKER_01 24:42

No, we'd have to get force place, which is like four times the cost. But been there, done that, trust me. All learning curves. Yeah. So my point is. On every note, we did force place, by the way. Yeah. Well, you did force place. So you'd have to factor that in. Again, being a nerd and being pretty conservative, like every time we went into a transaction was like a spreadsheet. And I would get outbid all the time when we were buying notes because I was so conservative. I eventually had to loosen my guidelines. Because there was a point where I was getting nothing. I would submit bids and then I figured out what's happening. I would submit bids and I would never get it. And I would, I was like, oh, they're using me as like a bid, and then they're just they're just shopping me to sell.

SPEAKER_00 25:24

That's it.

SPEAKER_01 25:24

They'd be like, I already have a guy, look at his freaking offer, just pay me another, you know, because I would just I would flood him with like, I want everything in Florida. Like anything you have in South Florida, I'll buy it all. And when I mean by all, it's not a hundred million. It would be like a million bucks worth of notes, which would be like two million of notional debt, you know? Yeah.

SPEAKER_00 25:41

So for the listeners, I would want to summarize that this is a very messy business to try and clean up what you entered in real estate, right? Taking on someone else's loan. And then if they don't pay you, you know, you have to take control of the property, secure it, fix it up if it's broken, get it occupied with a tenant, and then be a landlord and try to get your money back for all the expenses you made.

SPEAKER_01 25:59

Full disclosure, I'm no longer in the in the business. Just full disclosure.

SPEAKER_00 26:03

So one bad transaction there can wipe out your profits from maybe 20 other good deeds that you've been a part of. And so going through that, did you at any point feel like just, you know, quitting the business or exiting it because it's too much maintenance? You know, they call it the toilets, tenants, trash, TTT, right? Yes, sir. And that's a nightmare to deal with. One property is a nightmare, but you did this at scale, maybe hundreds of properties. So at any point, did you feel like quitting, just you know, um, hanging your boots and saying maybe I'll I'll enter another industry?

SPEAKER_01 26:36

So it's pretty much what happened. Now, when you're talking, are you talking about notes, hard money lending, or fixing and flipping and renting property?

SPEAKER_00 26:45

All real estate focused.

SPEAKER_01 26:47

So I love real estate. I'm not gonna lie. It's an asset. You could touch it, you could quantify it, you could pass it down. There's great tax benefits. I'm still involved in the real estate business. Uh, more passively, you know, we own some industrial warehouses for rent, less maintenance, less toilets, less tenants, less, you know, a lot of the stuff that you're talking about. I'm a partner as an LP in and a GP, well, not a GP, but just partners, a couple of us with a management company and a bunch of apartments and homes. I love real estate. Real estate as a full-time job is not a hobby. It's a full-time job. And what I mean by that is it's hard to be great at real estate and great at doing other stuff, in my personal opinion. You could do a deal here, you could do a deal there, but at scale, it's hard unless you have a full-time person who's operating for you, which, which I currently don't have. Just like trading, by the way. Like everyone asks me, like during COVID, they're like, Dave, are you trading? You must be killing it. And I'm like, dude, when I trade, it's a full-time job. It's I'm I'm only staring at the screen. I'm doing research at night. Like, it's a job. And and if I do it 50%, I'm gonna get smashed because there's guys that are doing it 100%, and I need to beat those guys. Right. And that's my personal philosophy. When I traded again, it was short-term trading, COVID, tons of volatility. Earlier this year, I was tempted to trade when Trump, you know, put the trade, the tariffs on and took the tariffs off. And, you know, there's a war and there's not a war, like great volatility, man. Amazing for a trader. But again, it's a full-time job. Like, if you're not in it and you just jump in it, it's like if you were playing in the NBA and then you left for 10 years and was like, all right, I'm gonna, I'm gonna suit up for a game and and play against, you know, uh Curry and LeBron, like you're gonna be a little rusty. Like, they're gonna eat you up for lunch. In my opinion, again, I might be wrong. So real estate to me is the same way. Like, if you're doing it at scale and you're growing it, we I eventually ended up leaving the business because we got involved with other businesses, which at the time were more lucrative cash flow-wise and required the attention. And truthfully, the only reason we probably sold a lot of the stuff we did have slowed down is because during COVID, the prices in South Florida, where I live, have gone up so much that the risk to me didn't justify the reward anymore. And the cap rates got so low that I was like, I can't quantify these deals. Now, I've left millions of dollars on the table, even in even in assets we own that we sold early. But to me, again, it was a math equation. It was it was science and not art and the art won on that trade, but it is what it is. I'm I'm comfortable with it. Sorry if that's a long-winded explanation, but to me, I just kind of try to quantify everything mathematically as much as I can.

SPEAKER_00 29:51

Yeah. Uh that's helpful. What do you think of the markets today? Uh, I know you touched on volatility, but aside from that, uh Which markets? The stock markets, I'm sorry. I I know you're not involved as a trader anymore.

SPEAKER_01 30:05

No, I mean, listen, I pay attention. I mean, I'm I'm uh we have a company in the Nasdaq, so I I pay attention to the markets. How do I put this? I think I think Mag 7 and the indices obviously have um a high weighting on the indices and and their growth and and everything that's going on. Those companies, by traditional valuations, are actually undervalued, believe it or not, in certain instances. And you see a lot of the large hedge fund managers essentially piling into the big companies because their forward-looking EPS is actually below their historical norms in certain cases. That being said, a lot of the other stocks, which you know, markets on their highs are way off of their highs. And those, again, might be more consumer-facing. Maybe it's a business that might not be as in favor. So I feel like post-COVID, have you seen this like K-shaped economy people talk about? You're kind of seeing that version in the stock market where you have kind of the leaders that are that are the big caps, the bigger getting bigger. Obviously, technology is becoming a bigger part of the weightings and the semiconductor index, I think, has had its highest run in the history of semiconductors, and deservedly so. Like what we're in the AI data center space. A lot of these components you you can't even get. I mean, they're just on back order for years. Generators and turbines and chips and switches, and so on on a pure business perspective, I can see why they're going up. But you look at stocks like again, I'm not an analyst, Home Depot, which is usually like an indicator of the general sentiment of the economy. It's I think it's like four, 30% off its highs or something. Now, I don't know if that's because Home Depot's not performing well. I'm not singling out of Home Depot. I just think it's a bifurcated market. And I'm not gonna give you any picks. Like whatever I say to do, just do the opposite.

SPEAKER_00 32:08

Yeah. And so after 25 years across so many different industries, market cycles, what would you say are some of your key principles that have stayed constant with you? You know, if your children could inherit a few of the handful lessons from your career, what would they be?

SPEAKER_01 32:27

So that's a good question. Uh so it's funny, I was actually in the process before I got super busy of writing a book on trading principles applied to business and life. So I always go back to my trading principles just because I think that's the root of a lot of the stuff that's kind of helped me in business and and helped me even when I've taken a beating and gotten smoked and said, okay, you know, it is what it is, and you got to kind of fight back. You know, one of the principles was, you know, I never I never lose, I either win or I learn. I think it's from Nelson Mandela. It's actually I got a poster of it in my in my staircase so my kids see it when they walk down from their rooms. So I think that's a, you know, you just gotta kind of like the the theme of your podcast, you know, any anytime you have a you know setback, you just gotta learn from it and get better from it. To take a sports analogy, you kind of have to have a short memory. You know, again, setback, you know, brush it off, next man up, you know, try not to make too many excuses. And there's always someone bigger, better, stronger, richer, taller. You know, you just gotta play with the cards that you're dealt and try to make the most of it. I don't know if that's like an analogy. And then just again, I try to quantify everything. I know this sounds crazy, literally everything in terms of risk and reward. Like, you know, I'm a very cheap guy by nature, but I've gotten less cheap with time because I've kind of learned to value, like, okay, this is what my time is worth. Instead of me doing stuff, I should be outsourcing certain things or paying for certain things that I normally would just do myself and figure out. Unless I need to learn it, now I've gotten better with like, okay, I'll, I'll, you know, I'll pay a premium for like a headhunter. I'm using an example. Before I would go on LinkedIn and interview guys, now I'm like, I'll just pay a headhunter, let them bring me the candidates, and I'll pay them a fee because my time is worth a lot more than spending all this time trying to find somebody. Like things like that, I think I've grown into because the risk of finding the wrong person is a lot bigger than than the time that I'm using training them, finding them. You know what I mean? You can still find the wrong person with a headhunter, but all that time and effort, it for me, I was able to quantify like, okay, it's it's better to just use somebody because I can make more growth and money and time, spending all my time doing stuff that's accretive to what we're doing. It's just risk reward. Everything's risk reward. I mean, you know, driving, you know, marrying the right spouse, everything is it's not on a spreadsheet, but you can quantify like, you know, this friend or or a friend who's like a negative person who's always negative. Like, what's the risk and reward of maintaining, you know, it's just a lot of trading principles with regards to business, but you know, even schools, like, okay, what's the risk if the kid goes to this school? This is what it costs, these are the type of kids. What's the reward? Okay, these are the schools they can get into, these are the type of friends that they, you know, could be surrounded by. I mean, I everything to me is I know it sounds really weird, is you're always looking, whether whether you know it or not, you're always managing gristmers for hard.

SPEAKER_00 35:41

Okay. Talk to us about your OPM experience. You just finished Unit One last week. What uh motivated you to consider Howard Business School, the OPM program?

SPEAKER_01 35:51

Yeah. So something I always wanted to do, like I said earlier, total nerd at heart, love to learn, love to meet people, love to network. I've been involved with a lot of businesses, and we haven't even touched on here, as you can see, uh, post-trading career. And even when we were trading, just investing in different things, good, bad, ugly. I wanted to do it about 15 years ago, to be honest with you, post-credit crisis. But I had three young kids at the house, and I was just uh, you know, when I was pivoting out of trading, I was like, oh, this could be cool. Like I can meet some people, see some ideas, you know, learn. But at the time I had no income and uh and kind of, you know, figuring out a new path. So I said, you know, when the kids get older, maybe I'll do it. Um, I ended up joining EO for a number of years. I was in a form. A couple of the guys I knew in EO and one of my form mates did it, and they and every time he came back, he's like, Dave, dude, this is all you like you would love it. Everyone just talks business all day and different ideas, like, and and it, and I was like, all right, I'm gonna do it. So we had a portfolio company in the restoration space. We got into the restoration space in like 2019. We bought a restoration company, grew it, sold it last summer, and I said, okay, it's kind of like I was more in the operations in that business. So I sold it, and then I said, All right, I can now have the freedom. I'm turning 50. I turned 50 in April. As a birthday present to myself, I'm gonna go do OPM. So I'm not gonna take on any new projects. We sold the business in August. I knew OPM was coming up in May. I wanted to take a trip of my family. We took, we took a trip. Me and my wife took a trip in February. My daughter moved to Europe. That's why I moved her to Europe uh for six months, was doing study abroad. Just a bunch of like family-related, you know, trips, things we wanted to do. Just I didn't want the stress. I was like, I'm not taking on anything new. And uh, and that's it. I was the timing worked out, and then of course, you know, I got, you know, now I'm like running this company, so I do have something, and it was going on during OPM, but it was it was amazing. It was like the best thing I ever did. Honestly, I loved it. Every minute. The people, the the learning, the teachers, the the weather was awesome in in May.

SPEAKER_00 38:13

Yeah. It was amazing. That will fell out for you.

SPEAKER_01 38:16

Yeah, I don't know how good the weather's gonna be in February, but at least I got I got the you know, OPM one in May was great.

SPEAKER_00 38:22

Any takeaways that stuck with you from Unit One?

SPEAKER_01 38:24

You know, the the biggest takeaway for me was um there was a lot. I have a book of notes. Uh tell them I'll be there in three minutes. Okay, I'll be in tell them I'll be there in three minutes. Sorry, I'm just working from home. There's a delivery. Um I would say the uh the personality introspective stuff about like your wobble, and I don't know if you guys had that. If you're empathetic, if you're logical, that kind of hit home to me. That was like a big takeaway. And I'm trying to get better at when we have like company meetings and get something and people don't get something, making it more like inquisitive and questioning. And you know, after a meeting, I want everyone to basically articulate, like, hey, what did you understand from this meeting? Because sometimes you leave meetings, and then the next time you're like, I don't understand. Like, we talked about this, how come it didn't get done? And maybe they didn't understand exactly what you and I understood, because it's in our head, but articulating it, I'm probably not as good as I think I am. So now I'm asking more, hey, do you understand this? Is there anything I can help you with? Just, you know, I don't want to say hand holding, but there were so many. I mean, leadership stuff, methodology of teaching. I'd love to teach at some point in the future, not as a career, just pro bono, like entrepreneurship and stuff. The case study method. I've never really had a case study method. I love it. I think it's the best way of learning, to be honest with you. A lot more than just memorizing a bunch of crap that you never use in the future, especially with AI. All the freaking facts and stuff are almost useless. It's more of like, how would you handle it? Like, kind of like the questions you're asking, how would you handle the situation? Give me a concrete example. What would you do? You know, seeing the pros and cons of everything if you notice, they put it on the board, the good, the bad. It's our version of risk and reward. And then, and then going from there, you know, how do you make your quantify your decision from there? Terrible. Uh you could have stayed another month and just just done case studies and hung out with everyone. Like that's how much I enjoyed it. It was tiring. It's a lot of work, you know, mentally tiring, but it was amazing.

SPEAKER_00 40:21

Let's get to your books now. Uh, I see the bookshelf. Is there any book which you think has influenced you the most? One book you want to talk about, or maybe a few?

SPEAKER_01 40:28

So if you're really for business, I really like traction. Thought it was really good. I'm probably gonna miss a lot of books, to be honest with you. For trading, I've read Reminiscence of a Stock Operator probably four times. Every time I get in a rut trading, back in the day, I would read Reminiscence of a Stock Operator by Jesse Livermore. There's a book about, and I don't remember the name, but I gotta look for it, about um all blacks, which is amazing. It's about the New Zealand rugby team and why this little country always wins in rugby. And their motto is champions do extra. And I use that with my team. I use that in my house. It's just if you just do that little extra, you just separate yourself from everybody else. If you're willing to put in that little work and that little extra, I believe it's called the all blacks or something related to the all blacks that's here. I like buy then build. I prefer buying businesses and building businesses. I feel like it's much easier. Again, you quantify the cash flows, how to leverage them. That's worked out for me more than just trying to start something from scratch where I pretty much failed at almost all my scratch stuff. Yeah, I mean, I think those are the three right off the top of my head. I can I can probably go through a bunch of these, but those are the three off the top of my head that I've read again. Tractions for me, I've read a couple times, more for operations, EOS, level 10 meetings, very good, simple reading, um, more for operational base. Definitely for your lending business would help. I don't know if you've read it.

SPEAKER_00 41:51

Uh last question to you. If you could go back in time, speak to the version of yourself from 25 years ago, what would you tell him today?

SPEAKER_01 42:01

Again, I grew up, you know, first generation. I didn't grow up, you know, the way my kids are growing up, let's just put it that way. I would say, I mean, don't be scared to give yourself loftier goals than you think you can do. Because I would limit, I would say, oh, if I could get here, that'd be amazing. You know, I I should have said, I should have said, you should try to get here because you could do it. But I would I would set lower goals and hit them and think I accomplished something. What where I should have said was you should put your goals here and you can do it, but if you make your goals higher, you're you're gonna reach higher. And for a number of years, I was very content make, you know, doing X, where I in retrospect, I probably could have done Y, but I never, I never thought I could do that. Now I think I could do that, so I want to kind of do that, you know, to challenge myself. Phenomenal.

SPEAKER_00 42:55

David, thank you very much for your time.

SPEAKER_01 42:57

I hope this was helpful, man.

SPEAKER_00 42:58

It was very helpful, and I hope to meet you in person soon.

SPEAKER_01 43:01

Yeah. If I'm in New York or if you're in Miami, I'll shoot you a text. Like I said, I'll definitely be in New York, and we could we could talk landing all you want, man. I want to hear about your business at one point.

SPEAKER_00 43:11

Sounds good. All right, be well. All right, thank you.

SPEAKER_01 43:13

Bye bye.