Stock market investing is often discussed in a language that assumes a level of knowledge many people were never given. That gap becomes especially clear during periods of uncertainty, when investors are expected to understand how to invest during market volatility while prices fall, headlines worsen and confidence begins to erode.
In this conversation, Derrick Kinney speaks with financial educator Brian Feroldi about the experiences that shaped his approach to money and investing. Feroldi reflects on continuing to invest through the 2008 financial crisis, the costly consequences of becoming overconfident in a single stock, and the role self-education has played in his financial life and career.
Their discussion also examines how investors can respond to volatility without allowing fear or recent performance to dictate their decisions. From building a strong savings habit to tracking net worth and recognizing recency bias, Feroldi makes the case that long-term financial progress depends less on finding the perfect investment than on developing sound judgment, discipline, and a willingness to keep learning.
Key Insights
- Volatility is part of investing. Feroldi explains why falling markets should not automatically push investors to the sidelines, particularly when they are working toward long-term goals.
- Confidence can become a liability. His Kinder Morgan investment shows how a strong conviction can obscure risk, especially when leverage and a concentrated position are involved.
- Saving matters before stock selection. Building wealth starts with income, expenses, debt and a consistent savings rate, not simply finding the highest-returning investment.
- Recent success can cloud judgment. Recency bias can make one good decision feel repeatable, even when the next investment presents a different set of risks.
- Most financial knowledge is built over time. Feroldi credits books, experience and independent learning with shaping his understanding of investing more than formal education alone.
- A clear purpose gives the work direction. His mission to spread financial wellness connects investing education with a broader effort to help people make better decisions with money.
Listen to the Conversation
Transcript
Derrick Kinney
Welcome to the Derrick Kinney Podcast on Modern American Advisor.
Each week, we revisit one of my most valuable conversations to bring advisors practical ideas to grow their businesses, serve their clients, and make more money to do more good.
Investing in the stock market can feel overwhelming and complicated, but it doesn’t have to be that way. Chances are, you probably didn’t grow up with your parents or grandparents who taught you what the Dow Jones was or how to invest in exchange-traded funds. In fact, right now you might be thinking, Derrick, it’s too late to learn. I should have started investing years ago. Well, listen, no matter your age, it’s never too late to start. And my guest today is going to tell you why.
Brian Feroldi is a financial educator who teaches beginner investors, just like you, easy and simple ways to make money in the stock market. He’s on a mission to teach you everything you need to know about investing that you weren’t taught in school.
Today, Brian’s going to reveal the worst investing mistake he made, how to invest in a volatile market, sound familiar? And what advice he would give to his 18-year-old self about money. It’s time for you to understand the stock market and how it can make you money. Brian, welcome to the podcast.
Brian Feroldi
Derrick, awesome to be here. Thank you so much for having me.
Derrick Kinney
And by the way, congrats on the new book. As we record this, you are topping the charts, great reviews, and I think why people are resonating about your book and you, you make money simple. And that’s really the topic today, is people make money so complex it really scares them off, and I think it leads them to make some really bad decisions.
And one of the things that you talk about is your first exposure to the Dow Jones Industrial Average was as a golf caddie in high school. Tell me about that.
Brian Feroldi
Yeah, I think like a lot of people growing up, I wasn’t taught anything about stocks or investing or the stock market. But if you watch the news or read the paper, you of course come into semi-regular contact with it, even if you don’t know what it means.
And I vividly remember I was a golf caddie at a local country club in high school, and a lot of the members there were well-to-do. During a tournament that was happening, I was caddying for some doctors or lawyers or whatever they were, business professionals in some way. And at the turn, so halfway through, they went in to get some food for themselves.
And when they came out, one of the golfers said to the other, “You’re not going to believe this, but the Dow is up like 300 points today,” right? And all the other golfers that were there were high-fiving each other. They were like, “Woo-hoo!” And me as the caddie, I had no idea what they were talking about, right?
Derrick Kinney
Surprised, right?
Brian Feroldi
I had no idea what the Dow Jones Industrial Average was. I had no idea what a point was, but I could infer from their enthusiasm that it was a good thing and that 300 points, whatever those were, was a good thing. And the odds just increased that I was about to get a good tip for that day.
Derrick Kinney
That’s what counts.
Brian Feroldi
That’s right, that’s right. And I just know that other people have a very similar experience because if you ever watch the news and they talk about business, the terms that always come up, Dow Jones Industrial Average, S&P 500, NASDAQ, they’re just thrown around as if everybody knows what those terms are and mean.
And for myself, I was never taught anything about those terms when I was growing up or in school. And by the way, I say that as someone that graduated college with a business degree. So I went through business school, graduated, still had no clue what the Dow Jones Industrial Average was. But it’s just funny how several times growing up, I still have memories to this day of coming in contact with the stock market, even though I didn’t know what it meant.
Derrick Kinney
And Brian, when you say that, what I take away is so many people think, well, if I go to college, then I will be better in business. But as our friend Morgan Housel, I know, endorsed the front cover of your book, on my podcast he talked about how the stock market is like an equal opportunity provider where anybody can make money in the market as long as they know what to do and know the rules of the game.
And I want to kind of walk through, about 10 years ago, the 2008 financial crisis. Walk us through your experience investing through that and how you came out of that, and really how you thought about investing while you probably kept losing money for a long period of time.
Brian Feroldi
Yeah. So the 2008 financial crisis happened essentially four years after I graduated from college. So I graduated in 2004, and as I said, I was taught very little, if not nothing, about stocks and investing during my time in college. We learned a lot about marketing and legals and the details of accounting, but nothing about the overall reasons about why you should invest or how the stock market works.
But beyond that, when I graduated from college, I was lucky enough for my dad to give me a copy of a very popular book at the time called Rich Dad Poor Dad. And for whatever reason, I just took to that book immediately. I read that thing cover to cover in just a few days, and it was the first time in my life that I’d heard terms such as compound interest, that you can become rich in one generation if you shift your mindset, that the rich think differently and teach their kids differently about money than the middle class and the poor do. Rich people buy assets. Poor and middle-class people acquire liabilities. All those concepts, it was the first time that somebody explained them to me in a logical way, and I just immediately ate it all up.
Now, from there, I graduated on to other books and I started to study the stock market a lot more intensely. I started to learn about Charlie Munger, Warren Buffett, David and Tom Gardner, and just consume as much content as I could about money and investing. And I was hooked from day one.
So as my income started to grow in my job, I started to put more and more of my money into the stock market. Now, in 2008, right before the crisis, the primary way that I was investing was through mutual funds. But I still vividly remember taking a sizable portion of my paycheck every single month and putting it into the stock market, only to see that immediately be a bad decision, right? You put money in, and pretty much the next day it was worth 10% less than it was that day.
And I thought to myself, great, I’m buying at lower prices. And then it went down again. Great, I’m buying at lower prices. And then it went down again. And this happened month after month after month. And I was lucky. My wife and I never lost our jobs during that period. Our expenses were very low during that period. So a lot of the money that we were putting into the market was at better and better and better valuations.
However, it was terrifying. Every time I turned on the news and I heard whatever the latest economic data was, whether it was the number of people losing their homes was skyrocketing, unemployment was skyrocketing, corporate profits were plunging, the news was just god-awful. But I knew enough about investing to know that you continually invest, you continually buy at better and better prices, and then in the long term, the stock market should do well.
Derrick Kinney
Which actually sounds somewhat similar to today. You know, we’ve got higher unemployment, we’ve got inflation rising. So let’s take it current day for an investor listening right now, Brian, thinking, boy, maybe I shouldn’t invest. Maybe this is not the best time. What would you say to them to encourage them as to the best strategy to work their way through a volatile market like we’re having right now?
Brian Feroldi
Yeah, if you look at the headlines over the last couple of months, or even the last, let’s say, year, it hasn’t been great, right? Starting back in 2020, when COVID came along, the number of people that lost their job just went parabolic, right? It was like an all-time high. The number of businesses that closed down, the government was doling out money just to keep businesses afloat. Everyone was scared for the health of their friends and family. It was scary times.
And yet a whole bunch of people during that time, for the first time ever, said, well, I have time on my hands. How about I learn about this thing called investing in the stock market? And that is one of the reasons why stocks just skyrocketed in 2020.
And the unfortunate thing about that is a lot of new investors, their first exposure to the stock market was buy anything. The riskier the thing, the better, and you are instantaneously rewarded with a high return. And this happened month after month after month after month. And if that is your first exposure to the stock market, how can you not think that you’re a genius and that investing is easy and that generating 20% annualized returns is no big deal?
Well, if you fast forward to today, anybody that’s invested in those high-growth stocks, like I have, for example, the last year has been absolutely brutal. It’s just been a huge drawdown from the peak valuations that we had in 2021. And when you combine that with the fact that inflation is back for the first time in essentially 40 years, interest rates are going to be on the rise, there’s supply chain shortages, and, oh, by the way, there’s a war going on in a part of the world. So it is definitely scary out there for investors.
And when prices are simultaneously falling, gas prices are rising, it’s understandable why people are fearful and they don’t want to invest in the market right now. However, if you study market history over any period of time, the data is unequivocal. No matter what is happening in the economy, the long-term returns that are generated in the stock market are superior to pretty much every other asset class that’s out there.
And specifically, if you’re not going to be investing, what else are you going to do with your capital? Are you going to keep it in a bank account? Now, I’m all for keeping cash reserves to protect yourself from the ups and downs of life, but with inflation currently where it is, the purchasing power of that capital that’s in a quote-unquote safe asset is eroding rapidly. So if you want to not only keep up with inflation over time, but actually build wealth in real terms, you have to invest it.
Derrick Kinney
Brian, what would be one of the biggest financial mistakes you’ve ever made that you’d be willing to share?
Brian Feroldi
Boy, I’ve made so many mistakes when it comes to investing. I mean, I’ve learned from the school of hard knocks what to do and, importantly, what not to do. So I’m not going to cheat and say things like, well, I should just put all my money into Apple on day one, or Netflix, or something along those lines.
So in general, I’ve made pretty good decisions with my money. We’ve always had multiple sources of income. We’ve always been allergic to debt. We’ve always kept a big cash reserve. So we’ve done the basic blocking and tackling of investing the right way, essentially since day one. But when it comes to investing, I’ve made so many mistakes. So many mistakes.
The biggest one that comes to mind, or at least the biggest one so far, I guess I should say, was back in 2013, 2014. I became overconfident in my own capabilities as an investor, and I just fell in love with a company out there called Kinder Morgan. The stock ticker there is KMI. If you know anything about Kinder Morgan, it’s an energy pipeline company, so they make money by moving natural gas and oil from one place to another.
And in theory, they were immune to volatility in energy prices, right? If energy prices are up or down, it doesn’t matter. They had these contracts in place that allowed them to get paid no matter what the price of energy was doing.
Derrick Kinney
Right, right.
Brian Feroldi
Well, I saw that and I found that it had a high dividend yield, was run by its founder, high insider ownership, right? Seemed to be a great business. And I made it my number one position. And on top of that, I added leverage by using options. So I used a bullish options position on top of that that added leverage to the upside for my position, simply because I thought that there was no way that this company could go down.
Well, you can probably guess what’s going to happen next. Energy prices pretty much started to fall immediately after I put this option position on, and Kinder Morgan stock fell with it. And I was like, well, that doesn’t make any sense, right? This company is immune to energy prices.
What I overlooked was the fact that Kinder Morgan’s customers, AKA the people on the other side of that transaction, they were hurting so bad that they couldn’t fulfill their obligations to Kinder Morgan. So Kinder Morgan stock, peak to trough, I think dropped like 75%. And my loss, not only was it my number one equity position, but my loss was magnified because I had an option position on top of that.
So after I finally realized that, and a few years later, I ended up liquidating my position at a substantial loss. And I have since learned an important lesson about, one, my own stock-picking and investing confidence, but two, about investing in companies that are dependent on commodity prices.
Derrick Kinney
You know, it reminds me, too, of that concept called recency bias, where we have one great selection that does really, really well. We make a lot of money, and suddenly we just sort of ease into the thought that I’m really good at this, and therefore I bet my hot hand will continue to the next investment, and it typically turns pretty cold.
And then you’ve got to make decisions when the bullets are flying, how to change your battle strategy, which can be really difficult. So thanks for sharing that. On the flip side of that, Brian, what would you say has been one of your best investment decisions you’ve ever made?
Brian Feroldi
Oh, to me, the best investment that anybody can make is in themselves, and specifically in their own education. And that could be formally through getting a college degree, an advanced degree. But I would say the better way to really invest in yourself is informally and just to become a self-learner on your own.
I mean, everything that I know about investing today, about building wealth today, that was all self-taught by reading books, by listening to audiobooks, by talking to other smart investors, by being engaged in the right parts of social media. The time that I’ve spent learning how to do that has paid off manyfold for me, well beyond what I got in a paid education.
And by the way, I say that as someone that went to grad school and has an MBA in finance. I’m happy that I got that education, but I’ve learned far more, far more about money, investing, about careers, about networking outside of the classroom than I did inside the classroom. But to me, the number one investment that anybody can make is to educate themselves.
Derrick Kinney
For many of our listeners who want to grow a business and have something they believe in, what would you say to them in terms of how they could also build their YouTube following, and how have you done that?
Brian Feroldi
Yeah, so I first got my start by looking at Twitter. When I first started on Twitter, I thought it was just a platform built of noise, and I had many of the preconceptions that many people do when they first hear about Twitter. They think it’s just a place to go to argue with each other about politics and celebrities. And don’t get me wrong, you can use Twitter and have that exact experience.
However, I’ve since learned that Twitter could actually be a phenomenal place to go to find like-minded people and to connect with other people that are interested in the same topics that you are. And I just so happen to be interested in finance and in the investing space, which is called FinTwit on Twitter. And I just regularly started to share my thoughts and what I’ve learned about investing over the last couple of years. And what I’ve shared has just seemed to really resonate with people because my following has grown substantially, as you pointed out, over the last two years.
And then about a year ago, I made the decision to give YouTube a try and basically start on a brand-new medium. I don’t claim myself to be a cinematographer or anything like that, but I think that if you use visuals alongside the lessons that I want to share, you can really help to tell a compelling story and really help to educate viewers about lessons that you’ve learned about investing and how to analyze a business.
But with any platform, what you really have to do is focus on helping other people to either learn something new or to entertain them in some way or to make them laugh. And if you just consistently share quality, high-quality content, you’re bound to grow on any platform you try.
Derrick Kinney
Well, that’s such good advice. And what I want to do is let’s go back in time a bit, Brian. What would you tell your 18-year-old self about money?
Brian Feroldi
That’s a great question that I actually think about all the time. And as I said, I was just born a saver. Some people just have a natural penchant for saving a portion of their income. Others are just born spenders, and they just naturally want to spend everything that they make and even more. So I was dealt a pretty good hand in that I just have frugality and savings naturally in my DNA. It’s just hardwired in.
I also tend to be a risk-averse person with finances, so I’ve always been anti-debt and tried to keep my personal balance sheet pretty stable, pretty safe. But a few things that I would tell my former self is, first off, savings and getting a high savings rate is actually more important than investing. What you do with your personal finances is, I think, an order of magnitude more important than what you do with your investing finances.
You could be the best investor in the world. You could generate 20% annualized returns. But if you’re only saving $1,000 per year, it’s going to take you a really, really long time to build wealth. Conversely, if you’re saving $1,000 a month, you’re going to build wealth way faster, even if you’re just putting that money into a savings account. So getting your personal finances in order, I think, is more important than worrying about investing, and really turbocharging your income and your savings rate is the first thing I would say to focus on.
One other thing I will say is that you can learn a lot about yourself by simply tracking your income, your expenses, and your net worth. I think that so many people don’t do that very basic, very simple step because they think it’s too hard or they’re not interested in finances. But there are so many tools that are out there today that really make that process easy for people, and you will learn a tremendous amount about yourself once you start to track your income, your expenses, and your net worth.
Derrick Kinney
Well, I call the net worth a report card for adults. It doesn’t lie. It tells the truth. It reveals exactly where you are right now. I think that is so well said.
And, you know, Brian, the last thing I want to ask you, in my book, Good Money Revolution, one of the concepts is I call it the generosity purpose, and that is, is there a cause that you care deeply about? And what we have found is that people who have a cause or they have something that they want to right in the world, an injustice per se, it gets them focused, and they actually find themselves making more money to then do more good.
And I’m curious, Brian, I know you are a very mission-driven person. Is there a cause that you care deeply about? What would you say is your generosity purpose?
Brian Feroldi
Yeah, as you said, I’m someone that thinks deeply about mission statements. And while for many years I just thought that mission statements were essentially corporate nonsense that was put out by the PR department, my mindset on that has completely shifted over the last 10 years. And I think that missions are one of the most underrated tools that people and businesses can use.
So my personal, my career mission statement is very simple: to spread financial wellness. To spread financial wellness. Four words. I think that I was put on Earth to help other people do better with their money. So whether that’s helping them to figure out how to create an income statement, how to look at their balance sheet, the order of what they should do with their money as it comes in, how to invest better, that topic just really energizes me.
And a lot of the content that I create online is specifically built about helping people to do better with their money and specifically learning how to invest better. So that is my mission. That’s my career mission in life, and that’s what I’m really going after.
Derrick Kinney
I love it. I love it. Well, Brian, I have really enjoyed this time together today. The new book is called Why Does the Stock Market Go Up? Brian, for our listeners, how can people contact you?
Brian Feroldi
Yeah, the best way to get in touch with me is to follow me on Twitter. It’s @BrianFeroldi, just my first name and last name. And if you’re interested in learning more about investing, I have a YouTube channel, which is, again, my name, Brian Feroldi, so you can check me out there.
Derrick Kinney
Brian Feroldi, thank you. I’ve really enjoyed this conversation.
Brian Feroldi
Right back at you, Derrick. Thanks so much for having me.
Derrick Kinney
Now it’s the part of the show where we talk about how to apply the key points of our conversation to help you be more confident and in control of your money.
I want to take a second and explain more about this concept called recency. Let’s say that you buy a share of stock and it does really, really well. You make a big return and suddenly you think, man, I’m really good at this. I’m like the next Warren Buffett. The problem with that, it’s called recency bias, meaning that you think because you made one good investment decision that your next one will be equally good or better. The problem is that type of investment ego, if you will, often costs you money.
The bottom line is take each individual investment decision as individual. Don’t base it on your success from last time. Instead, observe the opportunity it presents to you right now and make a separate decision based on the investor you are today and where the opportunity is right now. Is this a good place for your money to work harder than you worked earning it?
And also remember this: you don’t lose or make money until you sell. One of the investment strategies I’ve always followed is you actually make money when you buy and not when you sell. That’s why, call me crazy, I get excited when I see the market drop. It’s sort of like when you have your eye on that big-screen television at Target and suddenly now you see it’s $500 less than it was a week ago. Well, now you want to go buy it.
The problem is in the stock market, typically people don’t think about buying. They think about what? They think about selling. So if you can put your toe in the water, ease money in while things are dropping, as long as you feel like it’s an investment that has a long-term growth opportunity, it could be a way to buy while things are low, wait it out, kind of like putting seeds in the ground. At some point, the sun does come out, and those seeds blossom.
Thanks for listening to the Derrick Kinney Podcast on Modern American Advisor. Do you want to attract more $3 million to $10 million clients and grow your business? Then check out SuccessForAdvisors.com. That’s SuccessForAdvisors.com. And remember, if you want a business that’s booming, focus on the human. We’ll see you next time.
About Brian Feroldi
Brian Feroldi is a financial educator, author and investor focused on making the stock market easier to understand. Through his writing, videos and social media, he helps individuals learn how businesses work, evaluate investments and make more informed financial decisions.
He is the author of Why Does the Stock Market Go Up? and has built his career around a simple mission: to spread financial wellness. His work draws on years of independent study, personal investing experience and the lessons learned from both successful and unsuccessful decisions in the market.
Connect with Brian Feroldi
FAQs
How should investors respond to market volatility?
Brian Feroldi argues that volatility should be viewed in the context of an investor’s long-term goals. Falling prices can be unsettling, but they may also create opportunities to invest at more attractive valuations. The key is to avoid making decisions based solely on fear or short-term headlines.
What was Brian Feroldi’s biggest investing mistake?
Feroldi points to his investment in Kinder Morgan. He made the company his largest position and added leverage through options because he believed the business was largely insulated from changes in energy prices. When that assumption proved incomplete, the stock fell sharply and his losses were magnified.
What is recency bias in investing?
Recency bias is the tendency to assume that a recent outcome will continue. A successful investment can make an investor feel more skilled than they may actually be, which can lead to overconfidence in the next decision. Feroldi stresses the importance of evaluating each investment on its own merits.
Is saving more important than investing?
Feroldi believes a strong savings rate is one of the most important foundations of wealth building. Even strong investment returns have limited impact if little money is being saved. Managing income, expenses, debt and cash reserves should come before trying to outperform the market.
What does Brian Feroldi consider the best investment?
He considers education the most valuable investment a person can make. Feroldi says books, independent study, conversations with other investors and firsthand experience shaped much of what he knows about money and investing.
Continue Listening
This conversation is part of Modern American Advisor’s ongoing Derrick Kinney Podcast series, featuring discussions with industry leaders, entrepreneurs and business strategists on the ideas shaping the future of wealth management.
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