4 Goldman Sachs Traders Taught Me This

I've been investing for around 15 years, and during that time I somehow ended up working with not one but four former Goldman Sachs traders. And I say somehow because I have no idea how I ended up there. I wasn't admitted onto one of the investment banking programs, and my dad couldn't exactly pull strings for me at JP Morgan because he was frankly up a ladder in Oldham fitting vinyl to the side of a truck. If you're new to the channel, I'm James. I'm a former professional trader turned financial educator, and in this video I'm going to be sharing with you some of the best lessons I've ever learned from my mentors, so you can stop feeling as though the market's all confusing and start seeing it more clearly in the way that these guys do. If you've been living under a rock for the last few years, then Goldman Sachs is basically the SAS of investment banking, and that reputation is how they've earned the rather fluffy nickname as the vampire squid of capitalism. And as Paul the Octopus proved when he correctly predicted those 12 out of 14 matches, was it, in the World Cup, Cephalopods don't mess about. But enough of the Squid Games, let's start with the first lesson and the first former Goldman guru who changed how I see things entirely. It comes from Lex van Damme, who was formerly Goldman's head of prop trading and would later go on to run a hedge fund as well as producing a TV show called Million Dollar Traders, which is how I first reached out to him. Now when I was starting out, I was in such a rush to make it as a professional trader. I remember at 21 or 22 first meeting Lex for a coffee Didn't even drink coffee back then. And he just looked at me and he said, you sound like a catwalk model. And what I thought I wanted was money, but really I think it was about status and validation. Without this turning into a counseling session, I emulated Lex in becoming a fund manager, and I was somehow— again, I say somehow— managing millions by my 30th birthday for a pension fund. And that's when my want shifted from status to it being purely about making money so I could quit the 9-to-5 and fuck off and travel the world. I visualized this daily. I would picture everything from the market that I'd invest in, the levels I would basically enter and exit at, and the exact amount of money that I wanted to come away with. And to cut a long story short, that opportunity came in 2021. It didn't matter that I was in crypto, in some strange corner of the internet, in this DeFi project. My attitude shaped the way that I approached that strategy to get in and out, and I made out like a bandit. For years I was actually chasing status thinking I was going after money. And as soon as that changed, it changed my behavior. And in turn that changed the outcome that I got. And Lex was right. We all get what we want from the market. If you approach this trading thing as a hobby, that's all it will ever be. This next lesson explains why so many people will remain trapped, why you have to break out and build your own financial infrastructure in order to be free. And it comes from a guy called Anton Kryil who worked with Lex at Goldman and also appeared on the TV show Million Dollar Traders. He was wired differently to anybody that I've ever met. And what he taught me completely changed my worldview of how the system works and why so many people are still stuck in it. A lot of people have a terrible relationship with money, whether it's being in the 9 to 5, the illusion of home ownership via a mortgage, or frankly just buying shit to impress people with whatever money you get from that slavery. It's behaving as a middle-class moron, as Anton put it so eloquently. And whilst some people didn't like his style, he was consistently proven right in the world. Even back in 2013, he decided not to have a smartphone and to go analog with one of those old flip phones. He could see what was coming 10+ years ahead of anyone else. The clarity that he had in terms of how the system was designed in this worldview, it taught me how to see through all of it, not rely on the state, why I needed to seek risk rather than safety in every aspect of life, and why the Rolex that I just bought myself at that time was, again, as he so eloquently put it, a middle-class handcuff. So I sold it. I began building a proper trading account using some money that I'd got from the watch sale, and I'd also raised with a friend. And I picked up a copy of The 4-Hour Workweek at his recommendation, and that's where really everything changed in terms of getting a whole different perspective on how being stuck in the rat race and that grind was a mirage. It was bullshit that keeps so many people controlled. I actually handed in my notice as a derivatives broker back then. I decided to choose freedom rather than security or the safe option that you're told to follow in the traditional model. And I started contracting out my services to different funds. That's how I became CIO eventually of a couple of them. To sum it up, I never looked back. When you understand how money works, you only need to get rich once. And that's a lesson that I want you to understand before it's too late here. If Anton helped me see that the system's broken, this next lesson showed me how that system actually moves and more importantly, how to trade it. You might recognise Raoul from Diary of a CEO and some of the other bigger podcasts that he's been on. I actually worked with him at Real Vision, the financial media platform that he founded, But years before that, these guys were actually all connected on the equities team at Goldman. And that's how Raoul ended up working behind the scenes with Anton and Lex also on the Million Dollar Traders TV series. Raoul earned a reputation as one of the smartest macro minds in the game. So he was basically the go-to for anything related to the business cycle, which drives pretty much everything you can think of, whether it's currencies, commodities, rates, stocks, you name it. And this is where a lot of people get lost because they fail to see the bigger picture of how these cycles play out and how you can actually position and profit from them. And this is what Raoul helped me to see. So let me walk you through a couple of examples here. So here we have one of the charts that's actually taken from Raoul's newsletter, and it shows the difference between the amount of people in the workforce, the so-called participation rate, declining over time. That's on the left-hand axis. And you can see how that has correlated with a buildup in debt, debt to GDP. The important thing to note here is that this axis is inverted. So it's actually debt to GDP increasing as that falls, so that you can more easily see the correlation between the two. As the labor force has been shrinking because people are getting older, increasing the so-called dependency ratio by not having enough young people of working age in the system to pay for them, the government has had to prop things up by issuing more debt to stimulate growth and pay for them all. And this is going to become so clear to you in a minute how this all plays out. And what made Raoul such a visionary. So the government's response to this, in terms of issuing debt, is to perform this sleight of hand, if you like, which Raoul refers to as debasement. Now, without getting too technical here, the idea is that if you're expanding the debt by printing loads more money and it's already at unsustainable levels, what you can do is attempt to inflate your way out of that. So if I owed you £100, let's say, over 10 years and inflation's at zero, £100, when you get it back in 10 years' time, will be worth exactly what it is today, or buy the same amount of goods or services. But if inflation is taken into account, then 10 years from now it's going to buy far fewer goods or services than it does today. So as the debtor Inflation is working in my favor because it's reducing the value of the money that I owe you. And that's the game that the government's playing here, and it's the reason why asset prices—stocks, property, whatever it is—are being inflated. So you can see the relationship between the amount of money that's been printed, so-called Fed's balance sheet, relative to debt to GDP. And that's why they're so obsessed with printing money. As it's known. By zooming out and understanding the big picture, you can profit from it. You can see the so-called Liquidity Index that Raoul's put together— just think of this as the amount of money pumping through the system— compared to the NASDAQ just above it. That's what this game is all about, guys. An aging population means that the economy is not going to grow as quickly. Because there aren't enough people of productive age in the workforce. Lower GDP means that the government is going to increase the amount of debt to pay for the NHS if you're in the UK or other things. And that combination of high debt and low growth means that the Fed needs to shift the goalposts. When I say the Fed, it's the central bank in the US. Just apply this to any Western central bank. And that is this debasement trick which they're performing. That's why they're so hell-bent on printing money, inflating asset prices to try and diminish the value of this debt that they'll never repay. Demographics are destiny. Now, this is of course just one of many macro forces that drive these tactical, cyclical, and secular trends. In other words, the short, medium, and long term in markets. And once you understand this, markets stop feeling random and you can actually begin to get on top of them. That was the lesson. Now, it's all well and good being aware of the cycle and knowing about these different indicators, but there are levels to this, I assure you. And if you've ever felt confused by the market doing something different to the data, then listen up, because what I'm about to show you reveals this layer cake of what the guys at Goldman knew and what ordinary investors like us mere mortals will rarely ever see. So if Raoul was the visionary, Roger Hirst was the professor, and what he taught me changed the way I look at every indicator. So take, for example, the ISM. This is one of the most commonly watched leading indicators of the business cycle, and this particular chart with the annotations already on it comes from Real Investment Advice. That's not me saying this is investment advice, that's the name of the publication. And the article was called, "Promised Recession, So Where Is It?" And the reason for that is, well, first of all, let's take a look at what we've got here. You can see that this thing oscillates, basically representing the business cycle. Expansion, expansion and contraction. And you can see during various crises here or market wobbles, it's tended to dip below the 50 level, which is this middle line. So what many people believe is the literal interpretation that 50 is this threshold for expansion or contraction in the economy 9, 10 years ago. To 12 months ahead. And hence people use it to trade the stock market and pretty much every pro-cyclical asset, as they're known, things that are sensitive to the cycle. But this is where people get it wrong, and this is where Roger came into his own, because it's not actually a level of 50 that you need to be watching, but rather 45. In this case, in 2024, we only reached 46. That historically was not sufficient to trigger a recession. So rather than 50, 45 was in fact the recession gauge. Now, it's not to say that you can't have a slowdown at 47, 48, 49, 50, but recessions have tended to only occur below 45. So Roger's lesson was that framing is everything. Most people are looking at the same charts, reading the same reports, they're reading the same headlines, but what they're missing is the nuance. And that context only comes with this forensic mind that Roger certainly had. And ultimately, it's a difference between reacting to the market and truly understanding it. And when you put this all together, what Lex taught me was about intent, what Anton taught me was about money, what Raoul taught me was about macro, And what Roger taught me was about framing. And you can see why so few people ever really get ahead when guys like this are at the pinnacle of trading. It's why Goldman's got the reputation that it does. I want to take a moment to thank Lex, to thank Anton, to thank Raoul, to thank Roger publicly for everything that I learned from them over the years. But these have been just a few of the lessons that have helped me to develop my own framework and get the freedom that I wanted in my 30s and now be able to share this stuff with you here on YouTube every single day. So I guess it's true that everybody gets what they want from the market. And if you want to take control of your money and build a portfolio based on everything I learned from Goldman's finest and more, then watch this video which shows you the exact system I used to make over half a million quid in my pension last year. Or you can go watch MrBeast. It's up to you. I'll see you in the next one.