Financial Fiction Review: ‘The Dealer’ by Paul Kilduff

Love financial fiction? So do I. And I review them for you!

In this post I’m reviewing…

The Dealer
by Paul Killduff

Big deals are won and lost in the stock market, the dealer floors, and in the bedrooms of London… but will the main character fly too close to the sun in his pursuit of the next big deal?

OVERVIEW: Greg Schneider is an American securities dealer who works at a mid-tier investment bank in London. Blacklisted on Wall Street, he fled to London and aspires for a bigger opportunity at an internationally-renowned firm.

To get that next big opportunity he has to carve out a name for himself as as a big deal deal-maker. The story starts as he pursues his latest opportunity… but things are not always as they seem.

Although he’s thought to have a Midas’ touch, it turns out that he relies heavily on secret recordings made by a proprietor of a high-end fetish service who specializes in working with bankers from The City (who ultimately confess their buisness dealings on secret tapes that tip off Greg to the latest opportunities).

All goes well until one banker dies… then all hell breaks loose as the fetish proprietor deals with the body of the banker. Meanwhile, Greg tries to keep his deals together even though he is pursued by London’s equivalent of the Securities Exchange Commission.

REVIEW: This is Paul Kilduff’s second novel, published in 2000. I haven’t read his other book “Square Mile,” which I believe also is a financial fiction book. What was interesting about this book is: there are no real heroes. At first you’re rooting for the main character but he turns out to be unethical in several ways (not a beloved rogue like the Oceans Eleven characters are, but rather much more despicable). Two other characters you spend a lot of time with are the fetish proprietor and the securities investigator, both of whom are tragic characters at best. So, I enjoyed the book but it was hard to feel like I was in the book and cheering for anyone specifically; rather, I was watching action unfold in front of me and mostly feeling negative about every character. That said, the book was enjoyable and engaging from start to finish, even though you don’t finish with a great sense of satisfaction.

FINANCIAL FICTION QUOTIENT: Paul Kilduff spent several years in an investment company himself so he knows what he is talking about and the financial fiction quotient is evident. Kilduff writes well without necessarily dumbing down for his audience, so readers will generally follow along but there are times when you may not. He’s not as technical as Paul E. Eerdman, but he’s more advanced than Christopher Reich. And, even though the book was written in 2000, it doesn’t feel as other books written in that time (sure, there are times when you notice that it’s been nearly 20 years since the book was written but for the most part it’s pretty timeless).

SUMMARY: Paul Kilduff’s book The Dealer is a solid financial fiction read and I would read it again. As long as you’re not looking for a hero to cheer for, this is an enjoyable and engaging read.

Get The Dealer from Amazon.

Find more financial fiction reviews here.

The Real Estate Investing Business Model: Opportunities To Get To The Next Level

Aaron Hoos

It seems like I can’t go a day without seeing someone in a Facebook post or group saying, “I really want to get into real estate investing. Can someone tell me the best way?”

Most often, this popularity comes from television where regular people seemingly make big money in only half an hour of work. (Of course you and I know that those shows are heavily edited to get them into the right duration but people still think that real estate is easy money.)

Those new-to-investing entrepreneurs are usually looking at flipping/rehabbing as their investing model of choice, since it makes for good TV.

But beyond rehabbing, there are many other types of real estate investing models; a quick list of these choices includes…

  • Flipping/Rehabbling
  • Foreclosure investing
  • Probate investing
  • Commercial investing
  • Preconstruction
  • Landlording
  • Wholesaling

… just to name a few.

And even within these types of investing strategies there are sub-categories (landlording single-family homes; landlording multi-family homes; wholesaling versus turnkey wholesaling; and the list goes on and on.)

I’ve worked with investors who do all of these things (and more) and each one swears by their model.

So which one is best? And, with so many real estate investors out there, how do you grow your real estate investing business in a way that helps you stand out from the crowd (and maybe be more profitable)?

To start, consider this almost-always-true rule of thumb I’ve observed over the years of investing and working with investors:

  1. The newbies who struggle are those who jump in based on the perceived ability to make easy money in their spare time.
  2. The newbies who end up doing well, approach it like a business (they create a plan, the execute the plan, they spend their day focused on investing as a business).
  3. The experienced investors who end up doing really well are those who find what works for them and who scale.
  4. The experienced investors who do REALLY well are those who innovate the business model, adding an angle or tweak to a well-known process.

The first group just try to fit an investing model into their life without making any other changes to their life; they will invariably struggle because investing takes capital and time and energy and creativity, and a ton of resources and assets that the “fast-buck newbies” are completely unprepared for.

The second group will do better because they’re approaching investing with more available assets and appreciate that investing should be approached like a business.

The third and fourth group are the ones who do well because they have learned to innovate the model—the third group innovates intrinsically by moving beyond the one-person style of investing to build an organization where they can do real estate deals at a faster rate; while the fourth group innovates by changing the approach or by adding some level of systems or technology to one or more of the steps.

If you are in the first or second group and want to get to the third or fourth group (where the real money is being made) then start here: identify the model and find ways to innovate inside that model.

The Starting Point: The Investing Model

Nearly all real estate investing can be summed up in a very simple model…

  1. Control the property
  2. Add value
  3. Profit from the property

Many different kinds of real estate investing fit into this model.

Controlling the property: The term “property” can be defined as any empty lot, residential structure, multi-family dwelling, commercial building, industrial building, recreational building, storage units, etc.

And the property can be controlled by either purchasing the property or by tying up the property with a contract or by acquiring empty land with a plan to build. This might be part of a foreclosure or probate scenario, an all-cash discount to a distressed homebuyer, or just purchasing the property on the open market. The point here is to position yourself as the one person who will be in control of the property to ultimately profit from it.

Adding value: There are many ways that you can add value to the property. You can add value by building the property (as in new development or preconstruction investing), by fixing up the property (as in rehabbing); you can add value by owning the property and making it available for a renter (as in landlording); you can add value by negotiating with the seller for a low price so you can sell the contract to another investor (as in wholesaling).

Profiting from the property: And again, there are many ways that you can profit from the property. You can sell the property itself (perhaps after a rehab) and make money on the capital gains. Or you can rent the property and earn rental income. Or you can sell the contract to an investor and make money from your fee.

Real estate investing takes many forms but it really has one business model, which I’ve broadly described above. The actual activities you take at each step of that model will depend on the subtleties of each type of investing.

For Those Who Want To Start Investing, Here’s The Question You Should Be Asking

While many people get into investing by asking “How can I make fast money?”, the question they should be asking is: “What strengths do I have and how can I use those inside the investing model?”

For example, maybe you’ve thought of flipping but simply don’t have the credit score to acquire a house or the cash to upgrade the property. In that case, a different kind of real estate investing – one that doesn’t require a credit score or cash – might be better for you.

Or another example, maybe you need money this month instead of waiting 6-12 months for a payout. In that case, maybe wholesaling to generate a small(er) fee is a better choice than flipping, which can take a while.

Or maybe you have some other role to play. You don’t have to actually run through the entire model yourself in order to profit from real estate investing: birddogging, for example, makes money by helping other real estate investors do their deal. Or maybe you build apps and can create an app for investors. Or maybe you’re a general contractor who can help investors add value.

Once You Start, Find Ways To Innovate

As you gain experience in the investing model, then you’ll start to find ways to innovate in that model. By examining each step, you can create new ways to do business:

  • Mix and match steps. Ask yourself what happens if a building is acquired like in one type of real estate investing, value added to it like another type of real estate investing, and then profited like in a third type of real estate investing.
  • Choose a technology and brainstorm how it can be used in the business model. A simple example might be: Trying to figure out how Twitter can be used in step 1 or step 3 of the model.
  • Describe how most real estate investors are doing one of the steps and then change up the elements within that step by adding/removing/increasing/decreasing elements.
  • Within the broader business model, there are sub-steps that are unique to each type of real estate investing. List out those sub-steps in detail and see what you can do differently (with technology or outsourcing) to change up or even eliminate that step.
  • Use strategic tools like the sales funnel, Blue Ocean Strategy, or the Business Model Canvas to gain a deeper understanding of your real estate investing business model.

I’m keeping it high level here but of course it goes deeper. There are opportunities in each stage of the business model to innovate.

I think some of the biggest opportunities right now are in sourcing deals, funding deals, marketing deals, and networking—both for brand new investors as well as doing that at scale for more experienced investors. Nailing down how to one of these really well, with new technologies or approaches, can turn a small-time investor into a big-time investor quickly.

Summary

When I encounter the newbies who are jumping into investing for its perceived “get-rich-quick” opportunity, I worry. That approach hurts them and their families and the people they do deals with and the industry as a whole.

But the investors who figure it out, and then grow to scale and innovate are the ones who interest me most—they’re entering a higher level of investing where there is still a massive greenfield of untapped opportunity just waiting for someone to innovate.

Copywriting Tip: Your Copy Must Sell Against 4 Types Of Competitors

Aaron Hoos - Copywriting Tips

Who are you competing against? Chances are, you might think of your direct competitors, and that’s who you might refer to in your copy. However, you’re leaving money on the table by not addressing the other types of competitors that influence whether your prospects buy from you.

There are 4 types of competitors and your copy needs to position you as a superior choice against each of the 4.

  1. Lack of interest in the copy—before you can address any of the other competitors, your reader’s wavering interest is the very first one to address!
  2. Direct competitors—this is the obvious one; it’s the competitors who sell a similar product or service to what you sell.
  3. Indirect competitors—this is the competitors who sell an alternate way to solve the problem. (A car dealership is a direct competitor to another car dealership; a bus ticket is an indirect competitor.)
  4. Inaction—the last type of competitor is that of no choice at all! Your reader may choose not to act, and simply to live with the problem as it is.

If you want to sell anything in your copy, you must sell against each of these 4 types of competitors.

(Hey! While you’re here, check out my other copywriting tips for persuasion secrets and psychology hacks to increase conversions.)

Copywriting Tip: Satisfy The 2 Basic Human Needs

Aaron Hoos - Copywriting Tips

Everyone wants to think they are more complex and philosophical than they are. But humans really only have 2 basic needs that must be fulfilled in life.

These 2 basic needs determine all decisions in life, including all buying decisions. Those basic needs are: survival and status.

People make survival decisions to keep themselves and their offspring alive. People make status decisions to make their neighbors jealous.

Those are the only reasons people do anything.

If you want someone to buy whatever you’re selling, your copy needs to satisfy at least one of those two needs.

(Hey! While you’re here, check out my other copywriting tips for persuasion secrets and psychology hacks to increase conversions.)

Stock Ticker—Board Game Review, Strategies, And Hacks

I’ve always been interested in finance… both real and for entertainment.

(BTW, if you enjoy fiction as entertainment, you should check out my financial fiction reviews!)

Like a lot of people, one of my favorite board games when I was a kid was Monopoly. In college, though, a friend of mine introduced me to another game: Stock Ticker.

It’s been 20 years since college but I still enjoy Stock Ticker (although I don’t get to play as much as I did in college… who has the time?!?) In this blog post I want to tell you about the game and I’ll reveal strategies to help you win.

Stock Ticker: The Game And How It’s Played

Stock Ticker is a game of making money from… well… not stocks! haha. Players make money on the capital gains generated from buying commodities at a low price and selling them at a high, as well as dividends. (I’ll be using “stocks” and “commodities” interchangeably throughout this post but in real life that is not how you should think of real stocks or real commodities.)

The board, as pictured above, is shared by all players at the same time. The board itself is the stock ticker and the 6 playing pieces mark the prices of each of the 6 commodities. There are six commodities—gold, silver, bonds, oil, industrials, and grain (I own an updated version, pictured above, in which bonds has been replaced by tech.)

At the start of the game: The playing pieces are set at the center of the board, at the $1.00/share mark of each commodity(or, in the board pictured above, “100”—right in the center).

Players are given $5,000 with which to buy shares of any commodities they choose. (Therefore, players can buy up to 5000 shares in any combination.)

Then the game begins. Dice are rolled to impact the price.

  • One die indicates the commodity: gold, silver, bonds (or tech), oil, industrials, grain
  • One die indicates the action of the commodity: the price goes up, the price goes down, or there’s a dividend
  • One die indicates the amount of the action: 5, 10, or 20

The game progresses as you’d expect: commodities fluctuate in price over the course of the game during dice rolls, and you can buy or sell your commodities. (For example, you may want to sell a high-priced commodity to buy more of a lower priced commodity.)

Commodities that drop below the center line of the stock ticker (below 100) do not dividend. Commodities that drop to the very bottom of the stock ticker have “crashed” and all investors who have bought that commodity will lose their money. Commodities that increase in price at 100 or above, will dividend when the dice indicate it, and they can eventually split, doubling the investors’ shares.

The end of the game is decided when one player is left with money, or when everyone decides to be done, or when you die of old age because this is a game that can go on forever.

You just count up your money and then brag about it if you are the winner.

Stock Ticker Preview

The game is pretty straightforward. Dice rolls influence the commodity prices, which determines the value of your holdings.

The game has a large element of chance to it because it’s the dice deciding the movement of the commodity prices and not fundamental factors or trends. In real life, the price of a grain commodity might go up because of a decrease in supply or increase in demand, or it might go down because of an increase in supply or decrease in demand.

However, just because the price can fluctuate randomly, that doesn’t mean there isn’t strategy involved.

… And that’s why I love this game. At first I didn’t like the chance element but then I realized: in real life I have little control over the supply or demand of a commodity, so it has the effect of chance. The only difference being: in real life I’d (ideally) know the fundamental factors ahead of time and can adjust my holdings before a price change, whereas in the game the price change comes first. And, the dice are purely random, which means there aren’t real trends* so every roll could change things completely, so you can’t buy on a trend. But hey, you can’t have everything, right? It’s just a game, after all.

*(A quick note on trends: Scientifically speaking, there are no trends in this game. The game is purely luck because dice have no memory and therefore are perfectly random. I know that to be a fact. I’m a logical person. BUT, ask any person who has ever played Stock Ticker and they’ll tell you that there are trends; they may also have favorite commodities that they buy, or despised commodities that they’ll never buy. Like grain… stupid grain. It almost always fails me. Stock Ticker is funny that way: perfectly logical people who know better will build theories around dice trends or commodities and interpret trends as a result. But I digress.)

Stock Ticker Strategies

So, how do you win at Stock Ticker?

Step 1. Please the gods with sacrifices and perhaps they will influence the roll of the dice enough times for you to win.

ha! No.

Here are a few ways to play strategically that could influence your play. As a disclaimer: I’ve played all these ways and have won triumphantly and lost catastrophically.

Buy Near Zero And Hope. As stocks drop, they become cheaper. That means you can buy more of them. Unfortunately, it also means that you lose out on the potential for dividends and (more significantly) you run the risk that they’ll crash completely and you’ll lose everything. But the upside? If the dice turn in your favor, you can easily double your money in a roll or two.

I’ve used this strategy as a “hail mary” type of investment when my holdings have performed poorly and I’m clearly losing the game. I’ve also used this strategy with spare cash or or by selling an under-performing stock to really get ahead of my opponent

Buy High(er) And Enjoy The Dividends. The idea of buying low and selling high is often thought to mean buying when stocks are really cheap at the bottom of the board, and then selling when they are really expensive at the top of the board. However, what if you adjust your thinking just slightly and “shrink” that field of “low” and “high”. In other words: buy when a stock is above par and hold it until it splits. All you’re really doing here is simply choosing how you define “low” to mean 110, 120, 130 rather than 10, 20, 30. It seems costly at first but you also get the benefit of earning dividends.

The question is, what do you do with stocks that drop below par in this situation? If I’m using this strategy, my preference is (usually) to sell the stocks at a slight loss and reinvest in something just above par.

I like this strategy because it creates cash flow throughout the game. What’s challenging is when a stock drops just below par, thus making it ineligible for a dividend… but since the dice are completely random, it could turn around in the very next roll!

Full Diversification. This is where you invest in each of the stocks across the board. The goal here is (hopefully) that your losses will be offset by your wins so you don’t lose but at least break even. It’s a useful way to start the game and then pivot, which is what I do (usually to the Buy Higher And Enjoy Diversification strategy).

If I have a really successful game and make a lot of money, I often return to full diversification at the end of the game just because I can stand to take a loss on one stock.

Strategic Diversification. This is where you diversify into multiple stocks… but not all of the stocks. Maybe 3 or 4 of the 6. You might start the game this way, or you might combine this strategy with the Buy Higher And Enjoy Diversification strategy mentioned above.

When I play Stock Ticker with my friend and former college roommate (Terry), with whom I have a 20-year rivalry in just about everything, this is my default strategy: Basically, I start the game by choosing any stocks he didn’t choose. If he picks three stocks, I’ll pick the other three.

Of all the strategies, this is the one I recommend most strongly to players (at least near the beginning of the game) because it gives you options without spreading you too thin.

Focused Investing. This is like going into the casino, walking up to the roulette table, and putting all your chips on black. In Stock Ticker, you’re betting on a single stock. Maybe it’s near the end of the game and you are low on money and need a hail mary. Or maybe you put it all on a stock that is above par and hope that the dice land on “Div 20” a couple times, which can lock up the game in your favor. This move is risky and fun, although I tend to only play it when I have nothing left to lose.

Stock Ticker Game Hacks

Changes to the dice rolling: In theory, you roll once and then people choose whether to take an action, then you roll again. This can drag out the game. I prefer one of these two alternate rolling option:

  • Roll continuously and just have someone call out if they want to pause the dice to buy or sell. This is a good way to keep the game moving at a brisk pace.
  • Roll the dice for a brief period of time (you’ll need a timer or a way to track an agreed-upon number of rolls) during which no one can do anything, and then do your buying and selling afterward. This is a fun way to create some additional tension as commodity prices rise and fall but you can’t react right away.

I would love to see a hack where you could make money shorting the commodities (which is essentially “borrowing” the commodities to sell at a high price but you have to buy them (hopefully at a lower price) later.

More About The Stock Ticker Game

The game was published by a Canadian publishing company called Copp-Clarke Publishing and sold for many years but, as far as I can tell, is no longer in print. I reached out to Copp-Clarke Publishing to see if they stilled owned the game and they told me that they had been acquired by Pearson Canada (another publishing company) and that company owned all of Copp-Clarke’s former intellectual property.