Tim Sykes became a self-made millionaire by the age of 21 by trading thousands of Penny stocks. Yes, penny stocks, Wolf of Wall Street-style. Except Sykes did it legit and no sports cars were destroyed on his rise to the top.
In just a few years, Sykes turned $12,415 into $1.65 Million and he’s made even more since those early days of trading.
The experience led Skyes to create Profit.ly, a community of over 84,000 traders who share their performance and trades openly to help each other learn & improve and Investimonials.com, a community of over 65,000 investors & traders who have reviewed over 25,000 financial products like brokers, blogs, newsletters, websites, financial movies & commentators. It’s like Yelp, but for finance.
Skyes is the latest to contribute to our Ask A Young Entrepreneur series and sat down to talk about his experience, his failing and his advice to others just starting out.
What does it feel like to see a million dollars on a bank statement?
Tim Sykes: It feels amazing! $1 million isn’t what it used to be, but just seeing a statement with seven figures with your name on it is validation of all the hard work and lessons you learned to achieve such a milestone…ideally the money you’ve made is through hard work and determination, not luck, and took several years to accomplish, as that makes it much more meaningful. That’s probably why child stars, musicians and lotto winners are so unhappy, they didn’t experience a long road before achieving success so their perspective is out of whack.
How long did it take you to make your first million and what is the biggest piece of advice you can give to a new investor on how to get there as fast as possible?
TS: It took me roughly 3 years as I was in the right place at the right time with the stock market boom in 1998-2001, but it was the second million I made 2002-2004 that really helped me understand how difficult it is to actually make seven figures within a few years as I made that during a bear market when very few others were profiting very much. Now my top student Tim Grittani turned $1,500 into $1 million in 3 years and is now closing in on $3 million in his 5th year as my student and judging from his success and mine, I would say new investors should learn niche, alternative strategies like short selling penny stock scams instead of mainstream long-term investing which might make you $1 million by the time you’re Warren Buffett’s age and then you can buy a shiny new metal hip!
When did you first realize “this business idea is going to work?”
TS: With stock trading, every day is a new challenge since the markets and hot stocks and sectors are always changing, but with teaching stock trading I knew my business would work from the start because I understood the huge demand for good, quality information in the stock trading world. I’m in an industry full of snake oil salesmen so I knew I didn’t have to be the best trader, I just had to be honest and transparent about my shortcoming and losses and be honest with my students about my ups and downs. Sadly, honesty is a revolutionary concept on Wall Street.
How many times did you fail before finding something that worked?
TS:Even though I turned $12,000 into over $100,000 my first year as a stock trader, I had so many bone-headed losses, it’s amazing I still grew my account so quickly. I definitely was in the right place at the right time with the tech bubble. Over time, I still make mistakes, but I’ve learned to cut losses quickly and not go “all in” like I did in the beginning; it’s much less stressful and not as risky that way.
If you could tell a person new to investing one piece of advice about investing or money management, what would it be?
TS: You NEVER have to be in at the exact bottom or out at the exact top of a stock’s move, focus on taking the “meat of the move” on an investment, whether you’re going long or short, perfection is not only impossible, it’ll hurt your overall performance if you strive for it as you’ll inevitably consistently miss…and that’s ok!
Name one mistake you made with your money?
TS: My biggest personal loss was over $500,000 when I invested in a family friend’s company that turned out to be an illiquid penny stock…never invest in friends or family businesses since you’ll be biased and don’t invest in illiquid investments since there’s no way to cut losses quickly and manage your risk. The good news is this loss really helped me cement my stock trading rules that have ultimately made me a much better trader and now a far wiser and more conservative teacher too.
What’s the one assumption strangers usually make about you?
TS: Most people look at the stacks of cash that I post on social media and the fact that I trade penny stocks and they think I’m like “The Wolf Of Wall Street”. What they fail to realize is that I actually bet against and expose penny stock scams and those stacks of cash are used to inspire my students to study my now 4,000 video lessons, not lure them into some scam. The good news is I don’t force anyone to learn or study, the benefit of being real is I get to choose my students so if anyone has any doubts, they save my team and I from wasting time on a non-dedicated student. Because I know how valuable and useful my lessons are, I know I have an upper-hand with every customer and student, they need me, I don’t need them. Many people ignore my rules and lessons and then come back hat in hand a few months later after they’ve lost 50-75% of their money trying to do everything on their own.
Is there a book, movie, quote who changed your life?
TS: The Wolf Of Wall Street portrays penny stocks in a very nasty light, but they made the world aware of them and now it’s far easier for me to teach how to expose penny stock scams since people have very vivid images of the scams that Jordan Belfort used to pull, so thank you Jordan for being such a scumbag and ripping so many people off!
How important is a mentor?
TS: I think this is one of the most important, if not the single most important, educational tools you can have to speed up your learning curve and truly develop your skill set and knowledge base faster than your competition. I was sadly self-taught and that hindered my education and performance for years so my goal these days is to be the mentor to people that I never had.
Did you set out to become a millionaire or did you have another goal?
TS: I always wanted financial freedom, I played tennis throughout my childhood in order to get into a good college which would then theoretically help me get a well-paying job. But when an injury sidelined me I got into stock trading skipped the good college and well-paying job in favor of my own path.
Do you think in the future it will be easier or harder to become independently wealthy?
TS: We’re at a unique time in history where no matter your background or where you live, you can tap into the internet and educate yourself and become an expert on practically any topic you can imagine. I had no mentor and there were no books written on the subject in which I specialize when I began my journey nearly 20 years ago now, in no small part thanks to my growing educational business, there are more online content and educational tools for all upcoming traders. It’s the same in every other niche too, people just need to take advantage of this revolution better!
Name a specific characteristic a person needs to have to become successful?
TS: I would say perseverance is most important because the journey to becoming truly successful is not overnight and you have to make tons of mistakes along the way to learn what not to do. Sadly, too many people make some mistakes or fail early on, then they give up and they never reach their full potential. My top student Tim Grittani who has now turned $1,500 into $2.8 million in 5 years lost rather consistently stock trading for the first few months, but he stuck with it, kept adapting, and he really found his groove in his second and third year. For some, it might take even longer, but you must persevere through the tough times too.
If you could start with nothing and do it all over again, would you?
TS: YES! I actually have “re-started” this year with my original $12,000 Bar Mitzvah gift money and in 4 months I’ve grown it to $40,000, meticulously sharing every trade and detail of my journey with my students. In the real world, and on Wall Street, it’s not much money, but I enjoy getting back to my roots and my students find it much more useful to see me trade stocks with such a small amount.
If there was no little to no money involved with what you do, would you still do it?
TS: YES! I know it sounds weird to say since I trade stocks and teach my students to be profitable stock traders, but the thrill has never been about money for me, that’s just a consequence of hard work; instead I greatly prefer the challenge, especially since there’s so little solid public information and teachings, I’ve literally had to write the book in my field of which I’m very proud.
Name one mistake you made in college that you learned from in business
TS: I wasn’t the brightest college student/businessman as I actually started my hedge fund while in college which was just a recipe for disaster, somehow I managed to become the #1 ranked short-selling hedge fund my first 3 years as a hedge fund manager. But I tried balancing going to class, taking meetings with potential investors and trading stocks all at the same time, it was a mess! Sometimes I would take a meeting and miss a trade or I’d do a trade and skip class or any other combination where it turned out to be the wrong decision. I’ve learned since to delegate much of my business tasks outside the stock market to my employees, like my mom and dad who both work for me!
Chris Illuminati is a senior editor with BroBible. If you’ve got a story that deserves to be told, reach out to him here.