A Crash Course in Mortgage Rates and Options Trading

Hey, what's up, Jeff Simphur. Thanks for tuning in to this episode of the mortgage marketing radio podcast. Hey, if you're a long time listener, thanks for coming back. New listener. Hope you're enjoying the content. At whatever point you feel compelled to leave us a review wherever you're listening to this on Spotify or Apple, please take a moment. Leave us a review. I'd love to know how our content is impacting you and helping you in your business. You know how to do that. That's just follow the prompts somewhere in the show notes. It says like the podcast, leave us a review. Appreciate that. Before we get into this special week, this guest for this week is another success story coming at you from the mortgage professionals within our my agent classes community. Guys, we want to reach more agents. We want to expand our reach and reputation. What's the fastest, most effective way to do that? Is it social media? No. Is it cold calling? No. What is it? You heard me say it enough repeatedly here. I've interviewed over 300 of America's top producers eight out of 10 all have this. This is how the top 1% get agent referrals. They lead with education content in person and virtual events and classes. I to reach agents at scale to move from being seen as a solicitor and vendor to a partner here and solicit and driving conversations at scale. Case in point, Kevin Bergeu. What's up? Shout out to you. Philly man. He's doing two different classes. Today, he had 83 agents registered for winning strategies for buyers agents and tomorrow. He has a live event database marketing for realtors. He's a busy man. He's reaching lots of agents. He's driving lots of conversations at scale and positioning himself to win, to capture market share and out value his competition. He's doing it repeatedly just like you would be if you want to get into shape, get six back abs, right? Whatever that goal is, it's the consistency that builds the momentum over time. That's how you crush it. That's what we help originators do across the country, done for you agent classes, done for you marketing, turned key social media content posts, emails, text messages, weekly live coaching and community calls. It's all there for you. Now, one of the ref ad members that have been with us for over four years. If you want to learn more, go to mortgagemarketing.pro. I'm opening up my calendar to a few calls willing to talk to some people who are looking for this type of solution. It's not for everybody. Ideally, you've been doing loans at least three years and you're closing at least three loans per month or more. You're coachable. You're trainable. You're willing to follow a proven system and willing to show up. That's it. Mortgagemarketing.pro. This week, my special guest, I'm bringing back Dan Roch on the program. If you know Dan at all, if you've been part of the mortgage coach, rate watch community for any time, you know Dan. Dan is like the Yoda of interest rates for years. He's at this product called rate watch, which is a daily rate watch forecaster. That's phenomenal. He's got a very esteemed background in the mortgage space in lots of different ways. First of all, he is probably amongst the most knowledgeable people that I have ever run into when it comes to markets and rates and understanding what impacts them and communicating. Having his ideas to help you be a better communicator in talking about the market and things like that. You can obviously sound intelligent when you're talking with people. Dan's a long time executive leader in the mortgage and real estate industry and he is founder and head trader at University of Options, which you're going to hear about it in part two of our conversation, which is all about this cool, awesome platform that he's been running for years. That helps. If you're looking to diversify and backfill the ups and downs in your income, I want you to check out and listen intently to part two of our conversation where Dan's breaking down how his platform with these amazing options, trading bots and futures. You get to look over Dan's shoulder and invest in like Forex trading, proprietary FX bots, futures trading and everything. It's everything that Dan is doing himself to trade the market and win and on a very low risk basis, by the way, and you're going to hear some of the success stories in this conversation. Part one is Dan and I are unpacking kind of what's happening with rates. He's listening and you'll talk about why Dan strongly believes that 4% range interest rates are in our future come 2025. So I think you'll hopefully enjoy this conversation and follow the links in the show notes. So without further ado, let's get into this week's show. Dan, welcome back to the show. It's been a while, Jeff. It has been a while since that I don't even remember. It's been so long I don't remember and I should have looked it up, but it's been a couple of years it feels like, yeah? Since you've had me on the show, yes, and of course we saw each other in Vegas and we ran into each other, the Dallas airport. The airport randomly and prior to that, it had been a long time since we've seen each other, but for those who aren't familiar with who you are and what you do, what do you want to tell them? So I'm currently I'm CEO of and head trader for a company called University of Options. We started that in about 2018 and it's grown really fast because of mortgage coach slash trust engine. I'm their chief economist going back to 08 and recorded, I guess at this point thousands of videos and so lots of people got to know me and I got out of the mortgage industry I think in 17 and then it's been just really fun since then. Well for people who do know you, you have had for many years this product called ratewatch, right? Is that still in existence? Yeah, really what that's come down to is it's an app which is actually owned by mortgage coach. I'm more like the spokesman I guess and then every morning I do the daily video which goes into the ratewatch app and also I posted on five or six different Facebook groups. Got it and so you're looking at the market every day, both stock market, interest rates and all that kind of stuff and kind of giving your forecast. You and I haven't prepared for this as this is how I usually fly. So whenever I hear somebody talk about interest rates, you know that's a hard thing to forecast. Here it comes, how would you score your accuracy of that? You've been doing this since like, oh, eight, you said, yeah, well, there's a saying a broken watch is right. So I've never been wrong ever, ever, you make a four time way for it to come to you. There you go, man. Yep. What's wrong with that? Well said. Well said. The tough question I apologize, but it really just makes me curious. Last question. In fact, usually I'll follow on my sword before you can ask me. So you know, recently I was with David Todd. And I did boldly say that I actually believe the fourth quarter to the first somewhere in that point and I gave all the reasons why and as a as a prognosticator, you learn to be clear that there are certain things that have to happen for your forecast to be right. So because we're factoring in GDP, we're factoring unemployment, we're factoring inflation, we're factoring manufacturing, consumer balance sheets, money supply, so all of the stuff factors in to, you know, to our forecast. And so if a couple of things don't hit when you think they will, then you're going to be wrong, at least for a while. And for me, the, the economy just doesn't want to stop. It's people, you know, we read that people are doing worse and it's harder and all that stuff for them. But basically if you look at retail sales and GDP and job growth and all that stuff, it's continued well beyond any reasonable scenario. And now we're beginning to see it now and jobs are always a last to go. So now we're beginning to see job slip, consumer confidence, a slipping, deflation starts becoming a concern, believe it or not. So all the things that I feared would happen, they're coming, and I was just early. Oh, what do you mean, they're, we feared to happen are coming, give us some examples. Titer labor market, so job losses, job losses for sure, decreases in retail sales, those are, you know, the big things, consumer spending, tomorrow we get the consumer spending numbers, which are big, they, they're called PCE, which is personal consumption expenditures. And that's a number of the Fed watch is much more than CPI. So, okay. So we saw the Fed do their first round of cuts, about a week or two ago, 50 basis points. And then there's some chatter coming after that, such as they think inflation is too low. And then there's the chatter about like they're going to be more aggressive with their rate cuts. Like what the hell's really going on? Can you like, you know, clear the air a little bit about what you think moving forward is going to happen? Yeah. So, personally, you know, for all of my loan officer friends, I'm glad that he cut a half. But it, my opinion was too much. And my weekly video this last week, I shared with all the reasons, they're, the condition of money, like, like financial conditions index is the looser it's been since the 60s while the Fed made a cut. So only one time, 60 years ago, were the financial conditions that we deal with every day. And it's, it's an index has a lot of stuff built into it. It has never, well, one only one time has it been doing this well and the Fed cut. So, so that was where that he, that he cut a half. There were plenty of things that I believe he should have tempered that. And you're seeing rates are not doing well since the half cut. So, bond investors are. And because on markets short, the Fed can only control the short end. Fed funds rate. And Fed funds rate will influence like the one year and two year treasuries. Fine. He has no influence up here on, on the long end of the yield curve, like, you know, 10 year and 30 year. The only way he's ever been able to influence that is QE, remember that quantitative easing. And he was buying mortgages and he was buying treasuries. He realized no matter what I do here, these guys do their own thing. And so right now, bonds are clearly telling him a half was too much. I don't trust you and I'm my one higher rates right now. So really? Yeah. So a quarter would have been healthier and that's what I had told people. Well, and so you're only the second person that I'm aware of who has said the same thing. And yet there's all that external pressure. You know, they say that that it's not a political position or whatever. I mean, but you know, we got affordability issues, right? All that kind of stuff. Yeah. So that's very interesting to think that that was the wrong move. And so where do we go from? It was weird coming from him because Powell's never been a Fed to surprise anybody. You know, he's been known to be very slow and very methodical in his moves. So I have to say it was just a surprise. So some people, some of the chat I read was like, you know, we didn't see a huge relief in interest rates because it was already kind of pre-baked in based on the talking we heard. True. But then you saw them come out recently and talk about more aggressive cuts to come. So are we expecting to see additional reduction in rates following future Fed cuts? Yes. Yeah. The feds are seeing things that not every consumer can see. Sure. And when we come up to the next Fed meeting, if he aggressively cuts again, and we know he's really concerned, whether he he voices those concerns or not, he did definitely reference labor market slowing. Yeah. But is not I wanted right? They tried to break the employment market. Yes. No. Because the Fed's number one charter actually is monitoring and managing full employment for the country. That's like one of their main charters. So the problem is this is a really challenge. The Fed should stay out of everything. They really are the worst. And they don't mean to be critical, you know, at the human level, Paul's nice guy, I think. But they have always been too late to cut. If you look back in like, oh, five, oh six, things were really starting to cook. The housing market was on fire. And the Fed just decided inflation is a problem. So the Fed started raising rates before the market crashed really. There's always been a I think a wrong a false understanding that low employment and an active economy equals inflation. Hmm. Wow. It sounds healthy to me. It never has. This economy, good job market has never brought us inflation. Inflation comes from too many people chasing too few goods. Right. Hmm. It's interesting. Yeah. That was like Milton Friedman, you know, growing up as an economist, you can out here in some Friedman. Yeah. Yeah. He's amazing. But it's very simple, right? Too many people chasing too few goods. Now look at what happened. We stopped making everything and then we locked people in their room and then we stuffed their pockets full of money. And now you have people like going crazy, the rage spending was that was the word we used back then they have pockets full of money. They're bored to death. And so they go out and they buy, but there's nothing to buy. How manufacturing shut off all around the world? Ships were stuck in ports and freight costs went to the roof. It was taking some of the ships like eight, 12 weeks just to get to the dock and then there was no place to put the trailers. Right. So once they started trying to gear up, it was too late. You had too many people chasing too few goods or actually too many people chasing no goods. Right. Well, the inflation and when Powell said it's transitional, yeah, it is. It always has been how long till the transition. That's really the question. Well, and that's like, you know, what we have in the housing market too as well, right? Too many people chasing too few goods. There's no inventory. Exactly. Exactly. And so that's driven up price, obviously. All right. So that's an interesting geek out conversation. I want to talk about the other thing you do as well, which I'm very intrigued with so loan officers, whoever's listening right now, this is an opportunity. I believe in multiple streams of income when possible, right? It's important to have focus and yet we're in this business that can be cyclical and I think we need to also consider, hey, how do I backfill those, those, those ups and downs or can, how am I adding to my total portfolio, my retirement portfolio, right? And I remember when I ran into the airport a couple of years ago, you're telling me about what you're doing with the University of Options, which is like Forex trading with proprietary FX bots, like what did he just say? Like could you tell me that again? So let's, let's jam on this for a second. Tell me about what you're doing with University of Options. What is that? Okay. So the original product was we taught people how to trade options and then once they had enough knowledge, they could come into a live trading room with myself or with one of our traders and literally we're calling out trades. So they're seeing my screen and I'm saying, all right, if the price crosses this, I'm going in and I'm buying that. And so we say we're going in, remember it goes in, we say we're coming out, and remember it comes out. It's been really a successful program. There's a lot more to what I just said and then just the live trading room. And then we started teaching people how to trade futures. There are tons of leverage in trading futures. So for instance, for $500 account, you could pretty easily make a couple hundred a day. It just doesn't take much capital to trade futures. So then while this was going on, we started building bots. So we have these auto traders that we tell people on the future side, the forex bots are a different story. But on trading futures, we tell people that use the auto trader as an auto pilot. Don't just turn it on and then go away and leave it alone. That's not a best practice for what I'm talking about for the futures. Futures, when you turn the bottom, make sure you're sitting at your desk just so you can watch it monitor it, et cetera. So then from the futures, we recently launched a product called Flight Paths and we worked on this technology for like two years. And what the technology allows us to do is take my trades. So you know, I've been doing this a long time, I'm a pretty good trader and places them in our members account. So literally the member can be doing whatever he wants and he'll see, oh, Dan just opened a trade on his account because his trade. So I place one trade with a daily goal of $100 with one contract. That's what takes 500 in capital. And that trade is executed across currently now about 300 accounts. And they can trade as much as they want. So for futures, you trade in what's called contracts. So just think of a contract as a share of stock. You can buy one, you can buy 10, you can buy 100. We just need to know for every contract you trade, you should have $500 in cash. So that's not much to prohibit somebody. So I'm trading one because it's psychologically extremely simple to wake up in the morning and know I just have to make $100. Because the stress of doing this right now, it's unbelievable. Like I didn't think I would feel this performance anxiety, but now that I have 300 people literally benefiting or not from each trade I take, but the $100 daily goal is very simple. It doesn't stress me out. And so I trade one contract, they could trade 10. We have members of trade 50. So 10 contracts, if I'm making $100 in your trading 10 contracts, that's $1,000 a day. And that's extremely realistic. And how much time would that take from somebody like me, right, to do that? So this is the deal in theory, almost no time at all. If you turn it on in the morning and then we tell you usually to turn it off around 10 a.m. Because we don't want your your bot running all day long. And I take trades that don't necessarily want to take for hundreds of people. So what we want people to learn, some of the terminology, we want to learn a little bit about futures, so we sell the replicator with the futures trading program. So you can start learning, learning the terminology, set it into your account, learn about how to set up your simulator accounts, because we like everybody start on a simulator. And then fire up the replicator, but we're finding it's just a lot more fun all around if people first learn a little bit about trading before we just throw them in the replicator. They're just lost and confused and scared otherwise. Yeah. So this is much more, well, I mean, it's a combination of active and passive, right? Because you've got these bots and things like that and people are essentially executing the same trades you are sort of a pseudo look over my shoulder thing, but it's done for you. Right? Yep. Hmm. I'm reading you're good. I finally found the share button, so we can show you a couple of slides if you want about what we're talking about. Yeah. Yeah. I'm reading your testimonials and stuff. And I guess so there's two things we talked about options and futures, right? Yep. So for those that need a quick comparison on what is an option versus a future, right? Like layman's terms. So they're very similar. They're both sort of derivative products off something else, but options options are cool and the reason we started with options is the leverage. So again, if you buy, if you wanted to buy 100 shares of Starbucks right now, then you need to have that $10, $97,000, or just 100 shares. So with options, you could do the same thing with probably $3 an option, $300 a contract probably and a contract in the options world controls 100 shares of stock. So you just can do so much more with so little capital. And there's other byproducts of options that we teach that are really helpful for people for managing their longer portfolios. So an option is like you take a stock and the stock usually has options that trade with it. So instead of trading individual shares of stock, we're buying an option's contract, let's say for $200 and we're selling it for $300. And that takes very little capital. Futures are different because they're more like tied to the NASDAQ or tied to gold or tied to oil, they're not tied to a stock. But they still do trade in contracts and the contracts do require very little capital. Arth. And I don't want to confuse that with commodities. That's something different, right? Like coffee and commodities are closer to futures for sure. Yeah. Like if you saw trading places, you can get a warning that orange juice market, right? Those they're really trading futures, they're trading orange juice futures. So as a mortgage professional listening, and I know you've got some clients who are mortgage professionals because I'm reading your testimonials on the website. Most of them are because that's a lot of people who know you. What for those that are hearing this, they're like, that's interesting. How can I possibly, because I got to go originate mortgages. So how can I possibly add this to my investment strategy? What advice or direction would you give them? It's more of an income generating strategy than an investment strategy. So the idea is to try to generate as much income as we can with as little as capital as possible. Like that. But when you're a member, like, you know, I do a nightly market update, not bond, but stock. You're going to learn so much about the broader markets and what drives things. And I just, I love it. When I look at our chat board, I'll say, I'll see something like, yeah, that was a liquidity grab. And this guy didn't know what liquidity was, you know, three weeks ago. And that just makes me feel super good. We just, we're really conservative. We ask everybody to start on a simulator and start with just one small contract. We have a whole plan to gear up. So as you start trading bigger, remember, I said, I'm trading one one contract to make $100. Let's say they want to trade 10 contracts to make $1,000. Right. I don't want them to turn on their computer day one and putting in a 10 contract, you know, a size, it's, it's just too scary. So start with one contract and I'll, I'll make you a minimum of 500 a week. And then so within, let's say, three weeks, you'll have 1500. Along with your original 500, now add the second contract. Now you can trade two contracts, which takes 1,000 capital, but you're going to make money twice as fast now, you're going to make 200 today. So that's, that's something where I can, like I said, in terms of time requirement. Yes, there's the initial learning curve and you want to, you want, you want to understand what you're getting involved in, right? But, but are, am I executing trades actually myself or that's happening through your system? You will be taught how to do that. You'll be given the, the, the bots that will do that for you. Okay. So that's all you really need to do is, is let me run the replicator for you. Well, you know, I mean, look at terminology. So the reason why I want to have this conversation, it goes back to what I kind of set up as we transitioned into this part of the conversation, which was income, right? And backfill and the cycles and the ups and downs and, you know, I'm definitely all, like I said, all one for you, focus on what, what you, you know, the key drivers, the key needle movers that are going to impact your business as an originator on a real estate agent, if you're listening to this. And we know what those are. And so a lot of you just need to go do that, by the way, I mean, right, truth be told, right? I mean, you know, this is a business owner. I just came out of two days on site with Alex Hermosi where they do this and be a very interesting thing for you to check out is two days intensive. You go through LTV, CAC, you know, all this kind of stuff. And you know, the big question is what's, what's the main constraint in your business? And most, most business owners work on a lot of things in their business, but usually it's not the thing they should work on, right? Totally. To grow sales and to, you know, be more profitable, et cetera. And so that's my message to everybody listening right now is, you know, keep the main thing, the main thing. But Dan's platform, which, you know, I've been following now for two plus years. And if you know anything about Dan, very intelligent understanding the markets and all that kind of stuff, like if I was going to put my trust in, yeah, man, I got some, I can play around with some money, you know what I mean? To, to create additional leveraged income and it's only going to take me maybe a couple hours a day. If I'm following you correctly. Is that correct? Yeah. Even a couple hours a day. Yeah. So that's why I'm bringing this to the surface guys and gals that are listening is, I think it's something that might be for some of you, not for all of you, but for some of you. And so we're going to put a link in the show notes and all that kind of stuff to go check out. UniversityofOptions.com. There's a lot of great content on there. But I, you know, I just want to make it clear that I'm not saying, oh, you should get out of originating mortgages or whatever, you know, but I mean, if you can add an extra, like let me just read a couple of these, I was on here. Okay. So this one, a couple of testimonials here, and you guys can go read these yourselves. Like whoever this was, $27,000, like within two months, it looks like maybe three months. What else we got here? I'm up $700. You know, what I like about this, here's another one, up a little over $1,000 last week, up $3,000 so far this week. What I like about it is we're not talking crypto type numbers, you know, we keep it conservative and believable. Yeah. Yeah. Exactly. Believable and achievable. And so anyway, this is just, there's, I get nothing for this, everybody, like there's no like, you know, all money on the backside of this or anything like that. So I think you should go check it out. That's all I have to say. Now, knowing that our audience is largely loan officers before we close out, anything else contextually, you would want to tell people who are suggest, who are considering learning more about this platform. Well, there's, there's a benefit here that, you know, we haven't talked about, but understanding the markets, it opens up so many doors. So let me give you an example. Real companies, if they're holding a thousand barrels of oil, let's say, for distribution, do they have any price risk by holding that oil? They do. You know, let's say they pay $80 a barrel and then oil falls to 40, they're hosed. They lost half of their net worth by the oil sitting in their, in their yard. So what do they do? They buy oil in the futures market. That way, if oil does drop, they make a killing on their futures investment. That's a hedge. So just like your secondary marketing guy, he gets a loan and he hedges it. Just in case rates go down, that would be terrible. You know, they're sitting on a loan, they're having to pay you X and then all of a sudden the loan is worth less. So one of the strategies that I've done and taught, think about the peak crazy of this industry, is that 22, 21, well, why was it so crazy? Well, it was so crazy because rates were so low. Now what if you were to have purchased bonds back when rates were that low? It's actually, there's actually a security called TLT, which is fun. It's like a stock, just like the stock, but it actually tracks with bonds. So TLT back a couple of years ago was running like $147 a share and we taught our members to sell short. Because when things are that great, it's because rates are that low and it's going to change. And so the more rates fell, the more wealth was built in our members that actually had pre-sold into the bond market. It's your hedging your career instead of just hedging your portfolio. It's just kind of an example, I know it's all confusing. And then again, it's the community is amazing, I've never seen anything like it. Our whole team, every one of our teammates, I think we have 14 or so now, and they've all come up through members. And so it sounds like almost tried and overused, but it really is a family. It's like the members really develop friendships and I love it. All here that these two guys met up when they were in Vegas and they never knew each other. So look at the minimum, yeah, at a minimum, I think somebody should check it out, right? Because if you're smart, you're always looking for strategies for creating income or assets, right? And of course, additional income helps fill in the gaps when there are some market cycles. So we'll put a link in the show notes once again, your universityofoptions.com. But Dan, I know you're busy and it's a little bit of a crazy day there and I thank you so much for taking time out from your day. Hey, I hope you enjoyed this episode and got some education. Check out the links in the show notes and we'll see you on the next one.