Jordan Belfort: Wall Street Is Evil. But Here's Why We Need It.

The closer you've been following your Equity Investments recently, the jumpier you likely are. A lot of Americans have concluded that the Wall Street game may be rigged. The whole thing is kind of a scam, but there's still a huge amount of money tied up in it. Not just in individual investing, of course, but in pension funds. The whole world is tied up in the American Stock Market.

So how exactly do you succeed in it as an individual? We thought the man to ask would be the man who's seen both sides of this business, legitimate and less than legitimate: Jordan Belfort, The Wolf of Wall Street, with a new book, The Wolf of Investing. And he joins us now to explain how you can make a fortune on Wall Street.

Can you make a fortune on Wall Street? You can, but it takes time. You know, I think it's, I think, listen, the mistake that people make is that the average person is that when you don't have that much money to start, let's just choose a number, let's say just $10,000, right? It's a random number, right? You say to yourself, if I'm going to really get anywhere as an investor, I need to make a big hit, like to turn that into like a million bucks. I've got to find the next Apple computer, the next crazy crypto token, right? Whatever it is, some wild, successful investment, right? Which leads you to engage in, you know, wild speculation, short-term trading, trying to time the market. And the truth is, is the opposite. You don't need to start with a lot of money to end up with a lot of money by doing the exact opposite, which is holding for the long term, and all the highest quality stocks, and relying on long-term compounding and reinvesting dividends and making small contributions along the way. But forgetting, like you said, the noise. And people are worried about their equities. This is the problem because as soon as you start buying into that, like, you know what, I think the market might be going down, or maybe it's going to go up next year, you have to time that by buying and selling. You create taxable events. And also, human beings, by our nature, we're kind of crappy stock pickers. And when you try to pick individual stocks, you tend to lose most of the time.

What, here's what I'm going to do. I'm going to give you my investment strategy, and I'm going to be as honest as I can be. And you assess it based on your expertise and tell me if I'm right or wrong, okay? So I'll get down in my rec room, big screen TV with my dab pen and my laptop, and I'll turn on Jim Cramer on CNBC. And when he tells me to buy, I buy. And if he sells, says sell, I sell. Yeah, you're getting financially whipsawed. So I, I think, is that working for me? No, it's not going to work. So I, I, I kind of buried Kramer in the book, I guess. I'm not going on CNBC anytime soon for any interviews.

Why don't you bury Jim Cramer? And this is a guy with an uninterrupted string of correct calls by JP Morgan of this generation, Sam Bankman-Fried's FTX. Listen, the best thing, the best thing was was an interrupted string of terrible calls. By, oh, listen, he's had a lot of good calls because he's on both sides of the market. He tells you to buy one thing on Monday and sell it on Wednesday, and back and vice versa. This guy literally is telling you, they actually did a study on this. When they put up his recommendations of what he said on Monday and then on Friday, the exact opposite. Like one day saying the market's going up, next day it's going down. Buy this, go from this sector to that sector. That's historically, mathematically, scientifically proven to be the worst possible way to invest your money. They've gone back a hundred years. The scientific, the academic studies, and the analysts can't pick the right stocks. The hedge fund managers and the mutual fund managers can't beat the S&P 500, which is the overall broader market. And there's a reason for that because all the information is out there. So unless you have inside information, which is illegal, right? And certainly the average person is not going to have that, or some other way to beat the market, whether it's, you know, high-frequency trading with computers that are lightning fast. So some of the big firms, they'll time the market like a millionth of a second better than an average investor. They get an edge. But for everyone else, you can't beat the market. You just, it doesn't work, especially when you deduct all the fees, the commissions, and also the taxes from short-term trading.

So let's say, let's say a hedge fund returns 15% one year. Say that's pretty good, right? But after they take their 2% manager fee, 20% performance bonus, right? Suddenly, it's not even beating the S&P 500. And that's a good year. Most of the time, they don't even beat it without their fees. So why would anyone hand money to a hedge fund?

So Warren Buffett asked this exact question back in 2007. Made a, made a big announcement, bet a million bucks that I don't care whatever hedge fund you are, you can't beat the S&P 500 over 10 years. And at first, no one took the bet. Eventually, someone did with a, what's called a fund of funds. It was 100 different funds, right? And after year seven, they threw in the towel. They couldn't even come close to the S&P. And that was without all their fees. And just, you know, the fees they take. So it's 20% typically is a performance bonus, right? If the fund makes money on the upside, on the upside. But if the fund loses money, the following year, they don't get any of the losses. So it's heads they win, tails you lose, right?

The mutual fund industry is equally bad. So they're engaging in, you know, basically asset gathering because what they do is they try to gather as many assets as possible, money, right? Because they get their management fees. But the returns on the average mutual fund are dismal. They don't keep up with the S&P 500, which is America's 500 biggest, baddest, most profitable companies. So, and those 500 companies change. So not this, the S&P this year is not the same as it was last year. So what happens when you buy that index as the centerpiece of your investments, right? You just hold it. You're always having the 500 top high-performing companies in your portfolio. It's very tax-efficient. Now, it's boring, but it compounds at about 11% a year. And guess what? If you invest $10,000, right, and just compound it at 11% a year, and you put a little extra money in whenever you can, each month or each quarter, right? Over 30 years, 40 years, it turns into millions of dollars.

But I, I, I'm still caught up on the hedge fund idea. So Steve Cohen, Ray Dalio, right? All these guys are billionaires. So, world's biggest art collection. So how did they get so rich if it doesn't work? Well, for a time, it was like the, you know, everyone thought, oh my God, they're so great, the hedge funds. So for many in the '90s and 2000s, like this, the word was really like this mystique that you had these really high-performing hedge funds. And there were a few. There were, there were a few people that actually can beat the market. Ray Dalio is one who's done it consistently. He's not taking your money. The average, when they're really that good, they don't take an average investor's money. They train their own money and a few very, very large institutions. So those funds are not open to the average investor. But then all the other hedge funds, which kind of suck, right? They're bathing in the afterglow of the aura of the hedge fund manager. We see like on Billions, right? So this is a mystical hedge fund. Well, guess what? Most of these guys suck. All right? They, they're not beating the S&P. They're just not. It's historically proven. They don't beat the S&P and they take these massive fees. When they do win one year, and they always get that 2% managing. So watch what happens. Let's say you're managing a billion dollars. So before you even start, it's $20 million a year you're getting, just before the fund even starts, plus 20% of all the profits. And when you take those.

And how about this? I'll go one step further. And also, when you have a hedge fund, you have to show activity because unless you're, you can't just buy the S&P and hold it. Someone will say, well, why would I give you my money? You're not doing anything. So they almost have to show activity to justify their existence, which makes them engage in short-term trading. And human beings are just terrible market timers. They, and this is just over-proven over 100 plus years of studies that you cannot trade in and out of the stock market, buying, selling, selling, buying, sector, this sector, one day. So it's just a trap.

The way I look at it is this. So Wall Street creates massive value. They do. Wall Street's necessary. You can hate Wall Street, despise them for what they think they do wrong, but Wall Street is necessary. They create massive value for the economy. They take companies public, right? They finance the growth of America. It's needed. They maintain the debt markets, the credit markets. That's the useful side of Wall Street, where they create massive value. Then there's the not-so-useful, the dark side of Wall Street, where they create bubble after bubble after bubble, where they have instruments of financial mass destruction, where they create for just gambling purposes, where they churn you, they have excess commissions and fees and rob the public blind.

So the question, right, in the book was, you know, how does the average person get the maximum exposure to the good side of Wall Street, which is the great companies they take public and finance that become huge multinationals? So how do you maximize that but avoid the corruption, all the churning and the burning, and the, you know, financial bubbles? And so for, try to, and play into what I call the Wall Street theme machine complex, which is this advertising monolith, where basically they convince you, like people like Cramer, to play the suckers' game, where they actively, if you go on CNBC, they're all day long trying to convince people to play the short-term trading game, which is indeed a suckers' game.

So you go into a casino, right? We spoke about, about gambling, right? So they own casinos, the Packer family, right? So in a casino, you, you go in there knowing that the odds are against you by what, 5% depending on what game you play. So the odds are against you, and the house will win over time, right? That's a legit casino. The odds are against you. But what if you go into a corrupt casino where they have loaded dice and are dealing from the bottom of the deck? That's Wall Street. So now, not only are the odds against you because you tend to pick winning stocks, but there's people who have information that's more timely than you. They're trading ahead of you. They are charging excess fees. And also, all these publications and new chat and news with it's CNBC, Bloomberg isn't as bad, right? Because they cater to professionals, but still trying to convince people that, you know, you can somehow figure out when you should buy oil and then sell your Meta, and then somehow go into a steel stock, and then go into overseas. It's insane. It doesn't work. And people get financially whipsawed. And I saw it myself. My own family member, very successful guy. I start my book off telling his story about your brother-in-law. Yeah, my brother-in-law, he's a very smart guy. And he's, I watched his portfolio get decimated through short-term trading and using margin, all the things that they was he doing it himself? He was trying to do it himself, and, you know, following tips he heard on TV or online. And, and it just, and it's so simple. And what happened to him? Well, he's thankfully he's successful. He lost a lot of money. And then he learned his lesson. And I showed him what to do the right way. And he now, he's building a proper portfolio for the long term.

So I think the distinction is this. You can get rich in the stock market, but not overnight. It's just, it doesn't work. You can't do that. And if you try to get rich by engaging in short-term trading or picking like one stock, you're probably going to end up in the financial poorhouse.

So the solution I put in this book, which is ironic, given where I came from, right? Because I committed fraud 30 years ago, right? So as you said, I've seen both sides, right? So the solution in the book is really very simple to build a world-class portfolio and secure your future. Because I don't think you can rely on Social Security these days. It'll be enough to pay for your diapers when you're in a nursing home by the time you get it, right? So this is about, you know, empowering yourself financially. And it's about doing less versus more. Not hiring experts, less trading yourself, less trade. It's about investing as opposed to speculating. Now, there's nothing wrong with speculating. It's fun, right? And if you want to take 5% of your capital and speculate and buy and sell, that's great. There's nothing wrong with that. I, I encourage people to do that because it's good. You can have fun with that. Maybe you'll make some money. But that's not how you secure your retirement. If you want to secure a great retirement, you start off as young as possible, right? And it's never too late, by the way. And it doesn't matter how much money you have to. You can start with a little bit of money. You don't need a lot. But the key is making little, small, regular contributions and not worrying.

Do an index fund? Is that what you're saying? Well, the main one is an index fund. You want to have an index fund, S&P, low-cost S&P 500 Index Fund. And you want to have it in certain types of accounts that are tax-deferred whenever possible, and so forth, right? Then you also want to balance that out with some, you need to have some bonds in there, a small amount, depending on your age, right? And on top of that, some cash for an emergency. And then if you want to speculate, you can have, let's say, 5% for speculation. But the key is this: don't hire an expert. Like, for example, we've been conditioned. This is the trap, right? So you're a homeowner, right? So if your pipes in your house burst, you're probably going to do a lot better off calling a plumber to fix your pipes than trying to fix them yourself, right? Right, right. Fair enough, right? If you're having an electrical short, I suggest you call an electrician versus trying to go put on rubber gloves and not get electrocuted. You'll get a much better result with the expert in that too. If you're sick, you say your appendix is about to burst, right? Don't do your own surgery. Have your wife cut you open. Go to a doctor that's an expert at doing surgery. Let him do the surgery. Fair, fair enough, right? That's true for almost all things in life except Wall Street. It's the one exception to the otherwise pretty much steadfast rule about seeking out experts to help you get the best result. On Wall Street, they don't get you a better result than doing it yourself. They get you a worse result because of all the fees, the commissions, the performance bonuses. And also, they can't outguess the market. The market is too hard to beat.

Now, you have, again, there's a few people that can do it. They're not taking your money. How I want to focus on them for a second because undoubtedly they're the touts. They're the, they're the people convinced the rest of us that this works, right? Because they're so rich. How did they get so rich? So if you look at a guy like, you know, for example, like Ray Dalio, who's been, he got in very early into the game, right? And he's an incredibly brilliant guy. He's a great stock picker. And whatever his proprietary method is, or Warren Buffett, you know, these, there's a few people out there. And this is what one of the great studies was from an economist named Paul Samuelson, right? In the '70s. And this is really what started the shift into index funds. He did a study that went back a hundred years, all the way to the earliest days of record keeping, right? Studied every mutual fund out there since the 1920s, all the stock recommendations since the 1890s, right? And he came to the conclusion, he goes, okay, maybe there were a few people who can outperform the S&P, but they remain remarkably well-hidden. He couldn't find any. Couldn't find. This is like a top, won a Nobel Prize, the guy, for this, right? So that was really the beginning. That was like the shot across the bow.

Now, Wall Street did everything they could to suppress this. So the first guy to try this was, was Jack Bogle from Vanguard. You know, Vanguard, right? So Vanguard is a place that, great, great place where you could buy the best index funds with virtually no expenses. I strongly recommend Vanguard, right? And there's a few others as well. But Jack Bogle was the first, right? But when he started Vanguard, Wall Street went out on the ultimate smear campaign for like a decade, suppressing everything about index funds, saying it's the stupidest thing. Who wants to be average? D.U.S., which is a huge mutual fund company, said, no fees, no way. Like, actually, in public, in Wall Street chart, a full page, like, if you don't like that, was marketed to the people who were the gatekeepers to investors. So if they're not, because Vanguard doesn't pay fees, right? So if they won't pay you fees, don't put your clients in their funds. Instead, put them in our high-commission funds. We'll pay you a lot of money. So for many, many years, Vanguard languished and was suppressed, right? It finally got traction after the crash of '87. For the first time, all of a sudden, you know, the mirage evaporated when everyone lost a lot of money. And for the first time, Vanguard started to get a fair shake in the market. And then slowly but surely, they started to grow and grow. And then as the internet came about and the high-speed connections and platforms for direct communications with customers, it suddenly became a mass exodus out of this, like, you know, sort of high-expense mutual funds, which I think that Bogle saved the public probably a few hundred billion by now in fees. Mutual funds were ripping people's eyeballs out forever. Now, they still do crappy. Their performance is crappy compared to the S&P 500. But for years and years, they're just ripping the public's eyeballs out. That was the most lucrative industry out there. And Wall Street just spent, you know, countless hundreds of millions on advertising campaigns and whatnot, right? To make people think this is the way to go. So your Merrill Lynch is bullish on commercials, bullish on America, right? All the, you know, T. Rowe Price. I don't want to point the finger at any one of them, right? But now they all offer this ultra-low-cost index options, which historically has outperformed people trying to pick individual stocks forever. It just, it outperforms people because people are really crappy at picking stocks. And also, you know, there's another part to it as well, right? Just trying to time the market. It plays into all our worst impulses.

So like you said, right now, people are scared, and rightfully so. The world seems to be on fire. And, you know, I watch your podcast all the time, and it scares me sometimes. It's a scary world, right? So you would think that, okay, the US economy is laden with debt, which is true, right? It's got fundamental problems. China's going to take over the world, right? Well, when I was, you know, just getting started, it was Japan taking over the world, which turned out to be a fallacy, and they had their own problems. So I don't know whether China is going to take over the biggest economy, it's going to surpass the United States. I don't know if the stock market's going to go up, down, sideways, or around circles for the next five years. I, how do you, you don't know. Anyone tells you they know, that is lying to you. So to sit there and try to watch the news and trade against like what's happening in the economy and what's happening in the world is a fool's errand. You're not going to succeed like that unless you're one of these rare individuals who, full-time, has this unique gift.

So how, but then again, though, look at all these massive companies that have been created in the last 20 years, like, you know, Google, Meta, right? This is huge companies. Not Nvidia with artificial intelligence. So how do you get exposure to all that without having to pick the winners from the losers? The answer is very simple. You buy them all in one investment, which is the S&P 500. And then you sit back and let time do the heavy lifting for you.

So you don't know if to watch Jim Cramer at all? If you watch Jim Cramer for entertainment, if you like that kind of bloviating humor, good for you. Me, I personally don't like it. The worst, even worse than that, is if you watch Jim Cramer and you happen to opt in, like if you have to answer one of the emails or on the website, they'll start barraging you with emails. I did this as an experiment. I was like, you know, a guy that injects himself with the virus to see how sick you get. I actually opted into Cramer's, you know, little thing online, and I started receiving a barrage of like a hundred emails about, join his special club, we'll alert you to what stocks are going up and down in real time. I mean, it's like, this is insanity. But this is a major network that's, you know, giving investors crappy advice.

Now, on the flip side, here's the weird part. They also have good stuff on that network. Like there's legitimate news. And that's the problem. So they mix in legitimate news, great reporting, interviews with great CEOs, and you learn about the economy, what's going on in the world. But they interspersed that with, like, this market giving advice. And it's not, it's not nonsense. You, you, people can't beat the market. And I saw it play out. My brother-in-law, many of my friends, back in when the bubble burst in 2008, and even worse, by the way, in 2000 with the dot-com bust, right? So every time the market busts out, all the gets exposed, of course. And all, all of a sudden, people thought they were expert day traders or expert market timers. They were like basking in the glow of just an up market. Like I say in the book, a rising tide lifts all ships. And a falling tide, well, it lowers all ships, right? So you see the truth come out. Warren Buffett says, you know, until the tide goes out, you don't know who's not has no clothes on, who's swimming naked, right?

But you said at the outset that there are people who do succeed in the market, um, because they have inside information, right? It feels like there's a lot of that. There is. How does that work? So I think there's, there's different levels of it. Right? There's like the full-on criminal stuff, like you saw in the movie Wall Street with Gordon Gekko, right? Where like people are actually paying people in moles and stuff like that to get, you know, information that's not public, paying off directors, having inside links to the company or law firms that are doing deals, right? That happens for sure. And people do get in trouble from time to time and go to jail, right? But Martha Stewart, right? Exactly, right? But she was like, kind of, you know, a fall guy. She sure was. Like, I mean, people did a lot worse than Martha Stewart, right? I mean, yeah, why they put her away? You know, it's hard to say because she's, you know, famous and she's a big target. And, you know, it kind of sucks when you're famous and a big target and they want to come get you, right? Especially if some of your views aren't that popular, they want to come after you, right? So, but that's sort of the cliché type of insider trading where they're just literally buying and getting moles. And that's highly illegal.

Then there's the softer side of it, which is where these big hedge funds have these like analytical firms that are getting like research that's inside research. So like, for example, they're like, I had a friend who was a, a very big short seller, right? And he actually had like people waiting outside of a warehouse, counting the number of trucks that were leaving the warehouse to try to, like, get it to see how are they really shipping the amount of goods. They're doing this deep type of research, which sometimes crosses over into inside information.

So what, what is the line? I mean, you're allowed to be informed. You're allowed to be informed. But theoretically, you should not be in possession of information that is non-public. Everyone's supposed to have access to the same information at the same time to make a fair market, right? And generally speaking, it's true for everybody, all the average investors. But there are certainly people on Wall Street. I mean, you'd be naive to think that, you know, an analyst that has special relationships that's doing the investment banking deal. So someone raises, you know, $500 million for a company, you tell me the CEO and the owner of that firm are not like having little conversations, little inklings here and there. So I'm sure that's happening. That's much more difficult to prove. So it's a lot of it is buried under like, you know, guidance in financial reports. So they'll issue an analyst report, right? And, you know, the analyst report will give sort of plausible deniability for why they think a stock is going up or down, right? But even then, I mean, I, I think that's difficult to prove, which is why you don't hear a lot of those cases.

No, the SEC doesn't seem to bring any. Well, the SEC, I have a whole history of the, in the book, the SEC is a ridiculous organization. So was conceived. Listen, the first chairman was, was, was Jack Kennedy, you know, or Joe, Joe Kennedy, you know, all Joe's original Wolf of Wall Street, right? So like, you know, the bootlegger. Yeah, from the beginning, it was set up with a two-tiered system where the big firms basically were protected. And, you know, when they got in trouble, they did things so egregious that it was undeniably egregious, they pay a small fine and move on, right? Which is why, like Goldman Sachs, for example, right now, Goldman Sachs serves a vital function to the US economy. And they're also behind every great crime, or the biggest crimes that are out there, including my movie that was The Wolf of Wall Street was financed by these Malaysians, right? The 1MDB fund, that scandal that was just coincidentally, and who is the banker that that paved the way for that? Goldman Sachs, out of, out of there, I think it was in Malaysia or Singapore office, that banker there that provided the funding and, you know, got double or triple the normal fees for doing it. And that money got siphoned off. That's classic Wall Street. So on one hand, they create massive value. On the other hand, they rape and pillage the village. And it's the average investor and the average person that bears the brunt of that with the bailouts and subpar returns.

So, well, just to follow up on the Wall Street investment firm, I mean, information firms, research, yeah, I mean, everyone uses those, correct? Right? Hedge funds are very much using them. So they got in trouble though, in the past, in some cases, they pay employees or former employees of companies to talk about what's happening inside the company, right? That's very common. Yes, that's, so that's same lobbyist. And it's like, so how is that not insider trading? I've always wondered. Well, again, it's, it's not if someone gives you an overall, you know, sense of what's going on, that's like nothing. That's not out in the public domain. But it's sort of like an insider's perspective versus information on like, are sales going down? Is there a problem with manufacturing? That's not public, right? So that's when it crosses over the line. And it's a gray area, right? But it's very common in hedge funds to use these research firms that go out there and get non-public information. And there's a very fine line. Like a drug trial, like there's a drug trial going on, like, you know, how do you know how the drug trial is performing? Well, if you're, imagine calling up all the people, interviewing people that are in the drug trial and trying to figure out yourself, or people are intimately involved with administering the placebo studies or double-blind studies, they're all over that stuff.

It appears that members of Congress consistently beat the S&P 500 in their personal investments. Nancy Pelosi and a lot of others. Especially, she's the famous one. Yeah, yeah. So how does that? Is Nancy Pelosi, do you think a stock-picking genius? No, she, she has to be operating on information that's non-public, or is not, wouldn't that make her a criminal? Yeah, but you know, look at Joe Biden right now. I mean, look what's going on right now. Like this, listen, you think he's a good stock picker? Joe Biden? No, I think he's great at laundering money though. I mean, honestly, what from what I've seen right now, I don't get it. Like, just imagine if it was Trump who was president, yeah. What every single day in the front page of the New York Times, the Washington Post, and every other publication would be like, $40,000 check for $20,000 check from his, his brother. It'd be game over. Cries for impeachment. Yeah, it'd be like the world falling down. He's in China's pocket. But it's like, we're living in an alternative universe right now where people in power, especially on the left, right? Can operate almost with impunity. And Pelosi is a perfect example. She's not the only one. But it's inconceivable that someone could have that higher return than the market when everyone else can't do it. So what's the edge? The edge is she knows key legislation. And also, you know, maybe someone's whispering in her ear, okay? Because, you know, they want to be on her good side, right? So it's, it's hard to prove that. But it's just prima facie. So if you, if what you're saying is true, and that is that the most sophisticated people in the world can't beat the S&P average, then any member of Congress, and I think they are on average dumber than the population, especially the career politicians. For sure. Yeah. There's no possibility they could do that without that inside information. No, it's not possible. But again, so how do you go proving that, right? They have to issue subpoenas. And listen, I think that the, in this case, the solution is they shouldn't be allowed to trade. These people, yes, they should not be allowed to trade. It's insane that they're allowed to. And, you know, as you said, it's prima facie, right? You know, if it looks like it smells like, well, guess what? Yeah, it is. And that's, you know, or it's in this case, right? So listen, she's done incredibly well in an area where like the most professional investors struggle to even match the index. So somehow she's doing three times as well. I don't know why. No one ever taken that seriously. I mean, this is like, like a feature of internet memes. But I don't know. I mean, don't we have an SEC to look into that? I mean, what, the SEC is not going to look into that sort of stuff because they don't, they don't want to make an enemy because they're funded. Who funds them? You know, funded by Congress. The budget's tied to Congress, right? There's a committee that, it's the, um, Financial Services Committee, right? So that, that funds the SEC.

But how does it make you feel? I mean, you got in a lot of trouble for fraud. But I deserved it. So like I, right? But so do they? I know, but like I, never one thing. Listen, I admit that after 2008, I got a little bit bitter. I was like, you know what? These people have bankrupted the world economy and no one went to jail. Basically, some schnook in Germany went to jail, right? So I was a little, I said, you know what? That's not really fair. But, you know, I don't think it's, you know, an empowering way to live to say, just because, you know, I went to jail, other people should too. I think jail's a terrible place, right? And, you know, I did my time. And, um, and I made the best that I wrote my first book in jail, which has turned out to be a great thing. But, you know, I learned from that. But I don't then wish it on other people.

How did you? I mean, a lot of people go to jail, few write books. How did you do that? It's a great story. So believe it or not, when I go to jail, how old are you? Uh, let's see. I was, uh, 41 years old, 42. Yeah, it's a terrible time to go to jail, right? And lost everything, right? Um, and I got two kids at the time, which was breaking the news to them was the most heartbreaking thing ever. I mean, literally, it was like, too much crying. And you go, I still get emotional about it, right? I bet. And had to tell them like, you know, Daddy made mistakes and now he's in. They were hysterical. They were 11 and 9 at the time, right? So, um, I go to jail and it's not the worst jail in the world. Not worried about slipping in the shower. So it's like a minimum security. But jail sucks, right? Who's my bunkmate? Tommy Chong from Cheech & Chong. What was he doing there? So he's there for selling, not marijuana, but bongs. Bongs. It was the most ridiculous thing ever. So he's doing a year and a day, a year and a day for selling bongs. I'm like, like, he's doing a year and a day for bongs. I should probably get 3,000 years for compared to how long did, how long are you serving? 22 months. Yeah, right. So he's there for a year and a day. And, you know, the first few days, you know, there's not much to do. You just tell each other stories. And I'm telling him stories about my life, the insane. Did you know who he was? Of course. Yeah. They put us together. We shared, we shared a cell, yeah, because we were both high-profile, so they just put us together, right? So in jail, as in normal life, all the famous people know each other, basically, right? So, and he's a great, he's a great guy. And he was, he was writing a book at the time. And I'm telling him stories and he's just rolling, just laughing hysterically every night, right? And the third night, he's like, you know, I thought you were making this up, but my wife Googled you and it's like, all true. In fact, your assistant knows you from a father from back in the day. He was a friend of, by the way, he's like, this is you actually sailed the boat, you crashed these cars, you did all this insane, you made all this money and all these drugs. He goes, you have to write a book. And I'm like, really? You think my life's exciting? Like, because what, it's your life. Matter how crazy your life is, it's yours. You don't think, right? You think it's just normal. I'm like, he's like, I'm Tommy Chong. I think your life is just insane because you write a book. So I, I started trying to write. And I was a terrible writer, terrible. I couldn't write anything. I never written before, like that, you know? So after like a month, I'm like, oh, this is just not working. I go to the prison library and I stumble upon a book called Bonfire of the Vanities, like Tom Wolfe, of course. I pick up this book and I'm like, oh my God, I want to write like this. So I, I plowed through the book. And then I, I started with the yellow highlighter and I used this book like a textbook. And I taught myself to write by modeling Tom Wolfe. So it's like I had a model now. And I spent about three months just every, I mean, every metaphor, how he used grammar, how he described locations, how he used conflict. And I really started to see my writing dramatically improve. So I wrote about 100 pages when I was in jail. And then I ripped them up. I didn't think they were good enough. I got out of jail with no pages, but I had a skill now, right? So when I got out, I was like, you know, I don't know what to do with my life. And I was like, maybe I'll just start trying to write again, right? So I wrote about 12 pages. And I'm like, wow, I think those are really good. Like I thought they were pretty good. And I hate my own writing always, right? It's like when you write, you're, it's very, like, you always hate what you write, right? So I'm like, I think this is pretty good. I sent it to a few friends and they're like, laughing, like, oh my God, it's the funny. I'm like, really? So I sent it to a book agent I knew very casually, just a casual friend, right? So I call him, I said, I want to, you know, write a book. He goes, oh, great, let's get you a ghostwriter. I said, well, I want to write myself. He goes, can you write? I'm like, I'll send you the pages. I sent him 12 pages. Next day he calls me back. He goes, did you pay Tom Wolfe to write those pages? It was like that close to Tom Wolfe's voice, my first draft, right? I'm like, no, no, I wrote it myself. He's like, it's really good. He goes, like, write 10 more pages. So I said, all right. So it took about, took me a week to write 10 more pages. I wrote another 10 pages. I send him the pages. 15 minutes later, call. She goes, stop everything you're doing. You have no idea what's about to happen to your life. This book is going to be a masterpiece. I'm going to get a movie made about this. We're going to get Leo DiCaprio to play you, right? I mean, right from the start, right? I was like, I thought he was delusional, right? But I didn't have much going on back then, right? So I was like, screw it. So I, you holed up and literally I had a little tiny apartment and I spent one year just like doing 18 hours a day writing the book, The Wolf of Wall Street, right? About on page 60, he took it down to Random House, who bought the book. I got a nice advance. So like, at least live, right? And then when the book was finished, about a year later, it went through seven edits because I overwrote it. Got it from a thousand pages down to 500 pages. And then when it was still a manuscript, it became a bidding war between Brad Pitt and Leo DiCaprio. Yeah, it wasn't even a book yet. I know, it was crazy, right? And then, you know, Leo brought in Scorsese. And I always love Leo. So I sold to Leo and Scorsese after a nice bidding war. And so began, you know, the story of The Wolf of Wall Street. What happened with the movie? And then there was a delay, by the way, for five years because that was 2007. And then the writer strike, it and it got delayed, which ended up being a great thing. And this is really empowering for all the listeners. I'll tell you why. Because when I, when they wrote the, the script, when the script was done by a guy named Terry Winter, who adapted the book, he did an incredible job. The first draft of the script was amazing, right? But it ended with me in jail, like, because I went to jail and got out, right? And that was the ending of the movie of the script, right? There was this delay then for four years after the writer strike. And during those four years, I got very wealthy again, going out there and speaking and training entrepreneurs and teaching sales, right? So finally, four years later, when Leo called me, go, we're ready to go. He came back to my new house. I was living in a mansion on the water. He's like, what the hell happened to you? Like, in four years, I was in a tiny apartment, now into a very nice house again. I'm like, oh, I'm doing this stuff around the world. I showed him my clips from live on stage. He's like, wait till Marty sees this, he's going to go crazy. They rewrote the third act of the movie and made it a comeback story. So yes, so I kind of rewrote my life story.

When were you happier? At the peak of your success, pre-conviction, or on the comeback? Comeback. I was never happy before. Why? Number one, I was massive drug addiction. Yeah, like I'm literally massive drug addiction. What were you using? Quaaludes and cocaine. Quaaludes. Is this the '70s? '70s. You know, I, where you get Quaaludes? I'll tell you how. So we, when I got really wealthy, you know, they made them illegal in the United States, a long time. But but in Switzerland and Italy and Spain. So we were going country to country and like buying out the supply of all the Quaaludes from overseas and bringing them back into the United States. Just not to sell them, just to take them, just to eat them. We weren't dealing them, just consuming massive quantities of these Quaaludes. And I got so wildly, I was taking about 10, 12 a day. Get very dull. Yeah, yeah. And like one of them would knock out a 200-pound Navy SEAL for eight hours. I would take four and walk around like, what? So what was the appeal of that? You know, um, euphoria. Incredibly euphoric. They get this, like, first you get this tingle phase, and then you get like the slurs and the happy drool. You get to the drool phase. And anyway, it's incredibly euphoric. And then I said, well, what's the drool phase like? The drool phase is when you're like drooling as you're talking, but you're like, well, drooling is not a big deal. Baby's drool. I drool. You know, and when you're slurring, you're like, baby slur. I slur. It's always a justification. But then the problem is, is the fourth phase is unconsciousness. Baby drool. That's a great. That's the best justification. But phase four though, is is unconsciousness, which is a problem. So what do you do then? Well, a responsible drug addict will then take cocaine to make sure you don't go into course. Right? So I start to balance it out. The yin and the yang. Come on, cocaine, which is great. Worked great. The problem is, cocaine makes you anxious. So I needed Xanax to get rid of the anxiety, right? So I take Xanax to calm the anxiety. But then I still need something to kick me over the edge with sleeping. So I took some Ambien to sleep. And then some Morphine for the pain I had. And before I knew it, I was taking 22 drugs at the same time. It was like a human petri dish, right? And I was just incredibly high all the time. And running. I know I'm very lucky. I know I don't, you know, I always wonder why I didn't have any permanent damage. Right? I think most was not a big drinker. I think alcohol is like that wildcard. Alcohol and Quaaludes would kill you. Yeah, it's a wildcard. It's like gasoline on the fire. So, um, I was very fortunate. I got sober in '97. Went to rehab. I went to rehab. I got sober. What's withdrawal like from Quaaludes? Not bad. It wasn't that bad. You know, for me, it wasn't so much withdrawal was the problem. It was more like, just I needed like an adult time out. I needed. I was so dumb with it. Like I think, you know, people can get sober in rehab. People can get sober in the rooms of Alcoholics Anonymous, right? You can get sober anywhere. But you have to be ready to get sober. Yeah. If you're not ready, right? You could be in the world's greatest rehab and you'll just relapse. You'll run. You'll climb over the wall as soon as you got. You'll use again. I was done. I, I, I like my life was so out of control. I had my kids were starting to get older now. Four.

And five years old, so I was like, I got to end this. So I know I was very happy to stop using drugs, right? So that was in '97. I had a problem in 2009 where I had like, had some terrible run of like five surgeries in this shoulder and five surgeries in this shoulder. I had really bad, bad back, the whole thing. So I was taking Vicodin from the doctor, from the doctor, right? And then I got off of that and went on something called Suboxone. Oh, of course, which is a disaster in its own right, but I, I could function on. Then I found Ibogaine, you know, Ibogaine, yeah. And I got completely...

How did that work? Well, you know, I, I was on this low dose of Suboxone for like 10 years and and like didn't affect me, but it's was like, it's just not, who wants... Why did they do that? Because the pharmaceutical companies make a fortune with it. So they get everyone addicted to opioids. Can you explain? Yeah, what that... So, so, so Suboxone. So what happens is with the opioid crisis, right? Everyone's taking OxyContin and Percodan and Perco... and Vicodin, all these, right? And they're giving out like their candy all over the place, right? So this, this massive opioid crisis, right? When they realized that especially OxyContin and Fentanyl was so addictive and people were like dying, they said, we have to have a solution. So they put people on something called Suboxone. Suboxone is what they call a partial opioid agonist, meaning it binds to similar receptors, but it doesn't really get you high. And it, you can't really, it's very hard to overdose on it. It's just like the modern methadone. Exactly. It's exactly what it is, right? So it's much more long-acting and you could be on it and no one knows you're on it, but your mouth maybe a little bit drier and so forth. You're a little bit tired at night, but generally speaking, if you're really careful, then, you know, you can live on that and it's not the worst thing in the world. It's far better than...

Does it affect your cognitive ability? Not at a very low dose. But the problem is most people don't stay at a low dose. They go up and they go up because they get a little bit of a high from it. So they abuse Suboxone and it's like a life sentence. And and it's like, you're not good for your liver. It's, you're taking an opioid, right? Yeah. So I was on that for a long time in a very low dose and finally said, you know what? I'm just, I want to be, I don't want anything in my system. So I went and did Ibogaine in Mexico, in Cancun, which, so everyone, you know, heard Ibogaine. Ibogaine is is a naturally occurring, it's a plant, right? At Africa, hallucinogen. It's a very powerful hallucinogen, but for some reason, it binds to the same opioid receptors as, as, as morphine, right? And, um, you know, Vicodin, right? And it resets them. So it's this weird thing. It resets you. It brings you back to pre-addiction. So when you're done with this 12-hour nasty, scary, the trip is scary, talk happens. It's not fun. I'm like, I'm... Where did you do it? Hotel? I did it in, in a clinic in, in Cancun called Beyond, which is a, I mean, I recommend this place to anybody. It's amazing. And they really did an amazing job. Very safe, very, all doctor supervised, almost hooked up to, you know, heart machine because it can be tough on your heart, right? And, um, and they really like support you emotionally, right? And when I did this...

Wait, but what happens? You take it. I did. I got the trip, the scariest, ugliest, like terrible trip. Like I was so, I was petrified before I started, by the way, because you hear all these horror stories about Ibogaine, right? Where like you're seeing your, you know, dead people talking to you and your fathers talking to you from back, you know, my father's, right? So you see all these visions and stuff and you hear a lot of noises and like bugs. It's terrible. Um, and was it as bad as you thought? It was pretty bad. It was, I was so, I was petrified. I'll admit it. I was petrified. The whole time. The first six hours is brutal. The second six hours is just like, get me out of this room. I want, like you're like diaper boy. Want to do a primal scream, right? But, but what I did feel, no, no, it's scary as all. Right? I'm telling you, it is not fun at all, right? But I did feel it like burning out my receptors. I could feel it, my brain working, like I knew it, like I knew it was happening. Like I'm done with it. Like I'm not going to need this stuff anymore, right? So anyway, so after it was over and like I recovered, like, you know, 12 hours, I got out. I never did another, you know, um, any morphine or any narcotics ever again. That was it. It was done. Amazing. Yeah. It resets your receptors. Did it affect you in any other ways? Um, you know, some people, I think have more, more of a spiritual journey, um, because it's great for PTSD as well, like for veterans, right? So right now they're trying to fund studies for veterans. It was very helpful with PTSD, right? I, I didn't think it made that many changes in me. I was in a pretty good place when I went in there. I just literally had a physical, like a physical addiction that if I didn't take this stupid drug, I'd get uncomfortable. And I didn't want to have that. Like I'm traveling all the time, right? So for me, you know, I didn't feel like I made any profound changes other than that, you know, for the first 45 days, I had to learn to be like completely sober again. So was, even though I had no physical uh withdrawals, I had some post-acute like mental, I just didn't feel great. But then after like 45 days and suddenly the, all the clouds lifted and I, you know, felt terrific again. So it was an amazing gift that I gave myself. And I would, I would strongly recommend this to anybody who's suffering from, you know, opioid addiction right now. It's certainly a better solution than Suboxone. And, um, and, you know, for me, it was, it was life-changing. So it's great.

And so you've never been tempted to go back to anything? Never again. No. Never. No. But I mean, I wasn't even, I wasn't using Suboxone to get high. It was, it was just a maintenance thing because I got addicted to these damn painkillers when I, after my surgeries, right? So I was using it at, at a dose. It wasn't like I was trying to get high. So I guess if someone like reluctantly put on Suboxone because they were like a drug addict and it was, you know, they just, they had to because their life was so out of control, um, I guess they'd have to probably work through some therapy as well afterwards. But, you know, I think that it's really helpful for that too. In other words, some people that go through Ibogaine when they, they emerge, they're like, they get this new perspective on their life. Why would I ever want to use opioids again? It's like disgusting and and terrible. So, um, but it is incredibly powerful. Like, it's no, no joke. It is no joke. But like I've tried ketamine, you know, like it's a great thing for that. Use ketamine now to expand your brain. I've tried other hallucinogens. I've tried mushrooms, right? You know, Ibogaine is in a class of itself. It's like, not like, no one ever abuses Ibogaine. You, you don't, like you're not doing Ibogaine, let's have a fun trip on Ibogaine. It's like, no. It's like, you know, it's like, let's go to the crazy house and and like, you know, hold on for dear life for 12 hours and and then all your addictions are gone. And and it really, it works. It actually works. That is wild.

Yeah. Do you keep in touch with anyone you were on Wall Street with? I do. Yeah. I still keep in touch with some people, uh, from time to time. I speak to, you know, Danny, the Jonah Hill character, other people that, my mostly people that were my good friends before. I still speak to, you know, but a lot of the people were like, you know, we employed about 4,000 people at Stratton over the years, probably more like 5 or 6,000 people. And a lot of them, you know, they come and go. I run into them from time to time. But, you know, my new life is, is very different. So for the last, you know, since 2009, right? I've been out there coaching and, you know, mentoring entrepreneurs and on how to build businesses and how to do sales and increase their, you know, marketing capabilities, right? And I never talked about Wall Street. Never, like I never wrote a book. And that was really my core competency, right? And what really made me do was honestly was my brother-in-law. When I, when I kind of saw him like just getting whipsawed, I'm like, you know what? Like there's two sides to, to I think to retiring and being wealthy or at least comfortable. One is you want to make money when you're in your working years, right? So that's, we all have to do that. And you want to make as much money as you can, hopefully doing something you like. That's part of the equation, right? The next part is what do you do with the money that you can save from from all the hard work? How do you put that money to work in a, in a very safe, responsible way that's going to outpace inflation significantly, that's going to compound and allow you when you're ready to retire, have an amazing life. I, I, I believe that people deserve that. So I, I look at this book as it's a gift. If you read this book, really, it's such, it's a, it's like a blueprint. And it's really simple. It's like not that complicated. But, you know, I, I knew that if I wrote the book in a dry way, people would not read it. So I wrote it in a very funny, more story so it'd be really engaging. But as you go through that, you get this, but I consider to be a turnkey formula for a portfolio.

Like, can I just ask a dumb question? So the S&P 500 is 500 stocks, right? But they're not all in the same tier, right? At all. I mean, they're thriving emerging companies turning out a lot of profit. And then there are a lot of older industrial companies that aren't. So why wouldn't you just take the, make your own S&P 15 or 10 or 50? Why would you? Which ones though? And how do you know which ones are going to win and which ones are going to lose? So here's the thing, right? Human beings and even analysts, I mean, any, even experts, just, they're terrible at picking the winning stocks. It's too hard. So you, you're just imagine everybody is trying to do the same thing. What's the next winner? What's the big winner, right? So all the money is chasing after this, this pool of shares, right? So the question is, you know, any given moment, you know, the way, you know, economics would say is that the market is fairly priced in this moment based on all the available information that's out there. This is what every single individual stock is worth right now. Over time, right? When you buy the S&P, now remember, the S&P 500 is the 500 biggest, most profitable companies in the US. They're in 10 different sectors. But the S&P, the index committee, every quarter will meet and say, okay, based on the US economy, is the weighting of each sector correct? Do we have enough in information stocks? Do we have enough in industrials? How about healthcare, right? So if you go back like 30 years, industrials is one of the biggest sectors out there. But then we exported on manufacturing based to China. And suddenly the financials become really big. And also especially computers and information and healthcare. So the biggest ones are now healthcare and and computers, information technology. Those are your biggest sectors. So what happens is the S&P will reweight itself every quarter to match the US economy. And any of the companies that are either underperforming, right, or becoming less relevant to their sector will be replaced by companies that are doing better and are more relevant. So you have at any given moment, the 500 best companies, all done for you for free by the S&P index committee.

Who's selling that information? Making money in a different way. They don't make the money. You can't invest in the S&P index because it's an index. You need a fund, right? That so, so there's a very big difference because when the S&P first came out, you could only watch it. There was no way to invest in it. It was like a benchmark. How am I doing compared to the S&P? You couldn't buy it. You'd have to go out and buy each of the 500 stocks, which is cost prohibitive and not, you know, you could just time prohibitive as well, right? So when the first S&P 500 Index Fund came along, it allowed people for the first time ever to buy all 500 companies in one trade, right? Which is incredibly tax efficient and time efficient. Now, what else happens? Once a company goes into the S&P, all the institutions have to buy it. So there's almost a self-fulfilling prophecy part of it as well, right? So if you have information like inside information, you're one of those rare people that can somehow, like one of 10 million people or 100 that could somehow figure out which stocks are going up are going to beat the S&P. God bless you, right? But my chance, the chance to everyone listening is that's not you, right? You're not going to be able to beat the S&P. You don't think that's me? You know, you're even with my Jim Cramer strategy, you don't think it's me? There's so much, so much talent. As a speaker, God would not give one man so much talent and so much insight, right, right, right.

So anyway, so, so I, I really, it's been proven. Like I'm not just saying this, it's like it's been proven by every study. When you read the book, I go through every study in a very funny way. And then when you, like the last chapter is called Meet the Instead of Meet the, I call Meet the So who are the? Well, the are the Jim Kramers of the world. These are all the who are out there. And he's just one of all the online, the Charlton on TikTok people, these five stocks are about to moon. What the? I mean, come on. Like this stuff is littered all over the internet trying to bait people into making stupid investment decisions that are self-defeating. It's the seminar guy who tells you to buy the magical trading system that's going to beat the market. You could turn $50 into $5,000 in three months in your bathroom from home with my algorithm. Well, it's so great how you're not using it yourself. Why are you freaking hawking this? It's so ridiculous. But this is what, and people fall for it, right? They do. They all the time. And they end up getting destroyed. And, you know, when it really hits them, when they're 55, 60 years old, and they don't have the money they should have. If you follow the advice in this book, which is an arguably the best advice Warren Buffett would give you, this advice, seriously, it's an arguably great advice. And that is to play the long-term investing game, relying on compounding. Meaning you start off with a small amount, as much as you can, right? And then add to it a little bit each month, whenever you can, as much as you can. And then also reinvest your dividends. So when you get quarterly dividends, because the S&P pays a dividend, reinvest those as well. And just forget it. Don't worry about what's going on in the world. Like you say, the US economy is going to go to okay, maybe it will, maybe it won't, who knows? But here's the deal. No matter how shitty the US economy gets, you're still going to have really big companies out there that are raping and pillaging, making a fortune out there. Like even the S&P 500, half the business is overseas. They're multinationals, right? So you're getting overseas exposure as well. And, you know, listen, I'm also, as much as America's broken, I still a believer in the American system of capitalism. I've traveled the whole world. I've never seen a country where they had this like the drive and the ingenuity that we have. The US is a special place. I don't care what's wrong with it, it's a special place. And also compared to what, it's the best bad option out there, right? So I, I really believe. And then also there's a couple other investments you want to make to balance out risk, right? You want to have a, what's called a bond fund in there. But again, none of this is about trying to pick which bonds are going to pay more than others. You, you can't do that. You're trading against bond professionals that are like going to rip your eyeballs out every try trying to beat the market. So you want to be engaging in these, in these like index, it's called passive investing. Yes, not active. Passive investing, right? It's exactly the opposite.

I told people do. So if I could sum up your advice, it would be ignore the experts and be passive, not active. 100%. Ignore the experts, especially Jim Cramer. But by the way, I call, I, I, I, I'm not, I call him a carnival barking ass clown, okay? But I mean, that's that's totally fair. Fair. But it's fair. And everyone, you like, when I was doing my legal vetting, they got that problem there at least once a day. I watched Jim Cramer on Sam Bankman-Fried. So just to make myself feel good. That's well, that's another story to the whole crypto world, right? With Sam Bankman-Fried. So he got, I mean, listen, I knew that was going to happen. I think I was asked, but maybe about a year ago, what's going to happen with Sam Bankman-Fried? Said this guy's going to go to jail for. I don't. Listen, I hope I don't think he deserves life in jail. No, I agree. But, you know, he's probably going to get 20 years. Very few people deserve life in prison, you know? So, but he's, he's for a world. People who started the Iraq War, too. But other than that, uh, I agree. Jordan Belfort, thank you so much. My pleasure. Great to see you. Thanks. Thank you. Take care.