Welcome to Trader Talk where we dish out the latest Wall Street buzz to keep your portfolio sizzling. I'm Kenny Polcari coming to you live from Yahoo Finance's headquarters in the heart of New York City, a global trade hub where deals are made, fortunes are built, and the next market moves.Always just around the corner. Coming up, we'll dive into why it's never too late to get started investing. We'll chat with Interactive Brokers's chief strategist Steve Soznick, and we'll be sure to stick around for my pork chop pizzaiola at the end of the show. Now, let's jump into my big take.Let's just bust the myth. Starting to invest late in life is not a lost cause. In fact, it's more common than you think. Maybe you were focused on family or a career or simply didn't have the means. But here's the truth. While time is a powerful ally, discipline and strategy matter even more when you're playing catch up. The biggest mistake, uh, late starters make is trying to gamble their way to make up for lost time. They chase the risky stocks, so they speculate on the next big thing.That's a recipe for sleepless nights and potential disaster. If you're coming in late, your number one job is to protect what you have even as you aim for growth. So what works? Prioritize stability and cash flow. Think high quality dividend stocks, blue chip companies and dividend, uh, diversified ETFs, defensive sectors like health care, utilities.Consumer staples. Think Johnson and Johnson, Procter and Gamble, the XLP or VOO should be core Holdings. These names provide steady income and tend to weather volatility better than the growth fads. Keep your time horizon realistic. If you're planning to retire soon, do not go all in on the riskiest ideas. Focus on capital preservation and onlyTake calculated risks with money you can truly afford to lose. Don't overlook bonds or fixed income. They're not flashy, but they add stability, especially as you approach retirement. Laddering maturities can give you flexibility and steady income and above all, get a plan. Don't just wing it. That means budgeting, working with a financial advisor if you can, and automated.Your investments where possible. The power of consistency can still work wonders even if you're starting from a smaller base. The bottom line, it's never too late to start investing, but your approach has to match your reality play defense first, avoid the lottery ticket mindset and let discipline, not desperation, be your guide. There's still time to build wealth, just do it with intention.OK, well, joining us today is Steve Soznick, the chief strategist at Interactive Brokers. With a career spanning over three decades in the financial markets, Steve has been at the forefront of trading, innovation, and strategy. He began his journey at Timber Hill in 1995, where he served as an equity risk manager and options market maker, eventually leading the firm's expansion.In Canada. Steve's expertise in algorithmic and electronic trading has been instrumental in shaping modern trading practices. Beyond his strategic roles, he is a respected voice in the financial media, frequently sharing insights on market dynamics and risk management. Please join me in welcoming Steve Sozy to the show. Steve, it's such a pleasure to have you and thank you for joining me today.

My pleasure, Kenny. This, this promises to be great.

Yes, I hope so. So listen, I know I gave you that a little introduction, but talk just a little bit about kind of your history and where you are today and how you ended up where you are.

Sure. Well, I mean,before, actually, by the time I joined what was then Timber Hill, the predecessor firm to Interactive Brokers, I'd already been on the street for several years. I started, um, in the Solomon Brothers training program, um, in, in January of 1987. I actually finished school in 1986, but I managed to postpone them for six months. It was a raging bull market, so they were doing two training classes a year, so I said, all right, here's my opportunity toTo venture out a little bit, so I went, you know, put on a backpack and then joined and finished pretty much just in time for the stock market to crash. So, um, that was, uh, that was quite an adventure. And, you know, one of the things that, that's fascinating about that whole period, and I was reminded of it just, you know, just last week, um, I, I spent some time at the NASDAQ, um, Thursday morning. I was privileged to bePart of the bell ringing. Um, and it was to celebrate 25 years of the ISE, which doesn't exist anymore, but that was, that was the first all-electronic, um, options exchange. We were very involved in that and I had my ISE, uh, polo shirt from back in the day. Somehow I still had it, much to my wife's chagrin, I was able to find it and still had it.Um, but it's amazing cause we, you know, some of the talk, because, you know, everybody who'd been there from the 25 year mark was of a certain age, and, you know, it was a time to look back on how the business changed, on how, uh, trading on the trading New York based stocks versus trading NASDAQ stocks.A completely different animal, um, and no, and you did one or the other, and then when moving, moving to the options game, you know, you had the, you had at that point single listings, which, you know, so, so if you wanted to trade Dell, you had to do that on the Philix. If you wanted to trade Ford, you had to do it onthe

unbelievable, wasn't it when you think about it, right?

And so it's the mechanics of the business of all change. I'm one of the rare people who in the old days actually traded NASDAQ and New York stocks at the same time because he was in the foreign, foreign business.The ADR issuers didn't really care whether the listing was, but, but for the most part, the mechanics were so different, um, I obviously don't have to tell you about New York NYSE mechanics, but, um, but it was just, you know, it was, it was mind boggling to have that little trip down memory lane and realize the evolution of how far we've come, um.You know, in, in, at least in our, in these, in the lifetime of older, you know, gentlemen of a certain age, you,

you and I could have our own separate show just about that because that is a fascinating conversation, right?In any event, let's move on to talk about investing kind of late in life strategies for people maybe who, you know, feel like maybe they've missed the boat, they didn't take advantage, they couldn't for whatever reason, they had kids, they had expenses, they had houses, whatever it was. They couldn't do it. So now they're starting to invest late late in life. And what are they, what are their key considerations for kind of building wealth and managing risk, uh, as we move into this kind of period of our life.So talk a little bit, talk a little bit about that.

I wish I could disagree with anything you said in the open, but I really can't. I mean, that's, I think first and foremost, yes, for the younger, for the, assuming we haven't completely tuned out any of the younger listeners, time is, time is your biggest asset. I, I, I think somebody once said compound interest is the eighth wonder of the world.Literally, time in the market, it is a big winner, but that doesn't mean you shouldn't start late. It doesn't mean you should, you should always be looking toward investment opportunities. And as you said, the key here is understanding your time horizon and understanding your risk, your risk limitations. And, andUm, you know, it's, it's, it's fascinating because I, I just actually, I got asked by some friends of mine who, who are doctors, and, and one of them, you know, the, the wife's, who's, she's a physician, her father passed away and she inherited this investment portfolio from her father, who was an economics professor, and she said, what do you think of this portfolio?And she said it's too heavily invested in stocks, and you know, for a 90 year old guy, how was he so invested in stocks? Except the stocks, this was like the dream portfolio. It was the only stock that didn't pay a high dividend was Berkshire Hathaway. Everything else was a was a solid dividend payer.You know, not the sexy stuff. He didn't go in for Nvidia, you know, whatever else, because he was, he was a, you know, a man in his 90s, was a 9 year old man, and he wanted to, you know, he, he needed the income, uh, but he wanted to leave something for his, for his children and grandchildren, which he did. And I'm looking at this, don't touch this. I understand you're gonna have to pay taxes, whatever. Touch as little of this as possible because that's really the right thing. But, you know, again, I think what happens isThe the big impulse a lot of people have is, oh right, I'm playing catch up. I'm gonna, you know, I gotta make up for lost time. You just, that'sinappropriate.

Right. Well, they're looking for every stock to be in video or Palanttier or, you know, some name that's going to grow it, you know, 500% year in and year out, which is certainly not the way to do it, right? You can have some exposure to that certainly as you get older. You should.have more of it and that's when you're younger, for sure. Um, but as you get older, you know, you get into the 60 category and up, you don't want to be, you, you have some exposure, but not, not nearly that much. And while the guy might have been 90 years old, to your point, he had a portfolio that was a beautiful portfolio. They weren't they they were they were stable, dividend paying stocks that were year in and year out solid performers.

Exactly, I, you know, I think it, I think at some point you get to a point, as you get to a point in life, even if you're investing late, you realize that it so you need the income because, because it, you know, we all want to retire. I think you and I are both a little lucky in the sense that we're, again, of a certain age and not necessarily looking to do that.Um, but we're, but what happens is the income comes, I'm not gonna say it comes in handy, it becomes a necessity. And so you want to have your money making money for you, and also quite importantly, you want that money to be there. You know, my, my, my I, I, my good.My friend Steve Sears wrote a book several, several years ago, um, and it was, you know, basically about people who've made, you know, some of the most successful investors of all time. One of those kind of books. And one of the key things that all of them focused on was, first, don't lose money.You know, that doesn't mean don't take risk. Let me, let me be, let me be real. You have to take risk and reward are always there. There's always the, you know, there's, you know, otherwise we would just do a show about like finding the, finding the highest bank account rate, you know, FDICC insured rates and that, that's not necessarily it either, but you have to have the mentality of making your risk reward appropriate. You know, I, my turn, you know, when things were selling off.You know, in April, you know, my son, who's 27, a bunch of his friends were, were calling him. What does your dad think about what's going on? I'm like, for you and your friends, don't do anything.

I buy more, right? You should be buying more. You should be freaking out by any stretch of the imagination. Yeah, I,

I, I, I,I bought as well. I bought you mentioned VOO. I bought VOO. But, but realistically, um, you know, I told the younger people don't get.Don't get out of the market. You've got, you've got 50 years to worry about this. This, this is gonna be a blip in time. Doesn't, doesn't, I, I'm not necessarily a believer that every dip is a reflexively a buying opportunity. That, that, that's a topic for another red, but, but if you had.50 years on your side, you know, 40, 50 years on your side. Just keep plowing your money and you know what, if you've got, if you're putting in for your 401k, just keep doing it come hell or high water, because that's averaging down. Don't worry about that. But if you're but you know, for the older folks, I also had people approach me like, you know, look, I'm thinking I was hoping to retire in 3 years. Now I don't know if I can and and and.You know, I, I think one of the things you have to remember in, in situations like that, and I think this is very important, is think about, do a gut check for how you felt in April. And if you felt freaked out, if you felt that you were just, you know, this was inconceivable, you're carrying too much risk. If you said, damn the torpedoes, I'm a buyer, well, that's a different story too. Most people, I think fall somewhere inbetween.

Steve, hold one second. We're gonna take a break and we'll be right back.All right, so now we're back. And so to your point, for people that were feeling unsettled in April when the market sold off on the back of all the tariff news and liberation news and all that stuff, then your point, you're right. They're either too involved in way too much risk in their portfolio, or they're just completely uncomfortable and they don't really know how to they don't know how to process kind of what was going on, right? Now, what, what's interesting.Is that if you or somebody had a portfolio on April 1st, and you did absolutely nothing with it, you rode that wave. By now you're right back to at least where you were, if not actually improved. Some of those stocks are actually at prices higher than they were on April, right? But a lot of people, you know, who said, no, no, no, I gotta get out. They sold, they sold, they hit the subway and then when it turns around, they rush to buy.They rushed to get back in, right? So they're in out, they're in out. And so you're not really sure where they end up because they screwed it all up, right? They sold everything, and then they bought everything. So where'd you end up? You don't really know how you would have been had you held that portfolio. So to your point, like I say, you know, and, and as long as it's a long-term investment portfolio and it's properly balanced.Then you should be able to ride the waves and take advantage of that, right? And to your point, the dividend stocks, if you're not taking the dividends yet, if you're not using it for income, the dividends should just automatically get reinvested into the same name that's paying the dividend. But if you like the stock to begin with, then you should, you should not mind reinvesting those dividends into the same name.

Absolutely.And you know, I, I think going into this, one of the ways that I think, you know, I, I, I come from a volatility trading environment. So to me, I'm always, I'm always conscious of volatility. And so, no, I think for institutional investors think in terms of returns adjusted for volatility. So right, so if you're going to invest in in crazy stuff, it tends to be more volatile. You, you get bigger risks, better returns, but I think sometimes or or bigger loss or not,

right?

Exactly. ButUm, I think for, you know, if you're starting at this a little bit later, you want to use the concept, let's say a beta is a good way to think about volatility in some ways. So beta is a, is a sim, you know, is sort of a, it's not perfect, but it's basically saying for each move that the S&P 500 makes, this stock moves one for one with it, one, you know, it moves 2 for 1 with it, it moves 0.7 to 1 with it. I think if you're investing later.And you don't have and or do not have a very high risk tolerance, you want to favor the lower beta stocks, those are usually found as value stocks. Those also tend to pay dividends, um, and so I think that's generally a way to go if you're, if you're coming into this late and don't have and don't have a huge, um, stomach for this. And, and quite frankly, I'm going to assume that if you haven't been investing this, you know, until relatively recently.You haven't been doing it because you don't have a huge risk tolerance. There's nothing wrong with that. Everybody's risk tolerance is different, and I would never say that what works for one person is going to work for another. It can't.No, I think first is know yourself, and then once you know yourself, figure out the investor, the investments that will follow along with with yourself.

Right, so talk about this for a moment because this is another area where you kind of spent a lot of your career. Options and derivatives, right? And maybe how should everyday investors use these tools? Could they use these tools? Can they use them responsibly to enhance their risk in return if they're not really sure how they work?

Well, number one, make sure how they work. And one of the, one of the things, one of the places you could do that is we've put a lot of effort at interactive brokers. It's free. You do not have to be a customer, although, of course, we would love you to become one. You do not have to be a customer to use our tools. Um, another great place is the options Industry council because I have a lot of friends that.You know, at that, at OIC, um, and they're, this is what they do for a living. So those are places to look. And, you know, when you people think of options, they think of them as gambling or, or, you know, or some sort of means of, of, of, of just, you know, trying to supercharge your returns. There are also ways to supercharge your, well, not supercharge is the wrong word.There are also ways to enhance your income, using covered calls, writing cash secured puts, you know, the, the, the, the covered calls is getting a little extra income. You're willing to forego maybe some of the return on your securities in in exchange for a little extra income. On the cash secured put side, if you're holding a lot of cash and you say, I want to buy, I, I wish I could buy.You know, XYZ stock at at at $90 a share, but it's trading at $95 a share, and you can afford to do so. You might want to sell a put and get paid to and get paid to wait. There's different reasons for doing this, but I do, I know some very successful, very conservative investors who utilize options strategies, um, to enhance.To enhance their income. Look, I know people gamble with them too, but I, I think they're very, they're a great tool for conservative investors when, when doneappropriately,

right? But, but, but to the other point, options investments are not, you, you don't buy an option and hold it long term for 10 or 20 years like you do a stock, right? They're very short-term and strategic when you use them.

Oh, absolutely.Remember options, options decay. They decay, you know that if I, if I ever write my autobiography, it'll be called The Life in Decay because that's literally, that's literally how I've spent it on Weight Watch, you know, and, you know, professional, there's two ways to approach it. You're either paying the premium.Um, to, you know, to, to get the turbocharged returns, or you are willing to accept the, you're willing to accept a little less in return in exchange for, for a cash outlay. This again can fall that we're talking about conservative things that investors can do. That is a conservative thing an investor can do is, is, is right, is right covered calls, cash secured puts, there's some other strategies, vertical spreads can be very conservative, um, play into that realm.You know, without getting into the real nitty gritty or crazy stuff that I think a lot of people associate with options.

Right. So let's talk a minute about, because you have a, you have a big history kind of electronic trading and algorithms. So let's talk about the impact of AI on trading, right? And how that technology is kind of reshaping behavior and what it ultimately means for investors.

It's interesting. Well, first of all, AI is a theme is certainly that's, that's the investment theme of the last, uh, of the last few years, right? It, it's, it's no coincidence that Chat GPT was released in November 2022 and that's literally was the, was when this bull run, which wasn't really, you know, I, I, you could say it was interrupted in April, it really wasn't. Um, that, that's really when that bull run dates to. So, no coincidence there, but in terms of using AI.I, I would say right now it's still not, there are people trying to do it. I, I, I think right now some of the algorithms that are using it are a little unsophisticated. I, I was actually at a panel at the options industry conference just earlier, I guess about a month ago now, and someone put up one of my friend Henry Schwartz from the CBO, which was another great resource if you want to learn more about options, the CEO has plenty of stuff too, um, and he put up a chart that blew everybody's mind, and it was certain algorithms.A lot of algorithms now you could see the time on the chart exactly when the trades were going off. It was a former floor trader would love it if you knew that some guy was gonna walk in the crowd at 10:15 and buy X and walk back in the crowd at 10:30 and buy it again and again at 10:40 and there were strategies that were doing this. It was like there was like a gasp of like.You know, how, how does someone let these algorithms out there unleashed in the world. So, artificial intelligence will will help. It probably will help people code certain algorithms, but it's still not at the point where it's replaced, um, humans yet. Although, believe me, I'm sure there are guys out there withPhDs who are trying.

Well, I'm sure they are, and I'm sure, you know, at some point that is going to happen, right? I mean, whether it happens, you know, next month or 2 years from now, I think at some point, they're gonna figure.How to use AI and look, if you look on it's popping up on Instagram or it's popping up on TikTok. It's even popping up on Twitter, you know, all these people saying that they can do it better. They got this AI machine that can do it better and do it better every time I look at it, I I shake my head and I go really?Anyway, look,Good.

I, I mean, you'reon social media, anytime I'm on like one of these things that's that, you know, if I'm featured on any particular any social media, any major media outlets post on social media, inevitably there are comments, oh, you should be listening to Joe Schmo 123. He's great, or, you know, or, you know, or, or Jane Doe, and, you know, and, and, and, and you realize there's just so much crap floating around out there, and this goes back to I guess our theme.Listen to people who've been at this for some period of time and who, you know, or who tell you what their vested interests are. I'll tell you, our vested interest is we'd love you to become customers. Once you become customers, we want you to make money because we want to keep you as customers. The options Industry Council, the CBO, they, they are, they want people to trade options, but they don't want to trade options and blow people up. They want people to, they want people to use this stuff responsibly. They want to. You've been at this for a while. You don't want to, you don't want to just create people.People followers and, and, and, and ruin them. So I think this is very important is get your, there's all kinds of stuff out there. There will be great models out there. Look for a track record, look for and or and or figure out who's motivating this idea that you're that you're gettinginto. And

that's right, because a lot of people are talking their own books and so yeah, it's like anything, right? Who's talking their own book because that's what you have to be careful about. Listen, Steve, we got.wrap this up, but I appreciate this conversation. I want to talk about maybe coming back 5 or 6 months from now and kind of revisiting where we are and where we were and what we talked about and kind of compare and contrast to see how this all turned out. But as you may or may not know, I end every episode with a with a recipe because I love to cook and it's just part of who I am. And so today I'm giving you pork chop pizzaiola, right? So when you ask what is pizzaiola? Well, the term ala pizzaiola literally means in the style of the pizza maker, right? Because in Italian, the pizzaiolo is the pizza maker and it.refers to the sauce that he makes with tomatoes and garlics and ego and olive oil, the same basic flavor that you use as a base for this classic Neapolitan pizza. So sometimes they add in crushed red pepper or bell peppers and capers or even olives depending on who's cooking and what's in the pantry, right? Originally, uh, the term ala pizzaola was a way to stretch for uh tougher meats, tougher cuts of meat, uh, into a meal, right? So they took thin slices of meat, simmered it in this tomato.Based sauce until it was tender. It took time. Uh, and over time, this method was adapted to other meats, including pork chops, uh, which are naturally flavorful and hold up beautifully in a slow cooked kind of tomato sauce. This recipe is rooted in Neapolitan ingenuity and is a symbol of the hearty family-focused Italian home cooking. It's not fancy, and it's not fussy, but it's full of love and that's enough to make anybody happy. You can scare the QR code on the screen to get the full recipe and you can thank me later.In the meantime, that's a wrap for today's traded Talk, but the conversation keeps going. You can subscribe on Apple Podcasts, Spotify, Amazon Music, or wherever you get your podcasts. You got questions or topics you uncovered? Email us at tradedertalk@yahoo Inc.com because we're always listening. And until next time, stay sharp, stay disciplined, stay in touch and take good care.

This content was not intended to be financial advice and should not be used as a substitute for professional financial services.