Our Guests Gave Us 119 of Their Most Important Investing Lessons: We Give You Our Favorite 12

[00:00:00] [SPEAKER_05]: Welcome to Two Quants and a Financial Planner, where we bridge the worlds of investing and

[00:00:03] [SPEAKER_05]: financial planning to help investors achieve their long-term goals.

[00:00:05] [SPEAKER_05]: Join Matt Zeigler, Jack Forehand and me, Justin Carbonneau, as we cover a wide range

[00:00:08] [SPEAKER_05]: of investing and planning topics that impact all of us and discuss how we can apply them

[00:00:12] [SPEAKER_05]: in the real world to achieve the best outcomes in our financial lives.

[00:00:15] [SPEAKER_12]: Jack Forehand is a Principal at Validia Capital Management.

[00:00:17] [SPEAKER_12]: Matt Zeigler is Managing Director at Sunpoint Investments.

[00:00:20] [SPEAKER_12]: The opinions expressed in this podcast do not necessarily reflect the opinions

[00:00:23] [SPEAKER_12]: of Validia Capital or Sunpoint Investments.

[00:00:25] [SPEAKER_12]: No information on this podcast should be construed as investment advice.

[00:00:28] [SPEAKER_12]: Securities discussed in the podcast may be holdings of clients of Validia Capital or Sunpoint Investments.

[00:00:33] [SPEAKER_09]: So Matt, we just released an episode with all the answers we've ever gotten to our standard

[00:00:37] [SPEAKER_09]: closing question on Excess Returns and the standard closing question is if you could teach

[00:00:40] [SPEAKER_09]: one lesson to the average investor, what would it be? And we have now, as I learned when I put

[00:00:45] [SPEAKER_09]: this together, we've accumulated 119 answers to this question, including answers by me, you

[00:00:50] [SPEAKER_09]: and Justin that I tacked onto the end. So we've gotten a lot of insights but I thought

[00:00:54] [SPEAKER_09]: it would be really good to put this together into maybe some of the ones that we think are

[00:00:59] [SPEAKER_09]: the most relevant for the average investor because a lot of people are not going to watch

[00:01:02] [SPEAKER_09]: and go through our three hour episode with 119 answers in it. So we wanted to pull together,

[00:01:06] [SPEAKER_09]: I think we have 10 or 12 here, of the ones we think are the most relevant for people

[00:01:11] [SPEAKER_09]: and we think are maybe the biggest lessons that your average investor should learn.

[00:01:15] [SPEAKER_07]: It's important to see these things from people in different walks of life. This is just,

[00:01:22] [SPEAKER_07]: wisdom from people where it's not just a tactic, it's not even just like a strategy. It's at a

[00:01:28] [SPEAKER_07]: higher level of how do some really thoughtful, articulate, smart people kind of set vision on

[00:01:34] [SPEAKER_07]: this whole thing when they look out on it and the what, the why of their doing it,

[00:01:39] [SPEAKER_07]: the what, the why of what they try to pass on to other people who are like,

[00:01:42] [SPEAKER_07]: if you just learn something from me, maybe remember this. I love the longer form version

[00:01:47] [SPEAKER_07]: of this. I love that you can just hear these last answers, but I think these 10 or 12 or however

[00:01:54] [SPEAKER_07]: many we got here, they're just super useful. They're life philosophy as much as their

[00:01:58] [SPEAKER_07]: investment portfolio philosophy. And it's cool because people went in all kinds of

[00:02:02] [SPEAKER_09]: different directions with this. For anyone who's watched the whole thing, you'll see. People

[00:02:05] [SPEAKER_09]: went in all kinds of different ways and I think that's sort of the nature of the question.

[00:02:10] [SPEAKER_09]: The question is meant to be a question that can go in all kinds of different directions and

[00:02:14] [SPEAKER_09]: this is one of the questions that we do tell every guest in advance that we're going to ask it,

[00:02:18] [SPEAKER_09]: because I think it's one of those things that off the top of your head, like what's the one

[00:02:21] [SPEAKER_09]: lesson I would teach the average investor? Even for people who are very practiced,

[00:02:24] [SPEAKER_09]: they'll come up with an answer, but it won't be their best answer.

[00:02:27] [SPEAKER_07]: It's a great gotcha question. It's a great gotcha question.

[00:02:32] [SPEAKER_09]: You're going to get a better answer if somebody thinks about like what's the one

[00:02:35] [SPEAKER_09]: lesson I would teach the average investor than if you just like wrote on the spot on them.

[00:02:38] [SPEAKER_09]: So we vote, I think we got a lot better answers here because we did allow people

[00:02:43] [SPEAKER_07]: to prepare their answers beforehand. Once in a while, it's good to say before you impart one

[00:02:48] [SPEAKER_07]: piece of life advice and wisdom. It's not a stop. Give it a little bit of thought.

[00:02:52] [SPEAKER_07]: A little bit of thought. What's the last joke you heard?

[00:02:58] [SPEAKER_09]: Everybody who loves like the person that can go on CNBC off the top of their head

[00:03:01] [SPEAKER_09]: and can answer every question well, but I mean pretty much everyone, even the great people,

[00:03:04] [SPEAKER_09]: when they get a little time to think about what they're going to say often give better

[00:03:07] [SPEAKER_09]: answers to a lot of things. So anyway, we should probably roll into them here and

[00:03:12] [SPEAKER_09]: I think that this is a great one to start on. And this is the one like whenever I share it

[00:03:16] [SPEAKER_09]: on Twitter and stuff, this is always the one that gets the most likes and the most retweets

[00:03:19] [SPEAKER_09]: and everything. And this is from Michael Mobusen and this is about the idea of base rates.

[00:03:23] [SPEAKER_02]: I think that I would encourage people to learn about and apply base rates as they think about

[00:03:28] [SPEAKER_02]: the world of investing. By the way, it's not just valuable for investing, but really business

[00:03:32] [SPEAKER_02]: or your life actually, it's good for your life. And again, a base rate, the basic setup is

[00:03:38] [SPEAKER_02]: the natural way to think about the world or solve your problems is to gather a bunch

[00:03:41] [SPEAKER_02]: of information and combine it with your own inputs and experience and project into the future.

[00:03:45] [SPEAKER_02]: And that's what we all do left to our own devices. Using base rate says, I'm going

[00:03:49] [SPEAKER_02]: to think about what I'm facing now or my problem as an instance of a larger reference

[00:03:53] [SPEAKER_02]: class. I'm going to basically ask what happened when other people or organizations were in this

[00:03:57] [SPEAKER_02]: position before. And it's a very unnatural way to think because you have to leave aside

[00:04:00] [SPEAKER_02]: sort of your own information gathering and your own experience. We all tend to place a lot

[00:04:04] [SPEAKER_02]: of value on that. And you have to find and appeal to the base rate, which may not be at

[00:04:08] [SPEAKER_02]: your fingertips and often it's not. So you have to go out and make a little effort to find it.

[00:04:12] [SPEAKER_02]: But once you do, I think it reshapes how you think a lot about the world. And I think makes

[00:04:17] [SPEAKER_02]: you more grounded in terms of how you think about how things are likely to unfold. So to

[00:04:21] [SPEAKER_02]: me, if that would be the one idea is to say, let's think about base rates. You know,

[00:04:25] [SPEAKER_02]: you mentioned before jokingly that we're in that sort of season where people do forecasts.

[00:04:29] [SPEAKER_02]: You know, that's a great example where base rates would be very helpful. And you sort

[00:04:32] [SPEAKER_02]: of made the joke 10% with some standard deviation, but that's actually the right way

[00:04:36] [SPEAKER_02]: to think about it. That's actually the right answer. And that's informed by base rates. So

[00:04:41] [SPEAKER_02]: you got to the right place and the right way to think about it using that actual technique.

[00:04:46] [SPEAKER_02]: So to me, that would be the one bit of advice I would give. And if I could go back to my 20

[00:04:50] [SPEAKER_02]: year old self, that's certainly what I would teach. And by the way, I would just say that

[00:04:53] [SPEAKER_02]: it's remarkable how underutilized this concept is now withstanding its demonstrable power.

[00:04:59] [SPEAKER_02]: Right? So anyway, that would be my concluding thought.

[00:05:02] [SPEAKER_09]: Yeah, so this is really cool to me because I think all of us think we can predict things.

[00:05:06] [SPEAKER_09]: Like I think I can predict things. You know, one of the reasons we do our annual prediction

[00:05:09] [SPEAKER_09]: episode of the podcast is to prove to me that I cannot predict things. Because the

[00:05:13] [SPEAKER_09]: stuff I said is going to end up being a bunch of garbage and be completely wrong. But

[00:05:16] [SPEAKER_09]: like what we want to do is we want to take the information we have, we want to process

[00:05:20] [SPEAKER_09]: that information, we want to put it together. And we want to say, I think this is going

[00:05:23] [SPEAKER_09]: to happen in the economy, or I think this is going to happen in the market. And what Michael

[00:05:26] [SPEAKER_09]: is saying is maybe take a step back and just say, what happened in the past when these

[00:05:31] [SPEAKER_09]: conditions were true when this was going on? Like, let's look at all the let's look

[00:05:34] [SPEAKER_09]: at the reference class of everything that happened in the past. And let's say what

[00:05:38] [SPEAKER_09]: can we learn from that versus me trying to take what is called the inside view in

[00:05:41] [SPEAKER_09]: terms of like taking my own analysis and trying to figure it out. Maybe a good thing

[00:05:44] [SPEAKER_09]: to do is use the outside view and just say what's happened in the past when these

[00:05:48] [SPEAKER_09]: types of things have happened.

[00:05:51] [SPEAKER_07]: Asking how this compares. And this is one of those lessons you just see. I'm pretty

[00:05:57] [SPEAKER_07]: sure I first learned this from reading mobs and stuff for listening to him on

[00:06:00] [SPEAKER_07]: podcasts, you know, years and years ago. The the inside outside view which you

[00:06:05] [SPEAKER_07]: referenced his whole Kentucky Derby. I don't think he said it in this

[00:06:08] [SPEAKER_07]: interview. I can't remember what's in the rest of the interview where he

[00:06:11] [SPEAKER_07]: gives the example of like, you can't just think about how fast the horse is.

[00:06:14] [SPEAKER_07]: You got to think about how fast is this horse compared to the other horses

[00:06:17] [SPEAKER_07]: like on this type of terrain with this type of weather with all these

[00:06:20] [SPEAKER_07]: different variables going in. It's a really useful way to think about any

[00:06:25] [SPEAKER_07]: singular investment as a reference and a broader as an instance of a larger

[00:06:30] [SPEAKER_07]: reference class. Did I get that right?

[00:06:34] [SPEAKER_07]: The concept that we then see applied with people like Aswath Damodaran

[00:06:38] [SPEAKER_07]: and some of the other people where like.

[00:06:42] [SPEAKER_07]: I don't think I could have understood the way Professor Damodaran would

[00:06:47] [SPEAKER_07]: approach the valuing of Uber pre IPO and just how to think through it

[00:06:51] [SPEAKER_07]: going, OK, well, we've never had a company like this before.

[00:06:54] [SPEAKER_07]: So how do we actually think about what it could be worth and how we

[00:06:56] [SPEAKER_07]: walks through the steps of going like, OK, here's what other very

[00:06:59] [SPEAKER_07]: successful high growth companies look like three years, five years,

[00:07:03] [SPEAKER_07]: ten years, whatever it was after the fact.

[00:07:05] [SPEAKER_07]: Then here's how we back into those numbers and those valuations along

[00:07:08] [SPEAKER_07]: the way. It's seeing these things as base rates and making you

[00:07:12] [SPEAKER_07]: look for if I think this is the story, how do I fit it in both

[00:07:17] [SPEAKER_07]: qualitatively and quantitatively into other stories and other situations

[00:07:21] [SPEAKER_07]: where we actually have some examples to draw from.

[00:07:26] [SPEAKER_07]: Endlessly informative concept base rates.

[00:07:29] [SPEAKER_09]: I think what he talked about with predicting like what the stock

[00:07:31] [SPEAKER_09]: market could do in any given year was an interesting use of this.

[00:07:34] [SPEAKER_09]: And he admitted this isn't an exact science, but the idea is what

[00:07:36] [SPEAKER_09]: most people do is they take all what's going on in the economy,

[00:07:39] [SPEAKER_09]: the valuations, they take everything and they're like the S&P will be

[00:07:42] [SPEAKER_09]: fifty seven twenty at the end of the year, like your average

[00:07:44] [SPEAKER_09]: forecaster. Well, maybe if we use a base rate approach, what we

[00:07:47] [SPEAKER_09]: probably would do is say on average, the stock market does about

[00:07:50] [SPEAKER_09]: 10 percent. Let's say the standard deviation is 15. So probably

[00:07:53] [SPEAKER_09]: minus five to 25. I've probably got a 68 percent chance, assuming

[00:07:57] [SPEAKER_09]: returns are normally distributed, which they're not. But it's

[00:07:59] [SPEAKER_09]: just to use it as a normal example. Like, but if I go out

[00:08:02] [SPEAKER_09]: there with my market forecast, you know, we're probably going

[00:08:04] [SPEAKER_09]: to see somewhere between minus five and 25 percent this year

[00:08:06] [SPEAKER_09]: or the 68 percent chance. Nobody's going to listen to my

[00:08:09] [SPEAKER_09]: market forecast, but that actually is a more accurate way

[00:08:11] [SPEAKER_09]: to look at it than saying the S&P is going to end the year

[00:08:14] [SPEAKER_09]: at fifty seven twenty.

[00:08:16] [SPEAKER_07]: I used to work with a guy who used to track all the street

[00:08:19] [SPEAKER_07]: and I don't know why he did this. He wasn't like a research

[00:08:21] [SPEAKER_07]: guy. He just tracked all like the street forecasts for the

[00:08:24] [SPEAKER_07]: S&P 500 for the year end targets and he'd update them

[00:08:27] [SPEAKER_07]: throughout the year and then email us all the spreadsheet.

[00:08:31] [SPEAKER_07]: And I was always amazed because I was just like, you

[00:08:33] [SPEAKER_07]: could just take the starting point and basically add the

[00:08:36] [SPEAKER_07]: average annual total return, adjust it modestly for your

[00:08:40] [SPEAKER_07]: standard deviation or various. Like these are entirely

[00:08:42] [SPEAKER_07]: predictable number sets and utterly meaningless in every

[00:08:46] [SPEAKER_07]: sense of the word for what's going to happen. But this guy

[00:08:49] [SPEAKER_07]: would religiously update it. I was like, is statistics a

[00:08:52] [SPEAKER_07]: magic trick to you? Like what's going on here?

[00:08:55] [SPEAKER_09]: Yeah, you know, everybody wants to do it and we're not

[00:08:57] [SPEAKER_09]: in season. We're not in forecasting season right now,

[00:08:59] [SPEAKER_09]: but you know, we'll be coming up soon. And when we look

[00:09:01] [SPEAKER_09]: back at last year's, they'll all be wrong. And you

[00:09:03] [SPEAKER_09]: know, this year's will all be wrong as well. And it's

[00:09:05] [SPEAKER_09]: just a good way. Base rates is a good way to test

[00:09:07] [SPEAKER_09]: when you're seeing people use the inside view and you see

[00:09:09] [SPEAKER_09]: people making forecasts using base rates, even if you're

[00:09:12] [SPEAKER_09]: not making your own forecast is maybe a good way to test

[00:09:14] [SPEAKER_09]: that. And so like what I just said about market returns,

[00:09:17] [SPEAKER_09]: would if somebody was trying to give you a very accurate

[00:09:19] [SPEAKER_09]: prediction, the stock market would lead you to conclude,

[00:09:22] [SPEAKER_09]: wait a second, this is a really, really wide range.

[00:09:24] [SPEAKER_09]: I can say with any kind of confidence like this,

[00:09:26] [SPEAKER_09]: this is just useless. This market prediction I'm

[00:09:28] [SPEAKER_07]: getting an important reminder to just look at the

[00:09:30] [SPEAKER_07]: math and think about the instance as part of a broader

[00:09:32] [SPEAKER_07]: reference class. And when in doubt, you know, do

[00:09:35] [SPEAKER_07]: what I did and take your annual stock projection from

[00:09:39] [SPEAKER_07]: Eddie Van Halen's amp at 5150.

[00:09:42] [SPEAKER_07]: Probably just as much of a chance of being right.

[00:09:43] [SPEAKER_09]: Just as much of a chance.

[00:09:45] [SPEAKER_09]: I like this next one because it really, it carries to

[00:09:47] [SPEAKER_09]: any type of investor. And so this is from Rick

[00:09:50] [SPEAKER_09]: Ferry and he's talking about the benefits of

[00:09:52] [SPEAKER_09]: keeping things simple.

[00:09:53] [SPEAKER_10]: Simpler the better. Honestly, if you can do it with

[00:09:55] [SPEAKER_10]: two funds, do it with two funds. I mean, you

[00:09:59] [SPEAKER_10]: don't need any more than a balanced index fund

[00:10:01] [SPEAKER_10]: in a tax deferred portfolio. And then in your

[00:10:05] [SPEAKER_10]: taxable portfolio, if you're going to have stock

[00:10:09] [SPEAKER_10]: in there, total stock market, total international

[00:10:11] [SPEAKER_10]: and, you know, something for a reserve fund of

[00:10:14] [SPEAKER_10]: some sort. But I mean, the absolute simpler that

[00:10:16] [SPEAKER_10]: you make it, the better it is for you, the

[00:10:19] [SPEAKER_10]: better it is for your family, the cheaper it is,

[00:10:23] [SPEAKER_10]: the less taxing it is. And the more time you

[00:10:26] [SPEAKER_10]: have to spend doing the things that you enjoy

[00:10:29] [SPEAKER_10]: doing, which is not this, you know, I hate to

[00:10:33] [SPEAKER_10]: say it, but it, it, it, this is a necessity.

[00:10:39] [SPEAKER_10]: Um, I don't know if I, you know, I could have

[00:10:43] [SPEAKER_10]: been an airline pilot, but I decided to do this

[00:10:45] [SPEAKER_10]: instead. I'm glad I did it. I was a real good

[00:10:49] [SPEAKER_10]: exercise, but at some point in my life, I'm

[00:10:52] [SPEAKER_10]: going to not want to have to think about any

[00:10:53] [SPEAKER_10]: of this anymore. I don't know when that is.

[00:10:56] [SPEAKER_10]: Like I said, in my seventies, I want to

[00:10:58] [SPEAKER_10]: rewrite some books and all of that. Maybe it'd

[00:10:59] [SPEAKER_10]: be in my eighties. I don't know, but there

[00:11:01] [SPEAKER_10]: has got to be more enjoyable things to do

[00:11:03] [SPEAKER_10]: than this.

[00:11:05] [SPEAKER_09]: So the reason I love this is because this

[00:11:07] [SPEAKER_09]: can apply to somebody who knows absolutely

[00:11:09] [SPEAKER_09]: nothing about investing. Because if you know

[00:11:11] [SPEAKER_09]: absolutely nothing about, nothing about

[00:11:12] [SPEAKER_09]: investing, what he's talking about is you

[00:11:13] [SPEAKER_09]: probably could accomplish, you know, what you

[00:11:15] [SPEAKER_09]: want for your long-term goals with a couple

[00:11:17] [SPEAKER_09]: funds. You don't need all this craziness.

[00:11:19] [SPEAKER_09]: You know, people tend to just keep adding

[00:11:20] [SPEAKER_09]: stuff to the portfolio. We've talked about

[00:11:21] [SPEAKER_09]: the mutual fund salad some advisors have

[00:11:23] [SPEAKER_09]: like, well, you, a basic approach to what

[00:11:25] [SPEAKER_09]: you're trying to accomplish can work really

[00:11:27] [SPEAKER_09]: well, but it also carries to somebody like

[00:11:29] [SPEAKER_09]: me who's building factor strategies. You think

[00:11:31] [SPEAKER_09]: those are complex, but the reality is most of

[00:11:34] [SPEAKER_09]: the time when you try to make them complex,

[00:11:36] [SPEAKER_09]: it can be done with a simpler approach. And

[00:11:38] [SPEAKER_09]: I think back to like when Wes Gray was on

[00:11:40] [SPEAKER_09]: the podcast recently and he talked about

[00:11:41] [SPEAKER_09]: like, they used to have this crazy filter

[00:11:43] [SPEAKER_09]: to try to like filter out bad companies

[00:11:45] [SPEAKER_09]: from their value screen. And like when

[00:11:47] [SPEAKER_09]: you read the book, it's like 10 pages of

[00:11:49] [SPEAKER_09]: different filters with all kinds of, you

[00:11:51] [SPEAKER_09]: know, symbols and everything. And like,

[00:11:53] [SPEAKER_09]: I programmed it at one point and it was

[00:11:55] [SPEAKER_09]: like so hard to do. There was so much

[00:11:56] [SPEAKER_09]: going on, but they changed it. You know,

[00:11:58] [SPEAKER_09]: they realized, wait a second, with this

[00:12:00] [SPEAKER_09]: simple approach, we can get 95% of the

[00:12:02] [SPEAKER_09]: same way there. And there's just no reason

[00:12:04] [SPEAKER_09]: to have all this stuff. So to me, it

[00:12:05] [SPEAKER_09]: applies in all levels of investing. This

[00:12:07] [SPEAKER_09]: idea of it doesn't mean you have to make

[00:12:08] [SPEAKER_09]: it simple just for the simple sake, but

[00:12:10] [SPEAKER_09]: most of the time you can accomplish the

[00:12:12] [SPEAKER_09]: same thing with a simpler approach than

[00:12:14] [SPEAKER_09]: what you're doing.

[00:12:16] [SPEAKER_07]: The cutting through of the noise to get

[00:12:19] [SPEAKER_07]: to the essence of the thing and tacking

[00:12:21] [SPEAKER_07]: back on that. And sometimes there's,

[00:12:23] [SPEAKER_07]: sometimes you need to be hyper specific.

[00:12:25] [SPEAKER_07]: Like you need a really, really deliberate

[00:12:29] [SPEAKER_07]: surgery scalpel narrowed in idea of

[00:12:31] [SPEAKER_07]: exactly what's going to happen. Other

[00:12:32] [SPEAKER_07]: times you just need to be generally in

[00:12:34] [SPEAKER_07]: that direction of correct. And I love

[00:12:36] [SPEAKER_07]: the example of West doing this. And I

[00:12:38] [SPEAKER_07]: also love the example, like with Rick

[00:12:40] [SPEAKER_07]: Ferry just saying for most of the

[00:12:42] [SPEAKER_07]: things, for most of the time, unless

[00:12:44] [SPEAKER_07]: you, and I think he would more or

[00:12:46] [SPEAKER_07]: less agree with this too, but for a

[00:12:48] [SPEAKER_07]: lot of people, I know this isn't a

[00:12:49] [SPEAKER_07]: lot of the other answers, unless you

[00:12:51] [SPEAKER_07]: really are passionate about doing the

[00:12:53] [SPEAKER_07]: work, about doing the math, about

[00:12:55] [SPEAKER_07]: thinking about these things, you

[00:12:57] [SPEAKER_07]: shouldn't torture yourself and you

[00:12:58] [SPEAKER_07]: definitely shouldn't way overpay for

[00:13:01] [SPEAKER_07]: advice. That's not necessarily

[00:13:03] [SPEAKER_07]: improving the outcome by a massive,

[00:13:05] [SPEAKER_07]: massive percent. You can get most of the

[00:13:08] [SPEAKER_07]: way there in many cases just by

[00:13:10] [SPEAKER_07]: figuring out what's the simple, most

[00:13:12] [SPEAKER_07]: logical way to do this. And you know,

[00:13:15] [SPEAKER_07]: if not, and we made him the

[00:13:16] [SPEAKER_07]: playlist, right? Do you think, do you

[00:13:18] [SPEAKER_07]: think Rick Ferry liked the kiss

[00:13:19] [SPEAKER_07]: playlist? I think he did.

[00:13:20] [SPEAKER_07]: He liked it on Twitter. I thought he

[00:13:21] [SPEAKER_07]: did. He did like it on Twitter. I

[00:13:23] [SPEAKER_09]: still haven't seen him put on like

[00:13:25] [SPEAKER_09]: I mean, I don't know if he listens

[00:13:25] [SPEAKER_09]: to it at home or anything, but uh,

[00:13:27] [SPEAKER_09]: I mean, he at least liked it on

[00:13:29] [SPEAKER_07]: Twitter. He strikes me as a guy. He

[00:13:31] [SPEAKER_07]: walked around the house bumping Beth.

[00:13:33] [SPEAKER_07]: What do you think? It could be. He's

[00:13:35] [SPEAKER_07]: playing Mad Ziegler's playlist.

[00:13:38] [SPEAKER_07]: 100 repeat 10 kiss songs that aren't

[00:13:40] [SPEAKER_09]: even the other cool thing with this

[00:13:41] [SPEAKER_09]: is like a lot of times simple is

[00:13:43] [SPEAKER_09]: also cheap investing, which is,

[00:13:44] [SPEAKER_09]: which is good too. Yeah. Because

[00:13:45] [SPEAKER_09]: obviously reducing fees is really

[00:13:46] [SPEAKER_09]: important in what Rick was talking

[00:13:48] [SPEAKER_09]: about. Like a lot of these

[00:13:49] [SPEAKER_09]: approaches to getting broad market

[00:13:51] [SPEAKER_09]: exposure or also have the advantage

[00:13:52] [SPEAKER_09]: of being not only simple, but also

[00:13:54] [SPEAKER_07]: very cheap. Yeah. Especially when

[00:13:56] [SPEAKER_07]: you're, especially when you're saving

[00:13:57] [SPEAKER_07]: the idea of keeping costs down is

[00:14:00] [SPEAKER_07]: something you can control versus

[00:14:01] [SPEAKER_07]: market returns, which you can't control.

[00:14:03] [SPEAKER_07]: And there's always going to be a

[00:14:04] [SPEAKER_07]: balancing act. If you need advice,

[00:14:06] [SPEAKER_07]: guidance and other things, you just

[00:14:08] [SPEAKER_07]: have to know what you're paying for.

[00:14:09] [SPEAKER_07]: I think people, when people kind of

[00:14:11] [SPEAKER_07]: get like snookered into paying up

[00:14:14] [SPEAKER_07]: for asset management or other things

[00:14:16] [SPEAKER_07]: when they don't, when it's not

[00:14:17] [SPEAKER_07]: additive either to what they're doing

[00:14:19] [SPEAKER_07]: or what they actually need in their

[00:14:20] [SPEAKER_07]: life on the planning, the tax

[00:14:21] [SPEAKER_07]: planning, the legal, all the other

[00:14:23] [SPEAKER_07]: sides that can get wrapped into this

[00:14:24] [SPEAKER_07]: stuff. Yeah, just expenses are

[00:14:27] [SPEAKER_07]: something you can control. You should

[00:14:28] [SPEAKER_07]: always be aware and cost conscious

[00:14:30] [SPEAKER_07]: when it comes to those things, not

[00:14:32] [SPEAKER_07]: despite yourself, but to be aware of

[00:14:34] [SPEAKER_07]: why you're making the decisions you're

[00:14:35] [SPEAKER_07]: making. Keep it simple is one of the

[00:14:38] [SPEAKER_07]: great guiding principles for that.

[00:14:40] [SPEAKER_09]: This next one's really interesting

[00:14:40] [SPEAKER_09]: to me because diversification is

[00:14:42] [SPEAKER_09]: something you'll get universal

[00:14:43] [SPEAKER_09]: agreement upon pretty much anybody

[00:14:44] [SPEAKER_09]: you talk to, you know, and anybody

[00:14:45] [SPEAKER_09]: we ask this question to would have

[00:14:47] [SPEAKER_09]: agreed diversification is good.

[00:14:49] [SPEAKER_09]: But like what diversification is,

[00:14:52] [SPEAKER_09]: is something you will get

[00:14:53] [SPEAKER_09]: disagreement on especially now.

[00:14:55] [SPEAKER_09]: And so I think this is really

[00:14:56] [SPEAKER_09]: interesting. This is Bob Elliott

[00:14:57] [SPEAKER_09]: talking about what he, how he

[00:14:59] [SPEAKER_09]: defines diversification and why

[00:15:00] [SPEAKER_09]: that's his most important advice.

[00:15:02] [SPEAKER_17]: Diversification. It's that

[00:15:03] [SPEAKER_17]: some diversification, right?

[00:15:06] [SPEAKER_17]: Is the ticket to is the ticket

[00:15:10] [SPEAKER_17]: to building durable wealth over

[00:15:13] [SPEAKER_17]: time. And when I emphasize

[00:15:17] [SPEAKER_17]: I emphasize that diversification,

[00:15:18] [SPEAKER_17]: I don't mean stocks and bonds

[00:15:21] [SPEAKER_17]: are not diversification.

[00:15:22] [SPEAKER_17]: It's better than holding an

[00:15:23] [SPEAKER_17]: all stock portfolio.

[00:15:25] [SPEAKER_17]: It's better than holding one

[00:15:26] [SPEAKER_17]: stock, but tree diversification

[00:15:30] [SPEAKER_17]: means diversifying your asset

[00:15:32] [SPEAKER_17]: class exposures and diversifying

[00:15:35] [SPEAKER_17]: your strategy, it's supposed

[00:15:36] [SPEAKER_17]: to your alpha strategy exposures,

[00:15:38] [SPEAKER_17]: right? In order to generate

[00:15:40] [SPEAKER_17]: that consistent return.

[00:15:41] [SPEAKER_17]: And that I think a lot of people

[00:15:44] [SPEAKER_17]: have really over the last 40 years

[00:15:46] [SPEAKER_17]: have, have, have become immune

[00:15:50] [SPEAKER_17]: to what diversification or

[00:15:52] [SPEAKER_17]: desensitized to what

[00:15:53] [SPEAKER_17]: diversification really means

[00:15:55] [SPEAKER_17]: because they've only seen assets

[00:15:57] [SPEAKER_17]: work in one way, but talk to

[00:15:59] [SPEAKER_17]: people who invested in the 70s

[00:16:01] [SPEAKER_17]: and the 60s and talk to them

[00:16:03] [SPEAKER_17]: about how they survived those

[00:16:05] [SPEAKER_17]: dynamics without, you know,

[00:16:08] [SPEAKER_17]: facing huge painful drawdowns

[00:16:11] [SPEAKER_17]: in particularly in real terms

[00:16:13] [SPEAKER_17]: in their wealth.

[00:16:15] [SPEAKER_17]: And the way that they did

[00:16:17] [SPEAKER_17]: that was by holding a lot of

[00:16:19] [SPEAKER_17]: different assets, gold,

[00:16:21] [SPEAKER_17]: commodities, inflation index bonds.

[00:16:23] [SPEAKER_17]: I mean, they didn't exist then,

[00:16:25] [SPEAKER_17]: but the effective exposure

[00:16:26] [SPEAKER_17]: of inflation index bonds,

[00:16:28] [SPEAKER_17]: real assets and various kinds.

[00:16:31] [SPEAKER_17]: That's how they survive that period

[00:16:33] [SPEAKER_17]: during a period when stocks

[00:16:34] [SPEAKER_17]: and bonds didn't do well.

[00:16:36] [SPEAKER_17]: And that's, you know,

[00:16:37] [SPEAKER_17]: that's what you have to face.

[00:16:38] [SPEAKER_17]: What does a high interest rate

[00:16:40] [SPEAKER_17]: environment look like

[00:16:42] [SPEAKER_17]: with elevated inflation?

[00:16:43] [SPEAKER_17]: It's something you've never seen

[00:16:44] [SPEAKER_17]: before. And so open your mind

[00:16:47] [SPEAKER_17]: to the diversification

[00:16:48] [SPEAKER_17]: possibilities that are out there.

[00:16:50] [SPEAKER_09]: So this was, this was

[00:16:50] [SPEAKER_09]: interesting to me because

[00:16:51] [SPEAKER_09]: coming up in investing,

[00:16:53] [SPEAKER_09]: I was certainly taught about

[00:16:54] [SPEAKER_09]: the benefits of diversification,

[00:16:55] [SPEAKER_09]: but I feel like for many, many years

[00:16:57] [SPEAKER_09]: we were taught the way you diversify

[00:17:00] [SPEAKER_09]: is you just have bonds.

[00:17:01] [SPEAKER_09]: You have stocks and you add bonds

[00:17:02] [SPEAKER_09]: to the stocks and then

[00:17:03] [SPEAKER_09]: you're diversified.

[00:17:04] [SPEAKER_09]: But that's, we went through

[00:17:06] [SPEAKER_09]: this 40 year period

[00:17:07] [SPEAKER_09]: where that worked all the time

[00:17:08] [SPEAKER_09]: and all of our views

[00:17:09] [SPEAKER_09]: are sort of, you know,

[00:17:11] [SPEAKER_09]: affected by the fact

[00:17:12] [SPEAKER_09]: that that worked all the time.

[00:17:13] [SPEAKER_09]: And now we have to take a step back.

[00:17:15] [SPEAKER_09]: I don't know if we're going to

[00:17:16] [SPEAKER_09]: continue to get inflation or not,

[00:17:17] [SPEAKER_09]: but if you think about this

[00:17:18] [SPEAKER_09]: from a long term perspective,

[00:17:20] [SPEAKER_09]: if you're not worried about

[00:17:21] [SPEAKER_09]: whether we have inflation now

[00:17:21] [SPEAKER_09]: or we don't have inflation now,

[00:17:23] [SPEAKER_09]: I think Bob's right

[00:17:24] [SPEAKER_09]: that true diversification

[00:17:25] [SPEAKER_09]: is not just stocks and bonds.

[00:17:27] [SPEAKER_09]: If you think about the different

[00:17:27] [SPEAKER_09]: economic outcomes you can get,

[00:17:29] [SPEAKER_09]: stocks and bonds have a major hole

[00:17:31] [SPEAKER_09]: as we saw in 2022

[00:17:33] [SPEAKER_09]: in terms of one outcome

[00:17:34] [SPEAKER_09]: where they don't do a very good job.

[00:17:37] [SPEAKER_07]: I think you need

[00:17:38] [SPEAKER_07]: and I think this is part

[00:17:39] [SPEAKER_07]: of the broader interview

[00:17:40] [SPEAKER_07]: at any time you

[00:17:41] [SPEAKER_07]: anytime you get to hear Bob Elliott

[00:17:42] [SPEAKER_07]: talk about stuff like this,

[00:17:44] [SPEAKER_07]: you need redundancies.

[00:17:46] [SPEAKER_07]: Like you need two eyes

[00:17:47] [SPEAKER_07]: and two lungs and two ears

[00:17:48] [SPEAKER_07]: and all those simple redundancies

[00:17:50] [SPEAKER_07]: and then you need diversification.

[00:17:51] [SPEAKER_07]: Like you need the eyes

[00:17:52] [SPEAKER_07]: and you need the years.

[00:17:53] [SPEAKER_07]: You don't just want one or the other.

[00:17:54] [SPEAKER_07]: You want things that are not

[00:17:56] [SPEAKER_07]: just going to like zig and zag,

[00:17:57] [SPEAKER_07]: but things that can work

[00:17:58] [SPEAKER_07]: in different environments

[00:17:59] [SPEAKER_07]: and make sure you can survive

[00:18:00] [SPEAKER_07]: to fight another day.

[00:18:02] [SPEAKER_07]: I love in that comment

[00:18:03] [SPEAKER_07]: when he invokes the like the 60s,

[00:18:05] [SPEAKER_07]: the 70s, some of the other periods

[00:18:07] [SPEAKER_07]: of time that we're just

[00:18:07] [SPEAKER_07]: we're just not thinking of it.

[00:18:09] [SPEAKER_07]: They've become a smaller part

[00:18:11] [SPEAKER_07]: even in our long term

[00:18:12] [SPEAKER_07]: historical studies right now

[00:18:13] [SPEAKER_07]: where stuff just got weird

[00:18:14] [SPEAKER_07]: and wonky and wild

[00:18:15] [SPEAKER_07]: for a little period of time.

[00:18:17] [SPEAKER_07]: You can't just assume

[00:18:19] [SPEAKER_07]: that the thing that works

[00:18:20] [SPEAKER_07]: over the broadest period

[00:18:21] [SPEAKER_07]: is going to work over

[00:18:21] [SPEAKER_07]: those smaller periods,

[00:18:23] [SPEAKER_07]: especially if some of your life

[00:18:24] [SPEAKER_07]: turning points happen in those periods.

[00:18:27] [SPEAKER_07]: I think all the time

[00:18:28] [SPEAKER_07]: about the differential that it makes

[00:18:29] [SPEAKER_07]: what the person

[00:18:30] [SPEAKER_07]: I remember working with a client

[00:18:32] [SPEAKER_07]: whose parents had retired

[00:18:34] [SPEAKER_07]: basically in the early 80s

[00:18:36] [SPEAKER_07]: at like peak yields

[00:18:37] [SPEAKER_07]: and more or less owned zero stocks,

[00:18:40] [SPEAKER_07]: but they had a ton of savings.

[00:18:41] [SPEAKER_07]: It was all like tax free municipal bonds

[00:18:43] [SPEAKER_07]: in the state they lived in

[00:18:44] [SPEAKER_07]: and it was just

[00:18:45] [SPEAKER_07]: it was like a grand slam.

[00:18:46] [SPEAKER_07]: It was you know

[00:18:47] [SPEAKER_07]: you know millions

[00:18:48] [SPEAKER_07]: and millions of dollars stacked up

[00:18:50] [SPEAKER_07]: paying crazy interest rates,

[00:18:52] [SPEAKER_07]: many of which that were locked in

[00:18:54] [SPEAKER_07]: for like 2030.

[00:18:55] [SPEAKER_07]: And I think there was even some

[00:18:56] [SPEAKER_07]: like 50 year periods

[00:18:57] [SPEAKER_07]: that were locked in

[00:18:58] [SPEAKER_07]: at these insane rates

[00:18:59] [SPEAKER_07]: and they were totally tax free.

[00:19:01] [SPEAKER_07]: And it was like well

[00:19:01] [SPEAKER_07]: mom and dad always did this.

[00:19:02] [SPEAKER_07]: They only ever bought municipal bonds.

[00:19:04] [SPEAKER_07]: Like well it's a little bit different

[00:19:06] [SPEAKER_07]: when those things pay 10 or 12 or 15 percent

[00:19:10] [SPEAKER_07]: and you got triple,

[00:19:11] [SPEAKER_07]: you know you're tax free

[00:19:12] [SPEAKER_07]: at every level

[00:19:13] [SPEAKER_07]: and you can lock in

[00:19:15] [SPEAKER_07]: at these rates

[00:19:15] [SPEAKER_07]: and inflation drops

[00:19:16] [SPEAKER_07]: for that whole period of time.

[00:19:18] [SPEAKER_07]: You got to be able to think

[00:19:19] [SPEAKER_07]: of these broader things.

[00:19:21] [SPEAKER_07]: I mean for me personally

[00:19:23] [SPEAKER_07]: you got Matt Ziegler,

[00:19:25] [SPEAKER_07]: you might want Ziggy the comic strip character.

[00:19:28] [SPEAKER_07]: You might want Zig Ziegler

[00:19:29] [SPEAKER_07]: for your life advice.

[00:19:31] [SPEAKER_07]: You know you start mashing

[00:19:31] [SPEAKER_07]: all these Zieglers together,

[00:19:32] [SPEAKER_07]: all these Zigs

[00:19:33] [SPEAKER_07]: and you start getting

[00:19:34] [SPEAKER_07]: some really interesting stuff

[00:19:35] [SPEAKER_07]: to zag against.

[00:19:37] [SPEAKER_09]: Yeah it was interesting.

[00:19:38] [SPEAKER_09]: I just put up a podcast today

[00:19:40] [SPEAKER_09]: with Jason Buck

[00:19:40] [SPEAKER_09]: an interview I did with him

[00:19:41] [SPEAKER_09]: and we talked about this a lot

[00:19:44] [SPEAKER_09]: because he's a big believer

[00:19:45] [SPEAKER_09]: in the same exact thing

[00:19:46] [SPEAKER_09]: and one of the things

[00:19:46] [SPEAKER_09]: we did in that podcast

[00:19:47] [SPEAKER_09]: is we looked at the longest returns

[00:19:49] [SPEAKER_09]: we could possibly find for stocks

[00:19:51] [SPEAKER_09]: and for bonds

[00:19:52] [SPEAKER_09]: and for other stuff too.

[00:19:54] [SPEAKER_09]: And when you look at that

[00:19:54] [SPEAKER_09]: like it may not be

[00:19:56] [SPEAKER_09]: we were sort of challenging

[00:19:57] [SPEAKER_09]: or he was challenging

[00:19:57] [SPEAKER_09]: the idea of stocks

[00:19:58] [SPEAKER_09]: for the long run

[00:19:59] [SPEAKER_09]: which I like doing

[00:20:00] [SPEAKER_09]: because I'm a big believer

[00:20:01] [SPEAKER_09]: in that idea

[00:20:01] [SPEAKER_09]: and I want to challenge myself

[00:20:02] [SPEAKER_09]: but you know you think about it

[00:20:04] [SPEAKER_09]: if you look over the long term

[00:20:05] [SPEAKER_09]: I mean stocks have produced

[00:20:07] [SPEAKER_09]: like U.S. stocks

[00:20:07] [SPEAKER_09]: have probably produced

[00:20:08] [SPEAKER_09]: I think about 6 to 7 percent real

[00:20:11] [SPEAKER_09]: over inflation.

[00:20:12] [SPEAKER_09]: Global stocks have produced

[00:20:14] [SPEAKER_09]: maybe five I think he said.

[00:20:15] [SPEAKER_09]: So U.S. has had

[00:20:16] [SPEAKER_09]: a pretty good premium there.

[00:20:18] [SPEAKER_09]: You know bonds have produced

[00:20:19] [SPEAKER_09]: something obviously significantly

[00:20:20] [SPEAKER_09]: less than that.

[00:20:20] [SPEAKER_09]: Commodity trend has produced

[00:20:21] [SPEAKER_09]: something a little bit less than that.

[00:20:23] [SPEAKER_09]: But the idea is

[00:20:24] [SPEAKER_09]: when you look across

[00:20:25] [SPEAKER_09]: all the different countries

[00:20:26] [SPEAKER_09]: and all the different experiences

[00:20:28] [SPEAKER_09]: you know the U.S. experience

[00:20:29] [SPEAKER_09]: is very, very different

[00:20:30] [SPEAKER_09]: than the other countries

[00:20:32] [SPEAKER_09]: and so when you assume

[00:20:33] [SPEAKER_09]: I'm going to get the same thing

[00:20:35] [SPEAKER_09]: that I've gotten

[00:20:35] [SPEAKER_09]: even over a period of 100 years

[00:20:36] [SPEAKER_09]: if you assume

[00:20:37] [SPEAKER_09]: I'm going to get that going forward

[00:20:38] [SPEAKER_09]: you know it might not make

[00:20:40] [SPEAKER_09]: as strong of a case

[00:20:41] [SPEAKER_09]: for diversification

[00:20:41] [SPEAKER_09]: but the reality is

[00:20:43] [SPEAKER_09]: and we'll talk about this

[00:20:43] [SPEAKER_09]: when we talk about Adam Butler's

[00:20:44] [SPEAKER_09]: one coming up is

[00:20:45] [SPEAKER_09]: the future may be very different

[00:20:47] [SPEAKER_09]: than the past.

[00:20:48] [SPEAKER_09]: And if we look at the other countries

[00:20:49] [SPEAKER_09]: and we look at their experiences

[00:20:50] [SPEAKER_09]: and put that all together

[00:20:51] [SPEAKER_09]: we may say all right the U.S.

[00:20:53] [SPEAKER_09]: what we've seen in the U.S.

[00:20:54] [SPEAKER_09]: might be a little bit different

[00:20:55] [SPEAKER_09]: than what we've seen in the past

[00:20:56] [SPEAKER_09]: and we might not get

[00:20:57] [SPEAKER_09]: that six and a half seven percent real.

[00:20:59] [SPEAKER_09]: If you get something lower than that

[00:21:01] [SPEAKER_09]: these other diversifying assets

[00:21:02] [SPEAKER_09]: not only are diversifying assets

[00:21:04] [SPEAKER_09]: but start to have

[00:21:05] [SPEAKER_09]: more reasonable returns

[00:21:06] [SPEAKER_09]: relative to stocks.

[00:21:07] [SPEAKER_09]: So I just think

[00:21:08] [SPEAKER_09]: it's an interesting thing

[00:21:08] [SPEAKER_09]: to think about

[00:21:09] [SPEAKER_09]: and I think I'm a big believer

[00:21:11] [SPEAKER_09]: in this idea

[00:21:12] [SPEAKER_09]: and this is the way we manage money.

[00:21:14] [SPEAKER_09]: I mean we have

[00:21:14] [SPEAKER_09]: our diversified portfolios

[00:21:16] [SPEAKER_09]: don't just have stocks and bonds

[00:21:17] [SPEAKER_09]: they have other things

[00:21:18] [SPEAKER_09]: in there besides that.

[00:21:20] [SPEAKER_07]: We are huge proponents of

[00:21:22] [SPEAKER_07]: whether it's alternatives

[00:21:23] [SPEAKER_07]: or just thinking in other places

[00:21:25] [SPEAKER_07]: to get those exposures

[00:21:26] [SPEAKER_07]: that don't just act like

[00:21:28] [SPEAKER_07]: stocks and bonds all the time.

[00:21:30] [SPEAKER_07]: And the whole just I don't know

[00:21:32] [SPEAKER_07]: the sheer lottery effect of it all

[00:21:34] [SPEAKER_07]: that here we are born

[00:21:36] [SPEAKER_07]: into this country.

[00:21:37] [SPEAKER_07]: There's so many things

[00:21:38] [SPEAKER_07]: where it's just like

[00:21:39] [SPEAKER_07]: you've already won

[00:21:40] [SPEAKER_07]: a bunch of these bets.

[00:21:43] [SPEAKER_07]: You got to I think recognize

[00:21:44] [SPEAKER_07]: some of that as just lucky.

[00:21:46] [SPEAKER_07]: Has the U.S. been

[00:21:47] [SPEAKER_07]: a little bit extra lucky?

[00:21:48] [SPEAKER_07]: There's definitely skill involved.

[00:21:50] [SPEAKER_07]: Don't get me wrong.

[00:21:51] [SPEAKER_07]: There's lots of things

[00:21:51] [SPEAKER_07]: that I think set this up for success.

[00:21:53] [SPEAKER_07]: But to just assume

[00:21:55] [SPEAKER_07]: blindly without any question

[00:21:56] [SPEAKER_07]: that it just goes on this way forever.

[00:21:59] [SPEAKER_07]: You know hedge some of those bets.

[00:22:00] [SPEAKER_07]: If you've made some money

[00:22:01] [SPEAKER_07]: just hedge some of the bets.

[00:22:03] [SPEAKER_07]: Build it into your plan.

[00:22:05] [SPEAKER_07]: Make that okay

[00:22:05] [SPEAKER_07]: because it's worth making it okay

[00:22:07] [SPEAKER_07]: or at least I'm a believer.

[00:22:09] [SPEAKER_09]: So I don't want to rain

[00:22:10] [SPEAKER_09]: on your parade here

[00:22:11] [SPEAKER_09]: because I know you got

[00:22:11] [SPEAKER_09]: some very effective trading strategies

[00:22:13] [SPEAKER_09]: but this next lesson

[00:22:14] [SPEAKER_09]: is from Andy Constant

[00:22:15] [SPEAKER_09]: and he's talking about how

[00:22:16] [SPEAKER_09]: you may not actually have an edge.

[00:22:18] [SPEAKER_14]: The answer is

[00:22:21] [SPEAKER_14]: find a portfolio you can live with.

[00:22:23] [SPEAKER_14]: Manage it passively through time

[00:22:27] [SPEAKER_14]: and don't think you have an edge

[00:22:30] [SPEAKER_14]: because you probably don't.

[00:22:31] [SPEAKER_09]: So yeah I think both of us

[00:22:33] [SPEAKER_09]: probably at times in our careers

[00:22:35] [SPEAKER_09]: where we might think

[00:22:35] [SPEAKER_09]: oh I've got an edge in this thing.

[00:22:37] [SPEAKER_09]: But it's like there's so many

[00:22:40] [SPEAKER_09]: people like I always think about

[00:22:41] [SPEAKER_09]: how many smart people are out there

[00:22:42] [SPEAKER_09]: competing and investing.

[00:22:43] [SPEAKER_09]: How many powerful computers

[00:22:44] [SPEAKER_09]: are processing all the data?

[00:22:46] [SPEAKER_09]: And you know anytime I think

[00:22:47] [SPEAKER_09]: I have an edge

[00:22:48] [SPEAKER_09]: and anytime I listen to someone

[00:22:50] [SPEAKER_09]: like Andy Constant

[00:22:51] [SPEAKER_09]: who has worked at basically

[00:22:52] [SPEAKER_09]: every big name firm

[00:22:53] [SPEAKER_09]: that exists in Wall Street.

[00:22:54] [SPEAKER_09]: Admitting he probably

[00:22:55] [SPEAKER_09]: doesn't have an edge

[00:22:56] [SPEAKER_09]: I probably have to say

[00:22:57] [SPEAKER_09]: I might not have one either.

[00:22:59] [SPEAKER_07]: I want the meme

[00:23:01] [SPEAKER_07]: from this clip

[00:23:02] [SPEAKER_07]: of just Andy Constant

[00:23:03] [SPEAKER_07]: you do not have an edge on it

[00:23:05] [SPEAKER_07]: and there may or may not be

[00:23:07] [SPEAKER_07]: a few occasional like YouTube

[00:23:09] [SPEAKER_07]: commenters and other things

[00:23:11] [SPEAKER_07]: that we could just

[00:23:11] [SPEAKER_07]: maybe instead of a like or reply

[00:23:13] [SPEAKER_07]: we can just drop that meme

[00:23:14] [SPEAKER_07]: into those giant threads

[00:23:16] [SPEAKER_07]: of whatever sham scam

[00:23:19] [SPEAKER_07]: trading strategies

[00:23:20] [SPEAKER_07]: try to promote themselves

[00:23:22] [SPEAKER_07]: below these things.

[00:23:23] [SPEAKER_09]: Well in our comments

[00:23:24] [SPEAKER_09]: where we have like you know

[00:23:25] [SPEAKER_09]: Susan B. Johnson

[00:23:26] [SPEAKER_09]: thieved me or whatever

[00:23:27] [SPEAKER_09]: like on our YouTube comments

[00:23:28] [SPEAKER_09]: and it made me tons of money.

[00:23:29] [SPEAKER_09]: We should probably

[00:23:30] [SPEAKER_09]: tell Susan B. Johnson

[00:23:31] [SPEAKER_09]: that she may not have an edge either.

[00:23:33] [SPEAKER_09]: You've been constant.

[00:23:35] [SPEAKER_07]: Yeah no it's just like you said

[00:23:38] [SPEAKER_07]: Andy is a brilliant man

[00:23:40] [SPEAKER_07]: brilliant thinker

[00:23:40] [SPEAKER_07]: with all the track record

[00:23:41] [SPEAKER_07]: in his career to show

[00:23:42] [SPEAKER_07]: where he's seen this stuff.

[00:23:45] [SPEAKER_07]: You're not as smart

[00:23:46] [SPEAKER_07]: as you think you are

[00:23:47] [SPEAKER_07]: but the perk of that is

[00:23:48] [SPEAKER_07]: neither is anybody else

[00:23:50] [SPEAKER_07]: and if you can approach you

[00:23:51] [SPEAKER_07]: with that humility

[00:23:52] [SPEAKER_07]: then you can start to say

[00:23:54] [SPEAKER_07]: well what things are smart

[00:23:56] [SPEAKER_07]: you know if the market

[00:23:57] [SPEAKER_07]: or the you know crowds

[00:23:58] [SPEAKER_07]: can be smarter than I can be

[00:24:00] [SPEAKER_07]: in many cases

[00:24:01] [SPEAKER_07]: start to look for the places

[00:24:02] [SPEAKER_07]: where the crowd is being smart

[00:24:03] [SPEAKER_07]: and figure out ways

[00:24:04] [SPEAKER_07]: to keep it simple

[00:24:05] [SPEAKER_07]: and follow along.

[00:24:06] [SPEAKER_07]: And likewise if we're going

[00:24:06] [SPEAKER_07]: to take a stance

[00:24:07] [SPEAKER_07]: and try to think somebody's wrong

[00:24:09] [SPEAKER_07]: or everybody else is wrong

[00:24:10] [SPEAKER_07]: think about how you're going

[00:24:11] [SPEAKER_07]: to build that position

[00:24:12] [SPEAKER_07]: build that trade

[00:24:13] [SPEAKER_07]: build that thinking

[00:24:14] [SPEAKER_07]: but at the end of the day

[00:24:16] [SPEAKER_07]: it's just really really hard

[00:24:17] [SPEAKER_07]: to have a sustainable edge

[00:24:20] [SPEAKER_07]: over time.

[00:24:22] [SPEAKER_07]: I also love these guys

[00:24:22] [SPEAKER_07]: that were able to like

[00:24:23] [SPEAKER_09]: get those kind of lessons

[00:24:24] [SPEAKER_09]: across in 15 seconds.

[00:24:25] [SPEAKER_09]: Like we've got a couple in there

[00:24:26] [SPEAKER_09]: we actually have two answers

[00:24:27] [SPEAKER_09]: from Andy which are both like that

[00:24:28] [SPEAKER_09]: but I mean he basically

[00:24:29] [SPEAKER_09]: got the essence of this across

[00:24:30] [SPEAKER_09]: like really really quickly

[00:24:31] [SPEAKER_09]: which is kind of cool.

[00:24:33] [SPEAKER_09]: It's almost like he's practiced this.

[00:24:35] [SPEAKER_09]: Yeah it's probably true

[00:24:36] [SPEAKER_09]: these guys have had

[00:24:36] [SPEAKER_09]: some experience doing it.

[00:24:39] [SPEAKER_09]: Yeah so this next one

[00:24:39] [SPEAKER_09]: is also very interesting

[00:24:40] [SPEAKER_09]: and this is from an interview

[00:24:42] [SPEAKER_09]: we did a while back

[00:24:42] [SPEAKER_09]: with GMOs Ben Inker

[00:24:44] [SPEAKER_09]: and he's talking about this idea that

[00:24:46] [SPEAKER_09]: you know if you think

[00:24:47] [SPEAKER_09]: you're going to get a return

[00:24:49] [SPEAKER_09]: in the market

[00:24:49] [SPEAKER_09]: you want to think about

[00:24:50] [SPEAKER_09]: who's on the other side

[00:24:51] [SPEAKER_09]: of that return

[00:24:52] [SPEAKER_09]: and why should they give you that?

[00:24:53] [SPEAKER_08]: I wish it was

[00:24:54] [SPEAKER_08]: a really simple thing.

[00:24:55] [SPEAKER_08]: I think it's a simple idea

[00:24:56] [SPEAKER_08]: but it requires more work

[00:24:58] [SPEAKER_08]: than I would love.

[00:25:00] [SPEAKER_08]: But that is whenever

[00:25:01] [SPEAKER_08]: you're investing in something

[00:25:03] [SPEAKER_08]: make sure you understand

[00:25:07] [SPEAKER_08]: why you should get paid

[00:25:09] [SPEAKER_08]: for owning this asset

[00:25:11] [SPEAKER_08]: for performing this activity.

[00:25:13] [SPEAKER_08]: Understand why it not only makes sense

[00:25:15] [SPEAKER_08]: for you as the investor

[00:25:16] [SPEAKER_08]: but whoever is going to be funding

[00:25:18] [SPEAKER_08]: that investment on the other side.

[00:25:22] [SPEAKER_08]: Why it makes sense

[00:25:23] [SPEAKER_08]: for them to be giving you

[00:25:25] [SPEAKER_08]: the return you need.

[00:25:26] [SPEAKER_08]: I would say there's you know

[00:25:29] [SPEAKER_08]: there's a lot of errors

[00:25:31] [SPEAKER_08]: people can make as investors

[00:25:33] [SPEAKER_08]: but one of the crucial ones

[00:25:35] [SPEAKER_08]: that people make time

[00:25:37] [SPEAKER_08]: and time again

[00:25:37] [SPEAKER_08]: is forgetting about the fact

[00:25:41] [SPEAKER_08]: that if you're going to

[00:25:42] [SPEAKER_08]: sustainably get a return

[00:25:44] [SPEAKER_08]: it needs to make sense

[00:25:46] [SPEAKER_08]: to give you that return

[00:25:48] [SPEAKER_08]: in terms of the person

[00:25:49] [SPEAKER_08]: on the other side.

[00:25:51] [SPEAKER_08]: And where you can't answer

[00:25:53] [SPEAKER_08]: that question well

[00:25:55] [SPEAKER_08]: you're not investing

[00:25:56] [SPEAKER_08]: you're speculating.

[00:25:58] [SPEAKER_08]: So I would say

[00:25:59] [SPEAKER_08]: you know for the retail investors

[00:26:01] [SPEAKER_08]: who are buying

[00:26:02] [SPEAKER_08]: you know one week call options

[00:26:05] [SPEAKER_08]: on AMC

[00:26:06] [SPEAKER_08]: the reality is

[00:26:08] [SPEAKER_08]: you're not investing.

[00:26:09] [SPEAKER_08]: The person on the other side

[00:26:11] [SPEAKER_08]: has no reason to want to

[00:26:14] [SPEAKER_08]: give you a high return.

[00:26:16] [SPEAKER_08]: Right?

[00:26:16] [SPEAKER_08]: The person on the other side

[00:26:17] [SPEAKER_08]: for one thing is a market maker

[00:26:18] [SPEAKER_08]: and the market maker is the casino.

[00:26:20] [SPEAKER_08]: The casino is only there

[00:26:22] [SPEAKER_08]: to try to make money

[00:26:22] [SPEAKER_08]: off of your activity.

[00:26:24] [SPEAKER_08]: But the simple truth is

[00:26:25] [SPEAKER_08]: whenever you're buying a call option

[00:26:27] [SPEAKER_08]: you're not doing anything useful.

[00:26:29] [SPEAKER_08]: You only get the upside

[00:26:31] [SPEAKER_08]: and if you only get the upside

[00:26:32] [SPEAKER_08]: the person on the other side

[00:26:33] [SPEAKER_08]: only gets the downside.

[00:26:36] [SPEAKER_08]: There's no reason for them

[00:26:37] [SPEAKER_08]: to want to give you

[00:26:38] [SPEAKER_08]: a good return in the long run.

[00:26:40] [SPEAKER_08]: So I think investors

[00:26:42] [SPEAKER_08]: could avoid a lot of errors

[00:26:45] [SPEAKER_08]: if they thought not just about

[00:26:47] [SPEAKER_08]: ooh does this make sense for me

[00:26:49] [SPEAKER_08]: but does this make sense for me

[00:26:51] [SPEAKER_08]: and the guy on the other side

[00:26:53] [SPEAKER_08]: it doesn't make sense

[00:26:54] [SPEAKER_08]: for the guy on the other side.

[00:26:55] [SPEAKER_08]: This is not going to be

[00:26:56] [SPEAKER_08]: a sustainable strategy in the long run.

[00:26:58] [SPEAKER_09]: So yeah the example he used

[00:26:59] [SPEAKER_09]: is a really good one

[00:27:00] [SPEAKER_09]: which is you know back

[00:27:01] [SPEAKER_09]: and we've kind of gotten past

[00:27:02] [SPEAKER_09]: the whole GameStop thing.

[00:27:03] [SPEAKER_09]: I mean I don't think there's

[00:27:03] [SPEAKER_09]: as many people thinking

[00:27:04] [SPEAKER_09]: they're going to be successful

[00:27:05] [SPEAKER_09]: options traders

[00:27:07] [SPEAKER_09]: as there were in the past.

[00:27:08] [SPEAKER_09]: That's a great example

[00:27:09] [SPEAKER_09]: in terms of the idea here

[00:27:11] [SPEAKER_09]: which is that if I'm an options trader

[00:27:13] [SPEAKER_09]: and I think I've got something

[00:27:14] [SPEAKER_09]: that's going to work

[00:27:15] [SPEAKER_09]: over the long term

[00:27:16] [SPEAKER_09]: who's going to give me that return?

[00:27:17] [SPEAKER_09]: Well Ken Griffin's

[00:27:18] [SPEAKER_09]: going to give me that return.

[00:27:19] [SPEAKER_09]: Well let me look at my house right now

[00:27:20] [SPEAKER_09]: let me look at Ken's.

[00:27:21] [SPEAKER_09]: You know let me look

[00:27:22] [SPEAKER_09]: at my bank account.

[00:27:23] [SPEAKER_09]: I mean this may shock you Matt

[00:27:24] [SPEAKER_09]: but I'm not currently a billionaire.

[00:27:26] [SPEAKER_09]: So let me look at what's going on with me

[00:27:28] [SPEAKER_09]: and let's look at what's going on with Ken.

[00:27:29] [SPEAKER_09]: It appears that most people

[00:27:31] [SPEAKER_09]: who thought they had an edge over Ken

[00:27:32] [SPEAKER_09]: ended up losing

[00:27:33] [SPEAKER_09]: from what I could tell.

[00:27:35] [SPEAKER_07]: You know Jack Four comma hand

[00:27:37] [SPEAKER_07]: come on like where's the bank?

[00:27:39] [SPEAKER_07]: Oh yeah.

[00:27:41] [SPEAKER_07]: There was I was asking you about this

[00:27:43] [SPEAKER_07]: before we press record on this

[00:27:44] [SPEAKER_07]: and if anybody listening to this

[00:27:45] [SPEAKER_07]: knows what I'm talking about

[00:27:46] [SPEAKER_07]: there was a paper

[00:27:48] [SPEAKER_07]: might have been a

[00:27:49] [SPEAKER_07]: like a PhD dissertation

[00:27:50] [SPEAKER_07]: or something else.

[00:27:51] [SPEAKER_07]: I remember this from years ago

[00:27:52] [SPEAKER_07]: and it was basically

[00:27:53] [SPEAKER_07]: who's on each side of

[00:27:55] [SPEAKER_07]: not every trade

[00:27:57] [SPEAKER_07]: but it tracks some stuff.

[00:27:58] [SPEAKER_07]: I want to say like stocks

[00:28:00] [SPEAKER_07]: or other things over a market cycle.

[00:28:02] [SPEAKER_07]: I think it might have been indexes

[00:28:03] [SPEAKER_07]: it could have been individual security

[00:28:04] [SPEAKER_07]: or an individual security

[00:28:06] [SPEAKER_07]: and it basically said like

[00:28:08] [SPEAKER_07]: here's when passive is going in

[00:28:10] [SPEAKER_07]: and likely buying or likely selling.

[00:28:12] [SPEAKER_07]: Here's when value is buying

[00:28:14] [SPEAKER_07]: but momentum is selling.

[00:28:15] [SPEAKER_07]: Here is when value is selling

[00:28:16] [SPEAKER_07]: but momentum is likely buying

[00:28:18] [SPEAKER_07]: and it kind of showed

[00:28:19] [SPEAKER_07]: maybe 10 or 20 or 30

[00:28:20] [SPEAKER_07]: or 40 of these factors

[00:28:22] [SPEAKER_07]: or these basically like quantitative ways

[00:28:24] [SPEAKER_07]: we can think about approaches to markets

[00:28:25] [SPEAKER_07]: and who would you would think

[00:28:27] [SPEAKER_07]: would be doing these different behaviors

[00:28:29] [SPEAKER_07]: over the course of time.

[00:28:31] [SPEAKER_07]: There's no buyer without a seller.

[00:28:33] [SPEAKER_07]: There's no seller without a buyer.

[00:28:35] [SPEAKER_07]: So you got to think about

[00:28:36] [SPEAKER_07]: what is the logical reason

[00:28:38] [SPEAKER_07]: or illogical reasons

[00:28:39] [SPEAKER_07]: that somebody's in that spot

[00:28:40] [SPEAKER_07]: in that given moment.

[00:28:42] [SPEAKER_07]: It's a wonderfully useful exercise

[00:28:43] [SPEAKER_07]: anytime you're buying

[00:28:44] [SPEAKER_07]: and selling something

[00:28:45] [SPEAKER_07]: and if nothing else

[00:28:46] [SPEAKER_07]: this is one of those great examples

[00:28:48] [SPEAKER_07]: where it's step away from thinking of it

[00:28:50] [SPEAKER_07]: in the broader markets for a second.

[00:28:51] [SPEAKER_07]: Think about your house

[00:28:53] [SPEAKER_07]: or something like that.

[00:28:54] [SPEAKER_07]: If you want to sell your house

[00:28:56] [SPEAKER_07]: you got to ask the question of

[00:28:57] [SPEAKER_07]: who wants to move into this neighborhood?

[00:28:59] [SPEAKER_07]: Why do they want to move into this neighborhood?

[00:29:00] [SPEAKER_07]: What access to financing do they have?

[00:29:02] [SPEAKER_07]: Those all are going to populate

[00:29:04] [SPEAKER_07]: the flow of potential buyers

[00:29:05] [SPEAKER_07]: to look at this property.

[00:29:08] [SPEAKER_07]: And what better lesson than just say

[00:29:10] [SPEAKER_07]: like if you're gonna get a return

[00:29:13] [SPEAKER_07]: you got to understand the motivations

[00:29:15] [SPEAKER_07]: of that person on the other side of the trade.

[00:29:17] [SPEAKER_07]: And I like how these lessons

[00:29:18] [SPEAKER_09]: they build on each other

[00:29:19] [SPEAKER_09]: they work together.

[00:29:20] [SPEAKER_09]: So let's go back to Andy Constant.

[00:29:21] [SPEAKER_09]: He says you don't have an edge.

[00:29:23] [SPEAKER_09]: You can say no Andy you're wrong

[00:29:24] [SPEAKER_09]: I've got an edge.

[00:29:25] [SPEAKER_09]: All right let's move on to Ben Inker.

[00:29:26] [SPEAKER_09]: Who's on the other side of your trade

[00:29:28] [SPEAKER_09]: and why are they giving you a return?

[00:29:29] [SPEAKER_09]: Can you get through that step

[00:29:30] [SPEAKER_09]: and we'll be able to do this

[00:29:31] [SPEAKER_09]: as we go through the whole podcast

[00:29:32] [SPEAKER_09]: but it's a good way to think about it.

[00:29:35] [SPEAKER_09]: That's fair enough.

[00:29:36] [SPEAKER_09]: If you think Andy's wrong

[00:29:36] [SPEAKER_09]: and you think you got an edge

[00:29:37] [SPEAKER_09]: well then you should be able to explain this.

[00:29:39] [SPEAKER_09]: You should be able to explain

[00:29:40] [SPEAKER_09]: who's on the other side of your trade

[00:29:41] [SPEAKER_09]: and you should be able to explain

[00:29:41] [SPEAKER_07]: why they're giving you a return.

[00:29:43] [SPEAKER_07]: An edge doesn't have to mean

[00:29:45] [SPEAKER_07]: you're making a bajillion dollars off this thing.

[00:29:47] [SPEAKER_07]: Edge could literally mean

[00:29:48] [SPEAKER_07]: a couple of pennies

[00:29:49] [SPEAKER_07]: or a fraction of a penny

[00:29:50] [SPEAKER_07]: or just a couple of bucks.

[00:29:51] [SPEAKER_07]: It could be the difference

[00:29:52] [SPEAKER_07]: of just understanding.

[00:29:55] [SPEAKER_07]: I'm gonna and again

[00:29:56] [SPEAKER_07]: use the real estate example.

[00:29:57] [SPEAKER_07]: Somebody is going to sell their house

[00:29:59] [SPEAKER_07]: they're going to sell it for a gain.

[00:30:00] [SPEAKER_07]: The question is how much of a gain

[00:30:01] [SPEAKER_07]: are they going to sell it for?

[00:30:02] [SPEAKER_07]: That's going to be based on market dynamics

[00:30:04] [SPEAKER_07]: and who's showing up.

[00:30:06] [SPEAKER_07]: And unless you're in one of those crazy things

[00:30:07] [SPEAKER_07]: where you list the house

[00:30:08] [SPEAKER_07]: and then you get a hundred thousand above ask

[00:30:10] [SPEAKER_07]: on the next day

[00:30:11] [SPEAKER_07]: as we saw in the last couple of years

[00:30:12] [SPEAKER_07]: more than once.

[00:30:13] [SPEAKER_07]: It might be a case where you go like

[00:30:15] [SPEAKER_07]: well how much of this profit

[00:30:17] [SPEAKER_07]: or how much additional

[00:30:18] [SPEAKER_07]: am I willing to say like

[00:30:20] [SPEAKER_07]: okay that's good enough.

[00:30:22] [SPEAKER_07]: That's a version of an edge.

[00:30:23] [SPEAKER_07]: That's a version of knowing

[00:30:24] [SPEAKER_07]: who the other side is.

[00:30:26] [SPEAKER_07]: There's layers to these things.

[00:30:28] [SPEAKER_07]: They stack to your point

[00:30:29] [SPEAKER_07]: and I think that's the best way

[00:30:31] [SPEAKER_07]: to take these in is

[00:30:33] [SPEAKER_07]: they actually help you

[00:30:34] [SPEAKER_07]: flesh out your own philosophy

[00:30:35] [SPEAKER_07]: because you can stack them up

[00:30:37] [SPEAKER_07]: and think about what you agree with

[00:30:38] [SPEAKER_07]: what you disagree with why

[00:30:40] [SPEAKER_07]: and they just force you

[00:30:41] [SPEAKER_07]: to think harder about this stuff.

[00:30:42] [SPEAKER_07]: It's so useful.

[00:30:43] [SPEAKER_09]: And to your point

[00:30:44] [SPEAKER_09]: these small edges

[00:30:45] [SPEAKER_09]: can be the best ones to have

[00:30:46] [SPEAKER_09]: like these small edges

[00:30:47] [SPEAKER_09]: that you can just repeat

[00:30:48] [SPEAKER_09]: and repeat over and over again.

[00:30:49] [SPEAKER_09]: I mean think of again

[00:30:49] [SPEAKER_09]: go back to Ken Griffin.

[00:30:50] [SPEAKER_09]: I mean that's basically what they've got.

[00:30:52] [SPEAKER_09]: They've got a they make

[00:30:53] [SPEAKER_09]: a little bit of money

[00:30:54] [SPEAKER_09]: over and over and over again.

[00:30:55] [SPEAKER_09]: So from a statistical standpoint

[00:30:57] [SPEAKER_09]: that's the kind of edge you want.

[00:30:58] [SPEAKER_09]: You've got a huge sample set of stuff.

[00:31:00] [SPEAKER_09]: You know you're going to make money.

[00:31:02] [SPEAKER_09]: Like it works out really well

[00:31:03] [SPEAKER_09]: versus being I'm the guy

[00:31:04] [SPEAKER_09]: who's the stock picker

[00:31:05] [SPEAKER_09]: where I'm going to pick

[00:31:05] [SPEAKER_09]: two or three stocks right.

[00:31:07] [SPEAKER_09]: Like that's an edge

[00:31:07] [SPEAKER_09]: that's much harder to say

[00:31:08] [SPEAKER_09]: like do I really have an itch?

[00:31:11] [SPEAKER_07]: I love the idea and I love it.

[00:31:12] [SPEAKER_07]: It's the small and repeatable

[00:31:14] [SPEAKER_07]: which is notoriously hard to do.

[00:31:17] [SPEAKER_07]: And I'm thinking there's a great

[00:31:18] [SPEAKER_07]: David Sedaris short story

[00:31:19] [SPEAKER_07]: where he just talks about how

[00:31:21] [SPEAKER_07]: he has a brief moment

[00:31:22] [SPEAKER_07]: where he's like he's just

[00:31:24] [SPEAKER_07]: I think he moved to Chicago

[00:31:25] [SPEAKER_07]: and he's like maybe I could survive

[00:31:27] [SPEAKER_07]: on just things people just leave behind.

[00:31:29] [SPEAKER_07]: He's like oh I found a cigarette

[00:31:32] [SPEAKER_07]: on the street that's still perfectly good.

[00:31:33] [SPEAKER_07]: Oh I found a dollar over here

[00:31:35] [SPEAKER_07]: I can go buy a cup of coffee.

[00:31:36] [SPEAKER_07]: Oh I found a quarter over here

[00:31:38] [SPEAKER_07]: in this phone booth.

[00:31:39] [SPEAKER_07]: Small edges if they're repeatable

[00:31:41] [SPEAKER_07]: are super super valuable

[00:31:43] [SPEAKER_07]: and also therefore super rare.

[00:31:46] [SPEAKER_07]: He did have to get a job

[00:31:47] [SPEAKER_07]: in that short story.

[00:31:49] [SPEAKER_09]: So building on these

[00:31:49] [SPEAKER_09]: so we've decided

[00:31:50] [SPEAKER_09]: we do have an edge

[00:31:51] [SPEAKER_09]: Andy Constant is wrong.

[00:31:52] [SPEAKER_09]: Now we've decided Ben Inker

[00:31:53] [SPEAKER_09]: we figured out who's on the other side.

[00:31:55] [SPEAKER_09]: Well now we have to think about

[00:31:57] [SPEAKER_09]: all right we think we can pick stocks

[00:31:59] [SPEAKER_09]: but maybe picking the stocks

[00:32:00] [SPEAKER_09]: is not the most important thing here.

[00:32:02] [SPEAKER_09]: Maybe what we do in terms of

[00:32:03] [SPEAKER_09]: how we size those positions

[00:32:05] [SPEAKER_09]: maybe how we manage risk

[00:32:06] [SPEAKER_09]: maybe that's more important

[00:32:07] [SPEAKER_09]: and that's what Aaron Stanhope's

[00:32:08] [SPEAKER_09]: getting at right here.

[00:32:10] [SPEAKER_06]: So you know if I think back

[00:32:12] [SPEAKER_06]: to my experience

[00:32:13] [SPEAKER_06]: so I started investing in high school

[00:32:16] [SPEAKER_06]: my golf coach actually got me

[00:32:17] [SPEAKER_06]: into investing because we would like

[00:32:19] [SPEAKER_06]: ride to these golf matches

[00:32:21] [SPEAKER_06]: and he was in the late 90s

[00:32:23] [SPEAKER_06]: so he was on the phone

[00:32:24] [SPEAKER_06]: with his broker selling call options

[00:32:26] [SPEAKER_06]: on Cisco which ended up not working out

[00:32:28] [SPEAKER_06]: in the end.

[00:32:30] [SPEAKER_06]: So that was a good learning experience

[00:32:31] [SPEAKER_06]: and in and of itself.

[00:32:33] [SPEAKER_06]: But what I sort of

[00:32:36] [SPEAKER_06]: it took me a long time to figure out

[00:32:38] [SPEAKER_06]: is that everybody spends time

[00:32:39] [SPEAKER_06]: on what we refer to as security selection

[00:32:42] [SPEAKER_06]: what to buy

[00:32:43] [SPEAKER_06]: which stock to buy

[00:32:46] [SPEAKER_06]: and the sort of gap

[00:32:47] [SPEAKER_06]: between I think most average investors

[00:32:50] [SPEAKER_06]: and most pros is kind of in

[00:32:52] [SPEAKER_06]: it's really twofold

[00:32:54] [SPEAKER_06]: so that the two other aspects

[00:32:56] [SPEAKER_06]: of investing that

[00:32:57] [SPEAKER_06]: there are very few.

[00:32:59] [SPEAKER_06]: I should say one of them

[00:33:00] [SPEAKER_06]: they're very few books about

[00:33:01] [SPEAKER_06]: the other one

[00:33:02] [SPEAKER_06]: there are lots of books about

[00:33:03] [SPEAKER_06]: but they're very sophisticated

[00:33:04] [SPEAKER_06]: and they're geared

[00:33:05] [SPEAKER_06]: towards institutional investors.

[00:33:07] [SPEAKER_06]: So the second aspect

[00:33:08] [SPEAKER_06]: that I think average investors

[00:33:09] [SPEAKER_06]: need to understand

[00:33:10] [SPEAKER_06]: and learn is portfolio construction.

[00:33:12] [SPEAKER_06]: So you got to figure out

[00:33:13] [SPEAKER_06]: how to size positions appropriately

[00:33:15] [SPEAKER_06]: because I think what a lot of people

[00:33:17] [SPEAKER_06]: sort of do and what I've seen

[00:33:20] [SPEAKER_06]: is people will get super excited

[00:33:22] [SPEAKER_06]: about an investment

[00:33:23] [SPEAKER_06]: they'll do a ton of work on it

[00:33:25] [SPEAKER_06]: and but it's you know

[00:33:26] [SPEAKER_06]: one addition to their existing portfolio

[00:33:28] [SPEAKER_06]: of like 10 other names

[00:33:30] [SPEAKER_06]: but because they're so excited about

[00:33:32] [SPEAKER_06]: they always size at the highest

[00:33:33] [SPEAKER_06]: and they usually oversize it

[00:33:35] [SPEAKER_06]: they never want to sell it

[00:33:36] [SPEAKER_06]: if there's a you know

[00:33:37] [SPEAKER_06]: if it goes into a loss position

[00:33:38] [SPEAKER_06]: so they're all these psychological issues

[00:33:40] [SPEAKER_06]: so learning how to size positions

[00:33:42] [SPEAKER_06]: and manage them

[00:33:43] [SPEAKER_06]: I think is unbelievably important

[00:33:45] [SPEAKER_06]: but there's so little information

[00:33:47] [SPEAKER_06]: that exists about how to do that

[00:33:49] [SPEAKER_06]: you really have to dig

[00:33:50] [SPEAKER_06]: and then the third component

[00:33:53] [SPEAKER_06]: so security selection

[00:33:54] [SPEAKER_06]: portfolio construction

[00:33:55] [SPEAKER_06]: and the third one is risk management

[00:33:57] [SPEAKER_06]: which again there are tons of books on it

[00:34:00] [SPEAKER_06]: but they're not really approachable

[00:34:02] [SPEAKER_06]: it's really all about

[00:34:04] [SPEAKER_06]: how to sort of bank your winners

[00:34:06] [SPEAKER_06]: and cut your losers

[00:34:07] [SPEAKER_06]: really really quickly

[00:34:07] [SPEAKER_06]: there's actually one book

[00:34:09] [SPEAKER_06]: that actually just came to mind

[00:34:10] [SPEAKER_06]: the Zurich Axioms

[00:34:11] [SPEAKER_06]: is a really great one

[00:34:13] [SPEAKER_06]: that speaks to sort of risk management

[00:34:16] [SPEAKER_06]: not sort of explicitly

[00:34:17] [SPEAKER_06]: but that's effectively what the rules are

[00:34:21] [SPEAKER_06]: and it's kind of like

[00:34:23] [SPEAKER_06]: you know from a golf perspective

[00:34:25] [SPEAKER_06]: security selection is like that guy

[00:34:27] [SPEAKER_06]: that always goes to the driving range

[00:34:28] [SPEAKER_06]: and he's always just hitting his driver

[00:34:31] [SPEAKER_06]: portfolio construction is like

[00:34:32] [SPEAKER_06]: the guy that's around

[00:34:33] [SPEAKER_06]: like the chipping green

[00:34:34] [SPEAKER_06]: constantly working on his short game

[00:34:36] [SPEAKER_06]: and risk management is like

[00:34:38] [SPEAKER_06]: the pro that's on the putting green

[00:34:40] [SPEAKER_06]: just banging out

[00:34:41] [SPEAKER_06]: eight and ten footers

[00:34:42] [SPEAKER_06]: a hundred of them

[00:34:43] [SPEAKER_06]: before going on the course

[00:34:44] [SPEAKER_06]: you know and I think that

[00:34:46] [SPEAKER_06]: a lot of people kind of miss

[00:34:47] [SPEAKER_06]: the second two elements

[00:34:48] [SPEAKER_06]: so it's kind of like studying yourself

[00:34:51] [SPEAKER_06]: keep a trade journal

[00:34:52] [SPEAKER_06]: or an investment journal

[00:34:53] [SPEAKER_06]: whatever your preferred style is to invest

[00:34:56] [SPEAKER_06]: and sort of measure your win rate

[00:34:58] [SPEAKER_06]: for average wins and losses

[00:34:59] [SPEAKER_06]: things like that to kind of

[00:35:01] [SPEAKER_06]: you know view yourself in the mirror

[00:35:03] [SPEAKER_06]: I think all of those things

[00:35:04] [SPEAKER_06]: will make a lot of people

[00:35:05] [SPEAKER_06]: much better investors

[00:35:06] [SPEAKER_06]: and we do it

[00:35:07] [SPEAKER_06]: we do it as a team

[00:35:08] [SPEAKER_06]: we do it all the time

[00:35:09] [SPEAKER_06]: we do it on our strategies

[00:35:10] [SPEAKER_06]: our factors

[00:35:11] [SPEAKER_06]: our themes everything

[00:35:12] [SPEAKER_09]: so Aaron is one of the most thoughtful people

[00:35:14] [SPEAKER_09]: we've ever had in the podcast

[00:35:15] [SPEAKER_09]: like we have to have it back

[00:35:16] [SPEAKER_09]: I mean we've had him a couple times now

[00:35:17] [SPEAKER_09]: because every time he comes on

[00:35:19] [SPEAKER_09]: he has stuff like this

[00:35:20] [SPEAKER_09]: and this is

[00:35:21] [SPEAKER_09]: this is against everything

[00:35:22] [SPEAKER_09]: most people believe

[00:35:23] [SPEAKER_09]: which is everybody believes

[00:35:25] [SPEAKER_09]: I got to pick the stocks

[00:35:26] [SPEAKER_09]: I'm a stock picker

[00:35:27] [SPEAKER_09]: like I got to get that right

[00:35:28] [SPEAKER_09]: if I get that right

[00:35:29] [SPEAKER_09]: I'm in great shape

[00:35:30] [SPEAKER_09]: and obviously if you get every one of them

[00:35:32] [SPEAKER_09]: right you are in pretty good shape

[00:35:33] [SPEAKER_09]: but the reality is

[00:35:34] [SPEAKER_09]: when you think about it long term

[00:35:36] [SPEAKER_09]: thinking about how do I

[00:35:38] [SPEAKER_09]: construct a portfolio

[00:35:40] [SPEAKER_09]: around what I'm doing

[00:35:41] [SPEAKER_09]: whether it's just individual stocks

[00:35:42] [SPEAKER_09]: or whether it's multi-assets

[00:35:44] [SPEAKER_09]: like how do I size these positions

[00:35:46] [SPEAKER_09]: how do I have a risk management system in place

[00:35:48] [SPEAKER_09]: that usually ends up

[00:35:49] [SPEAKER_09]: being much more important

[00:35:50] [SPEAKER_09]: than the assets I'm picking

[00:35:53] [SPEAKER_07]: shout out to his golf coach right

[00:35:55] [SPEAKER_07]: like getting these lessons from an early age

[00:35:57] [SPEAKER_07]: is really amazing

[00:35:58] [SPEAKER_07]: what was he was selling

[00:35:59] [SPEAKER_07]: I think he was selling call options in Cisco or something

[00:36:01] [SPEAKER_09]: is that what he said

[00:36:02] [SPEAKER_07]: over the phone or whatever

[00:36:03] [SPEAKER_07]: while they were driving

[00:36:04] [SPEAKER_07]: all of them

[00:36:05] [SPEAKER_07]: that's a dangerous game to play

[00:36:07] [SPEAKER_07]: I love it so much

[00:36:09] [SPEAKER_07]: I love being a kid

[00:36:10] [SPEAKER_07]: and like just being like

[00:36:11] [SPEAKER_07]: what is even happening

[00:36:12] [SPEAKER_07]: with this adult in my life

[00:36:14] [SPEAKER_07]: but it stuck around just long enough

[00:36:16] [SPEAKER_07]: that he can process it all these years later

[00:36:19] [SPEAKER_07]: as the brilliant man in mind that he is today

[00:36:21] [SPEAKER_07]: this idea too of just position sizing

[00:36:24] [SPEAKER_07]: and risk management

[00:36:26] [SPEAKER_07]: I think it's so critical to like just

[00:36:28] [SPEAKER_07]: planners and allocators

[00:36:30] [SPEAKER_07]: and I think it's one of those things

[00:36:32] [SPEAKER_07]: the first time you really engage it

[00:36:34] [SPEAKER_07]: you almost have to engage with it

[00:36:36] [SPEAKER_07]: at the extremes

[00:36:37] [SPEAKER_07]: you have to think about

[00:36:38] [SPEAKER_07]: what is like extreme concentration

[00:36:41] [SPEAKER_07]: look like in a position

[00:36:42] [SPEAKER_07]: and why was that the wrong move to make

[00:36:45] [SPEAKER_07]: what does it mean to be like

[00:36:47] [SPEAKER_07]: extremely out of something

[00:36:48] [SPEAKER_07]: and why was that the wrong thing to make

[00:36:50] [SPEAKER_07]: you could make like two examples would be

[00:36:53] [SPEAKER_07]: you know the guy he saves up his money

[00:36:55] [SPEAKER_07]: and he takes it

[00:36:56] [SPEAKER_07]: and he puts it all in the coffee

[00:36:57] [SPEAKER_07]: the coffee can instead of like

[00:36:59] [SPEAKER_07]: even putting it in a savings account

[00:37:00] [SPEAKER_07]: where it earns any interest

[00:37:01] [SPEAKER_07]: and 30 or 40 or 50 years later

[00:37:03] [SPEAKER_07]: it's just like well

[00:37:04] [SPEAKER_07]: I've got more or less

[00:37:06] [SPEAKER_07]: a worthless paper

[00:37:07] [SPEAKER_07]: because it inflated it all away

[00:37:09] [SPEAKER_07]: and I should have just put it

[00:37:10] [SPEAKER_07]: in a savings account

[00:37:11] [SPEAKER_07]: before I rip Van Winkle

[00:37:12] [SPEAKER_07]: that might be a preview

[00:37:13] [SPEAKER_07]: to a later conversation we're about to have

[00:37:14] [SPEAKER_07]: but then there's the other side too

[00:37:16] [SPEAKER_07]: you could have

[00:37:17] [SPEAKER_07]: and I've met some of these people

[00:37:19] [SPEAKER_07]: you start a business

[00:37:20] [SPEAKER_07]: the business is going well

[00:37:21] [SPEAKER_07]: you forgo savings to plow more

[00:37:24] [SPEAKER_07]: and more money into the business

[00:37:25] [SPEAKER_07]: but you never step back

[00:37:26] [SPEAKER_07]: and think about it

[00:37:27] [SPEAKER_07]: as an instance of a broader reference class

[00:37:29] [SPEAKER_07]: to understand that

[00:37:30] [SPEAKER_07]: I'm taking an insane amount of risk

[00:37:32] [SPEAKER_07]: I've sized this position all wrong

[00:37:34] [SPEAKER_07]: especially when there's debt

[00:37:36] [SPEAKER_07]: or leverage or anything else involved

[00:37:38] [SPEAKER_07]: and when that business gets wiped out

[00:37:40] [SPEAKER_07]: it ends up completely financially out

[00:37:42] [SPEAKER_07]: wiping out the family

[00:37:43] [SPEAKER_07]: the individual whatever it is

[00:37:45] [SPEAKER_07]: this is position sizing

[00:37:47] [SPEAKER_07]: risk management writ large

[00:37:49] [SPEAKER_07]: and it matters as much in our portfolio

[00:37:52] [SPEAKER_07]: how we build stuff

[00:37:53] [SPEAKER_07]: and what those building blocks

[00:37:54] [SPEAKER_07]: stack up like

[00:37:56] [SPEAKER_07]: as it does in our financial plans

[00:37:57] [SPEAKER_07]: and our broader asset allocations

[00:37:59] [SPEAKER_07]: across all of our assets

[00:38:00] [SPEAKER_07]: I mean how many times

[00:38:01] [SPEAKER_07]: do we hear the stories

[00:38:02] [SPEAKER_07]: every like weird deleveraging

[00:38:04] [SPEAKER_07]: cycle or crisis that we go through

[00:38:06] [SPEAKER_07]: and it's you know

[00:38:08] [SPEAKER_07]: you hear about

[00:38:09] [SPEAKER_07]: I'm thinking about big short stuff

[00:38:11] [SPEAKER_07]: where it's like

[00:38:12] [SPEAKER_07]: somebody owns three pieces of property

[00:38:13] [SPEAKER_07]: and has some money in the market

[00:38:15] [SPEAKER_07]: but they're levered up so much

[00:38:16] [SPEAKER_07]: it's just the first domino goes

[00:38:18] [SPEAKER_07]: and you clear out the rest

[00:38:19] [SPEAKER_07]: for fire sale discounts

[00:38:20] [SPEAKER_07]: that's the kind of stuff

[00:38:22] [SPEAKER_07]: if you know this

[00:38:23] [SPEAKER_07]: if you ask these questions

[00:38:25] [SPEAKER_07]: what Aaron Stanhope is trying to tell you to do

[00:38:27] [SPEAKER_07]: you have a better chance of at least

[00:38:29] [SPEAKER_07]: avoiding these disastrous outcomes

[00:38:31] [SPEAKER_09]: yeah and to your point

[00:38:32] [SPEAKER_09]: this happens to sophisticated

[00:38:34] [SPEAKER_09]: sophisticated investors all the time

[00:38:35] [SPEAKER_09]: they've got their position sizing wrong

[00:38:37] [SPEAKER_09]: they've got their risk management wrong

[00:38:39] [SPEAKER_09]: like I think about melvin capital of gamestop

[00:38:41] [SPEAKER_09]: you think about long-term capital management

[00:38:43] [SPEAKER_09]: you know these were very very sophisticated people

[00:38:45] [SPEAKER_09]: who had systems in place to handle this stuff

[00:38:48] [SPEAKER_09]: position sizing risk management etc

[00:38:50] [SPEAKER_09]: but it still blew up on them

[00:38:52] [SPEAKER_09]: and it just shows how incredibly important it is

[00:38:54] [SPEAKER_09]: and it can be a difficult thing to get right

[00:38:57] [SPEAKER_07]: goes back to what we were talking about earlier

[00:38:59] [SPEAKER_07]: it's just getting that redundancy

[00:39:00] [SPEAKER_07]: and diversification in place

[00:39:02] [SPEAKER_07]: so that you're

[00:39:03] [SPEAKER_07]: just you have to be thinking

[00:39:05] [SPEAKER_07]: and talking about this stuff

[00:39:06] [SPEAKER_07]: and if you're all walled up

[00:39:07] [SPEAKER_07]: in your formulas

[00:39:08] [SPEAKER_07]: or your math or your spreadsheets

[00:39:10] [SPEAKER_07]: on the thing

[00:39:10] [SPEAKER_07]: and you're not

[00:39:12] [SPEAKER_07]: there's a lot of danger

[00:39:13] [SPEAKER_07]: and just not communicating this stuff

[00:39:14] [SPEAKER_07]: just thinking everything I assume goes wrong

[00:39:18] [SPEAKER_07]: am I still going to survive

[00:39:20] [SPEAKER_09]: so one of the things I've learned doing this

[00:39:22] [SPEAKER_09]: doing the separate podcast breaking news

[00:39:23] [SPEAKER_09]: that we do with den hunt

[00:39:24] [SPEAKER_09]: is the importance of words

[00:39:26] [SPEAKER_09]: and I think this next one with jason buck

[00:39:28] [SPEAKER_09]: is a great example of this

[00:39:29] [SPEAKER_09]: you know we call our portfolio our portfolio

[00:39:32] [SPEAKER_09]: but maybe if we called it something different

[00:39:34] [SPEAKER_09]: maybe we would treat it a little bit differently

[00:39:36] [SPEAKER_09]: so I'll let jason explain

[00:39:37] [SPEAKER_15]: it's tough for me

[00:39:38] [SPEAKER_15]: I hate giving advice

[00:39:39] [SPEAKER_15]: because I don't want

[00:39:40] [SPEAKER_15]: I don't listen to any myself

[00:39:41] [SPEAKER_15]: and I don't really think I have any

[00:39:43] [SPEAKER_15]: but I always like to watch what people do

[00:39:45] [SPEAKER_15]: not what they say

[00:39:46] [SPEAKER_15]: and that's why I was happy to be on here

[00:39:47] [SPEAKER_15]: to talk about what we do

[00:39:48] [SPEAKER_15]: because that's how I view the world

[00:39:49] [SPEAKER_15]: the one piece of advice I give

[00:39:51] [SPEAKER_15]: or I would think about

[00:39:52] [SPEAKER_15]: is that stop thinking about

[00:39:55] [SPEAKER_15]: your savings as investments

[00:39:57] [SPEAKER_15]: that's where I think the industry's lied to all of us

[00:39:59] [SPEAKER_15]: is everybody thinks

[00:40:00] [SPEAKER_15]: I'm going to put this money away

[00:40:01] [SPEAKER_15]: and I'm going to get rich off of it

[00:40:02] [SPEAKER_15]: so then I can retire to a beach somewhere

[00:40:04] [SPEAKER_15]: these are your savings

[00:40:05] [SPEAKER_15]: you need there to be when they need them most

[00:40:07] [SPEAKER_15]: and to outpace inflation

[00:40:08] [SPEAKER_15]: as soon as you start thinking about a way to get risk

[00:40:11] [SPEAKER_15]: you're going to take imprudent risks

[00:40:12] [SPEAKER_15]: and you're likely going to lose most of them

[00:40:14] [SPEAKER_15]: or they can be underwater for decades

[00:40:16] [SPEAKER_15]: so the only way to get rich

[00:40:18] [SPEAKER_15]: is in your business

[00:40:18] [SPEAKER_15]: your job

[00:40:19] [SPEAKER_15]: whatever you want to do

[00:40:21] [SPEAKER_15]: but your savings need to be as robust as possible

[00:40:23] [SPEAKER_15]: so they'll be there when you need them most

[00:40:24] [SPEAKER_15]: so I really love this idea

[00:40:26] [SPEAKER_09]: because I think about like

[00:40:28] [SPEAKER_09]: if I'm going to go make a trade in my portfolio

[00:40:30] [SPEAKER_09]: and I say all right

[00:40:31] [SPEAKER_09]: I'm going to go buy

[00:40:31] [SPEAKER_09]: you know GameStop call options in my portfolio

[00:40:34] [SPEAKER_09]: I think about that one way

[00:40:35] [SPEAKER_09]: but now if I go

[00:40:36] [SPEAKER_09]: I'm going to go take my savings

[00:40:37] [SPEAKER_09]: and I'm going to go buy GameStop call options

[00:40:39] [SPEAKER_09]: I'm going to think about that

[00:40:40] [SPEAKER_09]: in a very very different way

[00:40:41] [SPEAKER_09]: I'm like wait a second

[00:40:42] [SPEAKER_09]: I don't want to risk my savings on that

[00:40:43] [SPEAKER_09]: I think that's great

[00:40:45] [SPEAKER_09]: I think of like everybody started referring to their portfolio

[00:40:47] [SPEAKER_09]: as their savings

[00:40:48] [SPEAKER_09]: I think we might have better decisions that are made

[00:40:51] [SPEAKER_07]: We probably have more conservative decisions

[00:40:54] [SPEAKER_07]: I think about this a lot

[00:40:57] [SPEAKER_07]: when I think about double entry bookkeeping

[00:40:59] [SPEAKER_07]: I think about this a lot

[00:41:01] [SPEAKER_07]: when this is part of the appeal or the draw

[00:41:03] [SPEAKER_07]: to like the modern monetary theory people

[00:41:07] [SPEAKER_07]: and stuff like that

[00:41:08] [SPEAKER_07]: where it's you can't ever think about

[00:41:10] [SPEAKER_07]: if you're pushing one thing

[00:41:11] [SPEAKER_07]: you're always pulling another

[00:41:12] [SPEAKER_07]: there's always a thing

[00:41:13] [SPEAKER_07]: we talk about investing in something

[00:41:17] [SPEAKER_07]: is outvesting in another thing

[00:41:20] [SPEAKER_07]: I don't know what's the opposite there

[00:41:21] [SPEAKER_07]: so it's like if I'm going into savings

[00:41:24] [SPEAKER_07]: and then also into investing

[00:41:26] [SPEAKER_07]: it's making that question of like

[00:41:27] [SPEAKER_07]: okay but if it's in savings

[00:41:29] [SPEAKER_07]: does savings confer some type of conservative nature to it

[00:41:33] [SPEAKER_07]: because it's been saved

[00:41:35] [SPEAKER_07]: and therefore I don't want it to be lost again

[00:41:37] [SPEAKER_07]: It forces us to grapple with this other philosophy on what it is

[00:41:42] [SPEAKER_07]: Now it's okay to have money that you've extracted

[00:41:47] [SPEAKER_07]: like I went to work

[00:41:48] [SPEAKER_07]: and now I have money in savings

[00:41:51] [SPEAKER_07]: and now I have excess funds

[00:41:53] [SPEAKER_07]: that came out of my work-work job

[00:41:55] [SPEAKER_07]: and I want to go buy

[00:41:57] [SPEAKER_07]: I don't know the GameStop call options

[00:41:59] [SPEAKER_07]: or pick anything from as degenerate as you want

[00:42:01] [SPEAKER_07]: to going to buy just a regular index fund or something

[00:42:05] [SPEAKER_07]: but don't call that savings maybe

[00:42:07] [SPEAKER_07]: I think that's part of the point

[00:42:10] [SPEAKER_07]: It's really easy to become unsaved

[00:42:14] [SPEAKER_07]: to become put at risk

[00:42:16] [SPEAKER_07]: because you thought of these things the wrong way

[00:42:18] [SPEAKER_07]: because you told yourself the wrong word

[00:42:20] [SPEAKER_07]: and then back to that example we just had

[00:42:22] [SPEAKER_07]: you bought the three investment properties

[00:42:23] [SPEAKER_07]: you're all levered up to the gills

[00:42:25] [SPEAKER_07]: and you're just like

[00:42:25] [SPEAKER_07]: oh I got plenty of equity in this house

[00:42:27] [SPEAKER_07]: and I have this big brokerage account

[00:42:29] [SPEAKER_07]: that I've saved up all this money into

[00:42:31] [SPEAKER_07]: but then the leverage wipes you out

[00:42:34] [SPEAKER_07]: if you're not thinking of it as like true savings

[00:42:36] [SPEAKER_07]: being truly conservative and protected

[00:42:39] [SPEAKER_07]: those stories can get the best of you real fast

[00:42:41] [SPEAKER_09]: Yeah to your point

[00:42:42] [SPEAKER_09]: I mean you probably could take this too far too

[00:42:44] [SPEAKER_09]: like if you think about

[00:42:45] [SPEAKER_09]: if you refer to your portfolio as savings

[00:42:46] [SPEAKER_09]: and then suddenly you've got it in CDs or something

[00:42:49] [SPEAKER_09]: like that's probably not the greatest long-term decision

[00:42:51] [SPEAKER_09]: because you obviously want to grow it

[00:42:53] [SPEAKER_09]: but I think the other part of this point is

[00:42:55] [SPEAKER_09]: most people are going to build their wealth

[00:42:57] [SPEAKER_09]: through something other than their portfolio

[00:42:58] [SPEAKER_09]: most people are going to build it

[00:42:59] [SPEAKER_09]: with their human capital over time

[00:43:01] [SPEAKER_09]: and if you think about

[00:43:02] [SPEAKER_09]: if I'm taking this risk with my human capital

[00:43:04] [SPEAKER_09]: if you use the word savings for your portfolio

[00:43:07] [SPEAKER_09]: it might lead you to do something like what Jason's doing

[00:43:10] [SPEAKER_09]: something more of a total return type thing

[00:43:12] [SPEAKER_09]: something that's not as risky

[00:43:14] [SPEAKER_09]: it might lead you to think about

[00:43:16] [SPEAKER_09]: like I really don't want to lose this money

[00:43:18] [SPEAKER_09]: like I'm taking my risk in my life

[00:43:20] [SPEAKER_09]: I'm taking my risk with what I'm doing in my career

[00:43:21] [SPEAKER_09]: I want to maybe at least think twice

[00:43:23] [SPEAKER_09]: before I do something too risky

[00:43:25] [SPEAKER_09]: with the other side of the portfolio

[00:43:26] [SPEAKER_09]: so I think that's a good way

[00:43:27] [SPEAKER_09]: to maybe think about it as savings

[00:43:29] [SPEAKER_07]: That's why all of my money is in Jack Forehand coins

[00:43:33] [SPEAKER_07]: which those if they exist

[00:43:35] [SPEAKER_07]: there would be certainly worth us

[00:43:36] [SPEAKER_07]: I think we could safely say that

[00:43:38] [SPEAKER_07]: but the point of it's coming off of your

[00:43:42] [SPEAKER_07]: it's coming out of your career

[00:43:43] [SPEAKER_07]: it's coming out of your job

[00:43:44] [SPEAKER_07]: it's coming out of the exchange of your human capital

[00:43:46] [SPEAKER_07]: where you say I've given my time and effort for something

[00:43:49] [SPEAKER_07]: and I've been compensated for that time and effort

[00:43:51] [SPEAKER_07]: because of whatever it is

[00:43:53] [SPEAKER_07]: whether you're a you know

[00:43:54] [SPEAKER_07]: you're a plumber or a portfolio manager

[00:43:56] [SPEAKER_07]: you've extracted some value from that

[00:43:59] [SPEAKER_07]: and then you say okay in exchange for my time and effort

[00:44:02] [SPEAKER_07]: I have this resource, this capital

[00:44:04] [SPEAKER_07]: now where do I want to reinvest that capital?

[00:44:06] [SPEAKER_07]: Do I want it in my investment capital?

[00:44:08] [SPEAKER_07]: Do I want it in some type of savings account

[00:44:10] [SPEAKER_07]: or something else that just helps me support my family

[00:44:14] [SPEAKER_07]: helps me support my friends

[00:44:15] [SPEAKER_07]: my social network

[00:44:16] [SPEAKER_07]: my social fabric

[00:44:17] [SPEAKER_07]: whatever it is

[00:44:18] [SPEAKER_07]: and these are all real considerations to make

[00:44:21] [SPEAKER_07]: if you just let other people push you around with those words

[00:44:25] [SPEAKER_07]: and this is part of what I admire so much about Jason

[00:44:27] [SPEAKER_07]: is Jason doesn't let these things just be words

[00:44:30] [SPEAKER_07]: he's really thought with intention on how he wants to approach it

[00:44:33] [SPEAKER_07]: to make the best go at his future that he can make

[00:44:36] [SPEAKER_07]: I really admire that

[00:44:37] [SPEAKER_09]: so if I had asked Justin one of these

[00:44:39] [SPEAKER_09]: I'm definitely going to put in

[00:44:40] [SPEAKER_09]: I think you both would have guessed the next one that's in here

[00:44:43] [SPEAKER_09]: because I've used this probably in at least 10 podcast episodes now

[00:44:45] [SPEAKER_09]: it's reaching the level of embarrassing

[00:44:47] [SPEAKER_09]: I've used this so many times

[00:44:48] [SPEAKER_09]: but I think it's a really cool lesson

[00:44:50] [SPEAKER_09]: and Adam said it so well

[00:44:52] [SPEAKER_09]: so here's Adam Butler talking about the past and the future

[00:44:56] [SPEAKER_09]: and how we can think about that

[00:44:58] [SPEAKER_13]: yeah I mean it would be diversify right

[00:45:00] [SPEAKER_13]: it would be humble about what you know

[00:45:03] [SPEAKER_13]: and what you can know

[00:45:04] [SPEAKER_13]: and don't be over reliant on what you observed in the past

[00:45:11] [SPEAKER_13]: the past is one sample draw

[00:45:15] [SPEAKER_13]: from an infinite variety of potential sample draws

[00:45:19] [SPEAKER_13]: that we might get in the future

[00:45:21] [SPEAKER_13]: in terms of combinations of inflation growth geopolitical risk

[00:45:27] [SPEAKER_13]: supply demand dynamics technological shocks etc

[00:45:31] [SPEAKER_13]: and the future is probably going to look quite a bit different from the past

[00:45:36] [SPEAKER_13]: and so the best way to prepare for the unknown is to diversify

[00:45:41] [SPEAKER_13]: so I think that would be my core message

[00:45:45] [SPEAKER_09]: so yeah I love this idea of one sample draw

[00:45:47] [SPEAKER_09]: in an infinite series of sample draws

[00:45:49] [SPEAKER_09]: because the thing you think about

[00:45:50] [SPEAKER_09]: this goes back to what we were talking about Jason Buck

[00:45:52] [SPEAKER_09]: and what we talked about in the podcast that we released with him today is

[00:45:55] [SPEAKER_09]: you think a hundred years

[00:45:58] [SPEAKER_09]: I can draw a lot of conclusions for a hundred years

[00:46:00] [SPEAKER_09]: I can pretty much think if I've got a hundred years

[00:46:02] [SPEAKER_09]: the next hundreds pretty much going to play out the same way

[00:46:05] [SPEAKER_09]: and when you dig into the data you realize

[00:46:08] [SPEAKER_09]: there are a lot of different ways those hundred years could have played out

[00:46:11] [SPEAKER_09]: even a period that long

[00:46:13] [SPEAKER_09]: like even if you think about the idea that US stocks have produced

[00:46:16] [SPEAKER_09]: six to seven percent real

[00:46:17] [SPEAKER_09]: whereas international or global stocks have produced five

[00:46:21] [SPEAKER_09]: that's a big difference

[00:46:22] [SPEAKER_09]: and inside of there there's

[00:46:23] [SPEAKER_09]: if you look at the spread on the different countries

[00:46:25] [SPEAKER_09]: I think Australia is one of the best along with the US

[00:46:27] [SPEAKER_09]: and obviously then you've got the Russia's of the world that just went to zero

[00:46:30] [SPEAKER_09]: like there's a lot of different ways that these things have played out

[00:46:33] [SPEAKER_09]: so even over a period of a hundred years

[00:46:35] [SPEAKER_09]: you could have had a completely different past than we've had

[00:46:38] [SPEAKER_09]: and if I'm going to use that past to predict the future

[00:46:41] [SPEAKER_09]: I've got to keep that in mind

[00:46:44] [SPEAKER_07]: uncertainty means more things can happen than will happen

[00:46:48] [SPEAKER_07]: so if it's the one spaghetti noodle that you pulled out of the pot

[00:46:53] [SPEAKER_07]: you got to realize before you throw it back in

[00:46:55] [SPEAKER_07]: or you think about you're playing that forward for the next thing

[00:46:57] [SPEAKER_07]: it's that the luck of that draw

[00:46:59] [SPEAKER_07]: that path that got drawn was just one of many, many things

[00:47:02] [SPEAKER_07]: that could have happened

[00:47:04] [SPEAKER_07]: and this reminder that the past could have played out differently

[00:47:08] [SPEAKER_07]: just as much as the future very likely will play out differently

[00:47:12] [SPEAKER_07]: from what just occurred behind it

[00:47:14] [SPEAKER_07]: it's a profound reminder

[00:47:15] [SPEAKER_07]: there's no mistake you keep bringing this one back up

[00:47:18] [SPEAKER_07]: because this is one of the most important lessons

[00:47:20] [SPEAKER_07]: I think in life in general

[00:47:21] [SPEAKER_09]: yeah we don't want to be doing with this

[00:47:23] [SPEAKER_09]: like I mean I don't think the US is going to see the path Russia saw

[00:47:26] [SPEAKER_09]: I mean obviously there's so many differences between the United States and Russia

[00:47:29] [SPEAKER_09]: I mean I don't think that's something

[00:47:31] [SPEAKER_09]: at least for me personally as someone investing in US markets

[00:47:33] [SPEAKER_09]: I'm not worried about the path of Russia

[00:47:35] [SPEAKER_09]: but let's look at the path of Japan

[00:47:36] [SPEAKER_09]: I mean could that have been our path?

[00:47:39] [SPEAKER_09]: it could have been

[00:47:39] [SPEAKER_09]: and I mean you had dead money invested in the Japanese market for decades

[00:47:42] [SPEAKER_09]: now we're not at the valuations Japan was at

[00:47:45] [SPEAKER_09]: a cap of 100 when it started

[00:47:46] [SPEAKER_09]: we're nowhere near that

[00:47:47] [SPEAKER_09]: we're not even at our own dot com yet

[00:47:48] [SPEAKER_09]: but it's just something to think about

[00:47:50] [SPEAKER_09]: like the future could be very different than we think

[00:47:53] [SPEAKER_09]: and some of the things we take for granted

[00:47:54] [SPEAKER_09]: when we look at the US data may not be the way it plays out

[00:47:57] [SPEAKER_09]: and that doesn't mean stocks and bonds aren't going to be a great investment

[00:47:59] [SPEAKER_09]: for the long term

[00:48:00] [SPEAKER_09]: it doesn't mean the US isn't going to be a great investment for the long term

[00:48:02] [SPEAKER_09]: it just means we think about the other possibilities

[00:48:04] [SPEAKER_09]: and we look and say as someone like you is building a financial plan

[00:48:08] [SPEAKER_09]: we think about all right

[00:48:09] [SPEAKER_09]: this might play out a little bit differently than we think

[00:48:11] [SPEAKER_09]: maybe we take that into account in what we're doing

[00:48:14] [SPEAKER_07]: you know the spaghetti noodle is still a spaghetti noodle

[00:48:17] [SPEAKER_07]: yeah you might pick a different one

[00:48:18] [SPEAKER_07]: but you still have a spaghetti noodle

[00:48:20] [SPEAKER_07]: and most of the time we're thinking about this stuff

[00:48:23] [SPEAKER_07]: and I think that's the optimist in me talking

[00:48:26] [SPEAKER_07]: that's where I don't think we go the Russian route

[00:48:29] [SPEAKER_07]: I hope we don't go the Japanese route

[00:48:31] [SPEAKER_07]: but you can certainly see where some of that stuff comes from

[00:48:33] [SPEAKER_07]: but it's like

[00:48:34] [SPEAKER_07]: you're pulling out the single spaghetti noodle

[00:48:36] [SPEAKER_07]: from the whole knot of potential spaghetti

[00:48:39] [SPEAKER_07]: you're probably not pulling out you know a snake

[00:48:42] [SPEAKER_07]: you're not pulling out like something deadly

[00:48:45] [SPEAKER_07]: and that's an important reminder here too

[00:48:48] [SPEAKER_07]: if we're looking at capitalism

[00:48:50] [SPEAKER_07]: if we're looking at optimistically

[00:48:52] [SPEAKER_07]: if we're looking at there's some checks and balances in the system still

[00:48:55] [SPEAKER_07]: then the hope is

[00:48:57] [SPEAKER_07]: there's a lot of good things that come from

[00:48:59] [SPEAKER_07]: when businesses are just trying to keep staying in business for the long

[00:49:04] [SPEAKER_07]: for the long run

[00:49:05] [SPEAKER_07]: not just for a short-term decision or to make a quarterly earnings report

[00:49:08] [SPEAKER_07]: but when they're actually committed to keeping the lights on

[00:49:10] [SPEAKER_07]: for the long run that creates jobs

[00:49:12] [SPEAKER_07]: that creates consumption

[00:49:13] [SPEAKER_07]: that creates all sorts of good stuff

[00:49:15] [SPEAKER_07]: and I'm a believer that you may not be able to pick or project

[00:49:18] [SPEAKER_07]: exactly which pot is or which noodle is coming out of the pot

[00:49:22] [SPEAKER_07]: but noodles in the pot are not a bad thing to be drawing from

[00:49:25] [SPEAKER_07]: even if yours is slightly more al dente than you'd preferred

[00:49:28] [SPEAKER_09]: so I was a little jealous of the next one

[00:49:30] [SPEAKER_09]: because I am incapable of taking a nap

[00:49:32] [SPEAKER_09]: I can sleep at night

[00:49:32] [SPEAKER_09]: I can't sleep at any other time

[00:49:34] [SPEAKER_09]: so this is Meb Baber talking about why investors should be

[00:49:37] [SPEAKER_09]: Rip Van Winkle instead of Nostradamus

[00:49:39] [SPEAKER_18]: There's a quote we've been using lately

[00:49:40] [SPEAKER_18]: despite all the amount of time we spend talking about the future

[00:49:44] [SPEAKER_18]: and forecasting and things people should think about

[00:49:47] [SPEAKER_18]: I think the quote is

[00:49:50] [SPEAKER_18]: for most investors it's better to be

[00:49:54] [SPEAKER_18]: Rip Van Winkle than Nostradamus

[00:49:57] [SPEAKER_18]: meaning what does everyone on CNBC do all day?

[00:50:00] [SPEAKER_18]: They like predicting what's going to happen with Google earnings

[00:50:02] [SPEAKER_18]: or the price of wheat

[00:50:04] [SPEAKER_18]: or what the Fed's going to do

[00:50:06] [SPEAKER_18]: and is gold a good partner portfolio?

[00:50:08] [SPEAKER_18]: All these things everyone stresses about

[00:50:10] [SPEAKER_18]: but in reality coming up with a portfolio

[00:50:14] [SPEAKER_18]: particularly with public markets

[00:50:15] [SPEAKER_18]: I want that sucker to be on autopilot

[00:50:17] [SPEAKER_18]: I don't ever want to think about my public market investments ever

[00:50:20] [SPEAKER_18]: let that thing whir in the background

[00:50:22] [SPEAKER_18]: a little robot Meb 2000 and just be done with it

[00:50:26] [SPEAKER_18]: and also I see my cash account as like

[00:50:29] [SPEAKER_18]: my investment account has a cash account

[00:50:31] [SPEAKER_18]: but it just kind of hums in the background

[00:50:33] [SPEAKER_18]: and that's why some of these platforms like Betterment

[00:50:35] [SPEAKER_18]: I think are pretty great

[00:50:36] [SPEAKER_18]: Ankar has one too

[00:50:38] [SPEAKER_18]: but essentially this concept of like put it in there

[00:50:42] [SPEAKER_18]: invest as much as you can

[00:50:44] [SPEAKER_18]: where you're happy and comfortable with it

[00:50:45] [SPEAKER_18]: and let it just happen in the background

[00:50:47] [SPEAKER_18]: and forget about it

[00:50:48] [SPEAKER_18]: and spend zero time

[00:50:50] [SPEAKER_18]: particularly in public markets and macro

[00:50:52] [SPEAKER_18]: going back to by the way it's startups

[00:50:53] [SPEAKER_18]: one of the biggest benefit of the startups is

[00:50:56] [SPEAKER_18]: investing is it's the most optimistic thing in the world

[00:50:59] [SPEAKER_18]: but you spend all day like oh my god these amazing ideas

[00:51:02] [SPEAKER_18]: these life-changing technologies

[00:51:03] [SPEAKER_18]: and passion founders

[00:51:04] [SPEAKER_18]: and then you turn on CNBC it's just like

[00:51:08] [SPEAKER_18]: you know just like bombarded with negativity

[00:51:10] [SPEAKER_18]: and wars and pandemics just like barf

[00:51:13] [SPEAKER_18]: like it just it's so tough

[00:51:15] [SPEAKER_18]: so to me spend less time on the like negativity

[00:51:21] [SPEAKER_18]: and forecasting and future prediction business

[00:51:24] [SPEAKER_18]: which is impossible and more

[00:51:25] [SPEAKER_18]: and like hey I'm going to save

[00:51:27] [SPEAKER_18]: put it over here

[00:51:28] [SPEAKER_18]: and it doesn't matter what you own

[00:51:30] [SPEAKER_18]: I mean it does

[00:51:31] [SPEAKER_18]: but it matters more that you save and invest

[00:51:33] [SPEAKER_18]: in the first place

[00:51:34] [SPEAKER_18]: this concept this ownership mentality

[00:51:37] [SPEAKER_18]: I think is important

[00:51:38] [SPEAKER_18]: so be Rip Van Winkle

[00:51:40] [SPEAKER_18]: I like to sleep

[00:51:41] [SPEAKER_18]: I like to take naps

[00:51:42] [SPEAKER_09]: so that this gets back to what we've been talking about

[00:51:44] [SPEAKER_09]: like everybody wants to be Nostradamus

[00:51:45] [SPEAKER_09]: everybody wants to predict everything

[00:51:47] [SPEAKER_09]: but like as Meb talks about

[00:51:49] [SPEAKER_09]: like having a set it and forget it thing

[00:51:51] [SPEAKER_09]: where you can go take a nap

[00:51:52] [SPEAKER_09]: and you can move on with your life

[00:51:53] [SPEAKER_09]: and you're not sitting like worrying

[00:51:55] [SPEAKER_09]: spending your days worrying about

[00:51:56] [SPEAKER_09]: your public markets portfolio

[00:51:57] [SPEAKER_09]: it's probably a better way to go

[00:51:59] [SPEAKER_09]: than making all these changes

[00:52:00] [SPEAKER_09]: because I think I can predict the future

[00:52:03] [SPEAKER_07]: It's a good it's a it's a good take

[00:52:06] [SPEAKER_07]: I admire the Rip Van Winkle Nostradamus

[00:52:10] [SPEAKER_07]: you know comparison

[00:52:11] [SPEAKER_07]: I take modest issue

[00:52:13] [SPEAKER_07]: and just how messed up

[00:52:15] [SPEAKER_07]: Rip Van Winkle's life is

[00:52:16] [SPEAKER_07]: I didn't even know that

[00:52:17] [SPEAKER_07]: Do you remember anything

[00:52:18] [SPEAKER_09]: I don't know this could be a whole separate podcast

[00:52:20] [SPEAKER_07]: Oh yeah yeah

[00:52:21] [SPEAKER_07]: I mean his wife's dead

[00:52:23] [SPEAKER_07]: he has to like move in with his daughter

[00:52:24] [SPEAKER_07]: there's all this stuff of people talking about

[00:52:26] [SPEAKER_07]: like the ghosts in the hills

[00:52:28] [SPEAKER_07]: and the crazies

[00:52:29] [SPEAKER_07]: like oh wow

[00:52:29] [SPEAKER_07]: it's not the best future that he wakes up in

[00:52:33] [SPEAKER_07]: for lots of reasons

[00:52:34] [SPEAKER_07]: that's a whole other conversation

[00:52:36] [SPEAKER_07]: but the point stands

[00:52:38] [SPEAKER_07]: you want to basically be able to go take that nap

[00:52:42] [SPEAKER_07]: you want to be able to go relax

[00:52:45] [SPEAKER_07]: again like worry about other stuff

[00:52:47] [SPEAKER_07]: don't just fall asleep

[00:52:48] [SPEAKER_07]: and have your life decay

[00:52:49] [SPEAKER_07]: and rot behind you

[00:52:51] [SPEAKER_07]: but you know you want to be able to like

[00:52:53] [SPEAKER_07]: go to sleep

[00:52:53] [SPEAKER_07]: let the things do their job

[00:52:55] [SPEAKER_07]: and not be obsessive over

[00:52:57] [SPEAKER_07]: picking what's going to happen next

[00:52:58] [SPEAKER_07]: and maybe it all wake up in a horrible scenario

[00:53:01] [SPEAKER_07]: I don't know

[00:53:03] [SPEAKER_07]: somewhere in like three-body problem

[00:53:04] [SPEAKER_07]: it's just like the people who get put into like

[00:53:06] [SPEAKER_07]: the temporary comas

[00:53:07] [SPEAKER_07]: and wake up like decades

[00:53:09] [SPEAKER_07]: and yawns into the future

[00:53:10] [SPEAKER_07]: like there's some other ways we can look at this

[00:53:13] [SPEAKER_07]: there's cryogenic freezing

[00:53:14] [SPEAKER_07]: or something like that maybe

[00:53:16] [SPEAKER_07]: that makes you feel a little bit better

[00:53:18] [SPEAKER_07]: than Rip Van Winkle

[00:53:19] [SPEAKER_07]: and the weird despairing reality

[00:53:22] [SPEAKER_07]: of some of his future

[00:53:23] [SPEAKER_09]: and these all play together

[00:53:24] [SPEAKER_09]: I mean this plays into Bob Elliot's idea

[00:53:26] [SPEAKER_09]: of diversification

[00:53:27] [SPEAKER_09]: this plays into Aaron Stanhope's idea

[00:53:29] [SPEAKER_09]: of risk management

[00:53:29] [SPEAKER_09]: I mean those are the things that allow you

[00:53:31] [SPEAKER_09]: to be that

[00:53:32] [SPEAKER_09]: because if you're sitting there

[00:53:33] [SPEAKER_09]: you know with a bunch of

[00:53:33] [SPEAKER_09]: you know profitless tech companies

[00:53:35] [SPEAKER_09]: and that's your whole portfolio

[00:53:36] [SPEAKER_09]: you're probably not taking too many naps

[00:53:38] [SPEAKER_09]: because you're too worried about what's going on

[00:53:40] [SPEAKER_09]: so all of this ties together

[00:53:42] [SPEAKER_09]: I think as we bring these together

[00:53:44] [SPEAKER_07]: and I appreciate this too

[00:53:45] [SPEAKER_07]: I also am not once in a great blue moon

[00:53:49] [SPEAKER_07]: I can take a nap

[00:53:50] [SPEAKER_07]: but I fall

[00:53:50] [SPEAKER_07]: I don't know if you fall to this too

[00:53:52] [SPEAKER_07]: I fall to the

[00:53:53] [SPEAKER_07]: if I do take a nap

[00:53:54] [SPEAKER_07]: and I do succeed

[00:53:55] [SPEAKER_07]: the odds of me having like nap coma

[00:53:59] [SPEAKER_07]: for the rest of the day

[00:54:00] [SPEAKER_07]: yeah

[00:54:01] [SPEAKER_07]: like it's just

[00:54:02] [SPEAKER_07]: I'll be in a fog

[00:54:03] [SPEAKER_07]: and it's you know

[00:54:04] [SPEAKER_07]: I might as well just go get drunk or something

[00:54:07] [SPEAKER_09]: that's our lesson for the podcast

[00:54:09] [SPEAKER_09]: go get drunk instead of taking a nap

[00:54:10] [SPEAKER_09]: is the it's the best we have

[00:54:12] [SPEAKER_09]: put it on the cover

[00:54:14] [SPEAKER_09]: what do we got next

[00:54:15] [SPEAKER_09]: put it on the cover

[00:54:17] [SPEAKER_09]: that'll be my highest click-through rate ever probably

[00:54:20] [SPEAKER_09]: so anyway

[00:54:21] [SPEAKER_09]: we're moving on to the next one

[00:54:22] [SPEAKER_09]: we've got a dual lesson here

[00:54:23] [SPEAKER_09]: it's both guys from Riddle's Wealth Management

[00:54:25] [SPEAKER_09]: Michael Botnick and Ben Carlson

[00:54:26] [SPEAKER_09]: and I think there's

[00:54:27] [SPEAKER_09]: I put them together

[00:54:29] [SPEAKER_09]: because I think they tie really together

[00:54:30] [SPEAKER_09]: you know one is people think there's this idea

[00:54:32] [SPEAKER_09]: of there is this perfect portfolio out there

[00:54:34] [SPEAKER_09]: and I think both of their answers address that fact

[00:54:37] [SPEAKER_11]: I think there probably is no perfect way to save and invest

[00:54:40] [SPEAKER_11]: there's no top 10 list you can read

[00:54:42] [SPEAKER_11]: or there's no book you can read

[00:54:43] [SPEAKER_11]: that's going to like completely change your life

[00:54:44] [SPEAKER_11]: and make it easier for you to figure it out

[00:54:47] [SPEAKER_11]: I think you just have to kind of pick a strategy

[00:54:49] [SPEAKER_11]: and then stick with it come hell or high water

[00:54:51] [SPEAKER_11]: because I think one of the hardest parts is these days

[00:54:54] [SPEAKER_11]: we can always see how other people are saving and investing

[00:54:57] [SPEAKER_11]: and this person is investing in this

[00:54:58] [SPEAKER_11]: and I think it's probably never been a better time

[00:55:00] [SPEAKER_11]: to be an individual investor

[00:55:01] [SPEAKER_11]: in terms of the strategies and products

[00:55:04] [SPEAKER_11]: and tools we have available

[00:55:06] [SPEAKER_11]: if you think about some of the strategies

[00:55:07] [SPEAKER_11]: that are now offered in a tax-efficient ETF

[00:55:09] [SPEAKER_11]: that were only available to rich individuals

[00:55:12] [SPEAKER_11]: or institutions or hedge funds back in the day

[00:55:14] [SPEAKER_11]: and individuals can now use these same strategies

[00:55:17] [SPEAKER_11]: for pennies on the dollar in terms of costs

[00:55:19] [SPEAKER_11]: that's a great thing

[00:55:20] [SPEAKER_11]: the problem is there are so many choices these days

[00:55:23] [SPEAKER_11]: for what you can invest in

[00:55:24] [SPEAKER_11]: that it makes it much harder for people

[00:55:26] [SPEAKER_11]: to stick with a strategy

[00:55:27] [SPEAKER_11]: so I think for most people

[00:55:28] [SPEAKER_11]: the good strategy you can stick with

[00:55:30] [SPEAKER_11]: is vastly superior to the great strategy

[00:55:32] [SPEAKER_11]: that you can't stick with

[00:55:33] [SPEAKER_11]: it's just really hard for people

[00:55:34] [SPEAKER_11]: to find that one strategy and stick with it

[00:55:36] [SPEAKER_11]: so I think that's kind of the lesson

[00:55:37] [SPEAKER_11]: I depart on a lot of people is just

[00:55:39] [SPEAKER_11]: if you find a strategy that works for you

[00:55:41] [SPEAKER_11]: don't worry what everyone else is doing

[00:55:42] [SPEAKER_11]: and just stick with your own strategy

[00:55:43] [SPEAKER_11]: and call it a day

[00:55:44] [SPEAKER_04]: I guess the first thing that comes to mind is

[00:55:47] [SPEAKER_04]: there is no universal playbook for investing

[00:55:51] [SPEAKER_04]: if there was everyone would be following the same thing

[00:55:54] [SPEAKER_04]: so there's no one or 10 right ways to invest

[00:56:00] [SPEAKER_04]: and there's probably a lot of wrong ways to invest

[00:56:03] [SPEAKER_04]: but there's also a lot of a lot of

[00:56:05] [SPEAKER_04]: reasonable ways to invest

[00:56:07] [SPEAKER_04]: and the most important thing in my opinion

[00:56:10] [SPEAKER_04]: is getting to the place

[00:56:13] [SPEAKER_04]: where you're comfortable doing what works for you

[00:56:17] [SPEAKER_04]: even if that's you know

[00:56:19] [SPEAKER_04]: something that would be subpar in a spreadsheet

[00:56:20] [SPEAKER_04]: 40% cash, 60% equities

[00:56:24] [SPEAKER_04]: whatever it is

[00:56:25] [SPEAKER_04]: whatever you have to do to get to the place

[00:56:27] [SPEAKER_04]: that you can stick to the strategy

[00:56:31] [SPEAKER_04]: through thick and thin

[00:56:32] [SPEAKER_04]: and when I say stick to the strategy

[00:56:34] [SPEAKER_04]: the strategy doesn't have to be buy and hold

[00:56:35] [SPEAKER_04]: but you have to have some sort of philosophy

[00:56:38] [SPEAKER_04]: that governs you

[00:56:39] [SPEAKER_04]: right and if because if you don't have that

[00:56:42] [SPEAKER_04]: then you're just then you're just flopping

[00:56:44] [SPEAKER_04]: like a fish out of water

[00:56:45] [SPEAKER_04]: so some people get there quicker than others

[00:56:48] [SPEAKER_04]: some people never get there

[00:56:49] [SPEAKER_04]: but I think that would be the most important thing

[00:56:51] [SPEAKER_04]: is just to find whatever jives

[00:56:54] [SPEAKER_04]: with your personality is the most important thing

[00:56:57] [SPEAKER_09]: so yeah so I mean what Ben was basically saying is

[00:56:59] [SPEAKER_09]: there is no perfect portfolio

[00:57:01] [SPEAKER_09]: and what Michael was saying is

[00:57:03] [SPEAKER_09]: whatever you can stick with

[00:57:04] [SPEAKER_09]: is probably a better portfolio

[00:57:06] [SPEAKER_09]: than trying to search for the perfect portfolio

[00:57:08] [SPEAKER_09]: and I think those tie together really well

[00:57:09] [SPEAKER_09]: because all of us get trapped in

[00:57:11] [SPEAKER_09]: you know this is the exact portfolio I should have

[00:57:13] [SPEAKER_09]: but really and it plays into what Meb said too

[00:57:16] [SPEAKER_09]: like the portfolio that achieves your goals

[00:57:18] [SPEAKER_09]: and allows you to take the naps

[00:57:19] [SPEAKER_09]: I mean that's probably the right portfolio for you

[00:57:22] [SPEAKER_09]: and maybe someone like me can give you a spreadsheet

[00:57:24] [SPEAKER_09]: and say well I've produced something

[00:57:26] [SPEAKER_09]: with better returns than your portfolio

[00:57:27] [SPEAKER_09]: but it doesn't really matter

[00:57:29] [SPEAKER_09]: if it's right for you

[00:57:30] [SPEAKER_09]: if you believe in it

[00:57:31] [SPEAKER_09]: even if it's something

[00:57:32] [SPEAKER_09]: that's maybe outside of the norm

[00:57:33] [SPEAKER_09]: of what someone like me would say

[00:57:35] [SPEAKER_09]: is a good portfolio

[00:57:36] [SPEAKER_09]: as long as it makes sense

[00:57:37] [SPEAKER_09]: you expect to have a reason

[00:57:38] [SPEAKER_09]: it'll work over the long term

[00:57:40] [SPEAKER_09]: and you can live with it

[00:57:41] [SPEAKER_09]: that's probably a really good portfolio for you

[00:57:43] [SPEAKER_09]: regardless of what the spreadsheet says

[00:57:45] [SPEAKER_07]: You need to have context for all these things

[00:57:47] [SPEAKER_07]: it's so funny to me that we talk about

[00:57:49] [SPEAKER_07]: like we talk about this

[00:57:51] [SPEAKER_07]: you can talk about this with kids

[00:57:53] [SPEAKER_07]: in choosing a career or career strategy

[00:57:55] [SPEAKER_07]: but we talk about that

[00:57:57] [SPEAKER_07]: like it's like well you know

[00:57:59] [SPEAKER_07]: little Johnny could be an astronaut someday

[00:58:01] [SPEAKER_07]: he's got the chops for it

[00:58:02] [SPEAKER_07]: but like you know little Jack

[00:58:05] [SPEAKER_07]: Jack can't be an astronaut

[00:58:06] [SPEAKER_07]: that's insane

[00:58:07] [SPEAKER_07]: here's all the reasons

[00:58:08] [SPEAKER_07]: that would be a terrible idea

[00:58:10] [SPEAKER_07]: likewise like I wouldn't

[00:58:11] [SPEAKER_07]: I don't want to be an astronaut

[00:58:12] [SPEAKER_07]: I don't want to be like flung into space

[00:58:15] [SPEAKER_07]: and go through all the training

[00:58:16] [SPEAKER_07]: or do all the other things

[00:58:17] [SPEAKER_07]: that's just it's not for me

[00:58:19] [SPEAKER_07]: it's not in the cards

[00:58:21] [SPEAKER_07]: so understanding like

[00:58:22] [SPEAKER_07]: why would that be any different from portfolios

[00:58:25] [SPEAKER_07]: you know I'm not supposed to be a surgeon

[00:58:27] [SPEAKER_07]: I get it

[00:58:28] [SPEAKER_07]: you know the hand is

[00:58:30] [SPEAKER_07]: you know it's just you know

[00:58:31] [SPEAKER_07]: the trigger finger whatever

[00:58:32] [SPEAKER_07]: but there's just all these things

[00:58:34] [SPEAKER_07]: that are not wired to do

[00:58:35] [SPEAKER_07]: it's the same with portfolios

[00:58:37] [SPEAKER_07]: I'm also not wired to be some

[00:58:38] [SPEAKER_07]: you know crazy option

[00:58:40] [SPEAKER_07]: you know gamma scalping trader

[00:58:42] [SPEAKER_07]: I'm just not wired for it

[00:58:44] [SPEAKER_07]: figure out the things that you're wired for

[00:58:45] [SPEAKER_07]: which are the things you can stick to across life

[00:58:48] [SPEAKER_07]: portfolios actually should be

[00:58:50] [SPEAKER_07]: one of the easier ones to do

[00:58:52] [SPEAKER_07]: because to your point

[00:58:53] [SPEAKER_07]: pick the thing that you can put in place

[00:58:55] [SPEAKER_07]: and basically go to sleep on

[00:58:57] [SPEAKER_07]: or get your enjoyment out of doing

[00:58:59] [SPEAKER_07]: and be able to demonstrate why it's a productive

[00:59:01] [SPEAKER_07]: a productive thing for you to do

[00:59:03] [SPEAKER_07]: it's a bat like

[00:59:04] [SPEAKER_07]: I'm not going to go moonlight as a surgeon

[00:59:06] [SPEAKER_07]: or a sniper with my affirmation trigger fingers here

[00:59:10] [SPEAKER_07]: the steady hand says

[00:59:12] [SPEAKER_07]: Matt stick to apparently making podcasts

[00:59:15] [SPEAKER_07]: and doing financial planning

[00:59:16] [SPEAKER_09]: yeah as Michael said

[00:59:17] [SPEAKER_09]: like if that means a little bit more cash

[00:59:19] [SPEAKER_09]: than the models would say you should have

[00:59:20] [SPEAKER_09]: then that means a little bit more cash

[00:59:21] [SPEAKER_09]: than the models say you should have

[00:59:22] [SPEAKER_09]: that's fine I mean that's not

[00:59:24] [SPEAKER_09]: you know we can't get trapped in this idea

[00:59:25] [SPEAKER_09]: of thinking what the optimal thing is

[00:59:27] [SPEAKER_09]: when we really have to just think about

[00:59:28] [SPEAKER_09]: what's right for us

[00:59:31] [SPEAKER_09]: so moving to the next one

[00:59:32] [SPEAKER_09]: this one's really interesting to me

[00:59:33] [SPEAKER_09]: because I think coming out of sort of 2020

[00:59:36] [SPEAKER_09]: and the GameStop era

[00:59:38] [SPEAKER_09]: and what's been going on

[00:59:38] [SPEAKER_09]: with faster moving markets and everything

[00:59:40] [SPEAKER_09]: I just feel like some people have lost this idea

[00:59:42] [SPEAKER_09]: you know we believe that we're trading

[00:59:45] [SPEAKER_09]: like this piece of paper

[00:59:46] [SPEAKER_09]: this electronic thing

[00:59:47] [SPEAKER_09]: and we're buying and we're selling

[00:59:48] [SPEAKER_09]: and you know GameStop is a great example of this

[00:59:51] [SPEAKER_09]: because you know people have traded GameStop

[00:59:53] [SPEAKER_09]: and then some people have made a lot of money

[00:59:54] [SPEAKER_09]: on GameStop

[00:59:55] [SPEAKER_09]: some people have lost a lot of money on GameStop

[00:59:56] [SPEAKER_09]: but I think when that whole saga happened

[00:59:59] [SPEAKER_09]: nobody really cared what was actually behind that

[01:00:03] [SPEAKER_09]: nobody cared what the company did

[01:00:05] [SPEAKER_09]: what its prospects were anything like that

[01:00:07] [SPEAKER_09]: so this is Chris Davis talking about the fact

[01:00:09] [SPEAKER_09]: that stocks are companies

[01:00:10] [SPEAKER_16]: well it would be that you own a business

[01:00:14] [SPEAKER_16]: you own a business

[01:00:15] [SPEAKER_16]: and this idea that you own a trading sardine

[01:00:18] [SPEAKER_16]: instead of a business

[01:00:19] [SPEAKER_16]: leads to so much bad behavior

[01:00:21] [SPEAKER_16]: and really you guys raised it the best

[01:00:25] [SPEAKER_16]: you know when Jack was talking about

[01:00:27] [SPEAKER_16]: selling those winners

[01:00:28] [SPEAKER_16]: you know if you just think

[01:00:31] [SPEAKER_16]: that I own this wonderful portfolio businesses

[01:00:34] [SPEAKER_16]: and I want to pass them on to my kids

[01:00:36] [SPEAKER_16]: or my grandkids

[01:00:37] [SPEAKER_16]: I think it keeps you out of owning stuff

[01:00:40] [SPEAKER_16]: because you think it has a quick double

[01:00:42] [SPEAKER_16]: and it keeps you out of selling stuff

[01:00:46] [SPEAKER_16]: simply because it doubled

[01:00:48] [SPEAKER_16]: and I think that everybody would do better

[01:00:53] [SPEAKER_16]: you know if they could think

[01:00:55] [SPEAKER_16]: you know I had my first girlfriend was from Maine

[01:00:58] [SPEAKER_16]: and her father worked at Bath Iron Works

[01:01:03] [SPEAKER_16]: and he showed me his portfolio

[01:01:07] [SPEAKER_16]: and it was such a wonderful portfolio

[01:01:09] [SPEAKER_16]: it was about eight stocks

[01:01:10] [SPEAKER_16]: that he had bought over the years

[01:01:12] [SPEAKER_16]: very thoughtfully and carefully

[01:01:13] [SPEAKER_16]: and it had just built into this real source of wealth

[01:01:17] [SPEAKER_16]: and I would guess that he had outperformed the market

[01:01:21] [SPEAKER_16]: but even if he had just simply tracked the market

[01:01:24] [SPEAKER_16]: over this long period of time

[01:01:25] [SPEAKER_16]: but he did it with deep conviction

[01:01:26] [SPEAKER_16]: because he saw each holding as a business

[01:01:29] [SPEAKER_16]: he didn't see it as a stock market

[01:01:31] [SPEAKER_16]: he didn't see it as a piece of paper

[01:01:33] [SPEAKER_16]: I think that you know really thinking about that

[01:01:37] [SPEAKER_16]: and thinking about what it is to be an owner of a business

[01:01:40] [SPEAKER_16]: I think that would really improve

[01:01:42] [SPEAKER_16]: a lot of people's returns over a long period of time

[01:01:45] [SPEAKER_09]: So going back to this GameStop thing

[01:01:47] [SPEAKER_09]: like I mean that is effectively a company

[01:01:49] [SPEAKER_09]: that would not exist

[01:01:50] [SPEAKER_09]: if not for all the money they've raised

[01:01:53] [SPEAKER_09]: based on the Rory and Katie stuff

[01:01:55] [SPEAKER_09]: so like anybody who bothered to go behind the scenes

[01:01:58] [SPEAKER_09]: and say oh what are the financials of this thing

[01:01:59] [SPEAKER_09]: how's it going

[01:02:00] [SPEAKER_09]: like how is this idea of having these stores

[01:02:02] [SPEAKER_09]: where they're selling these video games

[01:02:03] [SPEAKER_09]: how's that working out for them

[01:02:04] [SPEAKER_09]: like how's their online strategy going

[01:02:06] [SPEAKER_09]: like anybody who asked those questions

[01:02:08] [SPEAKER_09]: didn't get the greatest answers

[01:02:09] [SPEAKER_09]: but like so many people were just trading what they were seeing

[01:02:12] [SPEAKER_09]: they were trading what they were seeing on their screen

[01:02:14] [SPEAKER_09]: and some people can be very successful at that

[01:02:16] [SPEAKER_09]: but it's important to separate speculating from investing

[01:02:19] [SPEAKER_09]: and I think if you're going to be an investor

[01:02:21] [SPEAKER_09]: you have to think about what Chris is talking about

[01:02:22] [SPEAKER_09]: which is you do own a portion

[01:02:24] [SPEAKER_09]: a share of an actual company that does things

[01:02:27] [SPEAKER_09]: and should be hopefully generating cash doing those things

[01:02:30] [SPEAKER_09]: at some point at least maybe if not now

[01:02:33] [SPEAKER_07]: this the word choice here

[01:02:36] [SPEAKER_07]: the narrative value of these things

[01:02:37] [SPEAKER_07]: just the same way we were talking a couple of minutes ago

[01:02:40] [SPEAKER_07]: about thinking about saving and investing

[01:02:42] [SPEAKER_07]: and what those words mean

[01:02:44] [SPEAKER_07]: and if you should be investing your savings

[01:02:46] [SPEAKER_07]: and does that mean the investments are coming out of savings

[01:02:48] [SPEAKER_07]: and therefore you have to recategorize them in your mind

[01:02:50] [SPEAKER_07]: stuff like this is

[01:02:51] [SPEAKER_07]: if we're talking about GameStop

[01:02:53] [SPEAKER_07]: if we're talking about public equity markets investing

[01:02:57] [SPEAKER_07]: we want to also be able to draw that corollary

[01:03:00] [SPEAKER_07]: to private equity investing

[01:03:03] [SPEAKER_07]: we want to think about

[01:03:05] [SPEAKER_07]: okay if I'm going to go give money to a GameStop

[01:03:08] [SPEAKER_07]: where I as shareholder or whatever else have zero control

[01:03:11] [SPEAKER_07]: zero influence

[01:03:13] [SPEAKER_07]: what's the business like

[01:03:14] [SPEAKER_07]: is there a reason I think this is going up

[01:03:16] [SPEAKER_07]: and it's okay if I'm just playing the crowd

[01:03:18] [SPEAKER_07]: I'm playing the crowd that can be that can be a job

[01:03:22] [SPEAKER_07]: the job therefore is interpreting the crowd

[01:03:24] [SPEAKER_07]: not really like the investment in the business

[01:03:26] [SPEAKER_07]: or the company itself

[01:03:27] [SPEAKER_07]: but the underlying idea that hey at the end of the day

[01:03:30] [SPEAKER_07]: a business is there to make a profit

[01:03:33] [SPEAKER_07]: a business is there to raise money at least if nothing else

[01:03:36] [SPEAKER_07]: whether it's from customers or from other willing shareholders

[01:03:38] [SPEAKER_07]: these are the things that have to happen for a private company

[01:03:41] [SPEAKER_07]: to stay in business

[01:03:42] [SPEAKER_07]: and for something to be public we want to ask that question

[01:03:46] [SPEAKER_07]: what justifies this thing able to stay in business

[01:03:48] [SPEAKER_07]: in this format in this way

[01:03:51] [SPEAKER_07]: not saying I have no clue what's going to happen

[01:03:53] [SPEAKER_07]: with GameStop or whatever else

[01:03:55] [SPEAKER_07]: over the days, weeks, years that come

[01:03:57] [SPEAKER_07]: but I am willing to say if you can say every public investment

[01:04:01] [SPEAKER_07]: I can also think of as a private investment

[01:04:03] [SPEAKER_07]: and every private investment

[01:04:04] [SPEAKER_07]: I can see as a public investment

[01:04:05] [SPEAKER_07]: and maybe why it never deserves to be so

[01:04:08] [SPEAKER_07]: that's almost as close to an edge as I think I can get

[01:04:11] [SPEAKER_07]: and working with a lot of business owners

[01:04:14] [SPEAKER_07]: working with a lot of people who have assets

[01:04:16] [SPEAKER_07]: or stakes in things that are different in nature

[01:04:20] [SPEAKER_07]: for all sorts of reasons

[01:04:21] [SPEAKER_07]: whether that's real estate or something else altogether

[01:04:24] [SPEAKER_07]: you start to think about stuff like this and go

[01:04:26] [SPEAKER_07]: okay not everything needs to scale to the moon and that's okay

[01:04:31] [SPEAKER_09]: and there's been debate

[01:04:32] [SPEAKER_09]: and we've had the debate in the podcast

[01:04:33] [SPEAKER_09]: about whether fundamentals matter less than all that

[01:04:35] [SPEAKER_09]: but that's sort of beside this point

[01:04:37] [SPEAKER_09]: I mean the point is whether fundamentals matter more or less

[01:04:40] [SPEAKER_09]: you're still buying a share of a company

[01:04:42] [SPEAKER_09]: like if you're investing in something

[01:04:44] [SPEAKER_09]: you're still buying a share of that company

[01:04:46] [SPEAKER_09]: and I think that's important to keep in mind

[01:04:48] [SPEAKER_09]: as people trade more and people make decisions like that

[01:04:51] [SPEAKER_09]: I just think it's important to keep in mind

[01:04:53] [SPEAKER_09]: what it is I'm actually buying

[01:04:54] [SPEAKER_07]: Yeah fundamentals definitely matter

[01:04:56] [SPEAKER_07]: I know we've covered this in other places

[01:04:58] [SPEAKER_07]: fundamentals definitely matter less

[01:05:00] [SPEAKER_07]: if there's a crowd of people who aren't concerned

[01:05:02] [SPEAKER_07]: with the fundamentals at the table

[01:05:04] [SPEAKER_07]: like it's a flow story

[01:05:06] [SPEAKER_07]: it's as our friend Dave Nottick keeps saying like

[01:05:09] [SPEAKER_07]: freem flow rules everything around me

[01:05:11] [SPEAKER_07]: if a bunch of people show up to play a game

[01:05:14] [SPEAKER_07]: and don't care anything for like the one guy

[01:05:17] [SPEAKER_07]: at the table's understanding of the game

[01:05:18] [SPEAKER_07]: that fundamentals matter Ben Graham forever

[01:05:22] [SPEAKER_07]: if that's one guy at the table

[01:05:23] [SPEAKER_07]: but there's 10 other people who think totally just like

[01:05:26] [SPEAKER_07]: hey we're here to have a ball with this thing

[01:05:28] [SPEAKER_07]: fundamentals aren't going to matter

[01:05:30] [SPEAKER_07]: but flip that on its head or play that over time

[01:05:32] [SPEAKER_07]: or if those guys screw themselves up

[01:05:33] [SPEAKER_07]: taking money for each other

[01:05:34] [SPEAKER_07]: and there's only one rich guy left

[01:05:36] [SPEAKER_07]: the other guys have had to go home

[01:05:38] [SPEAKER_07]: because they've blown themselves up

[01:05:39] [SPEAKER_07]: and now it's like guy with the money

[01:05:41] [SPEAKER_07]: but nobody else to trade with

[01:05:42] [SPEAKER_07]: except for fundamental value guy again

[01:05:45] [SPEAKER_07]: like fundamentals are going to matter again

[01:05:47] [SPEAKER_07]: just the way it works

[01:05:48] [SPEAKER_07]: depends who's sitting around that table with you

[01:05:50] [SPEAKER_07]: back to the know the people

[01:05:51] [SPEAKER_07]: on the other side of your trade too

[01:05:53] [SPEAKER_09]: so we spent the whole episode talking about investing

[01:05:55] [SPEAKER_09]: but I think this is a great way to end

[01:05:56] [SPEAKER_09]: because some people went outside the world investing

[01:05:58] [SPEAKER_09]: in terms of the answers they gave us

[01:06:00] [SPEAKER_09]: and they really relate to keeping what we're doing

[01:06:02] [SPEAKER_09]: whether it's your career

[01:06:03] [SPEAKER_09]: or whether it's your investing

[01:06:04] [SPEAKER_09]: keeping it in the context

[01:06:05] [SPEAKER_09]: of what's important in your life

[01:06:07] [SPEAKER_01]: oh just remember the portfolio is secondary to your life

[01:06:11] [SPEAKER_01]: like that that I honestly think

[01:06:13] [SPEAKER_01]: we often really lose perspective around that

[01:06:16] [SPEAKER_01]: and I just continually emphasize

[01:06:18] [SPEAKER_01]: part of why you hear me railing against

[01:06:20] [SPEAKER_01]: behavior of the federal reserve etc

[01:06:24] [SPEAKER_01]: we behave as if everything is about financial outcomes

[01:06:27] [SPEAKER_01]: as if the market tells us truth

[01:06:29] [SPEAKER_01]: there is no truth to be found in financial markets

[01:06:32] [SPEAKER_01]: there is no truth to be found in financial assets

[01:06:34] [SPEAKER_01]: there is no truth to be found

[01:06:35] [SPEAKER_01]: in your relative success

[01:06:37] [SPEAKER_01]: in terms of your wealth or anything else

[01:06:38] [SPEAKER_01]: truth is to be found in the smile of your child

[01:06:40] [SPEAKER_01]: the greeting that your wife gives you

[01:06:42] [SPEAKER_01]: when you come home etc

[01:06:44] [SPEAKER_01]: enjoy life and try to be a better person

[01:06:46] [SPEAKER_01]: every single day in that context

[01:06:49] [SPEAKER_03]: put first things first right

[01:06:51] [SPEAKER_03]: we spend all this time talking about money

[01:06:54] [SPEAKER_03]: but money is only as good

[01:06:56] [SPEAKER_03]: as the life it builds and the people it serves

[01:07:00] [SPEAKER_03]: and so I think in your pursuit of money

[01:07:03] [SPEAKER_03]: right in your pursuit of acquisition

[01:07:07] [SPEAKER_03]: make sure that none of it's happening

[01:07:10] [SPEAKER_03]: at the expense of the people that you love the most

[01:07:14] [SPEAKER_03]: I think it just becomes really easy

[01:07:16] [SPEAKER_03]: to let family and relationships take a back burner

[01:07:21] [SPEAKER_03]: when you're trying to get ahead

[01:07:23] [SPEAKER_03]: it's easy to tell yourself that

[01:07:26] [SPEAKER_03]: you'll be around when or you'll do this when

[01:07:30] [SPEAKER_03]: and I just think that

[01:07:33] [SPEAKER_03]: none of this should come at the expense of your health

[01:07:35] [SPEAKER_03]: none of this should come at the expense of your family

[01:07:38] [SPEAKER_03]: and I think that people who put first things first

[01:07:41] [SPEAKER_03]: are gonna be alright over time

[01:07:42] [SPEAKER_09]: yeah so I love both these

[01:07:43] [SPEAKER_09]: this is what I want to wrap up on

[01:07:44] [SPEAKER_09]: because all of us can get trapped in this

[01:07:47] [SPEAKER_09]: we can spend too much time thinking about this

[01:07:49] [SPEAKER_09]: and we can spend too much time working

[01:07:51] [SPEAKER_09]: it's important to really take a step back

[01:07:54] [SPEAKER_09]: and say what are the most important things in my life

[01:07:56] [SPEAKER_09]: and for most people that's their family

[01:07:57] [SPEAKER_09]: if they have kids it's their kids

[01:07:59] [SPEAKER_09]: maybe I should just think about that

[01:08:02] [SPEAKER_09]: and not get too wrapped up

[01:08:03] [SPEAKER_09]: in everything that's going on in my portfolio

[01:08:06] [SPEAKER_09]: maybe I shouldn't bring the bad day from work home

[01:08:08] [SPEAKER_09]: or if I lost money in the market

[01:08:09] [SPEAKER_09]: I just think it's a great thing to just

[01:08:11] [SPEAKER_09]: I want to have these on my desktop

[01:08:13] [SPEAKER_09]: and just be able to play these occasionally

[01:08:14] [SPEAKER_09]: because I think they'd benefit me a lot

[01:08:16] [SPEAKER_09]: if I thought about them more

[01:08:18] [SPEAKER_07]: that's what the value of these clip shows is

[01:08:20] [SPEAKER_07]: and even just preparing for it

[01:08:21] [SPEAKER_07]: and I love that we're ending on this

[01:08:24] [SPEAKER_07]: because I do this other podcast

[01:08:26] [SPEAKER_07]: The Intentional Investor

[01:08:27] [SPEAKER_07]: and this is a big part of the conversation

[01:08:29] [SPEAKER_07]: it's literally I have

[01:08:31] [SPEAKER_07]: so this is like the cheat card

[01:08:33] [SPEAKER_07]: there's not outlines for those conversations

[01:08:35] [SPEAKER_07]: it literally boils down to this cheat card

[01:08:38] [SPEAKER_07]: and that's literally thought of as the five capitals

[01:08:42] [SPEAKER_07]: and the things we care for

[01:08:43] [SPEAKER_07]: and my goal in those conversations is often

[01:08:46] [SPEAKER_07]: to ignore financial capital as much as possible

[01:08:49] [SPEAKER_07]: because I know these people

[01:08:50] [SPEAKER_07]: have spent all their time thinking about that

[01:08:52] [SPEAKER_07]: and in many cases they've gone on an interview

[01:08:54] [SPEAKER_07]: been interviewed by other people talking about this

[01:08:56] [SPEAKER_07]: but the rest of life

[01:08:58] [SPEAKER_07]: like what is the human capital

[01:08:59] [SPEAKER_07]: what is the intellectual property

[01:09:01] [SPEAKER_07]: what is the spiritual or the wisdom

[01:09:03] [SPEAKER_07]: or the stuff that they're going to share with others

[01:09:05] [SPEAKER_07]: what is the social capital

[01:09:06] [SPEAKER_07]: the friends the other people they keep around them

[01:09:09] [SPEAKER_07]: and if you're prioritizing those things as much as

[01:09:13] [SPEAKER_07]: if not more than the financial capital

[01:09:15] [SPEAKER_07]: the crazy thing is a lot of times the financial capital

[01:09:18] [SPEAKER_07]: I'm not saying it takes care of itself

[01:09:19] [SPEAKER_07]: you gotta do stuff

[01:09:21] [SPEAKER_07]: you can't just be a bump on a log

[01:09:23] [SPEAKER_07]: but if you're investing in your friends

[01:09:25] [SPEAKER_07]: your relationships

[01:09:26] [SPEAKER_07]: you're providing for your family

[01:09:27] [SPEAKER_07]: something's going on in that financial capital space too

[01:09:32] [SPEAKER_07]: and if you don't let the financial capital side

[01:09:35] [SPEAKER_07]: of the equation take over everything else

[01:09:38] [SPEAKER_07]: this is where a lot of the actual meaning comes from

[01:09:40] [SPEAKER_07]: because I know you felt deeply spiritually fulfilled

[01:09:44] [SPEAKER_07]: when you made your billions of dollars

[01:09:46] [SPEAKER_07]: on GameStop Call Options

[01:09:47] [SPEAKER_07]: I did yeah it was fantastic

[01:09:49] [SPEAKER_07]: but let me remind you about the children

[01:09:53] [SPEAKER_09]: exactly so that was it

[01:09:56] [SPEAKER_09]: yeah these are fun to do

[01:09:57] [SPEAKER_09]: and I want people like if anybody likes these

[01:10:00] [SPEAKER_09]: if you find value in these

[01:10:01] [SPEAKER_09]: we're trying to do more of these clip shows

[01:10:02] [SPEAKER_09]: so if you find value like them

[01:10:05] [SPEAKER_09]: I just talked last time about why these likes are irrelevant

[01:10:07] [SPEAKER_09]: but it's still like if you like this

[01:10:08] [SPEAKER_09]: or you write a comment

[01:10:10] [SPEAKER_09]: we would appreciate it

[01:10:11] [SPEAKER_09]: and by the way just as an aside

[01:10:12] [SPEAKER_09]: like my son watches these videos all the time

[01:10:14] [SPEAKER_09]: we were talking about this

[01:10:15] [SPEAKER_09]: how like likes and subscribes can be irrelevant

[01:10:17] [SPEAKER_09]: and like in the video

[01:10:18] [SPEAKER_09]: in these kids' videos

[01:10:19] [SPEAKER_09]: the guy will basically be like

[01:10:21] [SPEAKER_09]: like this video right now

[01:10:22] [SPEAKER_09]: and I'll paint my wife's face red or something

[01:10:25] [SPEAKER_09]: like clearly he has no

[01:10:26] [SPEAKER_09]: he's filled this well in advance

[01:10:28] [SPEAKER_09]: he has absolutely no idea if you like the video

[01:10:30] [SPEAKER_09]: but yeah I guess those techniques

[01:10:32] [SPEAKER_09]: maybe you and I need to be like in the middle of the video

[01:10:34] [SPEAKER_09]: like like this right now

[01:10:35] [SPEAKER_09]: we'll give you a bonus lesson or something like that

[01:10:37] [SPEAKER_07]: but maybe that'll get us more likes than what we usually do

[01:10:40] [SPEAKER_07]: it's a great idea

[01:10:41] [SPEAKER_07]: my wife already appreciates

[01:10:43] [SPEAKER_07]: that I'm not trying to paint her face red

[01:10:45] [SPEAKER_07]: on blind VC or something

[01:10:47] [SPEAKER_07]: so you've already dodged one bullet

[01:10:49] [SPEAKER_07]: I think diversification for the win

[01:10:50] [SPEAKER_09]: and he did he painted the face red

[01:10:52] [SPEAKER_09]: so even though he didn't know

[01:10:53] [SPEAKER_09]: whether they actually liked it

[01:10:54] [SPEAKER_09]: he went ahead and just went over there

[01:10:55] [SPEAKER_09]: with the paintbrush and like painted her face red

[01:10:57] [SPEAKER_07]: so no the perverse incentives

[01:10:59] [SPEAKER_07]: he just invented in that whole community

[01:11:01] [SPEAKER_07]: like I didn't even have to like this guy

[01:11:03] [SPEAKER_07]: I control him with my mind

[01:11:06] [SPEAKER_09]: so anyway thank you everybody for joining us

[01:11:07] [SPEAKER_09]: and we'll see you next time