Ask The Compound - Episode Summary

Episode Title: How Do You Fix the Housing Market?
Date: November 12, 2025
Hosts: Ben Carlson, Duncan Hill
Guest: Jonathan Novy (Ritholtz, Chicago)

Overview

This episode is a wide-ranging Q&A addressing listener-submitted questions on investment planning, insurance products and potential scams, sequence of return risk in retirement, the pros and cons of 50-year mortgages, and early-career choices in portfolio management. The central theme revolves around the broken U.S. housing market, radical mortgage ideas, and navigating the complex landscape of financial products pitched to investors and retirees.

The tone is energetic, conversational, and pragmatic, with Ben and Duncan using humor and anecdotes to make complex topics accessible.

Key Discussion Points and Insights

1. Is My Asset Allocation Reasonable? (Listener Question)

[02:47–06:21]

• Question summary: Listener provides a detailed asset allocation (55% growth ETFs, 20% large cap value, 20% mid/small cap value, 2.5% gold, 2.5% crypto, and 4 years’ expenses in Treasuries) and asks if it’s reasonable.
• Ben’s assessment:
  • Portfolio is “very reasonable” and sensible as long as the Treasuries are short-term to reduce risk.
  • Praises diversification across style (growth/value), size, and even alternative assets like gold and crypto for hedging.
  • Only quibble: no international stocks, but “we’re splitting hairs here.”
  • Key takeaway: The most important thing is whether you can stick with the chosen allocation and rebalance through both ups and downs.
• Notable quote:
  • “There are a lot of reasonable allocations and investment plans you could choose. The biggest question is, can you stick with this one?” – Ben Carlson [04:32]
• Crypto/gold as small hedges:
  • “Talking about having a small piece of your portfolio that’s in a highly volatile asset is not a bad thing, if you rebalance around it. Right. Sell when it’s up, buy when it’s down.” – Ben Carlson [05:26]

2. Insurance Products & The Kyle Busch Lawsuit

[06:22–15:37]

• Background: Listener’s parents are being pitched high-premium insurance products promising stable income. Kyle Busch’s legal battle with an insurance company for misleading products is referenced.
• Guest Jonathan Novy (insurance expert):
  • Many insurance agents are incentivized with huge upfront commissions—sometimes up to 90% of a policy’s first-year premium.
  • Most common issues are misaligned sales incentives and complex products, not outright Ponzi-style scams.
  • Disclosure tools: Public databases (e.g., BrokerCheck, FINRA) can help you spot red flags about a salesperson’s disciplinary history.
  • Kyle Busch case: Not fraud, but aggressive sales tactics and misleading illustrations led to confusion and disappointment.
• Advice to listeners:
  • Products often work better for agents than clients, especially when use as investment vehicles in retirement planning.
  • Permanent insurance products for retirement income are usually a poor fit for most individuals: “Too many razor thin assumptions have to come true in order for these things to work. They are very high cost.” – Jonathan Novy [13:30]
  • Insurance should be for insurance needs, not investing.
• Memorable moment:
  • “Sam, go find the clip from the movie Minority Report. When Tom Cruise is talking to Agatha, and…she screams, RUN…Your parents should run.” – Jonathan Novy [13:43]
  • “Insurance is different than investing.” – Ben Carlson [14:49]
  • Beware advisors who “lead with an insurance product.”

3. Sequence of Return Risk in Retirement & The Role of Annuities

[16:00–23:22]

• Listener question: How to structure withdrawals in retirement to avoid sequence risk? Are annuities a good solution or are they “scammy”?
• Key explanations:
  • Sequence of return risk: The danger of retiring into a market downturn, forcing sales at depressed prices.
  • Annuities explained: Insurance products guaranteeing lifetime income in exchange for losing liquidity control; can be helpful for the risk-averse or those seeking predictable income.
    • “What you trade is you trade liquidity for longevity risk...and then if that money runs out, [the insurance company is] on the hook to pay you.” – Jonathan Novy [18:19]
  • Annuitizing (e.g., using a single premium immediate annuity—SPIA) can give peace of mind but comes at the price of less flexibility.
• Drawing the line:
  • Not all annuities or insurance products are “bad,” but complicated, fee-heavy, or mis-sold options are problematic.
  • Annuities should be a tool among many, not the default answer to every financial need.
  • If an advisor is always pitching insurance, especially up front, they’re likely not a fiduciary.
    • “If you get on a call with an advisor and the first thing they're pushing is an insurance product, is there a good chance they're not a fiduciary?”
    • “There is a very good chance they're not a fiduciary.” – Jonathan Novy [22:13]
  • Rising popularity of ETF-based retirement solutions.
• Notable quote:
  • “Buyer beware, all that stuff.” – Ben Carlson [23:22]
  • “Don’t buy things you don’t understand.” – Referencing a listener named Cliff [23:45]

4. The 50-Year Mortgage Debate

[23:51–30:54]

• Listener asks: Ben has criticized paying off mortgages early; does he support proposed 50-year mortgages?
• Ben’s analysis:
  • 50-year mortgage offers only a slightly lower payment but nearly doubles overall interest paid (e.g., $500k at 6%: $366/mo lower payment, $500k+ more in interest).
  • Main problem: It barely builds any equity in the first decade (only ~$20k versus ~$82k in a 30-year).
  • Most people won’t keep a 50-year mortgage for full term anyway; average holding is 10–12 years.
  • As an interest-only style loan, it’s “a band aid on a machete wound” that doesn’t solve affordability challenges for first-time buyers.
• Real solution:
  • Lower rates matter so much more than longer terms. Government-backed 3% mortgages for first-time buyers would have far greater impact (saves $900/month vs. 6%).
  • Even better: Build more homes. Supply shortage is at the root. Government-backed building programs, reforming red tape, and incentivizing construction are proposed.
• Notable quotes:
  • “A 50 year mortgage is kind of like a band aid on a machete wound.” – Ben Carlson [27:54]
  • “All these policies are just trying to keep home prices from going down for homeowners. But there's no solution that is going to help young people be able to afford houses other than home prices coming down one way or another.” – Duncan Hill [29:14]
  • “Until we start building more homes…We just don’t have enough housing and they don’t allow you to build. That’s the fix.” – Ben Carlson [30:54]

5. Choosing Between Bank of Israel vs. Family Office: Career Advice

[31:14–34:10]

• Listener dilemma: Aspiring portfolio manager must pick between a higher-paying family office offer and a more prestigious (but likely lower-paying) role at the Bank of Israel.
• Ben’s matrix:
  • Learner vs. Earner: Early career choices often hinge on learning potential vs. immediate salary.
  • Large institutions offer training, structure, and breadth.
  • Small organizations give hands-on exposure but may limit upward mobility.
  • Ben himself chose “learner” roles and benefited in the long run.
• Final advice:
  • No right or wrong answer – depends on personality, risk tolerance, and long-term goals.
  • Chat participant Matt: Go for the bank first, then family office.
• Notable quote:
  • “Early in your career, do you want to be a learner or an earner?...There are pros and cons to each route.” – Ben Carlson [31:43]

Notable Quotes

• “There are a lot of reasonable allocations and investment plans you could choose. The biggest question is, can you stick with this one?”
  — Ben Carlson [04:32]

• “Sam…find the clip from Minority Report…she screams ‘Run!’…and your parents should run.”
  — Jonathan Novy [13:43]

• “Insurance is different than investing.”
  — Ben Carlson [14:49]

• “A 50 year mortgage is kind of like a band aid on a machete wound.”
  — Ben Carlson [27:54]

• “All these policies are just trying to keep home prices from going down for homeowners. But there's no solution that is going to help young people be able to afford houses other than home prices coming down one way or another.”
  — Duncan Hill [29:14]

• “Early in your career, do you want to be a learner or an earner?...There are pros and cons to each route.”
  — Ben Carlson [31:43]

Important Timestamps

• Asset Allocation Q&A         [02:47–06:21]
• Insurance & Kyle Busch Scandal    [06:22–15:37]
• Sequence of Return Risk/Annuities   [16:00–23:22]
• 50-Year Mortgage Debate & Housing [23:51–30:54]
• Portfolio Manager Career Advice   [31:14–34:10]

Final Takeaways

• Stay skeptical of complex financial products, especially when they come with high commissions and vague promises.
• The housing problem is fundamentally about supply, not clever financing products.
• Financial advice must be tailored to circumstances and personality – there are rarely one-size-fits-all solutions.
• If you don’t understand a financial product, don’t buy it.
• For long-term financial and career decisions, weigh learning opportunities as highly as immediate earnings.

For questions or more episodes, email: askthecompoundshowmail.com
Watch or listen: The Compound YouTube