Is It Time to Take Some Profits?

Summary

Ask The Compound - Episode Summary

Episode: Is It Time to Take Some Profits?
Date: October 15, 2025
Hosts: Ben Carlson, Duncan Hill, Josh Brown

Overview

This episode tackles some of investing’s thorniest questions: Is now a good time to lock in market gains after significant run-ups? What are smart rules for trimming individual stock positions? How should windfalls like inheritances be allocated, and what’s the best investing mindset for middle age? The hosts, joined by Josh Brown, share candid stories, practical frameworks, and contrarian takes, all while keeping things engaging and accessible for investors at every stage.

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Key Discussion Points & Insights

1. Is It Time to Take Profits? (01:41–07:31)

Listener Questions:

• Should investors take profits with the S&P 500 up ~38% since April?
• How to handle big short-term gains in individual stocks versus long-term conviction holdings?

Panel’s Perspective:

• Market timing is extremely difficult.
  “Buy and hold is such an easy strategy in name only, right? It’s so difficult to stick with because of questions like this.” — Ben Carlson [03:09]
• Define why you own each position.
  “These generalized questions make absolutely no mention of what these holdings are and why they were bought in the first place… Neither one of these people knows who they are or what they’re doing.” — Josh Brown [04:07]
• Conviction should mean holding through volatility.
  “You have high conviction unless it works, unless it immediately rewards you, and then maybe you don’t have high conviction. I don’t understand.” — Josh Brown [04:59]
• Distinguish Between Investments and Trades:
  • If your thesis on a company hasn’t played out, big short-term gains shouldn’t make you eager to sell.
  • For trades, set clear technical or price targets and consider using stop-losses.
• Example Perspective:
  “Uber… is up 55% year to date. I’m not like, well, should I sell it? No, because my overarching idea…hasn’t played out yet.” — Josh Brown [09:00]

Memorable Quotes:

• “No one ever went broke taking profits, or do you continue to hold?” — Ben Carlson [03:37]
• “If you’re changing it from an investment to a trade that quickly, it was never an investment to begin with.” — Ben Carlson [06:49]

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2. Should You Trim Your Stock Winners? The 5% Rule (11:13–16:30)

Listener Question:
Is it sensible to automatically trim any stock position above 5% of your portfolio?

Panel’s Perspective:

• Arbitrary concentration limits can hinder wealth-building.
  • “If you’re invested in something and it’s going well, why have some arbitrary cap on how much money you can make? It defeats the purpose.” — Josh Brown [12:25]
  • Reference to Peter Lynch: “Selling your winners to buy your losers is like cutting your flowers to water your weeds.”
• Practical Rebalancing:
  • Use broad asset allocation bands for risk management (e.g., stocks vs. bonds), not micro-managing individual positions.
  • Use trailing stop-losses if you need discipline, rather than rigid rebalancing.
• But, risk tolerance matters:
  • Setting concentration limits can help some sleep at night — so consider wider bands, but don’t over-systematize.

Notable Exchange:

• “Charlie Munger said never interrupt something while it’s compounding.” — Josh Brown [13:05]
• “You’re allergic to getting rich.” — Josh Brown, jokingly, to those who constantly trim winning positions [13:52]

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3. Handling Inheritances Wisely (19:14–28:02)

Listener Question:
What should you do with a $150-200k inheritance (considering college savings, vacation funds, and home projects)?

Panel’s Perspective:

• No major “leaks” to patch? Allocate for both prudence and enjoyment.
  • “Patch up your leaks first—if you have no debts or emergencies, then allocate to meaningful goals and allow some room for fun.” — Ben Carlson [20:24]
• Acknowledge the emotional side:
  • Inheritances often come with family loss and complex feelings.
• Consider the stage of life:
  • “In your 50s, it’s all about travel. In your 60s, a second property for climate reasons. In your 70s, proximity to grandkids. In your 80s, health limits mobility.” — Josh Brown [25:02]

Notable Quotes:

• “I like that she included vacations…take some of it and actually enjoy it.” — Ben Carlson [22:23]
• “Financial advisors in the years ahead are going to have tons of questions like this about inheritances. There’s going to be so much money.” — Ben Carlson [23:20]

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4. Investing in Middle Age (28:12–37:10)

Listener Question:
How should investors in their 40s think about asset allocation, given higher net worth and high savings rates, but still many working years left?

Panel’s Perspective:

• Straddling accumulation and preservation.
  You have enough saved that market declines hurt, but you still have decades to benefit from growth.
• Most in their 40s should stay with high equity exposure.
  • “You should be investing as though you have 50 years left, because you probably do. Stop talking about middle age. Stop walking around afraid of your own shadow.” — Josh Brown [31:47]
• Savings rate and career longevity may be even more important than precise allocation tweaks.
• **Don’t get fixated on hedging or market timing; focus on maintaining your career runway and compounding wealth for future goals—travel, homes, grandkids.

Notable Quotes:

• “If you just stop focusing so much on the next five years… you have nothing right now compared to what you will have.” — Josh Brown [32:41]
• “Focus on extending your career… the worst thing that can happen is you retire and have nothing to do and no income.” — Josh Brown [33:08]

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5. Succession Planning and Young Advisors’ Careers (38:02–44:17)

Listener Question:
What should you do if your firm’s owner reveals he’s passing the business to his child, not selling it to staff as expected?

Panel’s Perspective:

• Don’t spend your career building someone else’s business with no path to ownership.
• “Why would they retire? What if they just stop working but don’t retire? What are you gonna do about it? …They’re gonna find some other 25 year old kid and sell them the same promise.” — Josh Brown [40:15]
• Move on if there’s no reasonable succession plan.
  Find a firm with a real pathway to partnership or ownership.
• Wider lesson:
  “You have your whole life ahead of you. Step one is recognizing this is not what you want.” — Josh Brown [43:21]

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Timestamps for Major Segments

• 01:41 – Is it time to take profits? Market run-ups and individual stocks
• 07:31 – Distinguishing trades vs. investments; rules for selling
• 11:13 – The 5% Rule: Arbitrary limits, risk, and letting winners run
• 19:14 – Inheritance allocation advice
• 28:12 – Investing in your 40s: Asset allocation & mindset
• 38:02 – Succession planning for young financial advisors

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Memorable Moments & Quotes

• “No one ever went broke taking profits…or do you continue to hold?” — Ben Carlson [03:37]
• “Never interrupt something while it’s compounding.” — Josh Brown, quoting Charlie Munger [13:05]
• “I think having some of these rules is not the worst thing in the world.” — Ben Carlson [14:41]
• On middle age investing, “You have nothing right now compared to what you will have…focus on extending your career.” — Josh Brown [31:47, 33:08]
• On succession, “They’re gonna find some other 25 year old kid and sell them the same promise… It’s like a stone collecting moss. The river keeps running by.” — Josh Brown [40:15]

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Tone & Engagement

The episode blends humor (“Josh’s stops trading — the market drops!” [19:04]), real-life stories, and direct listener Q&A. The hosts balance tough-love financial wisdom, personal anecdotes, and an accessible approach, making dense investing topics easy to digest and actionable for all.

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Useful for new and seasoned investors alike, this episode gives listeners frameworks and stories to help them stick with good habits, tune out noise, and take action—whether that means letting winners run, enjoying a windfall, asking for what you’re worth, or simply staying the course.

Transcript

[Ben Carlson]

This is Ask the Compound, the show where you ask and we answer. I'm Ben Carlson. The s and P500 is up 35% or so from Liberation Day lows in early April. A lot of stocks are up way more than that. Is it time to lock in some profits and wait for a pullback to reinvest? We answer this question and more straight from our viewers. Stick around, please. As always, we're here to answer your questions directly from our compound viewers and listeners. Askthecomoundshowmail.com it's our email. If you're in the live chat, fire away. Please will answer your questions directly on the spot.

[Duncan Hill]

Chat's already blowing up today.

[Ben Carlson]

All right. Yeah, bring it, people. All right. On today's show, we discuss questions about when to take profits after a big rise in stocks. How to size your positions, when to let winners run and when to trim them. What to do with an inheritance. That's going to be a question a lot of people are asking in the years ahead. How to invest in middle age. That's me. And how to think about succession planning as a young financial advisor. Today's show is sponsored by Public. Public is the investing platform for those who take it seriously. You can build multi asset portfolios with stocks, bonds, options, crypto and more. You can also access industry leading yields like 3.8% API APY you can earn on your cash with no fees or minimums. But what sets Public apart AI isn't just a feature. It's woven into the entire experience from portfolio insights to earning call recaps. Public gives you smarter context at every touch point. Plus earn an uncapped 1% match when you transfer your portfolio. That includes IRA transfers, rollovers, even contributions. Fund your account in five minutes or less. Visit public.comatc to learn more. That's public.com atc paid for by Public Investing. Full disclosures in the podcast description. Click that link. All right, lots of stuff to get to today. Let's do it.

[Duncan Hill]

All right, let's dive in. First day, we got one from Davis. As of today, the S and P has climbed roughly 38% since the April lows. At what point should investors consider locking in profits given that a market correction or pullback is likely at some stage, whether in six months or a few years down the line. Thanks for the great content. And then do you want to go ahead and knock out?

[Ben Carlson]

Yeah, we got another one that was just like this, so we figured we'd have them both.

[Duncan Hill]

And then part B is from Brian. I've Got a few stocks that have made big moves since April. And I'm wondering if you have a rule of thumb for selling after sharp short term gains. Most of my portfolio is in index funds, but I like to pick up a few individual stocks I have high conviction in. I generally hold them long term, but for more volatile names, I tend to trade more actively and roll the profits into index fund positions. I realize there are tax implications, but I also know I'm never disappointed taking a double digit gain over a month or two.

[Ben Carlson]

All right, good questions. Let's bring in everyone's favorite stock guy at the compound.

[Duncan Hill]

Hey, Josh.

[Josh Brown]

Josh, that's my role here.

[Ben Carlson]

Can I call you a stock guy? Isn't that fair?

[Josh Brown]

Yeah, dude, I love the stock. I fell in love with the stock market at 19, so yeah, I own it, okay?

[Ben Carlson]

I didn't know what the stock market was at age 19. So these questions, these two similar questions. One is about kind of index level, I think, and one is more about individual stocks. I think this is one of the reasons that buy and hold is such an easy strategy in name only, right? It's so difficult to stick with because of questions like this. So give us a chart on guys. So this just shows the S and P Russell 2000. And I also threw in Nvidia here and the Qs. So since from the bottoms in April 8, small caps are going nuts. Q's are up almost 45%. S&P is up 35%. I have Nvidia up almost 90%. I put that one in there just to give myself up, not to brag. Chart off, please. Remember those back to back down 5% days. I know you've been Nvidia forever, but I finally pulled the trigger and bought it on those. I'm like, if this Stock is down 40% and we're going to have an AI bubble eventually, I got to buy it here. So I'm probably up 80, 85% on this. So I'm like, these people, it's like, okay, what do you do? Do you lock in profits now or. And count yourself lucky, you know, no one ever went broke taking profits or do you continue to hold? Like, obviously the market timing piece is very hard, but I think it's a different situation with individual stocks. What do you think when you have these big gains in short periods of time?

[Josh Brown]

What's so crazy is like these generalized questions make absolutely no mention of what these holdings are and why they were bought in the first place. Both of these people, by the way, shout out to everyone that Sends us questions. We really appreciate it. And the goal of answering them is not to dissect anyone personally. But neither one of these people knows who they are or what they're doing. Here, put up the second one. Think. I want you to think about this. Most of my portfolio is in index funds. Okay, good start. But I like to pick up a few individual stocks I have high conviction in, but then I tend to trade them more actively when they go up. Well, do you know what the term high conviction means or not.

[Ben Carlson]

You have.

[Josh Brown]

High conviction unless it works, unless it immediately rewards you, and then maybe you don't have high conviction. I don't understand.

[Duncan Hill]

Maybe they're.

[Ben Carlson]

Maybe it's a. It is funny because, I mean, how many people actually have like, price targets or thresholds or. I feel like with individual stocks, for a lot of people, it is the wild west where they don't really go into it with a strategy. It's just they don't know what they're doing.

[Duncan Hill]

Well, I kind of relate to.

[Josh Brown]

They don't know what they're doing.

[Duncan Hill]

On that note of not knowing what they're doing, I kind of relate to this question, though, because I've bought things before. I'm like, I think this is definitely going to go up over the next couple of years. And then it goes up 40% over a month or two. And yeah, you're like, well, man, should I just go ahead and sell it and make 40% or do I really want to hold on to it long term? You know, that's. I find myself not to.

[Josh Brown]

Not to brag. A week ago, I interviewed the greatest investor of all time, and here's what he said. He tells great story about buying McDonald's in the 1980s. McDonald's had started in the 50s, okay. And so he's buying it in the 1980s and they're telling him he missed it and then it went up tenfold. Right. Or maybe he's buying the late 70s and then went up tenfold. So, like, when you say high conviction, what does that mean? You have high conviction that the stock is undervalued by 10 points and then it goes up 10 points. Or you have high conviction in the company as an investment. And it doesn't always have to be the same answer for both. But like, if you own shares in a company, you have high conviction that the company is going to be a big success and the stock price is going to reward you, then who cares that it just went up a lot.

[Ben Carlson]

Unless it would have to be a pretty big game? To turn from an investment to a trade, it'd have to be an enormous gain, I think, because you're right.

[Josh Brown]

Like so obscene. Yeah, yeah, yeah, yeah.

[Ben Carlson]

If you're trading, if you're changing it from an investment to a trade that quickly, it was never an investment to begin with.

[Josh Brown]

That's it. That's it. That's what I think.

[Duncan Hill]

But what if you thought it was going to go up 40 or 50% over two years and it goes up that in a month? I guess that's kind of.

[Josh Brown]

Well, why did it just. Okay, so why did it just go up 40 or 50%? Maybe something at the company changed where all of a sudden everybody agreed and maybe the opportunity was bigger than you originally thought and now you have to rethink it. But the way this question is phrased, it's not even really about the company. It's about the gain and the, the speed of the gain. That's what they're asking. And so my, my answer, which is profoundly unhelpful is I need to know more.

[Ben Carlson]

And the first question about the should I, should I sell out now? Because we're due for a correction. It's like that's that, that we know that one's the hardest one is the market timing piece because guess what, we already had the correction. The professionals, we had to crash it.

[Josh Brown]

No, see, professionals don't invest in individual, invest in individual companies that way. That's like more of a macro question. Or like I'm 80% stocks and I'm normally 70 because the market just went up a lot and I think we're due for a correction. All right, then trim back to 70%. That, that's a good question. But like on an individual stock basis, I want to sell CrowdStrike because I think we're due for a market pullback. What are you, are you a macro market timer or are you an investor in a company? All right, so my real answer to this is sometimes when I buy a stock it's because I want to be a long term investor and it running up 20 or 30% a month. Maybe that's only validating why I wanted to invest in the first place and not making me want to sell it. But sometimes I will literally say I'm buying this for a trade. So here's an example, here's an example. Uber, I have prints in this stock in the twenties purchases, it's a hundred and it's 94 or whatever.

[Duncan Hill]

Not bad.

[Josh Brown]

I've been down 50% in the stock and I added to it it's an investment. The fact that it just, it's up 55% year to date. I'm not like, well, should I sell it? No, because my big, my big overarching idea that transportation, moving people and, or food and or freight is a trillion dollar tam and the market cap is 220 billion. No, I don't think it's a sell. I'm GLAD it's up 55% this year. But like I'm not walking around like, should I get out? Because it hasn't played out yet. Phillips 66, I bought it as a trade. I like the technical setup. The other two publicly traded refiners already broke out. Valero has made a huge move. Marathon has made a huge move. PSX is the one that hasn't yet. And Elliot, or there's big, there's big hedge fund buying, activist fund managers buying it. So it's a trade. I don't want to be in Philips 66 for 10 years. But I think there's an opportunity as the stock breaks out. Hasn't happened yet. So I'm still in the trade. I have a predefined stop. If it technically breaks down, I have to sell because I bought it on the technicals. So two different things. I'm the same person. So knowing what you're doing with a particular investment going into it will define the answer to that question.

[Ben Carlson]

I think we go to the next question because I think the next question is someone who actually does have some rules and they're, they're questioning them. So this is a good one too.

[Duncan Hill]

Oh yeah, One, one thing I was just going to throw in there, something you guys have helped me with talking about over the last year a lot is not to be afraid of 52 week highs. I think a lot of young people in retail traders, they see that and they think like, oh, that means it's due to reverse now because it hit.

[Josh Brown]

What goes up must come down.

[Duncan Hill]

Right. But yeah, you guys have basically shown data that it's bullish when something hits a new 52 week high generally.

[Ben Carlson]

Right. That's usually.

[Duncan Hill]

Yeah.

[Josh Brown]

Unless you think the market is always wrong, which on this show that's. We're not, we're not contrarians on this show per se. We, we don't think every other investor is a. And we have to fade everything that makes a new high.

[Duncan Hill]

Right.

[Josh Brown]

That's not how we operate.

[Duncan Hill]

So. All right, so up next question 2. Given the recent run up, I find, I'm finding several of my five individual stock holdings have grown past the 5% concentration level. In each case, I've been selling enough shares to get back to just below 5%. But I get a tinge of regret that I'm leaving additional profit on the table. Does the 5% rule make sense or does it really not matter when the individual stocks aren't part of my core investments?

[Josh Brown]

Okay, so what is the 5%, what is the 5 rule?

[Ben Carlson]

I think, I think for them it's 5% holding. And if it gets above 5% of their portfolio, then they trim.

[Josh Brown]

Sorry, but that's not like a rule. That's what I was going to ask.

[Ben Carlson]

I think that's just, that's just their rule. They seem to be calling it a 5% rule. So part of this could be your Peter lynch quote that you talked to him and he said like, selling your winners to buy or losers is like what, cutting your flowers to water your weeds. But I like the idea of having some rebalancing rules. Like the people in the first two questions didn't have any rules in place. This person.

[Josh Brown]

Not on individual stocks, but.

[Ben Carlson]

So you. So you don't like it at all?

[Josh Brown]

I like it for asset class and allocation. I think it's really important.

[Ben Carlson]

But you think for individual stocks you're cutting off your.

[Josh Brown]

I would have sold Apple. I would have sold Apple 10 years ago. Like, I hate it. It just. If you're, if you're invested in something and it's going well, why have some arbitrary cap on how much money you can make? It defeats the purpose. We should be, we should be uncapped in our. So here's what I like better. Ben, honestly, to answer that question, throw the 5% rule out use stop loss, use stop losses, let it ride and raise your stop loss. You may never get hit. You may, you may have a rule where I'm going to trail this thing with a stop loss and maybe I'm going to use a 200 day moving average or maybe I'm going to use like my initial purchase price. Like the. None of them are like perfect. Obviously none of these things are. If they were all, if they were foolproof, everybody would do it. But like, why proactively sell something that's in the. Charlie Munger said never interrupt the. Never interrupt something while it's compounding. Like if, if you want to risk, manage. If you want to risk, manage, because something that should have been 5% is now 10% because you were really right. Okay, trail it with a stop loss, but by God, let it keep going.

[Ben Carlson]

Let me come to the defense of this strategy, I think some people have a threshold in their mind of I don't like having one position be that concentrated in my portfolio. So I'm going to trim it, but.

[Josh Brown]

Guess you're allergic to getting rich.

[Duncan Hill]

Someone in the chat said, Kevin. Someone in the chat said, that's Kevin Oweri's rule. So maybe that's where this came from.

[Ben Carlson]

Okay, let me just come to the defense here. Some people have an upper threshold where I don't want an individual position to be that much because I'm losing sleep over it. It's. You're right. That's how you, that's how you win, essentially. But I can see having bands where, hey, if this stock gets to 10%, I'm going to trim it back to, to 7 or 8, right? If it gets down to 5, then I'm going to buy it back up to 7 or 8 or whatever. Whatever the number is. I think having some bands on it to give yourself some sort of rules because the stop loss situation in your Uber example, when you're down 50%, what if you got stopped out of it? Then what? That, that's. So I think having some of these rules is not the worst thing in the world.

[Josh Brown]

I don't. So I wouldn't have a stop loss 50% below where I own a stock.

[Ben Carlson]

Because it got out way earlier. I think, I think if you have some of these bands, I think maybe what they need to do is just increase the size of their bands so that when they rebalance, it's a, It's a wider range so they let things run a little. Because that's the thing with individual stocks. They're. They're trying to play the volatility. So if it does crash 50%, then they buy more to bring it back up.

[Josh Brown]

Okay, I don't, I don't hate it. It's just, it's bizarre because if it's not because the guy's saying it's not part of the core portfolio or the gal. It's not part of the core portfolio. So stop treating it like it is. Treat it like it's an individual investment.

[Ben Carlson]

That's true. If it is a side pocket thing, maybe you shouldn't have as many rules on it.

[Josh Brown]

There shouldn't be. The rules should be when I no longer think it's a good investment, I'm selling not what percent of my net worth it is. I like that for asset allocation. I like that for somebody that's like, okay, U.S. stocks are supposed to be 50% of my portfolio. And for 10 years, international stocks did nothing and the S and P doubled. And now I have too much exposure to U.S. stocks. Absolutely. Rebalance back, add to the areas of the market that haven't been doing as well. Ultimately you'll be rewarded. Look at this year, International is crushing the US large cap indices. So I like that when I'm buying a stock and it's a long term investment and I have an idea about why it's going to 2x3x4, by the way, I won't make an investment if I don't think it could. At least 2x. I have no interest. That's a trade. So this is so like some of this stuff that is like a nomenclature, almost like a semantic thing where it's like, if I'm buying a stock for a trade, I obviously don't want to have it be more than 5% of my. I don't want to take swings like that on a regular basis.

[Ben Carlson]

So part of it is, you know, the part in A Few Good Men when Tom Cruise gives the guy the rulebook on the stand and he says, show me where it tells you to get to the mess hall. And he says it's not in the rule book. Some of this stuff with individual stocks. Maybe it's more of a rule of thumb. And it's not. You can't make it so systematized because there's a ton of really good books on how and when to buy stocks. Has there ever been a good book written about how to sell stocks ever? Yeah, I don't think there has.

[Josh Brown]

No, I agree with that. And then the other thing that I would just bring out here is you also have to know what phase you're in. So I'm assuming most of the viewers of the show are in the wealth accumulation phase. It practically demands that you concentrate if you're doing individual stocks. Like what's the point of buying 100 shares of a stock and then it doubles and it doesn't move the needle in your net worth. And what are we doing?

[Ben Carlson]

Yeah, if you're diversifying stocks outside of your core holdings, it's easier to do that in ETF than it is yourself.

[Josh Brown]

Yeah, I guess make it count. Like if you're going to. If your core portfolio like 90% of your net worth away from your house is like broad diversified exposure, first of all, great decision. And then you're going to go to the trouble of setting up this like sort of like side pocket account with a few high conviction, concentrated, high conviction stocks. They should be concentrated. And you Should. You should win big when you're right and focus on mitigating loss when you're wrong. But like being in the middle.

[Ben Carlson]

So what?

[Josh Brown]

Almost. What's the point? Like, take a. Take a swing. Be somebody.

[Ben Carlson]

That's why Duncan has 150% of his portfolio in oatly. He's got it on leverage.

[Josh Brown]

Like, be somebody, though. Do it. Look, I know the advice I'm supposed to give, but I'm not talking to somebody that's 70 and can't replace this money with more income. The demographics of this show, most of the people, by definition, like watching this on YouTube, are in the accumulation phase. I'm saying go for it.

[Ben Carlson]

Yeah.

[Josh Brown]

And I was risk management, but I am. I am over 5%. I have to sell it. Why? What do you think?

[Ben Carlson]

Probably I'm probably more like this person that I have a lot of rules and even in my brokerage account, I don't have rules like this. Because I agree. It's. This is. This is where you should be willing to take a. Take a swing. That's. That's the. Anyway.

[Duncan Hill]

All right, John Carlo in the chat.

[Josh Brown]

While it stocks, right?

[Duncan Hill]

Yeah. John Carlo wants to know why the markets dropped during this show.

[Josh Brown]

Sorry.

[Ben Carlson]

Yeah. Josh stops trading. All right, see, another question.

[Duncan Hill]

All right. Up next, we got a question from Molly. My husband Scott is a loyal.

[Ben Carlson]

See, I told you we would give more females representation on this show. Yeah. Look at this.

[Duncan Hill]

Yeah.

[Josh Brown]

Finally.

[Duncan Hill]

Well, I like that Scott game the system here. He had his wife write the question.

[Ben Carlson]

Yeah.

[Duncan Hill]

My husband Scott is a loyal listener and has encouraged me to reach out to you with a financial question. My grandmother is unwell and recently told all her grandchildren will each receive a significant inheritance of 150 to 200,000.

[Josh Brown]

Way to bring this show down.

[Duncan Hill]

Yeah, yeah, yeah. Sorry. Sorry to hear. Scott and I live a reasonable lifestyle. Max out our 401ks, have the cars paid off and have a good emergency fund. How should we use this money? My thought was to divide it into thirds. College fund for our son, savings and a house project or vacation fund. What are your thoughts on this plan? Are there better uses I should consider?

[Ben Carlson]

First of all, Molly, kudos to your grandmother for telling you this in advance. Most people don't talk about this stuff, so the fact that you can kind of plan on it is good. This is going to be something a ton of people are going to have to work through in the years ahead. We've already gotten a lot of questions on inheritances over the years, like the great wealth transfer. Josh, I Don't know if you've seen the numbers. It's 70 trillion or 80 trillion or 100 trillion, whatever the number, depending on who you ask.

[Josh Brown]

It's a lot.

[Ben Carlson]

It's a lot of money, and people are gonna need advice on this. So obviously, from a financial standpoint, this is a good problem to have. For some people, the money's gonna have an emotional component to it. So I think it's gonna be hard to separate that. For some people, your grandparents, like, they're old enough, you probably figure they're gonna get there. But for other people, you never know. It sounds to me like Molly and her husband don't have any leaks in the boat to patch up. Really. Like it's not. Doesn't sound like they have credit card debt or anything crazy. I like the idea of having more like an asset allocation. When you get a bonus like this, do you have any strategies when you get a bonus set of money outside of your income for putting it to work? Because I think the way what she outlines seems relatively reasonable to me.

[Josh Brown]

Can I see Molly's question one more time on screen? I just want to parse something my husband Scott, and is it cozy? Okay, so it's. Molly's grandmother told all of her grandchildren. So she is one of it. Sounds like there are at least three siblings. Right. You wouldn't say all of her grandchildren. You'd say both if there were two.

[Duncan Hill]

Right.

[Josh Brown]

Okay. So the grandmother is gonna drop 200 grand on a whole set of siblings, her grandchildren who are adults. Okay, got it. So in Molly and Scott's case, they're sort of good. This is not like. Right. Okay, so that's your point, like patching holes. There's no emergency use of this money right now. There are, like, smart things to do, obviously, paying down debt. The kids are going to have to go to college. Yeah, I guess the. The most obvious thing is the 529. I don't know how old the kids are, but that's an. That's an obvious thing. The grandmother, frankly, should have done it before she.

[Ben Carlson]

Yes, the grandmother, you would think, would like that as a. As a strategy.

[Josh Brown]

I think grandmother should have personally done it anyway, years ago. But fine. That's the. That's the. That's the.

[Ben Carlson]

And.

[Josh Brown]

And I think. Is that $50,000 you could do in one year as a lump sum?

[Ben Carlson]

Yeah. I don't know.

[Josh Brown]

Is that the number?

[Ben Carlson]

That's a bill. Sweet question. I don't know exactly what the.

[Josh Brown]

I don't know either.

[Duncan Hill]

Yeah, no idea.

[Josh Brown]

I'm not financial advice, but I like.

[Ben Carlson]

That she included vacations. She said, she said we're also going to include in here vacations and house remodels or whatever. But I think you should take some of it and actually enjoy it. Right. That's the whole point of the money. It's like this bonus money that you weren't expecting. I would take, I would take some of it and take your kids to Hawaii or something. Right. Have. Do something fun with it.

[Josh Brown]

Yeah. Or all that 529 shit. Establish a Digital Assets Trust or DAT. If you will go public, raise an additional $8 billion because everyone's out of their mind right now and really maximize the grandmother's. This inheritance that your grandmother left here, I'm just spitballing here, it's another way.

[Ben Carlson]

You could go just do the airdrop to the kids. That's all they need. Do.

[Josh Brown]

Do a literal grandma. Do a granny shot with that money. Granny shots for every all of the great grandchildren would be the way I would.

[Ben Carlson]

Here's the thing though. Financial advisors in the years ahead are going to have tons of questions like this about inheritances. There's going to be so much money because as we've discussed many times, a lot of the baby boomers are not spending down their money. They can't force themselves to do it. And there's, and there's. You're not going to change them at this. I talk to my wife about this all the time about my parents and her parents. Do you think we're going to change them as people in their 70s and 80s? Of course not.

[Josh Brown]

It's, it's such a, it's such a huge point that you make. There's actually no possible way that they're going to spend the money. No, it's, it's, it's like, it's like $20 trillion when they're in their 70s and when they're, when they're 80s, it's like $40 trillion. Like, it's. So we see like, we see attempts at this. We see patriarchs and matriarchs of families do like these gigantic ski houses because like in the winter their kids and their kids, kids will come for a week and they'll ski and they'll write. Or like, like, like a house, like a vacation home in Mexico or something. In your 70s you could do that. In your 80s you just. You're not traveling anymore, right?

[Ben Carlson]

Yeah. It's funny. One of the guys short of vacation.

[Josh Brown]

Properties, how do you spend that much money?

[Ben Carlson]

You almost can't the guy three houses down for me at our lake house said the reason we bought this because our children are now in their 20s and this is an excuse for them to come visit us somewhere. That's a great spend of your, that's a great use of your resources though.

[Josh Brown]

I think as someone who's older than you, Ben, and in some ways slightly, slightly more experienced.

[Ben Carlson]

Than me. It's three years old than me. Get out of here.

[Josh Brown]

I'm just gonna tell you, I want to give you a sneak preview of what I see. And maybe you see the same thing. Actually, I have some friends who are a little bit older, in their 50s, because their youngest kid was friends with my oldest kid. Right. So like you probably have some of that and you get like a little bit of a glimpse, like a little bit, like a little bit of a cheat code to see what their priorities are. So my friends who are in their early 50s, whose kids are now either in college or graduating and starting to move out, it's all about travel. That's all these people talk about. Eat, sleep and breathe. Where's our next trip? I think the madness of sitting at home, like just looking at the two of us. Two of them looking at each other. Yeah. So it's, it's all about travel. It's, it's hiking trips and cruises and Europe through the European tour and it's.

[Duncan Hill]

That's it.

[Josh Brown]

That's like the whole ball of wax. In addition to obviously paying all the bills for their, their young adult children who are away, like that's what they're going to do with their money. Then in the 60s, something interesting happens. It, it becomes more about a second piece of property because the winters are a little bit less tolerable. Right.

[Ben Carlson]

And then the cold is probably less tolerable too. You don't have as much energy.

[Josh Brown]

You sort of. Right. You sort of slow down the travel. You know, it doesn't cease completely. But then it becomes more about a second home. I gotta get outta here for the winter. Going away to the Caribbean for six nights doesn't do it. I need to be away for like three months. So in your 60s, that's the priority. This is a. Well to do. 60 something is Florida, Arizona, whatever. Okay. The 70s. Now your kids are having kids. And now the priority is proximity to the grandkids, right. Being in the grandkids, life. So then it becomes about paying for family vacations. Okay. Or that second home. Like let's turn. Instead of just having a regular second home, let's build like a vacation palace in the Hamptons or in the mountains upstate. Like a lake house. Let's build something, seven bedrooms, something insane, where my kids will bring their kids for a week at a time. So that's what I'm seeing in people in their 70s. And then your 80s, that shit just stops. I wish it weren't so, and I don't like saying it out loud and I'm not trying to upset anyone, but like the way it ends is you're always ill and if you are not, your spouse is. You're not touring your.

[Ben Carlson]

In my 80s, I'm gonna find a bar stool at the local bar and I'll be there every day. How's that?

[Josh Brown]

Something tells me you'll still be in the gym like Schwarzenegger. But like, so the cadence of these things and the time and place and the priorities. So I'm seeing like it starts. I forgot what the original question was.

[Ben Carlson]

But like, no, that year, what you just outlined there is actually a really good segue to the next question because it talks about the stage, stages of life. So Duncan, do the next question. It's actually a good segue here.

[Duncan Hill]

All right, up next we got one from Adam. I'm a middle aged guy like Ben. I'm 45. There's plenty of advice for young people. Just keep buying and old people, 60, 40, and diversify. But what about us middle aged people? On the one hand, my net worth is doing great. $2.6 million, including our house.

[Ben Carlson]

All right, good.

[Josh Brown]

Not to brag, not to brag. I like it.

[Duncan Hill]

On the other hand, my income is at an all time. Is at all time highs along with our savings rate. Should I be rooting for a lost five to seven years in the market to buy lower before a bull market that leads me into retirement at 60. Should I be protecting my portfolio? I'm basically 100% stocks. Besides my emergency fund. How should I invest in my 40s?

[Ben Carlson]

Okay. I mean, I should be hurt at this question, but I'm not. I'm 44. See? How old are you? 47. 48.

[Josh Brown]

48.

[Ben Carlson]

See? Yeah, you're not that much older than me.

[Josh Brown]

I'm a very youthful 48.

[Ben Carlson]

I'm told this is a very good question though, because he's right. There isn't a lot of. Because you're kind of straddling two lines here, right? You have enough money where if there is a severe bear market, it's going to be painful because the dollar declines hurt more than the percentage declines. When you actually have a portfolio, right. When you See the dollar declines in your portfolio. It could be a 15% portfolio that hurts more than a 50% crash when you didn't have as much money. Right. Because you see those dollars evaporate. But I actually think being middle aged is kind of a little bit of the best case scenario because you have a little. Because he said your income is probably at all time highs. So if the market does go nowhere for five to seven years in his perfect scenario and you're buying at your all time high savings rate or whatever, that's actually a good thing for you. Even though you're seeing your portfolio evaporate, the thing you have to figure out is, are you okay not having your portfolio protected at all? Do you need to hold more cash or bonds or some other type of strategy to see you through so you don't freak out if there is an extended period of, of downturns? How do you think about investing in middle age? Is your, is your mindset changed at all about this?

[Josh Brown]

No. I mean, dude, you know me, I, I'm 100% either. I'm 100% stocks in my 401k. I don't root for downturns. I just accept that they're inevitable.

[Ben Carlson]

Right.

[Josh Brown]

And look, my income will suffer. A lot of my income is derived from the registered investment advisory firm that we own. And you know, of course, when portfolio values fall, we will make less money, but we will attract more clients. And you know, there's a lot of people that they don't know how bad their portfolio is until, until that happens.

[Ben Carlson]

Right?

[Josh Brown]

So we'll come out of that next downturn bigger and better, you know, so like, that's fine.

[Ben Carlson]

I don't think people realize how much turnover there is among financial advisor clients in a bear market. It happens. That's like a thing for our business. It's crazy.

[Josh Brown]

We're gonna, we're gonna eat on that next one for sure because it's been so long since we've had one, like a legit one. But so like, I don't root for them, but I also don't like, live in fear of them. And I've been through, you know, I've been through 100.

[Ben Carlson]

It's part of the game now, right? Yeah. I'm the same way. I'm all in socks. And I think like, gosh, should I take some money off the table here? But I'm not gonna. Why am I gonna stop working? You know, you do with it. Exactly. That's the, that's the thing. What am I gonna do? With it. And I'm, I'm fine taking the risk too. But actually he said, like, how should I invest my 40s? I think your whole thing, the cyclical part, you went on the last question like, hey, in your 50s, you're gonna do this. In your 60s, you're gonna like, start planning for some of those goals. If, if you had, this guy is worth almost 3 million bucks in his mid-40s. Kudos to him.

[Josh Brown]

I honestly think AI is going to cure most forms of cancer. I have to be honest with you. You should be investing as though you have 50 years left, because you probably do. If you're in the upper end of the wealth and, or income distribution in the United States of America, there is a very high likelihood, barring a nuclear conflict with China, that you're going to live to your 90s. Stop talking about middle age. Stop walking around afraid of your own shadow. Stop worried about hedging. You have like, respectfully, $2.7 million is a super accomplishment by your mid-40s. It's awesome. But like, in the scheme of what you could be worth if you just stop focusing so much on like the next five years or what do you say, five to seven years, you have no money right now compared to what you will have. You have nothing.

[Ben Carlson]

Right? And the thing is, all those goals that you laid out, hey, if you want to have, if you want to Travel in your 50s to Europe and then in your 60s, you want to buy the vacation home. And you're not doing that because of the grand, you're going to need more money. And so that's why you want to let it grow today. And, and unless you, unless you have a goal that you want to use it for today besides like the kids, you know, college fund or whatever, like, yeah, you have plenty of time to let it grow still. You have two, three, four decades to let this money compound. You have plenty of time still.

[Josh Brown]

I mean, I mean, focus on, focus on, still in your 40s, like, focus on extending your career. The worst thing that can happen is, the worst thing that can happen is you retire yourself and then you have nothing to do and no income. Like, it's not, it's not ideal for most people. Most people do not thrive. Some people do. Some people spend their 20s and 30s dreaming of retirement and then they do it and they move to a low cost area and they make it work and they have a hobby that's so important to them that it almost feels like this is their life's pursuit. And I applaud that. That's not me. I can't relate to it.

[Ben Carlson]

If we retired early, you and Michael and I would make Duncan still hop on and we'd do a podcast for.

[Josh Brown]

Each other, be doing more YouTube. So I can't relate to it. But if I had a job that I hated and I used to, this part I can relate to. Yeah, that would be my goal. Like, how do I turn this 2.6 into 3.6 and then find a place where I can make 3.6 last for 40 years? But that's not. I mean, I don't think that that should be most people's agenda. If you hate your job that much that you're dreaming of retirement at 45, maybe invest some money into a career change.

[Ben Carlson]

Yeah.

[Josh Brown]

Or buying a business where you're in control and you don't hate what you're doing every day. So look, it's not for me to tell people how to live because I do understand the mentality of like, I'm just tired of it and I want to be done. I just.

[Ben Carlson]

Everyone's had one of those jobs before where it's soul sucking because you go to it every day.

[Josh Brown]

My first job. So actually I don't want to do a whole tangent, but this is the best thing that ever happened to me. I hit my wife's uncle's car. So my wife's aunt and uncle had like this big gigantic Mercedes Benz boat parked in, parked in my wife's parents driveway. I was 7, 16, 17. Shouldn't say I was 16. I was 17, so I was legally allowed to drive. And they were pulling. They had pulled into the driveway and I didn't see how big their car was. And I was pulling up to the house and I took out the quarter panel, that rear quarter panel, the, the, the brake light. I just, I screwed the car up. And I hadn't, like, I didn't want to tell my parents, so I got a job. I went to the hardware store, and I swear to God, I'm sitting 100ft away from the hardware store right now. Okay, But I went to the hardware store and they said you could be a cashier. And they put an apron on me. It was called Pergament. And I stood at the cash register and watched the clock all day. I can't wait for this to be over. I went after school, my friends would come in and with me, they'd fill up a shopping cart filled with stuff right at closing and then leave it there, get in the car and drive away. I had to spend an Hour, every aisle, putting each item away. Great friends. But I did it for three months until I made enough money to give to my father in law, who would give my future father in law. Then it was my wife's dad. And then he said, josh, that's it. I'll pay for the rest. You don't have to stand there at a cash register. Focus on your. He's like, you proved your point. You're a kid with integrity. I appreciate it. I'll pay for the rest. Just go back, focus on school. But that job, that job taught me so much about being in a. Like a thing where you're like, you can't wait for it to be over, right? And I never had a job like that again. Almost like I refused to do it. I've had other bad jobs, but like, so if you're in that situation where you can't wait for it to be over, maybe the best investment is thinking about a different career rather than like, how quickly could I be retired on, like, what's the bare minimum amount of money I need to never have to work again?

[Ben Carlson]

All right, let's do Josh's career advice for the next one. I saved this question just for you. Cause I know that you talk about this one a lot. So let's do one more.

[Duncan Hill]

Sean Grealish in the chat is very excited about retiring. He said, I reserved a spot at del Boca Vista 25 years ago. I don't know what that is.

[Ben Carlson]

A Seinfeld reference, right? That's a Seinfeld reference.

[Duncan Hill]

Oh, is it? Oh, okay.

[Ben Carlson]

Yeah, Come on. That's where George's parents go to retire. Jerry's parents retire, and they wouldn't let George's parents come.

[Josh Brown]

I was in Boca last week. I worked harder than I've worked in any week at all this year. So I'm. Duncan will tell you, you just have to spend half the time. I spent half the time on TV, on YouTube, on Zoom calls, talking to advisors and their clients. Like, I. I don't even know. I was away. If you guys could have been in a closet somewhere.

[Duncan Hill]

If you guys retire, we just do a nightly two hour live stream or something.

[Ben Carlson]

Yeah, right, exactly.

[Josh Brown]

Retirement live.

[Ben Carlson]

Yeah. Yeah, There you go.

[Duncan Hill]

Okay. Last but not least, we got an anonymous one. As you'll see from the question, I'm a 25 year old advisor at a small firm in the Midwest. I started working here right out of college and have learned a lot over the past three and a half years. Recently, one of the owners mentioned that he would likely never Sell the business or eventually pass it on to his sons who are 11.

[Josh Brown]

This is the best thing I've ever heard.

[Duncan Hill]

This was surprising as when I was hired, the plan seemed to be that he would retire at some point and possibly sell the firm to me or another current advisor. This shift has me questioning the long term prospects of my role at the firm. I've been fortunate to build a solid client base without needing to cold call, which I appreciate since sales isn't my favorite part of a job. But the clients aren't considered my book of business as every client is technically owned by the firm. Part 2. I earn a good living and the firm is generous with 401k contributions. However, since a recent advisor retired, my workload has increased and I find myself spending more time on administrative tasks and supporting other advisors rather than working directly with clients, which is my favorite part of a job.

[Josh Brown]

Oh God. This is longer than War and Peace. We got it.

[Duncan Hill]

Any advice on how you'd approach the situation? All right, this is because Josh has.

[Josh Brown]

Talked about that would never end.

[Duncan Hill]

Josh has talked about this very scenario.

[Ben Carlson]

Before we even cut this one down. His boss, spoiler alert, his boss is Logan Roy. This is a succession that's just. He's going to pass down to his 11 year old sons. Can you imagine thinking you're gonna get that book of business someday? My daughter is 11 and I'm thinking about like imagine me saying that I'm passing my blog onto my daughter someday or something. I can't.

[Josh Brown]

It's twin 11 year old boys in Iowa who show up at the office and tell this guy to go get them a glass of water.

[Ben Carlson]

Yeah, get my Stanley cup for me. So. But you've talked about this a lot for me, Mr. But you've talked about this a lot. Like how this happens all the time. Where these advisors say they're going to retire or they're going to hand down a book of business and they never do. Because guess what? Being an older advisor is easy when you have younger people doing all the hard work. Hard work for you. They don't need to retire.

[Josh Brown]

They never.

[Ben Carlson]

They just keep cashing the paycheck.

[Josh Brown]

Why would they leave? That's. This is it. This is the thing. Why would they retire? What if they just stop working but don't retire? What are you gonna do about it? You're gonna keep showing up until you've had enough and you quit and then they're gonna find some other kid, 25 year old kid and sell them the same promise. Yeah, I'm Gonna leave in five years, this will all be yours. They don't leave. They're like. It's like a stone just collecting moss. It just sits in the river. The river keeps running by. Those are the fees. The moss just accumulates, and they don't have to do anything anymore because you're doing it because you think this is going to be your business. But there's two kids in sixth grade laughing their asses off. You know what I picture? What's the Wes Anderson movie with Ben Stiller?

[Duncan Hill]

Royalty.

[Ben Carlson]

Royalty bombs. Yeah.

[Josh Brown]

Royal Tennis. He's in, like, the Adidas tracksuit, and his two sons are identically matching. Like, no, no disrespect, bro, but, like.

[Ben Carlson]

Wait, so what do you. What nobody is kid. Do you say get your. Get your experience and then get out after you've got experience, or what?

[Josh Brown]

You should be interviewing right now. First of all, get. First of all, get out of Iowa. Go to Indianapolis. Go to Chicago. Go some. Go someplace with a much bigger pool of potential companies to work for. You could always come back to Iowa and establish. You're in your 20s. I'm assuming if you are married and there are kids, everyone's young, everyone's mobile. You got to go somewhere bigger and be exposed to a wider world and find a different work situation. And you have to focus on your career. Don't focus on this guy's business that he's telling you is never going to be yours. Do not. Do not spend your. I get it. It's stable income. You can find that elsewhere. Do not spend your 20s and 30s building something that you are already being told will never be yours.

[Ben Carlson]

Especially once you had it in your mind that this was going to be your business. Now you're going to. You're going to spite this guy for the rest of your days. There's never going to be a relationship.

[Josh Brown]

Shoop in the chat. Josh, a crazy Midwest hater, shaking my head. Are you deaf? Did you not hear me say go to Indianapolis or Chicago? Where are those places located? California. Okay, sorry. Continue. All right, you guys want to do this live?

[Duncan Hill]

Yeah. I was surprised to see that I was in the Midwest.

[Ben Carlson]

Josh's wife went to Michigan. She's a fellow flower state person.

[Josh Brown]

I love the mid. We just opened our second headquarters in the Midwest. It's like one of my favorite places in the whole world. Never a Midwest hater.

[Ben Carlson]

Yeah, but you're right. This is never going to work out. He's going to hate this firm for the rest of his days there. He's. I think you have to. Especially once you realize you know what you want to do. You can't stay there anymore. It's the same thing about having the job you hate.

[Josh Brown]

He's in a. He's in a very shallow hole right now and he's asking, should I keep digging it deeper? Right. Like that's you. You have the whole. You have your whole life ahead of you. You have a whole great big adventure ahead of you. Step one is recognizing that it's not what you're doing today. I know it's easier said than done because it's income.

[Duncan Hill]

I wonder what is his boss expecting to happen telling him this? I just don't understand.

[Ben Carlson]

Yeah, it doesn't exactly help morale, but.

[Josh Brown]

He'S doing the right thing. What the guy should be doing is saying, I'm going to make you a partner, but you're never going to own the whole thing because.

[Ben Carlson]

Right.

[Josh Brown]

I envision now it's very possible the 11 year olds in 15 years have no interest in doing this.

[Ben Carlson]

Kendall and Connor aren't going to want to take.

[Josh Brown]

You want to find out?

[Ben Carlson]

Yeah.

[Josh Brown]

You want to wait and find out?

[Duncan Hill]

They'll just be stakeholders, you know, say.

[Josh Brown]

Someday this could all be yours. No, I'm good.

[Ben Carlson]

Yeah?

[Duncan Hill]

Yeah.

[Ben Carlson]

All right.

[Duncan Hill]

It's possible. Wow.

[Ben Carlson]

This is an action packed advice for Josh today.

[Duncan Hill]

45 minutes and 26 seconds. Wait. 2,665 people watching right now across Twitter and YouTube.

[Josh Brown]

Oh, that's super fly.

[Ben Carlson]

We appreciate everyone in the live chat as always. Remember, ask the compoundshowmail.com if you have a question for us. Leave us a comment on YouTube. Subscribe Rate Review. I don't. Shop.com for all your compound needs. I think we're still waiting on the new hats to come back in, right? You can't. We're still here.

[Duncan Hill]

Yes, we're gonna get more hats, but they're not there yet.

[Ben Carlson]

Bring em back. All right. All new compound and friends on Friday. Do you still have tickets available for the Jim Cramer show or are they all out?

[Josh Brown]

I don't know.

[Duncan Hill]

I think we have a couple. I think we have a couple.

[Josh Brown]

Like two?

[Duncan Hill]

Yeah. As in like maybe two or three? Yeah.

[Josh Brown]

All right, maybe I'll give them to my mom.

[Ben Carlson]

All right, thanks everyone. See you next time.

[Duncan Hill]

Thanks everyone.

[Podcast Disclaimer Narrator]

Thanks for listening to Ask the Compound. All opinions expressed by Ben Carlson, Duncan Hill and any of their guests are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.