Financial Advisors React to Big Money Fails

Summary

Money Guy Show: Financial Advisors React to Big Money Fails Host/Author: Brian Preston and Bo Hanson
Release Date: January 31, 2025

In this insightful episode of the Money Guy Show, hosts Brian Preston and Bo Hanson delve into the common financial missteps that can derail wealth-building efforts. Through engaging discussions and real-life examples, they highlight the dangers of speculative financial behaviors and emphasize disciplined investing strategies. Below is a detailed summary capturing the key points, discussions, insights, and conclusions from the episode.

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1. Day Trading: The Emotional and Financial Rollercoaster

The episode opens with Brian Preston sharing a personal anecdote about his experiences as a full-time day trader. He candidly discusses the volatile nature of day trading and its impact on both his finances and emotional well-being.

Brian Preston [00:24]: "This is how much I made this week as a 20 year old full time day trader. Monday, in one day I lost $4,270. It's been worse."

Bo Hanson responds by underscoring the unsustainable nature of day trading for long-term wealth creation.

Bo Hanson [01:08]: "Building day trading and having huge wins and huge losses on a day to day basis is not how you build wealth over the long term. I would say that was indeed a big money fail."

2. Sports Betting: A Destructive Financial Habit

Brian transitions to his foray into sports betting, revealing the extent of his losses and the desperate measures he took to continue betting.

Brian Preston [01:31]: "I'm selling my car at CarMax so I can get some money and bet on tonight's Cowboys Bengals Monday Night Football game. I need some money. I lost thousands yesterday."

Bo Hanson criticizes this approach, highlighting the futility and risks associated with gambling as opposed to investing.

Bo Hanson [02:14]: "The sheer fact that he's having to go sell a car or get a title loan on a car to be able to do sports betting, it just breaks my heart."

3. Financing Luxury Vehicles: The Hidden Dangers

A significant portion of the discussion focuses on the pitfalls of financing high-end automobiles. Both hosts share alarming statistics and personal opinions on how such financial decisions can lead to substantial negative equity.

Brian Preston [04:37]: "I saw somebody has $200,000 of negative equity. Guys, what are we doing? Don't drive your wealth around. It's better to be rich than to just look rich."

Bo Hanson provides practical advice on purchasing vehicles, emphasizing the importance of cash purchases for luxury cars to avoid debt traps.

Bo Hanson [05:54]: "When you do buy an automobile, we think you should follow 23, 8, 20%. Don't finance for any more than three years, and you cannot have your car payment exceed 8% of your monthly gross income."

4. Speculative Investments: Penny Stocks and Meme Coins

The hosts critique speculative investment strategies, such as investing in penny stocks and meme coins, drawing parallels to gambling rather than sound investing.

Bo Hanson [07:01]: "This is not investing. This is spec. This is no different than Adrian Peterson sitting at a roulette table saying, hey, you know what I love? I love the Red 17."

Brian adds to the discussion by highlighting the high volatility and emotional stress associated with such investments, advocating for more stable and informed investment choices.

Brian Preston [13:55]: "Investing shouldn't have this much ups and downs and investing shouldn't take you on these rides where you could, yes, hit the boom. But there's a heck of a lot of bust out there."

5. Discipline in Wealth Building: Living Below Your Means

A recurring theme is the importance of financial discipline. Brian emphasizes living on less than one's income and avoiding the trap of leveraging for consumption.

Brian Preston [10:38]: "The key ingredient to wealth creation, the first ingredient, is discipline. That's the ability to live on less than you make."

Bo concurs, reinforcing that responsible spending and avoiding unnecessary debt are crucial for long-term financial health.

6. Common Money Mistakes: Financing Depreciable Assets

Both hosts share their own financial mistakes to illustrate the pitfalls of financing items that depreciate over time, such as solar panels, cars, and even furniture.

Brian Preston [09:26]: "What you spend on the solar panels. It's $36,000 on a. Yeah. Nothing down."

Bo Hanson [10:03]: "If you were borrowing 100% of whatever the value of that asset is, and that asset goes down in value over time, you are literally setting your financial future on fire."

7. Investing vs. Speculating: Building Sustainable Wealth

The episode culminates with a clear distinction between investing and speculating. The hosts advocate for disciplined, long-term investment strategies such as index funds over high-risk speculative ventures.

Bo Hanson [12:09]: "Peter Lynch, great mutual fund manager from yesteryear, always said, don't invest in something you don't understand."

Brian Preston [13:55]: "I'm going to do investing my way, where I take a little bit today to build my great big beautiful tomorrow by doing index funds and other things that are much more likely to tie into the success of the economy than just hoping this is the next big thing that's going to hit for me."

8. Final Insights: Empowering Better Financial Decisions

In wrapping up, the hosts reinforce their mission to educate listeners on making informed financial decisions. They highlight the resources available on their website and encourage disciplined, knowledgeable investing as the path to financial success.

Bo Hanson [13:55]: "Building wealth is surprisingly simple, but it's not incredibly easy. And there are tons of voices out there, tons of people out there trying to get you to make bad financial decisions."

Brian Preston [10:38]: "If you don't know any better, I want you to go check out moneyguy.com resources. We have our financial order of operations if you want to fast track."

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Conclusion

This episode of the Money Guy Show serves as a cautionary tale against high-risk financial behaviors such as day trading, sports betting, and financing depreciating assets. Brian Preston and Bo Hanson provide valuable insights into the importance of disciplined investing, living below one's means, and avoiding speculative ventures that can jeopardize long-term financial stability. By sharing personal experiences and expert advice, the hosts empower listeners to make informed decisions that align with sustainable wealth-building goals.

For more resources and detailed financial strategies, visit moneyguy.com/resources.

Transcript

[Brian Preston]

I've been losing all my money sports betting. So I'm selling my car at CarMax so I can get some money and bet on tonight's Cowboys Bengals Monday night Football game. Hey guys, the team has put together some cold videos for us on big money mistakes.

[Bo Hanson]

Brad, I am so excited to see what the Internet has for us today. Let's dive in.

[Brian Preston]

This is how much I made this week as a 20 year old full time day trader. Monday, in one day I lost $4270. It's been worse. Tuesday saved my $7100. Maybe this week ain't so bad. Wednesday, big news event. I didn't trade $0. Needed a day off. People ask me how I get used to losing so much money.

[Bo Hanson]

I don't.

[Brian Preston]

And today I said I was going to come back. I dug a deeper hole, but I'm only down this much. It's been worse, surprisingly. Hopefully next week is better. Oh my gosh. I don't do public math, but I saw there are a lot more negatives than positives and can you imagine? You could sense it almost in the video. His everyday interaction with happiness and sadness is directly correlated to what happened in his trading portfolio. For me that would be a disaster emotionally and for relationships that felt the.

[Bo Hanson]

Exact same way as I have friends who love going to casinos and they'll come and tell me, oh, I was hot and I hit it. Oh man, I got, I got. But it's okay, I'll make it back. It's okay. It's good. That is not investing. That is not wealth. Building day trading and having huge wins and huge losses on a day to day basis is not how you build wealth over the long term. I would say that was indeed a big money fail.

[Brian Preston]

I've been losing all my money sports bets in. So I'm selling my car at CarMax so I can get some money and bet on tonight's Cowboys Bengals Monday Night Football game. I need some money. I lost thousands yesterday. They just gave me 3,000 and I know I shouldn't do this, but I'm betting it tonight on Monday Night football. Jamar Chase 50 yards. Joe Burrow 2 passing touchdowns. Cooper Rush 200. Makes my stomach hurt. Easiest bet ever. Once it hit BMW right here.

[Bo Hanson]

Could you imagine your stuff being so bad that you had to go hawk your car, you had to get rid of your car and then you had to take that money and go bet. And you know what? I'm willing to bet Ryan. I bet it didn't hit. I bet that he did not get that money back. Nate, can you confirm he did it? Didn't. He just lost that money?

[Brian Preston]

Brian, I think that we talk about compounding growth. You can also have compounding bad decisions where you keep making one bad decision and you chase it with another. The sheer fact that he's having to go sell a car or get a title loan on a car to be able to do sports betting, it just breaks my heart. And then the fact that he still has, by the way, if he hits it, you notice he didn't say, I'm going to go fund my Roth ira. He had his eye on this consumption decision of buying a BMW. That is just not the path to success. We work with thousands of millionaires and I can just tell you that that is not their journey to building seven figure wealth.

[Bo Hanson]

Could you imagine if one of our employees called in and said, hey guys, I cannot come to work today because Joe Burrow did not throw for two touchdowns last night. I sports bet my car and it's gone. Maybe I'll see y'all next week.

[Brian Preston]

I'm noticing a trend here. Understand the difference between gambling speculating versus investing. Investing can actually build wealth for you. Gambling speculating, yeah, maybe you get it, you hit it. But there's sheer numbers. The majority of people are going to come out as a sad tell. Walking is for people who are broke. Do you think any respectable business owner is going to waste their time trying to pass by slow walking? Normal people, people don't respect their time, which is why they walk as slowly as this. And then you as a business owner, you have to take over. It's gonna waste a lot of your time. That's why rich people don't walk. If you're gonna walk through the premium version of walking, which is on a freaking treadmill in your house, at your desk, making money.

[Bo Hanson]

Rich people don't walk. I just, I don't think that's true. I know many very wealthy people and a lot of them walk. A lot of wealthy people walk all the time. If you are in the place where walking is causing you to not build wealth and the only type of walking you ought to be doing is walking at your desk on a treadmill, I'd argue you haven't found the right job yet.

[Brian Preston]

Proof. If you go look at the Apple campus that Steve Jobs. Steve Jobs designed because he did some of his best, like decision making while he was walking, it kind of. Maybe he was wrong. What did he say? Did he say millionaires? Maybe he meant to say millionaires don't Walk. But billionaires do. I don't know, but I disagree. I'm sure it was all a joke. Jason, this is Alex with Earth Motor Cars giving you a call about your 21 SF9 you have for sale. Yes, sir. Yeah, I'm trying to get rid of this car, and I want to trade it.

[Bo Hanson]

Corvette Stingray C8. I think it's the 21.

[Brian Preston]

Yeah. Okay. And you have a Ferrari SF90 for trade? Yeah, I do, man.

[Bo Hanson]

Yeah, that's. That's the car that I want to.

[Brian Preston]

Kind of get out of now, so. Okay. I don't know, man.

[Bo Hanson]

The payments are getting kind of crazy, so I just thought I'd give it.

[Brian Preston]

A minimum or something also. Yeah, sure.

[Bo Hanson]

Yes. Want to get as close to my payoff as possible, or if not all of it.

[Brian Preston]

Okay. On the car, so. Okay, well, how much do you owe on it? About 690 something. Oh, man. Oh, yeah.

[Bo Hanson]

I bought the car for 776.1.

[Brian Preston]

I'm going to be honest with you. My number is probably going to start with a four.

[Bo Hanson]

Oh, my God.

[Brian Preston]

Yeah, man. You're close to a little over $200,000 in negative equity, bro. Graham Stephan had some content on with this. This gentleman who's from Atlanta. I was like, how do I not know this guy since we're Atlanta boys? And he was saying he sold luxury cars, you know, kind of these exotics. 75% of people that are buying those type of cars are financing them for super 12 years, and I couldn't believe it. So to hear somebody has $200,000 of negative equity. Guys, what are we doing? Don't drive your wealth around. It's better to be rich than to just look rich. And do people really care what you're driving in the first place? No.

[Bo Hanson]

So I'm going to throw this out there. When you do buy an automobile, we think you should follow 23, 8, 20%.

[Brian Preston]

Not on those cars, though.

[Bo Hanson]

Don't finance for any more than three years, and you cannot have your car payment exceed 8% of your monthly gross income. That guy did not follow any of those. And our number one caveat is if you buy a luxury automobile, you do not finance it. You have to pay cash for luxury automobiles or else you're going to find yourself in a situation. Maybe you're not $200,000 underwater, but maybe you're $20,000 underwater. And any underwater on a vehicle is too underwater on a vehicle.

[Brian Preston]

Here's a succinct thought. If you have to put premium fuel in the vehicle, you ought to pay cash for it.

[Bo Hanson]

Oh, I like that. Write that down.

[Brian Preston]

I would encourage people to really look into the penny stocks where you paying a couple dollars fifty cents or whatever. Whatever. Within five or six months, that money will flip so fast, you'll be like opportunities. Where I got into crude oil, it was fluctuated. It was $3, $2. And I end up kind of doing my research and I found a competitor of it. They kind of had the same trend. When I seen them, they were down one was like 39 cents. So I bought into it. Right? I like that music they put in the background. It makes it 3 million.

[Bo Hanson]

This is not investing. This is spec. This is no different than Adrian Peterson sitting at a roulette table saying, hey, you know what I love? I love the Red 17. That Red 17 is looking hot. And yeah, you might hit Red 17 and you might get a big ROI but over the long term, that is not a consistent and sustainable investment strategy. Picking penny stocks, hoping that you're going to find the one that happens to go 10x is not how you build wealth.

[Brian Preston]

Was that Adrian Peterson?

[Bo Hanson]

Yeah, that's who that was. Adrian Peterson.

[Brian Preston]

That was Adrian Peterson giving that advice. So Adrian Peterson is telling people to buy penny st. And then he's done. Okay. What Adrian is not telling you is yes, he might have made $2 million on that one transaction. I want to know about the other 60 transactions that he didn't make that on. That's the thing everybody always tells you. They're winners. They're very quick to tell you about the winners. I want to know about the losses. I've worked with a lot of NFL players back in the early part of my career, and I don't think that's something you can build your financial life off of. Going on, folks, it's your boy Steve Odin Stevo. Today I got my man Marco approved. Look at 2019. He's got a baby in his arms. He's got his wife there with him. Good baby. Oh, my gosh. And he's got the shovel out, and he's digging the hole for his life and death. Everyone's approved, as you know.

[Bo Hanson]

All you need is your id, piece.

[Brian Preston]

Of mail in your name. Oh, God. DM me at SKO got me rolling. We're gonna get you rolling off today. Rolling into the ditch.

[Bo Hanson]

I1, is a Luxor automobile. So you're gonna buy a luxury automobile, you got to pay cash. Two, I don't think $499 down qualified for 20%. I don't think that that would. And look, when you are in the messy middle and you have life pulling you in a thousand different directions, you have a brand new baby. The thing that you probably don't want to be doing is going out and buying luxury automobiles that you're putting very little down on. I imagine you're financing it over an extended period of time with a huge monthly payment. I just don't believe that is what a sound financial decision maker would be making in the messy metal.

[Brian Preston]

Yeah, I think he's feeling good only in the moment because I think about the depreciation insurance. I think about the insurance. I think about the premium fuel. I think about the repairs on those premium vehicles.

[Bo Hanson]

I think about the chicken nuggets and the french fries and the milk and the throw up and the poop.

[Brian Preston]

Oh, all that stuff with the baby. By the way, Steve. O. He might get you rolling, but he ain't gonna get you out of the ditch. Tell us your biggest money mistake you've ever made. Biggest money mistake would have to be the investment in the solar panels.

[Bo Hanson]

O.

[Brian Preston]

What you spend on the solar panels. It's 36,000 on a. Yeah. Nothing down. Nothing down. What's your biggest money mistake? I would say buying a brand new car. Ooh, what was it? It's a 2015 Grand Cherokee. Brand new Jeep Grand Cherokee. And you took out a loan for this.

[Bo Hanson]

How big was the loan?

[Brian Preston]

The full amount. I think the biggest money mistake was financing a bed. Oh, a bed.

[Bo Hanson]

How much do you finance?

[Brian Preston]

Seven, eight thousand. Wow. Yeah. Where's that been? As they make you coffee? I mean, what are they. What are they putting in that?

[Bo Hanson]

It seemed to me that there was a common here around depreciable assets, whether it be solar panels or an automobile or a bed, and people financing 100% of it, meaning they have no skin in the game, no down payment. Now, I don't love financing furniture if you can avoid it. I don't know that financing solar panels makes a ton of sense when you actually run the math, but financing an automobile is not the craziest thing in the world, so long as you're following 23A. But if you were borrowing 100% of whatever the value of that asset is, and that asset goes down in value over time, you are literally setting your financial future on fire.

[Brian Preston]

You know, the key ingredient to wealth creation, the first ingredient, is discipline. That's the ability to live on less than you make. You know what doesn't get you closer to that goal is when you're having to leverage all of your key consumption purchases because in the short term, it feels like you can afford anything at $200 a month at a time. But when you start stacking those on top of each other plus the interest payments, you quickly realize that you're paying more towards the consumption than to living your best life. And that's why I don't like anybody using debt that way. Make sure if you don't know any better, I want you to go check out moneyguy.com resources. We have our financial order of operations if you want to fast track. I've even written a book called Millionaire Mission that details each one of those steps. You don't have to be stuck in this life where you're lost knowing where your next dollar is going to come from, but also what you're going to do with your next dollar after that margin into your life to actually live on that discipline. I'm going be completely honest, man. I done lost all my money trading crypto and I'm basically homeless. This meme coin get rich scheme is really not what it is and everyone's just trying to sugarcoat it. But I'll be the first to tell you that I basically feel like I got scammed. You guys might be asking, well, who scammed you, bro? Who scammed you? Well, it's really you guys in the comments. I mean, you guys just keep telling me to buy all these coins and I see it in my comments too. Of course, right when I bought it, I saw a big dip and my money just went down. So the fact that you guys keep commenting and I keep buying is just getting ridiculous.

[Bo Hanson]

Peter lynch, great mutual fund manager from yesteryear, always said, don't invest in something you don't understand. Don't buy things that you don't understand. If you're buying a meme coin or a crypto or something like that and you have no idea what it is, how it works, or why it might make sense for you. You should have a red flag going off saying, maybe I should not invest in this thing. I don't understand. That's thing number one. Thing number two, don't let other people tell you how to spend your money or how to use your resources if they are not qualified to do so. Let me go and put your mind at ease. Most folks in the social media comments are not qualified to tell you what to do with your dollar. So just because someone says, hey, buy this thing, invest in this thing, carry out this strategy, it's what you need to do, they don't know you they don't know your situation and they are not looking out for your best interest.

[Brian Preston]

You know, I did a crypto experiment and here's where the big red flag for me when I saw the daily volum volatility when this thing was moving multiple percentage points, not every now and then, but almost every day, I was like, it hit me, I mean, as a person who actually manages money and has built my own very successful portfolio, I was like, if it's moving this much every day, this is closer to speculation than it is to investing. Investing shouldn't feel this way emotionally. Investing shouldn't have this much ups and downs and investing shouldn't take you to on these rides where you could, yes, hit the boom. But there's a heck of a lot of bust out there. And that was a red flag for me. And I realized I don't want to own this train. I'm going to do investing my way, where I take a little bit today to build my great big beautiful tomorrow by doing index funds and other things that are much more likely to tie into the success of the economy than just hoping this is the next big thing that's going to hit for me.

[Bo Hanson]

Building towards financial success. Building wealth is surprisingly simple, but it's not incredibly easy. And there are tons of voices out there, tons of people out there trying to get you to make bad financial decisions. Well, that's not what we want to do. We want to help you believe that you can do money better. It's exactly what we do with the Money Guy Show. If you want to know more, make sure you go to the website moneyguy.com resources check out all the free resources so we can load you up.

[Brian Preston]

I'm your Host, Brian Preston. Mr. Bo Hanson.

[Bo Hanson]

MoneyGuy Team out the MoneyGuy show is hosted by Bryan Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.