← The Iced Coffee Hour
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- [00:01]
Brian
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- [01:13]
Graham
What are some of the biggest mistakes that you've seen people make?
- [01:16]
Bo
Whether you're a 20 year old or you're a 60 year old, if you don't have discipline, it's going to be very, very hard for you to be successful financially. That's why we see so many professional athletes who sign these huge contracts or have these huge salaries and end up broke.
- [01:29]
Jack
Do you think that that's on purpose?
- [01:31]
Brian
Consumption is profitable. Selling you stuff is profitable. Creating people who are independent and know how money works, it's not as easy.
- [01:40]
Graham
Should investors be worried about how much
- [01:41]
Jack
the market is now dominated by AI?
- [01:44]
Bo
The market has a way, at least in my experience, of making us all, even the smart ones, look like fools.
- [01:53]
Jack
Brian and Beau, thank you so much for coming on the Iced Coffee Hour. You guys manage about $2.2 billion worth of money for your clients. You guys are both certified financial planners, cfa, cpa. You guys are the real deal. And at the end of the episode we want you both to react to Graham and my investment portfolios. I think you guys are going to hate how I'm investing my money. But before we do that, Graham has a question.
- [02:19]
Graham
I want you to react to this clip because you focus a lot on retirement and saving. And Elon Musk just said that saving for retirement right now is point.
- [02:29]
Jack
Here's exactly what he said.
- [02:30]
Brian
One side recommendation I have is don't worry about squirreling money away for retirement. In 10 or 20 years it won't matter.
- [02:39]
Bo
Okay, either we're not going to be
- [02:41]
Brian
here or it just like you won't need to save for retirement. If any of the things that we've said are true, saving for retirement will be irrelevant.
- [02:52]
Bo
So I think the context behind that clip is he was saying that artificial intelligence is going to advance to the point to where there's going to have to be some sort of like the basic universal baseline for everyone.
- [03:02]
Brian
And also I think he, because I've followed enough of what Elon says is that he thinks because of all the breakthroughs that are come is things are going to become so much cheaper because they're so efficient that you're not going to have the need for the way we think about money currently.
- [03:18]
Bo
And so I think when we, if you know my reaction, okay, we could move in that direction and he, he could absolutely be right. And so what do you end up with? You end up with a lot of people that saved a whole bunch of wealth or prepared for a thing that perhaps they did not have you prepared for. But he's saying, or 20 years on the line. What's the other side of that coin? The other side of the coin is it doesn't manifest exactly the way that he, that he says the grasshopper did not store up for winter. Winter ended up showing up and twenties on the road. You're like, whoa, I don't have any money, I don't have any savings, I don't have any retirement. Elon told me I wasn't going to need it, but I got there and now I need it. Which one of those is a worse outcome? I sacrificed a little bit of today that I guess I could have been living it to the full. Or I actually get to retirement, get to the place where I want to not have to work anymore. And I didn't do the stuff I was supposed to do to be able to actually retire.
- [04:04]
Brian
I'll put some context with it. Is that now fortunately, and we see it with our clients too, 80% of millionaires are first generation. But I've been doing wealth management long enough. I've had a few people come across my path to where they're waiting for their parents to die because they know there's significant wealth when their parents die and they're going to Inherit this money. It's the saddest thing in the world because do you want to root against your parents? And I think that's. He said, you know, in 10, 20 years do you really want to kind of lay all of your. It's tied into what Beau's saying. I'm too self determining with my life. And I also know the secret to success is if you start early and often time is your most valuable resource. So maybe get excited about the dream that Elon's putting but don't build your life off that. Just like I would never tell anybody. Build off of your parents inheritance. I don't come for money. Bo doesn't come for money. But it's just a good case study on you need to be more self determining with your success and be disciplined and make something happen. That sounds like something to kind of get excited for or to fear. But it's more to get people excited. Elon also has a tendency to really throw the world at you and get you excited and then it takes a while for it to actually come to you.
- [05:22]
Graham
Well, speaking of savings, we got some really scary statistics that just came out. A personal savings rate that just hit a low of 4%. Nearly 40% of Americans have less than $500 in saving. 70% of Americans are living paycheck to paycheck. Gen z is at 72% and the average American carries about 65 to 60 $700 in credit card debt. Personally, why do you think people are saving so little?
- [05:47]
Bo
Yeah, it's. I think you can obviously talk about the, the outside factors, right? Housing has gotten more expensive, cost of living has gotten more expensive. Inflation is a thing that we have been dealing with over this past couple of years. But what's really, really interesting, even though that savings rate hit quote unquote an all time low, it's been low for a long time.
- [06:05]
Brian
That's what I was going to say.
- [06:06]
Bo
Right. It's not like, it's like we were sa. The only time in the last 20 years we've seen an uptick in savings rate. You know What?
- [06:11]
Graham
It was 2020.
- [06:12]
Bo
It was 2020 free money. Cuz nobody could go out and spend money. And it's amazing how much money you can save when you can't go spend on anything. And so I think what we're seeing right now is more of a continuation of bad behavior that's gotten slowly and slowly and slowly worse and, and I. It seems like people have arrived. The conclusion, oh well, life is difficult, life is hard, money is tight. I Will never be able to be where I want to be financially. So why would I even do anything differently today? I'm just going to keep moving in this direction. And I think that's just bad information. It's bad intel for a lot of people. I don't think a lot of people, when they come out of high school, out of college understand the fundamentals of wealth building and budgeting and cash flow management and living on less than you make. I think we're failing our young people and having them prepared to be able to do that.
- [07:00]
Jack
Do you think that that's on purpose? Because if you ask any intelligent person that has any ounce of financial literacy, they would argue it is clear cut, objective, beneficial to everybody. If we have more financial literacy in schools. If people know that they maybe shouldn't be taking out all this ludicrous student debt for a degree that's not going to guarantee them a job, you're setting these kids up for failure. Is there a malicious reason maybe behind that? Are like the credit bureaus lobbying the universities saying like, hey, we don't want to promote financial literacy. Is there anything going on that we may be unaware of?
- [07:34]
Bo
Well, I think that it is more, more lucrative for people to be bad with money. It's why payday lenders do so well. It's why credit card companies make so money. If you look at tuition, how much the cost of education has gone up, it's sort of asinine at this point. And there's sort of two sides of this coin. The, the more fiscally responsible individuals all are, are in mass, the less profitable some of those entities will be. So there is a misalignment of goals. It's in the credit card companies or whoever's best interest for people to not make good decisions.
- [08:09]
Brian
I think it's interesting because you were giving us a lot of stats. The one that always shocks me is if you look at the Fred data, the Federal Reserve data on net worth of Americans, you know where there was a huge pop in the last few years and it was all homeowner equity. Which shows me is that the only net worth that the typical American has is the equity in their house, meaning they're not saving any money outside of just the whole, the old American dream of just go out and buy a house and then, you know, and you'll build wealth through that. That shows me that we are failing in the fact that there is a better way to do money. And it's, and if you knew like one of the things we just introduced a Brand new resource that we updated, that we spent a lot of time kind of putting it out there trying to make sure the education impact was there is how much should you save? And it's one of the. If you go look at this resource@moneyguy.com resources if you just start saving anything when you're like 20 years old, it's hard to screw 22. I mean it literally. You just have to basically do rounding errors on and it can be small decisions like coffee or it doesn't take hardly anything at all. That's why, look, take the politics out of it. But I do think there's an interesting experiment going on with Michael Dell's contribution. And then these, these Trump accounts is what they're known is what if we gave all newborns a thousand bucks because we've done the research. If you go to the website moneyguy.com resources you can be a millionaire incredibly easily. Now look, we have inflation and other things, but I can tell you if you want to get to a million dollars or $5 million, get to the million first. And it gets much, much easier because I think if people knew that for your newborn you only need to save $13 a month to be a millionaire, you know, by the time you get to retirement, that's how powerful. But I don't think anybody does that. I mean I think about, you know, the typical age when people start saving and investing is 30 years of old. 30 years of age. You know, where they even discover probably your content. Our content. I would love for it, Jack. I think it would be. And more high schools are adding curriculum. What I'm curious about is who's driving that curriculum? If you have the banks drive it, are they going to talk about credit cards? Honestly, that's the thing that I always. Because consumption is profitable. Selling you stuff is profitable. Creating people who are independent and know how money works, that's, that's not, it's not as easy.
- [10:31]
Jack
I agree. And I think, I guess for me that just makes me suspicious because like I said, every single person with above average IQ and some form of financial literacy would argue everyone needs to learn these things.
- [10:42]
Bo
Absolutely.
- [10:42]
Jack
It's not like if they learn these things, hopefully it's not when they learn these like we want it to be asap. People need to know this stuff way more than need to learn all of the other stuff that they're taught in the universities, especially with like the, the random prerequisites and these other classes that you're forced to take a language class right before you learn financial literacy is absolutely absurd.
- [11:01]
Brian
Do you think it would move the needle a ton though? Because you've heard of the marshmallow test and other things. There is a. I've often wondered if we stratified. I wish there was more behavioral science research on just. Is there always just going to be a portion of population? Because I think anybody can be wealthy. I really do. I truly believe it. But it's going to require discipline. You living on less than you make, using that margin to actually create the money that then gets invested. And anybody, if you give it enough time, can be a millionaire.
- [11:29]
Graham
You know what, it's the same thing with getting in shape. Like, everyone knows objectively how to be in shape, but there's only a small percentage of people who are actually in shape.
- [11:36]
Bo
And we all know, hey, I need to eat good food, move my body, eat good food, move my body. We objectively have that knowledge and yet a lot of people don't carry it out. Saving money and building wealth is no, it's no different.
- [11:46]
Brian
But this is why I love what we get to do. I mean, I really do feel like we're moving the needle. I truly do. If you go now, look, that's what we had, a whole off camera conversation. We just don't have the sizzle sexy of like setting cars on fire or doing weird things that people but if you really want to know how money works, we try to lay it out there, you know, so that people can learn the basics.
- [12:07]
Jack
Yeah, I think that's what makes the Trump account so interesting, is because what Dave Ramsey would argue is that people might have the information, which I would also argue that most people don't have the information. But of the people that do have the information and still decide to not act on that information, it's because they lack faith that if you put the good ingredients in that the recipe will turn out as you wanted it to. People think like, hey, if I go to the gym and start eating healthy, like I won't actually look the way that I my idealized body looks. The same thing goes for investing. If I actually save money and I invest it, billionaires or a millionaire is so far out of reach I'll never be able to get there. Which is why I think the Trump account is so interesting, because it's forcing these people to actually see the light at the end of the tunnel because they can watch this growth over a period.
- [12:47]
Graham
You know what's funny? It's not forcing people. I've spoken with several people who have just had kids in the last year, had no idea that the Trump account even existed.
- [12:56]
Bo
Oh, see, that's a lack of.
- [12:56]
Graham
And they're just like, what was that? And I explained it.
- [12:59]
Bo
Oh, I gotta do it.
- [13:00]
Jack
I've never heard of that. They've known, though. They would've signed up.
- [13:04]
Graham
Maybe I'm just in a bubble. I like to not know about the
- [13:07]
Bo
Trump account, but I don't know. It's one of those things. We'll have young people all the time, high school students, college students. Hey, I just got, you know, whatever. I just got my first paycheck. I have enough. I can go max out my Roth ira. Should I go max out my Roth IRA and this will surprise you? You know what? My answer is yes, no, no. And here's why. So many times through life I've told someone, hey, go max it out. Way back in the day, hey, put 5,000 in. Put 6,000 in. They would do that, and inevitably 2008 would happen. 2011, flat year, 2022, fill in the blank. And then make a contribution in March of one year. One contribution, one contribution. In March of the next year, it's down. And they're like, oh, this investing thing is ridiculous. I don't like this. I said, hey, instead of going to max it out, just start doing $20 a month. Put $20 a month, every month into your Roth and watch what happens if you can get someone experientially to see what money can do. I'm doing this with my oldest daughter right now, and I'm showing her how interest works inside a bank account. And they can say, holy cow. No, no, it. I put $20 in there last month, and this month I have $20 and 50 cents. Holy. And you can get them to experience it. I think that's where it starts to actually stick. It's just most people don't take that very first step of doing it. And then even with the Trump accounts, it's great to, like, use that to teach someone. But how often have you seen someone who, like, they go work for an employer, Employer has a match, they say, okay, if you put in 3%, we'll put in 3%. And they do that, but that's all they do. And that's noble and that's great. But if you don't actually increase that, if you don't get better at it, right. It's not going to actually move the needle. So you have to start somewhere, but then you do have to improve through time.
- [14:39]
Graham
So what's interesting, though, is that just as many People are living paycheck to paycheck, making over 150 grand a year as making under 60,000.
- [14:46]
Brian
It's a behavioral issue.
- [14:47]
Bo
It's not about the dollar figure. It's not about the dollar figure.
- [14:49]
Brian
There's a lot of wealthy are rich in income, but still dirt poor people because they spend every dollar they make.
- [14:56]
Graham
But what separates the people who make less but still are able to get ahead?
- [15:00]
Brian
It's the discipline, it's the teachers. That's why teachers are always so successful. They somehow.
- [15:04]
Graham
It's a knowledge problem though, because I would argue that just as many people have the knowledge to be able to
- [15:09]
Jack
get out of that well.
- [15:10]
Bo
And I think a lot of people, even when they're able to get to a high income, 150, 200, $300,000 incomes, you would not argue that they aren't intelligent, don't have knowledge. They must have some level of knowledge to get them to where that they are. But discipline really is the. You know, we talk about the three ingredients. There's discipline, there's margin, there's time. You have to have all three. Discipline is the one that matters the most in every facet. Like whether you're a 20 year old or you're a 60 year old, if you don't have discipline, it's gonna be very, very hard for you to be successful financially. That's why we see so many professional athletes who sign these huge contracts or have these huge salaries and end up broke. It's a discipline issue.
- [15:46]
Brian
If you look at the categories that typically become millionaires, you know, historically it's like your teachers, your engineers, and then like your accountants are those very popular categories. There's a big disparity on income between those. But you know, what they all have in common is that they all start jobs pretty early in an apprenticeship type things, early 20s. They kind of both all encourage systematic type that mind and thought processes. It's the starting early and often that kind of does it. I mean, and I know it's, it's not sexy enough for people to say this, this cannot be what it is. And I'm here to tell you, just do something. I mean, if you. Because that's what got me. I mean it was, it's back to my morrow moment. That high school teacher who told everybody in the class, look, if you could save a hundred dollars a month, you'd be a millionaire. And coming from no money, I was like, I could be a millionaire a hundred dollars a month. I was working fast food, I was like, you mean I Could I could save a hundred dollars. I really did think that and that's what made it happen for me. And it's the reality, it's the truth.
- [16:43]
Jack
Okay, so this as a challenge, guys, not that we are, you know, financial advisors or anything. If you've never invested, open up an account. What brokerage?
- [16:52]
Brian
I mean any of the big ones that like the low cost ones like you think Charles Schwab, Fidelity Vanguard and then just buy the market the index, right, Like a total market index, S&P
- [17:01]
Jack
500 contribute some amount of money or target.
- [17:03]
Brian
Retire a target index fund and send
- [17:06]
Jack
a screenshot of it to the email that is right on the bottom of the screen and we will respond to it. Just saying, good job.
- [17:12]
Graham
What about Robin Hood?
- [17:14]
Bo
Robinhood's a great one too. One of my. I'm an I don't say problem that sounds too aggressive. But Robin Hood has gamified a lot of stuff that allows you to get distracted. Like when I go into Robin now I can start doing sports betting and all these other things that. What I don't want someone to do is be like, oh, I'm going to start investing, I'm going to start investing. And they see this shiny thing in the corner and they're like oh, okay, well now I'm going to go start picking stocks or I'm going to go start doing sports betting. I must go start. I think some of the, some of the larger brokerages done a good job of not letting that become so flashy and so in your face for a disciplined person. I don't think Robinhood's a bad solution necessarily. But I would probably go to one of the big low cost anchor providers.
- [17:53]
Brian
In the beginning your savings rate is so much more powerful than even what you invest in. So that's why if you can stay. That's why I like broad indexes because it lets you just set, set the behavior, let it take hold, let it grow roots, let the compounding growth actually do something. Because you said, I can't remember which one of you said it said people never can imagine a small thing can turn into a million dollars. That's because we don't, we think in a very lateral, you know, where linear way instead of thinking in the exponential way that money really works. And that's why I would love, I don't like the gamification to where people get distracted because that's where young people, a lot of times they're trying to cut the corner off. I mean I've had, look, we've had young people show us that you can play arbitrage with sports betting and all these other things. They're fun distractions to kind of look at, but they're not actually what I would consider what I'm going to be able to to to set my retirement by. That's why like when I was writing a Millionaire mission, I said fish with nets because you want to feed the family. Go sports fish, you know, for fun later. But if you're going to actually try to feed the family down the road, fish with nets, which is what index funds do.
- [18:58]
Graham
And really quick. I shouldn't have to say this, but we all think it Life could sometimes be extremely busy and eating healthy can oftentimes feel like an impossible task. With work, friends, family and everything else you've got going on, nutrition can often take a backseat. But that doesn't mean it's not important. Prioritizing protein, minerals and fiber could really make all the difference.
- [19:18]
Jack
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- [19:26]
Graham
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- [19:37]
Jack
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- [19:52]
Graham
It's also under $5ameal, which makes it a practical alternative to many quickbook breakfast or lunch options.
- [19:57]
Jack
The Black Edition powder works incredible for just days at home or when you want something that's more customizable. It has 40 grams of protein per serving, mixes super easily, and can be blended with ingredients like fruit or milk. Literally anything you want, just depending on your preference.
- [20:11]
Graham
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- [20:18]
Jack
Seriously guys, I could not recommend it more. It is the easiest way to stay on track of things like daily protein, fiber and just overall nutrition without needing to break the bank or plan out every single meal. It is so convenient, so delicious I could not recommend it more.
- [20:32]
Graham
And for a limited time, you could get HU today with our exclusive offer of 15% off online with our code ICED15. When you go to heel.com ICED15 with the link also down below in the description. It's for new customers only. Thank you again to Hu for partnering and supporting our show. And now let's get back to the episode.
- [20:50]
Jack
So to settle the debate of this harsh truth about money, would you then say if someone is not where they want to be financially, if they're broke between the ages of, let's just say 25 and 45, is that their own fault or the fault of the environment around them?
- [21:06]
Bo
Well, I think certainly some people are born into more difficult environments to come out of than others. I don't want to minimize that idea, but I do think that building wealth is available and attainable to all folks. No matter what your path is, no matter where your financial journey, no matter how bad it was at the start, that does not define what the end of your financial journey might look like. So you might have had different circumstances that caused it to be more difficult for you. But I still think even for that person, they have the ability, whether it was environmental and circumstantial or it was their behavior. I used to run up credit card debt and live on more than I make and you know, make all these bad decisions. I do think that there is an onus where they can change that, where they can actually improve their financial life.
- [21:48]
Brian
It's a mindset issue. If you look, we all hate villains, but I'll tell you, villains and unfortunately victims don't come out ahead. So if you self define yourself as a victim that this system's built against you, you'll never get yourself out. Whereas if you can put the mindset that yeah, okay, the system's hard, but I believe and these guys are sharing some of the tools and take an active role to be the hero of your own story. I really do believe anybody can do it. And it's a mindset thing. Don't let because we've done shows, we got a show that I'm so excited it's coming out because where we said is it harder truly harder for the new generation versus the baby boomers to get ahead? And we found out yeah, there are some things that holy cow, we ought to be pretty ticked off about what's happened in education and even some of the things in somewhat in housing, it's not as bad as what happened in education. But still there's so many new things with technology. I mean if you saw what it was like to try to invest when I came out of college, you had to go through a broker. You couldn't Buy index funds. It was, it was just completely a different game. So much has happened now. You can go online, you can do everything. It's instantaneous. You can do something.
- [22:55]
Graham
Do you think AI is going to make it easier or do you think that's going to mislead a lot of people?
- [23:00]
Brian
Yes, I think it's both. I think Beau is exactly right because we've even found, I mean, it's amplifying what we can do for clients. It's not taking us out, it's going to make us better. But I do think if you're a person, and this is something I've tried to figure out, I'm not trying to change the subject to AI, but I think people ask us all the time, like how you know when you try and do Roth conversion strategies. How long does that take you to figure that out? Now, Michael, I can typically in 45 minutes of looking at your portfolio, I can have a pretty good plan. But it took me 15 to 20 years to kind of really see, know all the things that go into all the factors and all the variables. So, you know, it's 45 minutes, but there's 15 years of experience or 30 years of experience. Now where I'm at 15 years and 45 minutes, I am, I think AI is going to bridge a lot of that stuff, but there's still a lot of ghost in the answers, meaning the information. We've even been playing with some LLMs and there's just, there's so much confidence and bad answers that if you don't have the experience to actually see what the output was, to kind of navigate. I do hope younger people don't lose the ability to, to be able to see what is, how to think through things because we, we, we outsource intelligence only to the AI models because I think that's, that's going to be scary for, for our, for our kids and the younger generations.
- [24:14]
Bo
So I think that technology and artificial intelligence will make it, yes, perhaps easier to invest, easier to build a portfolio, easier to like, gather information. But I do think it's also going to create the opportunity to be distracted as most other technologies have done. So there will be pros and cons to it. It'll be interesting to see how it
- [24:32]
Brian
shakes out until I notice that when you talk to any of the chats or you know, chatgpt, the grox and they all just trying to make you happy. So I mean, they have this level of confidence. Yeah, but they are trying to gronk
- [24:44]
Graham
people pleasers has been really good.
- [24:46]
Brian
Yeah.
- [24:46]
Bo
ChatGPT is awful in terms of just a confirmation bias. Wanting to say what you want, Gronk,
- [24:52]
Graham
I found to be pretty objective. But chatgpt yesterday, I was trying to figure out at what point the S&P 500 would have to fall for me to get a capital call on a box spread.
- [25:02]
Bo
Okay.
- [25:02]
Graham
And it was so confident. It was like 72. I'm like, that's incorrect.
- [25:06]
Bo
Did you check the math on it?
- [25:07]
Graham
Yeah, I did.
- [25:07]
Bo
Okay.
- [25:08]
Graham
I knew that was incorrect. They said, oh, sorry, actually it's 68. I said, no, that's not correct. Oh, it's 84. Just kept changing.
- [25:14]
Brian
It's just right.
- [25:15]
Graham
No, it's 90 plus. She's like, oh, yes, my apologies. I was interpreting incorrectly how you phrased the question. It's actually like 94. Like, that's too high. Oh, actually it's.
- [25:26]
Bo
And it would keep saying, oh, you're right.
- [25:27]
Brian
Oh, that's.
- [25:28]
Bo
Oh, great catch. Oh, I'm glad. I'm like, no, I'm not supposed to. You're supposed to catch it.
- [25:32]
Brian
It's. That's what.
- [25:33]
Bo
That's.
- [25:33]
Brian
That's why you do have to be careful because the confidence that it comes out of the gate with is. Is really strong. And there's a lot of ghost in those numbers still.
- [25:40]
Graham
But what's interesting is that now brokers are implementing this new AI into their system where you could tell it what you want it to do and it'll execute whatever trade on your behalf. So if Jack wants to buy call options on Amazon at a certain strike price, he can literally just type it in the chat and it'll go and do the thing that he's described, which brokerages have that public and Robinhood are launching that.
- [26:01]
Bo
Yeah, interesting. But I do think one of the things. So when I hear you say that, I was like, oh, that's really neat. That's super interesting. At some point, Jack would have to decide, okay, should I be buying call options on Apple? You know what I mean? Just cause you can doesn't mean you should. When it comes to that financial stuff, that's like a really neat thing. That's probably like a cool value add. Assuming it makes sense for me doing that. What I wouldn't want someone to do is hear that and be like, oh, I'm gonna go get that and I'm gonna start buying call options. If you don't understand what that is or how that works, that. That might not be.
- [26:32]
Graham
Talk to you like, chatgpt, great call. I totally agree with this.
- [26:36]
Bo
Do you think Apple you are right now? Yes, yes.
- [26:39]
Jack
Warren Buffett Graham said that he thinks selling covered calls is the dumbest thing ever. What are your words on this?
- [26:45]
Graham
I said it was pretty dumb.
- [26:46]
Jack
He said selling covered calls. It was pretty dumb.
- [26:51]
Brian
How far out of the money? I mean, what do you have? There's so many, there's so many variables here.
- [26:55]
Graham
Like very little out of the money, but within like a month, two months, give or take. You know, how is that dumb? Because you're picking up pennies at the expense of the long term stock market growing and there's no such thing as free money.
- [27:08]
Bo
That was my question. Whenever someone asked us, what do you think about this? I always default back to why. Okay, selling covered calls. Why do you want to sell covered calls?
- [27:16]
Jack
I would say there are certain stocks that I'm like hesitant on buying. For example, let's just say Chris Camillo says you should buy Bloom Energy.
- [27:24]
Bo
Okay.
- [27:24]
Jack
I'm like, well, I don't necessarily want to do all the due dilig into why I should buy Bloom Energy, but maybe I would like to have the appreciation of this Bloom Energy. And so I go and I buy a hundred shares of Bloom Energy. But the only way I justify myself to buy this hundred shares is because let's say I can get three and a half percent per week on weekly call options if I want to sell covered calls. That's a good enough hedge where, hey, look, if it does end up going down, do I think it's going to go down on average more than three and a half percent? It could, could have gone less than three and a half percent. It could, but still I have some appreciation of a stock that he told me I should buy. I get to watch it. I get to be more like involved with the.
- [28:04]
Bo
Okay, so let's play the other side of it. You do it, you buy the Bloom Energy and you're selling this. And then Bloom does some exciting stuff and it takes off and it did.
- [28:13]
Graham
And it just, it's, it's $300 now.
- [28:16]
Bo
And your position, you know, it gets called away.
- [28:18]
Brian
Would you buy a.
- [28:20]
Jack
Well, I bought it kind of all over the place, but let's just say like my average. I don't know why he's laughing. Because I made more money on Bloom Energy than him. So you go ahead and keep.
- [28:27]
Bo
But let's say, but let's say that it gets called away. Yeah, right. It did for forever. You're going to be sitting in that position where you're like, man, or just
- [28:33]
Brian
like we are totally pick on each
- [28:36]
Bo
other saying that he's laughing because I made more on Bloom Energy than you
- [28:39]
Graham
make a blue better.
- [28:39]
Jack
Dude, I'm up 26 grand right now on my 200 shares I'm holding.
- [28:43]
Graham
I'm up more than that.
- [28:45]
Brian
Oh, yeah, you're making my point from something I said earlier. Do you want a sports fish, or are you trying to feed the family? Because y' all are.
- [28:53]
Graham
Y' all are up way more than that.
- [28:54]
Brian
Y' all are no different than two buddies who go out fishing so you can tell fishing stories on the fish that you almost caught and it got away. Whereas I'm telling you there's a huge difference between investing versus speculating some of this stuff. This is. This is speculative.
- [29:08]
Bo
It's hardly.
- [29:09]
Graham
I mean, sure, because you're.
- [29:10]
Jack
You're. You're trying to. But you're making money off of time, which is what you're doing with invest. But you can explain that theta decay. Please explain that.
- [29:20]
Graham
Jackson understand that when he buys a stock, there is a risk that it goes down. So if he's making 3% in a week, it could very well go down 6% in a week, and he's net negative.
- [29:29]
Jack
I don't understand. I absolutely do. Your position is more bullish than my position because mine is actually a hedge against the position.
- [29:37]
Graham
That's why I'm up so much.
- [29:39]
Jack
But you were speculating more than I was. Yes, you are.
- [29:42]
Graham
I bought in cheaper.
- [29:43]
Bo
So one of the. So one of the questions I'm asking is like, okay, what's the thing?
- [29:46]
Graham
I'll show you mine.
- [29:47]
Bo
What's the thing you're trying to accomplish here? What's the goal you're trying to achieve? What do you want your money to be doing for you? In the instance that you're describing, that would not be one that screams to me, ooh, selling covered calls makes a lot of sense. Where a covered call position might make sense is if you're executive who has a highly concentrated stock position, and you want to figure out a way, okay, I can't sell this position because of embedded gains. Perhaps I'm doing some sort of strategy where I want to protect my downside, but I also want to recoup some premium on the upside to cover the cost of the. Put something like that. You're in your. In your scenario. If I was trying to just make a little bit more money on it, and I was, you know, bullish on it, I would maybe just buy a different stock that would do. Do something differently because I agree with you. Just because just because you can make some money doing something oftentimes doesn't mean it makes a lot of sense. You can, you can go walk around the freeway and pick up cans and you can bag up all those cans. You can spend a couple hours doing that. You can take them in and trade them in and get the recycling money for that. But is that a good use of time and was that a good use of mental calories?
- [30:44]
Brian
I don't think it's all worth the hassle factor because look, I've had. This has happened to me so many times in my decades of investing. I'll meet a neighbor and he'll find out. He's over here calculating returns. I've had a neighbor find out I'm a financial advisor and they're like, you know, what stock do you recommend? And then you know, they're talking to me, you know, whether at the time it's Fitbit or whatever the latest greatest thing is. And then what's always funny is I tell them once they get to know me, I'm like, I buy index funds. I mean that's what I actually do with my money is I buy index funds. And it was funny as I watched the education is, you know, after we get to be friends and five years in the future now, you know, I looked, I start looking at my annual return of all the trading I was doing in individual stocks. And then I started looking at what I was making on just the total market return or the total market or the s and P500 index. And I think I'm making more money on the S&P 500 or whatever. And I'm like, yeah, it's amazing. And you didn't have to stress out and, and think about everything that was going on. That's, that's the reality I try to share with people because even if you, and this is, let me play devil's advocate because even if you weren't selling the covered call where they, you got it taken away from you, if it goes, shoots up, I've experienced because I even have a story back in 2008, I called all my buddies and I was like, look, Apple stock right now is trading at a price that is the equivalent of what their physical assets. I'm not talking about their, the actual IP and intellectual property. I'm talking about the campus and other things. This stock has been beat up so bad. I was like, this is the biggest, no brainer, we should buy some Apple stock. So me and some buddies, because I don't buy a lot of individual Stocks. I'm an index investor. We bought Apple stock. I after. And let me ask you. This stock you bought, would you have sold it if it was up 200, 300, 400%? Or would you have taken your money?
- [32:34]
Jack
Probably not.
- [32:35]
Brian
You would have kept it. You'd have just rolled forever. I honestly ride or die.
- [32:38]
Jack
Have never really sold stocks. The only thing I've ever sold. Really.
- [32:40]
Brian
So you have permanent portfolio for everything.
- [32:43]
Graham
Except for Robin.
- [32:44]
Jack
Robinhood. Because I had. Yeah, because I. That was a different.
- [32:48]
Bo
You.
- [32:48]
Brian
You're the type, Jack. You're the prospect that we would get. I want to get back. Don't let me get off topic on this margin culture.
- [32:53]
Graham
$10 a share for Robin Hood.
- [32:55]
Brian
Yeah, Jack. It would be the prospect that comes to us. And it looks like a quilt of his life. It's the. It's the quilt of Jack's wonderful life. Because you can see what he was doing in every decade of his. Of his life.
- [33:05]
Bo
Three and a half percent.
- [33:06]
Jack
Three and a half percent. Guess what time how long this is? One week. If you sell a call 25 cents out of the money on Robinhood weekly calls, you can get three and a half percent. This already not. This is just linear growth. Not even counting compound interest. 52. This is 185% return on Robinhood over the course of a year.
- [33:28]
Bo
What price did your balloon get called away at?
- [33:30]
Jack
It got called away at a few different. I mean just like I had quite a few different. So that's why it was like 88, 92, 94. I was making money on all of. What's it trading for now to 280 bucks.
- [33:40]
Bo
I would argue that the long position you missed out on did not compensate for the ROI you got in the covered calls. Right. Like had you held it.
- [33:49]
Brian
But I'm not.
- [33:49]
Jack
I'm not observing. I'm just observing it in terms of what is the growth expressed as a percentage?
- [33:54]
Brian
Sure.
- [33:54]
Jack
And so like. And also I had 200 shares because guess what? It started going up and I had 200 shares that didn't get called away from me. Like, you know what? I'm just gonna ride it out. And I did. And now it's at 200 and whatever dollars. And so I'm just saying a company is solvent as Robinhood. Do you think that it's going to zero in the next year?
- [34:11]
Bo
I haven't looked at their financials. I wouldn't.
- [34:13]
Graham
Probably not.
- [34:13]
Bo
I wouldn't.
- [34:14]
Jack
I met Vlad Tenev. We had him on the podcast. The CEO, founder of the company. Everything seems total Love the company, have used the app like I invest on the app. It's phenomenal. And so like, why, if the company doesn't go to zero, assuming that premiums stay the same, right, you'll get 185% return in a year.
- [34:32]
Brian
But is this the best use of your time?
- [34:33]
Jack
And this is the point for me is, is it the best use of his time to be hunting for a coffee that's a dollar cheaper, Right?
- [34:40]
Graham
It's the hunt, right?
- [34:42]
Jack
This time, hobby to buy five of those shirts because they give you at checkout additional 5%, 5% off when you add other. But let me talk about that for the episode.
- [34:50]
Brian
Let me bring it. Why I don't love individual stocks.
- [34:53]
Graham
Now, I gotta say one thing that I've noticed by talking to a lot of entrepreneurs is that all of them want to use AI, but they don't know how it'll actually work inside their business. Like, it's one thing to use AI to write an email, but it's another to have it handle incoming calls, set appointments, answer questions, and talk to customers in real time.
- [35:12]
Jack
And that's where today's sponsor, 11 Agents by 11 Labs comes in. It's a platform that lets businesses build real time AI voice agents for sales support operations, inbound calls, and more.
- [35:22]
Graham
What's really impressive is just how fast it is to set up. You could launch voice agents in minutes and they could speak in over 70 languages. Here's an example.
- [35:30]
Jack
Podris de sir me que tipo de ayuda necesitas. It also works with tools businesses already use like Salesforce, HubSpot, Zendesk, Google Calendar, and Twilio. So instead of having to change up your entire workflow, it fits right into the systems that you already have.
- [35:44]
Graham
And you could train these agents using your own knowledge base, SOPs and policies. That way the responses seem consistent within your business instead of just sounding generic.
- [35:53]
Jack
Plus with expressive mode, they give you way more control over the tone and delivery. So the conversations sound way more natural and human.
- [35:59]
Graham
So try out 11 agents by going to 11 labs IO iced coffee hour to get started today for free. Again, that link is down below in the description. Thank you so much. Now let's get back to the episode.
- [36:12]
Brian
Let me bring it back to why I don't love individual stocks. Because I just gave you the perfect example of Apple. We got in in 2008, dirt cheap. Me and buddies all threw a few thousand bucks at it. When it went up threefold, I jumped out because I was excited. I made 300% in a short period of time because when the market recovered it came back quick because everybody else caught on. Hey, Apple's a pretty good company to own. My other buddy, I think he might have held on for four times. But the thing is we all dropped off one of my buddies. He still owns it, he never got out. So I know he might be the Jack. So what is the million group it's worth? No, because I think he put in 5,000 bucks. It's worth over half a million dollars from that one holding. Wow. So I mean that. But I'm telling you that the. But that sounds great. But the majority of us are going to exit.
- [37:01]
Jack
This is not anything that I would recommend publicly because it's like you need to. This is purely logic, no emotions whatsoever.
- [37:08]
Graham
What Jack is trying to say is that he's able to make over a hundred percent a year with little downside if he keeps doing covered calls. Right? Because if he gets the shares called away, he could always buy a little
- [37:19]
Jack
more and make another more shares.
- [37:21]
Brian
But the problem is there is some long term because you're getting called away on its short term holdings. So you're paying, you're paying ordinary income tax rates instead of the long term capital gains.
- [37:31]
Bo
But okay, when you buy a position that actually does go down, that doesn't come back and you made a poor purchase, you can't get those dollars back into the Roth. My opinion is if you're going to do those sort of strategies, I think the losses would likely be more valuable than sacrificing Roth dollars. You will not be able to replace Roth. You 7,500 in there at a time. You make one bad call that loses you 20, 30, 40 grand. That's like years and years and years of contributions you won't get back unless you have another, you know, investment that hits. I would argue the tax drag is something I'd factor into my calculation and I'll consider them a tax.
- [38:05]
Jack
So even qqq.
- [38:06]
Graham
Right.
- [38:07]
Jack
For example, you can sell daily call options on Q. Q. Q. And if you extrapolate that over the course of a year, it's like a 26% guaranteed return. If you were holding QQQ in your Roth IRA, why would you not guarantee a 26% return as opposed to what else? You know, what other way you could,
- [38:21]
Bo
you could get that it were a guaranteed 26% rate of return that was an assured thing. Why wouldn't every fund manager in the world be doing that?
- [38:30]
Jack
Probably a volume investor, right?
- [38:32]
Graham
Because they do covered call ETFs.
- [38:34]
Bo
They certainly do, but not ones that are guaranteeing 26% rate of return. Because once an inefficiency exists, we live, we operate in a capital market that adjusts pretty quickly. So, yeah, inefficiencies can exist, but once inefficiencies get exploited, they then become efficient. So I'd argue, I don't think something like that has staying power where even if you made three and a half percent for a week and if you did that for multiple weeks, I don't believe that that would sustain throughout the course of a year. So I think it's illogical and irrational to assume that you could extrapolate 185% rate of return. No different than if you. And look, it's not the exact same thing, but if you go to a casino and you. All right, I hit red. I hit red. I hit red. Well, if I did it a hundred times, think about how much money I'd make. That's not the way that it works.
- [39:18]
Jack
I mean, you can get 3/10 of a percent daily on QQQ calls at the money, which is not too bad.
- [39:24]
Brian
But you do real like you. You said you make 100. Was 185% or.
- [39:28]
Jack
Yeah. On Robinhood selling cover calls, there's.
- [39:30]
Brian
It's Bo's. Exactly right. If you could actually do that repeatable, you know, in a guaranteed way, people would be making a. There'd be a. You'd be able to do that. And there are structures Carter brings to us all the time, these crazy structures with, you know, that you can set. He's gonna be mad that said the word crazy, but he's. He doubt. He looks at those things where they do try to play these crazy arbitrage situations. And they're interesting, but it's not something. I don't know, maybe this is where
- [39:59]
Jack
the reason why billionaires don't do it is just because it's a strictly like, volume problem. Problem. There was not enough volume.
- [40:04]
Bo
But why not millionaires? I. I agree with you.
- [40:06]
Jack
A lot of millionaires do. Yeah. I mean, a lot of people retire just doing the wheel strategy.
- [40:10]
Graham
What's the wheel strategy?
- [40:11]
Jack
You sell a put, and then if you get a stock put to you, then you sell a call to get it called away from you.
- [40:15]
Graham
I've never heard of that.
- [40:16]
Brian
I would ask you to, to track your time on all these things too, because I think if you add the time element to, to all these hobbies,
- [40:24]
Bo
it seems like it's a hobby. This is something you enjoy. You're not doing it. So Much for the economic outcome. You're doing it for the environmental outcome.
- [40:28]
Brian
Because this is the same problem I have when people try to compare my index investing to, like real estate investing. I'm like, like, yes, levered debt is going to do incredibly well compared to an index fund. But let's put into how much time you have to put into the real estate and everything. The time that's going on these strategies is worth something too.
- [40:43]
Jack
Yeah. I sell calls on maybe 5% of my portfolio, 10% of my portfolio transparently.
- [40:48]
Bo
So this is just play. It's a.
- [40:49]
Jack
And. And yes, I have lost out on a lot of gains when stocks have gone up, but I've also decreased my level of loss when stocks have gone down. And if you extrapolate this as a return or maybe expressed an on an annual basis, I've beat the market, like, consistently since I've done it.
- [41:03]
Graham
I'm not counting Bloom.
- [41:04]
Brian
I'm going to counting Bloom.
- [41:06]
Jack
I made money on Bloom.
- [41:07]
Bo
I don't understand.
- [41:08]
Graham
Not the shares that got called away,
- [41:09]
Jack
though I did make money on the shares that got called away.
- [41:11]
Graham
3%.
- [41:14]
Jack
Yes. In a week. How was that bad? 3% in a week is 150.
- [41:17]
Graham
They're up to 100% since then.
- [41:19]
Jack
But I'm talking compared to, like the average stock market.
- [41:22]
Brian
Here's what I can't wait to see, Jack, because y' all have already put yourself in a box because you said you're gonna let us see your portfolio at the end of the show today. Sorry. So we will get to look at your portfolio. You've also. Because we've all gotten friendly. I kind of know what you make to a degree. We're going to judge you hard if we know how well you're doing in life. And when we look at your portfolio, we're expecting to see magical stuff. Because otherwise.
- [41:41]
Jack
Why don't we do that right now?
- [41:42]
Brian
Because otherwise I want to. I want to feel like you're here right now. You're growing with your. You have so much capacity to grow with your good income.
- [41:51]
Jack
So the money guys react to my stock investing portfolio.
- [41:54]
Bo
All right, let's go.
- [41:57]
Brian
Okay, let's look at this now. Now can I, Can I ask you a question, though?
- [42:02]
Bo
Yeah.
- [42:02]
Brian
You shared last time we got. Last time. We got to hang out. I kind of know what your income is. Multiple. How long have you had that income that you shared with us last time we got to hang out.
- [42:12]
Jack
What did I say my income was?
- [42:14]
Brian
Well, I can't. I'm not going to say that. I'm not going to say that. I'm not going to say that. Maybe here you want me to write something?
- [42:20]
Jack
A year and a half.
- [42:21]
Bo
Okay. Okay.
- [42:24]
Brian
Because I want to see a multiple of that.
- [42:27]
Jack
I don't spend any money. So I mean you could, you could. Look, this is like my, my gains over time. See, I don't spend any of my money. Most of my money is in this or not that like the Vanguard equivalent.
- [42:37]
Brian
And Jack, let me ask you another question.
- [42:39]
Graham
Yeah.
- [42:39]
Brian
When these stocks on volatile days, like right here, I mean if there was a stock, none of them are having huge days. But if you, if you lost 20, 30% in about a three day cycle, do you emotionally feel like you get, you know, does it feel like you got kicked in the stomach? Do you actually have emotional reactions to what's going on in your portfolio?
- [42:58]
Bo
So as I'm looking at this, right. Like I'm just looking at. This is specifically your taxable account. So you were kind enough to let us look through all the accounts. I was expecting to see a bunch of really, really crazy stuff in here.
- [43:07]
Brian
It's actually a bunch of household names.
- [43:09]
Bo
The lion's share of what you have is even spy. Yeah. Or in like you know, low cost ETF indices, which I think is fantastic.
- [43:19]
Brian
This is like Vanguard.
- [43:20]
Bo
Yeah, right. It's a vast majority.
- [43:23]
Brian
And so you just dabbling.
- [43:24]
Bo
So like yeah, you have, you're dabbling. You have some individual stock positions but at least in this account I'm going to say relative to your total wealth, relatively immaterial. So this doesn't give me a lot of pause. Like I'm not, I'm not super concerned in this account. And these names that you hold aren't really frightening names. They aren't things that I think that I think I would be afraid of holding. I do see some losses in here that perhaps if I were worried about my tax bill and stuff, I think maybe clip that loss and find something that seems a little bit more attractive. I know he really likes that one though.
- [43:56]
Jack
Which one is it?
- [43:57]
Graham
You could say the names of the stocks. It's got the amounts.
- [44:00]
Bo
Robinhood. That's one that you really super bullish on your position right now though. Pretty attractive loss in there that could be used to offset some of these future capital gains.
- [44:08]
Jack
You can see how much I've lost.
- [44:09]
Brian
32%.
- [44:11]
Bo
You're down 22 and a half percent on that position. Might be a great. Again, might be a great little loss to clip. Just so that way in our world losses are. We don't love Losing money. But whenever losses are present, we love taking advantage of those. So that's something there.
- [44:26]
Brian
Can I, Can I look at something?
- [44:28]
Bo
Yeah, I want to go. I want to get to the Roth.
- [44:29]
Brian
That's the one thing that I'm just going to say this. I would say I couldn't do the math because it was moving really quick before me, but it looked like three quarters of that account that we just looked at was pretty much in what I'd call tried and true. You know, it's. It's index fund type or. Or fun or stocks that are in the index or the top performers. So, you know, in the top.
- [44:50]
Jack
Tech heavy.
- [44:51]
Bo
It's super tech heavy.
- [44:52]
Brian
It's already, you know, because the s and P500 is already probably highly concentrated in a lot of these stocks that you already have. I don't think you're as. You're acting like you're an exotic. And it's actually pretty. Pretty plain vanilla.
- [45:06]
Bo
Yeah.
- [45:06]
Brian
Like, in a lot of ways, if you look at the 75% of this, 80% of this is doing the. The same thing. So then I'm back to my point of what are we doing here? I mean, what's the hassle? And I'm fine with that. I'm fine.
- [45:18]
Jack
Well, actually, I've made money on it. Well, like a decent amount of money.
- [45:21]
Bo
A lot. There's a number of people that made money gambling. There's a number of people make money sports betting. There's a number of people that do those things. You can make money on hobbies. I'm not disagreeing with you there, but what I'm suggesting is it's more of a hot. You get utility out of this, totally fine. I was nervous I was going to look on here and see a bunch of like, penny stocks.
- [45:37]
Brian
You had $100,000. It's much more.
- [45:40]
Jack
I wouldn't do this strategy on a stock that I'm not bullish on.
- [45:43]
Graham
What would you rate his portfolio out
- [45:45]
Bo
of 10 from aggressiveness or for quality
- [45:47]
Graham
of portfolio overall for his age?
- [45:49]
Jack
Let's say. Yeah, quality of portfolio considering my age, my income, the industry I work in, et cetera.
- [45:54]
Brian
How much time are you spending on this? I know I keep asking that.
- [45:57]
Jack
No, honestly, none.
- [45:58]
Brian
No, but you are spending time because you obviously you've got stuff all over the place.
- [46:01]
Jack
I can show you my schwab screen time. I mean, maybe it's like, maybe it's five minutes a week, ten minutes a week.
- [46:08]
Brian
Okay.
- [46:08]
Jack
I literally, I don't even look at the numbers. Like, I just Hop on. And I just like I sell a call if I need to. I'll buy something if I have some spare cash.
- [46:15]
Bo
I'm gonna give you. I'm gonna give you a seven and a half eight. Seven and a half eight. And. And I'm also want to disclose this portfolio is probably gonna perform pretty well because it's very aggressive. Right. So like when you. We see a year like last year, 20, 25, where the market did really, really well. I'm willing to bet this portfolio did really, really well. And that.
- [46:34]
Brian
That now the things I'll pick on is also. Okay. I do see an individual 401k, but it's. There's no money in that account. There is a separate. Where there's some money in you. Would you strike me as with your level of income, that solo 401k should have been fully loaded.
- [46:49]
Jack
It will be.
- [46:49]
Brian
Yeah. Okay.
- [46:50]
Bo
And that's why. And that sepire will probably disappear. Right. So then we're going to open up some opportunities, do some backdoor Roth contributions, that sort of thing.
- [46:56]
Brian
Because.
- [46:58]
Bo
Yeah. And look, you've been safe and good. This is a big.
- [47:01]
Brian
Yeah. Cause that's the other thing.
- [47:02]
Bo
How old are you again?
- [47:03]
Jack
27.
- [47:04]
Bo
27. That's a great solid.
- [47:06]
Brian
No, you're doing great in the fact of your age and where the assets are at. And your Roth, you probably haven't been able to make contributions because of that sep. But we're about to change that by doing the Solo 401K. Yeah. So there's some account structure stuff that I would totally want to clean up. So you could do backdoor Roth contributions and then really give it to the man legally by loading up that solo 401k, maybe y' all have enough profitable profitability. They could potentially do like cash balance and other things too.
- [47:35]
Jack
Graham would attest that, like, I have never been a big spender. Like, I have never spent money on anything. Like, the most expensive thing I've ever bought was my car, aside from my house. And I bought a watch.
- [47:48]
Bo
Very nice car.
- [47:49]
Jack
It was a Tesla.
- [47:50]
Bo
Okay. Yeah. But it's not. It's not. You didn't go out and buy a Cullinan, you know, like a. A reasonably nice car.
- [47:55]
Jack
Yeah.
- [47:56]
Bo
Look at his unrealized gain loss I'm assuming is this year to. Is that okay? Now I want to see realized gain loss here today. That's going to be on here, right?
- [48:04]
Brian
Yeah.
- [48:05]
Bo
That's just interesting.
- [48:05]
Brian
Dividends. It doesn't show losses and gains because I was.
- [48:08]
Graham
Yeah.
- [48:08]
Bo
What I was trying to See is how was it tax inefficient? Like, you know, so one of the, one of the things that, you know,
- [48:15]
Jack
it's probably tax inefficient.
- [48:16]
Bo
Yeah. A lot of people, they like trading, they like, it gets super exciting and then it gets to April. And one, if they have an accountant, they got to pay their accountant an extra X number of hundred thousand dollars because of the 4,000 transactions have to put in or at least 4,000 transactions have to monitor when they file their tax return. And then there's usually a huge capital gain that thought, you know, if they've had success and they've not been harvesting the losses. So I was trying to see where that existed. But in full disclosure, I'm going to give you an 8 out of 10. 8 out of 10.
- [48:43]
Graham
What would take it to a 10?
- [48:47]
Bo
Some well thought out strategy. Right? Like explain to me how you defined your allocation. Because what I really see is it's a lot of us, Fortune 100, Fortune 500 tech companies, which is fine, but there's a lot of concentration. The singular asset class. Okay. Perhaps for a portfolio that size, I'd want to see something a little more diversified.
- [49:09]
Jack
So my, my response to that is I think that the, the asset class that I'm in right now is like tech is going to just grow faster. And, and for me, I, I'm very, very. Since I've been investing for so long, I've weathered so many ups and downs and I also assume every single time because I don't dollar cost average, whenever I take a distribution from the company, let's just say I take $10,000, I immediately take 2,000, put it into my like checking account, 8,000 immediately into the investment account.
- [49:36]
Bo
How often do you take distributions?
- [49:37]
Jack
Maybe monthly, month and a half.
- [49:39]
Bo
That's dollar cost averaging. You said you don't dollar cost average, but that is in fact dollar cost averaging.
- [49:42]
Jack
Okay, sure, yeah, yeah, but, yeah, but I basically just buy as much as I can and I buy as quickly as I can. And then if taxes come up and I need money for taxes, I'll even sell my investments in order to pay my taxes. Because here's the thing though, if you extrapolate this over a long enough period of time, then it's a winning bet
- [49:59]
Bo
if the market went up that year.
- [50:01]
Jack
But if, yeah, if it went up that year, it went down that year. But if on average the market goes up 10% per year, you're taking a 10% advantage bet. It's like you're being the house with a yeah, but you said you love every year.
- [50:10]
Brian
You love sequence of return does matter.
- [50:12]
Bo
You love three and a half percent guaranteed so much. If you just park that, some of that money for that tax bill in a three and a half percent high yield account.
- [50:18]
Graham
No, but you. Three and a half percent a week.
- [50:20]
Brian
In a week.
- [50:21]
Bo
Okay, fair.
- [50:21]
Graham
Not fair. I've been a week, not a year, man.
- [50:25]
Bo
That's, that's a strategy. That's a strategy.
- [50:27]
Brian
I do think that there's room for improvement on structure, which you already know though, because you just talked about.
- [50:31]
Jack
I think the structure is.
- [50:33]
Bo
And you see like last year, you know, again, we, we are bullish on the same things that you are bullish on. Yeah, but we do still love like international holdings. We do still love small cap. And like if you look this year, especially the first quarter, we saw volatility in the S&P 500. It was wonderful to have those parts and pieces in the portfolios because they've outperformed. They outperformed last year, outperformed this year. So again it's an 8. I would just love to see more like thought behind it. It looks like the thought is, I like this today. I'm going to buy this today.
- [51:03]
Graham
Yeah.
- [51:03]
Jack
And then just hold on to it
- [51:04]
Bo
forever and just hold onto it forever.
- [51:05]
Graham
So speaking of investments though, the market has hit today, officially an all time high at the time we're filming this right now. Should investors be worried about this?
- [51:15]
Brian
Do you know how. I mean, I figured y' all are going to ask something like this. I should know the exact number, but I don't you realize we've had like, I think it's 200 plus all time highs this decade alone. I mean in the six years. Yeah. So I mean when markets run through bull markets, so you know, you start going up, the market's up much longer. Like bear markets typically are 11 months, but bull markets run for much longer. So you hit all time highs over and over again.
- [51:41]
Graham
Okay, but this chart is pretty scary. This is going viral right now on Twitter and the caption is only one question. Who's the exit liquidity? That's a spooky looking chart.
- [51:51]
Bo
Yeah, it is a spooky looking chart, but 1984. Right. So we're looking at 40 plus years of data right there.
- [51:58]
Brian
That is the economy though.
- [52:00]
Bo
That's, that's what's happened. Think about where US GDP is today relative to where it was in 1984. Right. It's a very different thing. The pizza pie gets bigger. Should you be concerned about the Market hitting all time highs. If you haven't thought about your asset allocation and having a portfolio that matches your risk tolerance, your risk capacity and your unique financial needs, then yeah, you should be worried about that. But you shouldn't be worried about that before the market at all time high. Warren Buffett, you know, is famous for saying be greedy when others are fearful, fearful when others are greedy. What you never see Warren doing is when, when markets hit all time highs, he doesn't dump his portfolio, he doesn't sell his positions. He may store up additional cash when he thinks there aren't things that are attractive, but he's not being afraid. He's waiting for that moment where he actually can be greedy when the opportunity persists. So I think if you're in the right portfolio, well structured, well thought out, right asset allocation, right asset location, the market does go down from here, 10, 20, 30 even in 2008, 37% over the course of 12 month period. The right portfolio should be designed to weather that well for your unique circumstances.
- [53:07]
Brian
Look, I, I get, I get the fact that a lot of this is concentrated in some of the biggest AI companies and technology companies right now. What I'm trying to figure out, just being honest because we don't by the way, I'm going to be transparent, tell you I don't have all the answers. But you should also know everybody who tells you they do with the confidence they don't. I'm fully in the system and I can tell you they are, they are probably trying to sell you something if they act like they have it all figured out. What I'm trying to figure out for myself is when you see this big run up, I'm old enough that I've been around for the personal computer coming on the scene. I've been around long enough when web and the Internet changed the world and here we are in a new disruptive technology with AI coming on the scene. I'm trying to figure out is this what everybody's worried about, is a bubble or are we truly at this, what Elon was alluding to, at this new disruptive side of things where efficiency and profitability gets expanded at a level we haven't seen. It's kind of like you know, the horse and carriage compared to what happened when you got transportation and then take it up to another level when you got air transportation. We don't know yet. And that's the part I trust the economics of an index fund more than I do a manager that we'll see. And plus we're diversifying. I mean, I will tell you, I just got off. I had a client meeting right before this interview where the client, you know, when I had got in the meeting, I thought he was retiring in the next two to three years. So we planned on having a lot of heavy discussions on let's start all time highs right now. Let's start bringing down the risk profile slightly. We're not doing apple cart turnover, exactly what Bo said, but we're going to bring it down slightly. He let me know he plans on working for many more years. So we're going to let it keep rolling. But you should make sure your allocation is good so that before something big happens, you don't have to react. You're good before, during, and after. That's what diversification is supposed to do for you. I'm always amazed that people think that they're going to do and that's why I always pick on the vu for life. I love the S and P, but there is too much of a good thing is if you think that you're going to do this until you're 55, 60 years old and you go slam your retirement into the ground and just, you'll be okay. That's scary to me. I mean, and I made the analogy of air transportation on purpose is because if you flew commercially and the pilot got you up and then Drew threw you into the ground as fast as possible, you would never fly commercial because you'd have a fear, a phobia of it. But what you want to do is you want to glide path this thing down, live your best life and not have to react no matter what the market. Because there's already going to be weird stuff that happens to you emotionally when you leave the workforce. So you might as well make sure that your money can actually keep you safe while you're. You're kind of going through the ups and downs of the volatility.
- [55:52]
Graham
Who do you think should manage their own portfolio?
- [55:55]
Jack
This episode is in partnership with Airbnb. Graham and I are always traveling for the podcast. We were just in Nashville filming a few episodes there. And let me tell you, the food was incredible. I had the absolute best appetizers I've ever had. There was this dough ball and these steak skin potatoes. It was incredible. But let me ask you this. Do you ever think about your place back home when you travel, when you're gone for days or even weeks at a time, you can list your space on Airbnb so it works for you instead of just sitting empty.
- [56:21]
Graham
And if You've ever considered listing your space, but you weren't sure how you'd manage everything while you're away? Well, that's exactly where Airbnb's co host network comes in. With this, you could partner with a vetted local co host who has hosting experience and can help take care of the important details for you.
- [56:35]
Jack
A co host can manage the reservations, communicate with guests, and handle the on site logistics so everything runs smoothly while you're traveling.
- [56:41]
Graham
If you have upcoming travel, you probably don't think twice about your home sitting empty. But you could bring in some extra cash while you're away.
- [56:48]
Bo
I kid you not.
- [56:49]
Jack
A couple years ago, before I had all of the rooms in my house filled up with roommates, I actually listed a room on Airbnb. And the entire process was genuinely so easy. The extra cash was amazing and I was genuinely just so surprised at the simplicity of the entire process. If you're trying to make some extra cash on the side, I couldn't recommend Airbnb more. If you're ready to host, but need a little bit of help, find a co host@airbnb.com host.
- [57:12]
Graham
Who do you think should manage their own portfolio?
- [57:15]
Bo
I think there's a lot, a lot of people. It's really interesting, like, oh well, you're financing. I think Jack should. Yeah, A lot of people think, oh, you guys are financial advisors. You must think that everybody should hire a financial advisor. No, not the case at all. There are a lot of people out there that are incredibly capable of managing their own portfolio. We actually say for folks that are just starting out while you're building out in your 20s, 30s, really, until your assets hit a critical mass to where complexity enters in and you have 500, $600,000 invested. There's so many great resources out there with YouTube channels and blogs and articles and self management is not that difficult and, and perhaps AI is making it even easier because now you can get real time feedback on real questions. You have answers aren't always right, so you want to make sure you kind of understand that. I think that a lot of people can self manage up to that point. But generally speaking, one of three things happens in your life. Either the gravity of your decisions is so great that you feel uncomfortable making the decision alone. Meaning like, okay, if I make a 10% boo boo on $10,000, it didn't change my life. I'll make a 10% boo boo on a million bucks. Okay, that's more significant. I don't know what I don't know. You Know my tax return used to be two pages long and I had my full. Now I've got different compensation structure, I have a rental property, I have all these other things going on where complexity has happened or I'm just so busy, stuff is falling to the back burner. Meaning like I know I'm supposed to rebalance but I just haven't had time. Or I know I'm supposed to think about my allocation but I haven't looked at it in two or three years. I think if any of those three things happen that's an indication maybe I'm not at the point where I can self manage. And a lot of times it's not even people who can't do it, it's people who aren't able to do it based on their current station and circumstance in life.
- [58:57]
Brian
The fourth one I'll throw in there is because we have some pilots that are clients that I told them in another life you should have done this for a living. Because I look at it, I mean you get, they become clients. Well they prospects first, their asset allocation,
- [59:12]
Bo
their portfolio is 10.
- [59:13]
Brian
You see, they've run all the Monte Carlos, they've done all the tax planning. You're like, you guys are geniuses, you're brilliant. And then you know, and I'm honest enough when I, when I was doing prospect calls with these guys, but you don't really need us. And then they let me in on. You're right. But I'm worried what happens when I'm dead and I'm getting old enough that I'm, you know, I don't want to, I don't want my wife or my spouse to be concerned about who takes us out. So we've actually had people hire us who are doing a superb job of self management but they just wanted us, we were their insurance policy in case they left and they wanted to make sure their spouse had somebody in the background that could, you know, that thought like they did about money.
- [59:53]
Graham
What should those people be investing in overall?
- [59:55]
Bo
I mean we love index funds. Low cost, well diversified, broad index funds. I think if you looked at the portfolios we managed the, the lion's share of those are there now there are areas where we do think that inefficiencies exist where maybe an active type fund might make sense. But for the vast majority low cost and the self managers that are young, that are just starting out, I think things like target retirement index funds are a great solution.
- [60:20]
Brian
The reason Bo gave the game earlier, we love index funds because, because we don't Talk about this a ton on the show. It's just the market because of how fast information travels everywhere now it's hard to think you have knowledge that somebody else doesn't have. So I think just buy the market. The efficient. That's why when he talks about efficiency like if you could truly do a trading strategy that generates 100 plus percent guaranteed a year, it would disappear so fast. I mean it's like we even.
- [60:49]
Bo
Because everybody, everybody.
- [60:51]
Brian
I mean we've even seen it because we really did have people present to us the crazy arbitrage that you can do on sports betting. And it's true. You really can make great money for a moment because their systems are so smart that they'll start limiting your bets as soon as they start realizing that you're playing those type of arbitrage trades the sports betting sites. It's the same way with normal investing too. If you really had the better mousetrap. I just don't. I don't.
- [61:16]
Jack
I think the things. The exact reason of what you're saying is like is what has prevented me from putting a meaningful amount of my portfolio onto a strategy like selling covered calls. Because every smart person says that the market is efficient and that there is no way to get 100.
- [61:30]
Brian
So just buy the index and save yourself the hassle.
- [61:33]
Jack
It's still. To me the logic does not make sense. Like I would love to be presented with an argument aside from just some theory that the market is efficient and you can't get it with actual math and data suggesting well look at the Spiva research.
- [61:46]
Brian
All these. If you could be an active manager that is just trouncing the S&P 500. Go look at the Spiva research. If you go spiva. Was it spiva.org or whatever is. But it shows you managers will beat the S and P but not consistently.
- [62:01]
Jack
I think that they probably have. They're probably trading huge amounts of money which is there. That's.
- [62:05]
Brian
Well, that's the other problem. That's a whole nother problem.
- [62:07]
Jack
I think that we. Let's. Let's discuss this afterwards at dinner because we're doing dinner afterwards and I would love.
- [62:12]
Brian
We'll.
- [62:12]
Jack
We'll say if they're right, if I'm right or if we just disagree to disagree.
- [62:16]
Graham
Jack's gonna cut back in like tears in his eyes.
- [62:18]
Jack
Yeah, I do but I do.
- [62:21]
Brian
I like But I think it's. It's actually freeing if we tell the general public that it's okay to buy an index fund even if you have millions of Dollars, it's okay to buy index funds because even there's still some sexy exotic stuff you can even do with index funds. Grandma had off, you know, conversations. Really cool things that are out there down the road if you're trying to get creative with borrowing money and other things. But you can just start your foundation still on just buying the general economy.
- [62:50]
Bo
And I think a lot of people are surprised to hear that even folks like deca, millionaires who have, you know, tens of million of dollars invested, a lot of them invest the money the exact same way as folks who have tens of thousands of dollars low cost, well diversified index fund.
- [63:03]
Jack
Should they be invested the same way?
- [63:05]
Bo
It depends on the unique circumstance. But I think in a lot of cases, yeah, I know for a lot of the folks that we work with, they're doing the exact same thing. Buying low cost S&P 500 well diversified, appropriate cash, appropriate risk metric.
- [63:16]
Jack
So here's, here's an interesting theory. I think if you have less money, you, depending on age, obviously, let's just say a young person who has a lot of money, a young person who has little money, the, the, the person who has less money should probably be a little bit more aggressive because to them you can't really do anything with.
- [63:32]
Brian
So what's your definition? Like if we, if you don't. Do you not. You don't think the S is aggressive, you think only the cues. You know, what do you think?
- [63:39]
Jack
Yeah, you know, you could be more tech heavy, you could maybe have a couple stocks that if they end up doing well, more risk, more risk capitalism
- [63:47]
Graham
hood.
- [63:48]
Bo
But wouldn't you argue that if you
- [63:49]
Brian
have recency bias to that as opposed
- [63:51]
Jack
to that analysis, if someone has $20 million and you'd say oh well, you should have tax free muni bonds, you should have, you know, a little bit of this, a little bit international index fund stuff that's more oriented towards capital preservation. Because once you have $10 million, you've won the game. There's nothing in your life that like for a reasonable, for a normal person that you want that you can't afford. But if you have $10,000, you can't raise a family, you can't afford a new car if you need one. You some, you know, let's say your car breaks, you might have a hard time transporting yourself around the city. You still need to work in order to afford the things that you want. Someone with $10 million does not. So like it's reasonable that they would go into capital preservation as opposed to the other person Going into more the
- [64:29]
Brian
S and P is not capital preservation. I mean, I mean look, it's not, it's not wide wild out but it's also not, it's not capital preservation.
- [64:39]
Bo
I would ask the. The risk of not being a successful investor is greater for folks with smaller sums of capital or lower incomes. That's why the, the person who has a smaller income but a lot of time and they're only able to save, you know, I can only save a thousand bucks a year or $5,000 a year. It matters for that person that that 5,000 grows and does well because they are really, really counting on it for that to be multiplied through compound interest over years and years and years and years. If they say, oh you know what I need to swing for the fences, I'm going to put all of it in Nvidia or, or an app or fill in the blank and it doesn't pan out. I would argue that that was more
- [65:18]
Brian
guts them behaviorally too because I mean I've. Look, I have a great friend came to America and he starts making good money, started some businesses here in the United States, starts making good money. And he asked me how investing works and I was like, let's, let's dabble into the, let's get you in the s and P500. You know, we set up, we open up like a Fidelity account, set up a contribution. I kid you not. It was probably two months into it. He calls, he sends me a text or calls me, I can't remember. And he's like, you didn't tell me I could lose 12%. And I was like, no, this is, it's part of the process. It's going to be a. Okay, don't worry about it. So he's, I found out he shut it down. So he only did, he only did two months. But they were decent sums though because he was going to dollar cost average some pretty good chunks because he has good money and he had some good savings. So these were two decent tranches that he put into the market. Fast forward five years, we're still good friends. He comes to me and he goes, I think I need to fire this thing back up. Because I looked at this account and Brian, this thing's up like 60%. And I'm like, yeah, this is the way this hall works is that, yeah, you know, you put the money in but you can't look at it daily. And that's what I worry. If you put something too aggressive for somebody brand new to the money making process and how the economy works, they get discouraged. And for a new person who doesn't know how economies work, what feels risky in the. In the. In the short term is actually your best advocate and success vehicle for the long term. And what feels safe in the short term is actually detrimental to you in the long term. That's what all these people. I grew up in a household. We didn't have money, but my parents were great savers, really good savers, really disciplined. I get my discipline from my parents, but they did CDs. CDs will gut you with inflation and everything else. If you don't understand the value of actually making your army of dollars work, you're. You're. You're doing the hardest part of the discipline, but never getting the part of letting your money do the work for you.
- [67:14]
Jack
So we've been pretty open about how much we love our team here at the Ice Coffee Hour. And when we were looking to hire Gavin, he wasn't just qualified. He was eager to learn about the job, excited about the podcast, and you could just tell that he wanted to be here, and that's what really made him stand out.
- [67:26]
Graham
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Jack
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- [67:49]
Graham
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- [67:56]
Jack
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- [68:01]
Graham
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- [68:13]
Jack
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Graham
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Jack
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Graham
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Jack
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- [69:27]
Graham
What are some of the biggest mistakes that you've seen people make?
- [69:30]
Bo
Well, not saving, I think is one of the most common you see across the general public. Just never actually getting started saving or putting something aside, living at their means. Because everything we're talking about is precipitated upon the idea that I'm going to defer a little bit of my income, my pay, my whatever today for some greater outcome in the future. And a lot of people don't even make it that far.
- [69:50]
Graham
I want to see the horror stories.
- [69:52]
Brian
Well, the other, the other thing, you see them, I mean the stats show it too. I can't remember if it was Schwab Vanguard, one of the big investment houses, talked about how much 401k money is just sitting in cash. Do you know how disgusting that is to think about how much money in an asset you can't even reach until you're in your 50s to 60s is just sitting in cash? That breaks my heart. I think that's a huge mistake. We see that all the time. Because a lot of people also don't know when you do rollover transactions, it's a two part transaction. You transfer from your old job to your new job, but then the second transaction you actually have to invest the money. A lot of people go through the hard work of transferring, but then it just sits in the cash reserves or the stable value and never gets invested. That's disgusting too. You know, say not Saving, not letting your money work. I'm trying to think of the other.
- [70:41]
Bo
I've got two horror stories for you. One, not knowing when you've won the game from a risk standpoint. Tell the story. You know who I'm talking about.
- [70:50]
Brian
I won't. I don't give too many details. We had. We had. We had somebody that was in our life that. And I saw their network. I mean, because they left some stuff on the copier machine one time.
- [70:59]
Jack
And so that's what you do when you see someone leaving papers there.
- [71:02]
Brian
Yeah, no, but it was, it was. It was a very successful. This gentleman had a small business. He was very successful. Well, he started off as it was. It was more of a food industry job. He had enough. His son comes along and convinces him, hey, use some of that financial success. Let's get into real estate development. Development. And they got into doing real estate development and now realize Pops is set for life. I mean, and. And by the way, Pops has done some good things. He owns commercial real estate. He's, you know, he's. He's got all these things going on. Well, they start getting into, you know, residential developments and they took on more and more debt. And unfortunately, they put up like, I knew the commercial building that we had some affiliation with them. It was debt free. It was completely. But a building can be debt free, but if it's promised to the bank as collateral. As collateral on some other deals that you do. That's why personal. When I used to work with professional athletes, the personal guarantee was the thing that gutted most of these guys is because they don't realize what they're signing on to when they sign those personal guarantees. Is that. And we watched this poor multi generational family that had every. Millions gone to nothing and essentially, you
- [72:12]
Bo
know, ended up losing the building, losing all that. And they just did not recognize, hey, we've won the game. We don't need to take on additional risk. And then we have.
- [72:20]
Brian
Don't run up the score.
- [72:21]
Bo
Another. This is a horror story. One of our recent guests on Making Millionaires, you know, we sit down and kind of do this, have this conversation with them. They had a financial advisor who had this unbelievable deal that they ought to get into and you just give us some money. And what ended up happening is the advisor said, hey, we're investing all this money in this development in Texas. They did not live in Texas. And turns out the advisor just fleecing them, just taking the money, never actually invested it. Ended up losing his license, having. And it was just this horrible thing where they lost hundreds of thousands of dollars from a nefarious actor because they believed him and trusted him and didn't actually know where their money was.
- [72:58]
Brian
I mean we've had cases, I mean because we've been doing this decades now. I mean I had somebody who convinced a widow with their 401k money to buy a bunch of equity indexed annuities. That was now fortunately, because those things have looked back periods, we were able to go and unwind it and fix it and kind of like the nick of time you can imagine, you know, we've done some things to help people out.
- [73:22]
Bo
Another retired couple paid off house. Prior financial advisor was trying to convince them.
- [73:27]
Brian
Yeah.
- [73:28]
Bo
To do a cash out refi, to take all that, go put that money
- [73:31]
Brian
in the accounts with him and go
- [73:32]
Bo
invest it and also buy a bunch like insurance annuity products out of the equity in their paid off house and they're already retired with pensions.
- [73:39]
Brian
It was, yeah. From a risk standpoint that's, that was less than fiduciary for sure.
- [73:43]
Bo
Did not make, did not make a lot of sense.
- [73:45]
Jack
So managing $2.2 billion. Who are the best investors aside from pilots and who are the worst investors?
- [73:55]
Bo
You know, I think anyone. Engineers tend to be like very good. If you work in like a pragmatic field like that, engineers tend to be really good accountants. People that are in finance generally understand how money works. But it's really interesting. I do think, and Brian said this earlier, I think there might be like a savings gene that we're born with. People that just understand this because you would be amazed at all the like different and wild vocations where people can be very, very successful even if they're not the attorney, doctor, engineer, you know, that sort of thing.
- [74:27]
Brian
On the stereotypical high income careers. The one. Now look, I have clients that are in this field so I don't want you guys write me and say I'm, I'm in that field. Why would you say I'm good with money? Yes, y' all are good with money. You work with us, you're a client, clients. But I am amazed at how few attorneys we have as clients. Now we do have attorneys as clients, so don't mishear us. But I, I don't, I'm one. If you look at engineers, accountants, teachers, attorneys, doctors. Because we have a lot of doctors too and we pick on doctor. Doctors already get picked on a lot.
- [74:59]
Bo
But there's a, what I think is interesting with medical professionals, there's a wide disparity.
- [75:03]
Brian
They Also have a target on their back there.
- [75:05]
Bo
There are some that are like unbelievably astute and incredibly good at managing money. And there are some that are unbelievably egregious and make horrible decisions. It's a wide path.
- [75:14]
Brian
I'm trying to figure out if attorneys personalities just don't lead to a lot of. I mean because obviously there's a lot of wealthy attorneys, don't get me wrong. But seeing them in practice working with financial advisors, I don't see as many. We do have some doctors now. We work with a lot of doctors too. But I think that they have. The uncomfortable thing is that they go from tremendous debt to making great incomes. So there's entire cottage industries trying to sell them products to kind of lock their money up in a lot of ways too.
- [75:42]
Bo
And I think a lot of people that have the most success are people that are able to, I'm going to say build wealth slowly but like build it consistently. Some of the things where it doesn't always turn out great. Professional athletes who like sign a big deal, big contract, but it's relatively short lived. People that inherit a lot of money from a first or second generation big windfalls, hey, I sold a family piece of business or I sold a business that was not liquid, but then it became liquid. Windfalls are also an area where it's kind of touch and go in terms of how well they're going to steward
- [76:12]
Brian
that good ones, blue collar businesses. Oh yeah, usually they crush small business owners. The small business owners, they crush it. Especially when you can get in there. That's my, that's the ones that I get the most like want to high five after I walk out of a meeting on. Because when you see their tax structures and you see their account structures and you show them the tax savings on certain strategies that you can do, they. Because if you're a small business owner, because you know what happens with small business owners, they go from they're paying taxes but then one year they hit, they actually hit it where their income bounces and then they realize oh, and they go meet with the CPA and the CPA is like by the way, this year you owe $75,000 plus you own an underpayment penalty of like 6 or $7,000. And that's just in the first year they hit in there what I paid all this tax already. And you know, so you can imagine they already have a relationship with, with, with taxation that they don't love it. So if we can go in there and show them through just good retirement structures and other things or even business structures that we can, we can clean that up. They love you. You can imagine. It's like, like I said, high five
- [77:13]
Graham
moment when it comes to investing. I'm curious because Vanguard now predicts lower than average returns over the next like, like decades.
- [77:20]
Brian
I saw your, I saw your substack and I chuckled to myself. You have to know, Graham, I have to. I have. I chuckled when I literally went. Because every year. And if you go, we could probably go pull the tape because we react
- [77:31]
Graham
every year Vanguard, one of these years.
- [77:34]
Brian
Every year Vanguard tells us, you know, what you ought to expect from the market going, but it seems about 3.8 to 4%. They tell you that every year.
- [77:42]
Graham
Realistic. Does it not, not seem.
- [77:46]
Brian
I want that guy's job. I want that guy's job.
- [77:48]
Bo
It's always back. Coming out of the Great Recession, we saw some really, really good years. 2009, 2010, all the way up to 2012 and then 2013, I think the market made like 32%. And they said it again, all right, Market has recovered, poised for below average returns. And they say it over and over and over again. And at that point in time you would have suggested, man, well, doesn't it look like this, look at all this stuff going on. Look at what's going on. It always quote, unquote looks like that. And yet it doesn't manifest. Now. Could there be a period of underperformance perhaps? Yeah, that could be a thing. But is there something going on right now distinctly that would suggest the next period is going to be underperformance? I don't think so. They literally said 10 years ago that over the next 10 years you're going to average 4%, 5%. If you look at what the broad markets have done it smoked it over
- [78:36]
Graham
17 to 20% every year.
- [78:39]
Brian
There's typically a 14 to 15% intra year up and down, down anyway. And then if you think about what we've seen historically, like broad markets like the S and P that we've already had all these conversations on, they typically do what's called a V shaped recovery. They will either get overpriced really quick or underpriced really quick in the. And you see snaps, you know, it's the, you know, it pops like we call it the rubber band effect, you know, so that's why if you just dollar cost average, I know it's boring, I know it's not sexy, but if you just consistently buy, you get to capture all that stuff, it's a great volatility protector from yourselves is just being consistent with your behavior. The difference is like real estate, because I know you have so much background in real estate. It's more of a, you know, a U shaped recovery. You know, you, it's not uncommon that you'll see the real estate market not do V shaped recoveries. They're more much slower moving. And I think that's why sometimes we have trouble, at least the public does differentiating that different things act completely different. And that's why when Vanguard tells me 3.8 or 4.8%, I'm always like that. A moment in time. I mean, last April, were we down 20%? I mean it was. So if you were basing decisions off of that, I think you would drive yourself crazy.
- [79:49]
Bo
But it also thinks like the weatherman, right? If the weatherman predicts a beautiful sunny day and it rains, you get pretty upset. But the weatherman predicts a rainy day and all of a sudden it's shiny. Everybody's in a good mood.
- [79:59]
Brian
I think that's what, that's what I've often thought. They've had their thumb on the scales. They we're gonna get you 4.8% and then voila. Oh, another year. We got 8% or 12% this year, like expectations.
- [80:10]
Bo
That's right. Under promise, over perform.
- [80:13]
Jack
Yeah.
- [80:13]
Graham
Well, speaking of over performance, what do you think about investing in Pokemon cards?
- [80:17]
Bo
It's. There's a lot of people.
- [80:18]
Brian
I watch a lot of content on that though, by the way. I don't do it myself, but I've watched all those seasons. I'm fascinated by the collectors and what's wild like.
- [80:26]
Bo
So my brother, he has my. Him and my nephew have kind of gotten into it and they'll do the thing or do the packs. And he's opened a couple packs that had like, like some very valuable because. And he's actually shown me how they have everything like cataloged by like what it is, how much it is, what the ro. And it's wild now. It's a collectible like anything else. I, I would not call that investing. That would not be my nomenclature. But it is a collectible that does have the ability to increase in value over time. No different than other types of collectibles that can increase in value.
- [80:53]
Brian
I've always wondered. Now look, I'm not, I'm, I do not. I'm putting the disclaimer out there, but it's just like I'd be curious and maybe somebody knows this and they Put in the comments section. Like Elvis now, maybe because the new movie came out, the market's back up or whatever. But I've often wondered, because that audience is aging out, are his collectibles, like still worth as much as they were? Because I also noticed Memorial. Because collectibles, I have to believe is there's some ebb and flow on the
- [81:19]
Jack
age of the people.
- [81:20]
Brian
Exactly. That's the inefficiency. Well, that's why they're taking advantage of right now.
- [81:24]
Graham
The future collectible is going to be Justin Bieber and Taylor Swift.
- [81:26]
Bo
Swift. Oh, really? Huh. But I would imagine their memorabilia is already.
- [81:31]
Graham
It is. But imagine in 30 years from now when a lot of those people have a lot of money and maybe they're not performing as much.
- [81:38]
Bo
One thing like Pokemon was a big thing when I was, when I was a kid. Right. And it seems like there's been this new resurgence that now young kids these days, it's still a big thing. So I don't feel like if it were going to be a collectible seems to be a long time for it.
- [81:50]
Brian
But you realize you are getting to the age now where things are going. You're going to see the boomerang.
- [81:54]
Bo
It's just starting to go.
- [81:54]
Brian
Because things from your childhood will now become the hot commodity just because of. You are the age of. You're the parents, the generation of kids. Consumption is profitable. So there are people who are out there creating markets to take advantage. You'll see the movies, the music. Everything is going to be catering to your group to when they're creating all this, this creative content.
- [82:17]
Graham
So what percentage of a portfolio should be allocated to Pokemon cards?
- [82:21]
Brian
I mean, look, if you want to. Because we let people do speculative stuff. So if you want to, if you want to dabble with 3 to 5% of your portfolio, go, go knock yourself out.
- [82:29]
Bo
That's more.
- [82:29]
Brian
But it falls into. Back to the, to the jack category of hobby. I mean, because that's what I'm not picking on you about that. It's just. But you said you get fun out of that.
- [82:37]
Jack
I do get fun out of it, yes.
- [82:38]
Bo
I say less than 5, less than 5% of your liquid portfolio would be okay to do something if collectibles are your thing, or individual stocks your thing or you know, cover call option strategy is your thing. I would try to limit it there.
- [82:50]
Graham
Here's what I found really interesting is that there's a theory out there that says that young people are not buying houses because houses are so expensive. So instead they're putting Their money in collectibles like Pokemon cards, watches, and cars. And that's why a lot of those things are going up in value. Because think about it. Maybe buying a $600,000 house is unobtainable. Buying a $20,000 Pokemon card, you can't theoretically obtain that. Or buying a $80,000 sports car.
- [83:15]
Brian
But the thing. Can I tell you, the only problem I have with collectibles is kind of like. Because I went through a watch phase myself, now I'm all. Seems like the wealthier I get, the more gizmo I get instead of looking at the luxury watches. The thing nobody ever talks about is the market drag cost to actually turn what the market value is into liquid value. Because you usually have to go through brokers. You typically have to. Or a trading site that's going to have a. Some type of trading cost to it. So the market what. And we all get frothy and excited about it. But if you actually. I think it took into account all the costs that you'd have to turn that into liquid cash, I don't think it's actually as valuable as people say. I think it's great if you sell that. I think Mr. Golden probably does a great living being the marketplace for that stuff because it's a pretty nice rake on that, doesn't he? But I mean. But if you were thinking, this is how I'm going to build my wealth, it's the same thing. If you're trying to sell watches or jewelry. They're going. The market is very inefficient on what the costs are going to be for you to turn that into liquid cash.
- [84:15]
Bo
Yeah. And they're all unique products. So you'd have to. I'd want to. You'd want to feel pretty confident you had the right one. Right. Not all Pokemon cards are designed the same. So you hope that you buy it for $20,000 today and it's worth more in the future. But it's only worth more in the future if someone else is willing to pay more than you paid for it. I would tell that young person, hey, if you have $20,000 instead of doing the Pokemon card, if you're going to set yourself for a higher probability of success, go buy $20,000 of the S&P 500. And you have a higher probability that in the future that S&P 500 would be worth more than it was when you purchased it.
- [84:45]
Brian
But I do want to give one. One exception is that because I've had two examples. We had a client of the firm who was making six figures trading Disney pins. Because he was just an expert at the market and there are a lot, since it's such an inefficient marketplace, he'd go find pins, you know, and you know, whether it's ebay or elsewhere and people not know what they're worth, he'd go basically steal them. It's kind of like your story.
- [85:08]
Bo
That's an active stealing.
- [85:09]
Brian
By the way, he knew the knowledge. We also, because you always hear people say don't buy boats. The best two days own a boat is the day you buy and the day you sell it. But then we, we had, we had a client that also made a great living buying trading boats. But once again it's because he was an expert. It's back to my point earlier, bringing it full circle. Sometimes it takes 10, 15 years to develop the expert where you can see stuff that nobody else can but you have to take into account there's a skill set or a time component that also went into that, that that efficient that you've built a skill that the market doesn't have. And that's why it's easier just to buy the index. If you can't go out there and spot that and if you don't know if you're the expert or not, then you're probably not.
- [85:49]
Bo
Probably not the expert.
- [85:50]
Jack
What are the riskiest investments that you both have personally?
- [85:53]
Bo
Well, I would argue like commercial buildings. Does that, does that count as risky? Is that, that's not a risky thing.
- [85:59]
Brian
What are you talking about?
- [86:00]
Graham
Triple net commercial real estate.
- [86:03]
Bo
I mean it's, I would argue that, that you know, that kind of stuff is, you know, we're small business owners, right? There's a lot of volatility in small business. So that investment.
- [86:13]
Brian
I know what you are getting. Where have you. I will tell you. I dabbled in crypto. I dabbled in crypto for a while. I did it for about a three year stint and I lost money on it. So I quit because I just, I was trying to dollar cost average into it to see if that would work. And it was just the thing that bothered me about.
- [86:32]
Graham
You took the exact same problem like the other guy you were telling about and then four years later let me
- [86:38]
Brian
defend my position and I will admit I was exactly. If I'd have stayed the course, I would have done okay. But what I didn't like about it, Graham, was the daily volatility. It didn't feel like an investment. It felt like a speculative play based upon how much play was Every day. I mean, when you have 4, 6, 8%, you know, every day on your trading, that's weird to me. I mean, it feels like the market swings. And we still. Like, right now, I'm barely keeping up with bitcoin anymore because when I gave off. And the other thing that scared me off from it was when the government put that line across the top of your 1040 and made you basically. Yes. No. Are you dabbling with cryptocurrencies? I felt like they were setting a trap to a degree, because a lot of people were out there marketing, hey, this is outside of the government. You don't have to do it. And I'm like, like, no, taxation's not outside the government. And if you're not checking that box. Yes, you don't. And you don't think Coinbase or even if you're putting this stuff in vaults and stuff. There's things. I don't know if you're keeping up with some of the geopolitical stuff. They just had a big announcement that a lot of the Iranian bitcoin and stuff has been frozen. How do they know about it? You know, when we had all the protests up in Canada, they froze all the bitcoin of those turkeys. How do they. That's what you're told these things about. And I just don't think it's as disconnected as everybody thinks it is. And I worry the volatility makes it feel more like a speculative play than an investment. And I'm more into the investment emotionally. Maybe it's because I come from an accounting background. I don't get my highs from. From. From riding the speculation. What.
- [88:08]
Graham
What price did you sell bitcoin for?
- [88:10]
Brian
I mean, it was probably in the. The mid-30s. It was in the mid-30s. There's around 35, 000 probably.
- [88:15]
Graham
So you would have doubled.
- [88:16]
Brian
Yeah, I would have doubled from here. I would have, but. But, you know, but I have no regret.
- [88:21]
Graham
Okay.
- [88:22]
Brian
I would have done it. I mean, but realistically, I could have tripled, but now I'd have been back to double only in, like. Because we went up to a hundred. We went up to a hundred. How did we go? 120.
- [88:31]
Jack
125?
- [88:32]
Brian
Yeah, 125. So, I mean, but look how crazy that rod is. I mean, I would be. Because the other thing is, I already told you the Apple story. I mean, I still kick myself on that one because emotionally, I started getting reactions. Now, look, as a percentage of my assets, it wasn't even a rounding error of a tenth of a percent, but yet I was mad that it was down. And it's the Apple. I mean, I should have held on, but you don't know. And that's why probably the craziest thing I have now is I do have close to seven figures in one stock, and I've just told myself I'm gonna ride or die with it.
- [89:06]
Jack
What stock is it?
- [89:06]
Brian
Well, should I say. Yeah, yeah. Should I say what it is? Is it okay to say?
- [89:10]
Bo
I think you can say because you've owned it for a long time.
- [89:12]
Brian
Okay. In 2018, I got my first Tesla. I got the Model 3. I got the Model 3.
- [89:18]
Jack
I knew it was Tesla.
- [89:19]
Brian
Yes, I got the Model 3 in 2018. And I had one of the early versions. It was because I remember I'd ride by the coffee and cars like where all the exotics were here in town because there's a lot of fancy cars here. And I watched all these. These people with their Lamborghinis. Right. Because the Model 3, when it first came on scene, people were like, really excited. Now we see them everywhere. I mean, you can go, I can walk outdoor and probably we can throw a rocket. 12 of them. But. But when they came on the scene, and this is the first time I drove a car that people were like, like ripping their necks trying to look at you. And everywhere you pulled up, you know, people would want to talk to you about it. So I was like, holy cow. This thing is pretty magical. So I put $25,000 into. Into Tesla back at the beginning of 2018. You can imagine it's done pretty well.
- [90:00]
Jack
So you're at close to seven figures now.
- [90:02]
Brian
Yeah.
- [90:03]
Jack
Now, if you sold some.
- [90:04]
Brian
I'm not going to sell.
- [90:06]
Jack
Like, you're a little overweight.
- [90:08]
Brian
Can I tell you the other thing?
- [90:09]
Jack
I make 3%.
- [90:10]
Brian
It's in a rock Roth IRA, too, is it? Actually, it's in a Roth IRA. So I am. I. I feel.
- [90:15]
Jack
I feel like the best investment you've ever done.
- [90:17]
Brian
It's pretty good. Now. Now the best investment is. Is hiring both.
- [90:21]
Bo
There we go.
- [90:22]
Brian
I hired Bo in 2008. That was probably the best, you know, but yes, from a individual stock is. It's been the best investment. And I've just decided I'm going to ride or die with it.
- [90:31]
Jack
At this point, there's no plan, there's no goal. It's not. If it hits this amount, you're going to do something. It's just like money for the sake of money.
- [90:36]
Brian
Because even as a. Even though that is at that level it's still as a percentage of my holdings. Is, is just, just. It's not enough to move the needle.
- [90:43]
Jack
And so for you, you don't have a story like that?
- [90:46]
Bo
Well, I have one similar, but it's way. It's. It's not as exciting. I also own Tesla stock. Mine's not quite seven figures, but I was gonna do. Mine was a content play. When they first, when they very, very first announced the cybertruck, I knew how much Brian loved his Tesla. I'd written it at lunch and I was like, oh, you know what I'm gonna do? I'm gonna see if I can create some content. So when they announced that I started just dollar cost averaging, buying a couple thousand dollars of Tesla every single month. Right. And my plan was by the time the cybertruck actually came out, I was going to create some content around. This is how Tesla paid for half my cybertruck or whatever the, whatever the thing was. Well, it ended up coming out and it was not as like, interesting or exciting to me. So I decided not.
- [91:26]
Brian
We decided we're not cybertruck type.
- [91:27]
Bo
I was like, I'm not really. But I was like, well, okay, I've got all the stock and it. And it did what I thought it would do. It was certainly more than enough to buy the. Buy the truck.
- [91:34]
Brian
Truck.
- [91:34]
Bo
I was like, but you know, I'm going to hold on to it first for some of the same reasons. Brian said, I'm like, I've got it. I don't really want to pay the taxes, I don't trigger the gains. So I'm just going to kind of consider that a lifetime holding. So that's, I guess technically that's my riskiest investment.
- [91:47]
Brian
My wife forbid me from buying the cybertruck. She thought it was so ugly I couldn't do it.
- [91:51]
Jack
And what's the most that both of you have lost on an investment because it was a speculative play.
- [91:57]
Brian
I mean, that Tesla has been all over the place, but I haven't lost.
- [92:01]
Jack
Yeah, you, you've made a ton of money off. What have you lost money?
- [92:05]
Bo
You was. We did options for a while. This was not a ton of money, but it was a great learning experience. You know, we put a. We did some option strategies way early back when I got the cfa very early on, this was like, we were
- [92:15]
Brian
like, let's flex the muscle on this.
- [92:16]
Bo
Early 2010s. I thought I had the market figured out, so I came up with some option strategies we could deploy. I was the strategist, Brian was the capital back then. And so we made, we, we doubled
- [92:29]
Brian
within like a month and a half. We thought we were genius. The worst thing that happened with a strategy is you actually hit it the first time. So we turned 5,000 into 10,000 like in a month. And we were like, we are like bo, we're gonna be so rich.
- [92:41]
Bo
And so then I was like, hey, you know what? Okay, this was good. I have another idea. And I came up with another idea. And this is what's so frustrating. We were going to, we were going to buy some long calls and we're going to buy some puts on. On we can.
- [92:53]
Brian
It's probably because it's kind of fun to think about as Netflix. Yeah.
- [92:56]
Graham
Oh, wow.
- [92:56]
Bo
So we bought calls, calls on Apple because we were bullish Apple and we were going puts on Netflix. Netflix. Because we thought Netflix was overvalued.
- [93:02]
Brian
It was. We were right.
- [93:04]
Bo
And here's what's wild.
- [93:05]
Brian
But this is why you have to be worried about the time degradation. I think it was a real thing
- [93:09]
Jack
why you sell them.
- [93:09]
Bo
It was like six, nine months, some, something like that. And I think Netflix was trading at like 300 or something at that point in time. And the time ended up running out options ended up expiring worthless. Because you know it never and I kid you not, it was like less than six months later.
- [93:25]
Brian
I think it was less than two months.
- [93:26]
Bo
Two months later it won't drop down.
- [93:27]
Brian
Like stock last like 30 or 40
- [93:29]
Bo
or 80 a share.
- [93:30]
Brian
It was, it was a huge drop. We would have made it a fortune
- [93:33]
Bo
if we would have been two months.
- [93:34]
Brian
But we realized that you can be right on a trade and still not make a dime because the time element of doing contracts, it can hurt you because you can be spot on. But markets aren't efficient in the short term. They're very inefficient on the short term. You can be spot on that something is overvalued. It's a bubble or whatever the case may be. Now look, Netflix turned out to be a great company in the long term. That's once more one more kappa feather in the cap for being a long term investor is that even if you would have ridden that stock down the 40% where we were right on the overvaluation, they caught their stride and went right back up because they were still, you know, there's been frothiness. All companies deal with that. And that's why I like being a long term holder.
- [94:15]
Bo
But that's why the lesson, the lesson I took away from that is as an investor now since that point until now, I have a really hard time betting when there's a time constraint. If I'm going to buy something or invest in something, I want to be okay. This is a Warren Buffett mantra again, being a lifetime holder of that thing. If I buy this, I don't care what it does this week, this month, this quarter, this year, this decade, I'm going to be okay holding it long term. That's why most all bets. Even if I was going to do some sort of option thing, I want to be long, I want to be bullish on whatever that is because it's just so hard to get the timing right when it comes to investing, the market has a way, at least in my experience, of making us all, even the smart ones, look like fools.
- [94:52]
Graham
What are your thoughts right now on the real estate market? Because here's a few other stats. 75% of US homes currently for sale are unaffordable with the median income household. And 97% of the US are considered unaffordable by historical standards.
- [95:08]
Bo
It's hard out there.
- [95:09]
Brian
We just did a show that's doing really well because I think we hit a chord with something, should you own a rent? And we went deep into the data and because something I've been on the rooftop screaming, I kind of, it's frustrating. I mean because that's. I want people to be able to buy a house, but I also want to be, I want people to get good information so they don't get themselves in a bad. Somebody give them the expectation that they should buy a house because that's the next thing successful people do and get themselves in a bad situation. And what I've been telling people and I'd encourage you please go check out that show we did because it was a super deep dive. Not gonna be able to do it justice with this quick answer is that for a lot of people, you know, the market made 50% in like a three year cycle on residential construction. You know, if you think about what houses went up, up. So to think that that reversion to the mean because like I said, it's not a V shaped recovery. With real estate markets, they typically are much slower moving. I think you're going to see real estate likely might underperform for a period of time. I mean you're even seeing it like a lot of, a lot of markets now have inventory levels exceeding four months, which is something that we didn't see that long ago. We're starting to feel like that it's a buyer's market more so. But it's not there yet because. Because also the interest rates went up to a point where 50% more. Your monthly payments went up 50% just off the interest rate alone. So don't feel forced to do it. Do it because it's actually something that makes sense for your personal life.
- [96:34]
Bo
So from an investment perspective, we would argue primary residence or not an investment. It's not an investment decision you're making, it's a lifestyle decision. You need to make that decision based on when it makes sense for you to buy a home. So if you're someone who's thinking about getting into real estate as an investment opportunity, well, then it comes back to the same tenants that real estate has always had. Location, location, location. What's attractive about that market? What type of property is it? What do you hope to get out of it? What are the. You're going to pay cash? What are the financing options? Can you cash float if it goes bad? I think you can still investigate it and look at. And I think there still can be a compelling case to be a real estate investor. It's certainly harder to do now, specifically in the residential side, than it was
- [97:14]
Brian
10 or 15 years and elongate your holding period. So you can. Hopefully the time will smooth out any craziness in the pricing.
- [97:21]
Graham
Yeah, it's crazy what I'm seeing right now. Throughout Los Angeles, a lot of properties are selling now for the same price that they were between 2014 and 2018.
- [97:27]
Bo
That's wild.
- [97:28]
Graham
Depending on the.
- [97:28]
Brian
Well, you've also highlighted, there's a lot of crazy stuff on restrictions on how you can use the property too, which I think that kills the market as well.
- [97:35]
Graham
It does. But even in Las Vegas, I'm seeing a lot of sales that when people bought from 2021 to 2023, they're selling at the same level, if not slightly less.
- [97:44]
Brian
Yeah.
- [97:45]
Graham
So these are people who bought and they're losing money on a sale, holding it for three to five years.
- [97:50]
Brian
So don't feel forced to do it because, you know, trees don't necessarily have to grow to heaven. You know, that's the thing. I think we, we all know real estate's good and especially the lever debt side of it. When things are good, everyone, it's great. But it also can hurt you if you have to use other people's money to afford whatever you're trying to do in real estate, you probably can't afford real estate. That's why we love real estate. You know, we've talked about. We do Quite. We've done some decent amount of commercial real estate, but it's more of once you have a good financial stability underneath you, so that if your place sits empty or, you know, you have to make big repairs or put a new roof, if it doesn't need to stress the system. Too many people try to get in way too soon.
- [98:28]
Graham
Is now a good time to flip a coin for a house?
- [98:31]
Brian
Oh, my God.
- [98:34]
Bo
It still seems that he did it.
- [98:36]
Brian
Yes, he did it.
- [98:37]
Bo
He was like, hey, and it was $1.9 million, right? Like, that was how much house with y'?
- [98:41]
Brian
All. Y' all said y' all are friends with him.
- [98:43]
Graham
Yes.
- [98:43]
Bo
I. I wouldn't flip a coin.
- [98:45]
Brian
He's got to come see us because I. I want to meet his person because his personality is the polar opposite of my. I'm just too. I'm too risk averse to. To ever do anything.
- [98:54]
Graham
He would probably do it. He did a whole financial audit with Caleb Hammer.
- [98:57]
Bo
What's the most amount of money that you would flip a coin? Would you flip a coin for a thousand bucks?
- [99:00]
Graham
Yeah.
- [99:01]
Bo
10,000.
- [99:03]
Graham
With you guys?
- [99:04]
Jack
Yeah.
- [99:05]
Bo
100,000.
- [99:06]
Brian
How many views do you think we could get if we did a full coin flip for ten thousand dollars?
- [99:11]
Graham
No, not a hundred thousand. I would do ten thousand because I know it would be going to you and you would invest.
- [99:15]
Bo
Okay, fair enough. So I just thought that someone could do that for $2 million.
- [99:21]
Brian
Y' all are great in the. Y' all much better at the content space than us. Do you think sometimes when you do those big transactions that do. Do the views cover the loss?
- [99:30]
Graham
No, he spent.
- [99:32]
Jack
Do you want me to call him? I'll call and ask him. What's the most you would flip for?
- [99:37]
Brian
Oh, no, we're not doing that. He just flipped for a house.
- [99:41]
Jack
And also.
- [99:41]
Brian
I am, I am, I am. How much do you deserve on things that I'm just not crazy enough to do it. Yeah.
- [99:46]
Graham
Okay, I see.
- [99:47]
Jack
We'll see if he answers.
- [99:48]
Brian
Yo, yo.
- [99:51]
Jack
We're on a podcast right now with the money guys, and you came up and we had some questions. Okay.
- [99:56]
Brian
Did you really flip a coin for a house?
- [99:59]
Jack
They don't believe that you flipped a coin for a house, so we need confirmation. You flipped a coin for a house and lost 1.9 million. 1.95 million on one coin flip.
- [100:08]
Brian
Actually real.
- [100:10]
Jack
And I don't own that house anymore, so.
- [100:13]
Brian
Okay.
- [100:13]
Jack
So my friend, the guy I lost it to, gave me a revolt up, but then I crashed it, so I didn't get much of It.
- [100:19]
Brian
So if. Okay, so if you would have won, you would have gotten cash or what? Would you have gotten cash? So he put up cash for my
- [100:26]
Graham
house, so I would have gotten 1.9.
- [100:28]
Brian
So would it have really gone down, like, if you flipped and you would have won, or would it.
- [100:32]
Bo
Do you think he'd have given you 2 million bucks?
- [100:34]
Brian
Gosh, that's just crazy. That's a different life.
- [100:36]
Jack
What's the best friend like? We. It's, you know, would you trust, you know, your friend to sit next to you to pay you 2 million?
- [100:44]
Brian
Yeah, but if you're my best friend and we flipped a coin for the house and I felt like I was gonna take your house, I'd probably be like, dude, I know. Don't worry about it. Well, you know, two out of three or something.
- [100:52]
Bo
Did the video at least make enough to, like, compensate, to make that a worthwhile investment of $1.95 million?
- [101:00]
Jack
No, no, you have to understand this. Listen. Ready? It's not like, oh, I invested 1.9 million. I invested in the opportunity to make 2 million.
- [101:09]
Bo
The video didn't.
- [101:10]
Jack
This is facts. First of all, it's not about the video ROI. Maybe the video ROI, like realistic 300,000.
- [101:18]
Brian
Okay, it did make 300,000.
- [101:20]
Jack
So what? I really, really. I made 300,000 on the video. And a 50% chance of making 4 million is worth 2 million. So I made 2.3. It just on paper, it don't look like that.
- [101:31]
Bo
That mathematics only works if you do it over and over and over again for a single outcome. You can't do that. Same sort of statistical.
- [101:38]
Graham
You wanted to do it again.
- [101:39]
Bo
You have to flip. If you were to flip a hundred times, and a hundred times you were to do that, in theory, that your math would hold, but one time, a
- [101:48]
Brian
bunch of nerds about it.
- [101:53]
Jack
All right, last question. What's the most you would flip a coin for? Honestly, as much as I joke about it, that was mildly traumatized.
- [102:02]
Brian
Okay, there we go. There we go.
- [102:03]
Graham
All right.
- [102:04]
Brian
All right.
- [102:04]
Bo
Today, in my life position today, I would do 400,000. I'm not comfortable doing anymore.
- [102:11]
Brian
Hey, can I ask a question, though, because, and you don't have to disclose this, what is your liquid assets like investments? I'm just trying to figure out how deep 1.9 was into your bench assets.
- [102:23]
Jack
This is funny. You're gonna like this. Hold on.
- [102:25]
Brian
I just want to know. I need to have context.
- [102:27]
Jack
Assets right now.
- [102:28]
Graham
Well, we have, like, you know, maybe
- [102:30]
Brian
we have a crib that's a few
- [102:31]
Jack
million a Bunch of. But I emptied the bank account. No investment. This is my only asset right now. This fucking parlay that just hit for $1.4 million. I gotta go cash it in in two days.
- [102:43]
Graham
Holy crap.
- [102:44]
Bo
What?
- [102:45]
Graham
What did you bet on?
- [102:47]
Jack
We put 600,000 on PSG to win two nights ago. So that's why I'm in Paris.
- [102:52]
Graham
We went watch the game.
- [102:54]
Bo
Name.
- [102:54]
Jack
Name five players on psg.
- [102:56]
Brian
Couldn't name one. Oh, God. That tells me everything I need to know. That is wild, man.
- [103:05]
Graham
Congratulations.
- [103:06]
Brian
That is so awesome. Thank you for. Thanks for answering.
- [103:09]
Graham
Appreciate it, man.
- [103:09]
Bo
That's wild.
- [103:10]
Brian
There you go.
- [103:11]
Bo
That's wild, man.
- [103:13]
Jack
He's as real as they come.
- [103:14]
Graham
Yes.
- [103:15]
Bo
That's.
- [103:15]
Graham
That's brutally honest.
- [103:17]
Bo
Yeah, that's.
- [103:18]
Graham
He's a guy you could trust with your life.
- [103:21]
Bo
Yeah. Someone else like, hey, I'll flip you for Bo's life. You probably take that. You know what I mean?
- [103:28]
Brian
I mean, holy cow. I mean. But you know what? In friend groups, I'd probably want to hang out with somebody like that because I'm always looking for opposite because I'm wired. So the opposite of that. That it. It's. It'd be interesting.
- [103:40]
Bo
I always love going to the casino and my buddies go in the high stakes room. I just get to kind of watch them. That's. I get utility from that.
- [103:46]
Graham
Oh, it's exhilarating. We went with Steve will do it into one of the back rooms and we saw there was a person there betting a hundred thousand dollars a chip.
- [103:53]
Bo
That's wild.
- [103:55]
Graham
And in a hand you could lose a hundred grand, make a hundred grand. He was up a few hundred thousand dollars. But it was just to me, I got the same feeling as if I were doing it myself.
- [104:05]
Bo
Oh yeah, but. But it wasn't your money, which is great. You got to same experience, not the same cost. That's why I like to have friends that have boats.
- [104:13]
Jack
So in order to afford a property, how much money must you be making
- [104:17]
Bo
these days for a primary residence? Oh, I think it depends. Right. You know, it's interesting you mentioned the affordability of housing is. I think right now, if you look at the median home price in this country relative to the median income, it's like 4.8 times. It's the highest it's ever been. So housing is at as unaffordable of a rate relative to the median household. It's been. So I think it's very much person dependent in our opinion when it comes to buying a house. We think that three things should hold. Hold true. You don't have to put down 20%. I think that a lot of people say you first house, you don't have to put down 20% on your first house, you don't have to put down 20%. Put down as little as 3 to 5% depending on the type of lawn you're getting. We do want you to be in the house at least for five to seven years. But we don't want your total housing costs to exceed more than 25% of your gross income. So I think that's where the barrier lies. Like what income do you need to be able to buy a home? It depends on the prices of homes in your area that you're looking at. And you need the income that would substantiate the housing is not more than 25% of your.
- [105:13]
Brian
There are two asterisks I'd put with that. If you live in high cost of living area that has public transportation, you might be able to boost that, you know, juice that number up 8% because you don't have a car loan. You know, most people have car loans. The other thing is if you're in a high flying career like you, let's just say you're right out of school, or you're an attorney or an accountant or somebody who's, your career trajectory over the next three years is going to go up, you can use some projections to go to skew a little higher.
- [105:42]
Bo
And I don't think you have to own a home. I think there's this conventional idea that you have to be a homeowner, have to be, you can be incredibly wealthy, incredibly successful and build towards financial independence as a renter. It's a very personalized decision based on where you live.
- [105:56]
Brian
Look at the market, because like some markets, you're crazy if you buy. I mean we, we have a number of clients in Silicon Valley. It's cheaper to rent, way cheaper than it is to buy and then you just go retire somewhere.
- [106:07]
Graham
So why are people buying there?
- [106:09]
Brian
Well, I think some people use it as a holder of value, you know what I mean? You know, if you have just told
- [106:14]
Bo
you the majority of Americans, only wealth they build is in their house and so it's like a force.
- [106:18]
Brian
And also you have outside resources, you know, you know, the international money, there's, you know, corporate money, there's others that are using real estate as a holder of value and you're in competition with that.
- [106:28]
Bo
And if you're, you're, you know, you, you get married, you have kids, you want to start a family, you Want to set roots, your family is there and you think, oh well, I want to be a homeowner but I'm not going to leave this area because everyone's here. There's a lot of things that pull people towards that. But if you're going to make that decision, you recognize that it can be hugely detrimental to your long term well being. If it's a poor financial decision.
- [106:49]
Brian
And I don't know if I, if I might have Ms. Mis misunderstood your question is because I think rent is so cheap in those places because a lot of those people have mortgage, I mean, I mean if they have mortgages on the property, it's sub 4% because then they also the prices were probably a third to a quarter because it wasn't that long ago that these property was much more affordable.
- [107:08]
Graham
That's very true.
- [107:08]
Brian
So renting is easier.
- [107:10]
Graham
Do you still think real estate's a good way to build wealth?
- [107:12]
Brian
Yeah, I mean it'd be crazy.
- [107:13]
Bo
And then like your primary residence. Yeah, I would say so over the
- [107:17]
Brian
long term, that's where your holding period, I know we said our checklist is five to seven years. Me personally right now, just giving an opinion. I love the rule. Five to seven is traditionally right, but I think you have to elongate your holding period because there could be some crazy volatility just buying how long because
- [107:35]
Graham
the average person I think holds their house for 11.8 years, 12 years.
- [107:38]
Brian
Yeah, I think that that would probably work. I think it's at least 10 years.
- [107:41]
Bo
But why does it build value? Well, most people buy a home, it's a lover property.
- [107:45]
Graham
Right.
- [107:45]
Bo
So you're borrowing money, you have small amount down, but the entire value of the property on average is going to increase at about the rate of inflation. So if you assume the rate of inflation is somewhere between 3, 4%, my home value is going to increase every year at 3 to 4%. And because I'm levered, I am now amplifying the actual rate of return. So if my house for me, cash on cash return can make, you know, 8, 10, 12% over a long time period, then yeah, it's going to build wealth. But you can't eat your house. So I wouldn't bank on that being the way that you're going to pay for your retirement living. But it's not, it shouldn't, it shouldn't surprise people that wealth can still.
- [108:22]
Graham
What about this argument that you're going to have a lot of boomers going into these nursing homes and having to sell their house and all of These homes flooding the market at a time when millennials cannot afford it.
- [108:35]
Brian
Well, you never, never bet against the system. Could change to a degree. Think about this. I've heard several proposals. What if all of a sudden, you know, capital gains right now are capped at 500,000 on being tax free for married couples, 250 for individuals. They could index that for inflation. They could change it. You'd probably have a lot more houses hit the market. And you know what they. But because it would be tax free gains potentially index, people might be willing to give a little bit that can maybe make affordability even help out a little bit because more houses would foot. Because it's a supply and demand thing.
- [109:07]
Bo
That's what you say, supply and demand. If all these houses hit the market, it's going to naturally drive down prices as inventory increase, as prices come down. Well now all of a sudden it's affordable for millennials or for Gen Z or whoever.
- [109:17]
Brian
And then even the SBA has now made where residential construction qualifies for some of these favorable deals that they offer, where these lines of credit are dirt cheap. Cheap. I mean, I don't think residential construction has always been considered eligible for some of those SBA loans. So there's. I know there was a huge headline that came out probably four months ago. I sent every one of my home building friends. I was like, hey, you might want to go check this out. It's just like when we bought this building. The SBA was a big part of the driving factor of that is because, you know, sometimes, you know, they, they're trying. I feel like, I don't think the government is overall a creator of economic growth, but I do think that they can help subsidize and spark things to a degree. You need to pay attention to what those incentives are.
- [110:00]
Graham
I'm going to show you this. What do you think about this as a strategy to pay your mortgage? I just last week bought $250,000 of stretch. And the reason I did it, one was just to sort of go through the experience, which I enjoy doing. But the second is I have monthly obligations. And I said, well, I have a 1.75% 30 year mortgage and if I can, instead of paying down that mortgage, put it into an instrument that pays me 11.5%, that's 10x my mortgage rate. I'm essentially making money by taking the money, putting it into stretch, getting 11 and a half percent and paying off my 1.75% mortgage. And where is that yield coming from? Since again, you're not selling Bitcoin.
- [110:42]
Bo
Yeah.
- [110:43]
Graham
The yield comes from us issuing shares typically into the market. So on the back end what we're doing is mstr, our computer coming right. High liquidity stock, the highest liquidity stock in the stock market, period. We're issuing shares and we're using that proceed to basically pay off our dividend. And as long as we're issuing shares above net asset value, that's accretive to our common shareholders. And it's good for Bitcoin and it's good for stretch.
- [111:12]
Brian
But haven't we seen this story play out though with other others? Because there's we, we reacted to some content where people were, were going out there and buying massive houses and then doing the. Was it stable coins or other things or these strategies and then they all kind of. If they imploded upon themselves.
- [111:29]
Graham
I remember that I saw, I could probably. It was Terra Luna because I remember seeing a TikTok where someone said I'm going to borrow from here and then I'm going to make 20% a year from over here. It's free money. Why is everyone doing.
- [111:43]
Brian
You know, what's funny is how full circle. Because we're not unique. We all are trying to figure out how we can make money easier than everybody else. But it's back to the if the market really lets you do that, I just don't believe it's possible.
- [111:54]
Bo
But let's step away from the actual investment that he was suggesting. That one. Yeah, if you're someone who has a two and a half, I mean he said 1.75, but two and a half, three and a half, four and a half percent mortgage. It's a really difficult thing to justify paying that mortgage off early because that capital likely could be better utilized somewhere else. Even if you're just buying a boring old index fund that's going to make, you know, 9, 10% annualized. If I can make 9 or 10% over the long term and I'm only paying over here, three and a half, four and a half, even five and a half percent. His strategy still works. It's not 10x but it's still, you know, a 2x rate of return or whatever that number may be. I don't know about the actual investment he's suggesting, but the idea that if I have low interest debt I shouldn't be super aggressive in paying it off makes all the sense in the world. It's why in the financial order of operations, the very last step, step nine for us would be prepaying low interest Debt. I leave that as long as possible so my money can work for me as hard as possible.
- [112:50]
Brian
I get nervous when somebody talks about how stable or safe something is but then tells me it's going to make 11%. I mean it just, it just, it doesn't pass the sniff test. I've been around long enough for the Bernie Madoff's conversation. I mean one of my. I've been doing content since 2006 and I remember one of my favorite shows. It never was really popular but you were involved with this too is we did the. I pulled Bernie Madoff's regulatory filings. There were so many red flags in there. If you just go read his adv.
- [113:16]
Graham
What did you see?
- [113:17]
Brian
Well it was just like when you
- [113:19]
Bo
deposit your money, you deposit to Bernie Madoff securities and then the statements you received were from Bernie Madoff Securities. And then the reporting he gave was Bernie. There was no check and balance. There was no Fidelity Vanguard, Charles Schwab. And there were certain disclosures you were signing off on. There wasn't any sort of mark to market reporting required.
- [113:38]
Brian
It was the small accounting firm that he was. That was the, the accounting firm elicited. It wasn't one of the big four at the time. I think it was still big four back then instead of big six. But it's none of the household name accounting firms that you typically see with public companies or big companies. It was just all kind of weird stuff that he was doing that just the only reason people were doing it is because a little bit of greediness that hey, this guy was making greater than 10% every year and it felt like it was somewhat guaranteed. So why not get in there and get some of that.
- [114:06]
Bo
You turn a blind eye when something seems too good to be true and you experience it for a moment. You let your rationality and logic fly out the window.
- [114:15]
Brian
I can understand how the s and P500 is average 10% a year because there's risk and reward tied to it. When somebody touts something on its safety and then tells me the same return as the S&P 500 that has risk associated with it. It just, it makes me my spidey senses go, so what do you think
- [114:32]
Graham
is the ideal risk free return?
- [114:34]
Brian
Return?
- [114:34]
Graham
Are you just looking at the treasury and we're talking 3 to 5%?
- [114:38]
Brian
We're talking 3 to 3, 3 to 5% depending upon where we are. With inflation in the treasuries, really good proxy.
- [114:44]
Bo
If you whatever you're making on your cash and a good high yield is a pretty Good proxy for what the risk free rate is because I would argue that's about as close to risk free as you're going to get.
- [114:52]
Graham
Yeah. Now, in terms of retirement, how important is it that you own your house?
- [114:56]
Bo
You know, we have a lot of clients who for their entire working career they owned a home. They had, they retired and they said, hey, I want to go be in Florida, I want to go be in Arizona. And they sell their house and they decide, hey, I'm just going to rent in different markets for. And that works totally fine. So I'd argue for them the necessity of homeownership doesn't exist at all. They have a very small footprint. They're able to kind of bounce around. That's totally okay. People can do it and be successful. And other people love having a home base. Hey, I'm going to buy my house, I'm going to have it paid off, I'm going to live here. This is where I'm going to age into a ripe old age. There's not a right or wrong answer. It is personal. Finance is so personal. It depends on the unique thing that you're trying to accomplish.
- [115:34]
Brian
I do like people to be debt free in retirement, but it's not a necessity. The thing I always try to remind people, you know, we have this concept, we talk about the wealth multiplier. That's why I get heartbroken when I find out a 32 year old is paying down their mortgage that's 4% instead of funding their Roth IRA because they're debt crusading versus. I don't get mad when I find out like a 58 year old is paying down a two and a half percent mortgage. It's because assuming they have assets, assuming they have assets is because they might be deciding that the arbitrage or the delta on what they're making is just not worth it. The squeeze of the fruit or the risk is not worth it when what they're trying to do overall. So I like de risking because I kind of alluded to this earlier. When you retire, meaning you're living off the money you've now saved or a pension or whatever, it stresses you out when you see all this geopolitical or economic stuff because you know, a lot of us, I think we have this cope that we do is when the market goes down, we're like, it's okay, I'll just put down my nose, I'll work harder, maybe I'll even save a little bit more to hedge against it. When you leave the work workforce and you go into full retirement, you don't get that comfort. Now you, you have to say holy cow, I'm not only living off these assets, but I'm watching the volatility decay what took me decades to, to build. So it just hits different. So if you could can do other things in your life like take out debt and other things that create obligations or things that you have to do, it's a truer version of freedom in retirement.
- [117:03]
Jack
Is $1 million enough to retire in 2026?
- [117:06]
Bo
Can you live off of $40,000 a year?
- [117:09]
Brian
How old are you?
- [117:10]
Jack
60 years old.
- [117:11]
Bo
Okay, 60 years old. What that means is Social Security is likely going to come your way. 60 year old with a portfolio. If you assume somewhere between a 4 to 5% annual withdrawal rate, you're going to be able to pull 40 to $50,000 off of that. That assuming you've never been into the principal, but in reality in retirement you can get into the principal.
- [117:25]
Brian
Did you say put Social Security on it too?
- [117:26]
Bo
So then I was going to say once you have that 40, $50,000, then you put Social Security on top of that, which for a lot of folks is another 30. 40 grand.
- [117:33]
Brian
4 or 5 grand a month? Yeah, maybe.
- [117:35]
Jack
What if you're 40 years old?
- [117:37]
Brian
No.
- [117:37]
Bo
Will a million be enough when you to retire?
- [117:40]
Brian
To retire?
- [117:41]
Jack
You want to retire?
- [117:42]
Brian
He's going to answer. I'm going to say, you want to tell you why I say no is because there, and I'm not going to call them out by names, but there have been other fire movement people who've retired super early, like 35, 40. And then they've come back and they're still, they're really good people and they've done great content. But they, but if you're being honest, once they started having kids and they realize, holy cow, these kids are a lot more expensive than I ever thought. And they usually have to go figure out because it's just they didn't have enough life figured out to truly call Yourself retired at 40 years of age because a lot of life is still going to happen to you. I think a lot of times in retirement you need to. The die needs to be set to a degree so you kind of really can measure out what your expenses are going to be in the future. If you're doing this at 35 or 40 years old and you don't like for you Jack, you're not married, right. Don't have kids, do you know how much life is going to change for you? If you tried to say Right now I'm done. I've got enough. I just don't know that you have enough of your life tied down.
- [118:37]
Jack
What is the realistic retirement amount for someone who wants to have a family of four?
- [118:43]
Bo
I want to make sure I understand your question. Question? Are you asking can a 40 year old with a million dollars retire today or can a 40 year old today get to a million dollars by the
- [118:53]
Jack
time can a 40 year old with a million dollars today retire?
- [118:56]
Bo
Yeah, I think that'd be hard.
- [118:57]
Jack
And so what is the realistic.
- [118:59]
Brian
Because health insurance too.
- [119:00]
Jack
What is the realistic amount that someone who is 40 years old needs to retire to support a family of four?
- [119:06]
Bo
It depends on their living expense. I know that's, it's a really hard answer to give, but it depends on living expenses. Expenses. Some families of four can live off of 3,000, $4,000 a month. Some families of four, it requires 9,000, $10,000 to live well. The retirement portfolio necessary to satisfy both of those enterprises very, very different. So it's hard to like give like a hard and fast number.
- [119:27]
Brian
I wouldn't even sniff around it unless I had three to five million dollars
- [119:30]
Graham
at the age of 40.
- [119:31]
Brian
Yeah, 40.
- [119:32]
Bo
Yeah.
- [119:33]
Jack
What would you say fu money is?
- [119:35]
Bo
10 million.
- [119:36]
Brian
Yeah, we talked, I think we kind of covered because I think 10 million is a good number because your money earns what is a great life. Even if you took very little risk.
- [119:46]
Graham
What if the market underperforms like Vanguard says?
- [119:50]
Brian
10 million or in general, that's the beauty of the 10 million is because it's so even if you use the safe withdrawal, I mean if you use the risk free rate of return of cash, of Treasuries, I mean it's still 400,000. You're talking about four or five hundred thousand dollars, depending hard to spend 30 grand a month.
- [120:07]
Graham
What do you think is the ideal spend? Safe withdrawal rate.
- [120:09]
Bo
What age?
- [120:10]
Brian
What age?
- [120:12]
Graham
40.
- [120:14]
Brian
I mean three and a half, three and a half.
- [120:18]
Jack
What is the amount?
- [120:19]
Brian
And I wouldn't retire with that. I would want to do a still I'm running Monte Carlos.
- [120:22]
Graham
So you know what's interesting? I, I've done so many calculations on this and it determined that if you want to retire at the age of. I, I, I can't remember If I put 36 or 40. It was one of those. And you live to the age of 95, assuming that average lifespans are going up. It told me that to be able to account for the Great Depression. So basically you're retiring the day before everything collapses. It said 2.75 to. I believe it was 3.2 at the very most. A variance between that and it said you could actually do a little more if you had a year of expenses in addition to that saved in cash.
- [120:59]
Brian
Yeah, but I think with three and a half, you're still young enough and able bodied. You can go subsidize it if you really got squeezed.
- [121:06]
Bo
And I want to be. This is something important for the audience to hear. In our mind, safe withdrawal rates are napkin math. Right. So like what we're doing, it's not
- [121:14]
Brian
a real financial plan.
- [121:16]
Bo
I would never let tell someone, oh, based on a 3 1/2% draw rate in this pot of money, you can retire. What I'd want to do is say, okay, you want to retire age 36, how much are you going to spend from 36 to 50? What are you going to spend from 50 to 65? What are you like? I'd want to actually not just factor in an estimate of the things you think that will happen between 36 and 95, but realistically put some teeth to it. Okay, you have daughters. Great. Are you gonna pay for their wedding? How much think a wedding's gonna cost in today's dollars? What do you project that wedding's gonna. How often do you replace automobiles? Do you replace them every seven years? What kind of automobile? Okay, you want to travel? How often do you want to travel? Do you think you'll be traveling when you're 93? And we would try to, and this we do for our clients, get as granular as possible on the things that we can realistically estimate. And then we would reverse engineer using Monte Carlo analysis. Does this get there? Because what actually ends up happening is it's not a static 3 1/2% safe withdrawal rate. Every year there may be a season where the safe withdrawal rate is nine and a half, 10%. But then something changes, spending changes, lifestyle changes and other income source enters. And then the safe withdrawal rate drops down to 2% or something like that. So it's way more dynamic in practice than it is in like academic theory around safe withdrawal rates.
- [122:29]
Graham
How common is it that people run out of money in retirement versus save too much?
- [122:34]
Brian
But it's always, you know, that's the, the, the save too much. Because I think I'm now at the stage with, with money that you try to figure out, you look back over your life and go, which were the dollars that actually turned into this dollar and which decision was it? And it was all the, is the culmination of all the good decisions together that I don't have regret that I'm going to probably without a doubt I'm not going to leave this planet broke based upon all the good stuff. But I don't have regrets or feel like I left something on the table. I know that's not really answering the question but I'm trying to get to the mindset that I think you have to be careful when because so many, so few Americans actually save what they need to for retirement. Even though we showed you with our wealth multiplier would take very little, just a little bit of discipline when you're younger to do it that people aren't Even I guess 60 year olds don't have, you know what was 100 and when we did the book tours like $110,000 was the average investments for somebody in their 60s. That's way below what they should be. So since we have a problem that nobody has the money, I don't want to say there's the risk is you have too much. That's just you're a rounding error statistically that that's probably not the message I'd want to put out.
- [123:46]
Bo
And then on the flip side of your question, are there a lot of people that run out of money in retirement? What often ends up happening is most people aren't like living life, living life, living life, living life. Everything goes to zero. What ends up happening is it kind of goes down and they begin having to make sacrifices they might not want to make. Hey, I had a house but we can't afford this house anymore so we got to sell it. Hey, I was living on my own but I can't afford the bill so I'm have to move in with family. And if it gets really dire to devolve in situations where I don't really have any assets but I've got Social Security I'm going to figure out how can I live on whatever my Social Security check is. I think that's more the reality because I think the number was something like like 60% of retired Americans right now the majority of their retirement income is Social Security number which is sort of, which is sort of a wild thing to think about. So how often do people have to make concessions in retirement they didn't want to make? I think that probably happens more often for the average American realize because I think the average American is not preparing for retirement the way they ought to
- [124:48]
Graham
to what about lifestyle creep? Do you see that as being an issue over time is just spending a little more like doing the $200,000 cruise. And then pretty soon I got to do the $500,000 cruise.
- [124:57]
Bo
Well, look, lifestyle creep gets a bad rap. This is a hot take. Lifestyle creep is not bad. We actually want lifestyle creep. We want for most people to have a nicer lifestyle in our 30s than we had in our 20s, a nicer lifestyle in our 40s, in our 30s, nicer in 50s and in 40s. That's your lifestyle creeping. What you can't let happen is, is let your lifestyle outpace your savings, outpace your building. So so long as you're continuing to save and continue to grow your pot of money and to continue to build for the future, there's nothing wrong with you buying the nicer home, buying the nicer car, going on the nicer trips, assuming you're doing all the other stuff that you're supposed to. I think far too often people forget that second part and they just let the lifestyle creep.
- [125:39]
Brian
I would like to give some old man knowledge, though, on something, you know, you hear we, we talk about on our show. The hedonic treadmill is good things that happen in your life, you should try to spread those out as much as possible so you can squeeze every ounce of dopamine and goodwill or good experience from it. And then bad stuff, you should stack up. And what I mean by that is like, you always hear about lottery winners. They go broke. If lottery winners would learn, hey, let's start off with 10% or something of what you learn, you know, of what you, you win. And maybe you buy a house and that's it. But usually they want to go buy the house, they want to buy the vacation property, the speedboats, they want to buy the new car. They do it all. And then they, they find out they're numb. All you did was you shot your system because you numbed it. You didn't give yourself any time to absorb and process it. So I always tell young people, as you start making money, don't shoot for the global, you know, international business class. Do it to the nine. When you're in your 20s, go do something, you know, go, go do Europe cheap because you're at the stage where that's the best. So that way you save something. Leave a little bit meat on the bone for your 30s and 40s. And if you can think about your life and creating success and achievements and experiences that way, I think you'll find that you have an appetite for and your happiness and fulfillment will be much better than if you just go run yourself in debt. Do the most exotic and luxurious vacation. You might be setting yourself up for just a life that is just not set up right because you did too much too fast.
- [127:09]
Graham
What's the best thing to spend money on?
- [127:11]
Brian
I mean, I, I. Look, I'm at this age where experiences family. You know, I'm the sentimental guy that tells everybody they should be having a gazillion kids because I only have two. But I also waited five years into my marriage to have kids. And now looking back because my oldest is graduating, leaving the house. I wish we had more. I mean, because it's just kids are. They're hard now. I don't want to misplay because you're in the messy middle. You have littles in your house. It's easy for me at my age to say it's not hard. But I love experiences and memories and doing things like that. Travel is awesome. Especially when I can get loved ones. I'll bribe the heck out of my oldest daughter to get her to do vacation with us.
- [127:48]
Graham
You have to bribe her to go on vacations.
- [127:50]
Bo
I just mean he wants to go on vacations that she wants to go.
- [127:52]
Brian
I don't mind. I planned on. And here's a compliment to her. She graduated high school. We took her to Paris to celebrate graduate. She graduated college. I said where do you want to go? And I'll write a check. And we've even had more success. I was thinking she was going to change. She just wants to go to Disney. So I mean I was like, I was shocked because we go to Disney all the time. But it showed me that that's where you worry about lifestyle creep and stuff. People. If you want to know the secret to happiness is the people that you surround yourself in. All the research into happiness usually comes down to spirituality, relationships, friends, not doing commute, commuter traffic and things like that. That's what it's not necessarily the, the exotic house and car. The biggest thing that shocked me once I got really what I could think would people look at my net worth on paper? They'd be like shock and awe. Is that I realized how empty the stuff was. I mean, and you, you, I mean, you. And I've talked enough that you. I think. Have you experienced any of that? I mean it's, it's the money.
- [128:52]
Graham
No, but I really don't buy that much.
- [128:55]
Brian
I know, but that's the thing. You don't buy that much because you, you could, you could buy anything. I could buy, you could buy any exotic car, you could buy any exotic watch. I just find that I don't get much out of that stuff. I mean, that's what. It's funny. We've done coverage on this. The billionaires look like they're almost homeless. It's the aspirational people that are typically out there, you know, blinging it up.
- [129:18]
Graham
Yes.
- [129:19]
Brian
Because they're trying to let people. They want people to look at them. I think there's something when you have. Doesn't feel like it's doing as much for you and you almost are a little embarrassed that if you wear some of those trinkets.
- [129:30]
Graham
Yeah.
- [129:30]
Bo
I think the best thing to spend money on is stuff that creates memories, experiences. My favorite thing to spend money on is stuff that creates convenience. I just love convenience in my life. So if I can outsource something or add some sort of efficiency, I'm willing to, like, spend money for that thing.
- [129:46]
Graham
That's what Jack has really been trying to hammer in me. I remember this. This stood out. Where you say, I was comparing. Sounds so dumb. I was comparing two dentists. One of them was expensive but was really close by. Could do everything in one visit.
- [129:59]
Jack
It.
- [130:00]
Graham
The other one was half the price. But I'd have to go back twice. And I was. Because they had.
- [130:04]
Jack
And also explain, Explain.
- [130:06]
Bo
Let's do this one.
- [130:07]
Jack
Let's talk. So how much was the more expensive one?
- [130:09]
Graham
Like 300. More expensive.
- [130:11]
Brian
I would go to the one that could do it all for $300.
- [130:13]
Jack
And then. And then the other one. How far away was it?
- [130:15]
Graham
Oh, an extra 15 minutes.
- [130:17]
Jack
15 minutes one way. Yeah, but it's 30 minutes. Two visits on two separate occasions. And then one is how far?
- [130:25]
Graham
Eight minutes away.
- [130:26]
Jack
Eight minutes away. So. And one visit and it's $300 more
- [130:30]
Bo
if I can afford the convenience. I'm going to go with the convenience.
- [130:33]
Graham
I went with a more expensive one. Great experience.
- [130:36]
Brian
Your time is worth a lot of money. The value of your time is worth a lot. That's the other thing I've learned, is that, you know, when you're younger, you are literally trading your time for wages. And as you get older and successful and you realize, holy cow, I don't have that much time left. You are. You understand the value of your time.
- [130:54]
Bo
So you will trade your money for time.
- [130:55]
Brian
You trade. You definitely trade your money for the time. That's why the experiences and other things is because it's not forever and it goes quick. I mean, I called a dear friend of ours, his birthday was yesterday, and we talked on the way in, and he was like, yeah, man, it feels like the, The, The Years go faster and faster the older you get. He's in his 70s. And so I, I, I cherish the time I get to spend with people I care about. And that's why I'm on the old man tour now. Like, I go on a spring training with my high school buddy. I go. I'm trying to get my college buddies. It's a little. It's an act of congress to get my college buddies to get together. But then every year I go on a golf. I play golf once a year. It's with my old neighbors from Georgia. We go down to Florida and we play rounds of golf together.
- [131:39]
Graham
Love that.
- [131:40]
Brian
It's important to make time for memories.
- [131:42]
Jack
Graham, you should show them your portfolio. Now you guys are going to react to all of Graham's investments. Obviously, no numbers. Just say what you think.
- [131:51]
Brian
After seeing how you. I hope you did. You keep track of what you gave on the previous score?
- [131:56]
Bo
Yeah.
- [131:56]
Brian
If you don't. Jack. You gave Jack a seven and a half.
- [131:58]
Bo
Seven and a half.
- [131:59]
Brian
Because I can see how Jack and Graham are. They're going to, they're going to be mad at whatever. Whoever loses is going to feel slight.
- [132:06]
Jack
I already know you guys are going to agree more. So with Graham and it's okay.
- [132:11]
Bo
We, like, we were not.
- [132:13]
Jack
I'm not, I'm not upset.
- [132:14]
Bo
Yeah.
- [132:14]
Jack
Like, I'm actively choosing every day when I wake up to have a portfolio that looks like this. So it's. I'm, I'm not, I'm completely.
- [132:20]
Brian
You're way ahead of the curve.
- [132:21]
Jack
I'm completely on bond.
- [132:22]
Brian
By the way, if you. I'll go ahead and tell you. If you want us to give you a prospect kit, we'll give you a prospect kit right out in the lobby. Lobby as you leave today.
- [132:27]
Bo
He just said he's one of those lifetime do it yourselfers.
- [132:29]
Brian
I know, I know.
- [132:30]
Jack
Look, I'm open to anything.
- [132:31]
Bo
I love it.
- [132:32]
Brian
Okay, this is. Now you can open up and see all the different accounts. Is this the biggest one?
- [132:37]
Bo
No. Here's the first investment account. Okay.
- [132:39]
Brian
Oh, this is all of it. This is, this is him playing around.
- [132:41]
Bo
All right. Some stuff.
- [132:43]
Brian
Robin Hood. You're basically. That's your speculative play account.
- [132:46]
Graham
Yeah, for the most part.
- [132:48]
Bo
A lot of.
- [132:49]
Graham
A lot of getting in on this.
- [132:50]
Brian
Go to the big stuff. Well, go to the big stuff.
- [132:52]
Bo
It's just an interesting to Note. Here's a $1 position. Here's a $5 position. Here's a 6.
- [132:58]
Brian
The free trades that they gave us. Those are the free trades.
- [133:01]
Jack
There's a $6 position in US dollars.
- [133:03]
Bo
There's a $7 position, there's a $12 position. So one of the things I'd probably do is clean up a bunch of the single digigit dollar positions.
- [133:10]
Graham
Some of those I can't close out because they're worth so little that I tried to sell them and they won't let me sell them. So I actually have to go and request this thing from Robin Hood or
- [133:18]
Brian
donate them or something.
- [133:19]
Graham
Yes, okay, just, just ignore those are.
- [133:23]
Bo
But, but don't look at his big stuff. We're assessing the whole. Well, you have to look at the whole picture. That's the thing.
- [133:28]
Brian
Your big, your big assets are the same thing. I mean they're in tried and true stuff and you could be a little resemble. But I think this is making our point because everybody here, we have decent investment portfolios, everybody at the table and we're all behind the same similar market type stuff. And that ought to be something for the audience to take a big note of is to be like, here we are having all these pontifications on the investment marketplace. But if you actually look at what money we're going to live off of in the future. Future, it's the broad markets.
- [133:57]
Bo
So you just have like a number of different accounts that could likely be consolidated. I'm sure there's some strategy that we're talking about.
- [134:03]
Graham
The investment accounts.
- [134:04]
Bo
Yeah, there's like just a couple, like there's a couple of different.
- [134:06]
Brian
Did you have like affiliations or do pro programs with some of these things? Because you do have a lot of different companies.
- [134:11]
Graham
Yeah, I use them all and I've just kept the investments in there and they've grown since.
- [134:15]
Brian
Is that because you were curiosity or you did something with these companies?
- [134:18]
Graham
No, a lot of those were me just trying out different brokerages because back in like 2017, I would go and make accounts with every single brokerage out there. Yeah, yeah, yeah. And I would use crazy.
- [134:29]
Jack
It drove me crazy. I had accounts at every single day.
- [134:32]
Brian
I want more simplicity in my life.
- [134:34]
Bo
I'm.
- [134:34]
Graham
I'm merging a few of these, but I have different accounts for different purposes.
- [134:39]
Bo
Okay, you've got a health saves account, love HSAs, right? Yeah. You have like 3, 600 of cash in your HSA.
- [134:45]
Graham
I forgot to invest it.
- [134:49]
Brian
But that's.
- [134:50]
Bo
He's gonna have a hard. I mean truly seven and a half, eight, you know what I mean?
- [134:53]
Brian
But it is, it is, it is the same. I mean, because I was gonna pick on. Because I was like, man, that's around. No, that. For that account size. That's actually a pretty decent size. I left a lot of cash.
- [135:02]
Bo
There's no positions in this one, so.
- [135:04]
Jack
Is that just cash?
- [135:06]
Bo
It's your Roth. There's no positions in here.
- [135:08]
Graham
It didn't probably translate over from. From that brokerage.
- [135:11]
Brian
Okay, we'll make sure. That's what I was talking about.
- [135:13]
Graham
That's V Phyx in the Roth.
- [135:16]
Bo
All of it. Okay.
- [135:16]
Graham
The entire thing.
- [135:17]
Bo
So that's great. The Acorns account. Can't see any. Cannot see any holdings in that one either. There.
- [135:24]
Graham
Yeah. That's four ETFs in that account.
- [135:27]
Bo
Good ones or bad ones?
- [135:28]
Graham
Good ones. Okay. Yeah, they're all. They're all, like, vanguardic.
- [135:31]
Brian
Okay.
- [135:32]
Graham
Yeah.
- [135:33]
Bo
All right. I mean, that's fine.
- [135:35]
Brian
You don't even classify yourself as an exotic.
- [135:38]
Jack
Talk about a news fest, right?
- [135:41]
Brian
Actually, I probably. I mean, it could just.
- [135:43]
Bo
It could be a little bit cleaner. Like, I just feel like there's some account consolidation. Like, if you were a client, I'd be like, hey, why do you have all these different accounts? Why do you have all these different positions? It might be easier to get your head wrapped or anything. And you. Not. Because what's interesting is, okay, I forgot to invest that $3,600 of cash. Well, $3,600 of cash can turn into $13,000 of cash. Just because he didn't. 13,000 turn into 30. 30 can turn into 100. Like, it just. It happens that way pretty quickly. If you have so much stuff that's hard to keep an eye on, where
- [136:09]
Brian
everything is also easier to compare to no annualized performance or how well you're doing when things are consolidated. Because you got stuff. I mean it. Now, I'm sure these things go spit out a report somewhere on here where it would tell you, but it's just. Just there's a lot of scrolling.
- [136:22]
Graham
I have, like, 12 1099s for different.
- [136:25]
Brian
That's the other part.
- [136:26]
Bo
And, like, is that. Does that not, like, bother you a little bit? Just.
- [136:28]
Graham
I keep track of them all. And then an account.
- [136:30]
Brian
Of course you do. I think you're. You're naturally good at this stuff, but that doesn't. Just because you have a way of doing this. I don't know that I think it's the most efficient use of your time either.
- [136:41]
Bo
Now, that's a. Okay, so that's a big one. It seems like maybe not enough to total net worth, but it seems like you. You're pretty bullish on crypto.
- [136:49]
Brian
Yeah.
- [136:50]
Jack
Yeah.
- [136:50]
Graham
But it's still under, I think 12.
- [136:53]
Brian
So how much is he up? Does it show how much he's up? Because we don't have to give the number, but it was. Does it. Do you know how much you're up total?
- [137:00]
Graham
I'm up maybe right now at these levels, like 6%.
- [137:05]
Bo
Okay, okay.
- [137:06]
Graham
Maybe 10.
- [137:07]
Brian
Maybe surprising because it's a decent size holding to hear you're only up 6%. Kind of. Of surprise.
- [137:14]
Graham
Yeah, because. Because I have a lot that I bought in 2017 and then a lot that I was buying in 2021 to 3, 4. Like more like dollar cost average.
- [137:23]
Brian
So do you think bitcoin's going to change the world, like for the term?
- [137:27]
Graham
I think there's an asymmetric upside that it will do better than it will do worse.
- [137:32]
Brian
What about all the quantum stuff that people are out there throwing out there as risks?
- [137:36]
Graham
Bitcoin would be able to change the way it's secured to be quantum resistant. I don't think it's going to be a risk.
- [137:43]
Brian
And I'm not saying that's a risk. I'm just saying I have these headlines thrown across our, you know, our, our, our feeds and I just.
- [137:50]
Graham
Banks would have to update as well. So it's like, you know, would banking be a risk?
- [137:53]
Bo
Yeah, it just a lot of.
- [137:55]
Brian
And those computers don't necessarily exist yet.
- [137:57]
Graham
Yeah.
- [137:58]
Bo
Like, you have some positions that are like pretty substantial and then you have some positions that are just very small relative. Right.
- [138:04]
Brian
Like it's more of a wrangling issue for you.
- [138:07]
Bo
I just, I got some thoughts on that.
- [138:08]
Graham
Yeah. So what would you rate my portfolio out of 10 you get.
- [138:13]
Brian
Now, remember, you gave, you gave Jack a seven and a half. I have a number I think you ought to say, and I'm curious.
- [138:18]
Jack
Don't do it because you gave me a seven and a half. Just do it independent of me.
- [138:21]
Bo
I like your.
- [138:21]
Brian
But you have to know where the scale is.
- [138:23]
Bo
I like your overall allocation much better. Like, I think it's, it seems to be a more well thought out, more robustly diversified portfolio, but it's a little bit sloppier in terms of like cleaning up some stuff. Right. So, well, he, when he says that,
- [138:39]
Brian
I, I think, well, I'll let you be because I would skew it. I was talking about the quilt of life. Yours is out of choice, is that you have assets all over the place, you know, different providers. And you said that you went on a journey trying out all the big providers. And I think probably from a content creation Standpoint, that was great, but just ongoing. I would probably try to consolidate to simplify your life so you own more of your time.
- [139:04]
Graham
And by that you're saying close down a lot of these brokers.
- [139:07]
Brian
Yeah. What are they going to collapse into one. If you don't have a business relationship with them and you don't, you know, then, then why make it where you have to do more compliance for accounting purposes and more just keeping up with it. Worried about access and everything else that comes with having more accounts.
- [139:21]
Graham
True.
- [139:22]
Bo
Was there a retirement account in there? As I'm going, I don't remember seeing a retirement account. There was no. Was there a soldier?
- [139:26]
Graham
There was just a Roth IRA that I had set up. No.
- [139:30]
Brian
What are you doing? I just figured you won't pay your taxes.
- [139:36]
Graham
My, my honest thought was I think that, you know, I didn't want to do a 401k because I just think taxes are going to be going up substantially by the time I retire and I would rather just pay the tax today. Okay.
- [139:49]
Brian
Roth 401K.
- [139:50]
Bo
I just makes sense for you. But if, if you're going to take that stance, do a Roth 401K K because you know what's cooler than taxable assets? Completely tax free assets.
- [139:59]
Graham
I thought about it and then I was just like, well, I just kind of want access to it now if I wanted to. Maybe.
- [140:06]
Bo
So right now.
- [140:07]
Brian
You literally said
- [140:11]
Bo
right now you have access to capital. Like, like we just saw your accounts. You have access to capital. So starting today, starting yesterday, it'd be sort of insane not to start building up 401k solo. 401k ass assets.
- [140:25]
Graham
You gotta give me a rating. Give me a rating.
- [140:27]
Bo
Okay, this is what I want to say. I'm going to give yours an eight.
- [140:33]
Brian
Wow.
- [140:33]
Graham
I'm only 0.5 higher than.
- [140:35]
Brian
No, I was thinking the exact same number. I didn't want to. I didn't want to color his answer, but I was thinking the exact same thing.
- [140:41]
Bo
A seven and a half. Because yours feels a little more emotional. And by the way, seven and a
- [140:47]
Jack
half is great emotional.
- [140:48]
Bo
Meaning you love your portfolio. Like you make your decisions based on emotion. This is. You said every morning I choose to. That's not a negative thing. Your emotion is. I like being only for a small portion.
- [140:58]
Brian
By the way, as we've disagreed, I
- [140:59]
Jack
completely disagree with that.
- [141:00]
Bo
And then yours is a little more well thought out, but it's just a little bit sloppy. It could be consolidated. Both of you just are missing some tax opportunities. Like there are like some Huge opportunities. So that's not really a portfolio rating. It's more like a financial planning rating.
- [141:14]
Jack
Man.
- [141:15]
Bo
There's some stuff that you could be taking.
- [141:16]
Graham
The only thing I should be doing on that, though, is just not the Roth 401K.
- [141:21]
Bo
Well, I, I think there's probably a case we made that you could do not only a Solo 401k, not only load that up, but you could also look at some sort of cash balance plan, which is another way to defer hundreds of thousands of dollars.
- [141:33]
Graham
I think taxes are going up, though. So, like, I don't want to defer anything. Like, I'd rather just pay the taxes now.
- [141:38]
Brian
Like, I, I think you can still do the Roth. You don't, you don't have to go as big as these numbers we're talking about, but from a legacy standpoint, you could still do some Roth.
- [141:46]
Bo
Okay, let's assume for the moment the taxes rates are going to go up.
- [141:49]
Graham
Yes.
- [141:50]
Bo
Do you think that. So we, we work in, we, we operate in a progressive tax system, and so a lot of people think, okay, well, tax rates are going to go up. That seems likely. Do you think that you're always going to be in a position where even if tax rates go up in, in mass, you're going to always be in the, the highest tax bracket? Yes, I think, I think with appropriate and proper planning, that doesn't have to be the case only because we have clients that live in that world.
- [142:16]
Brian
World. The only thing I will say, because I do think at the level Graham's at, that he is probably gonna be in the higher tax brackets, but it's more of the opportunity cost of what you could do with the money yourself versus giving it to government right now. Because that's really what also we're talking about. If you could save a few hundred thousand dollars off your taxes now, that's money you get to keep in your back pocket and deploy if you want to. Now you don't. That's the thing. I still don't have the why figured out for you.
- [142:42]
Bo
You.
- [142:42]
Brian
Because I think that, you know, I would want to have a lot of discussion on what you're trying to build for.
- [142:48]
Jack
He's too busy to be a real estate professional right now, but maybe at some point in the future, if work slows down, that he could become a real estate professional, take a bunch of paper losses, and that's when he can,
- [142:56]
Graham
oh, I never want to touch real estate ever again. Done with that.
- [142:59]
Brian
You really think you're done with real estate? Which is, which is so interesting to me. It really is.
- [143:04]
Graham
Nope. I want nothing to do with real estate.
- [143:05]
Brian
What soured you so much?
- [143:08]
Graham
A lot of.
- [143:09]
Brian
Besides the timing?
- [143:10]
Graham
Yeah, a lot of Los Angeles. The illiquidity of it. Like right now, I'm in the process of listing and selling two properties and the amount of time and work it's taking to be able to get those ready to list. Because I don't want to list a place that's like, not to say falling apart, but sloppy. I don't want people to go in and there's like peeling paint. Like I'm spending maybe 80 grand this month fixing up these places just to
- [143:36]
Bo
get it ready to sell.
- [143:37]
Graham
Just to get it ready to sell.
- [143:38]
Bo
Yeah, that's fine.
- [143:38]
Graham
And it's not only that, but it's also dealing with contractors and dealing with. Oh, what's the staging quote coming in? Are they doing this or they. That should have been done. I caught a few things that should have been done that weren't. It was different when I was 25 and I had the free time and all I was doing was real estate. It was really not difficult for me to manage these properties like I was in the areas anyway.
- [144:01]
Bo
Also, money was so much less expensive. The prices were so much the economics.
- [144:06]
Graham
And for my time, it was valuable. Like, I showed up every single day to every job site and I was there at 9am and when they weren't there, I'd give them a call. Where are you? Why aren't you here? I'd be stopping by like after work. And I loved it. I had so much fun. Now that's a pain in the ass. Like now I couldn't.
- [144:22]
Bo
It's a young man's game.
- [144:23]
Graham
Yeah, exactly. So is there anything you'd recommend me doing differently besides opening up a Roth 401k?
- [144:29]
Bo
I didn't do the math. Because you had so many accounts, it was difficult for me to. The mental accounting of how much of your portfolio is like risk on, risk off.
- [144:35]
Graham
Off.
- [144:35]
Bo
Right. Like, I saw some risk off more conservative positions, but I didn't have like a good asset mix. I'd want to be able to figure out what those numbers were.
- [144:42]
Graham
Under 12% is risky.
- [144:44]
Bo
So under 12% is risky.
- [144:48]
Graham
Yeah, that. That's basically the crypto definition.
- [144:52]
Bo
So I would say, like, risk off more would be like fixed income bond holdings, that sort of stuff. Like, you know, is your. Is your portfolio seven?
- [145:00]
Graham
It's 75% equities, real estate, 25% treasuries.
- [145:04]
Bo
Okay, great. So that's, you know, Given the size of the portfolio, probably not crazy, maybe even a little bit more conservative than I would have thought at your age, but not awful. I didn't see a clear performance metric for either one of you across the whole portfolio. So one of the things we like for our clients to be equipped with is like every report they get or even on the portal they see, they can see exactly what their portfolio, the whole thing, all of the accounts have done year to date. Date for the last one year, last three years, last five years, since the day they started working with us. So even though we see the portfolios as they exist today, what was not clear to me in looking at it is how effective of an investor have you been over the last five years?
- [145:40]
Jack
Yeah, I actually don't know how to create that with Schwab because I had all of my money spread across a few brokerages. But then about eight months ago, I consolidated everything with Acat's transfers into Schwab. And so it's kind of hard to track my action.
- [145:54]
Graham
They count. That is like your game.
- [145:56]
Jack
Exactly. Every time I monthly they reset it.
- [145:59]
Brian
I mean it seem change their system
- [146:00]
Bo
because what they do is a lot of these brokers, they focus so much on short term performance. Hey, we'll show you what you're doing for the day, what you're doing this quarter so far. We want our folks to have a much longer term view. Hey, how much did I start with? How much have I put in? How much have I pulled out?
- [146:12]
Brian
The other thing is tracking too. We help our clients. Yeah. Because we're, we're. We're tracking all that stuff.
- [146:19]
Graham
You know, swamp is good about tracking basis.
- [146:22]
Brian
But if you're consolidating, that's the part.
- [146:25]
Graham
Performance is lacking.
- [146:27]
Jack
They include the principal.
- [146:28]
Graham
Yes.
- [146:28]
Jack
In which I wish you could just toggle that off.
- [146:30]
Bo
Yeah, I wish.
- [146:30]
Jack
I wish too.
- [146:31]
Brian
Yeah. Charitable giving. I didn't know. I didn't see doll donor ever consider donor advised funds. Because I saw gains in there. You could do donor advised funds if you're charitably minded.
- [146:40]
Bo
I forgot to look for a loss position. I didn't say I was so blinded by the $3 positions that I didn't look for losses to see.
- [146:46]
Brian
There's also a lot of. If we'd have gone through every one of your accounts, this would have been a full three hour audit. I mean it was a lot of accounts. There really was. I mean it was scrolling.
- [146:55]
Bo
But look, you're both, by and large you're both doing the big thing, right? This neither one of These were dumpster fire portfolios. Neither one of them things would give us a whole lot of.
- [147:02]
Brian
We could give both of you prospect kits and feel really good about it.
- [147:06]
Graham
So Jack and I are actually working on a side business because for us to be in front of the camera all the time, indefinitely, it's just. It's not going to happen. It's not feasible. So we want to build something outside of the iced coffee hour. And we were spitballing back and forth a while ago what good ideas are. And one of the things that we kept coming back to is the fact that people who open credit cards have these rewards that they are either unaware of or they just never utilize. Like there's like a Saks credit and like a Dell credit, and they all
- [147:33]
Jack
expire on different time horizons. So you have one that expires. Let's you get two per month. Maybe you get one every three months. Maybe you have one semiannually, one annually for all of these different websites for different amounts. And so what we decided to do was consolidate every single credit card, bonus, credit, discount, benefit all into one dashboard. And then it'll send you notifications when something is expiring according to your liking. So if you want notifications, like a lot of notifications, very little notifications, it'll just kind of tell you based off your preference. Hey, by the way, here's a link to Saks Fifth Avenue. Just click it and use this card at checkout because you have 50 free bucks that's expiring in a week.
- [148:10]
Bo
How. How difficult will it be to keep up with the rapid, rapid changes that take place?
- [148:15]
Jack
It's very easy. There are already things that exist online that can scrape all of that data and just immediately. Yeah, so it's. It's 99.9. 99.9 accuracy. The software that we're using, 40 that. But the main idea is that people will pay $900 a year for like the Amex Platinum or whatever it costs, but not use resi credit that comes $100 every single quarter, $400 or Uber. Because what I do is at the end of every single month, I'm like, oh crap, I have an Uber credit. And so I just Uber eat some food. Because I'm like. Even though I don't even need it because I want to use it. Same thing. I forget that my Amex Gold has benefits.
- [148:51]
Bo
So what is this a membership thing? How do you.
- [148:53]
Jack
So it would be a membership thing?
- [148:54]
Graham
Yeah. So people could l. Right now, the concept, people could link a few cards for Free to be able to try it out. And then if they want to link more than that, there'll be a small fee with that. But it'll also tell you which cards you should be using for certain purchases. And it'll look through your transactions and tell you how much you missed out in rewards by not using the appropriate
- [149:14]
Bo
card and will update like rotating categories. Like some cards also, like if you
- [149:19]
Jack
go through a Chase portal with different Chase credit cards, you know how they have like the discounts and promotions tab. So like if you expiring at the end of the month, you get 10% back at Lululemon up to $50 back total. So 500 total expenditure. So it'll also determine, hey, on this card you're spending Lululemon quite often, but on this card, if you just click and what is it? Like accept the feature.
- [149:42]
Graham
Yeah, exactly. And that's the thing. When you look at the offers on Amex, there are hundreds of them. Yeah, we never go through. It's like, oh, Home Depot's offering $5.
- [149:51]
Jack
And it doesn't tell you, hey, you shopped at Home Depot. It could also just link you and say, hey, just opt into like these 30. Because you shop at these 30 places across these cards. And then like, it'll just.
- [150:02]
Bo
Yeah, interesting.
- [150:03]
Graham
So we bought the website Extra dollar. Like Extra dollar Com.
- [150:08]
Bo
Nice. We're working on that was available, so
- [150:11]
Graham
we're working on it. So if anyone wants to sign up for the wait list and get first access to be able to try it out, it's extra $com.
- [150:18]
Bo
E x or the letter X. E
- [150:20]
Jack
X, T, R A, X. Yeah, like
- [150:21]
Graham
actually written out Extra dollar. Love that because you get to save an extra dollar or more. Extra dollar plus.
- [150:32]
Jack
Cool. Well, thank you guys so much for coming on the ice coffee hour. It's always a pleasure. Thank you for the team, for all sitting in on this. Thank you for letting us use all of your equipment. This has been such a blast.
- [150:41]
Graham
I love it. I've been looking forward to this.
- [150:43]
Brian
So, Mikasa su casa. We always have a blast. Really? And you guys, I love the dynamic. I mean, I think Bo and I pick on each other. You guys.
- [150:50]
Graham
Yeah, we were joking earlier. We were saying like, Jack and. And. Oh, the way it works.
- [150:58]
Jack
Alrighty. Well, thank you guys. Thank you guys so much for watching. We would not be here if not for you.
- [151:02]
Brian
We.
- [151:02]
Jack
We flew all the way out here. Okay.
- [151:04]
Graham
The flights were expensive because gas prices are going up like crazy.
- [151:07]
Jack
Were expensive.
- [151:08]
Graham
The flight was twice as much as it usually is. So if you appreciate that. Just hit the like button. Subscribe. We'll link to all of your information down below in the description as well.
- [151:15]
Brian
Thanks guys. We always have a blast.
- [151:17]
Graham
By the way, if you enjoy this episode, we just posted our next one early for members, so if you click the join button, you could literally begin watching our next episode right now. Really hope you enjoy it.