How NOT To Invest: Lessons from Barry Ritholtz SB1672

Summary

Summary of "How NOT To Invest: Lessons from Barry Ritholtz SB1672" – The Stacking Benjamins Show

Release Date: March 26, 2025

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Introduction

In the episode titled "How NOT To Invest: Lessons from Barry Ritholtz SB1672," hosts Joe Saul-Sehy and OG welcome Barry Ritholtz, the founder of Ritholtz Wealth Management and a renowned financial expert. The episode delves into common investment pitfalls, behavioral finance, and the importance of risk management, all presented with the show's signature light-hearted and engaging tone.

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Barry Ritholtz on Investment Mistakes

Barry Ritholtz opens the discussion by highlighting the significance of recognizing how not to invest. He emphasizes that understanding common mistakes can be as crucial as knowing successful strategies.

Notable Quote:

"If you're trying to match up your timeframes of your goals with the timeframes of your money, none of this ever has to be a concern to you." — Barry Ritholtz [04:24]

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Behavioral Finance and Personal Biases

The conversation transitions into behavioral finance, where Barry and the hosts explore how personal biases and psychological factors influence investment decisions. They discuss the concept of the "blind spot bias bubble," where individuals recognize others' biases but fail to see their own.

Notable Quote:

"It's not what you know, it's what you think is so, but just isn't." — OG [11:35]

Barry references the foundational work of Kahneman and Tversky, underscoring that even experts are susceptible to the same cognitive biases as everyone else.

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Case Studies: Sam Zell, Michael Burry, and Robert Kiyosaki

Barry examines the investment strategies of prominent figures like Sam Zell, Michael Burry, and Robert Kiyosaki, cautioning listeners about following outlier projections without understanding the underlying principles.

Notable Quote:

"When experts are wrong, it's because they're experts in the way the world used to be." — Barry Ritholtz [24:17]

He critiques the tendency of some investors to consistently predict market downturns, often without sustained success, and warns against relying solely on confident, specific forecasts without thorough analysis.

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Risk Management: The Cornerstone of Investing

A significant portion of the discussion revolves around the importance of risk management. Barry shares insights from his book, emphasizing that managing risk is more critical than attempting to predict market movements.

Notable Quote:

"There is no Such thing as 20% risk free, just like there's no such thing as inexpensive risk-adjusted." — Barry Ritholtz [55:07]

He advises investors to adopt strategies that protect against significant losses, even if it means sacrificing some potential gains.

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Technological Innovation and Productivity

Barry and the hosts explore the impact of technological advancements, particularly AI, on productivity and investing. They discuss how embracing new technologies can lead to substantial efficiency gains but also caution against overreliance without understanding the associated risks.

Notable Quote:

"It's all cheaper, faster, better than it ever was before financially." — OG [41:18]

Barry draws parallels between past technological shifts and the current AI wave, suggesting that adaptability is key to leveraging these innovations effectively.

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Listener Feedback and Questions

The episode features feedback from listeners, addressing concerns about job security, the disparity between remote and in-office workers, and the viability of creating personalized ETFs.

Gavin's Letter:

"Having been let go in recent months, I can state for a fact that many top performers, mid performers, and bottom performers were let go in a downsizing event where we were names and numbers on a spreadsheet and it had zero to do with the rating we had or our value to the company." — Gavin [49:55]

Lance's Inquiry:

"Could you discuss the pros and cons of Buffer ETFs? Is it possible to create your own and avoid high fees?" — Lance [53:51]

Barry responds by cautioning against Buffer ETFs, explaining that while they offer downside protection through option trading, they come with inherent costs that can erode returns over time.

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Conclusion: Key Takeaways

The episode wraps up with Barry Ritholtz reiterating the importance of understanding investment mistakes, managing risk, and staying adaptable in a rapidly changing financial landscape. He encourages listeners to remain humble, continuously educate themselves, and approach investing with a balanced perspective.

Notable Quote:

"If you're trying to control volatility on something that you don't need for 15 years, my question is why?" — Joe Saul-Sehy [62:08]

Barry emphasizes that long-term investing should focus on aligning investment strategies with one's financial goals and risk tolerance, rather than attempting to mitigate short-term market fluctuations unnecessarily.

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Final Thoughts

"How NOT To Invest: Lessons from Barry Ritholtz SB1672" offers a comprehensive exploration of investment strategies, behavioral biases, and risk management. Through engaging dialogue and insightful anecdotes, Barry Ritholtz equips listeners with the knowledge to avoid common investment mistakes and build a resilient financial portfolio.

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Notable Quotes with Timestamps:

• "If you're trying to match up your timeframes of your goals with the timeframes of your money, none of this ever has to be a concern to you." — Barry Ritholtz [04:24]
• "It's not what you know, it's what you think is so, but just isn't." — OG [11:35]
• "When experts are wrong, it's because they're experts in the way the world used to be." — Barry Ritholtz [24:17]
• "There is no Such thing as 20% risk free, just like there's no such thing as inexpensive risk-adjusted." — Barry Ritholtz [55:07]
• "It's all cheaper, faster, better than it ever was before financially." — OG [41:18]
• "If you're trying to control volatility on something that you don't need for 15 years, my question is why?" — Joe Saul-Sehy [62:08]

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About The Stacking Benjamins Show

Named the 2023 Best Personal Finance podcast by Bankrate.com, The Stacking Benjamins Show aims to make financial literacy enjoyable and accessible. Hosted by Joe Saul-Sehy and OG, the show features expert interviews, listener letters, and engaging discussions on personal finance, saving, investing, and current money trends. Tune in every Monday, Wednesday, and Friday for insightful and entertaining financial conversations.

Transcript

[Joe Saul-Sehy]

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[Doug]

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[Barry Ritholtz]

Ladies and gentlemen, we have a big show, a real big shoe.

[Doug]

Live from Joe's mom's basement, it's the Stacking Benjamin Show. Joe's mom's neighbor, Doug. And you say you want advice from the best financial people in all the land. We got you Stacker, because today we welcome to the basement the man behind one of the nation's top financial firms, Ritholtz Wealth Management. Yeah, he's here. Barry Ritholtz. Barry shares lessons on how not to invest that you'll want to implement right now. Plus, you've had lots of feedback on our last few shows. We'll share your thoughts on on losing a job working remotely, movies and more. And don't worry, I'm getting to it. Your trivia, of course, will be served just in time. And now, two guys who think diversification means having more than one streaming subscription. It's Joe and. Oh, juju.

[Joe Saul-Sehy]

J.J. that's not it. It's more than that. Hey, everybody. Welcome to the. I was this many days old when I found out what real diversification was. Podcast the Stacking Benjamin Show. I'm Joe Saul Sehi and across the card table from me, the guy who has Peacock, Paramount plus and Pluto. Just trying to think of all the.

[Doug]

Like, how rich am I? I've got. I've got two B and Plex.

[Joe Saul-Sehy]

I'm Pluto.

[Barry Ritholtz]

Well, I don't know what any of those things are, so I'm gonna say no. But if you haven't taken your iPhone, you guys can do this and everybody at home can do this too, right now. Do it with me.

[Joe Saul-Sehy]

Do it with a science experiment, kid.

[Barry Ritholtz]

This is a self help. Take your iPhone, open it up, and from the top swipe down and type in the word subscriptions. And then it pops up at the top, says subscriptions. And then you click on it and it will tell you or show you all of the subscriptions that you have on your phone that you subscribe to. And so you can go through that and go, wait a second. Why am I still subscribing to my fitness pal calorie counter? I haven't counted a calorie in five years. Unsubscribe. You know, hypothetically, another little hack is unsubscribe from all of them. You will still get to use them for the period of time for which you subscribed. And then just see if you notice that you don't have it anymore. And then you can resubscribe later. Sometimes they'll even send you a deal and go, if you resubscribe now, we'll send you a deal. But you look and you go, I don't really need to have this app anymore. I don't think I do. Just unsubscribe Doug.

[Joe Saul-Sehy]

Did he start giving advice like one minute into the show?

[Doug]

I think we're done here.

[Barry Ritholtz]

You're talking about subscriptions, and I heard you talk about TV subscriptions. And I noticed this weekend that I still had a Paramount subscription. And I haven't watched Paramount in a couple of weeks because I was done with all the shows on Paramount that I wanted to watch.

[Joe Saul-Sehy]

I finally got rid of Peacock and January and I. The Tour de France ended at the end of July and that's the whole reason why I got it. And now, of course, I unsubscribed and I'll resubscribe July 1st.

[Barry Ritholtz]

You're the guy that subscribes to Peacock for the Tour de France.

[Joe Saul-Sehy]

I'm the guy.

[Barry Ritholtz]

I saw the article about that.

[Joe Saul-Sehy]

It was incredible. A whole feature on the Guy Guy keeping Peacock network alive. Oh, speaking of keeping alive, the guy keeping this show alive today. Barry Ritholtz is here.

[Barry Ritholtz]

OG yeah, nice. Never heard of them.

[Joe Saul-Sehy]

The idea, we have no idea. And so everybody's on their best behavior. Mom is already upstairs making cookies. We got a great show today. Barry's going to talk about how not to invest. We've got your letters. It's going to be a humdinger as mom's friend Gertrude whiz bang. A whiz bang. It's gonna be lights out. Goodness on today's podcast. But before we get started, we've got a couple sponsors that make sure we can keep on keeping on. You don't have to pay anything for this goodness. So let's hear from them. And then Barry Ritholtz, the man behind Ritholtz Wealth Management, joins us. You have read his blog. You have seen him on every financial channel, but not the best one, Mom's Basement Barry Ritholtz is coming up next. That can really take a toll on you. I mean, between minimum payments and interest rates, it's really stressful and at times it feels, and I've been here, like you just can't get ahead on Navy Federal Credit Union understands debt's a huge stressor and they're here to help. Navy Federal Credit Union has all the financial tools and resources you need to dominate debt. Right now, Navy Federal Credit Union is offering a 0% intro EPR on credit card balance transfers for 12 months. Here's the way. Use that stackers. First of all, you create your debt payoff strategy. You figure out exactly how that's going to help you because a 0% transfer for 12 months can save you a ton. But make that work for you. Plus you can get $250 when you spend 20 $500 in your first 90 days on a cash rewards or cash rewards plus credit card again needs to be part of the overall plan. Don't let debt drag you down. Visit navy federal.org to start dominating debt today. Navy Federal Credit Union Our members are the mission. Navy Federal is insured by NCUA. After the intra rate expires, variable APRs are 14.9% to 18% based on creditworthiness. Rates are subject to change. ATM fees for cash advances are up to $1 at non Navy Federal ATMs. Small business owners State farms there with small business insurance to fit your specific needs. Whether you're starting a new venture or growing an existing one, State Farm helps you choose the right coverage to protect what matters most. Working with a local State Farm agent helps you understand your coverage options. Offering local support to help you achieve your goals. Focus on turning your passion into a thriving business. Knowing your insurance can change as your business grows. State Farm here to help you succeed with your business. Like a good neighbor, State Farm is there.

[OG]

We return you now to your regularly scheduled program. You know the really crazy thing is when you see some of the studies on financial literacy, it has a really finite half life. You have to stay on top of people. They could be as educated as possible and it fades. Eventually it Fades.

[Joe Saul-Sehy]

I think maybe the dopamine hit gets too strong. Right?

[OG]

There's some of that. There's some of that. It's funny because it's a process, not only learning. So first you have to learn all these things that most people unfortunately never learn. Thank goodness for Kahneman, and Tversky taught us so much about it. But then you have to recognize that so many of these things apply to you. And I had put a post up on the blog today about our blind spot bias bubble, that even as you go down the, you know, the behavioral finance rabbit hole and learn all these mistakes we make the assumption is, it's that guy. It's not me. It's always that guy. It's funny, somebody's name came up. We're talking about March madness. And Batnik's 40th birthday is coming up. So I took him to a Knicks game last week. We got floor seats. It was just. The whole thing was crazy. And I started telling the story about Joe Bessecker of Emerald. And the story is kind of funny, just that I was a big Knicks fan during the Ewing, Oakley, Starks, Mason era, and Michael Jordan was the immovable force they never could get past. And I was convinced that the officiating was against the next constantly. And then I went to this nit game. And I don't give a crap about college basketball. I mean, I'll watch some March Madness, certainly the Final Four.

[Joe Saul-Sehy]

Yeah.

[OG]

And if, like, a team has it, like a Michigan or a Tar Heels have a breakout year, I'll see a bunch of that. But he's a big alum, and all he saw was nothing but travel and foul and charging. And I'm watching the game with zero stake in it. I have no skin in the game. Could care less, Joe. That's two and a half steps. That's what's allowed.

[Barry Ritholtz]

3.

[OG]

Joe's foot was clearly on the line. It's not even a little bit. It's like planted on the line. That's a charge. Joe, he was moving. He wasn't planted like. And as the game went on, I had the sinking feeling in my stomach that, oh, my God, I'm. My worldview. My worldview is wholly delusional, at least when it comes to basketball. And then when I'm trying to remember, I don't think it was Kahneman's noise, but he talks about this. It was like an early interview. It might have even been a pre thinking fast and slow interview where Kahneman. Where. I want to say Danny, but I don't Feel like I, I should. Like Jason Zweig calls him Danny. He talks about our own bias bubble and how even though I've spent my whole career studying this, Kahneman says I have all the same biases and blind spots everybody else does. And it's horrifying when you hear that. I'm like, oh, I guess I. Even worse than being an idiot is knowing what an idiot you are. It's really like, that's what I get for 20 years of studying this crap. Well, thanks. Thanks for nothing.

[Joe Saul-Sehy]

I don't know. Or is that better? You know, I like that line, the more you know, the less you know, the more you know. And then you become very, you become more humble because you realize it's the you don't know that's going to get you where you've got all these idiots that are out there that I see all over TikTok all the time, you know, that are telling me all the truth of the universe that I need to know at 57 years old that apparently I didn't see before them.

[OG]

There are some great, you know, I, I love great quotes from really smart people and the book is just sprinkled with them. But, but go all the way back to Socrates. The only thing I know is that I don't know anything. It sounds like it's an exaggeration or hyperbole, but it's a step towards recognizing the importance of modesty and humility. And you know, Wall street is a fake it till you make it kind of place. Modesty is not the default setting by any stretch of the imagination, but it really helps you to be an investor if you want to just avoid the avoidable errors. You have to be much less arrogant, much less cocky. And don't just assume you know everything. But that seems to be especially newbies. And you could be a newbie for, I don't know, five years, 10 years. I started in the business on a trading desk. So you kind of get thrown in the deep end of the pool. And whoever doesn't drown, congratulations, you're a trader. So there's a little bit of cockiness. But you better learn to identify really quickly. You know, far less than you. You think you do. It's helpful not only to be aware of what you don't know, but to paraphrase the Twain quote, it's not what you know, it's what you think is so, but just isn't. And, and that's a big, you know, that's what people really get destroyed.

[Joe Saul-Sehy]

Well, I was going to say Barry, let's get started. But you know what? While we were talking, I just hit the start, so I think we're already in it. I think we're in it.

[OG]

I don't think I cursed or said anything on inappropriate.

[Joe Saul-Sehy]

So, no, not yet, but we'll try to get on.

[OG]

What are we? Are we PG rated? Are we R rated? What can I get away with?

[Joe Saul-Sehy]

We are. We are PG13. So we swear from time to time. But we beep it out. Mostly because it's funnier to beep it out.

[OG]

No, it definitely is amusing because it's not that hard to figure out what people say. Mother beep. It's like not that difficult. People aren't that silly.

[Joe Saul-Sehy]

I know. So I'm going to just tell everybody we faded up into it. I read this book back in the 90s called trading rules, which really is a boring book. And it's a.

[OG]

Who's the author?

[Joe Saul-Sehy]

I don't remember. But it was a guy at the commodities exchange in Chicago. And it's all of his rules. And here's a guy who's investing in stuff that 99.9% of your audience and my audience would never invest in a million years. And all he talks about is risk. All he talks about. The fact is you got to give up the fact that you know what the price is going to be tomorrow. You even say this in your book. You know, once we know that, once you realize nobody knows anything, right? Like we're going to be better off. But he's like, once I give that away and I realize what a little fish I am and how little I know, and people trade for all these reasons I can never fathom, no matter what it says on CNBC or Fox Business, I'm going to be better off. And it just blew me away how much this super professional, seasoned trader was all about risk management.

[OG]

I had the exact same experience you did, but with a different book. Do you remember Jack Schwager's first Market Wizards book? I want to say I love.

[Joe Saul-Sehy]

We've had Jack on three times. Because I love that guy so much.

[OG]

I was on a trading desk. My head trader handed me that book. My takeaway from that, that was so astonishing was it had nothing whatsoever to do with what you were trading itself. What you had to learn was how to manage yourself and how to manage your risk. And that's what was so astonishing to me, was it didn't make a difference what you were trading. Could be commodities, could be currency, could be stocks, bonds, it made no difference. Futures, it was all about having a process, having an approach, knowing when on those rare, rare occasions where you could let your rules be stretched a little bit and managing your own behavior. That was eye opening in the late 90s. I don't think a lot of people, at least in published format were discussing that. And it's funny because the behavior you would witness on the desk versus what I was reading about is the difference between a so so trader and back then, you know, in the pre reg FD era, it didn't even matter if you got good inside information as long as you got it from a source that was plugged in. It could be bad inside information, legal inside information, speculative rumor driven inside information. But if you're early in the pyramid scheme because that's what essentially these sort of Wall street gossip was. As long as you're not late to the party, there was money to be made and reg FD really changed that. And the people who recognize, oh, the whole risk scenario is completely different than it used to be. The people who recognize that did really well and the people who failed to recognize that we continue to see their excuse making going forward. Listen, I don't care if this manager or that manager has a bad quarter or a bad year. What I'm fascinated by is blaming the Fed's financial repression for my underperformance. Well, now that you know that the Fed is financially repressing the markets, shouldn't you be on the other side of the trade? I mean, you're not a grad student smoking clove cigarettes and drinking espresso. I used to joke about Cafe Reggio on McDougal street across from NYU. If you're just going to go there and stroke your goatee, well then you're a grad student. But if you're a fund manager, then once you figure out reality, why do you stay on the wrong side of the trade? Oh, you are emotionally involved in rationalizing what just happened. So you can't admit error and flip. Like those sorts of things are really formative to somebody who just was intrigued not only by trading, but how come this guy's making money this week and this guy's getting killed. I'm pointing left and right. And then next week the guy who's getting killed is just every trade is a winner. And the guy who is destroying, suddenly he can't trade his way out of a wet paper bag. And you start to recognize, oh, it's their thought process, it's their, you know what they believe. It's their ability to come up with A process and stick with it. And that was really formative to me, seeing how people just made fundamental mistakes. Look, you don't have to be a robot, but it helps to not be a 2 year old. It helps to not be, you know, to infantilize every trade and fight the tape. And I saw a lot of that.

[Joe Saul-Sehy]

But in some ways to have the curiosity of a young kid and to be willing to go with the next thing versus be so entrenched, in my opinion, I think it's important. What I love about what you did in this project is taking stuff from outside finance and applying it to finance. And by the way, that's always where I seem to find my best inspiration is when I look at these things and I apply it to my world. Not stuff that's right on the, you know, hitting right on the nail head. You talk about the music world and the Beatles and it's amazing. I never knew just how much the US was going, no, no, no, Barry, like, no, there is no way we're going to accept the Beatles here.

[OG]

Right? It started out with the Beatles record Company in the UK was EMI and I think in the US was capital. Unless I inverted those.

[Joe Saul-Sehy]

Yeah, it was capital.

[OG]

The EMI people, the UK people are telling their American counterparts, this band is just tearing up the charts. You got to release this. It's like, no, no, we know American taste. This guitar music is over. They said in 1964 it's like you just, it's a flash in the pan. And at one point in time the Beatles had the number one spot on the UK charts. The number two, the number three, the number four, the number five. How many times you have to get hit over the head before you say, I don't understand this music but something is going on here. Like I give you a million examples from the modern day about things that, hey, that's not necessarily my forte. But there's a groundswell. Pay attention. You have to notice this if that's your profession. And so not only did they not want to release the Beatles singles here, Ed Sullivan turned the Beatles down once or twice. And then by coincidence, what used to be called London Airport is now Heathrow. He's coming back to New York through Heathrow and the Beatles are coming home from, I want to say Scandinavia or Sweden or somewhere tour and there's 10,000 screaming teenage girls in the airport. Sullivan sees this and when he gets back home says, hey, I don't know what's going on over there, but get the Beatles here. It's a full Blown phenomena. Two Capitol Records credit, I should say two good corporate opportunistic profit seeking behavior before the. By the way, it's Sullivan was one of the biggest shows on tv. Sure, he regularly broke acts. He regularly would cause giant sales booms. In anticipation of that booking, they kind of were forced to release a couple of singles and they all went to number one, top five, top ten, whatever. And sold a million copies like that. And like, oh, maybe this, you know, maybe this Mercy Beat thing has got some legs. Maybe they'll still be here in 65, which is pretty hilarious. And then the reviews of the Ed Sullivan show from professional music critics are and admittedly cherry picked the worst, by the way. Target rich environment. There's thousands of terrible reviews. Bob Seawright is the first person who kind of wrote this up. And I did a bunch of googling and picked a bunch of other stuff. But just like the Washington Post, the Daily News, the New York Times, it was amazing. People who should know better just didn't.

[Joe Saul-Sehy]

And I've got the ones. I got the ones, Barry, right here that you wrote in your book. The Boston Globe quote, don't let the Beatles bother you. If you don't think about them, they'll go away in a few more years. They'll probably be bald. The New York Times. The Beatles vocal quality can be described as hoarsely incoherent with the minimal enunciation necessary to communicate the schematic text. It's awful.

[OG]

The Washington Post somehow made it an inside the Beltway discussion about, you know, once again we got screwed in our trade with Europe. I thought that was pretty hilarious. But my favorite things are people who, look, you don't have to be a Beatles fan, but to write, hey, you know, there's no melody or harmony here. It's like, no, what are you talking about? It's all melody and harmony. If you're gonna not like them, well then don't like them. But you can't just make crap up about it. It's obvious. And your criticism, clearly 60 something years later, almost 60 years later, has not stood the test of time. It just goes to show, you know the big lesson there, not only does no one know anything about what's going to happen in the future, to me there's two giant takeaways from this. One is we all tend to find a little bit of a complacent comfort zone. And when that happens, it's very easy to not see the train coming down the tracks. It could be the dot com implosion, it could be the Financial crisis. It could be Covid, flash crash, whatever it is. Our sort of complacency because we found a comfortable level is potentially problematic for a lot of people. That meant missing the ETF revolution, missing the shift towards passive. There's like a lot of examples where people were just stubbornly comfortable in the past and failed to adapt. And I'm not even talking about selling the top and buying the bottom. I'm talking about, hey, is there a value to passive? Probably. Is there a value to SPACs? Not really. You have to be able to question things that either are new or are just bubbling up again. You know, like spacs have been around for 30 years. They seem to come up every 10, 15 years. The last group of people have sort of moved on and no one is around that remembers the last time they got burned by spacs. But the other thing is there's a great Paul Graham quote in the book which is when experts are wrong, it's because they're experts in the way the world used to be. It has to be that because, you know, whatever, whenever you got your doctorate, whenever you got your first couple of. It's always in the past. Whatever we know today is pretty much backwards looking and historical. And if things are changing, if the world is changing, well then an expertise in the way the thing world used to be, it'll only get you so far. You have to be willing to adjust to changing conditions. And I don't mean day trading or turning your portfolio over. I mean philosophically understanding how to interact with the markets, the economy and investing.

[Joe Saul-Sehy]

You talk about two characters in the book, Sam Zell, who you know, I mean, you look at Sam Zell back in 2015 and you think there was. If Sam Zell's on CNBC, I'm going to watch and see what he has to say. Michael Burry. Heck, they had the whole. They had a whole movie about Michael Burry in the Big Short. What's wrong? Following advice from people like Burry and Zell.

[OG]

So there's a couple of concepts involved. One is epistemic trespass. When you're an expert in one space, that really shouldn't give you license to move to either an adjacent space or something wholly unrelated.

[Joe Saul-Sehy]

And this is Sam Zell specifically I think you're talking about.

[OG]

It's a little bit of both of them because. And Robert Kiyosaki as well. So how did Sam Zell become rich and famous? He is a phenomenally good distressed real estate investor. He got the nickname the Grave Dancer for when stuff run into trouble. He would be the only bid out there when everyone was panicking. Zelle, you know, solid contrarian instincts would buy deeply distressed real estate and then hold it for decades at a time. I think some of his holdings were literally half a century like crazy, crazy numbers. And then he just starts forecasting recessions. Sam never made a penny forecasting a recession and he's like pretty consistently wrong. Although Zell was like a big famous name and I wanted to start with something that was pretty obvious. The burry thing is more nuanced because he's been forecasting a market crash kind of on the regular. He made close to $100 million on the big short. And according, and he doesn't have to disclose any of this since he's a private individual, but some reports are that he pyramidded that up to a billion dollars. He's worth a billion dollars now. I don't know if that's true, but I love the idea that not only was this guy a contrarian once and most outlier call makers tend to be one hit wonders and not repeat the skill. The way he trades distressed assets and the way he trades anticipation of things falling to the downside is really challenging because over long periods of time the market tends to trend upwards. So you have to be not only precise in what you're betting against, but you also have to get the timing more or less right. In the big short, you find out that even 24 months is forever. And even when the bet starts going your way, then you're relying on the market actually marking things correctly. Like for six or eight months of the collapse, none of these traded derivative products got marked down. So I don't understand. This is a basket of mortgages. The average mortgage is, you know, usually run a 2% default rate, it's 20%. How are these still the same price? I got more to sell for you. If that's the case at this high price, he couldn't get a print that accurately reflected what was going on. It's so difficult to do. So I love the concept of him continuing to be, I mean he's a phenomenal manager, but he's been forecasting market crashes. Not quite as much as Robert Kiyosaki who wrote Rich Dad, Poor dad, or as my colleague Ben Carlson says, Rich Dad, Poor Reader. Here's a guy who literally wrote the best selling finance book of all time. You think Morgan housel's book at 7 million copies is a blockbuster? That's not even a quarter of what Rich Dad, Poor dad that sold like 32 or 33 million copies. It's like a crazy number. Some guy on Twitter tracks all of Kiyosaki's tweets. And every year since the financial crisis, he's been forecasting a crash. One of my favorite forecasts of his was in 2018, sell us real estate. Big crash coming. You don't want to own any residential real estate in the U.S. i don't think there was a better time in our lifetime to be a buyer of US real estate than 2018. And so when you see these people who have authority and some recognition and some level of success, the danger is that we, the home viewer, very much tend to believe. We tend to believe people who are confident, who are really specific. You know, the old joke is, why do economists use two decimal places? It's to prove they have a sense of humor. But when we see People forecast stocks 47,653, we all know it's a throw the dart. The viewer loves that. And anyone who's gotten an outlier call correct, not only are they more likely to make more outlier calls, and not only are they more likely to be incorrect, but the home viewer or reader loves those people and tends to believe what they say.

[Joe Saul-Sehy]

It's so absolutely frustrating. I often, whenever I see Kiyosaki today, I just wonder how this guy keeps a huge audience because he's been wrong on so many calls in a row. Like, you can be wrong 50,000 times in a row, and yet still you've got this massive amount of people that want to. Have you come? Speak? Have you come? I don't. I don't understand it.

[OG]

There's a fund manager that consistently bears since the financial crisis and started out with, I don't know, 8, 10, $12 billion, down to like a billion dollars. And. And one of my might have been Batnik said he was down to like 950, $950 million. And someone said, how long do you think this bull market's gonna last? And Michael's answer was, still another $950 million to go. And there's some truth to that. The guys who are like perma bears when they finally throw in the towel when there's nobody left to buy, when all the shorts are covered, tends to be capitulation means surrender when everybody in a downturn just gives it up and pukes up stock, that's how bottoms are made. And you can make the claim that when you run out of bears, when you run out of sellers, that's how tops are made.

[Joe Saul-Sehy]

I Remember back in the early 2000s, back when I was a financial planner, a long, long time ago? Harry Dent Jr. Remember?

[OG]

Harry Dent Jr. Population drives markets.

[Joe Saul-Sehy]

Yes.

[OG]

Except it doesn't.

[Joe Saul-Sehy]

Well, that means, by the way, when I first heard Harry Dent Jr. Blew me away, Barry, because I was like, this guy knows exactly. He's exactly the prototypical what you're talking about. I remember reading the roaring 2000, going, oh my goodness. And so it kind of helped my cynicism later on when I noticed this dude was selling annuities and where everything's going to roar. If everything's going to roar, why do I need all this downside protection with the annuity market? You similarly loved, quote, a book called Dow 36,000, which I think, Barry, these were out about the same time, these two books.

[OG]

The timing was so perfect. Dow 36,000, I want to say, came out the fall of 1999, which meant you had a quarter or two from publication date to get out of the market, if that's how you invest. And what was so fascinating to me, there were two big takeaways from that one. These guys were political analysts and they've sort of evolved into in fact, one of the two authors works in this administration. But the first thing is the recency effect that, wait, you're telling me after a thousand percent 18 year bull market, now you're pounding the table to get bullish and your forecast is simply just taking the previous seven years, which have been unusually robust and strong, and you're just tacking that on to the end of an 18 year bull market, like intuitively, that immediately was a red flag. But the other thing was their fundamental thesis. If anybody who bothered to fight their way through the book, which was pretty poorly conceived and written, was their fundamental premise was sort of, it's not that valuations don't matter, but valuations for stocks are so much cheaper than bonds that you have to own stocks. And I'm like, I didn't understand their methods, their models. None of it made any sense other than we want to have an outrageous discussion that would attract attention. It was, that book title was kind of clickbaity. And it worked for about six months. You know, they were, they did all, they did cnbc, they did Bloomberg, they did Fox, they did all the television shows, you know, the morning shows that they like. A lot of people spoke to them. And I'm trying to remember which company you're kind of my era in March 2000, was it Dell that preannounced? It was one of the companies that had said Y2K pulled forward all this hardware buying in the fourth quarter of 1999. Maybe it was intel, could have been Dell, a company like that. And that was the first crack. And that was just the beginning of the end. And it very rapidly unwound. And as, as you watched it fall apart, you know, the muscle memory of being rewarded every time you bought the dip was still fresh and still strong. And so a lot of people got a lot of traders and investors, both amateur and professional, got really slapped around in 2000, 2001. By the time 02 rolled around like October O2, it looked like the selling was done. You started to find stocks that were trading for cash on hand or less than cash on hand. Right?

[Joe Saul-Sehy]

Yeah, yeah.

[OG]

And that's a good sign that. All right, you know, these things don't go on forever. And to be fair, you didn't get out of that trading range till 2013. You know, a lot of people like to mark March 09 as the start of this bull market, but it really isn't. It's. That's the equivalent of the 73, 74 bear market. The, the crash that was about the same 56% and change as 0809. You don't start the new bull until you breach the previous highs. You don't just start it from the very low because, hey, from 66 to 82, we saw a lot of false starts and a lot of crashes and the same thing from 2000 to 2013. So a lot of like, oh, this looks good, and then the rug gets pulled out. So you need to be a little bit of a market historian if you want to be. Look, in the book I talk about the advantages of dollar cost averaging and buy and hold and broad passive ownership. Hey, if you want to decorate the Christmas tree with some active ETFs or strategies, a little garland, a few ornaments is fine, but the bulk of what you're doing should be that low cost, passive. If you want to do anything beyond that, you really have to be a market historian and understand the broad history of what's come before. And even knowing it doesn't guarantee you're going to get it right. It just gives you some insight into. Here's how the humans dealt with this last time. Now let's see what they do going forward.

[Joe Saul-Sehy]

Well, and as a little bit of a market historian, I really felt this. You didn't write this explicitly, Barry, which is why I wanted to ask you about it. This is a little bit of a cautionary tale about loading up on the Magnificent Seven right now, I would think.

[OG]

Yeah. And it's funny because the book actually looks longer than it is. There's a lot of one and two page chapters.

[Joe Saul-Sehy]

It is very, very short, concise chapters. Yeah.

[OG]

But there's a lot of white space. So the 400 pages is really less than that because there's. Forget all the footnotes at the end. But like, there are a lot of page and a half, two and a half pages throughout. But some of the examples that we use, you know, when you think about the telephone company a century ago, a century ago, there were a handful, or especially Ma Bell, but there were a handful of telephone companies and manufacturers. You didn't have to invest in any of those companies so much as recognize that the rest of corporate America that was at least service oriented, oh, this was going to be a big productivity booster and profit boost. The same thing in the 1990s with the dot coms. You know, it's sort of funny and you're old enough to remember when we referred to these companies as Internet companies. What publicly traded company today doesn't use email, doesn't have a website, doesn't use technology? In a way, but that's not how we talked about Internet companies. And I have jokingly referred to, if you're looking at AI and the Magnificent Seven, the value is not going to be necessarily in us picking one or two of those companies, be it Nvidia, Microsoft or whoever, the value is going to be the next 493 companies, all of which will become more efficient, more productive, more profitable. That. And I don't want to be Pollyannish about this, but history has told us again and again, you know, whether it's telegram or phone or the automobile or the computer or the Internet. Now, AI, there's a process that takes a decade plus before everybody figures out how are we going to use these newfangled website thingies. And then, oh, here's what we can do, I assume, AI maybe it won't take a decade, but it'll take a couple of years and eventually everybody just becomes that much better. That's not because I have any special insight into AI. Trust me, I don't. But when you look at every new technological breakthrough and how it's been deployed, you know, even mainframe computers, like for the longest time it was giant insurance companies that were doing these big number crunching on expected payouts for, you know, life expectancy and annuities and insurance plans and all these different things required a huge, huge ability to crunch numbers. Eventually that made its way downstream until eventually, hey, we just have a database. We're using Excel. That's all we really. Or Oracle or SQL or whatever it is. But the technology eventually makes its way into the whole system, and everybody does that much better.

[Joe Saul-Sehy]

They would keep wondering, I mean, my whole career and your whole career, you keep looking at the productivity numbers and go, how can we get more productivity? There's no way. There's no way. Humans are stretched. We can't. And then now you got the AI wave. And I just look at my productivity using AI today versus just two years ago. Barry, it's. And like you, I'm not an expert in it at all, but, man, it's part of our system today to plug in.

[OG]

I've been having this ongoing debate with my economist friends because I just look at what we do in the office. We always talk about productivity and I say, I know you think there's no productivity gains, but I can just see the evolution in our firm. How much time. Like, I have a vivid recollection two jobs ago, printing out quarterly statements for clients, performance statements, and having to have everybody's portfolio, which all were at the core similar, but all these different variations, and painstakingly making sure that the right cover letter and the right performance update went into the right envelope and got the right sticker stop and think about, like, how manual that was. And we had a few hundred clients. You never could have scaled up to a few thousand clients. And then you think about just the sort of thing we can do today with tax loss harvesting and direct indexing and just the ability to move money securely, easily, quickly. I rebuilt a car in South America and I was using an app called Remitly, and there's another app called World Remit to move money down there. That used to be like a painful process of going to the bank with two forms of ID and wiring. $10,000. Why are you sending money to Bogota, Colombia? Well, you know, I like cocaine and I'm having them ship up like a couple of pounds. Me and one of my colleagues at work saw a truck that was rebuilt in Colombia and started doing some research and discovered that for whatever reason, Colombia, South America, became the Toyota FJ capital of the world. They have tons of them and they rebuild them all. And if you want to rebuild one in the U.S. it's, you know, to do a nice job is full paint job, the whole thing. 40, 50, $60,000. It's half the price down there. Yeah, it's a little longer. You have to ship it up to the states for $1,000 back then, or 1,200 bucks. The original hesitation to do it was moving money was a big pain in the butt internationally. And wait, I'm a sec registered. I don't want to have to explain why am I sending $10,000 from my personal checking account to Colombia. But these apps now, you create a record. It's like, no, no, it's going to. You know, so and so's garage. We're rebuilding a truck like it. It felt like, oh, I could do this and not go to jail, which is always a bonus. So the technology just. And you know, it's funny, cause I. I talk in the book about Paul Volcker talking about there's been no financial innovation since the ATM. And maybe when he said that, I don't know, 15, 20 years ago, maybe that was true, but today it 100% isn't true. Everything is cheaper, faster, better than it ever was before financially. And again, this. This comes back to, hey, when you start to observe these big shifts, these big changes, I'm not telling you liquidate your portfolio or go all in on AI, but pay attention to what's happening and find ways to use these new tools to your best advantage. I just think about what we used to do with the blogs and the podcasts. My quarterly call to clients was a painful ordeal four times a year because everything had to be done manually, and everything had to been. Was one take. There were no edits that. Now the technology to put that together is just. It's so easy, and it just. Oh, my God, you could be. This is why I'm stunned. Now, the best pushback I've gotten from an economist was you're in a service industry, one that happened to be particularly unproductive. So there was a lot of headspace. And, you know, it's much harder to make those gains in manufacturing. Okay, maybe, but, you know, you got to be aware of what's going on in the world.

[Joe Saul-Sehy]

That next breakthrough, like, we just don't know what's coming. By the way, the one place we need innovation. I know that Sheila Baer was one of the people that blurbed your book. You and Sheila and I got to get together and figure out why is the ACH the same damn thing it was in 1988.

[Doug]

Like.

[Joe Saul-Sehy]

Like, why the heck.

[OG]

It's all the legacy technology that underlies this. In fact, the. You know, I'm not big, as you can tell from the book on making forecasts, when I. I'm always looking to see what is going to be the disruptive technology that either puts myself out of business or any of the technology partners and, or financial players that we all interact with. And you know, for a long time people thought the robo advisors were going to put people out of business. We were pretty sanguine about that early on because if you work with enough so we have no minimum, we'll take accounts no matter what size. But we have some pretty substantial households that we work with. Wealthy people aren't looking to get cheap or free advice. They want the best surgeon, the best lawyer, the best accountant, and hopefully the best financial advisor slash wealth manager. So we didn't.

[Joe Saul-Sehy]

I feel like they also want to have a conversation from time to time too, Barry.

[OG]

Especially when the hitting the fan and everybody's freaking out. They want someone to talk them off the ledge. You know, when I look around and we were just talking about those legacy systems, when I look around at the custodians, I'm shocked that nobody has come up with a way to disrupt them. Other than it's not exactly a high margin business and there's a lot of heavy lifting and a lot of risk and I think that's what's prevented technology from challenging them. But they're like, when I look around it's like, gee, that's a tough business. Especially now that trading is free. I don't know if that's a business I would want to be in.

[Joe Saul-Sehy]

Yeah, I don't think I'd want anything when it's erased to zero and you've achieved it, that stuff. The book is available tomorrow, everybody. It's called how not to Invest. And if you thought this was a fun conversation with Barry, wait till you read it. Because I found myself flipping chapter after chapter and going, oh man, that's good. And also laughing a fair amount of the time. Barry, thanks for mentoring us today.

[OG]

Well, thank you so much for the kind words. That is exactly the reaction I was hoping for. And when you're in the thick of it, you just never know, you know, if you're hitting the mark. I will say, unlike Bailout Nation, which was kind of a slog to write, aside from the fact that every three months another company would blow up and I'd have to rewrite that whole section of the book, this book was a joy to write. It was fun revisiting some ideas and kind of seeing how they've held up and expanding on them and, and just looking outside of typical Wall street writing to find ways to teach people, hey, if only you don't make These mistakes. You'll be great. You'll be fine.

[Doug]

Hey there, Stackers. I'm Joe's mom's neighbor, Doug, and today is national Create your own holiday day. Wait, I can create one? Whatever holiday I want. Really?

[Joe Saul-Sehy]

Oh, wow.

[Doug]

Well, the honor is all mine. Where do I start? Oh, oh, I know. We're gonna call today Bow Chicka Wow wow Day. Because if it's your birthday, happy birthday, and here's why. It's Bow Chicka Wow wow Day. If you were born today or heck, even this week, there's a good chance your parents were getting busy making you. On what holiday? I'll be back right after I go back. Bring out the sparklers for today's big reveal. You're gonna love the answer.

[Joe Saul-Sehy]

This episode is brought to you by Progressive Insurance. You chose to hit play on this podcast today. Smart Choice. Progressive loves to help people make smart choices. That's why they offer a tool called Auto Quote Expl that allows you to compare your Progressive car insurance quote with rates from other companies so you save time on the research and can enjoy savings when you choose the best rate for you. Give it a try after this [e-mail] Progressive Casualty Insurance Company and affiliates not available in all states or situations. Prices vary based on how you buy.

[Barry Ritholtz]

The Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA. Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen and keep striving. Visit strayer.edu Jack WelchMBA to learn more. Strayer University is certified to operate in Virginia by Chev and its many campuses, including at 2121 15th Street north in Arlington, Virginia.

[Joe Saul-Sehy]

Still getting around to that fix on your car? You got this on ebay. You'll find millions of parts guaranteed to fit.

[Barry Ritholtz]

Doesn't matter if it's a major engine.

[Joe Saul-Sehy]

Repair or your first time swapping your windshield wipers. Ebay has that part you need ready to click perfectly into place for changes big and small, loud or quiet. Find all the parts you need at prices you'll love. Guaranteed to fit every time. But you already know that eBay things people love. Eligible items only.

[Barry Ritholtz]

Exclusion supply.

[Doug]

Hey there, Stackers. I'm the guy bringing to life a new holiday and also the guy Joe's mom won't let carry fireworks into the basement to celebrate Joe's mom's neighbor, Doug. Shouldn't we be able to celebrate Bow Chick A wow wow Day? However we want According to Joe's mom, the answer is quote makes air quote sounds. What the hell are air quotes? Quote sounds. Okay, I'll try it. Not if you want to keep using my basement because she thinks fireworks will, quote, maybe send the house up in flames. What a warrior. Sure, there was that one time last year when we singed OG's eyebrows, but that guy loved every minute of it. You know, once we got the cat unstuck from him. It's a long story, but on today, today's reason for celebration, Bow Chicka Wow wow Day. If you are celebrating your birthday right now, which day did your parents probably have a great time celebrating? It turns out that your parents were making fireworks on Independence Day. Of course, it was also the day when you began seeking your own independence. Nine months later, Happy birthday stackers. I'm going back to celebrate more. And you're headed back to Joe and Og making some fireworks.

[Joe Saul-Sehy]

Og, we had some fireworks down here in the basement. Very old here, but some people go putting the math together for the first time. Wait a minute, hold on. Big holiday, tons of fun, barbecue and some fireworks. Next topic, let's, let's head into your letters because, oh gee, we've had some, some great, great, great letters. Doug, you've got the mailbag. Yeah, let's talk about some of these letters. I know that Gavin had some thoughts for us. Thanks by the way for the note, Gavin, about our show on, you know, when the job goes bye bye. That was episode 1646, when the job crumbles. Preparing for life. Surprises. And this is the surprise that happens to some of us when we go to meet with our boss, Doug and hr. HR happens to be in the room as well.

[Doug]

Yep. Gavin sent us a great note saying having been let go in recent months, I can state for a fact that many top performers, mid performers and bottom performers were let go in a downsizing event where we were names and numbers on a spreadsheet and it had zero to do with the rating we had or our value to the company. This is especially true at very large publicly traded companies where I have seen seen it multiple times in my 29 year career. Luckily, this is the first time I was impacted. Thanks for the great show as always. Cheers. And Doug is amazing. Gavin.

[Joe Saul-Sehy]

Might, might, might have put a word or two in there that Gavin may or may not have said much.

[Doug]

Read it verbatim I think.

[Joe Saul-Sehy]

But the gist of this og, you don't know. I mean, when I got fired, I had just received the best performance evaluation I gotten at that Company and two weeks later, and I knew, by the way, my boss did not like me. And I knew my boss was looking for a reason to fire me. I told my dad a couple weeks before this was at a smaller place. So I knew that I was like you.

[Barry Ritholtz]

That's so weird.

[Joe Saul-Sehy]

I knew that I was already in the hot seat. And then I get this wonderful evaluation and then bam, it's gone. So it can come at us out.

[Barry Ritholtz]

Of the blue anytime. Obviously, if you're a top performer, you feel like you're safer than bottom performers. But like Gavin said, at the end of the day, sometimes the reaper comes for you regardless. And you're just a number on a spreadsheet with a cost and ongoing expenses to keep. And they just. With a sledgehammer, just chop you out of there. That doesn't make any sense. What, with a big giant butcher knife, chop you out of there? I don't know.

[Joe Saul-Sehy]

There it is. With a big sledgehammer, just chop you out.

[Doug]

Business. It's not personal.

[Barry Ritholtz]

They cut down the tree with a big old hammer.

[Joe Saul-Sehy]

How does this guy's ever used a hammer before? You know, we get pushback often, Gavin, to your point, we get pushed back often on why do I need an emergency fund? Why do I need this money sitting in a bank account doing nothing and yet it's that bank account that you're so happy that you have. I just happened to a family member just recently who was super happy. He's like, I have. I think the number OG was 5. $58,000 to live on. $58,000. And knowing that you have $58,000 sitting in a safe place is a great.

[Barry Ritholtz]

Government employees right now there's a bunch of, a bunch of stress going on. And if you're a federal or you know, some states are going through it as well. Employee and meta. You think, oh, I work at such and such a place or I work for the U.S. treasury. I'm not going anywhere. I'm an IRS agent. It's like, oh, well, maybe you are.

[Doug]

And not the job for life you thought it was.

[Barry Ritholtz]

Yeah, it's not going to make it feel any better, you know, if you get let go. But it's going to give you the opportunity to just go just a half a step slower on the next decision. Whatever it is, you know, you still have to hustle. You still got to do all that stuff necessary to find the next thing. But if you've got a little extra cash or you've got your emergency fund in the right place, you don't have to be as worried.

[Joe Saul-Sehy]

We talked about 10 of Barry's maxims around investing on Monday, and I think, oh, gee, this kind of applies because the people that I worry about are not the people that are working for shaky organizations. To your point, where they think they see it coming. It is the people 100 to your point. They're like, no, no, I got a great job. I got a great boss. I love it. And as a guy who's had a great boss who was then replaced with the worst boss I've ever had, apologies. You're just. You're just one. You're one job change a notch above you from going from your favorite job to a horror story. And that could happen next week.

[Barry Ritholtz]

Yeah, absolutely.

[Joe Saul-Sehy]

Horrible stuff. Yeah, great. Great points there, Gavin. Thanks for that one. What else we got in the mailbag, Doug?

[Doug]

We got another note from Lance who says or asks, could you discuss the pros and cons of Buffy ETFs? Is it possible to create your own?

[Joe Saul-Sehy]

I think that's Buffer ETFs.

[Doug]

Oh, sometimes I just read so fast.

[Joe Saul-Sehy]

Buffy ETF is. Is after that older show, Buffy the Vampire Slayer etf.

[Doug]

That's what I thought he would. I mean, that's what I'd want to create.

[Joe Saul-Sehy]

Absolutely.

[Doug]

Anyway, he wants to know, Lance wants to know, is it possible to create your own and avoid high fees? Thanks. And Doug is amazing. He said that too, at the end.

[Joe Saul-Sehy]

This is also OG after some of the investing shows that we've been talking about lately, and some of diversification matters. But what exactly is a buffer etf? What's he even talking about?

[Barry Ritholtz]

I have no idea. I had to look it up. I figured I would guess and I guess right. But it's basically a scam where companies try to get you to give them more money in exchange for your results, and that's that.

[Joe Saul-Sehy]

Wait, is a buffer etf then? Buffer ETF like a. Like.

[Barry Ritholtz]

Basically what it. What it does is it combines option trading with a etf in this case. And the idea being that with some option trades, you can limit your downside.

[Joe Saul-Sehy]

Oh, this goes back to our crypto, our zero market neutral crypto fund garbage that we talked about a few episodes ago.

[Barry Ritholtz]

Well. Or what Barry talked about in his book. There's no such thing as the free lunch and everything. Everything has a cost associated with it. There is no Such thing as 20% risk free, just like there's no such thing as inexpensive risk adjusted. Every time you take money to prevent upside, you have to be. Or prevent downside, rather, you have to be preventing upside. That's just how it works. So I looked this up. I looked up an iShares product. IShares, good company, BlackRock. Basically, it's a year product. It's a ETF that you buy. And they say, okay, we're gonna give you 10% on the S and P. You go, great, that sounds awesome. Until they start using these option trades to account for potential downside. As I look at it Today, they have 108 days left. This goes until the end of June, I guess. And the maximum upside of this fund is 6% right now. Well, the S and P over the last one year is nine and a half. So if the S and P was flat for the next three months, obviously, you know, may or may not be. It's a 3% delta. You're going to get 6 versus 9. And I get that the whole idea is like, well, yeah, but I didn't lose a whole bunch of money. How many times I've given up 2, 3, 4% a year do you have to get before you make up for the one time of, you know, a minus 20? And the minus 20 only sticks with you if you sell it. Like, that's the crazy thing. Again, this all just boils down to if you're trying to match up your timeframes of your goals with the timeframes of your money, none of this ever has to be a concern to you. Where it gets to be a concern is where you go, oh, my gosh, I need to invest really super aggressively or I need a high return. You don't even think about investing aggressively. You just go, I want a high return. Then it goes down by 30 or 40%. You go, oh, the market's rigged. I knew that was a scam. Da, da, da, da. It's like, well, no, that's just part of the deal. The stock market one year and seven is going to go down a third. That's just. Look at history. It's all there. It's like when people go like, oh, tech stocks only go up. It's like, wait, no, we've had this book before. I've read was in 2000. We were all there, the three of us. If you weren't there in 2000, ask somebody who was the famous Mark Twain quote. History doesn't repeat itself, but it often rhymes. This is the same thing over and over and over again anytime. And this is when you get to market volatility. Go watch your favorite news channel, Fox, msnbc. Either one doesn't matter. All the Ads during the day are.

[Joe Saul-Sehy]

For cnbc, not msnbc.

[Barry Ritholtz]

No MSNBC or cnbc, whatever. It doesn't matter.

[Joe Saul-Sehy]

You talk about your favorite political channel.

[Barry Ritholtz]

Yeah, I'm just saying, news. Yeah, like wherever you get your news, if you gotcha.

[Joe Saul-Sehy]

Okay.

[Barry Ritholtz]

You know, news channel, money channel, doesn't matter. I don't really care. Yep, some sort of cable news network. How's cnn? Whatever your pleasure is. Okay, you're going to see two ads. The one ad is going to be William Devane going my money's in gold. Or you're going to see the commercial about protect your downside with blah blah blah annuity. All the smart people are doing blah blah blah annuity. And that's all that's on people's minds right now is oh my God, the S and p is down 10%. What do we do, guys? Look, the, the intra year peak to Valley average is 14. If minus 10 gets you all squirrely, you're doing it wrong. It doesn't move anything until minus 15. You're not even average until minus 15 in a year. So wake me up when it's minus 15. And we can, and we can say, oh hey guess what? Today we're average. It's an average year. JP Morgan puts together this great report every quarter and they update some things monthly called the Guide to the Markets. And you can just google this called JP Morgan Guide to the Markets. And you can download the slides, they don't add any commentary to it. Generally it's just data. And I find this data to be very helpful to really provide some context for where we happen to be in this seasonality or cycle or whatever you want to call it. I don't think it's predictive in any nature and I don't think it's a necessarily decision making tool. Right. It's not like, oh, we're pes are really high, therefore we should do this. But I think it provides context and color commentary for what's, you know, what you're seeing and experiencing. Is it more likely to have a lower return year when you've had three out of the last four years be 20%? Yeah, that kind of makes sense to me. Right. If the average, the s P is 10 over the last freaking 100 years and you bang out 2, 2 or 3 plus 20s in a row. Well, what does that mean? Does it mean that historically the average from now on is going to be 20 for the next hundred years? Or does it mean maybe, just maybe that we have to get a zero in there to get the 20 and a zero to equal 10. Or it was a 30. Do we have to get a minus five? You know, like this?

[Doug]

Just.

[Barry Ritholtz]

I don't know. I gotta stop. Just breathe. Wow.

[Doug]

His face got redder and redder and redder throughout that entire thing.

[Joe Saul-Sehy]

I wasn't gonna stop him. Were you gonna stop him?

[Doug]

No way. I was terrified.

[Barry Ritholtz]

Breathe. I need that. What's that? I think I'm gonna get up my. Hold on. Go back to your subscriptions.

[Doug]

Calm App call map.

[Barry Ritholtz]

Yeah, subscribe.

[Joe Saul-Sehy]

It's the perfect day for Lance's question with Barry here. How not to invest. Don't invest in things like a buffer etf.

[Barry Ritholtz]

I mean, he said, can I do this on my own? And the answer is, yeah, you can. You can just go buy puts or, you know, sell calls. Every side of that transaction, there's a good thing and a not so good thing. I mean, just you go, well, if I bought a put, which means I've got the right but not the obligation to sell at today's price in the future, that could be beneficial for you, right? If the market goes down 20% and you've got a piece of paper that says, well, hold on a second. Says here I get to sell as of March 15, I'd like to use this. They go, oh, all right, then you're good. But how many times do you not win that? How many times do you pay that for that piece of paper and expires worthless. An option contract has a $0 intrinsic value. There's no terminal or, I'm sorry, terminal value. There is no the end of the day, it's worth zero. It's just a binary gamble. You can look and say, well, but I think the market cool. Make your bets then. But know that when you do that, you are impacting your results. You're impacting your returns on both sides. Because if you spend the money and you don't get to exercise that option, what did you do? You used your capital. It went to zero. It was like buying a stock that went to zero. Like, it's just, you know, whatever.

[Joe Saul-Sehy]

Here's the problem, though, og which is kind of goes back to our show on Monday, which is if you're trying to control volatility on something that you don't need for 15 years. My question is why?

[Barry Ritholtz]

Yeah, why?

[Joe Saul-Sehy]

Because all you're doing, every time you buy an option, the option has an intrinsic cost. And in some cases, I like the cost because I like the insurance policy. If I know that I'm in a position too long, that I Probably shouldn't be in, but I want to see if I can wring it out a little more. I might buy an option and fully accepting the fact that I got to pay X amount of money as an insurance policy to ensure the fact that this stupidity that I'm engaging in is not going to go against me. Right. That I can go ahead and do something which is not technically what I maybe should be doing. But if I, you know, if I get a strong feeling that this is going to continue to go the way that I want, I can buy an insurance policy against that. But I also accept the fact that that's going to cost me, that it's going to bite into my return big time.

[Barry Ritholtz]

Sure does. And the, and the less risk you're willing to take, the more that cost is, you know, just like any insurance.

[Joe Saul-Sehy]

Yeah. Lance, thanks a ton for that note.

[Doug]

Thanks for winding OG up, Lance.

[Joe Saul-Sehy]

That was our whole goal with that one, Lance. So mission accomplished, buddy. Who else we got?

[Doug]

Yeah, we got another really good one from Bob Stacker. Bob, he says regarding SB 1653, which if I'm not mistaken, was first week of March of this year of 2025.

[Joe Saul-Sehy]

Yeah, this was, this was our, one of our rewind episodes, actually. And I think what Bob and Bob, by the way, might have missed this, that this episode was from when we were just coming out of COVID and so there was a big discussion about work from anywhere. Because if you remember, Doug, everybody was working from home. Everybody was still working from wherever the heck that they. That they were. And, and the beginning of his message, which I didn't include here, was about how, man, you guys really talked a lot about working from any. Well, Bob, and I apologize because I did not put this at the top of the episode enough that Greatest Hits episode. Everybody was working from home anyway. But he does make some fantastic points.

[Doug]

Let me, let me go on here because he does make some good points. Bob says, while I support remote work, this episode missed the mark for workers who cannot work from home. It highlighted a stark disparity within organizations. Those who work remotely versus those who must be physically present, which can be both divisive and unfair. Consider professions like medical workers, restaurant staff, law enforcement officers, and many others who. Who face additional challenges and expenses such as long commutes. And then he actually sent us a link. He referenced a 2024 piece from the US CareerInstitute EDU, a piece that came out after this episode originally aired. But anyway, it was a good article. The article mentioned that remote workers in the Same metro area reportedly receive a $12,000 raise over their in office counterparts, a figure that doesn't even factor in the true cost of commuting. Yes, issues like the blurred boundaries of work life balance for remote workers and increased productivity are real. But the use of work phones suggest that the difference between remote work and office work may be less significant than assumed. After all, a call during a 72 minute daily commute is still work related. The tone of SB 1653 felt dismissive of those who must report to an office. And that.

[Joe Saul-Sehy]

And that by the way, is because it was during COVID Bob.

[Doug]

It wasn't an option.

[OG]

Wrong.

[Joe Saul-Sehy]

There were people like my spouse who going into the hospital every day that did have to work from work, work from there. But I don't think we were dismissing people out of hand as much as we were acknowledging the times. But anyway, continue, because I like where he's going.

[Doug]

But he still brings up some good points. So it's. It's worth going through it and that's why I wanted to bring it up today, he says. Could we explore solutions to address this disparity? For instance, should in office workers receive higher compensation to offset additional costs? Or should remote work come with adjusted pay reflecting its conveniences? Throughout the pandemic, I embraced a hybrid model and experienced firsthand the cultural and organizational benefits of being in the office. The collective effort, everyone coming together despite individual hardships, creates a sense of unity and shared responsibility. This is not an anti remote work stance, Bob says. Rather it is a call for fairness. Without addressing these discrepancies, either by equalizing conditions or compensating differences, the concerns highlighted in the episode may increasingly resonate with a growing number of workers.

[Joe Saul-Sehy]

Well, and I think it makes an interesting point. Oh gee. About people that you know, a the whole cost of your job. What does your job really cost? What does it cost you to do the job? And when you're looking at salary A versus salary B, do I get the convenience working from home versus the commuting cost and all the extra costs that Bob mentions here of going into the office, I need to compare those in terms of fairness. I think fairness though OG is up to the marketplace. If there's a boss that will pay you more to come into the office, what does the boss get for that? Hopefully the boss gets loyalty, gets people that stay at the job for more than four point X years, which is the average amount of time somebody stays in a job. So hopefully that pays that you have an enlightened boss that does it and I think looking for that job is a noble thing. But I think the question, and this is capitalism, right? If Barry here today is a great thing about this. With markets going up and down, job markets change. So it's up to employers. Do you want to reward that? Do you want. And if you don't, is it going to be harder for you to find a worker? I don't know. That's all marketplace related.

[Barry Ritholtz]

I don't know what there is to add commentary here. I think everything works itself out how it's supposed to work itself out. If you, if you are underpaying for a service or for a position, regardless of whether or not it's in the office or not in the office, eventually you'll figure that out because the market forces will, will align against you. And if you're overpaying, you'll figure that out too because you'll have lots of applicants. You figure that out too. So I don't think you can mandate or regulate. You know, if you work from home, you get an extra. You know this, you, you get a work from home fee. Like what could you imagine? Doug would be incredulous. Be like, what do you mean I owe you guys money to work here? It's a work for home fee, Doug.

[Joe Saul-Sehy]

Mom keeps trying to do that to us. A basement related tax.

[Barry Ritholtz]

But I do think that there's a little bit of a moral obligation to, you know, there was this hack, I don't know if it's still as prevalent, but there's this, there's this thing where people would work two jobs. Have you seen this? Like you work from home, so you can just work for two companies. Like they don't know and you're not going to volunteer the info.

[Joe Saul-Sehy]

So we did the story, oh gee, remember before COVID guys, we did that story about the guy that got caught. He made I think $80,000 a year working this job. He paid somebody else in India to do the job for him, $40,000. He ended up doing nothing by outsourcing his own job to somebody else.

[Barry Ritholtz]

I think companies now have best efforts clauses in their employment agreements and stuff. Like your full time focus needs to be on this organization. You know, I don't know how you police that, but I think morally it'd be a little jacked up to be working for one company and then also working for a competitor or something. I don't think that that really flies. But I don't know, I mean, you can work at Dick's Sporting Goods and go work at McDonald's too. Why can't you have two part time jobs? And what's the difference by having two full time jobs? Maybe. I don't know.

[Joe Saul-Sehy]

It's interesting to see too as that greatest this episode was coming out of the pandemic. And around that time, Doug, we had a discussion about work from home and you were talking about how work from home is better. And a lot of our stackers 100% agree with you. Disagreed with me that being in the office I thought was, was, was where we were headed. But it does appear for better or worse, that is where we are headed. You look at the statistics of the number of people that are in the office now versus in the office a year ago and the number of companies saying return to the office. Heck, that was part of the, you know, some of this new federal government stuff. Nope, you're not working from home anymore. You are coming in. Which is funny when you look at Washington D.C. having gotten rid of a lot of parking spaces, created, created some, some issues because we thought it was forever.

[Doug]

But a lot of that is driven not necessarily by higher quality of output of the work, but more around the economics of we have this office space that we're committed to and we need people in here using it.

[Joe Saul-Sehy]

That's not what you're hearing CEOs say though. They're talking about collaboration.

[Doug]

Of course not. You can't carry the flag of we're already paying for this, so you got to come in and use it. That's not marketable. But you can talk about culture and, and collaboration and all of the other things.

[Joe Saul-Sehy]

Of course we're not going to solve this today. But I totally agree with the collaboration piece. I collaborate much better when people are in person. Much, much better. It's a thing. And Doug's looking at me like, and you've worked in an office in how long, Joe?

[Doug]

Well, it's thinking about the three of us who do not work or collaborate physically together more than a couple times a year.

[Joe Saul-Sehy]

Yeah, there's. I get this huge spark when I go to industry conferences, when I went to Chicago to strategic coach. When I'm in the room with people collaborating, I find phenomenal stuff happen. So when they say it, whether it's whether it's window dressing or not, by the way, I was at the Cumulus Studios, the mothership of the overlord corporate overlords who, who distribute our show and oh my goodness, talk about empty, Doug. I mean they did these and they're stuck in a long term lease, you know, in their offices. Their offices are probably made for. I'm going to say the one floor I was on. I know they have two floors probably I'm going to say 300 or 400 people. And there were maybe 12.

[Doug]

Yeah.

[Joe Saul-Sehy]

People in that entire office.

[Doug]

Yeah.

[Joe Saul-Sehy]

And by the way, talk about morale killer is, you know, if you've got an office that's made for 12 people and there's 12 people in there, you got an office made for 20 people or 12 people in there, there's a little bit of morale kill. I went in there, my morale went down.

[Doug]

Right. No different than going into a restaurant or a bar that's huge. And is. And there's empty. Bunch of empty tables that you just don't want to be there at 7:00 on a Friday place. Be. Yeah.

[Joe Saul-Sehy]

Yeah.

[Doug]

Anyway.

[Joe Saul-Sehy]

Horrible.

[Doug]

Great points. Thanks for sending that into us, Bob.

[Joe Saul-Sehy]

Yeah, thanks to everybody. Doug, if you don't mind, I got just a couple quick ones that came from Spotify conversations.

[Doug]

All right.

[Joe Saul-Sehy]

Which have been really fun over there. On our Spending Too Much Money episode, which we got a lot of feedback on someone on TikTok OG looking at your ability to buy two Xboxes to solve the. To solve the problem.

[Barry Ritholtz]

Was it well received?

[Joe Saul-Sehy]

They said something funny and I said something funny back. We'll just leave it at that.

[Doug]

That OG he's a man of the people.

[Joe Saul-Sehy]

L. Husby says when we were talking about the huge cost of airport food taking off from Las Vegas to Charlotte just paid 17 for a bacon, egg and cheese and a cup of coffee from Rachel's Kitchen at Gate D. Preposterous airport food. Not that good and ugly. J.D. dozer had had a recommendation or had a request for next year. They loved JD Loved the best tax prep software episode that we did with the team from the college investor Eric Rosenberg had said as an early tax preparer. I'd love to hear this episode in February. Want to hear it sooner. Love the show. And we got it as soon as Robert told us it was out. JD So I would love it sooner too. And in fact I passed this on to Robert Farrington who's the head of the college investor, saying, please give it to us the second it's out. We'll see if we can get it to you in February because I agree. Best tax prep software. We want that as early as you can. You can possibly get it. And then last on our episode about the surprising benefits of financial inaction, the same episode we talked about earlier, a nice comment from it looks like somebody's phone number. Joe, Doug and OG if you're ever feeling burnout, let this comment be a reminder of the reason why you do it. I'm so thankful to be 50% of your fan base. Keep up the good work. Thank you so much to everybody for sending all this wonderfulness.

[Doug]

I mean, why wouldn't you read that submitter's name out loud?

[Joe Saul-Sehy]

Well, it looks like it's their phone number.

[Doug]

That's my point.

[Joe Saul-Sehy]

8675309. Okay.

[Doug]

All right, I'm gonna call that person.

[Joe Saul-Sehy]

Is their phone number. All right. I think it's gonna do it for today. Thanks for hanging out with us, everyone. As usual, love your feedback on our episodes. Also, big thanks to Barry. I've never had an interview where, as you heard today, Steve, our engineer, just had to slowly move into it because we just started talking. Literally immediately, Barry and I just start chatting. I'm like, well, I guess we're in the interview now.

[Barry Ritholtz]

Guess we're going.

[Joe Saul-Sehy]

Never had that happen in almost 15 years. But Doug, something happens at the end of every episode. What should be on our to do list today?

[Doug]

Well, Joe, first, take some advice from Barry Ritholtz. How not to invest is every bit as important as knowing how to to invest. And you can learn lessons from many areas of life, not just your financial statements. Second, our stackers. Brilliant people coming up with even more ideas on job losses, working from home, and how Doug is awesome. All kinds of great stuff. But the big lesson, don't tell Joe's mom. You want to celebrate Bow Chick a wow wow Day? Unless you want a speech about, quote, wearing protection, unquote. Wait, you want me to wear gloves while I sing? I don't get it. Thanks to Barry Ritholtz for joining us today. You'll find his book how not to Invest Wherever finer books are sold. We'll also include links in our show [e-mail] this show is the property of SB Podcasts, LLC, Copyright 2025, and is created by Joe Saul Sehive. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome [e-mail] along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello.

[Joe Saul-Sehy]

Oh, yeah.

[Doug]

And before I go, not only should you not take advice from these nerds, nerds don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug. And we'll see you next time back here at the Stacking Benjamin Show.