← The Stacking Benjamins Show
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- [00:03]
Joe
Are you someone who tries to drive while distracted by your phone? Someone who props it on the steering wheel or peeks down at it for a glance? Or just scrolls and scrolls? If so, you could be the next person to get into a fender bender, get a ticket, veer off the road, or even cause a crash that kills you or someone else. Enough already. Put the phone away or pay.
- [00:30]
OG
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- [01:06]
Doug
Live from Joe's mom's basement. It's a special tariffs episode of the Stacking Benjamin Show. Well, normally, right about now, I'd be giving you a snappy, open crafted with wit and intelligence that makes you think that neighbor Doug. I'd like to buy him a beer, but instead I'm gonna throw it over to Joe and OG to get their take on. On the current state of your investments, the market and the economy as a whole. Boys, take it away. But I'll still take that beer.
- [01:32]
OG
Intelligence. Did he say intelligence and wit. Hey, everybody. Happy Tuesday. You normally don't hear from us on Tuesday. I am Joe Salsi, sponsored by Michelob Ultra. Because that when. When we've had three wild days in the market. That's where OG goes, right there. That, that'd be a great sponsor.
- [01:53]
Joe
Actually. Two wild days. Honestly, today was weird. Today was, you know, today was weird.
- [01:59]
OG
Today, Monday, we're recording up and down and then up and down. Yeah, we're recording this on Monday. Haystackers. The reason we are recording this is because we obviously have business as normal on the Monday show. We're going to have business as normal on the Wednesday show most of the time. As you guys already know, if you've been with us for a while, in our stacker community, we're. We ignore these types of events, but when we get as much news and coverage and stuff that happens. I've been on TV twice in the past scoreboard. 48 hours, absolute freaking scoreboard. There's a lot going on. So we're just going to take maybe, well, just a few minutes.
- [02:42]
Joe
I sent out an email today too, and you guys might have seen It, And I said at the risk of inadvertently sounding the alarm, because that's, that's, that's one of the challenges, I think, that we have is recognizing that, okay, this is, this is, you know, this is a thing.
- [03:02]
Doug
Are we legitimizing it by even saying.
- [03:04]
Joe
But it's not a thing. But, you know, and it's like the struggle that I have with it is when we, when we do stuff like this or I send out an email or you're on TV or whatever, are we, yeah, that's a good point, Doug. Are we saying is this isn't a thing, but, oh, my God, we're doing a special episode. So, you know, OG never sends emails, but he just sent one. So I know he says it's not a thing, but he never sends an email, so maybe it is a thing message. I mean, it's a lemon juice.
- [03:33]
Doug
Squeeze it over the paper, honey.
- [03:35]
OG
He's keeping all our money in while he takes his money out.
- [03:37]
Joe
It's a thing, but it's not a thing. It's not like, did you hear this, this, this bit from David Portnoy, kind of a famous guy. David Trump has put his tariffs all over the place. I've been trying to understand him. I don't like, it's more a trade deficit, tariff, tariff to me. Like, hey, we get this much from you and you get this much from us. Let's even that up. Let's get some wacky formula and do tariffs and everything's in this because of it. I almost tweeted out, dave, how much are you down right now and today? 7 million. I'm down 7 million bucks and stocks and crypto. I think Trump's a smart guy.
- [04:23]
OG
That's a, I love how it says, I'm down 7 million bucks. I think Trump's a smart guy.
- [04:28]
Doug
Well, but without, and we don't normally go there. Right. We don't normally hit that. But, but what I think is interesting about that is I think he's doing and saying what a lot of people are, which is, I'm down X percent. But are you, because were you going to liquidate today anyways?
- [04:46]
OG
Oh, no. I think Portnoy was pissed in that deal.
- [04:49]
Joe
Yeah, there's, I think there's a lot. I mean, obviously, I don't know. I, I, I think that there's, there's nothing reactive to do based on this information, but I think it's important to focus on the things that are proactive from an investing standpoint that you should be doing. I don't Know, that's how I think about these things is not so much like this is different and we got it. It's just, well, okay, here are the facts, new facts, it's different, but it's not different. You know, it's just a different reason. But the market going down, you know, 15%, it's not completely off the wall. Crazy going down in three days kind of is. But.
- [05:41]
OG
All right, let me ask you some, let me ask you a few questions here because I'm going to ask you the questions that everybody's wondering. Obviously this is around the tariffs, but, but why does the stock market go down so absolutely quickly over this tariff stuff?
- [05:56]
Joe
OG I mean, I don't have any idea why. I have some, I have, I have, I have a, I have a thought around potentially why. And I think largely it has to do with potentially two things. Number one, the impact of profitability on the fact that goods and services, or mostly goods I guess now have this unknown tax associated with the tax or cost. It's just a new structure that potentially nobody's really had the opportunity to figure out. And, and so is there some panic in there of going well, I don't know. I mean, is all of a sudden Apple going to start selling phones for 1500 dollars instead of 1000? Do they eat some of that cost? Where does that, you know, how does that all shake out if, if all of this stays in the system now, like what happens? Because stock prices are really based on the future expected profitability. And when you start changing those expectations, especially as radically as hey Tomorrow, everything costs 30% more. It's like whoa, how does that, how does that, like nobody knows. Does that affect the consumer? Does it affect profitability? I think it's just a little bit of a knee jerk reaction. But it's also some forward looking potential issues.
- [07:15]
OG
We've seen what you're talking about specifically borne out in the numbers. The three sectors that went down the most, the energy sector, OG Went down the most because of fear. Some of our energy comes from Canada. We also have, you know, the cost of, of, of, of trucking, transporting goods, whatever that might be. So energy down big time. Second was technology, but technology wasn't even either. What's interesting is, is that Apple that imports a product from places like China and Vietnam hit really hard where Microsoft, which has a lot of stuff on U S soil, not hit nearly as hard as Apple was. And then third, financial companies, so, so Wall street firms and banks often get hit in these downturns pretty hard. What's Also interesting there is firms that have a big brokerage presence not hit nearly as hard because if people re reevaluate their portfolio and the companies make money on the spread between those transactions, they'll get some versus companies that don't have a big brokerage and got hit harder during these three days. Companies that got hit the least were consumer staples stuff that we're going to buy no matter what you're going to buy, Procter and Gamble stuff regardless because you still are going to need those things. So the stuff that you're talking about some of it being forward looking based on the tariffs 100% is what I've seen in that, in that fallout from those, from those numbers.
- [08:47]
Joe
I, I, I think the second reason is Whoa, balloons.
- [08:51]
OG
For people not watching us apparently two.
- [08:55]
Joe
Fingers means balloons means happy.
- [08:57]
Doug
It's a vic like a victory party.
- [08:59]
Joe
Yeah, I guess so. I think so. And then the second reason is as it relates to or potential reason would be as it relates to how that affects the US currency valuation in other places which is one of the reasons why you're seeing international and emerging market stocks do a smidge better so far this year is because of the difference in the currency pricing and maybe the dollar is not as strong as it had been previously and now goods and services priced in euros could potentially be a little bit more attractive. So I think those are the two reasons why there's some whipsaw. But I also, I don't know, I don't know if you want to talk about that so I'll let you keep firing away questions. I'll get. Yeah, no, well this is my take home.
- [09:46]
OG
Well yeah because, because the second piece is, is if we look at the market today, I mean we had Thursday down, then we had China levy their tariffs back at us so we get a Friday down today. The futures are absolutely horrible. The market opens up way, way, way negative territory really fought back fairly quickly actually made its way all the way to even for a moment.
- [10:09]
Joe
Oh it's positive. Even I was green for a little.
- [10:12]
OG
Bit and then, and then went back south and ended up the day the Dow Jones down just over a 1% and the S and P down about a third of a percent. Yeah.
- [10:21]
Joe
Kind of a nothing burger in the, in on the, on the day over day numbers it's like oh, down point three. Okay.
- [10:28]
Doug
Right.
- [10:28]
OG
Yeah. So how does this, what does a daylight today mean if I'm, if I'm looking at, looking at my stuff?
- [10:38]
Joe
Well I don't think any of the days mean anything individually or in aggregate, because. And this is, I think more to like, what, what do we do with this new information? Maybe. And maybe this is the direction you wanted to head with this. We didn't, we didn't really talk about this, so I just, we didn't, we literally just fly. You just hit record. You're like, hey, what are you doing? Let's hit record.
- [10:59]
OG
We normally have all this prep work laid out, this thing, none of which.
- [11:03]
Joe
I pay attention to. So you're like, how is this any different than anything else you do?
- [11:07]
Doug
This little thing we do is as good as the rest of them. Get rid of all of the prep. Yeah, it's a waste of time.
- [11:13]
Joe
What do we need prep for? But I think there's a couple of things you do with this new information and maybe some of it's just kind of big picture stuff that I think about. So if there's wild swings, right? So you think about that rubber band of, you know, the market just got pulled back some aggressive number. And I saw some stats that said biggest two day point decline or percentage decline since 87, matched only in September of 08. Matched only in Covid of 2020. Like, you think about these times if you were an investor and during COVID or if you're an investor during the Great Recession or if you're old like Joe and you're an investor during the Black Monday in 1987. I mean, I was nine, so I.
- [11:56]
OG
Thought he was going 1929. I mean, I was going to reach across the table.
- [11:58]
Joe
There's 1929. Let's not get started about the, you know, but I think they all feel a little different. And Joe, maybe your perspective here would be helpful too, because I know you're, you were an advisor during the recession, but I remember the Great Recession being more of like death by a thousand paper cuts. Like it was just kind of every day sucked. Not like to the extent of -10, but it just sucked. And then this day sucked. It was just kind of bad news after bad news after bad news. Building for an entire year almost. Then the bottom dropped out. With Lehman, of course, that was pretty chaotic for, you know, whatever that two week period. But, but it wasn't like it wasn't like this. It wasn't just like Tomorrow it's down 5%, the next day it's down 5. It's like now it just kind of drip, drip, drip, drip, drip. So this reminds me a lot like Covid, where, you know, it's just this big uncertainty, a lot of chaos. The rubber Band gets pulled back really sharply. Market was down 30% in 17 trading days. And then what did we see? When it pulls back that quickly, it's got to snap back the other direction every bit as quickly. So I just, I just, just take pause. If you're thinking about doing stuff, I would just encourage you to just kind of take a breath. And there's two things that, there's two things that I think about. First of all, for those of you that like rules of thumb as it relates to investing and saving and, and back of the envelope calculations, we talk a lot about the 4% rule, right? You think about financial independence and you're like, oh, my 4% rule? So if you have a million bucks, that means, hey, I can, I can start with 40 and add inflation to that, inflationary increases to that every year. And there's a really high likelihood that for 30 years I'm going to have money left over. Right? That's kind of the broad brushstroke of 4%. But what does that include? That includes days like yesterday. It includes weeks like the last six that we've had. That's part of that plan. Right? And so when, when you're looking at your plan and you say, well, I looked at my plan on January 1st and I felt pretty good, but now I feel not so great, you should feel okay with it because the, that, that, that's built into the, into the overall structure of your plan. The market going down or there being variability or volatility is already there even in those back of the envelope calculations. So I would argue that for the vast majority of people, even if you just said, well, I gotta start a new plan today, like new day, new new day, new plan, I gotta start over. Am I planning? I bet your plan is pretty decent still today, even with the last three days of stuff. So take it in context. Yeah, it's not great, but not the end of the world.
- [14:35]
OG
Well, it's the worst time to make an evaluation. Well, it's the worst day to be evaluating any of this stuff.
- [14:41]
Doug
And I was going to say you said the word context, which makes me think, zoom out. Look at the, everybody's looking at the line graph for the last two weeks and you think, oh crap. But if you just keep zooming out and look at five years, this is, this is right on track. It's right on, you know, we probably needed a correction. There have been corrections over the last five, eight years and this just fits into that. So just put it into the larger context.
- [15:09]
Joe
You can't have two 20% years in a row, right? Without something, you know what I mean? Like, and, and, and, you know, the S and P is at maybe 5,000 right now, which is a great number, except, you know, about 6,000. If you didn't know about six, five is a great number, you know. And to your point, what I, what I do to kind of visualize this, Doug, is I take that Yahoo. Finance thing on the S and P and yeah, it's at. Whatever it is today, right. And you just keep on zooming backwards or zooming out, as you said, zooming out until you find that day and go, all right, when was that day? And look and see when was the last time? When did we cross it on the way up? And we're back to this number. It's like August or July. It's like, oh, that was last summer. Oh, that was last Easter. That was last, you know, when, like, it's, it's a lot shorter time period than you think.
- [15:55]
OG
I think that the, you know, the big thing I want to caution people against is, is this. I saw our, our good friend Jill Schlesinger on CBS News this morning. Jill was talking about how in the past this has been, you know, this has been, been outside factors. OG this time it is self inflicted. Right?
- [16:17]
Joe
I was going to say this is, this is, this is all internal.
- [16:20]
OG
Yeah, well, that was her point is this is self inflicted. Our administration and this tariff policy brought this on. And so you're seeing already people saying this time is different, this time is different. And if we go to the pandemic, the pandemic was different. That was something different. If we go back to the time before that, the big one, the Great Recession you talked about, we had, we had Wall street firms failing, we had bankruptcies in the auto industry. You know, it was funny, but that time was different. The time before that, the tech wreck, the, the, you know, web explosion, Internet 2.0 that exploded 2000 to 2002, that had never happened before.
- [17:12]
Doug
I'm, you're killing me, man. But I think you're going to, you might, you might save yourself. You might get to a point at the end of all of these examples. I want to let you finish your thought before I come in.
- [17:24]
OG
And the point is it's always different. It's always different. It's different every time. It's always. And yes. Was it self inflicted stuff? Absolutely, it is. It totally is.
- [17:35]
Doug
And I would argue, and I hear a lot of people saying that right now, like in the last 36 hours, I hear that phrase. But this time it's different because we did it to ourselves. You know what? You could easily make the case that every one of those previous examples that you just gave 2007, 2008, 1987, 19 to us.
- [17:53]
OG
I did not do that.
- [17:54]
Joe
But.
- [17:54]
Doug
No, but hold on. All of those things, we financed it.
- [17:57]
Joe
So.
- [17:59]
Doug
But, but all of those things were results of policies that got put in place that were not well thought out and then there was some ramification or unknown consequences. Unknown consequences. Right. And so, but, but we did it to ourselves. But the difference was they happened. You never heard about it, it happened three years prior. And then there was an unforeseen consequence. But it was still something, some policy decision or some, you know, there was a lack of a protection put in place or wasn't a protection put in place. We still did all of those things to ourselves. It just wasn't as sensationalized because it, it was. We couldn't spot the moment when it happened. When it happened.
- [18:39]
OG
Well, we could obviously. We could obviously spot this one. I mean, from, from.
- [18:44]
Doug
Right. I just don't want people from a mile into thinking this one's different because it was, you know, this day when this person made this decision. There was one of those days and every previous crash or decline. It's just that I think we didn't see it coming.
- [19:01]
OG
I think definitely because of the fact that so many people were anti tariff going into this. There was so much of a resounding cacophony of people that were. Didn't want anything to do with terrorists.
- [19:15]
Doug
That word for a week.
- [19:16]
OG
That, that's, that, that's why we saw the first two days and that's why today was much more of a nothing burger. Right? Because we got those first two days out of our system. So to your point. But my, my big point is it's always different. It's never the same. I get tired of people telling me it's different. This time is. Yes, it is different. Yes, it is different. And I'll. And og I think we should end on this. This is what I said on television and I just want to see if what your take is here. But I'm not worried about your stocks. If you did the things that you and I have been talking about on the show, you, you own stocks for the long term. You're a tomorrow investor, not a today investor. You're. You're looking 10 years out or longer with your stocks. You shouldn't be in stocks if you're looking shorter than that. If you're looking 10 years out, not worried at all. You know why? Because to use your Coca Cola example that you used in past shows, the people at Coca Cola are figuring out, how am I going to get around this? What am I going to do so that I can keep my job and I can continue to sell Coca Cola? I'm going to pass on these tariffs to the customer in the least egregious way possible. I'm going to make sure that we stay profitable. Companies always find a way to stay profitable. So that's number one. I'm not worried about your stocks. What I am worried about, though, over the short run, that I think enough people aren't paying attention to. Just looking at these studies that are showing that your Life may be $3,800 more expensive for the same stuff next year as it was last year. And you're not buying anything new. I don't think enough people are tracking their expenses. I think this is where, if you're just back of the envelope, just, okay, I'm just going to, you know, got a feel for how I spend money. This is where credit card debt comes from. I'm much more worried about your budget than I am about your portfolio.
- [20:56]
Joe
Yeah, I know you said wrap up, but I've got a. I've got like a whole. I was going to say cacophony, but that's already been used. Litany. Yes, I have. Litany. I've got. So can I run through the seven. I got seven things, but I think there's. I think there's two more that are on there. I mean, we'll just burn through them. I don't need to explain every.
- [21:17]
Doug
You have a casserole in the oven.
- [21:18]
Joe
So Doug's got a casserole. So let me go.
- [21:20]
OG
Got a bun in the oven, everybody.
- [21:21]
Joe
So, so casserole of cookies. And, you know, all right, so a couple of things. So here's some. Here are the things that you might consider doing with the new information. So you wake up today, you, you look at your account. You go, okay, it's based on, you know, last year's numbers. All of a sudden, like, what do I do? Probably rebalance. If you haven't looked at the allocation of your portfolio now yet, or you're too scared to just run some. Run some allocations, decide if now is the time to rebalance. Look at your workplace plans, your brokerage accounts, that sort of thing. If you have brokerage account money, number two, I've got tax loss harvesting. If you have position, you own Voo and it's gone down 10% in the last three days. Sell it. Buy Spy instead. And now you've realized that loss, you can use that to offset gains in the future and use it up to $3,000 against your taxes. If you've watched your cash balances, we talked about this. If you watch your cash balances kind of creep up a little bit, maybe now's the time to deploy a little cash. We're not going to say back the truck up because that's Joe's least favorite phrase in finance.
- [22:33]
OG
Back the truck up and land the plane.
- [22:34]
Joe
Oh gee, those are the two things. Back the truck up and land the plane. But if you, but if your cash reserve balance is crept up, maybe now's the time to, to kind of move some money longer term. The fourth 1, 1, 2, 3, 4, pull forward funding of goals. If you have that excess cash. Another way to deploy it is to say, hey, you know, I'm doing 10% in my 401k. Can I do 40% for the next two paychecks? Can I just, can I just really go. I'm going to wrap, ramp up my, I'm going to pull forward all this savings and live on some of this cash for a little bit. I've got dollar cost averaging as the, as I don't know what number we're on. As you're continuing to save, just keep dollar cost averaging. Review your plan we already talked about. And then the, the other one is probably the best thing is to do nothing. You know, just turn off the news, turn off the alerts from cnbc, turn off your Schwab account updates, that sort of thing. Like that's a good one. But I, I want to add one more because you made me think. Well, two more. One you made me think about. So the other one that I don't have on my list is Roth conversions. If you are thinking about doing a Roth conversion later this year or you're going to do your backdoor Roth contributions and then do the conversion, maybe pull it up maybe now. Right. We wait generally until the end of the year so you don't pay taxes on today's conversion and the market going down tomorrow and you're paying a high tax bill. But if you look and it's gone down a little bit, maybe you think, hey, it's going to go up from here. Maybe now is the time you do this year's Roth conversion as opposed to waiting late year. And then the second one, that wasn't on my list, but you brought up a Good point was on debt pay down, if, if this is a time to be very aggressive with cash flow in terms of your obligations, because look at the other potential downstream effects, right? So you could have recessionary type stuff. I'm not trying to, you know, be, you know, Chicken Little here, but. But there's some other things that could happen, right? There could be some recessionary things, there could be some job changes, and the more you have the opportunity to free yourself from obligations, if you're hanging on to that credit card debt and it's that $500 a month payment, you got a little extra cash. Yeah. Maybe you want to pay that off. You know, you got a car payment that's got a year and a half left on it, and it's, you know, $600 a month. And you got to look, maybe you want to pay. Maybe you want to stretch and pay that off just to free up that cash flow in case some other things happen down the line, give you flexibility for your monthly obligations. So I don't know what. How many that ended up being. 7, 8, 9, something like that as a list, but it was 9. Doug kept very accurate track as it's time for his casserole.
- [25:14]
OG
Fabulous. We're gonna have. We're gonna have Gertrude list those, by the way, in the basement. Facebook group for us.
- [25:22]
Joe
Yeah, absolutely. That'd be great.
- [25:24]
OG
Yeah.
- [25:24]
Joe
So Steve Stacker's got other ones to add to it. What other ones?
- [25:27]
OG
Yeah, that'd be great to have more of a conversation there. Everybody, thank you so much for, for hanging out with us. And if you think that, that, that now is a. Is a good time to meet with somebody, I think it's a good time to take your hand off that mouse, get your hand up off that mouse. Get somebody in your corner playing with your clicker.
- [25:49]
Doug
Why do you make it weird all the time?
- [25:50]
Joe
Time.
- [25:51]
OG
OG at stacking Benjamin's doc Because, you know, there's somebody sitting there on the Fidelity website right now saying, sell, Doug. Yeah, We've been doing this long enough. So.
- [25:59]
Joe
StackingBenjamins.com OG StackingBenjamins.com we're happy to. Happy to visit with you. And, and, and if you, if you, if it's time for a second opinion on your plan, this is, this is where we get really excited, is saving people from the big mistake. So if you're, as they say down here, if you're fixing to make a big mistake, if you're fixing to fix into. No, it's not even fixing to. It's fixing fixing to.
- [26:24]
OG
All right, well, we're fixing to. We're fixing to get out of here. Thanks, everybody.
- [26:27]
Joe
Some casserole, apparently. Unless it's broccoli. This is woman's work with Nicole Khalil. I would rather have the temporary pain of discomfort than the avoidable pain of regret. There are too many of us there. We're waiting for someday, and the clock is ticking, redefining what it means to be doing woman's work. Make sense of this wild, chaotic and beautiful world and your place in it. That is woman's work. This is woman's work from Believe, follow and listen on your favorite platform.