Joe Saul Sehide (3:26)

Happy, happy Monday, Stackers. Douglas, passive aggressiveness from mom. You should have started yesterday.

Doug (3:33)

My bad.

Joe Saul Sehide (3:33)

But you know, today's good enough. Today's good. Happy Monday, everyone. We're so happy that you're here. Sit back and relax because we're talking investing.

OG (3:42)

Sit back and relax. That's my middle name.

Doug (3:46)

Yeah, you can't say that at the beginning of an episode, Joe. We'll lose them for the whole thing.

Joe Saul Sehide (3:52)

And he's God. Hey, Doug, how you doing?

Doug (3:56)

I guess I'm giving the investment advice today.

Joe Saul Sehide (3:59)

You know that things are on a slippery slope when OG goes from his normal relaxed to incredibly relaxed. We got a great show. Investing policy statements on Friday show live from fincon. OG you know we said the R word. There may be a recession in the future someday. When that day comes, though, you don't want to be reacting. You want to be able to focus on keeping your job, on keeping the wheels on the bus.

OG (4:28)

Yeah. Take advantage of the downturn.

Joe Saul Sehide (4:30)

Yeah. You don't want to react. So. Investment policy statement going today.

OG (4:36)

Back the truck up.

Joe Saul Sehide (4:37)

We read Doug's investment policy statement. I think Twizzler is spelled with twosies.

Doug (4:43)

No way.

Joe Saul Sehide (4:44)

Yeah, it's unbelievable. We've got those, those, those crazy people. Onesie's not enough for Twizzler.

Doug (4:51)

That's when you know something's really crazy. Look at this. I'm drinking black raspberry.

Joe Saul Sehide (4:57)

Yeah, two Z's in there.

Doug (4:59)

Two Z's in raspberry at the lacroix factory.

Joe Saul Sehide (5:02)

Yeah, none of that SP stuff. The silent P is where they get you. Right.

OG (5:07)

I got my investment policy statement written right here.

Joe Saul Sehide (5:10)

Don't. Don't do dumb with your money.

Doug (5:15)

With my money.

Joe Saul Sehide (5:16)

There it is.

Doug (5:18)

Yeah, I have a great story about that from college, but we'll let that roll for right now.

Joe Saul Sehide (5:23)

Is that what you're telling the guy at the tattoo parlor to put on your arm?

OG (5:26)

Yes.

Joe Saul Sehide (5:27)

You just keep looking at it.

OG (5:28)

Life. You know, people put like little witty things from like the Bible or, you know, the like.

Doug (5:33)

Wait, witty things from the Bible, you know, Dave Barry column.

Joe Saul Sehide (5:39)

All that Bible hilarity.

OG (5:40)

Doug, guys don't think there's witty things in there. I don't know, you know. Got some zingers. Oh, Jesus. Man, he's got some zingers.

Doug (5:48)

Looks like it's time for a reread. I didn't know it was a comedy skit.

Joe Saul Sehide (5:53)

Matthew writing his gospel. They're going to love this one.

Doug (6:00)

But were there rim shots in the Bible? I missed.

Joe Saul Sehide (6:06)

The next verse of Psalms will make you lol.

OG (6:09)

So there I was at the Sea of Galilee. You won't believe this.

Joe Saul Sehide (6:16)

And that's how quickly we derail the trade investment policy statements today, everyone. We've got a couple sponsors, though, to make sure we can keep on keeping on. We're going to hear from them first, but then take out your preferred writing device and get ready to actually make an investment policy statement with us on today's show. Huge Savings on Dell AI PCs are here, and it's a big deal. Why? Because Dell AI PCs with Intel Core Ultra processors are newly designed to help you do more faster. It's pretty amazing what they can do in a day's work. They can generate code, edit images, multitask without lag, draft emails, summarize documents, create live translations. They can even extend your battery life so you never have to worry about forgetting your charger. It's like having a personal assistant built right into your PC to cover the menial tasks so you can focus on what matters. That's the power of Dell AI with Intel inside. With deals on Dell AI PCs like the Dell 16 plus starting at $749.99, it's the perfect time to refresh your tech and take back your time. Upgrade your AIPC today by visiting Dell.com deals that's Dell.com deals this episode is brought to you by Navy Federal Credit Union. With rising housing prices and steeper mortgage rates, we know homeownership may seem too expensive to be achievable. But that's why we offer a Home Buyer's Choice loan that can open the door to affordable homeownership. Our Home Buyer's Choice loan has no down payment options available, which means you don't need to wait years to save money. And with our no refi rate drop, you might be able to lower your rate in the future without refinancing. Plus, while most lenders require borrowers to purchase private mortgage insurance unless they can make a 20% down payment. We don't require PMI. Finally, we offer fixed payments, so your monthly payment will always be the same. So if you're looking for your first home or your next home, you can open the door with a Navy Federal Home Buyer's Choice loan. Visit navyfederal.org to learn how you can achieve homeownership. Navy Federal Credit Union Our members are the mission. Terms and conditions apply equalizing lender loans subject to approval and eligibility requirements. Learn more@navy federal.org the Horror Story that keeps on giving on this Show over nearly 15 years, OG has been the fact that every time the market has gone down, we have seen every single time the question how do I react to this? Or I've lost a bunch of money, I don't know what to do and I get a pit in the bottom of my stomach every time we read this over and over and over. Now I'm not going to tell our Stacker family, and you won't either that with an investment policy statement you won't lose money. But why do you want one? What actually is an investment policy statement and why do you especially want it during a market downturn?

OG (9:25)

Well, I would say actually you won't lose money because in my opinion, you only lose money when you sell. And if you have an investment policy statement that's focused on your long term financial goals and it's behaving in a manner in which you would expect it to behave, then temporary market declines won't force you to sell and therefore you won't actually lose any money. But an investment policy statement is the opportunity for you to think through what your belief system is and how you want to behave when things don't go your way. When the market's going straight up, it's super easy to be an investor. It's like, oh, I just buy S and P stock and it's great, or I buy Nvidia this year, I buy international funds or whatever. And it's easy to do. The hard part is to be an investor when things don't go your way, when your expectations are not matched with reality. And that's really when people make the biggest mistakes in their money investing is because they don't expect the outcome to happen. I didn't expect this to go down 20%. That's a function of not knowing what you're investing in and then not knowing what to do when it gets here is a function of not having a plan in advance. And so investment policy statement can be as succinct as One little card like this, or it can be a couple of pages. But I encourage everybody to write down, for lack of a better term, your belief system around how you invest money. And then you do that in a calm day and you're not emotionally charged up, and your belief system will be challenged when you're down 20% or 30%. So don't write it on that day, write it today. And then when you get there, you pull out your card and you go, well, what. What did I say when I was saying, oh, yeah, don't do dumb with my money. Okay? So that's, you know, or whatever. And it helps make the decision process easier when it comes time to make decisions.

Joe Saul Sehide (11:21)

The story that always makes me sad is when somebody tells me that during a market downturn, they have trouble sleeping that they get so worried about their money. And what I love about the investment policy statement is that, you know your strategy. And I feel like the heartburn in that situation, OG is really because you're not sure what to do next, you're not sure where you're going next. And with your investment policy statement says, here's exactly where I go next. You mentioned earlier, partly joking, partly not, that maybe you, quote, take advantage of the fact that the market is down. That can go in your investment policy statement. How low does it go before you take advantage of it? Where would that money hypothetically come from ahead of time? It's almost like, you know, and coming up, I'm sure we're going to have this soon. We have it almost every year near the end of the year. Right. We. We talk about the financial fire drill, and we also have guests on who help us with the real fire drill. I mean, we all have homeowners insurance, but the fire drill, in a lot of ways, I feel like, OG that this is your financial fire drill. The investment policy statement is your financial fire drill.

OG (12:28)

Yeah, I call them lifeboat drills, but basically it's the same thing, right? It's what am I? And this all feeds together in one thing. If you're just investing for the sake of investing, if you don't have a goal in mind, you're like, well, I got a hundred bucks left over every month. I got a thousand bucks. I'm just going to throw it in the market, then whichever. The way the wind is blowing is how you're going to be making your decisions. When you have your investment policy statement, your investment plan is aligned with your retirement plan or your financial plan, and the market goes down 20%, that's a factor that You've already calculated in your retirement plan. So the person who says, well, I can't sleep well at night because I had a million bucks and Now I have 800,000 and that's making me really concerned has not tied those two things together because a well thought out financial plan or a retirement plan already incorporates that as part of the ebbs and flows of how things really go in the real world. This is why it's always so interesting to me when people are like, if I just put in $500 a month at 12% for the next 30 years, I'm a go zillionaire. It's like, well, yeah, if you can get 12% every single year exactly on pace, that works out really good. What happens if halfway through there you get a minus 40, which has happened twice in the last 25 years, or a minus 55 or whatever happens when all of those things are tied together, it gives you a lot more confidence when things are not going exactly on that straight line path. And to your point, when you say, you know, when am I going to make other choices, when am I going to rebalance, for example, when am I going to deploy some excess cash? You know, I've got my six months reserve, the market's down 30%. Do I want to drop that six month reserve to three month reserve so that I can get more cash in? Every single one of us over every single time the market's gone down in the last, you know, quarter century, if you've been investing that long, has said, the next time the market goes down, I'm going to go all in. And guess what? It frigging happened in the middle of April. And what did everybody say? Well, not right now because those tariff things are crazy. So I'm not, I'm not going to invest right now. Or it happened in 2022 and the market's down 23% or whatever. You were like, yeah, maybe not this time because we don't know how this inflation thing's working out.

Doug (14:40)

Oh yeah, I'm totally down for that. Polar bear plunge. Hit me up next winter.

OG (14:43)

Yeah, exactly.

Doug (14:45)

A little chilly out now.

OG (14:46)

I didn't think it would be snowing.

Joe Saul Sehide (14:48)

I think a lot of people think that the investment policy statement is something that billionaires use. And like the average person who's out there juggling retirement kids trying to pay off their mortgage, like, this is something that I need. I think specifically the reason why institutions use an investment policy statement, you look at mutual fund manager will use it, or a pension fund manager will have one. And the reason I think that you should too is because og that you're, you're focused on so many different things. If you read about tariffs, since you brought it up, you read about tariffs today in the newspaper and then you, oh, man, I should look at my portfolio today. Like, what's the, what kind of a money manager goes on a random Tuesday? Oh, let's just mix things around. I read something today through complete serendipity and decided to move things around. So it helps you stay systematic when you've got a lot of stuff going on. And I think for that reason this is where it's not for billionaires. It actually is for the average person out there who in a fit of despair later on without the IPS would go, well, what do I do? What the heck am I doing?

OG (15:56)

Yeah, ultimately you're trying to avoid the one big mistake. And the one big mistake is selling when the market's down because you didn't have a plan. And there are so many people that I've talked to. There's so many people. I mean, maybe not the people listen to this show, but there's a lot of people out there who sold out in the middle of April and when the market was down 17% or whatever it was and are going, I'm just waiting for things to calm down.

Doug (16:24)

Yeah.

OG (16:25)

It's not only recovered that minus 17, but then grown to new highs since then. If you would have just been in a coma, God willing, over that month, you wouldn't have known. Right. I mean, why can't I ever be.

Doug (16:38)

In a coma when it counts?

OG (16:41)

Exactly. But I say that I would have.

Joe Saul Sehide (16:44)

Been in a coma and not looking at my investments.

OG (16:47)

I, I obviously say that tongue in cheek.

Doug (16:49)

So programmed in every other aspect of our lives for pain avoidance.

OG (16:53)

Yeah, yeah. Fight or flight.

Doug (16:55)

The burner's hot. You pull your hand away right away. And when you see all of that red on the screen or on your, you know, morning report that you're getting about how far the market went down, you're going to pull your hand away. It's so natural. And we're telling everybody not to do that and actually just push down on that red hot burner. That's what we're saying.

OG (17:15)

Well, I'm not saying to do that. I'm saying that if you have a plan already in place and you've already thought about the fact that this is going to happen, this is back to psychology. Your brain doesn't know the difference between imagination and reality. So if you've Already said in my brain, this is what I'm going to do when the market like I, the S and p is at 6,000 minus 20 is 4,800. So when I see the S&P at 4,800, I'm going to do these things. Then your brain goes, oh, we already did this. I already know what to do.

Doug (17:43)

Must follow directions.

OG (17:45)

Yes, exactly. You know, and maybe it is selling some. That's not the point. The point is that you're following the clear path that you've already laid out. And it's not reactionary, but rather part of your plan.

Joe Saul Sehide (17:57)

And the other cool thing is if you do something, well, if something works instead of just catching it that one time, now you can say, how does this go in my investment policy statement? Like, how does, how do I make this a part of the machine of how I invest? We're going to help you get started. Oh, gee, I like what you said about this can be as simple as one sentence. It could be super, super complicated. We're going to give you an example of where to start. If you just go to stacky benjamin.com ips I've put one together for you to start just all the different, different pieces. And we're going to go over the core components again. You don't need to include all of these, but I think these are all things that need to go into the consideration process. So the very first piece is the purpose of the investment policy statement and what your overall objective is. Now this is going to be as an example, I mentioned somebody in their 30s who is trying to save for their kids and they're also trying to save for retirement. They're juggling a bunch of different stuff. This goes back to the financial plan. My goal is to get to retirement at X age. My goal is to save X amount of money for my children. My goal is a second home. Whatever. The thing is, purpose and objective is the first line. Now for some people, for mine, as an example, I don't have that. My investment policy statement, that's part of my financial plan. But oh, gee, I still wanted to mention that because really that's where it needs to start from. It isn't. Hey, I, I just go and get all crazy with my investment policy statement.

Doug (19:33)

Can I jump in here? You said in a couple of examples you rattled off there, Joe, you did something that a lot of people avoid. And I found this all the time when I was helping companies create strategic plans and you. And we asked, okay, what's the goal? And it always started off super broad like, well, to make more money or, you know, or to, or to, you know, increase our market share. It's, it's so easy to be broad that it's not valuable. When you're that broad with your goal statements, there isn't a lot of value because six months later, when the stuff hits the fan, it's hard to use that as guidance. So I would encourage everybody, when you're making a statement, you could change it later. Don't forget, you get to change it later if you realize that that specific thing you came up with six months ago doesn't apply anymore, or you've come up with a better goal. But, but be really specific. And you know, it could be pay for college or it could be retire by 36, but put a number in there. Don't just say to recover, retire comfortably.

Joe Saul Sehide (20:34)

What I love about that, Doug, is that what I've always found with any investment plan, the more specific it is, the stickier it is, you're more likely to follow it. So to your point on guidance, like, okay, if it's to be comfortable, what the hell does that mean? You know, so, so how does that going to change my change my investment strategy, by the way? Then a subset of those things then are going to be, of course, your time horizon. You're going to know that because you know exactly when I'm going to need the money. Time horizon then helps you with your risk tolerance and your risk constraints. But then the next piece, oh, gee, I think that's important, is liquidity needs, right? If my time horizon changes, I know this is one of the risks you CFPs talk about that a lot of people don't talk about. What if the time horizon changes and I need to take the money out? Like, what do I draw from first? Do I have a place to go get money? I think a lot of people get really conservative because they think they might need the money sooner than the time that they have allocated it for.

OG (21:30)

I think in my experience, for people that are savers, there's two categories of people. There's people that are habitually under saving, which is obviously a problem, and then there's people that are saving well, but habitually underspend. And there is no scenario. I'm thinking about the person who has the financial plan where you can throw all this stuff against the wall to try to break it. You're like, well, what if inflation's really high? What if the market sucks? What if the economy crashes and it's like, you're still good, right? And that happens a lot because generally speaking, people who are really good savers by their nature are not really good spenders. There's only so much money every year and they save a considerable amount of it. So they build a nice nest egg and then they've got this problem of, now I need to retire or I want to retire, but I'm scared of the potential of this blowing up. And I think as long as you are cognizant of the different kind of time frames, right, I got one to three year money, I got three to seven, you know, or maybe three to ten year money. And I have ten year money. Plus just think about those like waterfalls or those as buckets, you know, as one lowers down. You just got to kind of refill it. And there's no timetable to do that. Some people choose to do that once a year. Some people love the idea of, hey, on January 1st, I get all my money. It sits in my savings account. I spend it down on December 31st, I'm out January when I start again. Some people like the idea of, hey, every month I get a deposit into my checking account of, you know, 10,000 bucks. And that's my spend for the month, you know. So it depends on how your lifestyle is set up. But if you think about it like, you know, two or three different buckets of funding, you should never be surprised when, you know, I have this big expense, right? Oh my gosh. Stupid. You know, H Vac went out. I need 30 grand to fix my H Vac. Where's that going to come from? It's like, well, you know, you should have one to three year money. There should be three years worth of it. So, yeah, you got to pull forward some of the end of year three, but that gives you ample time to use year three to seven to backfill it. And you've got two and a half years to get it. You know what I mean? Like, you don't have to do something immediately to get there. And then that helps with the recession, too. Back to the recession talk. You've got three years worth of cash sitting there and you go, well, I was kind of waterfalling this every single month. I was selling a little bit in each bucket every single month. And now the market's down 20%. I don't want to sell anything. Well, you don't have to. You got three years of cash. Run that baby dry and then go fill it back up again. There's no prescribed timetable on how you do this. I think you can automate it largely but then maybe hit pause for a while. Maybe you've got a big expense or maybe the market doesn't pay the way that you want, or maybe the market behaves better than you want. And you say, well I'm going to use this as an opportunity to put five years of spending here because I'm so far ahead of my financial goals right now, I can protectively bit of it. No wrong answer here.

Joe Saul Sehide (24:24)

What I love about that stacker, I want you to just pause on this for just a second. The mindfulness of this going back to that fire drill you've pre thought through. What if the time horizon changes? How would it change? What are all the different things that could get in the way? And then how would I put money in other pot so that I the train can keep it rolling, right? The whole goal is to keep the train rolling down the track. And what often happens because you've been so mindful, not only is it sticky and you sleep at night, but also you do garner higher returns during the uptime. You know why? Because you're not hedging your bet that the time horizon is going to change because you thought through it. You know the ways is going to change. You've thought about the different black swan events that could happen. And now the train keeps moving. And now Instead of getting 30, 40, 50% of the S&P 500, let's say you could get all of it. And now once again, S&P 500 really is not where we're headed. And I'm going to get back there in a second because before that on my list here I've got constraints and constraints like taxes. And I've seen some investment policy statements og where people are much more likely to let their winners run a little bit more in a taxable account because of the fact that you know the capital gains monster is going to eat into it more where if I'm going to, let's say in a market downturn, if part of my investment policy statement is to try to quote, take advantage of it, I can do that. My Roth ira because I'm not worried about taxes. I'm also not worried about the fact that that making these changes just creates a mess that may or may not have any efficacy. I'm going to look at the role of taxes on my investments. And again, maybe your investment policy statement doesn't need to. But that's a spot that I've seen some people look at before. But the next I want to tie that into the next piece which what is your Benchmark. Your benchmark is not the s and P500. Your benchmark is I need to save X amount of money per month and I need to get so much return. What is that? Return? You need to reach this goal. So your benchmark is going to be different for the kids fund than it is maybe for the second house fund than it is for the retirement fund. And so you kind of back into the benchmark OG and then what I love about benchmarking this way too is you start realizing that what the market does is not as important as getting where you need to go.

OG (26:44)

I think the stock market as a whole in the sense of watching. If you like to flip on the nightly news and hear the little bit where say Dan Rather, but he hasn't done it forever, use somebody a little bit more contemporaneous like Tom Brokaw, Walter Cronkite. Yeah, or Walter, one of these news guys. When you flip it on Peter Jennings, if you're an ABC guy, when they had that little blurb in there and they say, you know, on Wall street today the market was up 17 points amidst positive trade rumors or something. Whatever they say, I think that's the level of interest you should have in what's going on with your money. If you flip open the news or you on Apple news or you got a newspaper and you see a little spot that has a green arrow, you go, huh, my money went up probably too. Or if it was a writer, my money went down. Like that's probably the level of interest you should have on it on a daily basis. If even that. Honestly, as it relates to how you're doing from a benchmark standpoint. Absolutely. Your benchmark needs to be. What do you need to reach your goals? If your monthly savings amount is such that you need to generate an 8% rate of return to reach your long term financial goals. And the S and P average is 7 this year. And you go, high five, man. I beat the S and P. I'm at seven and a quarter. Woo hoo. Look at me, I'm an investment manager. Guess what? It sucks, bro. Cause you didn't, you're still broke in retirement. Congratulations, you failed successfully. You know, and so using it as a flag that's whipping out in the field to go, which way is the wind blowing right now? Okay, cool, right? Like that's good enough. Because you're gonna, you're going to generally behave in the similar manner if you're looking at your investments going, well, this investment went up 9.67% and this benchmark went up 9.87. So my 9.67 sucks. It's like, well, but if your goal is 8, you're blowing it out of the water. That's what you need to focus on. What do you need to reach your goals? And then use the indexes as a proxy for what's going on. Just big picture.

Joe Saul Sehide (28:48)

My favorite way to benchmark it was to begin with the goal amount that I wanted and then work back every six months. Where do I need to be by that point? And so looking six months into the future, where do I need to be at that point? And it can be then a mix of the market or my saving. And if I reach it, then I can decide, do I slow down for the next six months, Do I speed up and take advantage of it so I can be coast fi, to use the crazy term the kids use, Or I could move the goal forward. Like there's so many different things that I could. If I'm behind, then I look at, was it the performance of my stuff? Do I have the wrong allocation? Or is it just the markets were all underperforming? Right. We had that inevitable recession and now I need to backfill. Now I need to figure out can I save more money? Maybe that was the problem. What I like about that is that it made it, it made my investment policy statement a mixture of two things. Are my investments performing? Yes. No. And then number two is, is there more that I personally need to do? Which brings up the next part, which is governance. Governance is a, is a big word for how are you going to actually look at this? And oh, gee, to your point, you look at the news and you go, oh, okay, this happened. But am I going to look at once a year? Am I going to look at it twice a year? A little bit more in depth? What's the timetable between when I'm going to look at my investments and then the last one is, of course, who's going to do that? And I like this OG and I, I'm sure you do. There's one member of every family that loves this stuff. Maybe somebody else who doesn't. I do not like just the person who loves this stuff taking full responsibility and the other person just going, yeah, I've got no clue. Like one person's living in fantasy land and the, and the other person knows everything. I think it's gotta be if you're planning with a partner. When do we look at this together?

OG (30:43)

I mean, yeah, there's no guarantee that both of you wake up tomorrow. If you're in a relationship of some kind where you're doing money stuff together, and if one person is the driver of all of that stuff, it's so stressful for the other person. Let me put it this way. The stress that that other person has while living, thinking about it, pales in comparison to the stress that that person will have if they have no frigging idea what's going on in your. When you say to somebody, well, you know, I deal with that. My spouse doesn't do the money. I'm telling you from experience, when your spouse has to do the money, it's way worse because they don't even know what they don't know. At least tell them, well, who to call, you know what I mean? And, like, where the accounts are and that sort of thing. Like, they need to have some pretty clear understanding of, you know, what's next.

Joe Saul Sehide (31:35)

I've got the perfect example, this OG of a good friend of ours, Chris Luger, who has the heavy metal money brand and is one of the people who runs our Minneapolis St. Paul meetup group. Chris has been very public about the fact that his ex wife handled all of this. He handled nothing. And when he went through his divorce og, he was like, I don't know where anything is. I don't know how to do any of this stuff.

OG (32:01)

Yeah.

Joe Saul Sehide (32:01)

So he's a money geek because of necessity, because of the fact that all of a sudden it was thrust upon him when things didn't work out the way that he wanted in his marriage. Yeah.

OG (32:11)

I mean, that's an awful scenario, too. It's a thousand times worse if it's. Somebody passes away, you know, suddenly, and you're trying to deal with.

Joe Saul Sehide (32:19)

Yeah. At least he can call her and say, how does this work?

OG (32:22)

You know, or have the lawyers talk to one another. Right. You know, it's like, you don't want to be worried about, like, how is the mortgage getting paid this month while you're dealing with the stress of losing a loved one? You just can't process all that. Like, something's gonna get missed. That's not the time and place.

Joe Saul Sehide (32:40)

What I like about also the number of times that you're gonna check it. And I'll tell you how mine works. Mine is I look at it once every six months, which, by the way, I think is even too often. It could be once a year. Stackers. I do it twice a year just because I'm a money nerd. I enjoy it. And I. Whenever the market drops 15% from its previous high. I also then have a percentage of my portfolio that I will then reallocate and look for opportunities to do more. The juice from that squeeze largely not worth it. But it's in my investment policy statement because it makes me feel good, og, to be contrarian, to know that, ooh, the market's down 15%. Instead of feeling the despair of the market's down 15%. I'm like, oh, my investment policy statement's about to trigger.

OG (33:24)

You're like, Mr. Burns, you're like, excellent.

Joe Saul Sehide (33:28)

Come down a little more, Mr. Market. Yeah, good stuff there. But I think once a year is enough. I know, og, you've looked at all these studies. Yeah.

OG (33:36)

Rebalancing once a year is the most efficient. There's no evidence to suggest rebalancing more frequently than once a year is worth it. I know a lot of people think six months, like you said, which is fine. I think you're going to find that in most six month periods of time, though, there's nothing to do. And so all you're doing is razzling yourself up for nothing. And depending on what six months you pick. Right. Like you could pick what if September is one of your six months? Generally speaking, September is kind of a crappy month. You just put yourself in a bad mood.

Doug (34:10)

I would say you also have to design or define some kind of plan of action for what are you doing when you look at it every 12 months or every six months? Because if you look at it the wrong day and think, sell it all, because, holy cow, it's all going to hell in a handbasket, you've completely undermined the whole point of trying to step back and be patient. So you got to say, okay, if I see these indicators over the course of the previous six months, then maybe I take action. But you can't just pick a day because there's a good chance you picked the wrong day.

Joe Saul Sehide (34:43)

So the way that mine works, Doug, people know I love using the efficient frontier. I have this allocation by percentage of this percentage is in X is in large company stock, this percentage is in small company stock, this percentage international, and so on. During that six month rebalancing, I'm just tweaking back to those percentages. I'm not moving money out wholesale, I'm not moving money in wholesale. I'm just tweaking to those percentages. If it goes down 15%, if the market's down 15% between those six month periods, I will then do that same thing again. So for people to get an idea of. Exactly, Doug, what you're talking about. That's what my investment policy statement looks like.

Doug (35:28)

Knew you were a tweaker.

Joe Saul Sehide (35:31)

So let's go over the pitfalls. Doug brought this one up. Being overly vague with your objective is a huge pitfall. Being too rigid for changing goals. I also like Doug, what you said earlier, you can change it. You can to. Don't hang on to it because it's in writing. Feel free to change it now. Don't change it like people change diet.

Doug (35:49)

I was going to say have a damn good reason to change it.

Joe Saul Sehide (35:52)

Yeah.

Doug (35:52)

Not just because it's not working for you at the minute.

Joe Saul Sehide (35:55)

That diet doesn't work. No, Doug, it's because you won't put down the donut. It doesn't work.

Doug (35:59)

Badass.

Joe Saul Sehide (36:00)

Not thinking about and oh gee, I liked you walking us through this. Not thinking about all the liquidity events that could come up, the cash flow events. Picking bad benchmarks like The S&P 500 drives us. This is why it drives us crazy. Stackers and people go, well, the S P500 did X and I didn't do that. That's the P500 has nothing to do with your goal. If your goal is in five years, you should have no relation to the S P500 or at least very little. Looking at then what your benchmarks would be, how much money for me, I like, how much money do I need to be at every six months on my way to to my goal. And then clearly defining roles and communication and making sure the person that isn't in love with this isn't a money nerd is involved and knows, at least on a cursory basis, guys, exactly what's going on. So best practices, make it personal, write it down, keep it simple, build in these regular reviews, have those on your calendar and get good clarity on who does what. So we'll have all of that@stacking benjamin.com slips Nice job, guys. Good work.

OG (37:05)

OG oh, well, thank you.

Doug (37:07)

He didn't do.

Joe Saul Sehide (37:11)

So go download your stackers. This is what we want to hear from you. Stacking benjamin.com voicemail. If you do this, tell us how you set up your investment policy statement, what it looks like, how it works, what struggles you had. We'll take your questions. We take questions. We're going to do a question here later in the show, but we'd love your questions about investment policy statements. Let's, let's help each other get this done because I think, because, oh gee, a recession is coming. You heard it here first. There will be at Some indeterminate time in the future, a recession.

Doug (37:42)

Dun dun dun.

Joe Saul Sehide (37:44)

We, we want to be. We want to be Ready. All right, Doug, It's a big birthday today. I think. What's on tap with today's trivia?

OG (37:52)

Foreign.

Doug (37:56)

Hey there, stackers. I'm trivia. Punk rocker Joe's mom's neighbor dug it. Today's the birthday of one of the biggest badasses in rock and roll, a woman whose poster Joe's mom has hanging on the wall right now. The one and only Joan Jett, the godmother of punk rock was lead singer of the Runaways before forming her own band. I feel like I need to do this whole thing in disc jockey voice. The godmother of punk rock was lead singer of the Runaways before forming her own band, the Black Arts.

Joe Saul Sehide (38:24)

Now can you do the the old Casey Kasem, the godmother of punk rock, was lead singer the runways before forming her own.

Doug (38:31)

Keep your feet on the ground and keep reaching for the stars. Okay, let's refocus here. She stacked tons of Benjamins with her debut album, which included the hit Bad Reputation. But her biggest song of all time was on her 1981 follow up album. What was Joan Jett's number one song? I'll be back right after I get Joe's mom down here to clap out the lyrics with me.

Joe Saul Sehide (38:56)

Bombas makes the most comfortable socks, underwear and T shirts.

OG (39:00)

Bombas are so absurdly comfortable, you may throw out all your other clothes.

Anonymous Caller (39:04)

Sorry, do we legally have to say that?

OG (39:06)

No, this is just how I talk. And I really love my Bombas.

Joe Saul Sehide (39:09)

They do feel that good. And they do good, too. One item purchased equals one item donated. To feel good and do good, go to bombas.com and use code audio for 20% off your first purchase. That's B O-M B-S.com and use code audio at checkout.

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Joe Saul Sehide (40:27)

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Doug (41:01)

Hey there, stackers. I'm punk rock rock trivia creator and guy who doesn't care about his reputation in the neighborhood, Joe's mom's neighbor Doug. We're celebrating the birthday of rock and roll queen Joan Jett today by asking you which of her songs was her biggest hit of all time. Of course it was none other than crowd pleaser and stadium rocker. I love rock and roll. Sing it with me now.

Joe Saul Sehide (41:25)

Put another dime in the jukebox, baby.

Doug (41:28)

Oh, that's not by the way.

Joe Saul Sehide (41:29)

Now wouldn't it be instead of a dime in the jukebox, wouldn't it be put another like $50 in the jukebox.

OG (41:36)

What's a jukebox?

Doug (41:37)

Put your Venmo request in the jukebox, baby.

Joe Saul Sehide (41:41)

Doesn't have the same ring anymore.

Doug (41:43)

No, not really. And now back to two guys who love drips but have absolutely no drip. Unless Old Navy khakis count Joe and.

Joe Saul Sehide (41:52)

OG OG does have that. That urologist situation.

Doug (41:58)

Oh my God. See, I'm trying to keep it relevant. Dividend reinvestment plans and then keep it, you know, so that the all of our young audience know what we're talking about with Drip. And you go straight to bad biological jokes.

Joe Saul Sehide (42:13)

It's time to pivot. Time to pivot away. Don't look over there, look over here, everybody. Time for our Tick Tock minute. This is the part of the show where we shine the light on a Tick tock creator who's either done something brilliant or air quotes brilliant. Oh, gee, we have a cautionary tale today. Do you think this is a. And Stacker Scott sent us this cautionary tale. Do you think that he sent us something Brilliant. He saw on TikTok or in this case, Instagram reels or. Yeah, not so brilliant.

OG (42:40)

No, it's fantastic. Very cautionary. Everybody should pay attention.

Doug (42:43)

Wow. What? He never says this.

Joe Saul Sehide (42:46)

Scott sent us a young stacker who may have misinterpreted the directions.

Stacker Scott (42:53)

You use Apple Pay. Honestly, just be so careful. This is a little embarrassing to admit, but if this could help one person, then I'm really willing to share what my experience was. I'm just gonna lay it out like this. When you use Apple Pay, that's real money. That's true American dollars from your credit card. If you, if you have your credit card connected, that's where the money is being sourced from. It's not like a special form of Apple Pay Apple Dollars. Why they don't just say this is real money while you're paying? I don't know. Because I thought that I had accumulated a bunch of Apple dollars to use for Apple Pay by, you know, spending so much time on my phone, giving my data very freely and willingly to any place that there's no way this is real. Are cookies okay? I say yes, yes, yes. Because I thought that's how I was getting prizes, getting rewards, getting Apple dollars. So I didn't think that was real money till I checked my credit card bill. I, I've been spending money like I'm a friggin millionaire. I got hair mousse. I have straight hair. My hair doesn't even hold mousse. I call Apple to straighten things out. I look at Please pick with Mr. Steve Jobs. They go, he's no longer with us.

Joe Saul Sehide (44:02)

Can I speak to Mr.

OG (44:03)

Totally Fake? This is why the Internet is such a waste of time and energy.

Joe Saul Sehide (44:09)

Oh, come on. I thought it was very entertaining.

Doug (44:11)

Long way of saying you were wrong because before we got into that you said this was going to be awesome.

Joe Saul Sehide (44:16)

Exactly.

OG (44:16)

But it's just, see, See what happens? I try to make you guys happy and say, oh, the social media is awesome, actually so great. And then just fake news like that is everywhere. And it's like, that's so. I don't even understand why people like, what's the benefit for that person? I mean, how many does you get? A bunch of likes or something?

Joe Saul Sehide (44:40)

A bajillion. Yeah. How many?

OG (44:43)

Yeah, Fantastic. And how much is that worth? How many Apple dollars does she get.

Joe Saul Sehide (44:46)

For each like 24,200 comments? Most people saying this is fake.

OG (44:52)

So no kidding.

Joe Saul Sehide (44:53)

1.1 million people watch this video. 1.1 million.

OG (44:57)

And how many Apples dollars did she get for that right.

Joe Saul Sehide (45:00)

695,000 people gave it a heart, OG should I give it a heart? Have a heart?

Doug (45:06)

Aren't we obligated to we just giving her another million just by talking about it?

OG (45:09)

Watching the Ted Lasso show that you guys, I know watched a lot of, I've decided I'm very much like Roy Kent.

Doug (45:19)

Wow.

Joe Saul Sehide (45:20)

What is he on season three?

Doug (45:21)

Doug, before he finally figures, everybody else listening knew you were Roy Kent years ago.

OG (45:28)

My general answer of all this is.

Joe Saul Sehide (45:31)

What he would say when our stackers watched episode one. They're like, this Roy Ken guy's a lot like OG that's what they said.

OG (45:38)

Yeah.

Joe Saul Sehide (45:39)

Scott, thanks for, for.

OG (45:41)

Thanks for nothing. Scott.

Joe Saul Sehide (45:42)

Scott, thanks for sending that in and for trolling our own OG with that for our next segment. Somebody said, you know what, I better call Saul.

OG (45:52)

See.

Joe Saul Sehide (45:52)

Hi. And OG this is a stacker whose voice Doug, I think you may recognize and I recognize, but this person would like to remain anonymous. But anonymous, it's great to hear your voice. I hope you're doing well and well. Let's say hello to Anonymous who has a question for her son.

Anonymous Caller (46:11)

Hi, Joe and OG. I'm a longtime listener and I'm sitting here with my 10 year old son and we've been talking about stock investing as he gets older and wants to learn more about this. One question came up that I didn't have the answer to. When someone sells an individual stock, what happens to that stock? Does the company buy it? Does someone else buy it immediately or does it get put into kind of a shelf or a holding until someone else is interested in that stock? Appreciate any guidance and looking forward to learning more with my son.

Joe Saul Sehide (46:40)

Thanks for the question and glad to hear that. Stackers out there educating young stackers all the time. All the time. Oh, gee. Somebody sells their stock, does it then go? Is it like the showroom when somebody returns at best buy, the. The thing they didn't want, it goes and waits for the next person. How does that, how does that work?

OG (47:01)

It's like an Amazon return. Yeah, it's just you get credit for it right away, but you don't have to like send it back to Kohl's for like a couple of weeks. And then when you do, you get all your money back.

Doug (47:09)

You have to go to the UPS store and show them that stupid QR code. Such a hassle.

OG (47:14)

That to you is a hassle versus having to ship it back yourself.

Doug (47:18)

Show up at my doorstep.

OG (47:20)

Okay. I mean, you can have them do that. You just have to package it and Pay for yourself.

Doug (47:24)

You gotta pay for it.

OG (47:26)

All right, so let's talk about stock. Stock is the ownership of a company, right? So when a company is formed, even a small company like Stacking Benjamins, we have shares of stock. And right now there's two. Joe has one and OG has one. Right, Doug? Sorry, we only made two. We were going to give you one, but we ran out.

Joe Saul Sehide (47:46)

Look at that. Look at Doug's face.

OG (47:47)

I know. My bad. That's on me, Coach. That one's on me.

Joe Saul Sehide (47:51)

Way to bring that up, OG.

OG (47:53)

Yeah, that's all right. And so big companies like Apple or something like that, they might have millions of shares of stock. And so they're taking their company and saying, we need to divide this into increments that are sellable to other people, right? Because the value of Apple is a $trillion or $5 trillion or whatever. If they just said, well, it's just really these three people that own it, well, then each share would be worth a trillion dollars or something. No one would be able to buy it. A stock is the ownership of very small percentage ownership of a company, and the company has issued those number of shares and they are public for sale. And so people, different people, different types of people can own those. So an individual can own the stock, a company can own it. Mutual fund, the company itself can own its own stock back. That's an option. And so when you hit sell on your brokerage window and you say, I'm going to sell one share of Apple, someone else is also simultaneously hitting buy. There are people and organizations that facilitate that transaction. And most of the time, this is electronic. These days, 99.999999% of it is electronic to facilitate. Hey, there's one stock for sale. Oh, there's one person that wants to buy it. Bang. That's electronically decided what the fair price is for they want to buy and that you want to sell. And boom. That's how that transaction happens. On occasion when there's not any buyers, then there's market participants who are out there saying, we're going to own. We'll take ownership of this. If there's a situation where there's not any buyers, so there's a bunch of people that want to sell. Not enough buyers called market makers. And they will say, we'll facilitate that just to keep orderly operations going so that we can have the liquidity. And that's really all there is to it. That doesn't really. It doesn't go on a shelf, it doesn't get deleted it's not gone. It's, it's just moving from one person to another. So the day you think it's a sell is somebody else's day. They think it's a buy. And that happens in a microsecond 100 billion times every day across the entire world of all the publicly traded companies in the universe.

Doug (49:57)

So, so, so 17,005 people want to sell, only 17,000 want to buy. So the extra five left over there are these angelic people called market makers who's are like, yeah, I'll hold on to that for you until.

Joe Saul Sehide (50:11)

Well, they actually get a lot of upside, which is they get to sit on top of the stock and see the good days as well. And so they get to load up generally on bad days when people don't want to buy, where people don't want to buy. But when that stock goes up, these people are able to make a killing.

Doug (50:26)

So give me an example of who this, I mean, is this the Goldman Sachs or like hedge funds or these, those kinds of large people able to swing those large amounts of.

OG (50:34)

In the old days, it literally was a person, a dude, one guy, they.

Doug (50:38)

Just raised their hand and said, overage.

OG (50:41)

Yeah, send it my way. You know, Doug, it's so electronic now that, you know, you say, well, there's only, there's five shares that weren't those shares would just be offered at a lower price. You know what I mean? Like there's going to be the transaction at which somebody. Because if this guy really wants to sell, I want to sell it for 100. And this guy goes, I'm only buying it for 80. Then how bad do you want to sell it at 100? I really want to sell it. Okay, well, will you take 95? Yeah, I really want to get rid of this. Will you take 95? No, I'll take 90. Will you take 90? I really want out. I'll take 90. Or they go, I'm not taking 90 for this, I'll keep it at 90 and I'll sell it some other day, cancel my transaction.

Joe Saul Sehide (51:19)

And that's why when you go to sell, you've got three different options. Sell at the market. And the market just means, it says on my screen is trading at a hundred. Let's say if something happened between the time that you made the decision and the time you hit sell and the market goes into free fall, you might only get $95. You might only get $90.

OG (51:38)

I'm saying give me whatever the, whatever the price is when, when I hit the market. Yep.

Joe Saul Sehide (51:43)

The second thing you can do is you can have a limit that is a trigger meaning that if this stock goes below a hundred dollars, I want to trigger a cell and then it becomes a market order. So then let's say the market starts, you know, it's, it's at 102. Then you put your cell at a hundred dollars, the market starts going down, it's a hundred, you hit sell. But then it's a market order and it fills at what again? Whatever the price is market and freefall you might get 50. Doesn't ever happen that way.

OG (52:13)

But well, not, not true has happened. I know somebody personally that that happened.

Joe Saul Sehide (52:17)

To can happen but doesn't happen at a normal.

OG (52:20)

Completely wiped out out of a hundred thousand dollars position because he did a market market order.

Joe Saul Sehide (52:26)

And then the third button that you have is when it gets to 100, I want to sell specifically for 100. And if it's a fast moving market, I don't want to sell, I want to just hold until it gets back to 100. And you can specify the amount of time that order stays open. So oh gee, to your point, a lot of the time when somebody places a market order, there's a lot of standing, what are called limit orders out there for either above or below. So if you decide to sell at the market and it's at a hundred, but things have been trending up and the next buyer is at 101, you might get 101, you might get 102. Might get something better or worse when you do a market order.

OG (53:03)

Yeah, it's really hard to comprehend exactly how much of this happens on a minute by minute basis.

Joe Saul Sehide (53:09)

I'm glad you said that. Cause there's this book in the 90s called Trading Rules that is. It is. I've had stackers pick this up and read this at your own. Read this at your own peril because it is kind of a boring book. But I also find it fascinating OG which is that the human brain cannot comprehend just how much liquidity there is out there. Just the huge number of shares that trade.

Doug (53:30)

Even easier and better than reading a book. Go back another decade, Joe to the 80s and just have everybody watch Trading Places with Eddie Murphy and Dan Aykroyd. That's all you need to learn about how trading happens.

OG (53:41)

Right.

Joe Saul Sehide (53:42)

Well you'll get a great cartoony look at it, which I like. Also the movie Wall street and Wall street by the way, when they're trading Blue Star Airlines, if anybody remembers that old movie. You see the market maker, OG in that movie, like the market maker, all of a sudden, there's a bunch of people standing around, one guy, and that's the market maker guy that you were talking about. Nobody wants it. Nobody wants. All of a sudden, everybody's telling him, I want to buy from you. I want to buy. Nobody's selling. Everybody's buying. So now this guy's got to give up his position because he's the market maker on the other side. And then three minutes later, they're all trying to sell it back to him as Gordon Gekko is trying to manipulate this. This market.

OG (54:18)

Allegedly manipulate. Well, and don't ruin it. Spoiler alert.

Joe Saul Sehide (54:23)

He may or may. Well, yeah, I can't. You know, have you even seen Wall street by this time? Is it on me? Is it truly on me?

OG (54:31)

Maybe Charlie Sheen's involved. Who knows? Wait for the end.

Doug (54:34)

See how I'll just tell you now he's dead the whole time.

OG (54:37)

Oh, boy.

Doug (54:38)

I heard.

Joe Saul Sehide (54:38)

By the way, this new Charlie Sheen documentary is really good from people I had dinner with the other night. There is one that the Charlie Sheen documentary is super. Him telling his own story. And anyway, sidetracked there.

OG (54:51)

Side quest. Side quest complete.

Joe Saul Sehide (54:53)

Anonymous. Great to hear your voice. Glad that you're. You're helping our stackers, our young stackers understand this. And you know what? We will. We'll have Gertrude get in touch with you and send either you or the young news stacker some swag. Maybe both. We should probably do both in this one, don't you think?

OG (55:10)

No, Anonymous is. Get a little demerit there.

Doug (55:16)

Yeah.

Joe Saul Sehide (55:17)

Stacky benjamin.com voicemail. If you would like to ask your question as well. We. We love taking your questions. And coming up in the next few weeks, we'll have just a complete letters episode so we can try to stay as close to the time that you send it in as possible. All right, that's nearly it for today, Doug. We've got what we call the back porch. We've had a lot of community today with Scott and Anonymous and the big challenge to create your investment policy statement. But what else we got on the back porch?

Doug (55:46)

Yeah, Joe, we got a call from stacker Jeff, who wanted to have a talk with us about our Labor Day episode.

Joe Saul Sehide (55:51)

Oh, let's hear what Jeff's got. Hi, guys. This is Jeff.

Doug (55:58)

I just wanted to say thanks for a great Labor Day show. I mean, both Tony and Chuck deserve a show all around. It was like getting two shows in one terrific guest. I. I like all your shows, but this one was really special.

OG (56:11)

So Keep doing what you're doing, Jeff.

Joe Saul Sehide (56:15)

That's very nice. Thank you so much.

Doug (56:17)

Why can't everybody be like Jeff?

Joe Saul Sehide (56:19)

Well, try not to take it personally that he's like less of you guys.

Doug (56:22)

Yeah, more of them. That was weird. I never heard my name in that whole call.

Joe Saul Sehide (56:29)

We do work really hard to have the people that come on our mentors be people that are going to be very helpful from a bunch of different, different places. And these two for people that missed our Labor Day episode. We'll have a link in the show notes. But Tony talked about life insurance and this idea of velocity banking and why og you thought we were spoiling Wall Street. You want to do the big spoiler here? Why velocity banking might not work. Tony's a life insurance expert, certified life underwriter walks us through exactly how permanent life insurance works and why it might not be a great idea to bank with it. And then Chuck is now becoming a grandfather. Of course, Chuck from the Money Life with Chuck Jaffe show on every Halloween here with the most hilarious and complicated Halloween game every year. But he also is great at thinking forward about his family and creating a legacy and and helping his grandchild get started with investing even as they're just born. So if you want to help the next generation by getting them started. Chuck Chaffee walks through how to invest for a very young child or grandchild. That's going to do it for today. Thank you so much, Stackers, for hanging out with us the last hour. Coming up on Wednesday, man, we're diving into more fun. Speaking of mentors, we've got a great mentor for you, but I'm going to leave it a surprise. Doug. Woo woo. So instead of previewing Wednesday show that, you just have to listen to Doug instead, why don't you tell us what are the three things that should be on our to do list today?

Doug (58:01)

Sure thing, Joe. First, take some advice from our main topic today. Looking to see your portfolio perform better over time rather than responding, responding when news or bad markets hit, Create an investment policy statement and work that machine, baby. You're much more likely to have money available when you need it than if you're making it up as you go. Second, take some advice shared by stacker Scott Apple pay. Yeah, allegedly, that's real money. We're still looking into it to confirm. But the big lesson, don't let Joe's mom hear you call Joan Jett the queen of rock and roll. Apparently, if you want free podcasting space in the basement, we need to acknowledge that there is only one queen. And it isn't Joan Jett. Happy Ma. Hey, let's meet back here on Wednesday and keep this momentum going, shall we? We'll welcome both you and certified financial planner Jeremy Kyle, who will lay out how to devise your retirement plan in five simple steps. This show is the property of SB Podcasts, LLC, Copyright 2025, and is created by Joe Saul Sehide. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome team@stackingbenjamins.com along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. Oh, yeah. And before I go, not only should you not take advice from these 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.