C (4:49)

That's great to be here. Thanks.

B (4:50)

Okay, let's start with the name of your podcast. Money for the Rest of Us. Well, who's your podcast not for?

C (4:57)

Yeah, there is a question. That name. I have a marketing friend, Bernadette Giwa, down in Australia, and she says, I got a name. You need to write a book. Here's what you should call it. Money for the Rest of Us. And without any explanation. It's like. That does have a ring to it. So I wrote a book and realized I didn't have an audience. And so we launched the the podcast in 2014 and eventually came out with the book in 2019.

B (5:30)

It works a lot better. In that order, I discovered as well, it works a lot better if there's a podcast or a blog or something and then the book comes out. It sells a lot better.

C (5:38)

Yeah, well, I quickly learned that. But the idea, the rest of us, we're not Wall street, we're individual investors trying to understand what's going on with financial markets and the economy. And so that's really the rest of us, as opposed to those kind of inside the financial regime.

B (6:00)

Okay. And you spent some time inside the financial regime. Let's bring people up to speed on kind of what you did for a career before you started becoming. You describe yourself. I don't know if you work full time, but you describe yourself as a full time podcaster. Now tell us what you did before that.

C (6:17)

Yeah, So I spent 17 years as an institutional investment advisor. The firm is FEG Advisors. They're based in Cincinnati. And I went to graduate school. And a couple years of that, I entered a classified ad which shows you how long ago that was. And they just said, you need to understand bank statements. And I didn't really know what it was. It turned out to be this 25 person advisory firm that had a number of university clients and other private foundations. And they provided investment guidance to them. They helped them with asset allocation, they helped them draft investment policy statements, helped them select investment managers. And that was in 1995. And I was there until 2011 and left as one of our senior partners, our chief investment strategist, and the chief portfolio strategist. So I was very involved in managing assets. I still had a number of clients such as Texas A and M University System, a handful of larger clients, but that was kind of my background investing. How do we help these universities generate essentially funds for their students and other programs.

B (7:27)

Very nice. And this was a large amount of money you were overseeing. I mean, we're talking Texas A and M, University of Puget Sound, the Sierra Club Foundation, I think, was one of the clients as well. I mean, it's not a small amount of money you were running. What did you learn running those billions?

C (7:42)

I learned there's still very much a human element. And so when you think about these big pools of money, at the end of the day, there's still an investment committee made up of or board members made up of seven to eight individuals. And they bring kind of their. Their human ticks to it and their, their emotion. And. And so the best performing clients I had were the ones that there wasn't a lot of turnover on the, on the committee. So they had that consistency. They knew why they had made decisions in the past, and that allowed them to stick to their plan, which is something you've talked about on your show, the importance of consistency over the long term, whatever plan it may be, to stick with it. And so we saw that on the institutional side also.

B (8:30)

Now something a lot of our audience has dealt with is dealing with currently is burnout in their career. And I've listened to at least one interview where you talked about the time you left this institutional asset management business. You were feeling a little bit burnout as well. Can you tell us a little bit about your experience with burnout and what you did about it and how you pivoted?

C (8:52)

Yeah. So this was 2011, and one of the things with managing money is you're measured against a benchmark every week or every month, every quarter. And I found myself as the person responsible for managing, you know, what's now called outsource cio, where you basically take discretion on the assets for these institutional clients. And I got tired of the game. I got tired of trying to outperform and the way we had structured the portfolio, actually, because we had some hedge fund components to it, we needed the market to actually fall, to generate some excess return. And I didn't want to root against the financial market. And I was just tired. And I remember my wife Lepreau, had encouraged me. We made it through the great financial crisis. I learned a ton. But around 2010, she said, I quit. And we had taken. Around that time, we'd taken our kids out of school and we went and spent two or three months in Maine just to be together. And we wanted to do more of that family travel. And I just remember at one time, just really tough week, performance wise. I was speaking at a conference in California and I just said, I'm done. And we were living in Idaho at The time. And I booked a red eye flight to our executive committee meeting and showed up. I mean, they knew when they showed up in person that there was an issue, and I left. And so it's been 14 years ago that I left. But yeah, there was some burnout to it. And part of it is I had partners. And I was just tired of saying we all the time, we think this. I just wanted to be able to do something on my own, investment related, and say, I think this and this is what I think. These are my views. And so I've done that. But now both my sons are partners in our business. And so now I get to say we again, as we continue to build what we're doing together.

B (10:54)

You know, I've talked to some people that have done very well, been very successful, you know, manage a lot of money for people, and, you know, and we get to talking about careers, you know, and this was more. When I was spending more of my time practicing emergency medicine. And one of them related to me how jealous he was that he spent all day long basically making rich people more money and felt like I was doing something that was really making a difference in the world. As you pivoted toward Money for the rest of us, did you feel like your work would be more impactful, kind of working for the little guy rather than these big endowments?

C (11:32)

Yeah. And in fact, toward the latter part, at feg, we started managing assets for financial planners. And so I did spend more time speaking in front of individual investors of some of our advisor clients. And I remember our head of marketing that came from that background. He said the word he used was noble. How more noble it is to sort of be working and helping individual investors. And so that's been our focus at Money for the rest of us. But the other focus is just back in 2000, I wrote a. I read a book called Soloing, and the whole idea was, how do you get paid to learn? And that's kind of what we've structured here is like most of my episodes are, they're solo podcasts. It's what I happen to be interested in and what am I learning. And just kind of carrying our audience along with me as we try to explore all the AI right now and how that's impacting everything. Is it a bubble? Is it not? And that's what I do, is just

B (12:34)

learn by teaching another person that kind of pivoted from the institutional asset management space to doing at least some work to try to help the individual investors. David Swensen, who famously Ran the Yale Endowment for a while. And as he wrote books, I recall, I think it was his second book that he put out, the one kind of aimed at individual investors. He realized that maybe the game was different for the individual investor than it was for the institutional investor. Did you find that to be the case as well? And in what ways do you see the game as being different?

C (13:07)

Well, the biggest difference for most institutional investors are nonprofits. So they don't have to worry about taxes. Well, more do now, sort of excise taxes have been passed on the larger endowments, including Yale. But back in the day, this wasn't an issue where with individuals it definitely is. And that's what's so remarkable about ETFs and that whole area of the market is because they're naturally much more tax efficient. And initially a lot of the institutional asset classes weren't available to individual investors. And now through ETFs, investors can invest in anything. Now, whether they should or not, that's different. But the taxes is a big thing when it comes to individual investors. And you mentioned it shouldn't necessarily drive the decision, but it is something we should consider in terms of asset location. But that would be the biggest difference.

B (14:07)

Now, you've said before the typical institutional investor has about a patience level of three years. And so if things aren't performing after three years, they want to make changes. Are individual investors better or worse or how do they stack up compared to the institutions?

C (14:26)

I say they're about the same because again, institutions are made up of investment committee members. And so you would like at an institution, you would select an advisor and my biggest job. So let's say a committee was trying to select a new small cap manager. And so you would have, we would call it a beauty contest. You'd bring in maybe three or four managers to be interviewed. They'd have their pitchbook and they would tell stories and they would try to convince the committee that they were the manager. And my job was to try to get them to hire the worst performer, at least that had underperformed over the short term because of their cycles, even within small cap. And the worst performing client I ever had and I kind of inherited, they hired a bunch of managers at the same time, the ones that had done the best and the short term and the long term. And I remember one of those managers that went through an underperforming cycle. He said, yeah, this college is our worst client performing client ever. And if you can get a manager, if you can get them a skilled firm, but it's underperformed, then you can catch that upcycle again. But if you hire at the top, sort of the first year, you, yeah, well, I can justify it. But by year three, it's like stepping in front of a freight train. You kind of get this institutional group think committee momentum to we just got to end the ping. Because if you're a volunteer on an investment committee, you want to make changes. And so you start looking at what seems like it's broken. And oftentimes that happens to be a manager that's underperforming. And I think as individuals we're similar because part of diversification is something is always underperforming. Otherwise it wouldn't be diversification, it would just be everything would be the same thing. And so there is this tendency to focus on what's not working and not like that pain of feeling like, well, maybe I made a mistake or I just, we don't like to lose money. And so part of investing is sort of understanding, well, why is it underperforming what's going on? And some of the tools that we've built here is to help investors do that. Because you think about three years ago where US stocks have significantly outperformed non US stocks. And if you are an advisor, an individual like why do I have non US Stocks? Well, it's helpful to look under the hood why The S&P 500 is outperforming a non US benchmark and realize, well, it's because valuations, what investors are paying for a dollar worth of earnings is added 4% to return over the past decade and a weakening or a strengthening US dollar added another 2 to 3%. And so once you know why something's happening, it's easier to be more patient. And now you've seen a year like 2025 where non US outperformed and continues to outperform us and then cycle starts over. Why? What's driving it? What are the underlying drivers of performance? And that's something I see a lot when people invest in index funds, they think it's a one and done decision. They don't spend time understanding what, what are the underlying drivers of that performance historically. And looking forward, you talk a little

B (18:01)

bit about persistence of performance. And there have been some studies that have looked at this. They're usually done in mutual funds, not exactly the same thing as endowments, but similar institution type management of a large amount of money. And what seems to show up in the studies that I've looked at is that performance is very persistent in the bottom Quintile, poor performers remain poor performers and not very persistent at all in the top quintile, that those in the top quintile are much more likely to be average performers in the next time period.

C (18:38)

Well, right, right, yeah. And we've looked in the institutional world, one of the things that you would show in our report is how is this particular manager performing relative to the index but also relative to their peers. And so you're always, you want a top quartile manager and a lot of times they'll put that in the investment policy statement. This is, we want a top quartile manager in that particular category. And what I found is a top quartile manager over a 10 year period generally was below average about 30 to 40% of the time on a rolling 3 year basis. Because in order to actually outperform a benchmark, you have to look different than the benchmark. You can't be a closet indexer. Now, should you be using an active manager at all? Most active managers and the studies support this, they underperform and index. And so that's why most, you know, as individual investors, my portfolio and most should be mostly more passive ETFs. Now that still opens up a huge variety of different asset types. It doesn't just have to be, you know, a two fund or a three fund portfolio. There are other ways to add incremental value if you choose to. If you find that interesting, that could be done.

B (19:58)

Now you talk about index funds and a passive approach and simplicity and, you know, buying and holding and sticking with your plan long term. Would you consider yourself a boglehead? And if not, how would you disagree?

C (20:11)

I'm not sure what the definition of a boglehead is. If the definition of a boglehead is, is I own three funds or three ETFs and don't change, then no, I'm not a boglehead. I like investing and so I have what I call an asset garden approach. I have a variety of asset types with a dozen or so different assets because I enjoy it and I like different return drivers and understanding what's going on. I am more boglehead in terms of I like lower fees of ETFs. I tend to be a patient investor, but I own gold, I own crypto, I own preferred stocks, I'm in private capital investments. And so it's more of an, let's say an institutional looking portfolio, perhaps unorthodox, but it's how I like to invest. And that doesn't mean everybody has to invest that way. But I teach investing for a living and so I like to experiment. I experiment all the time as a teaching tool to help individual investors. It's like, yeah, this was a good idea. This perhaps not so good.

B (21:24)

Maybe it can be compared to a big tent philosophy and a small tent philosophy with the political party, for instance. Right. I consider myself kind of a big tent boglehead. People that care about passive investing, they care about low cost, they care about buy and hold. I put them in the tent, I call them a boglehead.

C (21:42)

Right.

B (21:42)

Whereas other people have a much more narrow.

C (21:44)

Yeah, I mean, I would be a big tent bogohead. Sure. I mean, and I've participated in the forum in the past and, and so. But I, I'm not one that says there's only one way to do things when it comes to investing. There. There's many different ways. You have to choose an approach to investing that resonates with your makeup, your personality.

B (22:04)

Yeah. Many, many roads to Dublin, as Taylor Larimore likes to say.

C (22:08)

Exactly.

B (22:09)

Okay, you mentioned an investor policy statement and I want to get your take on an investor policy statement. This sort of idea, a written investing plan of some kind, is something I'm a huge proponent of. You mentioned it. Tell us why you think it's important, how you use it, how you think an individual investor ought to look at some sort of written investment plan, an investor policy statement.

C (22:32)

So this comes down to individual sentiment in terms of their approach. Institutions have it and it's a policy statement, outlines the objective, it outlines the strategic allocation. Any potential restrictions? Sometimes it can be ESG type restrictions, but it's a living document. It is a strategic plan for those investments. And the reason why is because there is turnover in staff, there's turnover in the board for an individual investor. For some people, they find it very helpful to write these things down, to have that strategic plan for how they invest because it helps control the emotion and helps them stick to that plan. Not everyone needs to have an investment policy statement. I don't have a personal investment policy statement. I don't have a strategic asset allocation. I have an approach where I have a variety of asset types and almost equal weighted in terms of the different types of assets between stocks and bonds and more income strategies and private capital and crypto and precious metals, et cetera. But one doesn't have to have a written statement unless it helps them in terms of how. Just like not everybody needs to have a checklist in terms of what they're going to do that day. Some people, I call them List makers and non list makers. I'm not a list maker. I don't find any satisfaction of clicking, you know, checking off what I had on my list that day. Whereas other people, that's how they drive their lives and they find it incredibly helpful and satisfying. I'm more of a Zen like person that wakes up and does what they feel like doing. That particular day, like this, like this was the one meeting I had scheduled for the entire week. Now I had things that I needed to do, but I didn't necessarily have to do them at any given time. So there's different ways to go in terms of how we manage our time, our list, and the same with having an investment policy statement.

B (24:33)

Now you mentioned that part of your asset allocation, your investments are driven by desire to learn, desire to teach, desire to experiment. Do you think your portfolio would have done better if you had set a strategic asset allocation, kind of a fixed plan and followed that day in and day out, rather than experimenting and learning about other things?

C (24:57)

No, not necessarily. My performance has been good. My goal was to just make sure that I earned more than inflation after spending, so there was some real growth in the portfolio. Clearly anybody in the past since I left, I should have just bought the S&P 500. And one could say, well, that would have been it. On the other hand, because they understand investing, I know why The S&P 500 outperformed, mostly because the dollar weakened and they've got people. The PE went from 18 to 27. And so that means when valuations are higher, future returns are lower. But that was. No, it wasn't the only reason. I mean, you had these, the mega cap stocks, they did compound its earnings over the past decade at 8,9% earnings per share. They had all the buybacks. But obviously I've made mistakes. I mean, there are things I wish I would not have done in the past decade. An example is an asset class master limited partnerships, which are. This is energy infrastructure, assets, pipelines and

B (26:08)

that sort of thing.

C (26:09)

Oh yeah, yeah. And I like, we recommended those to our investors, institutional investors in the past, because it was always structured as sort of, as a, as a toll booth. There are hedge funds that introduced us to this and it was really a challenging asset class because of the structure. In some ways it was the complexity. And I remember our real back at feg, the analyst that covered that space, the real estate, I remember one time, in exasperation, he says, I wish I had never heard of MLPs because. And I had too much money in MLPs. And, and they've had a great five, ten years. But this was, you know, I don't own them anymore because this was an asset class that in some ways came about due to tax policy. And the number, if you go to an MLP ETF, there's only about 25 holdings now. So it's gotten more and more concentrated as these master limited partnerships have moved to a different corporate structure. Yeah, one of the risk is falling in love with an asset. And I got my exposure too high in MLPs. But again, it didn't like I'm still here. Right. I didn't have 80% of my portfolio. But it's like I mentioned, we all hate to lose money. I might have had 5% MLPs and lost more than six figures on MLPs over the years. And that stung. I don't like to make mistakes, but we all do. And that's just part of investing. And I talk about this in my book that the goal is we're all going to make mistakes. You just don't want the mistakes to be so big that you're financially ruined. But mistakes is just part. We all make. It's part of investing.

B (27:48)

Now you mentioned PE ratios and let's talk a little bit about valuations. What do you see as the role of watching market signals or valuations like PE ratios for the individual investor? In a lot of ways, the market's been expensive for a decade. And you know, if you're just watching for a higher PE ratio, you might have bailed out long before you got the 2023 and 2024 and 2025 returns. What is the role for an individual investor? How should they be thinking about things like PE ratios?

C (28:20)

Well, they should be understand when something is expensive, it's just like when you go to the store, would you rather buy a car that is selling for more than it's worth or buy a cheaper used car like you've mentioned in the past? And so the PE is basically the price of what investors are paying for that future cash flow. And there is a statistic over the long term when you pay more for stocks more than average or twice as high as average, your future returns are lower. And so if you care about the return in your portfolio, then you should at least have some understanding of how it's priced and what investors are paying for it. And so I do think it's important and I have found it frustrating how difficult that data is to get sometime, which is why we build an entire suite of software tools because I got tired of not being able to get the data and it wasn't. And we tried so many different providers and eventually just signed a data license with MSCI and Bloomberg. So we can get the data and we just build our own tool. And I use it to teach all the time. I've used it. We launched that four or five years ago. I use it all the time in our teaching so we can show people here's why this area has outperformed. Here's what is the least expensive area. And these are index funds. Like these are indexes. This isn't individual stocks. This is all allocating in a bogle like way in index funds. But there's a variety of index funds and that's kind of been our approach.

B (30:03)

It sounds like you would advocate for some sort of tactical asset allocation changes based on valuations. And that's hard because short term PE ratios don't predict a lot in the long run they predict broad cycles, but they don't give you any indication when to when to change. How do you make those decisions of when, when do you change? I mean sometimes you're going to be literally years too early and sometimes a little bit late.

C (30:33)

Well, absolutely. But you're not, you're not. You're trying to get the season right. So I have said for years that there are no truly passive investors unless you just own one ETF. Even if you own two ETFs, at some point you have to rebalance. And so should you rebalance into the S&P 500 when it's selling at price to earnings ratio that's two standard deviations more expensive than average. Or do I allocate more to non us? This isn't. As an institutional advisor we would make several changes a year. But as individual investors we don't have to make that many changes. But we do. I mean we do rebalance and it's helpful to know. Let's take looking at the end of 2004, the S&P 500 was so expensive and had done so well. And that there you could see that small cap value outside of the US was extremely cheap. And we're not talking about moving all of our money, but on the margins it is helpful mainly so you can sleep at night. Right. In terms of. I think many passive investors are naive investors. They just think the stock market goes up because it goes up. They don't understand that the stock market goes up because of an economy in terms of earnings. But it also depends on what, like anything, what is being paid for that future cash flow and for those earnings.

B (32:03)

Let's step back a minute and be a little bit more philosophical. You've talked about how to live without worrying about your money. What do you mean by that?

C (32:14)

I don't want people to spend most of their life worrying about money or investing. There's just too many more interesting things out there. There are individuals that like to invest. I think for most of us, they don't have to be an investment expert. You just have to have a level knowledge so you don't get taken advantage of like you did. I mean, that's what led you to understanding investing because you felt like you were being taken advantage of by so called experts. And so I think there is a level of knowledge that we need to have in order to invest, but it's not, definitely not the most important thing we do. Which is why in my podcast, I mean, it is something we talk about investing, but we talk about all types of philosophical of things because in some ways they're, they're more interesting. Which is why you don't listen to our podcast if you want four bullet points. Because the point is the journey. It's, it's, it's, it's the narrative, it's the story, it's how it relates, how it all links together. Which is why we spend a lot of time talking about how does the economy really work. And we thought, well, here's an example. Right Now, Bitcoin's down 50%. And if you read the Financial Times, a lot of the columnists, it's like, who would ever buy this? It's worthless and is it going to be worth anything in a hundred years? And coming from a traditional financial background, I could say the same thing about the US dollar. It's worthless because money is a trust network in and of itself. It's just bits. Most of it's electronic. It is not worth anything. But what is worth something is the fact that your neighbor is willing to accept this worthless thing for payment. And so it's important as individuals to be linked in to this financial network, this fiat currency network, and believe in it. Not to run and hoard everything and think the world's going to crash. So cryptocurrency is the same thing. Bitcoin has come out of the woodwork over the past decade. It is something that people trust. It's a trust network. Now, will the Trust be there 10 years from now? Nobody knows. Will it be there in the US Dollar? We don't know. But those are the type of more Philosophical stepping back. What is money? And when you know that money itself, the actual US dollar is worthless, that it is a trust network and there are some threats to that trust right now in terms of Federal Reserve independence and a lot of things that are going on. Well, there's a reason that maybe we should allocate to some other areas that give us a little more monetary diversification.

B (35:07)

He brought up a couple of ideas I want to spend some more time on. But before we get there, I've found that for a lot of people, just getting more information, becoming more financially literate, knowing more about investing, whatever you want to call it, does not necessarily reduce their anxiety level about money. In fact, sometimes it seems it even increases their worry. It gives them more things to worry about. Now they found out about sequence of returns, risk, and they want to start worrying about that too. Do you have any advice for people that tend to be kind of anxious and carry that anxiety with them into their financial dealings?

C (35:46)

Yeah, go outside. Like, stop, Stop now. One of my intentions this year is less narration, more giveness. Like what is the. The grace and the things that are coming in, the. On the ceaseless creativity that you see in the world. You go outside and you get involved in physical things. I know you do mountain climbing. Some people ski, some people just. I just walk, tennis, hike. But just stop the narrative. Find a way to learn to. And it's hard because everybody. I had a conversation with AI about this the other day because some people have a constant narrative all the time and they just constantly worry. And I'm not necessarily wired that way, but I do think the more we can focus on real things, embodied things, things in nature that can help settle some of that. It help us not get into these thought spirals. But it's hard. I mean, sometimes it could certainly takes professional help to do that, but I don't think it's having more knowledge. I just think it's more just their makeup and learning to figure out how do I manage that? Because they're not. It's not like it's going to stop. We all do it. What I have found is the more I can focus on what is happening now in the present in front of me and stop leaning into the future or worrying about the past, but just focus on who's in front of me right now. What are they saying? Listen to them. That helps. We can only think about one thing at a time and that can put some of those money worries on the back burner.

B (37:34)

Let's go back to crypto a little Bit. You talked a little bit about bitcoin, how you have some money invested in bitcoin. Bitcoin's often criticized for being a non productive asset, a speculative asset that essentially requires somebody else, a greater fool to pay more money for it later than you paid for it today. How do you view crypto as, as far as its investment qualities, as far as its place in a portfolio for high income professional like a position.

C (38:03)

In my first book, Money for the Rest of Us, it's 10 questions that investors should ask before they buy any asset. And the second question is, is it investing, speculating or gambling? An investment is something with a positive expected return, usually because it's generating some type of cash flow. So it's a stock. The stocks are ownership in a company. There's profits being generated. It is a productive investment. A bond or real estate is generating cash flow. So that's investing and most of our portfolio should be investing. Now there are also speculations and speculations is something where there's disagreement on what the price should be, usually because there isn't any cash flow. And an example of speculation would gold. Gold's been held for thousands of years. It's truly a speculation because you can't value it. That doesn't mean it's worthless. It means it depends on trust. Now when it comes to something like gold and Bitcoin, one of the advantages is this. The supply is constrained. It's constrained because in the case of Bitcoin, it's the algorithm. There's only a certain amount of 21 million Bitcoin that will ever be created in gold. It's linked to the real world because it has to be mined. And the supply only grows 2 to 3% per year. You take that the US dollar has grown at 6% a year and so the supply of that dollar is growing faster, which means that it will be debased relative to real things. Now is Bitcoin a real thing? No, it's a trust network. I mean there's an algorithm but doesn't matter. It's just if people find value in it just like they find value in artwork or whatever, will that continue? And we don't know. The advantage of something like Bitcoin is people do find it valuable and you can keep it completely away from the financial system. You don't have to be locked in. You can whatever, put it in a USB wallet and you can carry it across the world and have access to money, which you can't necessarily do with other type of currency. You can't take more than $10,000 outside of the country? No, most people don't need to, but it's just, it's trust. And so that's what's, you know, these are speculations. And then the third one is gambling, which is something with a negative return. And I've been going back and forth. I did an episode months ago on Sports Betting is not Investing. And I got into this dialogue with this guy, super nice guy, who is basically taking the investing framework for gambling. He calls it low stress betting. Low, I think, low stress bets. And, and it's, it's. I have, and I've talked to him. It's fascinating because in his case, his bets, there's a 72% chance of winning, which seems really high. But that includes the, the spread for the, the betting company. So even if you would, you are betting in something with a 72% probability of winning. You have to do better than that in order to actually make money. Which is why, if you see his performance is actually he hasn't lost much money, but he has. And so these are the type of things we talk about on our show. And a lot of it is philosophical, but the original question is gold, Bitcoin. These are speculations. They shouldn't be a large part of your portfolio, but they are protection against monetary disorder.

B (41:51)

At what point does it start making you nervous when somebody tells you they have this much of their portfolio in these speculative investments in gold and bitcoin? If they told you they had 5% in gold and 5% in Bitcoin, I presume you'd be okay. What if they told you they had 20% in gold and 20% in Bitcoin? Does that start making you think maybe the person is being foolish?

C (42:10)

Yeah. Above 20 makes. In my case, once gold and crypto gets above 20%, then I sell. So I sold bitcoin this past summer, right? And gold. I actually went to a gold dealer in New York City, which was an experience to sell a few gold coins that I happened to carry with me. But yeah, there are financial advisors that I know that got into their clients early or they got into bitcoin early, and they have clients with 40, 50% Bitcoin. To me, that makes me incredibly nervous because it's not tied to the real economy, the innovation that we see in the economy. That's where we want most of our assets because of how dynamic it is. These hoarding assets. It's okay to hoard. It's okay. People have had gold jewelry for years as a protection in case they need it in economy, you know, less developed in poorer countries. I mean, that is a primary way they save. And you wear it.

B (43:20)

It's the classic, classic Indian, Indian investment.

C (43:23)

Right, well, right, yeah. And that's a good thing. Can't be the only thing. But it is same. I mean, you say the same thing about vintage Rolex watches, right? It's, it's a store of value. No guarantee it'll go up. But if it's something as scarce in a world where fiat money is growing much faster, these are things, these hoarding assets can hold some value over the long term.

B (43:54)

Well, let's talk a little bit about fiat money. You've alluded to this today. You did a series on the podcast all about how the economy works. And some of that talked about how money is created by the Fed and by banks. Do you view creating money out of thin air as a bug or a feature? I mean, is this just an accounting sham like Enron that's bound to crash, or is it just the benefit of being the world's reserve currency as long as the US economy doesn't collapse?

C (44:22)

It's both the bug and the feature. So historically, most money was created when banks make a loan. So my first loan I ever got was for a used Ford Granada. 1982 Ford Granada. I borrowed $5,000 at 18% interest rate. So the bank that lent me that money on their balance sheet, they put David owes us $5,000 as a loan receivable. That was their asset. On the liability side, they created the money out of thin air. They just changed the digits in the account of, in this case, the car dealership that I bought the car from. That is money that was created out of thin air. But, and this is important, I had to work really hard to pay back that loan. So money is energy in the sense of it didn't take any energy to create that money. But because it still was tied to the real economy, it was tied to my life energy that I expended to pay back that money. And that's how most money has been created over time. People only borrow money because they're willing to expend their life energy to pay it back. And so there is still a link to the physical world. Just like with gold, there is a link to the physical world because they're mining the asset. Or with cryptocurrency, there is energy being expended to secure the network and create the new Bitcoin. Where it is broken down is because the US dollar read it, it's a Federal Reserve node. It's a non interest bearing perpetual note from the, from the central bank. And they can create it out of thin air. And they have. And that's one what's known as quantitative easing. And when that is being done at the same time the government's running a budget deficit, the federal government that, that's creating new money. And so that's the danger of fiat currency because a government can create it out of thin air and you get the supply in Venezuela and some of these nations and that's again it comes back to a trust network. If people don't trust fiat anymore, they think the supply is growing too fast or the government's just printing it, then its value falls relative to real things

B (46:51)

and can do so very rapidly.

C (46:53)

Right, and what is that? What do we call it? We call that inflation. Inflation is when the fiat currency isn't worth as much compared to real things. And that's something we just have to. And that's why we own some alternative assets. And that could be other current fiat currencies. When we buy non US stocks, it could be gold and crypto, but it's part of our garden, part of our diversification pool, our capital reservoir. But it can't be the only thing. You can't just play the same piano key. You need a variety and not get emotionally tied and overly bearish or overly bullish in any one asset type.

B (47:35)

Let's talk about investing beliefs. What belief about investing have you changed your mind on in the last decade?

C (47:42)

Gold would be one. When I was an institutional advisor, I remember, I think I was doing a presentation at the Rhode Island School of Design. We were pitching to be their investment advisor and somebody asked me about gold, he must have been pro gold. And I just said it's just like we've talked about. It has no productive use. It's just a shiny rock. In fact, I wrote about it in one of our investment pieces and one of our analysts pushed back because he'd invested in gold for a long time. And I've gotten much more comfortable owning gold because I understand where it fits as a monetary like asset. And so I've changed. And that's why I think I bought gold for the first time probably in 2012. So this isn't something I had bought for decades because I always sort of took the institutional view that no, you need something tied to the real economy. Well, not always because of some of the flaws with fiat currency. And that's why I was early participant in Bitcoin, because of the same way And I've always in occasional, I've always taken profits. And what do I do with the profits? I go buy real things. First time I sold bitcoin, I went and bought windows for the house we're in. They're made out of steel, right? Because it's real. And that's. We don't want to lose track of what's real in the world. And it's not bitcoin and it's not fiat currency.

B (49:04)

Let's talk a little bit about some of the limited things we have in life, right? There's time versus health versus money. And there's been a fair amount of discussion in the last few years. Some of it's centered around the book Die with Zero and some of the ideas put out by its author. Do you view that people ought to see their net worth peak at some time during their life? And if so, when? And you know, is there a time they should begin to be more active in deploying their money, spending it, giving it away, rather than focusing on more returns and investing? How do you balance time and health and money?

C (49:41)

It's hard. The way that I look at it is these financial assets, they're a type of capital. And what capital is? Henry David Thoreau, in his essay on walking, he talked about how he walked all the time, spent hours of walking. And he said independence and freedom is the capital of the walking profession. And we don't usually think of independence and freedom as capital, but capital is something that expands its choices. And I've been writing about this in my second book that I'm working on. We have this capital reservoir. It includes time, it includes mobility, includes our life energy, includes our human capital, our skills and our education. And it includes some financial assets. And there's always trade offs. We spent much of our life trading our life energy for more financial capital. And at some point, yeah, we have enough, we don't have to. And everyone has to decide when. That is John Maynard Keynes back in the 30s, he said eventually, given how fast the economy is growing, we're going to say we have enough. Like everybody's going to have enough. And then we can go. He said there's still, there will still be purposeful money makers. People just love to make money because money is status and the more money. And you see this with billionaires, they're always trying to see who's got the most status, who's got the nicest yacht and plane. Most of us shouldn't do that. What Cain says at some point we need to focus on what the real purpose of life is and the same for our capital reservoir. At some point we need to stop trading life energy for more money. And maybe we need to draw down some of that financial capital to go take a trip. And there isn't a right time, but it is part of the overall discussion and it isn't. You said something on your podcast about as something you've changed with because you used to try to optimize everything. But optimization is a flattening of the world. It's mathematically trying to get the right amount given certain constraints. And we cannot do that with this reservoir of capital because it includes so many intangibles that it's hard to put a value on. And so we're really just trying to calibrate our life and, and figure out what the mix is. One of the things I've taught for years is we should live a life that we don't want to retire from. So instead of spending all this time waiting to retire and saving all this money is why don't you structure life now that you're happy with it? Sounds like you've done that in your life, Jim. Right? You still like being a doctor. You still do it, but it isn't the only thing you do. So you've structured a life that you don't want to retire from. Maybe people won't, maybe you'll never retire. Who knows? But we. So with something like Die with Zero, which is a good book, but there isn't a right answer. When I quit my job as an Advisor, I was 45 and I told my clients we were retired. I mean, that's what we said to clients. And then you think about 50 years. How am I going to invest, thinking of a 50 year time horizon? Well, you can't. You can just do it one year at a time. And I still do that one year at a time. Where do we want to take a trip this year? What do we want to do this year? Because we don't process 10 year increments of time very well. But we can focus on how we feel now. What do we want to do now? I plan out maybe six months ahead. I have no idea what we're going to do this fall. Maybe we'll travel somewhere, maybe we won't. Now, not everybody can do this. Some people, like I said, they're list makers. They want it planned out. We have to figure out what works for us. The best analogy I have this metaphor is this capital reservoir with all of our assets in it. And then figuring out how to calibrate that.

B (53:44)

The wild thing is how challenging it is for us to predict what will make us happy ten years from now. As I go back over the decades in my life, I thought, oh, if this is where I'm at in 10 years, that's really what I'm going to want and that's what's going to make me happy. And I've been amazed how different I am at 50 than I thought I was going to be at 50 when I was 40.

C (54:08)

Oh, absolutely. And that's where this whole idea of letting see that's narrative driven. We're thinking, in 10 years I will be this. Well, we don't know now we can prepare and do things now that we think that we're enjoying that. Maybe it's also very helpful to have proxies go ask 50 year olds. I remember we were living in Idaho Falls and our neighbor was 92 and I'd spent a lot of time with this neighbor, Jay, and a lot of it was talking about what's it like to be 92. So asking people that are there. And it can be very helpful in terms of guiding our decisions. But no, we can't. What we can do is not spend so much time thinking about the future, making sure our life now is something that brings us joy. Absolutely.

B (54:55)

All right, well, our time is getting short. David, what else do you think? High income professionals. And there's going to be 25,000 or 30 or 35,000 high income professionals listening to this podcast? What have we not talked about today that you think they ought to know?

C (55:10)

I think we've covered a lot of ground here. We've covered investing, we've covered speculation, we've covered allocating all of our capital, not just financial capital, and that you can optimize it. We talked about not leaning so much into the future, but to focus on the present. And so I think anyone right now, I think it's just helpful to step back and think, am I happy and what can I change now that will help me be more happy? And perhaps much of that is just allocating more time to physical things, what's happening, just being in nature or things like that. And spend less time worrying about money.

B (55:58)

Yeah, absolutely. All right. Been speaking with David Stein. The book is Money for the Rest of Us. The podcast is Money for the Rest of Us. I encourage you to check it out and take as much value as you can from it. Thank you so much for your time with us today, David.

C (56:14)

Great. Thanks, Jim.

B (56:17)

Okay. I hope you enjoyed that. You know, the Fun part about investing is you talk to people that know about investing. There are certain things that everybody agrees on, right? Keeping your costs low matters because those costs have to come from your return. You know, broad diversification matters. Sticking with your plan matters. But you know what? Everybody's plan's a little bit different, and that's okay. You don't have to have the same plan as everybody else. I always worry when I get an email and people ask me what I invest in, as though their goal should be to find a guru you like and copy what they're doing. It's fine. I guess what I'm doing is reasonable, so it's okay if you copy it. But my point is there's a hundred other reasonable ways to invest as well, and you just have to pick one of them, fund it adequately, and stick with it long term. David obviously invests in a few ways that are a little bit different from the way I invest. Right. He puts some money into speculative assets like gold, bitcoin, that sort of thing. I've chosen not to do that. I prefer to have all of my serious money invested into productive assets, and that's okay. David's been successful, he's met his financial goals. I've been successful, I've met my financial goals. You too can be successful and meet your financial goals. You know, Whether you have 5% in Bitcoin or don't have 5% in Bitcoin, you can be just as successful. Now, we give cautions, right? If you've got 80% in Bitcoin, neither one of us thinks that it's a good idea. And that would be the case for the vast majority of informed investors would give you that same advice, that that's too much. But we're all going to draw the line differently at where we think. Too much is hope that's helpful to you as you formulate your own investing plan and work on following it. Perfect is the enemy of good. Get good and stick with it. Earlier we mentioned working locums with Comp Health, the number one staffing agency. But Comp Health isn't just a locums agency. They also staff regular permanent positions across the nation. They also offer telehealth, medical missions and more. And that's what makes them unique. They can look at your situation, offer multiple solutions to build your career the way you want it and meet your financial goals. And they know their stuff, especially when it comes to time to negotiate contracts, which they're willing to do for you. So whatever career move you're looking for visit whitecodeinvestor.com comp health and use the power of Comp Health to build your career your way. All right, don't forget about the podcast sale. It goes through the 16th use podcast 20 at checkout you can go to wcicourses.com, you can get there from the links@whitecoatinvestor.com if you can't remember that you'll find our courses. You've been hearing about them for years. You've been thinking maybe I ought to take fire your financial advisor or I'm really interested in real estate but don't know where to start. Well, no hype. Real estate investing is perfect for you, so check those out. Check out our new podcast, especially if you're relatively new to this one or you feel like you still don't have an awesome grip on the basics. You can find@whitecoatinvestor.com BootcamPodcast and thanks as always to those leaving us 5 star reviews and telling friends about the White Coat Investor, the podcast and other resources. A recent one came in from greenmed051 said terrific. No hype Resource podcast is great for commutes, but make sure you combine it with a fantastic WCI webpage. They've got concise, clear articles on nearly any question you have. This is one of the single best financial literacy sources I've found in years. Five stars. Appreciate that review. Those really helped us spread the message. Okay, that's it. We're at the end of the episode. Keep your head up and your shoulders back. We're here for you. You've got this. You can do this. You can have the same financial success that you hear about on this podcast or all the time. All you got to do is develop a plan, follow your plan and you're going to get there. Thanks so much for what you do.

A (60:04)

The White Coat Investor Podcast is for your entertainment and information only and should not be considered financial, legal, tax or investment advice. Investing involves risk, including the possible loss of principal. You should consult the appropriate professional for specific advice relating to your situation.