The Compound and Friends - Losing money is THE COOLEST, Larry Kudlow is not a scientist, trading your time for what you value, with Ben Carlson and Dasarte Yarnway

Episode Date: October 16, 2020

Josh talks to Ben Carlson about how it is that over 400 companies in the Russell 3000 have lost money this year but posted an average stock market return of +57%. Over 100 companies that lost money in 2020 have actually seen their share price double! WTF is going on? Dasarte Yarnway joins Josh to talk about his burgeoning financial advisory firm and the powerful message he's been sharing throughout the industry: Spend time doing the things you value and the rest will fall into place. Plus: The Fastly blow-up this week may be more meaningful than you think, BlackRock says $1.4 trillion is sitting in mutual funds with negative 3-year returns, and is it Larry Kudlow's responsibility to help you trade the pandemic? Nope! Be sure to leave us a rating and review, they go a long way! Thank you! Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

All right. I got so much to get to today. I want to start with this. This company Fastly blew up this week. The ticker is FSLY and it's only a $10 billion market cap, but it's not an important stock. Okay. The company itself, basically what they do is they speed up the delivery of online content and their biggest customer is TikTok. And for whatever reason, coincidentally or not, TikTok, I guess, has not done as much business with Fastly as they thought. Fastly comes out and they're like, yeah, third quarter, the original guidance we gave you guys was $73 million in revenue, but we're only going to do $71 million in revenue for this quarter. So of course, Wall Street acted very maturely. They beat the shit out of the stock to within an inch of its life. The stock is down, as I'm talking, 27%, 34 points a share on that news. So it's not that it makes sense or doesn't make sense for a stock to lose a third of its value because revenues will be 2 million light in one quarter. But that's what happens

when you have a price to sales ratio of 48 times. There's no margin of safety in the stock price. So the slightest hiccup and you get this outsized reaction to the downside, all that is, is a mirror image, you know, opposite version of what it looks like when the stock is going up. And the bears would sit back and say, stock is, there's no reason why this company traded at 48 times sales. Yeah, of course there's no reason, right? So you can't do 71 million if the street's expecting 73 million and you're trading at almost 50 times sales. So now the stock is down to a much more reasonable 35 times sales. sales. It's only a 2000 price earnings multiple on next year's, I guess, one or two pennies that they're supposed to earn. And this, in my view, probably has more room to the downside

because it's not that it's a bad company or that it's not a fast growing company. It's that when the illusion is shattered, like the illusion of these companies are perfect and they can do anything, right? When it turns out that they're not all Michael Jordan and they stumble or they miss expectations or whatever, they have a hiccup in a particular quarter because of one customer. When that happens, the people who had been buying the stock and riding it higher, they're not like serious investors. They're momentum people. And if you ask them, why do you own Fastly? I don't know.

It's going up. Well, so now it's not going up anymore. So now why do you own it? I don't know. I don't. I just sold it. Next. Right? Next, right? So then you've got this air pocket in between the price at which those people will sell,

which is any price because momentum people don't want to own a stock that's crashing 30%. Well, where are the buyers coming in? Where are they? Well, the buyers are much lower because the next set of buyers are going to be the growth at a reasonable price people. next set of buyers are going to be the growth at a reasonable price people. And 35 times sales, while lower than 48 times sales is not growth at a reasonable price. So they're not like running in to take the stock off people's hands. And then even lower than them are the value investors who will never probably ever end up owning this stock. By the time the value investors want to own this

stock, that means the company's in trouble. It's selling at 10 times earnings and it's lost 90% of its market value. So they're not going to be a factor here. So the distance between where the momentum people will get out versus where the growth at a reasonable price type of fund managers will start buying, we don't know how wide that chasm is. type of fund managers will start buying. We don't know how wide that chasm is. And that's how you get a stock go from trading at 125 to 89 inside of one day over a stupid $2 million revenue shortfall. That's how that works. That's how that works. And a lot of investors who are in the market right now have never seen this, this process play out. So it's bewildering. They don't understand.

How can you lose 28% of your money in one day because a company is going to miss revenue by a million? Well, that's how. It's an expectations game. And the illusion is shattered. And now it takes time. You could see this stock be in the penalty box for a full quarter, two full quarters. Instinctively, the momentum people know that.

And so they're running. They don't want to wait. They're not investors anyway. They don't care about this company. They want to be in ticker symbols that are going up. So that's what's happening there. And the broader implications for something like that for everyone, because most of you, I know, don't own shares of Fastly.

The broader implications of that are if this happens to more companies that are in this group of stocks, and we're going to get into this group of stocks in a little while, that has the potential to shift sentiment market wide. And one of my formative experiences in the market, I watched that happen. There was a company called MicroStrategy. I swear, I think the stock went down $300 a share on an earnings restatement. They had an accounting problem. And that was one of the things that put a top in to the original dot-com bubble back in 2000. It was one of several developments.

The Knight MicroStrategy blew up after hours on a restatement. I don't even think it was earnings. It was like sales, I think, was an important linchpin to that whole thing falling apart or lack of a linchpin. The whole thing started to crumble. So I'm not suggesting Fastly is going to play that role because as this is blowing up, Peloton made a new all-time high today. Zoom made an all-time high today. So it's not exactly working its way through the system and beating up all those stocks. Just something to keep an eye on.

Okay. I want to get into this thing from BlackRock really quickly. BlackRock put something that's very provocative out this week. They were basically saying, as of the end of Q3 2020, which was two weeks ago, 54% of active equity mutual funds have a negative three-year price return. That's pretty incredible. So in dollar terms, there's $1.4 trillion of money in equity funds that have negative returns since October 1st, 2017. That's real. I mean, that's half the money in active mutual funds is down since October 1st, 2017. It's really, really unbelievable.

1st, 2017. It's really, really unbelievable. And then BlackRock says, among the hardest hit portions of the active mutual fund universe were the value and blend categories. More than 90% of value funds across all market caps and more than 87% of mid and small cap blend funds had negative price returns. What are the implications of that? BlackRock, which is a little bit biased, one of the largest passive and ETF platforms, is basically saying that this kind of thing triggers record level money movement. People that don't have a capital gain in these funds, it's very easy for them to sell these funds. Then what do they do with the money? Probably some of them go look for a new active manager, but most of them, they just say, you know what? I still want this exposure to a blend or to value, but I'm just going to get it

passively. I'm not going to find another fund after spending three years and being down. So value funds have just absolutely killed people in the spending three years and being down. So value funds have just absolutely killed people in the last three years while the market has, for the most part, been rallying. And even if an investor is going to stick with value, and when I say an investor, I could be talking about an individual or a financial advisor, like an intermediary who's picking funds. That person might say, I'm not giving up on value investing, but I'm not going to sit here and pay one and a half percent for value when I can just get it for nine basis points for my shares or Vanguard. And that way, if value continues to underperform, at least the meter is not running. And I'm not just paying expenses to somebody who's going to underperform for three years. So that mentality, I think, helps explain why after big negative

market events like 2008 or like what we saw this spring when the pandemic started, people, they change it up. And what ends up happening, according to my friend Dave Nodig, is almost always the money that leaves these active funds, it finds its way to passive, finds its way to indexes. So this year in particular, with the distance between value versus growth, I mean, it's just this yawning gap between the two things. And I just think people that stick with value are going to look for a cheaper way to stick with it. And then people that don't care, value, growth, blend, whatever, same thing. Those people are going to find index vehicles, probably ETFs as they come out of these underperforming funds that they don't have a tax consequence for selling. So look for

more of the same, possibly even accelerated. Last thing I want to do before we get to our guests this week, this is a wild story. So my friend Kate Kelly at the New York Times broke this, and it seems to be a big topic of conversation over the last couple of days. Basically, in February, while White House officials, Larry Kudlow in particular, were going out and saying that we have this coronavirus thing airtight,

like it's no big deal, we're on top of it. While they were doing that publicly, like Larry Kudlow came out and did that on CNBC, privately, they were speaking with think tanks and like these Republican or conservative research organizations who are mostly donors, big money donors are involved with things like the Hoover Institute and a lot of these types of organizations. So privately, they were telling people within these think tanks and research groups and lobbying groups, they were like, look, we don't really know how bad this thing is.

We're not sure. Which is the truth. How could anyone know, right? And this is no disrespect to Larry Kudlow. I've got a good relationship with Larry. I've known him for years. Larry's not a scientist. So if he's going on CNBC and saying airtight and you're taking that as gospel, I mean, I have to ask you, what have you been hitting the head with a hammer? What the hell is wrong with you? Larry Kudlow doesn't know anything about the science. He's not an epidemiologist. Larry Kudlow is a former Wall Street employed economist who went on to become a television personality who is now serving as an economic advisor to the White House. And if you're not clear, he's not actually giving economic advice in the White House

because I know he hates tariffs and the president didn't listen to a word he had to say about them. So he's not really giving advice. What he's doing is he is coming out anytime there's a major economic data release, like a jobs number or a GDP number or whatever. And he is explaining to the media how Donald Trump brought that wonderful thing about. That's his job. There's nothing wrong with that. I'm not poking fun. Maybe one day I'll have that job for some administration, right? It's okay. It's okay. Somebody's got to do it, right? And Obama had Austin Goolsbee and every president has somebody in that role.

Okay. And I think Gary Cohen was doing this job before Larry Kudlow, another person who Trump wasn't listening to. So Larry Kudlow's job is to come out and say, look at this incredible economy we have. That's what he does. He's also there to make sure the stock market stays calm because his boss is fixated on the Dow Jones like no president ever before in history. So he comes out there and kind of cools people off when they start panicking about like a down stock market or whatever. Okay, fine. So he comes out on TV in February and let's give him the benefit of the doubt.

To the best of his knowledge, we're going to contain this coronavirus thing, right? I would guess that he thinks that's true. And people told him and he trusts those people. So he says that. And then in this article, they're saying like, all right, then they're a little bit less sure of themselves in this Hoover Institute meeting than they are on TV. No shit. And some people that are at these private meetings start sending emails describing what's really being discussed behind the scenes. They're sending these emails to hedge funds. You don't say. And David Tepper is part of the scenes. They're sending these emails to hedge funds. You don't say. And David Tepper is part of the article. And he's like now a family office, not even really a hedge

fund. He owns the Panthers. And I think he's focusing on football. But whatever. He's a multi-billionaire investor. So it's his right to receive briefings from events that people attend. It's not inside information. Some people have better, more accurate information about the pandemic than others. This is life. The way to think about a pandemic is it's a force of nature. It's like saying somebody had a better Intel on a hurricane than someone else. Yes, because some people make investments in technology and relationships and they get information faster

and they process it better and they're just smarter than you. That's the reality. That's what the money is for. You ever hear this term where people say something is a game of cumulative advantage? Okay. Investing is a game of cumulative advantage in one specific way. If you're already a multi-billionaire and you run a successful hedge fund and you've got 30 years of experience on Wall street and connections and contacts and people want to be on the phone with you and want to be in meetings with you and want to be important to you both for money and for the optics of, Hey, I talked to David Tepper, right? Like that's going

to be a thing that you can use to your advantage. If you're guy or that girl. If you've built that reputation and that social capital and that pocketbook, you now have a cumulative advantage over other investors who have not built that. And as a result, you're going to get an emailed heads up from somebody who's sitting in on a think tank and hearing a more in-depth, some would say more honest version of what a White House advisor had to say about a pandemic or about the damage a hurricane's about to do or about the presence of Area 51 in Arizona and what's going to happen when the world finds out that we actually have alien technology or whatever, right? You're going to get just a little bit of a better glimpse. It's totally fine. It's above

board. It's legal. And if you're mad about this, you need to grow up. How do you think it works? Rich people have the information first and they have a better version of the information and they're better. If they're professional investors, they're better at figuring out what to do with it. It's how it works. It always has. This predates hedge funds. Wealthy people have always had faster and better information. There was an episode during the Napoleonic Wars where Napoleon was finally defeated at Waterloo and Nathan Meyer Rothschild, who was, I guess, the equivalent of a billionaire hedge fund manager in America today. But this was the Rothschild or some say Rothschild banking dynasty. And Nathan was very clever.

He had somebody immediately following Napoleon's defeat at Waterloo. He had somebody jump in a boat or connect a message to a carrier pigeon or whatever. He got that information in London or in England before anyone else. He knew before the British cabinet that Napoleon lost and the Brits won. And here's what this clever son of a bitch did with that information. Back then, there was no stock market. There was a bond market. So you basically could buy and sell what they called consoles.

Consoles were British government bonds. And you would buy them if things were looking good for the empire, right? And you would sell them if things were looking good for the empire, right? And you would sell them if things were looking bad. So you had speculators buying and selling the consolidated debt of the British government or consoles. Okay. So just think about that as a stand-in for the stock market. So Rothschild gets this information.

He runs right to the exchange in London where people are speculating in British consoles. And listen to what this guy does. You would think he starts buying, right? You would be wrong. This is next level shit. He sells. He starts dumping whatever British bonds he has. And people looked at that and they said, well, you know Rothschild knows. You know this guy knows what's going on. So if he's dumping, I'm dumping. He causes a panic in the British console market first. He gets everybody to dump, which creates a huge opportunity to come in and sweep up all these consoles at very, very low prices. And then he starts to buy and buy and buy and everyone else starts to buy.

And then he starts to buy and buy and buy and everyone else starts to buy. And then the news trickles in that Napoleon has been defeated. And I don't know if they were called the Allied powers, but all of Europe, including England, that's been a raid against Napoleon and France have been victorious and the console market explodes. been victorious and the console market explodes. And they say that this was one of the biggest windfalls in the history of trading. I don't know how you'd quantify that. But the point is, this is a very old, old concept, a very old conceit that there are going to be people who have information faster than you and know what to do with it and are in a position to do something with it that's beyond the position that you're in, you're going to have to be okay with that. You're going to have

to be okay with that. That's not necessary to be a successful investor. You are not David Tepper, right? Most likely you're not. Dave, if you're listening, thanks for listening. Most of you aren't. I'm not, okay? It's unnecessary. So you can't let that kind of thing get you angry. You can't start screaming, oh, the investment markets are rigged. Well, if they're rigged because of that coming to light, then my friends, they've always been rigged and they always will be. This is just a fact of life. All right. That's all I want to say on that topic. We're going to talk to Ben Carlson. Ben is the head of institutional asset management at my firm, Red Holtz Wealth. He did this really great post this week about

how money losing companies, let's call them the fast leads of the world, have been the best performing stocks and how completely on its head, the whole paradigm of profits and how investors think about profits, how that's been flipped completely on its head. Ben is just absolutely the man. And then after that, very special guest, Desarte Yarnway of the Berknell Financial Group. Desarte is killing it right now. He's got three books out. He's got his own podcast. He's got a fast-growing wealth management firm that he founded out in San Francisco. He's done all of these things before the age of 30, and he is a first-generation American in his family. So you are going to absolutely love this conversation that Desarte and I had about spending your time and energy and capital on the things you personally value.

He's got an amazing story. I'm so proud of all of his accomplishments just in the last couple of years since I met him for the first time. So you're going to fall in love with Desarte and what he's building. So we're going to do Ben. We're going to do Desarte. Stick around. We'll do the disclaimer right now. And then we're going to tap in. Welcome to The Compound Show with downtown Josh Brown. Josh is the CEO of Ritholtz Wealth Management. All opinions expressed by Josh or any podcast guest are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritholtz

Wealth Management may maintain positions in the securities discussed in this podcast. Hey, so I'm here with Ben Carlson. Ben writes A Wealth of Common Sense. We work together at RWM and you're probably listening to Animal Spirits. Ben is one half of the duo with Michael Batnick and you guys have been at it, is it four years yet? Is it three years? Three years and change, I guess, yeah. All right. And you guys passed 5 million downloads this summer, which I'm still blown away by. It's definitely my favorite podcast. So congrats.

What's going on lately? You guys talked to Burton Malkiel, the Efficient Markets, I guess, creator of the efficient markets concept? 88 years old and still able to anger technical analysts, which is pretty impressive. Yeah, he crushed it on your podcast. He was sharp as a tack. Yeah, he still got it. And yeah, he wrote the book in 1973. And the fact that he basically laid out the entire indexing thing, and it happened exactly as he called it. It's pretty amazing.

What kind of feedback did you get for that? People love it. I mean, everyone said that's one of the first booksing thing. And it happened exactly as he called it. It's pretty amazing. What kind of feedback did you get for that? People love it. I mean, everyone said that's one of the first books I read. I was surprised at the amount of feedback because there were so many people, especially in the industry, who said, that's one of the first books I read that the light bulb went off. I understood how I'm supposed to invest. So you did a thing this week that I don't want to say it would be an argument against markets being efficient. But you looked at why so many unprofitable companies are the best performing stocks this year. And you were inspired by a conversation between Barry and Joel Greenblatt recently. recently, but I think everyone has picked up on this phenomenon to some extent, which is that earnings per share had absolutely nothing to do with whether or not a stock went up this year. And in fact, it might've been the worst possible thing you could be focused on.

If you just focused on revenue growth or forward-looking price to sales or whatever, you probably made a lot of money this year. So is that your big takeaway so far? I guess we're 10 months through the year at this point. You almost have to give investors credit that they're thinking and acting long-term for some of these companies. And obviously it's the idea that these software companies are eating the world. I have a friend who does global sales for SaaS business. And he was telling me a couple of weeks ago, they have 80 to 90% retention on clients because once they get them to sign up and he was explaining it like an annuity, which is kind of how Ben Thompson at Stratechery explains it. And the idea is with a company like

Snowflake, people say it lost $180 million in the last year, last quarter. How could it be worth $60 billion after an IPO? And the idea is they're spending money to get those clients in. And once they have them, they're there for a long time and they are essentially an annuity stream. And so I looked at the numbers and the Russell 3000, I found over 400 stocks that have lost money over their last annual report, no net income or negative net income, the average return of those 416 companies was close to 60%. The median was 20%. And 76 of them were up 100% or more. So one out of five losing companies has gained 100% or more this year. And that's versus the S&P,

which is up what, seven, six? Something like that. Yeah. It's insane. So you have more than a hundred companies that lost money this year on a gap profitability basis, right? Have doubled in price. So like, if you're like saying like, what's the right pond to fish in this year, the right pond is the one that's packed with companies that are telling a story about sales growth to the street and not even attempting to earn money for the time being. Is that right? Yeah. I think there's like three ways to look at this. One is a lot of people that are from the old school will say this is ridiculous.

This is 1999. Everything is frothy. This makes no sense. These companies are going to get theirs. And of course, companies like Amazon have shown that that's just not the case because those companies in the late 90s really didn't have future revenues coming in. They had nothing. These companies are different. Another one is if people on the tech side say, well, software is eating the world, so this makes sense. We're going to find the next Amazons.

I tend to fall in the third group, which is some of these companies are going to be wildly successful. They're sure not all going to be Amazon. And so the middle ground is what expectations are being built in for these future revenue streams and how badly are those expectations going to get taken out of whack? So they don't have to be Amazon. They just have to have this Amazon-like allure to the investor class, the investor base. They have to have the investor base believe that, trust us, the worst thing we could do right now

is try to eke out a profit margin. The best thing we could do is 10x the amount of customers we have. And then when we're ready to pull that lever, we'll do so. So they don't have to quite become Amazon and that ubiquitous and that large. Salesforce is probably a better analog for these SaaS businesses, where Salesforce just came along and said, we're just going to pile up clients that pay us on a regular basis. It'll cost us a lot of money in SG&A or whatever to get those clients. But once we do, they're going to stay with us. And we're Salesforce customers. We can't move. Yeah, that's the problem. You're

stuck once you sign up for them. And I mean, a lot of these CEOs should probably be sending Bezos a Christmas card every year because he was the one who initially talked these investors and analysts into thinking and acting for the long term like this. And this is something that everyone always complains investors are so short-sighted and never think about the future. But this is looking past the initial valley of spending and getting long term. So I guess, again, the other side of this is how much of this growth is being priced up because interest rates are so low. And thinking if interest rates are staying low forever, then it's worth paying for this much growth.

Yeah. So like – and Bezos learned this from John Malone because really the way that cable conglomerate was assembled in the 70s and 80s, the premise was we're never going to earn money. The worst thing that we could do is earn money. Every time we have extra money, we're going to use that to buy more cable customers. And he actually said, I'd rather pay debt than pay taxes on profits. So they never had any profits. And then one day he sold the whole thing, maybe to AT&T or whoever he sold it to. And he was right. And he did that a generation before Bezos.

There's always been some version of that. Now I think there are so many companies pursuing the same thing. And this is what I wanted to ask you. So the premise on Snowflake is that these customers are basically a future annuity. So right now it's a land grab and you have to get as many of these customers as you can to agree to store their data in your warehouse. And then once you have established yourself as the dominant company that does that, profitability will follow. So they're basically saying, this is the total addressable market. This is how much all of the companies in the world

are going to spend on data. And we're going to try to get 10% of that or 20% of that or whatever. The problem with these TAM stories, total addressable market, is you have 10 companies come public in a six of software companies, SaaS companies that all think the same opportunity is going to be theirs and they want to all win, right? Right. And investors probably think the same thing. Well, I'm betting on my horse because that's going to be the one that's going to take it. And, I mean, it's the Shark Tank thing where you tell Mark Cuban, if I just get 1% of this market, I'm worth billions, or maybe these investors want trillions, I don't know. But I guess that's the idea. Yeah, that there's only so much room for all this stuff to work. And then

you have to price in future competition as well. I guess that the barriers to entry are lower than ever because you don't need to invest a lot upfront to get some of these companies off the ground. Right. Do you think there's a lot of investors that are sitting with like a portfolio that's almost all SaaS companies or high-flying software stocks? Like, do you think that that's what a lot of the younger investors are doing? I do, but I don't know how to prove it. But I do think that there are a lot of people just exclusively involved in these names. We have, it's funny because sometimes people come to us like they're, we're their financial that there are a lot of people just exclusively involved in these names? It's funny because sometimes people come to us like we're their financial therapists.

And especially podcast listeners, they tell us, here's my portfolio. What do you think of my seven companies I own? And they're super worried because it's so concentrated. And they are all tech names when they share those with us. And it's almost impossible to get out of those names because they've been doing so well. And yeah, you wonder if people have a quick trigger finger on some of these because they have such huge gains embedded. If something ever happens and the cascading inserts selling that these people get out because they've, you know, what is it to them if they already have hundreds of percentage of gains in these stocks? Right. It's almost like the mentality of playing with the house's money. Like if you're in Zoom and it goes up 600% and you say to yourself, well, I won't get out at the top, but if it falls like 20% from the high, I'll sell. And so what? I'll still have all this money that I made.

The only problem with that line of thinking is you now have the most dollars in it than you've ever had. Right. And that's a problem. People don't know how to rebalance out of these huge positions that they become 20, 40, 60% of a portfolio. And no one has a plan on the other side of that. It's a good problem to have, but people don't think through that stuff very much.

Also, it's not clear what the catalyst is going to be. That's going to change the mindset of investors and really put an end to this, um, to this moment where people just, all they want to know is what's the growth rate and they're paying 30, 40 times sales for these stocks. Um, and they, and they say, well, it's going to be justified someday because look how fast they're growing sales. What, what makes that end? Is it something sudden or is it a gradual shift in mindset that is imperceptible while it's taking place? I wonder if it's more of a macro thing, especially if all this government spending leads to a World War II level spike in inflation where we see this short-term blip of all of a

sudden we get 6%, 8%, 10% inflation, even for a short period of time. And it erodes some of that future growth. Maybe that's the kind of thing that gets people to change their mind. But it's hard because some of these people are entrenched in this idea of the technology names. And that's all there is. It's not on the same level as something like Bitcoin. But don't you think that the technology believers have become to understand that that's all they're going to invest in in some ways?

I do think there's a mentality where they say, well, why would I waste – I only have X dollars in capital to invest. Why would I put any of those dollars into a bank stock or an energy stock or a transportation stock or anything that doesn't have the same potential as technology. And you said to these people in January, well, second level thinking, like Howard Marks, like, yes, those companies that you're obsessed with, they are going to grow really fast. But the second level thinking is everyone knows they're going to grow really fast. really fast. But the second level thinking is everyone knows they're going to grow really fast. That actually would not have helped anyone, that kind of walking people through that. This year, if you just followed first level thinking and you said, what are the fastest growing, most popular stocks? I'm going to buy those. You crushed everybody. So it's really hard

to talk people out of that now. Well, the one that I was looking at this week, so Goldman Sachs, since October 2007, so 13 years, is essentially flat. And that includes dividends, the stock. And that's a company that market cap-wise is about the same size as Uber or Snowflake, a little bit bigger, $70 billion versus $65 and $60 billion. bit bigger, $70 billion versus $65 and $60 billion. So it is hard to say. A lot of these companies have been cheap fundamentally, if you look at old school metrics, for a long, long time and just gone nowhere. And so I don't know, do these old school financials and energy companies, are they just railroads that more or less go away? Or do they become so cheap fundamentally eventually that people decide to reallocate into them? It hasn't happened yet. You're right. What the catalyst is,

it's hard to see what that could be. I just saw that PayPal's market cap is $240 billion and Wells Fargo or Bank of America is under $200 billion. Could Bank of America shrink to $100 billion and then get bought out by PayPal? I mean this is like literally – this is a question that you almost have to ask right now, like these types of questions. The longer this goes on, the more realistic some of these outrageous ideas become. I was also thinking – and the shift has been underway for a while now. I was also thinking, and the shift has been underway for a while now, how do you, as Wall Street, come to these Ivy League universities, Stanford and Harvard, and Stanford's not an Ivy League, but close enough, and get the talent to come if your stock price is going nowhere? And they see these technology companies handing out stock shares to their employees and going nuts. How do they continue to attract the talent that they want and not have all the smartest people in the country go to the tech giants. I think it's very hard. Imagine the guy from SoFi comes to your campus

and he pitches you right after the guy from Goldman Sachs. And the guy from SoFi says, we have 1000% revenue growth over the last five years. And we haven't even come public yet. But if you start working here now, you'll get stock and you'll be part of the IPO. And we just threw our name on the LA Rams new stadium. And we're having parties where Halsey and Chainsmokers come and perform and blah, blah, blah. And then the guy from Goldman Sachs, like, well, we went public already like 20 years ago. And the stock price hasn't moved in 20 years. And this is basically, you know, we went public already like 20 years ago and the stock price hasn't moved in 20 years. And this is basically, you know, we're Goldman.

Which one resonates with you more? Right. Maybe that's part of it is that the tech companies are turning into financials and eventually some regulation comes down the pipeline and either further entrenches the biggest names. And so some of these competitors and also rants can't really get to that level or they somehow break up the big ones. And maybe that's the biggest risk at this point is just the government. Yeah. One other thing I was thinking about is that what put a stop to this new era of thinking in 2000 was actually a Barron's article. It was the cover story. And if you actually look at when this article came out, you can pretty much say this was the thing that topped the NASDAQ companies are burning, and here's how many months they have at this rate to survive. So they totally shifted the focus from, look how

absurd these valuations are, and they changed it to, hey, this company's going to run out of money in six months. This one in three months at the rate that they're burning. I don't think that these companies that we're talking about are cash burn stories. They're really just like reinvestment stories because they're all like close to profitable. And most of them, if they stop spending right now, could get to profitability pretty fast. Like we're seeing Uber trying to do that. So I think it's somewhat different, but something like that could all of think it's somewhat different, but something like that could all of a sudden spook investors, right? Yeah, that makes sense. And I think the other thing is just if we have a complete sea change, if we get back to normal post-vaccine, post-COVID

world, if that happens and people say, you know what? I'm reallocating out of these tech stocks that have been wonderful to me through this whole thing. And I'm betting on a more normal world. And I think that could be the kind of thing that flips the switch where people say, all right, it's time to go back into small caps. These are the things that have gotten just crushed because things are now different. And that's a sentiment change. Why are you going to sell a company that you think is going to grow sales by 30% for the next three years and buy a hotel chain that in a great year sees like 5% growth in revenue? But what I would say to that person is don't worry about the next three years. Just think about one year.

What are the comps for Live Nation going to be in 2021 versus 2020? What are the comps for Marriott going to be the 12 months following a vaccine versus the 12 months leading up to it? You're talking about companies that could easily have 100% revenue growth. Easily. They're going from zero in some cases. So that's the answer I would give investors about, you know, is that trade worth thinking about? I'm thinking about it all the time. All right.

So we want people to listen to Animal Spirits. We want people to check out A Wealth of Common Sense. And one last thing I wanted to hit you with. I had this idea. I was talking to Batnick about it. I haven't even had a second to bring it to you. Did you see that? Speaking of unprofitable tech stocks, did you see that Invesco just launched the NASDAQ 100 Junior?

I sent off a sarcastic slap to Michael saying this is the top. So it's the triple QJ. It's QQQJ. And the J is for junior varsity. It's like the Mouseketeers club. I'm surprised it almost took this long, but it seems like the NASDAQ 100 is becoming its own core holding for people. And maybe that's something people look back on.

Yeah. For some people it is. Yeah. I'm surprised it took that long, but yeah, that would make a good headline in the future if that was the, if that was the top, I suppose. Oh, wait. So, but, so let me pitch you my thing. Cause I, we can really put a top in if we want to.

So the QQQJ is going to be the 100 to 200 names, right? So the triple Q's is the top 100 stocks. This is going to be 101 to 200. And you know some of the companies. It's not all tiny companies and it's not all tech. There's consumer discretionary. There's some retail. There's some other stuff in there. It's mostly tech. My idea was you, myself, Michael, and maybe one other person, maybe we get somebody from outside the firm. We try to draft the five names in that 101 to 200 index and hold them for six months and see who wins. And maybe we allow a trade. So it's like rotisserie. It's a rotisserie league. So you got to draft, you get to pick your five. And I like we just check in with each other every once in a while and see who's up, who's down.

And maybe we even allow a trade or two. See who makes the varsity team potentially. All right. Well, that's the point. Because if you pick one of the names that goes from the NASDAQ Junior up to the big leagues, it's kind of cool. the Nasdaq Junior up to the big leagues. It's kind of cool. And then the other thing is like, it really forces you to learn about that next tier of companies that ordinarily, like most people, don't pay any attention to or don't have that much time to pay attention to. But these are the hottest stocks in the market right now. So I was thinking about that.

That product will be huge, almost assuredly. I think so. We'll see what the flows are. I think it just came out this week. I would imagine Nautical tell us pretty soon that the flows were bananas. All right. So everybody check out Animal Spirits if you haven't already. Thanks so much, Ben, for joining us.

I'll let you know if I want to go forward with this rotisserie idea and see what your thoughts are on that. Next Animal Spirits comes out next Wednesday, or do you guys have a Friday episode this week? Yellow Friday, where we do a talk or book with someone looking at actually picking new ETFs. All right, cool. We'll be listening. I'll talk to you later. Hey, it's Josh. My guest today is Desarte Yarnway. Desarte is, in my opinion,

one of the most inspiring and exciting entrepreneurs within the financial advisory space. He's been making a name for himself. He's got multiple books, launched his own firm. We'll get into why his story is so inspiring. And I'm just so happy to have you here. Thank you so much. Josh, it was an honor. When I saw that email come through, I was like, this is incredible. So I'm happy to be here. Awesome. So great. So first of all, you launched a firm called Berknell Financial Group. And you guys were in the Bay Area? I'm currently in Princeton, New Jersey, but most of my clientele is in the Bay. Okay.

And how long did you live there before coming back east? I lived in the Bay all my life, man. I went to school there. My parents immigrated to the Bay Area before I was born, obviously, right? I went to college there at the University of California, Berkeley, where I was a varsity football player. Kind of migrated around in the financial services space. So I did a couple of years in New York, a couple of years in DC, and then I made my way back to San Francisco. Okay. How are things in Princeton? And do you

miss being in San Francisco? Yes, I do. And fall's coming, right? So obviously the leaves are changing. It's getting cold. This is the time when I miss California, but I just got engaged last week. Congratulations. And my lady's here. So it's a great place to be. Okay. And these days, at least this is what I find. And I would imagine it's similar for you. These days, it matters less and less where you are physically located.

Everyone is building, right? Everyone's building businesses with investors all over the country. And we're forced to do things remotely anyway. So to me, it matters less and less. That's the experience that you've had as well, right? Absolutely. And the pandemic has kind of pushed that agenda, right? It's forced the boomers to get with the learning curve, right? And it's just validated what us millennials were already trying to do. We were already trying to build practices that were lifestyle practices, giving us the ability to travel, right? Be with our growing families and do things from the convenience of our homes. And I just think that it's expedited the process. Josh, they say crisis promotes change, right? And I think that's essentially forget if I forget if this number is still is actual, but I think we've met less than half of our clients and we're twelve hundred households. We've been at it for a while, you know, and we onboard clients in every state in the country.

And if we can meet, great. But until then, we're working together and we're getting to know you virtually and it's just as good. It's crazy because I've sat down with more of my clients through the pandemic than I did when I had a physical office in San Francisco. When I had that office, I thought that I was young. I thought that for me to have credibility, I would need a physical space so they can come in and see the pictures of me and my fiance now, right? And to just feel that this business was stable, me and my fiance now, right? And to just feel that this business was stable, but nobody came. I did a study and I think I had about 700, 734 meetings, quote unquote. 38 of those meetings were in office. The rest were over the phone, coffee shops in San Francisco, or me going to their homes, right? Through the pandemic, I've met with, I would say three fourths of the households that I manage here, right? And that's been amazing. I just gave a talk to a financial planning group in England yesterday, obviously virtually.

But the theme was like building a virtual financial planning practice. And one of the things I said that I thought would be more controversial than it turned out to be when I heard myself say it out loud. than it turned out to be when I heard myself say it out loud. But in my PowerPoint deck, I was like, clients are going to view it as more of an inconvenience than anything to have to go see you. Like they will like to see you perhaps, but like it's no longer going to be a given that everyone wants that. And when I said it, it just sounded right. And that's the experience that we've all had even prior to the pandemic. So I think we're just like, we're just proving that again and again with how much stuff we've been able to move virtually. So you're in a really interesting place in your life in that.

And I told you this over email. You seem to have figured out a lot more about what you want for your career and what to do with money and how to help others with money. You seem to have figured that stuff out in your 20s. So either I was a late bloomer in that regard compared to you, or you've got more wisdom for your age than most people have, or some combination of that. How did you get so mature about money and so comfortable with these concepts at such a young age? Because I'm really jealous. It took me a long time to get to where you are. I think that I come from a family of quote unquote have-nots, right? My parents were born

in Liberia, which is a war-torn country. It's faced 14 years of civil war. My mom specifically was born on a rubber plantation. It's an old story or, you know, story. Firestone tires brought a thousand acres of land in one of the richest rubber like fields in the, in the world, essentially for 10 cents an acre. And my mom was one of those kids that were harvesting the rubber from the trees, right? Having those early beginnings, we dream about having money, right? We dream about having a better lifestyle, seeing the pain, the devastation, hearing about some of your family or friends get killed in the war, right? Was something that has always rung a bell

to me. Like if I had money, what would I do to change the world, right? If I had the ability to teach somebody to do better or teach a man to fish, what would I tell them, right? So this is something that has always kind of been the underlying theme of my life. I think that I played college football because that was the ticket. Like if I could do this, right, I'll be able to help so many people. And it didn't work out. I got injured. The story is long. Right. But I think with that kind of backdrop, it allowed me to think about what impact could I use this tool of money for? And that's kind of what I've done over the course of the last five years and running Birkenau Financial Group.

So learning about money was less of a luxury and more of almost like an essential ingredient to what you wanted for yourself. And you knew that really early. Absolutely. And then along the lines, I was sitting next to people in class that just had different experiences than me, right? Like, we're going to the Hamptons for our summer vacation from California. Or we're going to Cabo. Or we're doing this. You know what I mean?

I'm like, how? Oh, my dad started a business when he was 24, and he's built it up to this level, right? So I started to see the drivers for wealth, right? How they would save, how they would spend, what they would invest in, creating companies. And I tried to mimic that, right? Because nobody around me did that. So I thought of myself as the generational curse breaker in health and wealth and everything in between. So you talk a lot about not just financial planning, but you talk a lot about entrepreneurship and I listened to your podcast. It's called Young Money. And how long has that been going for? It's

a couple of years now? Two years. Yeah. A little called Young Money. And how long has that been going for? It's a couple of years now? Two years. Yeah. A little over two years. It's a grind, right? It is. But you do a great job with that. And you talk a lot about entrepreneurship. And that seems to be like something that's got a big priority for you in your own life. And I think a lot of your friends and people you know, and you talk a lot about helping other entrepreneurs and making investments in them and friends of yours. Why is that so important to you? Is that because you witnessed that being the ticket to wealth

for the people that you met in college that had that different experience from you? What they all had in common was there was a lot of entrepreneurship in their families? experience from you, what they all had in common was there was a lot of entrepreneurship in their families? Yeah, yeah. Part of it is that freedom, right? And I think that for me, my dad, and I talk about this in the project that we're working on, right? My dad passed away in 2003 of terminal prostate cancer. I was 12 years old and he never watched me play a football game. I was an All-American in high school. I was a little chubby running back in peewee football, but he never saw me play. He was working. He was working. He was working to provide for my five sisters and I and all the refugees that he brought over to the states from the Civil War in Liberia. Right. Just to provide. So when I think of entrepreneurship, yes, I think about wealth building.

But I think about the freedom in time, which is to me the most valuable asset that I have. self-building, but I think about the freedom in time, which is to me the most valuable asset that I have, right? To say, hey, I can be there for life's precious moments, right? I can pour into my future wife, my future kids, the community that I serve, right? And to be a living, breathing example, because I have the time based on growing these businesses. So for me, wealth, it depends on what your definition of wealth is, but with that freedom and time and how I spend that time, that currency, I'm able to have bigger impact than I would just if I had a couple million dollars in an investment account. Does that impact the way that you've built your financial advisory practice and the types of clients that you bring on, that concept of being in control of your time? concept of being in control of your time? Absolutely. If I was to say what our niche would be, it would be that generational curse breaker or that person seeking to design their own wealth, right? It's a mindset. It's a personality. It's even impact when I started

to build my firm, right? I was 24 years old when I started Berknell. I didn't know anything about running a business, right? I'll tell you before that. Funny story. In like third grade, we had a general store in our school and they were selling pencils for like 75 cents a pencil. This is back in like the 90s. So I'm like, mom, let me get five dollars. Let me go to Walgreens and get a 20 pack of pencils. Yeah, I'll sell them for 25 cents. And this is just so I can eat junk food because they didn't let me eat junk food. So I'm like, if I make my own money off these pencils, you got to let me go get some junk food. Right. And that was like my first business. What was your go-to? What kind of junk food were you looking for at that age? I don't know. I looked like a McDonald's kid. Give me the toy. Give me the, you know, the thing. So I would go do that. And every week I would come

back home with $10, $15, $20, because I've taken 20 packs of pencils and I began to sell them to the kids at school for less than the general store. Right. So nobody told you to do that. You figured it out. You saw it with, you saw it with your own eyes and put two and two together and figure that out. You know, Buffett tells like that exact same story, right? Not with, not with pencils, but it's like almost identical. I forget what he was selling. Yeah, yeah. I mean, I'm a huge follower of Buffett. Yeah.

Arc icons, Benjamin Graham, right? But essentially, that's what I did. Entrepreneurship has been in my blood for a long time. But I started my firm early so I can save that time, right? Like I'm 24. If I give it a try for five years, six years, and I turn 30 and it didn't work, I'll go to a firm and I'll have more experience. I have more value. I have more things to give to that place because I tried to do this by myself. And that's what I did. So I think back to your question,

the idea of owning your time, being a generational curse breaker, right? Designing your wealth in which I talk about in Young Money as I'm living it, right? I want to be a living, breathing example for my clients, for my community, for my household. I think that's such a great point that you made. The experience that you have, even starting a business that doesn't work out, if you're going to be an advisor to other business owners and you've lived it, like positively or negatively, I could see value in both. But you're talking to a business owner and you yourself are a business owner. That's a pretty powerful connection that you'll have with those potential clients right off the bat that maybe a lot of financial advisors wouldn't necessarily have. So that's a really prescient thing that

you realized early on. But you don't need plan B because, because it is working. So tell us about, tell us about your practice today. Like what's the most, what's the most rewarding part of, of running your own firm and giving advice the way you want to give it? Yeah. Before we get there, I think what you said was spot on, right? Being able to live, breathe the experience. We talk about in your blog post, how I invest my money. You said that, hey, I have the same stuff that my clients have for my retirement. Right. That's huge. That's a huge value add. That's a huge piece of comfort for the people that are trusting you with their money. Right. So for me and my content creation, I decided to write about the life stages that I am in for those prospective clients that are in the exact same life stage.

So the first book, Dating Benji, straight talk on finding your personality with money. I wrote about different money personalities because I could see myself being each of these things at certain times. The big spender, the conservative. Right. These different personalities. I knew my friends felt the same way. The next book, Young Money, Four Proven Actions to Design Your Wealth. Now that I'm wise, I've made some mistakes. What are things that I can do to design the lifestyle that I want to live? And then Pay Me In Equity. As a business owner, as somebody that may be working in tech, the game is about ownership, right? Assets minus liabilities, net worth. How can you understand that concept? So throughout my business and with the content that I create, I want to make sure that people

know that I'm in lockstep with them. I'm not writing any retirement books soon, to say the least, but I'm there. And I think that it gives people comfort and trust by being in that same life stage. Yes, you're right. You're interacting with people who are working for the next generation of corporations and they're being paid in stock. the next generation of corporations and they're being paid in stock and your biggest asset is going to end up being the stock that you own in your own company.

So you have that in common from, from the jump and you could explain those concepts to them. And I do agree with you. There is a mindset among young workers today that maybe wasn't as prevalent even 20 years ago about, you know, I, I want part of my compensation to be an equity. I understand that means I have to wait to spend it, but all of the wealth around us has been created by people that had that mentality. And that's who owns, that's who owns America. That's who owns the real estate. That's who

owns the corporations, the cash flows, the banks. It's people that were willing to spend later and let that equity accumulate. Yeah. Now, Josh, there is a demographic of people that are overlooked and underserved who never get that memo, right? So now it's up to advisors like myself, right? People like Tyrone Ross to really take the information, a Robin Hood of sorts. Right. And give it to the demographic who might never hear this, whose mom and dad may just didn't know to talk about this at the dinner table. Right. So I think that is why my job as an advisor is even more important. That's why I would make the podcast and run it for two years or write the blogs every week, right? As a solopreneur, because people need to hear this. Now you talk about the most,

back to your question about the most fulfilling thing is when people get this and it clicks, right? Like I've gotten emails and people have been like, I've been listening to your podcast for six months and it's changed my life. They're not my clients, right? I might not ever meet them. Not yet, but you've inspired them. Exactly. I might not change the world, but I might touch the heart that might change the world, right? So essentially, that's the biggest joy for me is just saying, hey, I've touched somebody. And because of that, they're going to change the financial trajectory of their family.

I do think that. So you're 28, 29? I just turned 29 in June. Okay. So I think your generation has this huge advantage over prior generation. Look, in many ways, they have a lot of headwinds and student loans is the example that most people would cite. But in many ways, you're very advanced in terms of your mentality, your generation about ownership and equity. And I do think that that's generational. And I don't think that people in your generation are as content to just accept a role when they feel like they could be an owner or a boss or a founder.

And I know that like Gen Xers and boomers like laugh at them like, oh, this millennial got a job on Monday and on Tuesday asked why they weren't in charge. I don't know that that's as much of a negative as the reverse would be. Now, I think that's coming from just the culture. So I think I was listening to a podcast about Chris Lighty, who was like one of the biggest rap behind the scenes moguls in the history of music. And like almost every famous rapper, he either signed him or discovered him or her. or her. And he was the first music industry figure to say to the talent, no, no, no, no, don't take a check, take stock. And the 50 cent deal with vitamin water, which I think ended up being worth a billion dollars or something or a hundred million, whatever the number is, a crazy number. But that was like the first time that a musician was put in

a position to have a piece of a company that they themselves would help to build up because of their popularity now we take it for granted like you know you think about how many athletes have uh deals and how many um musicians have deals and now all you read about is venture capital investing by like NBA stars. So I think your generation has grown up with seeing that story again and again and again in their heroes in both sports and pop culture. So you guys have that as an advantage. You have that mentality. Whereas when I was growing up, like nobody was really thinking that way. People were trying to like get a law degree, you know, or get an investment banking job. So, but you see that everywhere you go. And those are your clients, people in their 20s and 30s who have that ownership mentality. What is that like when you're building portfolios with people like that and you're helping them plan their finances? It's good because people have a better idea of what they want, right? They might not know how to get there and that's a value add for us being their advisor, right? But they know what

they want, right? Whereas I feel like maybe even 10, 15 years ago, they were like, I don't know where to start. I don't know what to do. I want to retire. Yeah. Very generic. Yeah. That's the only answer. People are coming to the table. Like I want financial independence. I want to build something that could pay me even if I get fired. Right. I want to own something. Right. These conversations are so rich. Right. Versus the financial advisor. Even when I got into the industry back in 2013, it's super different. Right. And I think something that you spoke to was just normalizing, um, ownership, normalizing equity. That is what I want to continue to do. Right. This should be a normal conversation for every race, color, creed background in the United States of America.

Right. It shouldn't be foreign to anybody. And I think that's slowly happening, as you alluded to. So I hope that's the case. And I wanted to ask you though, is there a trap where, like if you think of the most searched things on, let's say YouTube in terms of the financial industry, one of the terms is passive income. And there's a little bit of a mythology that like, you could have this thing that just pays you in your sleep and not have to put any effort into it. And, you know,

one of the most popular books of our era is, is the four hour work week, uh, Tim Ferriss. And, you know, just this concept that there's something for nothing and you can just own things that pay you and not put in the

work. Do you see people getting caught up in that or not really? I do. I do. Especially folks that don't come from wealth, right? Because they're looking to get out of the situation. So if it sounds good, they're going to give it a try, right? And that's kind of, it's easy. You want to give it a try, but nothing is free. Nothing is easy. And if it's easy, you might as well run the other direction. Right. So I think that it's up to people like you and I to really educate people on the fundamentals on how to build well.

So you said something that I think is really important about how this conversation that we're having about ownership and equity and, and being a boss and being a founder and having a piece of something rather than just taking a salary should not be alien to anyone in the United States in the year 2020. So I agree with that. And I do think that things are changing. And because of what people are seeing in pop culture, they're emulating that. And it's very, very positive. What has this summer been like for you as somebody who's really plugged into what young people are doing and thinking? Do you feel that we've hit some sort of a tipping point in terms of wealth equality or inequality, in terms of social justice? What's your take on the whole situation that we've been in?

It's been a roller coaster for sure. In March, a lot of people panicked, right? I'm just talking about the young clients in the community that I'm very plugged into. For the younger millennial, even my age folks, right? In 2008, we were in high school. So these were our parents' dollars that were at risk, fluctuating. We didn't have a care in the world but to get into university, right? You didn't feel it. Google, right, that are fluctuating. So that fear really changed the minds and hearts of the millennial. Like, wow, this is real. This is not just Robin Hood, throw something at a dart and watch it go up. Right. So that was the first kind of phase. The next phase was instead of getting on somebody's boat, I'm going to build my own raft. Right. And I saw people saying like, hey, my job might not be able to save me if this happens again. I need to double down on my own financial planning, my own life plan, right? And really find the help or figure out how I'm going to do this myself. And I saw that happening a lot, right? So you had people searching to build their own thing, right? Looking to invest intelligently, right? And looking to really seek out the information to design their own lives. That was phase two,

like end of the summer. And I think right now we're all experiencing the lessons of what a recovery looks like, right? Like, man, if I didn't pull out the money, I would be here. You know what I mean? If I didn't panic, I would be here. So we're jotting down those notes. So in the event, the next downturn happens, right? They'll be able to act more wisely. So I'm seeing that within my clients and we're having these conversations like, you were right this our day. I should have just sat, right? I tell them all the time that investors make more money by the soles of their seat than by the soles of their shoes. And it's working. Yeah. So you were talking to investors in that moment who had never been through this before. Not only had they never seen a crash, they'd never seen a recovery. And so you could show them charts, but I find that people have to live

through something to really learn it and myself included. So, but so now we think we're in a recovery, but not everyone's recovering equally. And you probably deal with people that work in all different types of industries. And, you know, with people that work in all different types of industries. And the people that you talk to in San Francisco that are working for Facebook, for example, their experience of the recovery is very different than someone who owns a restaurant. And you've got to be the advisor to both. And one conversation is much more difficult than the other, right? Yeah. I mean, empathy is a gift for advisors, the ability to meet people where they are, right? And the ability to understand

what they're trying to accomplish. And I think too often as advisors, we use numbers as like the direction or the compass for how we serve people. How much do you have in your account? Or like, it's actually doing good. It's up 2% year to date. Like people don't care about that when they feel like their goals and their lives are at risk. So for anybody listening to this, it's about empathy. It's about meeting your clients where they are. And by doing that, you'll have lifelong clients instead of transactional relationships. Right. So if somebody says to you, Desarte, do you think the stock market will recover? What they're really asking is, do you think the things that I want to be able to do, I'll be able to do someday? Like, is my future still on track or not? That's the real question they're asking. Yes. Simply stated, they're asking, will I be okay? that's like maybe the most important question in our profession. And if you've been doing this long

enough, you should have trained yourself to hear it every time you hear most questions. It's like in the background. So people say like, is the stock market over or undervalued? What's the difference? What are you writing a book? I know what you really are concerned about, really concerned about. Is my investment portfolio going to do the job it's supposed to do, you know, for me, right? Yeah. Okay. So you have a chapter in the book that Brian Portnoy and I edited.

We're listed as the authors, but we really didn't write it. We asked the people that we consider to be some of the most interesting and unique and exciting voices in the profession to talk about what they do with their own money. And the premise is like, you know, every time you see somebody like me in the media talking about investing, it's always like, what should other people do? So what, right? So like, then you say, all right, well, what do you do? Like, what do you actually do with your own money? And I don't think anyone's really ever asked a group of financial industry professionals that question before, or turned it into something that would become a book. So this, I think it's unique. I love your chapter because

you get right to the point. And the point that you're making is the intersection of what you value personally, like what's important to you, and then how you want to spend your time. And Carl did this really great illustration that I love. Yeah, yeah. And I think that's, again, to get to that realization as young as you have, and I'm still not there. I still got a schedule loaded up with stuff that I'm just doing, and I'm not even sure why I'm saying yes to it. So I think it's remarkable that you've reached that point. Now, the longer, the further you go in terms of your own entrepreneurship, the harder it's going to be to make certain decisions because you won't always be able to spend all your time doing the things that you value or that you want

because there's going to be this new section of things. It's like, oh, the stuff I kind of have to do. Are you finding that? Are you finding that just yet or not quite? Yeah, yeah. I just got engaged, man. So the world is changing, right? I feel like I'm responsible really for another human being and that's just going to have a ripple effect over the years, right? So that's one part about it. My life is changing with my family and just my household. So that's number one. Number two, big shout to Carl on the illustration. That was great. When you read that chapter, the first line in the book says money and how we use it is just an extension of what we value. Yeah. And I truly believe that where you put your money is what you value, whether that's towards your family, towards stocks, towards spending on luxury items.

These are the things that you value. And me knowing that, especially after devastating loss. Josh, I mean, I lost my dad in 2013. I lost my brother in 2015. My cousin in a car crash in 2016. That's allowed me to realize that we have a finite amount of time on earth. So how you spend this currency, which we call time, is important, right? So the way that I'm going to spend my time and money is going to directly align with our value. And I kind of try to outline that in the book. Even so, I don't want to give away any parts, but I'm like, I spend my money to buy back my time so I can reinvest it in the things that I value, right? So it was a great project. Thank you for

including me on it. I think that readers are going to get something wonderful from it and hopefully from my chapter. But I just want to point people in the right direction that this is bigger than the stock. This is bigger than the stock. This is bigger than thing. That's right. There's so much more to be gained. Do you find that when people come to you and you're talking to educated, hardworking people, do you find that they've even fully accepted that reality yet? How finite their time is and how much of it they're probably spending on things they don't want to really be spending it on? Or do you really have to teach that? Not at all. People don't get it, right? We're so consumed with the day. We never can really

take our head up, lift our head up and look like, where am I going? What am I trying to accomplish? It takes a really disciplined person to breathe. Yeah. And like, just look like, how's my family? How's my life? How's my health? What direction am I going? It takes a disciplined person to do that because you can get lost in the rat race. Right.

So most people, I would say 95% of people are not looking long-term, are not thinking about their legacy, are not trying to create something that's bigger than their nine to five. They're trying to get through the day for the month. Trying to get through the day. Yeah. Get through the day. And I always say that you have to think big and operate small. So when you come from that perspective, like I want to buy my time. I want to be, you know, bigger than, I want to impact so many lives, right? That's the big thing. Now the day is the small steps or the operations that will help me get to that big thing, right? That's the big thing. Now, the day is the small steps or the operations that will help me get to that big thing, right? So I think if people took on that perspective, they'll be

able to have a good balance of the day, right? And the journey. And if you have that good balance, then your goals are going to find you. So I want to say that that perspective makes it so that the people who find you to become their financial advisor are very lucky because you're giving it to them in a very matter of fact way. And you're someone that's had the life experience that's really forced you to learn that. And I think you do a really good job explaining it to people. And as we both know, oftentimes things that you explain to clients have to be re-explained multiple times in different ways for them to really sink in. And that's okay. That's the job. But I think that perspective that you come to the profession with

is so important. And I really appreciate you sharing with us today. Appreciate having you in the book. The book would not be the same without your chapter. It's just, it's so powerful. So I want to say thank you for that. And I want people to check out your podcast. So let's just go through how they can find your stuff. Young Money is the name of the podcast. You're two years in. You're going to keep going with that? Keep going.

We got that. How often are you doing new episodes? So we're switching it up. Next year, we're doing seasons. So we'll do a season of 10 episodes by month, like biweekly for six months. So it's going to be 20 episodes next year coming out. I'm super excited about that. I think people are going to really like it. Very cool. I'll be all over it. And the Berknell Financial Group, and you guys are serving clients nationally.

Yep. National clients. You can find us www.berknell.com. That's B-E-R-K-N-E-L-L.com. And Josh, man, I just want to say thanks. Since I met you and started interacting with you on Twitter, my life has changed. You're doing great work. I respect you, Ritholtz and the whole firm, and I appreciate the opportunity. Great to hear my man. And we'll talk soon. And thanks for coming on. And we'd love to have you back. Everybody follow my man Desarte's stuff. He's killing it. He's going to keep killing it. And just such valuable perspective. All right, we'll talk to you soon. Thanks for listening. Check us out at thecompoundnews.com for daily investing and market insights. You can watch all of our videos at youtube.com slash the compound RWM. Talk to you

next week.