The Iced Coffee Hour - The #1 Investment That Will Make You RICH In 2026! | The Money Guys

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Starting point is 00:00:36 I think we're seeing the consequence of elevated volatility. Because I think anybody can be wealthy, but it's going to require discipline. You live in a less thing you make. You're using that margin to actually create the money that then gets invested. And anybody, if you give it enough time, can be a millionaire. What are some of the biggest mistakes that you've seen people make? Whether you're a 20-year-old or you're a 60-year-old, if you don't have disciplines, it's going to be very, very hard for you to be successful financial.

Starting point is 00:01:00 we see so many professional athletes who sign these huge contracts or these huge salaries and end up broke. Do you think that that's on purpose? Consumption is profitable. Selling you stuff is profitable. It's creating people who are independent and know how money works. It's not as easy. Should investors be worried about how much the market is now dominated by AI? The market has a way, at least in my experience, of making us all, even the smart ones, look like fools.

Starting point is 00:01:30 Brian and both, thank you so much for coming on the iced coffee hour. You guys manage about $2.2 billion worth of money for your clients. You guys are both certified financial planners, CFA, CPA. You guys are the real deal. And at the end of the episode, we want you both to react to Graham and my investment portfolios. I think you guys are going to hate all I'm investing my money. But before we do that, Graham has a question. I want you to react to this clip because you focus a lot on retirement and saving.

Starting point is 00:02:01 And Elon Musk just said that saving for money. retirement right now is pointless. He's exactly what he said. One side recommendation I have is like, don't worry about like squirreling money away for retirement in like 10 or 20 years, it won't matter. Okay. Either we're not going to be here or? It just like you won't need to save for retirement. If any of the things that we've said are true, saving for retirement will be irrelevant. So I think the context by that clip as he was saying that artificial intelligence is going to advance to the point to where there's going to have to be some sort of like basic universal baseline for everyone. And also, I think he, because I've followed enough of what Elon says, is that he thinks

Starting point is 00:02:44 because of all the breakthroughs there are come, is things are going to become so much cheaper. Because they're so efficient. That you're not going to have the need for the way we think about money currently. And so I think when we, if you have my reaction, okay, we could move in that direction and he could absolutely be right. And so what do you end up with? You end up with a lot of people that saved a whole bunch of wealth that were prepared for a thing that perhaps they did not have you prepared for. But he's saying 10 or 20 years on the line. What's the other side of that coin? The other side of the coin is it doesn't manifest exactly the way that he says. The grasshopper did not store up for winter. Winter ended up showing up in 20 years on the road. You're like, whoa, I don't have any money. I don't have any savings. I don't have any retirement. Elon told me I wasn't going to need it, but I got there and now I need it. Which one of those is a worse outcome? I sacrificed a little bit of today that I guess I could have been living it to the full. Or, I actually get to retirement, get to the place where I want to not have to work anymore, and I didn't do the stuff I'm supposed to do to be able to actually retire.

Starting point is 00:03:41 I'll put some context with it is that, now fortunately, and we see it with our clients, too, 80% of millionaires are first generation, but I've been doing wealth management long enough. I've had a few people come across my path to where they're waiting for their parents to die, because they know there's significant wealth when their parents, you know, die and they're going to inherit this money. it's the saddest thing in the world because, you know, do you want to root against your parents? And I think that's what he said, you know, in 10, 20 years, do you really want to kind of lay all of your, it's tying into what Bo's saying. I'm too self-determining with my life. And I also know the secret to success is if you start early and often, time is your most valuable resource.

Starting point is 00:04:26 So maybe get excited about the dream that Elon's putting, but don't build your life off that. Just like I would never tell anybody build off of your parents' inheritance. I don't come from money. Bo doesn't come for money. But it's just a good case study on you need to be more self-determining with your success and be disciplined and make something happen. That sounds like something to kind of get excited for or to fear. But it's more to get people excited.

Starting point is 00:04:52 Elon also has a tendency to really throw the world at you and get you excited. And then it takes a while for it to actually come to you. Well, speaking of savings, we've got some really scary. statistics that just came out a personal savings rate that just hit a low of 4% nearly 40% of Americans have less than $500 in savings 70% of Americans are living paycheck to paycheck Gen Z is at 72% and the average American carries about $65 to $6,700 in credit card debt personally why do you think people are saving so little? Yeah it's I think you can obviously talk about the the outside factors right housing has gotten more expensive

Starting point is 00:05:31 cost of living has gotten more expensive. Inflation is a thing that we have been dealing with of this past couple years. But it's really, really interesting. Even though that savings rate hit quote-unquote an all-time low, it's been low for a long time. That's what I was going to say. It's not like it's like we were saved. The only time in the last 20 years, we've seen an uptick in savings rate, you know what it was? 2020.

Starting point is 00:05:50 It was 2020. It was free money. Because nobody could go out and spend money. And it's amazing how much money you can save when you can't go spend on anything. And so I think what we're seeing right now is more of a continuation. of bad behavior that's gotten slowly and slowly and slowly worse. And it seems like people have arrived the conclusion, oh, well, life is difficult, life is hard, money's tight. I will never be able to be where I want to be financially. So why would I even do anything differently today? I'm just

Starting point is 00:06:18 moving in this direction. And I think that's just bad information. It's bad intel for a lot of people. I don't think a lot of people, when they come out of high school, out of college, understand the fundamentals of wealth building and budgeting and cash flow management and living on less than you make, I think we're failing our young people and having them prepared to be able to do that. Do you think that that's on purpose? Because if you ask any intelligent person that has any ounce of financial literacy, they would argue it is clear-cut objective, beneficial to everybody if we have more financial literacy in schools, if people know that they maybe shouldn't be taking out all of this ludicrous student debt for a degree that's not going to guarantee them

Starting point is 00:06:57 a job. You're setting these kids up for failure. Is there a minimum? malicious reason maybe behind that are like the credit bureaus lobbying the universities saying like hey we don't want to promote financial literacy is there anything going on that we may be unaware of well i think that it is more uh more lucrative for people to be bad with money it's why payday lenders do so well it's why credit card companies make so money uh if you look at tuition how much the cost of education has gone up it's sort of assinine at this point and uh there's sort of two sides of this coin the the more fiscally responsible individuals are in mass, the less profitable some of those entities will be.

Starting point is 00:07:37 So there is a misalignment of goals. It's in the credit card companies or whoever's best interest for people to not make good decisions. I think it's interesting because you were giving us a lot of stats. The one that always shocks me is if you look at the Fred data, the Federal Reserve data on net worse of Americans, you know where there was a huge pop in the last few years, and it was all homeowner equity,

Starting point is 00:08:02 which shows me is that the only net worth that the typical American has is the equity in their house, meaning they're not saving any money outside of just the old, the old American dream of just go out and buy a house and then, you know, and you'll build wealth through that. That shows me that we are failing

Starting point is 00:08:21 in the fact that there is a better way to do money. And if you knew, like one of the things, we just introduced a brand new resource, we updated, a lot of time kind of putting it out there, trying to make sure the education impact was there is how much should you save? And it's one of the, if you go look at this resource at money got.com slash resources, if you just start saving anything when you're like 20 years old, it's hard to screw it off. I mean, it literally, you just have to basically do rounding errors on,

Starting point is 00:08:49 and it can be small decisions like coffee or it doesn't take hardly anything at all. That's why, look, take the politics out of it. But I do think there's an interesting experiment going on with Michael Dell's contribution, and then these Trump accounts is what they're known, is what if we gave all newborns a thousand bucks? Because we've done the research. If you go to the website, money got dot com slash resources,

Starting point is 00:09:10 you can be a millionaire incredibly easily. Now, look, we have inflation and other things, but I can tell you, if you want to get to a million dollars, or five million dollars, get to the million first, and it gets much, much easier. Because I think if people knew

Starting point is 00:09:23 that for your newborn, you only need to save $13 a month to be a minimum. millionaire, you know, by the time you get to retirement. That's how powerful, but I don't think anybody does that. I mean, I think about, you know, the typical age when people start saving and investing is 30 years of old, 30 years of age, you know, where they even discover probably your content or content. I would love for it. Jack, I think it would be, and more high schools are adding curriculum. What I'm curious about is who's driving that curriculum. If you have

Starting point is 00:09:52 the banks drive it, are they going to talk about credit cards, honestly? That's the thing that I always, because consumption is profitable. Selling you stuff is profitable. Creating people who are independent and know how money works, that's not as easy. I agree, and I think I guess for me that just makes me suspicious

Starting point is 00:10:11 because like I said, every single person with above average IQ and some form of financial literacy would argue everyone needs to learn these things. Absolutely. It's not like if they learn these things, hopefully it's not when they learn these.

Starting point is 00:10:24 Like we want it to be ASAP. People need to know this stuff way more than need to learn all of the other stuff that they're taught in the universities, especially with like the random prerequisites and these other classes that you're forced to take a language class before you learn financial literacy

Starting point is 00:10:37 is absolutely absurd. Do you think it would move the needle a ton, though? Because you've heard of the marshmallow test and other things. I've often wondered if we stratified, I wish there was more behavioral science research on just, is there always just going to be a portion of population? Because I think anybody can be wealthy.

Starting point is 00:10:54 I really do. I truly believe it. But it's going to require. discipline, you live in a less thing you make, you're using that margin to actually create the money that then gets invested, and anybody, if you give it enough time, can be a millionaire. You know what? It's the same thing with getting in shape. Like, everyone knows objectively how to be in shape, but there's only a small percentage of people who are actually in shape. And we all know, hey, I need to eat good food, move my body. Eat good food, move my body. We objectively have that

Starting point is 00:11:18 knowledge, and yet a lot of people don't carry it out. Saving money and building wealth is no, it's no different. But this is why I love what we get to do. I mean, I really do feel like we're moving the needle. I truly do. If you go, now look, that's what we had a whole off-camera conversation. We just don't have the sizzle sexy of like setting cars on fire or doing weird things that people, but if you really want to know how money works, we try to lay it out there, you know, so that people can learn the basics. Yeah, I think that's what makes the Trump account so interesting is because what Dave Ramsey would argue is that people might have the information, which I would also argue that most people don't have the information, but of the people that do have

Starting point is 00:11:53 the information and still decide to not act on that information, it's because they lack faith, that if you put the good ingredients in, that the recipe will turn out as you wanted it to. People think, like, hey, if I go to the gym and start eating healthy, like, I won't actually look the way that my idealized body looks. The same thing goes for investing. If I actually save money and I invest it, a millionaire is so far out of reach. I'll never be able to get there, which is why I think the Trump account is so interesting, because it's forcing these people to actually see the light at the end of the tunnel because they can

Starting point is 00:12:22 watch this growth over a period of amount. But you know it's funny? It's not forcing people. I've spoken with several people who have just had kits in the last year had no idea that the Trump account even existed. Oh, see, that's a lack of knowledge. And they're just like, what was that? And I explain it at all. I got to do that. I never heard of that. They're known though. They would have signed up. Are you one of those media strategy people clicking through slides, scrolling spreadsheets? Yes? Good. This is for you. Because on Spotify, there's an audience that's different. Locked in. Loyal. Invested. They're called.

Starting point is 00:12:52 called fans. Fans don't just listen to music. They feel seen by it, like it belongs to them. So when your brand shows up on Spotify, that's who you're talking to. And you're right next to artists like me, Lizzo. So, are you ready to talk to fans? Spotify advertising. You're among fans. Maybe I'm just in a bubble. I like too late. Do you not know about the Trump? I don't know. It's one of those things. We'll have young people all the time, high school students, college students, hey, I just got, you know, whatever, I just got my first paycheck. I have enough. I can go max out my Roth IRA. Should I go max out my Roth IRA? And this will surprise you. You know what my answer is? Yes. No. No. And here's why. So many times through life, I've told

Starting point is 00:13:34 someone, hey, go max it out. Way back in the day. Hey, put $5,000 in, put $6,000 in. They would do that. And inevitably, 2008 would happen, 2011 flat year, 2022, fill in the blank. And then make a contribution in March of one year. One contribution in March of the next year, it's down. And they're like, oh, this investing thing is ridiculous. I don't like this. I say, hey, instead of going to max it out, just start doing $20 a month. Put $20 a month every month into your Roth and watch what happens. If you can get someone experientially to see what money can do, I'm doing this with my oldest daughter right now and I'm showing her how interest works inside a bank account. And they can see, holy count, no, I put $20 in there last month and this month I have $20.50. And you can get them to

Starting point is 00:14:15 experience it, I think that's where it starts to actually stick. It's just most people don't take that very first step of doing it. And then even with the Trump accounts, it's great to like use that to teach someone, but how often have you seen someone who like, they go work for an employer, employer has a match? They say, okay, if you put in 3%, we'll put in 3%. And they do that, but that's all they do. And that's noble and that's great. But if you don't actually increase that, if you don't get better at it, right, it's not going to actually move the needle. So you have to start somewhere, but then you do have to improve through time. So what's interesting, though, is that just as many people are living paycheck to paycheck making over 150 grand a year is making under 60,000 dollars. It's a behavioral issue.

Starting point is 00:14:54 It's not about the dollar figure. It's a lot of wealthy or rich in income, but still dirt poor people because they spend every dollar they make. But what separates the people who make less, but still are able to get ahead? It's the discipline. It's the teachers. That's why teachers are always so successful. They somehow... Is it a knowledge problem, though? Because I would argue that just as many people have the knowledge to be able to get out of that. Well, and I think a lot of people, even when they're able to get to high income, 150, 200, 300,000, $300,000 incomes, you would not argue that they aren't intelligent, don't have knowledge. They must have some level of knowledge to get them to where that they are. But discipline really is that, you know, we talk about the three ingredients. There's

Starting point is 00:15:33 discipline, there's margin, there's time. You have to have all three. Discipline is the one that matters the most in every facet. Like whether you're a 20-year-old or you're a 60-year-old, if you don't have discipline, it's going to be very, very hard for you to be successful financially. It's why we see so many professional athletes who sign these huge contracts or these huge salaries and end up broke. It's a discipline issue. If you look at the categories that typically become millionaires, you know, historically it's like your teachers, your engineers, and then like your accountants are those very popular categories. There's a big disparity on income between those. But you know what they all have in common

Starting point is 00:16:07 is that they all start jobs pretty early and in apprenticeship type things, early 20s. they kind of all encourage systematic type mind and thought processes. It's the starting early and often that kind of does it. I mean, and I know it's not sexy enough for people to say this, this cannot be what it is. And I'm here to tell you, just do something. I mean, because that's what got me. I mean, it was back to my morrow moment, that high school teacher who told everybody in the class, look, if you could save $100 a month, you'd be a millionaire.

Starting point is 00:16:38 And coming from no money, I was like, I could be a millionaire, 100. a month. I was working fast food. I was like, you mean, I could save $100. I really did think that. And that's what made it happen for me. And it's the reality. It's the truth. Okay. So this as a challenge, guys, not that we are, you know, financial advisors or anything, if you've never invested, open up an account, what brokerage? I mean, any of the big ones that, like the low-cost ones, like you think with Charles Schwab, Fidelity, Vanguard, and then just buy the market, the index. Right. By a total market index, S&P 500. Contribute some amount of money into it. Or a target, a target. A target. get index fund. And send a screenshot of it to the email that is right on the bottom of the screen and we will respond to it, just saying, good job. What about Robin Hood? Robin Hood's a great one too. One of my, I'm going to, I don't say problem. That sounds too aggressive, but Robin Hood is

Starting point is 00:17:27 gamified a lot of stuff that allows you to get distracted. Like when I go into Rob, now I can start doing sports betting and all these other things. That, what I don't want someone to do is, oh, I'm going to start investing. I'm going to start investing. And they see this shiny thing in the corner. and they're like, oh, okay, well, now I'm going to go start picking stocks or I'm going to go start doing sports betting. I'm going to go start. I think some of the larger brokers have done a good job of not letting that become so flashy and so in your face. For a disciplined person, I don't think Robin is a bad solution necessarily. But I would probably go to one of the big, low-cost anchor providers.

Starting point is 00:18:00 In the beginning, your savings rate is so much more powerful than even what you invest in. So that's why if you can state, that's why I like broad indexes, because it, it, It lets you just set the behavior, let it take hold, let it grow roots, let the compounding growth actually do something. Because you said, I can't remember which one of you said. It said people never can imagine a small thing can turn into a million dollars. That's because we think in a very lateral, you know, linear way instead of thinking in the exponential way that money really works.

Starting point is 00:18:30 And that's why I would love, I don't like the gamification to where people get distracted because that's where young people a lot of times, they're trying to cut the corner off. I mean, I've had, look, we've had young people show us that you can play arbitrage with sports betting and all these other things. They're fun distractions to kind of look at, but they're not actually what I would consider what I'm going to be able to set my retirement by. That's why, like when I was writing a millionaire mission, I said, fish with nets because you want to feed the family, go sports fish, you know, for fun later. But if you're going to actually try to feed the family down the road, fish with nets, which is what index funds do. And really quick, I shouldn't have to say this, but we all. all think it. Life could sometimes be extremely busy, and eating healthy, it oftentimes feel like

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Starting point is 00:20:59 of this harsh truth about money, would you then say if someone is not where they want to be financially. If they're broke between the ages of, let's just say, 25 and 45, is that their own fault or the fault of the environment around? Well, I think certainly some people are born into more difficult environments to come out of than others. I don't want to minimize that idea.

Starting point is 00:21:19 But I do think that building wealth is available and attainable to all folks, no matter what your path is, no matter where your financial journey, no matter how bad it was at the start, that does not define what the end of your financial journey might look like. So you might have had different circumstances. that caused it to be more difficult for you. But I still think even for that person, they have the ability,

Starting point is 00:21:41 whether it was environmental and circumstantial or it was their behavior. I used to run up credit card debt and live on more than I make and make all these bad decisions. I do think that there is an onus where they can change that, where they can actually improve their financial life.

Starting point is 00:21:55 It's a mindset issue. Look, we all hate villains. But I'll tell you villains and, unfortunately, victims don't come out of head. So if you self-define yourself as a victim that this system's built against you, you'll never get yourself out. Whereas if you can put the mindset, that, yeah, okay, the system's hard. But I believe, and these guys are sharing some of the tools and take the active role

Starting point is 00:22:20 to be the hero of your own story, I really do believe anybody can do it. And you just, it's a mindset thing. Don't let, because we've done shows, we've got to show that I'm so excited that's coming out because where we said, is it truly harder for the new generation versus the baby boomers to get ahead. And we found out, yeah, there are some things that, holy cow, we ought to be pretty ticked off about what's happened in education.

Starting point is 00:22:41 And even some of the things in somewhat in housing, it's not as bad as what happened in education. But still, there's so many new things with technology. I mean, if you saw what it was like to try to invest when I came out of college, you had to go through a broker, you couldn't buy index funds. It was just completely a different game.

Starting point is 00:22:57 So much has happened. Now you can go online. You can do everything. It's instantaneous. You can do something. Do you think AI is going to make it easier, or do you think that's going to mislead a lot of people? Yes. I think it's both.

Starting point is 00:23:09 I think Beau is exactly right, because we've even found, I mean, it's amplifying what we can do for clients. It's not taking us out. It's going to make us better. But I do think if you're a person, and this is something I've tried to figure out, I'm not trying to change the subject to AI, but I think people ask us all the time, like, when you're trying to do Roth conversion strategies, how long does that take you to figure that out? And I'm like, well, I can typically in 45 minutes of looking at your portfolio, I can have a pretty good plan. But it took me 15 to 20 years to kind of really see, you know, all the things that go into, all the factors and all the variables.

Starting point is 00:23:42 So, you know, it's 45 minutes, but there's 15 years of experience or 30 years of experience now where I'm at. 15 years and 45 minutes. I think AI is going to bridge a lot of that stuff. But there's still a lot of ghost in the answers, meaning the information. We've even been playing with some LLMs. And there's just, there's so much confidence in bad answers. that if you don't have the experience to actually see what the output was to kind of navigate, I do hope younger people don't lose the ability to be able to see what is how to think through things

Starting point is 00:24:12 because we outsource intelligence only to the AI models. Because I think that's going to be scary for our kids and the younger generations. So I think that technology and artificial intelligence will make it, yes, perhaps easier to invest, easier to build a portfolio, easier to like gather information. but I do think it's also going to create the opportunity to be distracted, as most other technologies have done. So there will be pros and cons to it. It'll be interesting to see how it shakes out.

Starting point is 00:24:40 How much all notice that when you talk to any of the chats or, you know, ChatGBT, the GROCs and the Alch is trying to make you happy. So, I mean, they have this level of confidence. Yeah, but they are trying to, the people pleasers. Has been really good. Yeah. Chat GPD is awful. Because the point where it's terms of just a confirmation bias wanting to say what you want to do.

Starting point is 00:24:59 Yeah. Yeah. Gronk, I found to be pretty objective, but chat chabit yesterday, I was trying to figure out at what point the S&P 500 would have to fall for me to get a capital call on a box spread. Okay. And it was so confident. It was like 72%. I'm like, that's incorrect. Did you check the math on it?

Starting point is 00:25:14 Yeah, I did. Okay. I knew that was incorrect. And I said, oh, sorry. Actually, it's 68. I said, no, that's not correct. Oh, it's 85. It just kept changing. And I said, no, it's 90% plus. He's like, oh, yes. My apologies. I was interpreting incorrectly how you phrase the question, it's actually like 94%. Like, that's too high. Oh, actually, it's And it would keep saying, oh, you're right. Oh,

Starting point is 00:25:34 yeah, oh, great catch. Oh, I'm glad. I'm like, I'm not supposed to, you're supposed to catch it. That's what you do have to be careful because the confidence that it comes out of the gate with is, is really strong and there's a lot of ghost in those numbers still. But what's interesting is that now brokers are implementing this new AI into their system, where you could tell it what you want it to do and it'll execute whatever trade on your behalf. So if Jack wants to buy call options on Amazon at a certain strike price, he can literally just type it in the chat and it'll go and do the thing that he's described. Which brokerages have that? Public and Robin Hood. Wow.

Starting point is 00:26:08 Launching that. Yeah. Interesting. But I do think one of the things, so when I hear you say that, I'm like, oh, that's really neat. That's super interesting. The days are longer, the calendar's filling up, and I want to feel as good as this beautiful summer weather. That's why I've been loving Grooons. It's one daily pack of gummies that covers my green. greens, vitamins, minerals, and even has six grams of prebiotic fiber. So I don't need to juggle a complicated wellness routine on top of everything else. They taste amazing. They're easy to toss in my bag on the go.

Starting point is 00:26:36 Plus, they're vegan, gluten-free, and HSAFSA eligible for reimbursement. Save up to 52% off with code podcast at grooms.co. That's code podcast at g-r-un-s.co. At some point, Jack would have to decide, okay, should I be buying call options on You know what I mean? Just because you can doesn't mean you should when it comes to that financial stuff. So that's like a really neat thing that's probably like a cool value ad, assuming it makes sense for be doing that. What I wouldn't want someone to do is hear that and be like, oh, I'm going to go get that.

Starting point is 00:27:10 And I'm going to start buying call options. If you don't understand what that is or how that works, that might not be the thing. It's going to talk to you like chat. You be great call. I totally agree with this. Do you think Apple? You are right now? Yes.

Starting point is 00:27:20 You're the next Warren Buffett. Graham said that he thinks selling covered calls is the. dumbest thing ever. What are your words on this? I said it was pretty dumb because selling government calls is pretty dumb. Can we just say it was like, how far out of the money? I mean, what are you? There's so many what stock. I mean, there's so many variables here. Like very little out of the money

Starting point is 00:27:39 but within like a month, two months, give or take, you know. How was that dumb? Because you're picking up pennies at the expense of the long term stock market growing and there's no such thing as free money. That was my question. Whenever someone asked us, what do you think about this? I always default back to Why? Okay, selling covered calls. Why do you want to sell covered calls?

Starting point is 00:27:58 I would say there are certain stocks that I'm, like, hesitant on buying. For example, let's just say, Chris Camillo says, you should buy Bloom Energy. Okay. I'm like, well, I don't necessarily want to do all of the due diligence into why I should buy Blue Energy, but maybe I would like to have the appreciation of this Blue Energy. And so I go and I buy 100 shares of Blue Energy, but the only way I justify myself to buy this 100 shares is because, let's say, I can get... three and a half percent per week on weekly call options if I want to sell covered calls.

Starting point is 00:28:29 That's a good enough hedge where, hey, look, if it does end up going down, do I think it's going to go down on average more than three and a half percent? It could. Could have less than three and a half percent? It could. But still, I have some appreciation of a stock that he told me I should buy. I get to watch it. I get to be more like involved with the grip. Okay.

Starting point is 00:28:46 So let's play the other side of it. You do it. You buy the Bloom energy and you're selling this. And then Bloom does some exciting stuff. And it takes off. And it did. And it just, it's, it's $300 now. And your position, you know, it gets called away.

Starting point is 00:29:00 Would you buy it? Well, I bought it kind of all over the place, but let's just say, like, my average, I don't know why he's laughing because I made more money on Bloom Energy than him. So you go ahead and keep laughing party. But let's say that it gets called away. Yeah. Right. It did.

Starting point is 00:29:12 Forever, you're going to be sitting in that position where you're like, man. You're just like we are. I totally take on each other. I didn't say that he's laughing because I've made more on Bloom Energy than he is. Dude, I'm up like $26 grand right now. On my 200 shares, I'm holding. I'm up more than that. But you're up like 60 days.

Starting point is 00:29:29 But you're making my point from something I said earlier, do you want a sports fish or are you trying to feed the family? Because y'all are, you're... I'm up way more than that. Y'all are no different than two buddies who go out fishing so you can tell fishing stories on the fish that you almost caught and it got away. Whereas I'm telling you, there's a huge difference between investing versus speculating. Some of this stuff, this is, this is speculated.

Starting point is 00:29:51 It's hardly, I mean, sure, because you're trying to, but you're making money. off of time. Sure. You're not. But you're not because. Oh, explain that. Explain that data decay, please.

Starting point is 00:30:01 Explain that. Can you do it? Understand that when he buys a stock, there is a risk that it goes down. So if he's making 3% in a week, it could very well go down 6% in a week. And he's net negative. I don't understand that. I absolutely do. Your, your position is more bullish than my position because mine is actually a hedge against

Starting point is 00:30:19 the position. That's why I'm up so much. But you were speculating more than I was. No. Yes, you were. I bought in cheaper. So one of the question I'd be asking is like, okay, what's the thing you're trying to accomplish here? What's the goal you're trying to achieve?

Starting point is 00:30:32 What do you want your money to be doing for you? In the instance that you're describing, that would not be one that screams to me, oh, selling covered call makes a lot of sense. Where a covered call position might make sense is if you're executive who has a highly concentrated stock position and you want to figure out a way, okay, I can't sell this position because of embedded gains, perhaps I'm going to do some sort of strategy where I want to protect my downside, but I also want to recoup some premium on the other. upside to cover the cost of the put. Something like that, in your, in your scenario, if I was trying to just make a little bit more money on it and I was, you know, bullish on it, I would maybe just buy a different stock that would do something differently. Because I agree with you. Just because you can make some money doing something, oftentimes doesn't mean it makes a lot of sense. You can go walk around the freeway and pick up cans and you can bag up all those cans. You can spend a couple hours

Starting point is 00:31:20 doing that. You can take them in and trade them in and get the recycling money for that. But is that a good use of the time and was that a good use of mental calories? I don't think it's all worth the hassle factor because look, I've had this, this has happened to me so many times in my decades of investing. Like, I'll meet a neighbor and he'll find out, he's over calculating returns. I've had a neighbor, find out I'm a financial advisor and they're like, what stock do you recommend? And then, you know, they're talking to me, whether at the time it's Fitbit or whatever the latest, greatest thing is. And then what's always funny as I tell them, once they get to know me, I'm like, I buy index funds. I mean, that's what I actually do with my money as I buy index funds.

Starting point is 00:31:57 And it was funny is I watch the education is that, you know, after we get to be friends and five years in the future, they, you know, I looked, I started looking at my annual return of all the trading I was doing in individual stocks. And then I started looking at what I was making on just the total market return or the total market or the S&P 500 index. And I think I'm making more money on the S&P 500 or whatever. And I'm like, yeah, it's amazing. And you didn't have to stress out and think about everything that was going on.

Starting point is 00:32:22 that's the reality I try to share with people because even if you, and this is, let me play devil's advocate. Because even if you weren't selling the covered call, where they got it taken away from you, if it goes, shoots up. I've experienced,

Starting point is 00:32:36 because I even have a story back in 2008, I called all my buddies and I was like, look, Apple stock right now is trading at a price that is the equivalent of what their physical assets. I'm not talking about their actual IP and intellectual property. I'm talking about the campus and other things. This stock has been beat up so bad.

Starting point is 00:32:56 I was like, this is the biggest no-brainer. We should buy some Apple stock. So me and some buddies, because I don't buy a lot of individual stocks. I'm an index investor. We bought Apple stock. I after, and let me ask you, this stock you bought, would you have sold it if it was up 200, 300, 400%, or would you have taken your money? Probably not.

Starting point is 00:33:17 You would have just rolled forever. I honestly have never really sold stock. The only thing I've ever sold really So you have permanent portfolio Everything? Except for Robin Hood. Except for Robin Hood? Yeah, because I

Starting point is 00:33:28 That was a different. You're the type, Jack, you're the prospect that we would get, I want to get back. Don't let me get off topic on this. March and call $10 a share for Robin Hood. Yeah. Jack, it would be the prospect that comes to us

Starting point is 00:33:40 and it looks like a quilt of his life. It's the quilt of Jack's wonderful life because you can see what he was doing in every decade of his life. It's 3.5%. Three and a half percent. Guess what time? How long?

Starting point is 00:33:52 This is one week. If you sell a call, $0.25 cents out of the money on Robin Hood weekly calls, you can get 3.5%. This already, this is just linear growth, not even counting compound interest times 52. This is 185% return on Robin Hood over the course of a year. What price did your balloon get called away at? It got called away at a few different price. I mean, just like I had quite a few different options. So that's why it could know.

Starting point is 00:34:17 So it was like $88, 92, 94. I was making money on all of it. What's it trading for now? 280 bucks. I would argue that the long position you missed out on did not compensate for the ROI you got in the covered calls. Right? Like had you held it? But I'm not, I'm not observing. I'm just observing it in terms of what is the growth expressed as a percentage. Sure. And so like, and also I had 200 shares because guess what, it started going up and I had 200 shares that didn't get called away from you're like, you know, I'm just going to ride it out. And I did. And now it's at 200 and whatever dollars.

Starting point is 00:34:47 And so I'm just saying a company is solvent as Robin Hood. Do you think that it's going to zero in the next year? I haven't looked at their financials. I wouldn't. Probably not. I wouldn't say. I met Vlad Tennev. We had him on the podcast, the CEO, founder of the company. Everything seems totally great.

Starting point is 00:35:02 Love the company. Have you used the app? I invest on the app. It's phenomenal. And so, like, if the company doesn't go to zero, assuming that premiums stay the same, right, you'll get 185% return in a year. But is this the best use of your time?

Starting point is 00:35:16 This is the point. For me, is it the best use of his time to be hunting for a coffee that's a dollar cheaper? right? It's the hunt. Right. It's the best use of your time to buy five of those shirts because they give you at checkout an additional 5% off when you add other things. But let me,

Starting point is 00:35:31 we're talking about that before the episode. Let me bring it back to why I don't love individual stocks. Now, I got to say, one thing that I've noticed by talking to a lot of entrepreneurs is that all of them want to use AI, but they don't know how it'll actually work inside their business. Like, it's one thing to use AI to write an email, but it's another to have it handle incoming calls, set appointments, answer questions, and talk to customers in real time. And that's where today's sponsor 11 Agents by 11 Labs comes in. It's a platform that lets businesses

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Starting point is 00:37:03 thousand bucks on it. When it went up threefold, I jumped out because I was excited. I made 300% in a short period of time because when the market recovered, it came back quick because everybody else caught on. Hey, Apple's a pretty good company to own. My other buddy, I think he might held on for four times. But the thing is, we all dropped off. One of my buddies, he still owns it. You never got out. So I know he might be the jack. So what is he? Does he have a jack in a couple million groups? It's worth, no, because I think you put in five thousand bucks. It's worth over half a million dollars from that one holding. So I mean, but I'm telling you that the, but that sounds great, but the majority of us are going to exit before that. You would sell. This is not, this is not anything that I

Starting point is 00:37:44 would recommend publicly because it's like you need to, this is, this is, purely logic, no emotions whatsoever. What Jack is trying to say is that he's able to make over 100% a year with little downside if he keeps doing covered calls, right? Because if he gets, the shares called called away, he could always buy a little more and make

Starting point is 00:38:02 another three percent. But the problem is, there is some long term because you're getting called away on a short-term holding, so you're paying... So yeah, you're paying ordinary income tax rates instead of the long-term capital gains. That's why you're doing Rothair. I mean, but okay, when you buy a position that actually does go down, that doesn't come back, and you made a poor purchase, you can't get those dollars back into the Roth.

Starting point is 00:38:20 That are, my opinion is if you're going to do those sort of strategies, I think the losses would likely be more valuable, then sacrificing Roth dollars, you will not be able to replace. Roth, you only get $7,500 in there at a time. You make one bad call that loses you a $20, $30, $40,000. That's like years and years and years of contributions. You won't get back unless you have another, you know, investment that hits. I would argue the tax drag is something on factor into my calculation and I'll consider in my tax.

Starting point is 00:38:47 So even QQQ, right, for example, you can sell daily call options on QQQ. And if you extrapolate that over the course of a year, it's like a 26% guaranteed return. If you were holding QQQQ in your Roth IRA, why would you not guarantee a 26% return as opposed to what else, you know, what other way you could get that? Well, if it were a guaranteed 26% rate of return that was an assured thing, why wouldn't every fund manager in the world be doing that? It's probably a volume investor, right? Well, they do cover call ETFs. They certainly do. but not ones that are guaranteeing 26% rate of return.

Starting point is 00:39:19 Because once an inefficiency exists, we operate in a capital market that adjusts pretty quickly. So yeah, inefficiencies can exist, but once inefficiencies get exploited, they then become efficient. So I'd argue I don't think something like that has staying power, where even if you made 3.5% for a week, and if you did that for multiple weeks,

Starting point is 00:39:39 I don't believe that that would sustain throughout the course of a year. So I think it's illogical and irrational to assume that you could extrapolate 10085% rate of turn. No different than if you, look, it's not the exact same thing, but you go to a casino and you, all right, I hit red, I hit red, I hit red. Well, if I did it a hundred times, think about how much money I'd make, that's not the way that it works. I mean, you can get three-tenths of a percent daily on QQQQ calls at the money, which is not too bad. But you do, like you said, you'd make

Starting point is 00:40:08 100, was 185 percent or? Yeah, in Robin Hood selling cover calls. There's, if, is Bo's exactly right, if you could actually do that repeatable, you know, in a guaranteed way, people would be making a, there'd be a, you'd be able to do that. And there are structures. Carter brings to us all the time, these crazy structures with, you know, that you can set, he's going to be mad that said the word crazy. But he's, he doubt, he looks at those things where they do try to play these crazy arbitrage situations. And they're interesting, but it's not something, I don't know. Maybe this is where I'm too boring. The reason why billionaires don't do it is just because it's strictly like, volume problem. There's not enough volume.

Starting point is 00:40:46 It's not millionaires. I agree with it. A lot of millionaires do. Yeah, I mean, a lot of people retire just doing the wheel strategy. What's the wheel strategy? You sell a put, and then if you get a stock put to you, then you sell a call to get it called away from you. I've never heard of them. I would ask you to track your time on all these things, too.

Starting point is 00:41:02 Because I think if you add the time element to all these hobbies... It seems like it's a hobby. This is something you enjoy. You're not doing it so much for the economic outcome. You're doing it for the enjoyment of up. Because this is the same problem I have when people try to compare my index investing to, like, real estate investing. I'm like, yes, levered debt is going to do incredibly well compared to an index fund, but let's put into how much time you have to put into the real estate and everything. The time

Starting point is 00:41:23 that's going on these strategies is worth something, too. Yeah, I sell calls on maybe 5% of my portfolio, 10% of my portfolio, transparently. So this is just plain. And yes, I have lost out on a lot of gains when stocks have gone up, but I've also decreased my level of loss when stocks have gone down. And if you extrapolate this as a return, or maybe expressed on an annual basis, I beat the market. like consistently since I've done it. Not counting Bloom. I'm good. I'm going to speak.

Starting point is 00:41:48 I made money on Bloom. I don't understand. Not the shares that got called away, though. I did make money on the shares that got called away. 3%. Yes, in a week. How was that bad? 3% in a week is 150% of it.

Starting point is 00:41:59 Is there up to 100% since then? But I'm talking compared to like the average stock market. Here's what I can't wait to see, Jack, because y'all have already put yourself in a box because you said you're going to let us see your portfolio at the end of the show today. So we're going to get to look at your portfolio. You've also, because. we've all gotten friendly, I kind of know what you make to a degree. We're going to judge you hard.

Starting point is 00:42:18 If we know how well you're doing in life and then we look at your portfolio, we're expecting to see magical stuff because otherwise, because otherwise, I want to, I want to feel like you're here right now, you're growing with your, you have so much capacity to grow with your good income. So the money guys react to my stock investing portfolio. All right, let's go. Okay, let's look at this. Now, can I ask you a question? Yeah. You shared last. Last time we got to hang out, I kind of know what your income is. This account is great. Multiple.

Starting point is 00:42:50 How long have you had that income that you shared with us last time we got to hang out? What did I say my income last? Well, I can't. I'm not going to say that. I'm not going to say that. I'm not going to say that. Maybe. Here, you want me to write something?

Starting point is 00:43:02 Maybe a year and a half. Okay. Okay. Okay. Because I want to see a multiple of that. I don't spend any money. So, I mean, you could look. This is like my gains over time.

Starting point is 00:43:14 See? I don't spend any of my money. Most of my money is in that, or not that, but like the Vanguard equivalent. And Jack, let me ask you another question. Yeah. When these stocks on volatile days, like right here, I mean, if there was a stock, none of them are having huge days. But if you, if you lost 20, 30 percent in about a three-day cycle,

Starting point is 00:43:33 do you emotionally feel like you get, you know, is it feel like you got kicked in the stomach? Do you actually have emotional reactions to what's going on in your portfolio? I don't. No. So as I'm looking at this, right, like I'm just looking at this is specifically your taxable account. So you were kind of enough to let us look at it. through all the accounts. I was expecting to see a bunch of really, really crazy stuff in here.

Starting point is 00:43:49 It's actually a bunch of household names. The lion's share of what you have is. Is even SPY. Yeah, or in like, you know, low cost ETF indices, which I think is fantastic. This is like, you. Vanguard. Yeah, right. It's a vast majority.

Starting point is 00:44:05 And so you just dabbling. So like, yeah, you have some. You're dabbling. You have some individual stock positions. But at least in this account, I'm going to say relative to your total wealth, relatively immaterial. So this doesn't give me a lot of pause.

Starting point is 00:44:17 Like I'm not, I'm not super concerned in this account and these names that you hold aren't really frightening names. They aren't things that I think,

Starting point is 00:44:26 that I think I would be afraid of holding. I do see some losses in here that perhaps if I were worried about my tax bill and stuff, I think maybe clip that loss and find something that seems a little bit more attractive.

Starting point is 00:44:37 I know he really likes that one, though. Which one is it? You could say the names that the stocks is not the amounts. Oh, yeah. Robin Hood. That's one that you really,

Starting point is 00:44:44 super bullish on. Your position right now, though, pretty attractive loss in there that could be used to offset some of these future capital games. You can say how much of loss? It's 20. You're down 22.5% on that position.

Starting point is 00:44:56 Might be a great, again, might be a great little loss to clip. Just so that way, in our world, loss is a great. We don't love losing money, but whenever losses are present, we love taking advantage of those. So that's something there.

Starting point is 00:45:09 Can I look at something? Yeah, I want to go, I want to get to the Roth because that's the one of the thing that's going to do. I'm just going to say this. I would say, I couldn't do the math because it was moving really quick before me, but it looked like three quarters of that account that we just looked at was pretty much in what I'd call tried and true. It's index fund type or stocks that are in the index or the top performance.

Starting point is 00:45:31 So, you know, in the top. It's tech heavy. It's tech heavy. It's already, you know, because the S&P 500 is already probably highly concentrated in a lot of these stocks that you already have. I don't think you're as, you're acting like you're an. exotic and it's actually pretty, pretty plain vanilla. Yeah. In a lot of ways, if you look at the 75% of this, 80% of this is doing the same thing.

Starting point is 00:45:55 So then I'm back to my point of what are we doing here? I mean, it's the hassle. And I'm fine with that. Well, I actually have made money on it. Well, like a decent amount of money. A lot of people. There's a number of people that have made money gambling. There's a number of people that do those things.

Starting point is 00:46:09 You can make money on hobbies. I'm not disagreeing with you theirs. But what I'm suggesting is it's more of a hot. you get utility out of this, totally fine. I was nervous I was going to look on here and see a bunch of, like, penny stocks that you had hundreds of thousand dollars in. It's much more. I wouldn't do this strategy on a stock that I'm not bullish on. What would you rate his portfolio out of 10? From aggressiveness or for quality of portfolio? Just overall for his age. Let's say, yeah, quality of portfolio, considering my age, my income, the industry I work in, etc.

Starting point is 00:46:37 How much time are you spent on this? I know I keep asking that. Honestly, none. No, but you are spending time because you obviously, they've got stuff all over the place. I can show you my Schwab screen time. I mean, maybe it's like, maybe it's five minutes a week, 10 minutes a week. Okay. I literally like, I don't even look at the numbers. Like, I just hop on and I just like, I sell a call if I need to. I'll buy something if I have some spare cash.

Starting point is 00:46:57 I'm going to give you, I'm going to give you a seven and a half eight. Seven and a half eight. And I'm also wanting to disclose this portfolio is probably going to perform pretty well because it's very aggressive. Right. So like when you, we see a year like last year, 2025 where the market did really, really well, I'm willing to bet this portfolio did really, really well in that kind of year. Now, the things I'll pick on is also, okay, I do see an individual 401K, but there's no money in that account. There is a SEP IRA where there's some money in.

Starting point is 00:47:25 You strike me as with your level of income, that solo 401K should have been fully loaded. It will be, yeah. And that's why, and that SEPIRA will probably disappear, right? So then we're going to open up some opportunities, some backdoor Roth contributions, that sort of thing. And look, you've been safe and good. This is a big. Yeah, because that's the other thing is... How old are you again?

Starting point is 00:47:45 27. 27. That's a great. It's a really, really solid number for 27. No, you're doing great in the fact of your age and where the assets are at. And your Roth, you probably haven't been able to make contributions because of that stuff. Yeah. So, but we're about to change that by doing the solo 401K.

Starting point is 00:48:00 Yeah, so there's some account structure stuff that I would totally want to clean up so you could do backdoor Roth contributions and then really give it to the man legally by loading up that solo 401K. Maybe y'all are enough, you all have enough profitable. profitability, they could potentially do like cash balance and other things too. Graham would attest that like I have never been a big spender. Like I have never spent money on anything. Like, the most

Starting point is 00:48:25 expensive thing I've ever bought was my car aside of my house. And I bought a watch. Is it a very nice car? It's a Tesla. Okay, yeah. But it's not you didn't go out and buy a Cullinan. You know like a reasonably nice car. Yeah. What is he gone? Look at his unrealized gain loss. I'm assuming

Starting point is 00:48:41 is this year to Is it okay now I want to see realized gain loss year today that's going to be on here right? Yeah that's just interest and dividends. It doesn't show losses and gains because I was what I was trying to see is how was it tax inefficient like you know so one of one of the things that you know it's probably tax inefficient. Yeah a lot of people they like trade and it gets super exciting and then it gets to April and one if they have an account it they got to pay their account an extra X number of hundred thousand dollars because of the four thousand transactions have to put in or at least four thousand transactions have to monitor. when they file their tax turn. And then there's usually a huge capital gain that thought, you know, if they've had success and they've not been harvesting the losses.

Starting point is 00:49:19 So I was trying to see where that existed. But in full disclosure, I'm going to give you an eight out of ten. Eight out of ten. What would take it to a ten? Some more well-thought-out strategy, right? Like, explain to me how you defined your allocation. Because what I really see is it's a lot of U.S. Fortune 100, Fortune 500, tech companies.

Starting point is 00:49:42 which is fine, but there's a lot of concentration in singular asset class. Okay. Perhaps for a portfolio that size, I'd want to see something a little more diversified. So my response to that is I think that the asset class that I'm in right now is like tech is going to just grow faster. And for me, I'm very, very, since I've been investing for so long, I've weathered so many ups and downs. And I also assume every single time, because I don't dollar cost average whenever I take a distribution from the company, let's just say I take $10,000. I immediately take $2,000, put it into my like checking account, $8,000 immediately into the investment account.

Starting point is 00:50:18 How often you take distributions? Maybe monthly, month and a half. That's dollar cost averaging. You said you don't dollar cost. But that is in fact, dollar cost averaging. Okay, sure. Yeah, yeah. But I basically just buy as much as I can and I buy as quickly as I can.

Starting point is 00:50:31 And then if taxes come up and I need money for taxes, I'll even sell my investments in order to pay my taxes. Here's the thing, though. If you extrapolate this over a long enough period of time, then it's a winning bet. If the market went up that year, it went down the year, but if on average the market goes up 10% per year, you're taking a 10% advantage bet. It's like you're being the house with a 10 bud advantage every year. Sequence of return does matter. You love three and a half percent guaranteed so much. If you just park that month, someone that money for that tax bill in a three and a half

Starting point is 00:50:59 percent high yield account, no, but he likes three and a half percent a week. In a week. Okay, fair enough. Fair enough. Fair enough. Been a week. Not a year, man. That's, that's a strategy. That's a strategy. I do think that there's room for improvement on structure, which you already know, though, because you just talked about. I think this structure is probably... And you see, like, last year, you know, again, we are bullish on the same things that you were bullish on. Yeah. But we do still love, like, international holdings. We do still love small cap.

Starting point is 00:51:25 And, like, if you look this year, especially the first quarter, and we saw volatility in the SP 500, it was wonderful to have those parts and pieces in the portfolios. Because they've outperformed last year, outperformed this year. So, again, it's an eight. I would just love to see more, like, thought behind it. It looks like, the thought is, I like this today, I'm going to buy this today. Yeah, and then I just hold on to it forever. And just hold on to it forever. So speaking of investments, though, the market has hit today, officially, an all-time high at the time we're filming this right now.

Starting point is 00:51:55 Should investors be worried about this? Do you know how, I mean, I figured you all-gagra asked something like this, I should know the exact number, but I don't. You realize we've had, like, I think it's 200-plus all-time highs this decade alone? I mean, in the six years. So, I mean, when markets run through bull markets, so, you know, you start going up, the market's up much longer.

Starting point is 00:52:17 Like, bear markets typically are 11 months, but bull markets run for much longer. So you hit all-time highs over and over again. Okay, but this chart is pretty scary. This is going viral right now on Twitter, and the caption is, only one question. Who's the exit liquidity? That's a spooky-looking chart.

Starting point is 00:52:33 Yeah, it is a spooky-looking chart, but 1984, right? So we're looking at 40 plus years of data right there. That is the economy, though. That's what's happened. Think about where US GDP is today relative to where it was in 1984, right? It's a very different thing. The pizza pie gets bigger. Should you be concerned about the market hitting all-time highs?

Starting point is 00:52:56 If you haven't thought about your asset allocation and having a portfolio that matches your risk tolerance, your risk capacity, and your unique financial needs, then yeah, you should be worried about that. But you should be worried about that before the market at all time. high. Warren Buffett, you know, is famous for saying, be greedy when others are fearful, fearful when others are greedy. What you never see Warren do it is when, when markets hit all-time highs, he doesn't dump his portfolio. He doesn't sell his positions. He may store up additional cash when he thinks there aren't things that are attractive, but he's not being afraid. He's waiting for that moment where he actually can be greedy when the opportunity persists. So I think if you're in the right portfolio, well-structured, well-thought-out, right, asset allocation, right, asset location,

Starting point is 00:53:36 The market does go down from here, 10, 20, 30, even in 2008, 37% over the course of 12-month period, the right portfolio should be designed to weather that well for your unique circumstance. Look, I get the fact that a lot of this is concentrated in some of the biggest AI companies and technology companies right now. What I'm trying to figure out, just being honest, because we don't, by the way, I'm going to be transparent to you. I don't have all the answers, but you should also know everybody who tells you, they do with the confidence. They don't. I'm fully in the system, and I can tell you they are probably trying to sell you

Starting point is 00:54:13 something if they act like they have it all figured out. What I'm trying to figure out for myself is when you see this big run-up, I'm old enough that I've been around for the personal computer coming on the scene. I've been around long enough when web, you know, in the Internet, changed the world. And here we are in a new disruptive technology with AI coming on the scene. I'm trying to figure out, is this, you know, what everybody's worried about is a bubble or are we truly at this, what Elon was alluding to, at this new disruptive side of things

Starting point is 00:54:44 where efficiency and profitability gets expanded at a level we haven't seen. It's kind of like, you know, the horse and carriage compared to what happened when you got transportation and then take it up to another level when you got air transportation. We don't know yet.

Starting point is 00:54:59 And that's the part. I trust the economics of an index fund more than I do a manager that we'll see. And plus, we're diversifying. I mean, I will tell you, I just got off a, I had a client meeting right before this interview where the client, you know, when I had got in the meeting, I thought he was retiring in the next two to three years. So we plan on having a lot of heavy discussions on. Let's start all-time highs right now. Let's start bringing down the risk profile slightly. We're not doing Apple Car turnover. Exactly what both said, but we're going to bring it down slightly. He let me know he plans on working for many more years.

Starting point is 00:55:33 So we're going to let it keep rolling. But, you know, you're not doing. You should make sure your allocation is good so that before something big happens, you don't have to react. You're good before, during, and after. That's what diversification is supposed to do for you. I'm always amazed that people think that they're going to do. That's why I always pick on the Vue for Life. I love the S&P. But there is too much of a good thing is if you think that you're going to do this until you're 55, 60 years old,

Starting point is 00:55:58 and you go slam your retirement into the ground and just you'll be okay. That's scary to me. I mean, and I made the analogy of air transportation on purpose is because if you flew commercially on the pilot, got you up and then drew, threw you into the ground as fast as possible, you would never fly commercial because you'd have a fear or a phobia of it. But what you want to do is you want to glide path this thing down, live your best life, and not have to react no matter what the market. Because there's already going to be weird stuff that happens to you emotionally when you leave the workforce. So you might as well make sure that your money can actually keep you safe while you're kind of going through the ups and down. of the volatility. Who do you think should manage their own portfolio?

Starting point is 00:56:37 This episode is in partnership with Airbnb. Graham and I are always traveling for the podcast. We were just in Nashville filming a few episodes there, and let me tell you, the food was incredible. I had the absolute best appetizers I've ever had. There was this dough ball and these steak-skin potatoes. It was incredible. But let me ask you this.

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Starting point is 00:57:47 cash on the side, I couldn't recommend Airbnb more. If you're ready to host but need a little bit of help, find a co-host at Airbnb.com slash host. Who do you think should manage their own portfolio? I think there's a lot of people. It's really interesting. We're like, oh, well, you're a funny. You see point. I think Jack should. Yeah. A lot of people think, oh, you guys are financial advisors. You must think that everybody should hire financial advisors.

Starting point is 00:58:07 No, not the case at all. There are a lot of people out there that are incredibly capable of managing their own portfolio. We actually say for folks that are just starting out while you're building out in your 20s, 30s, really until your assets hit a critical mass to where complexity enters in and you have $500,000, $600,000, $600,000 invested, there are so many great resources out there with YouTube channels and blogs and articles and self-management is not that difficult. And perhaps AI is making it even easier because now you can get real-time feedback

Starting point is 00:58:36 on real questions you have. The answer's not always right, so you want to make sure you kind of understand that. I think that a lot of people can self-manage up to that point. But generally speaking, one of three things happens in your life. Either the gravity of your decisions is so great that you feel uncomfortable making the decision alone.

Starting point is 00:58:53 Meaning like, okay, if I make a 10% boo-boo on $10,000, I didn't change my life. I'll make a 10% boo-boo on a, million bucks, okay, that's more significant. I don't know what I don't know. You know, my tax return used to be two pages long and I had my full, now I've got different compensation structure, I have a rental property, I have all these other things going on where complexity has happened, or I'm just so busy, stuff is falling to the back burner, meaning like, I know I'm supposed to rebalance, but I just haven't had time, or I know I'm supposed to think about my allocation, but I haven't

Starting point is 00:59:23 looked at it in two or three years. I think if any of those three things happen, that's an indication. Maybe I'm not at the point where I can self-manage. And a lot of, it's not even people who can't do it. It's people who aren't able to do it based on their current station and circumstance in life. The fourth one I'll throw in there is, because we have some pilots that are clients that I told them in another life, you should have done this for a living. Because I look at I mean, you get, they become clients. Well, they prospects first. Their asset allocation. Their portfolio is 10. You see they've run all the money. Carlos, they done all the tax planning. You're like, you guys are geniuses. You're brilliant.

Starting point is 01:00:02 And I'm honest enough when I was doing prospect calls with these guys, but you don't really need us. And then they let me in on, you're right, but I'm worried what happens when I'm dead. And I'm getting old enough that I'm, you know, I don't want to, I don't want my wife or my spouse to be concerned about who takes this out. So we've actually had people hire us who were doing a superb job of self-management, but they just wanted us, we were their insurance policy, see in case they left and they wanted to make sure their spouse had somebody in the background that thought like they did about money. And what should those people be investing in overall?

Starting point is 01:00:38 I mean, we love index funds, low-cost, well-diversified broad index funds. I think if you looked at the portfolio as we managed the lion's share of those, are there? Now, there are areas where we do think that inefficiencies exist, where maybe an active type fund might make sense. But for the vast majority, low-cost index funds. And the self-managers that are young that are just starting out, I think things like Target Retirement Index Funds are a great salute. The reason, Bo gave the game earlier,

Starting point is 01:01:05 we love index funds because we don't talk about this a ton on the show. It's just the market, because of how fast information travels everywhere now, it's hard to think you have knowledge that somebody else doesn't have. So I think just buy the market, the efficient, that's why when he talks about efficiency, like if you could truly do a trading strategy, that generates 100 plus percent guaranteed a year, it would disappear so fast.

Starting point is 01:01:30 I mean, it's like we even... Because everybody would be like... I mean, we've even seen it because we really did have people present to us the crazy arbitrage that you can do on sports betting. And it's true. You really can make great money for a moment because their systems are so smart

Starting point is 01:01:45 that they'll start limiting your bets as soon as they start realizing that you're playing those type of arbitrage trades, the sports betting sites. It's the same way with normal investing, too. If you really had the better mouse trap, I just don't, I don't, I think the thing. Yeah. The exact reason of what you're saying is like, is what has prevented me from putting a meaningful amount of my portfolio onto a strategy like selling covered calls.

Starting point is 01:02:07 Because every smart person says that the market is efficient and that there is no way to get a hundred and 85 percent rear. So just buy the index and save yourself the hassle. But it's still to me the logic does not make sense. Like I would love to be presented with an argument aside from just some theory that the market is efficient and you can't get it with actual math and data. suggesting why I could be wrong. Look at the SPIVA research. All these, if you could be an active manager that is just trouncing the S&P 500,

Starting point is 01:02:34 go look at the SPIVA research. If you go to SPVA, was it SPIVA dot ORG or whatever? But it shows you managers will beat the S&P, but not consistently. I think that they probably have, they're probably trading huge amounts of money, which is there. Well, that's the other problem.

Starting point is 01:02:48 That's a whole other problem, though. I think that we, let's discuss this afterwards at dinner because we're doing dinner afterwards. And I would love, we'll say, If they're right, if I'm right, or if we just agree to disagree. Jack's going to cut back in, like, tears in his eyes. Yeah, I was wrong. But I do.

Starting point is 01:03:02 But I do. I like, but I think it's actually freeing if we tell the general public that it's okay to buy an index fund. Oh, 100%. Even if you have millions of dollars, it's okay to buy index funds. Because even there's still some sexy exotic stuff you can even do with index funds. Grandma had had off, you know, conversation. Really cool things that are out there down the road if you're trying to, get creative with borrowing money and other things, but you can just start your foundation still

Starting point is 01:03:30 on just buying the general economy. And I think a lot of people are surprised to hear that even folks like deca millionaires who have tens of millions of dollars invested, a lot of them invest the money the exact same way as folks who have tens of thousands of dollars, low cost, well-diversified index funds. Should they be invested the same way? It depends on the unique circumstance, but I think in a lot of cases, yeah, I know for a lot of the folks that we work with, they're doing the exact same thing buying low cost S&P 500 well diversified appropriate cash appropriate risk metric so here's here's an interesting theory I think if you have less money you depending on age obviously let's just say a young person who has a lot of money a young person who has little money the the person who has little money should

Starting point is 01:04:10 probably be a little bit more aggressive because to them you can't really do anything with so what's your definition like if we if you don't do you not you don't think the S&P is aggressive you think only the cues you know what are you thinking you know you could be more tech house You could maybe have a couple stocks that if they end up doing a more risk capitalized. You've heard of say like in Vidia hood Amazon. But what you argued that if you have a recency bias to that analysis. If someone has $20 million and you'd say, oh, well, you should have tax-free muni bonds, you should have, you know, a little bit of this, a little bit of international index fund,

Starting point is 01:04:42 stuff that's more oriented towards capital preservation because once you have $10 million, you've won the game. There's nothing in your life that like for a reasonable, for a normal person that you want that you can't afford. But if you have $10,000, you can't raise a family. You can't afford a new car if you need one. You know, let's say your car breaks. You might have a hard time transporting yourself around the city.

Starting point is 01:05:02 You still need to work in order to afford the things that you want. Someone with $10 million does not. So like, it's reasonable that they would go into capital preservation as opposed to the other person going into more like a group. But the SMP is not capital preservation. I mean, I mean, look, it's not, it's not wild out, but it's also not it's not capital preservation. I would ask the risk of not being a successful investor is greater for folks with smaller sums of capital or lower incomes. That's why the person who has a smaller income but a lot of time and they're only able to save, you know, I can only save a thousand bucks a year, $5,000 a year. It matters for that person that that $5,000 grows and does well because they are really, really counting on it for that to be multiplied through compound interest over years and years and years and years.

Starting point is 01:05:49 If they say, oh, you know what, I need to swing for the fences, I'm going to put all of it in Nvidia or an app or fill in the blank and it doesn't pan out, I would argue that that was more got some behaviorally too, because, I mean, look, I have a great friend, came to America, and he starts making good money. He started some businesses here in the United States, starts making good money. And he asked me how investing works. I was like, let's dabble into the, let's get you in the S&P 500. You know, we set up, we open up like a Fidelity account, set up a company, contribution. I kid you not, it was probably two months into it. He calls me, he sends me a text or calls me. I can't remember. And he's like, you didn't tell me I could lose 12 percent.

Starting point is 01:06:30 And I was like, no, this is part of the process. It's going to be a okay. Don't worry about it. So I found out he shut it down. So he only did, he only did two months. But they were decent sums, though, because he was going to dollar cost average some pretty good chunks because he has good money and he had some good savings. So these were two decent tranches that he put into the market. Fast forward five years. We're still good friends. He comes to me and he goes, I think I need to fire this thing back up because I looked at this account and Brian, it's things up like 60%. And I'm like, yeah, this is the way this whole works is that, yeah, you know, you put the money in. You just, but you can't look at it daily. And that's what I worry if you put something too

Starting point is 01:07:09 aggressive for somebody brand new to the money making process and how the economy works, they get discouraged. And what, and for a new person who doesn't know how the economies work, what feels risky in the in the in the in the in the in the short term is actually your best advocate and success vehicle for the long term and what feels safe in the short term is actually detrimental to you in the long term that's what all these people I grew up in a household we didn't have money but my parents are great savers really good savers really disciplined I get my discipline for my parents but they did cds will gut you with inflation and everything else if you don't understand the value of actually making your arms

Starting point is 01:07:48 of dollars work, you're doing the hardest part of the discipline, but never getting the part of letting your money do the work for you. So we've been pretty open about how much we love our team here at the ice coffee hour. And when we were looking to hire Gavin, he wasn't just qualified. He was eager to learn about the job, excited about the podcast. And you could just tell that he wanted to be here. And that's what really made him stand out. And honestly, that is everything when you're hiring.

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Starting point is 01:09:59 a top-rated doctor today. That is Z-O-C-D-O-C.com slash iced. This message is sponsored by Zock-D-D-D-C. Thank you for sponsoring the episode. What are some of the biggest mistakes that you've seen people make? Well, not saving, I think is one of the most common you see across the general public. Just never actually getting started saving or putting something aside, living at their means. Because everything we're talking about is precipitated upon the idea that I'm going to defer a little bit of my income, my pay, my whatever today for some greater outcome in the future. And a lot of people don't even make it that far. I want to see the horror stories.

Starting point is 01:10:34 Well, the other thing, you see them. I mean, and the stats show it too, I can't remember Phil. Schwab, Vanguard, one of the big investment houses talked about. about how much 401k money is just sitting in cash. Do you know how disgusting that is to think about how much money in an asset that you can't even reach until you're in your 50s to 60s is just sitting in cash? That breaks my heart.

Starting point is 01:10:56 I think that's a huge mistake. We see that all the time because a lot of people also don't know. When you do rollover transactions, you know, it's a two-part transaction. You transfer from your old job to your new job. But then the second transaction, you actually have to invest the money. A lot of people go through the hard work of transferring. But then it just sits in the cash reserves or the stable value and never gets invested. That's disgusting, too.

Starting point is 01:11:19 You know, not saving, not letting your money work. I'm trying to think of the other thing. I've got two horror stories for you. One, not knowing when you've won the game from a risk standpoint, tell the story. You know who I'm talking about. I won't give too many details. We had somebody that was in our life that, and I saw their network, I mean, because they left some stuff on a copier machine one time. And so that's what you do when you see someone leaving papers there?

Starting point is 01:11:44 No, you're just trying to cry out and be like, holy cow. It was a very successful, this gentleman had a small business. He was very successful. Well, he started off as it was more of a food industry job. He had enough. His son comes along and convinces him, hey, use some of that financial success. Let's get into real estate development. And they got into doing real estate development.

Starting point is 01:12:06 And now realize Pops is set for life. I mean, and by the way, Pops has done some good. things. He owns commercial real estate. He's, you know, he's got all these things going on. Well, they start getting, you know, residential developments and they took on more and more debt. And unfortunately, they put up, like, I knew the commercial building that we had some affiliation with them. It was debt free. It was completely. But a building can be debt free, but if it's promised to the bank as collateral. As collateral on some other deals that you do, and that's why personal, when I used to work with professional athletes, the personal guarantee was

Starting point is 01:12:38 the thing that gutted most of these guys is because they don't really, is what they're signing on to when they sign those personal guarantees, is that, and we watched this poor, this multi-generational family that had millions, gone to nothing. And essentially, you know, end up losing the building, losing all the assets. And they just did not recognize,

Starting point is 01:12:59 hey, we've won the game. We don't need to take on additional risk. And then we have another, this is a horror story. One of our recent guests on making millionaires, you know, we sit down and kind of do this, have this conversation with them. they had a financial advisor who had this unbelievable deal that they ought to get into and you just give us some money. And what ended up happening is the advisor said, hey, we're

Starting point is 01:13:19 investing all this money in this development in Texas. They did not live in Texas. And turns out the advisor just fleecing them, just taking the money, never actually invested it, ended up losing his license, haven't, and it was just this horrible thing where they lost hundreds of thousands of dollars from a nefarious actor because they believed him and trusted him and didn't actually know where their money was. I mean, we've had cases. I mean, because we've been doing this decades now. I mean, I had somebody who convinced a widow with their 401k money to buy a bunch of equity indexed annuities that was, you know, fortunately, because those things have looked back periods, we were able to go and unwind it.

Starting point is 01:13:58 Wow. And fix it, you know, and kind of like the nick of time, you can imagine, you know, we've done some things to help people out. Another retired couple, paid off house prior financial advisor was trying to. convince them to do a cash out refi to take all that money. Go put that money in the accounts with him. And go invest it and also buy a bunch like insurance annuity products out of the equity in their paid off house. And they were already retired with pensions. It was. Yeah, from a risk standpoint, that's that was less than fiduciary for sure. Did not make did not make a lot of sense. So managing $2.2 billion, who are the best investors aside from pilots and who are the worst

Starting point is 01:14:35 investors. You know, I think anyone, uh, engineers tend to be like very good. If you work in like a pragmatic field like that, um, engineers tend to be really good accountants, people that are in finance generally understand how money works. But it's really interesting. I do think, and Brian said this earlier, I think there might be like a savings gene that we're born with. People that just understand is, because you would be amazed at all the like different and wild vocations where people can be very, very successful, even if they're not the attorney, doctor, engineer, you know, that sort of thing. On the stereotypical high income careers, the one, now look, I have clients that are in this

Starting point is 01:15:15 field. So I don't want you guys write me and say, I'm in that field. Why would you say I'm good with money? Yes, y'all are good with money. Your work with us, you're a client. But I am amazed at how few attorneys we have as clients. Now, we do have attorneys as clients, so don't miss here. But I don't, I'm one, if you look at engineers, accountants, teachers, attorneys, doctors, because we have a lot of doctors too. And we pick on doctors. Doctors already get picked on a lot. But there's a lot. What I think is interesting with medical professionals, there's a wide disparity. They also have a target on their back. There are some that are like unbelievably astute and incredibly good at managing money. And there are some that are unbelievably egregious and make horrible decisions. That's a wide. I don't, I just, I'm trying to figure out if attorneys' personalities just don't leave.

Starting point is 01:15:59 to a lot of, I mean, because obviously there's a lot of wealthy attorneys, don't get me wrong, but seeing them in practice working with financial advisors, I don't see as many. We do have some. Doctors, now, we work with a lot of doctors, too, but I think that they have the uncomfortable thing is that they go from tremendous debt to making great incomes. So there's an entire cottage industry is trying to sell them products to kind of lock their money up in a lot of ways, too. And I think a lot of people that have the most success are people that are able to, I'm going to say build wealth slowly, but like build it consistently. Some of the things where it doesn't always turn out great, professional athletes who like sign a big deal, big contract, but it's relatively short-lived,

Starting point is 01:16:38 people that inherit a lot of money from a first or second generation, big windfalls. Hey, I sold a family piece of business or I sold a business that was not liquid, but then it became liquid. Windfalls are also an area where it's kind of touch and go in terms of how well they're going to steward that. Good ones, blue collar businesses. Oh, yeah. They usually, they're They crush it. Small business owners? The small business owners, they crush it, especially when you can get in there. That's my, that's the ones that I get the most, like, want to high five after I walk out of a meeting on because when you see their tax structures and you see their account structures and you show them the tax savings on certain strategies that you can do. Because if you're a small business owner, because you know what happens with small business owners?

Starting point is 01:17:19 They go from, they're paying taxes. But then one year they hit, they actually hit it where their income bounces. And then they realize, and they go meet with the CPA. and the CPA is like, by the way, this year you owe $75,000, plus you own an underpayment penalty of like $6 or $7,000. And that's just in the first year they didn't know, what? And I paid all this tax already. And so you can imagine they already have a relationship with taxation that they don't love it.

Starting point is 01:17:44 So if we can go in there and show them through just good retirement structures and other things or even business structures that we can clean that up, they love you. You can imagine. It's like, like it's a high five moment. When it comes to investing, I'm curious because Vanguard now predicts lower than average returns over the next, like, decades. Well, surprise, surprise. I saw your substack, and I chuckled to myself. You have to know, Graham.

Starting point is 01:18:06 I have to, I chuckled when I literally want to sell it. Because every year, and if you go, we could probably go pull the tape because we react to that every year. Vanguard. One of these years, they're going to be correct. Every year, Vanguard tells us, you know what you ought to expect from the market going forward? But it seems. About 3.8 to 4%. It seems.

Starting point is 01:18:24 It seems realistic. Every year. Does it not seem to be the easiest job? I won't that guy's job. I want that guy's job. It's always, back coming out of the Great Recession, we saw some really, really good years, 2009, 2010, all the way up to 2012. And in 2013, I think the market made like 32%. And they said it again.

Starting point is 01:18:41 All right, market is recovered, poised for below average returns. And they say it over and over and over again. And at that point in time, you would have suggested, man, well, doesn't it look like this? Look at all this stuff going on. Look at what's going. it always quote unquote looks like that and yet it doesn't manifest now could there be a period of of underperformance perhaps yeah that could be a thing but there's something going on right now distinctly that would suggest the next period is going to be under performance i don't think so they literally said

Starting point is 01:19:11 10 years ago that over the next 10 years that you're going to average 4% 5% if you look at what the broad markets have done it's 17 to 20% last 6 years every year there's typically a 14 to 15% entry year up and down anyway. And if you think about what we've seen historically, like broad markets like the S&P that we've already had all these conversations, they typically do what's called a V-shaped recovery. They will either get overpriced really quick or underpriced really quick. And you see snaps. You know, it pops. Like we call it the rubber band effect, you know, so that's why if you just dollar cost average, I know it's boring. I know it's not sexy, but if you just consistently buy, you get to capture all that stuff. It's a great volatility

Starting point is 01:19:53 protector from yourselves as just being consistent with your behavior. The difference is like real estate, because I know you have so much background in real estate, it's more of a, you know, a U-shaped recovery. You know, it's not uncommon that you'll see the real estate market not do fee-shaped recoveries. They're more much slower moving. And I think that's why sometimes we have trouble, at least the public does, differentiating that different things act completely different. And that's why when Vanguard tells me 3.8 or 4.8 percent, I'm always like, a moment in a moment in time. I mean, last April, were we down 20%? I mean, it was, so if you were basing decisions off of that, I think you would drive yourself crazy. But it all things like the weatherman, right? If the

Starting point is 01:20:33 weatherman predicts a beautiful sunny day and at rain, you get pretty upset. But the weatherman predicts a rainy day and all of a sudden it's shiny, everybody's in a good mood. I think that's what I've often thought. They've had their thumb on the scale is they, we're going to get you 4.8% and then voila. Oh, another year we got 8% or 12% this year. It's best to set expectations. That's right. Underpromise overperforming. Well, speaking of overperformance, what do you think about investing in Pokemon cards? There's a lot of people that do it.

Starting point is 01:21:00 I watch a lot of content on that, though, by the way. I don't do it myself, but I've watched all those seasons. I'm fascinated by the collectors. And what's wild is like, so my brother, he has, my, him and my nephew, have kind of gotten into it, and they'll do the thing, do the packs, and he's opened a couple packs that had, like, some very valuable. And he's actually shown me how they have everything, like, cataloged by, like, what it is, how much it is, what the RO. And it's wild. Now, it's a collectible like anything else.

Starting point is 01:21:25 I would not call that investing. That would not be my nomenclature. But it is a collectible that does have the ability to increase in value over time, no different than other types of collectibles that can increase in value. I've always wondered. Now, look, I'm not, I'm putting the disclaimer out there. But it's just like, I'd be curious. And maybe somebody knows this and they put it in the comment section.

Starting point is 01:21:44 Like, Elvis, now, maybe because the new movie came out, it's back, the market's back up or whatever. But I've often wondered, because that audience is aging out. are his collectibles still worth as much as they work? Because I'll often have to believe, is there some ebb and flow on the age of the people? Exactly. That's the inefficiency that's taking advantage of.

Starting point is 01:22:05 Right now, the future collectible is going to be Justin Bieber and Taylor Swift. Oh, really? But I would imagine their memorabil is already. It is. But imagine in 30 years from now when a lot of those people have a lot of money and maybe they're not performing as much.

Starting point is 01:22:20 What are things? Like, Pokemon is a big thing when I was, when I was a kid, right? And it seems like there's been this new resurgence that now young kids these days, it's still a big thing. So I don't feel like if it were going to be a collectible, it'll be a long time for it. But you realize you are getting to the age now where things are going to, you're going to see the boomer ring. He's just starting to go again. Because things from your childhood will now become the hot commodity just because of you are the age of you're the parents, the generation of kids. Consumption is profitable.

Starting point is 01:22:47 So there are people who are out there creating markets to take advantage. You'll see the movies, the music, everything is going to be catering to your group to when they're creating all this creative content. So what percentage of a portfolio should be allocated to Pokemon cards? I mean, look, if you want to, because we let people do speculative stuff. So if you want to dabble with three to five percent of your portfolio, go knock yourself out. But it falls back to the jack category of hobby. I mean, because that's what I'm not picking on you about that. But you said you get fun out of that.

Starting point is 01:23:19 I do get fun out of it, yes. I say less than 5% of your liquid portfolio would be okay to do something. If collectibles are your thing or individual stocks your thing or, you know, cover call option strategies you're thing, I would try to limit it there. Here's what I found really interesting is that there's a theory out there that says that young people are not buying houses because houses are so expensive. So instead they're putting their money in collectibles like Pokemon cards, watches, and cars. And that's why a lot of those things are going up in value. Because think about it, maybe buying a 600,000. thousand dollar house is unattainable buying a twenty thousand dollar

Starting point is 01:23:52 Pokemon card you can't theoretically obtain that or buying a eighty thousand dollar sports car but the thing can i tell you the only problem i have with collectibles is kind of like because i went through a watch phase myself now i'm all seems like the wealthy i get the more gizmo i get i instead of looking at the luxury watches the thing nobody ever talks about is the market drag cost to actually turn what the market value is into liquid value because you usually have to go through brokers you typically have to, or a trading site that's going to have some type of trading cost to it. So the market, and we all get frothy and excited about it, but if you actually, I think it took

Starting point is 01:24:29 into account all the costs that you'd have to turn that into liquid cash, I don't think it's actually as valuable as people say. I think it's great if you sell that. I think Mr. Golden probably does a great living being the marketplace for that stuff, because it's a pretty nice rake on that, doesn't it? But I mean, but if you were thinking this is how I'm going to build my wealth, The same thing if you're trying to sell watches or jewelry, the market is very inefficient on what the costs are going to be for you to turn that into liquid cash. Yeah, and they're all unique products. So you'd have to, I want to, you'd want to feel pretty confident you had the right one, right?

Starting point is 01:25:02 Not all Pokemon cards are designed the same. So you hope that you buy it for $20,000 today and it's worth more in the future, but it's only worth more in the future if someone else is willing to pay more than you paid for it. I would tell that young person, hey, if you have $20,000, instead of doing the Pokemon card, if you're going to say yourself for a higher probability of success, go by $20,000 of the S&P 500. And you have a higher probability that in the future that S.P. 500 be worth more than it was when you purchased it.

Starting point is 01:25:28 But I do want to give one exception is that, because I've had two examples, we had a client of the firm who was making six figures trading Disney pins because he was just an expert at the market. And there are in a lot, since it's such an inefficient marketplace, he'd go find pins, you know, and, you know, whether it's eBay or elsewhere, and people not know what they're worth. And you can go basically steal them. It's kind of like your story. But that's an active.

Starting point is 01:25:50 That's not stealing, by the way. He knew the knowledge. Well, also, because you always hear people say, don't buy boats. The best two days own a boat is the day you buy and the day you sell it. But then we had a client that also made a great living, buying, trading boats. But once again, it's because he was an expert. It's back to my point earlier, bringing it full circle. Sometimes it takes 10, 15 years to develop the expert where you can see stuff that nobody else can.

Starting point is 01:26:14 But you have to take into account. there's a skill set or a time component that also went into that, that efficient, that you've built a skill that the market doesn't have. And that's why it's easier just to buy the index if you can't go out there and spot that. And if you don't know if you're the expert or not, then you're probably not. You're probably not the easiest. What are the riskiest investments that you both have personally? Well, I would argue like commercial buildings. Does that, does that count as risky? Is that, that's not a risky thing? What are you talking about? Triple net commercial real estate. Come on. You know what I mean? I would argue that that kind of stuff is. You know, we're small business owners, right? There's a lot of volatility in small business. So that would be, you know. In a best bet.

Starting point is 01:26:55 Look, I don't mind. I know what you are arguing. Where have you put your money? I dabbled in crypto. I tabbled in crypto for a while. I did it for about a three-year stint. And I lost money on it. So I quit because I just, I was trying to dollar cost average into it to see if that would work.

Starting point is 01:27:12 And it was just the thing that bothered me about big. exact same problem like the other guy you were telling about and then four years later like oh man let me defend my position and i will admit i was exactly if i'd have stayed the course i'd have done okay but what i didn't like about it graham was the daily volatility it felt it didn't feel like an investment it felt like a speculative play based upon how much play was every day um i mean when you have four six eight percent you know every day on your trading that that's that's weird to me i mean it just feels like the market swings. And we still, like right now, I'm barely keeping up with Bitcoin anymore because when I gave off. And the other thing that scared me off from it was when the

Starting point is 01:27:53 government put that line across the top of your 1040 and bade you basically, yes, no, are you dabbling with cryptocurrencies? I felt like they were setting a trap to a degree. Because a lot of people are out there marketing, hey, this is outside of the government. You don't have to do it. And I'm like, no, taxation's not outside the government. And if you're not checking that box, yes, you don't, and you don't think Coinbase or, you don't, you don't think Coinbase or even if you're putting this stuff in vaults and stuff, there's things, I don't know if you're keeping up with some of the geopolitical stuff. They just had a big announcement that a lot of the Iranian Bitcoin and stuff has been frozen. How do they know about it? You know, when we had all the protests up in Canada, they froze all the Bitcoin of those turks. How do they, that's what you're told these things about, and I just don't think it's disconnected as everybody thinks it is. And I worry the volatility makes it feel more like a speculative play than an investment. And I'm more. into the investment. Emotionally, maybe it's because I come from an accounting background.

Starting point is 01:28:47 I don't get my highs from, from, from, from, from, from speculation. What, what price did you sell Bitcoin for? I mean, it was probably in the, the mid 30s. It was in the mid 30s. It's around 35,000 probably. So you would have doubled. Yeah, I would have doubled from here. Oh, what'd have.

Starting point is 01:29:01 But, you know, but I have no regret. You would have done okay. I would have done okay. I mean, but, but realistically, I could have tripled. But now I'd have been back to double only in like, because we went up to 100. We went up to 100. How how did we go? 120?

Starting point is 01:29:14 125. Yeah, 125. So, I mean, but look how crazy that ride is. I mean, I would be, because the other thing is, I already told you the Apple story. I mean, I still kick myself on that one because emotionally I started getting reactions. Now, look, as a percentage of my assets, it wasn't even a rounding error of a tenth of a percent. But yet, I was mad that it was down. And it's the Apple.

Starting point is 01:29:38 I mean, I should have held on, but you don't know. And that's why probably the craziest thing I have now. I do have close to seven figures in one stock. And I've just told myself I'm going to ride or die with it. What stock is it? Should I say what it is? Yeah, yeah. Should I say what it is?

Starting point is 01:29:52 Is it okay to say? I think you can say, because you've owned it for a long time. Okay. In 2018, I got my first Tesla. I got the Model 3. I got the Model 3. I knew it was tested. I got the Model 3 in 2018.

Starting point is 01:30:04 And I had one of the early versions. It was because I remember I'd ride by the coffee and cars, like where all the exotics were here in town because there's a lot of fancy cars here. And I watched all these people with the Lamborgines of right because the model three when it first came on scene people were like really excited now we see them everywhere I mean you can go I can walk outdoor and probably we can throw a rocket 12 of them but but when they came on a scene and this is the first time I drove a car that people are like ripping their necks trying to look at you and everywhere you pulled up you know people would want to talk to you about it so I was like holy cow this thing is pretty magical so I put $25,000 into Tesla back at the beginning of 2018 you can imagine it's done pretty well. So you're at close to seven figures now. Yeah. Now, if you sold some cover calls on it, it's just seems like you're a little overweight in that stock. Can I tell you the

Starting point is 01:30:51 other thing I am excited? It's in a Roth R8 too. Is it actually? It's in a Roth R8. So I am, I feel, I feel like the best investment you've ever done. It's pretty good. Now, no, the best investment is, is hiring both. There we get. I hired a hard bow in 2008. That was probably the best. You know, but yes, from a individual stock is, it's been the best investment. And I've just decided I'm going to ride or die with it at this point. There's no plan. There's no goal. It's not if it hits this amount. You're going to do something. It's just like money for the sake of money. Because even as a, even though that is at that level, it's still as a percentage of my holdings is just, it's not enough to move the needle. And so for you, you don't have a story like that.

Starting point is 01:31:28 Well, I have one similar, but it's way, it's not as exciting. I also own Tesla stock. Mine's not quite seven figures. But I was going to do, mine was a content play. When they first, when they very, very first announced a cyber truck. I knew how much Brian loved his Tesla. I'd ridden it of lunch. And I was like, oh, you know what I'm going to do? I'm going to see if I can create some content. So when they announced that I started just dollar cost averaging buying a couple thousand dollars of Tesla every single month, right?

Starting point is 01:31:53 And my plan was by the time the cyber truck actually came out, I was going to create some content around, this is how Tesla paid for half my cyber truck or whatever the thing was. Well, it ended up coming out and it was not as like interesting or exciting to me. So I decided not. We decided we're not a cyber truck type of people. I was like, I'm not really, but I was like, well, okay, I've got all the stock. And it did what I thought it would do. It was certainly more than enough to buy the truck.

Starting point is 01:32:17 I was like, but you know, I'm going to hold on to it. For some of the same reasons, Brian said, I'm like, I've got it. I don't really want to pay the taxes. I don't trigger the gains. So I'm just going to kind of consider that a lifetime holding. So that's, I guess technically that's my riskiest investment. My wife forbid me from buying the cyber truck. She thought it was so ugly.

Starting point is 01:32:32 I couldn't do it. And what's the most that both of you have lost on an investment? Because it was a speculative play. I mean, that Tesla has been all over the place. But I haven't lost. I didn't lose. Yeah, you've made a ton of money off. Right.

Starting point is 01:32:46 What have you lost money? You know, there was, we did options for a while. This was not a ton of money, but it was a great learning experience. You know, we put a, we did some option strategies way early. Back when I got the CFA, very early on, this was like, we were like, let's flex the muscle on this investment. I thought I had the market figured out. So I came up with some, um, option strategies we could deploy. Uh, I was the strategist.

Starting point is 01:33:05 Brian was the capital back then. Uh, and so we made. We doubled in a month and a half. We thought we were genius. The worst thing happened with strategy is you actually hit it the first time. So we turned 5,000 into 10,000, like, in a month. And we were like, we are genius.

Starting point is 01:33:21 Like, Bo, we're going to be so rich. And so then I was like, hey, you know what? Okay, this was good. I have another idea. And I came up with another idea. And this is what's so frustrating. We were going to, we were going to buy some long calls, and then we're going to buy some puts on, on.

Starting point is 01:33:35 Well, we can say, it's probably, because it's kind of fun to think about it as Netflix. Yeah, we were going to, so we bought calls. So we bought calls on Apple because we were bullish Apple. And we were going to putts on Netflix because we thought Netflix was overvalued. And it was. We were right. And here's what's wild.

Starting point is 01:33:48 But this is why you have to be worried about the time degradation. I think it was like, that's why you sell it. It was like six, nine months, something like that. And I think Netflix was trading at like 300 or something at that point in time. And the time ended up running out. Options ended up expiring worthless because, you know, it never. And I kid you not, it was like less than six months later. I think it was less than two months.

Starting point is 01:34:08 Two months later, it won't drop down on like 70 or 40%. $70 or $80 a share. It was a huge drop. We would have made a fortune. If we would have been two months. But we realized that you can be right on a trade and still not make a dime because the time element of doing contracts, it can hurt you. Because you can be spot on, but markets aren't efficient in the short term. They're very inefficient on the short term.

Starting point is 01:34:30 You can be spot on that something is overvalued. It's a bubble or whatever the case may be. Now, look, Netflix turned out to be a great company in the long term. Once more, one more, you know, cap, you know, feather in the cap for being a long-term investor is that even if you would have ridden that stock down the 40% where we were right on the overvaluation, they caught their stride and went right back up because they were still, you know, there's been frothiness. All companies deal with that. And that's why I like being a long-term holder. But that's why the lesson, the lesson I took away from that is as an investor now, since that point until now, I have a really hard time betting when there's a time constraint. If I'm going to buy something or invest in something, I want to be able to be able to. okay, this is a Warren Buffett mantra again, being a lifetime holder of that thing. If I buy this, I don't care what it does, this week, this month, this quarter, this year, this decade, I'm going to be okay holding it long term. That's why most all bets, even if I was going to do

Starting point is 01:35:22 some sort of option thing, I want to be long, I want to be bullish on whatever that is, because it's just so hard to get the timing right when it comes to investing. The market has a way, at least in my experience, of making us all, even the smart ones, look like fools. What are your thoughts right now in the real estate market? Because here's a a few other stats. 75% of U.S. homes currently for sale are unaffordable with the median

Starting point is 01:35:43 income household, and 97% of the U.S. are considered unaffordable by historical standards. It's hard out there. We just did a show that's doing really well, because I think we hit a cord with something, should you own a rent? And we went deep into the data.

Starting point is 01:35:59 And because something I've been on the rooftop screaming, I kind of... Because it's frustrating, thank you. I mean, because I want people to be able to buy a house. But I also want to be... I want people to get good information so they don't get themselves in a bad. Somebody give them the expectation that they should buy a house because that's the next thing successful people do and get themselves in a bad situation.

Starting point is 01:36:19 And what I've been telling people, and I'd encourage you, please go check out that show we did because it was a super deep dive, I'm not going to be able to do it justice with this quick answer, is that for a lot of people, you know, the market made 50% in like a three-year cycle on residential construction, you know, if you think about what houses went up. So to think that that reversion to the mean, because like I said, it's not a V-shaped recovery with real estate markets. They typically are much slower moving. I think you're going to see real estate likely might underperform for a period of time. I mean, you're even seeing like a lot of markets now have inventory levels exceeding four months, which is something that we didn't see that long ago.

Starting point is 01:36:57 We're starting to feel like that it's a buyer's market more so, but it's not there yet because also the interest rates went up to a point where 50% more. your monthly payments went up 50% just off the interest rate alone. So don't do, don't feel forced to do it. Do it because it's actually something that makes sense for your personal life. So from an investment perspective, we would argue primary residents are not an investment. It's not an investment decision you're making. It's a lifestyle decision. You need to make that decision based on when it makes sense for you to buy a home.

Starting point is 01:37:27 So if you're someone who's thinking about getting into real estate as an investment opportunity, well, then it comes back to the same tenants that real estate has always had, location, location, location, what's attractive about, out of market. What type of property is it? What do you hope to get out of it? What are the, you're going to pay cash for the financing options? Can you cash flow if it goes bad? I think you can still investigate it and look at it. And I think there still can be a compelling case to be a real estate investor. It's certainly harder to do now, specifically in the residential side than it was 10 or 50 years ago. And elongate your holding period. So you can hopefully the time

Starting point is 01:38:00 will smooth out any craziness in the pricing. Yeah, it's crazy what I'm seeing right now throughout Los Angeles, a lot of properties are selling now for the same price that they were between 2014 and 2018. That's wild. Depending on the market. Well, you've also highlighted there's a lot of crazy stuff on restrictions on how you can use the property too, which I think that kills the market as well. It does.

Starting point is 01:38:18 But even in Las Vegas, I'm seeing a lot of sales that when people bought from 2021 to 2023, they're selling at the same level, if not slightly less. Yeah. So these are people who bought and they're losing money on a sale, holding it for three to five years. So don't feel forced to do it because, you know, you know, you know, you know, you're not. you know, trees don't necessarily have to grow to heaven. You know, that's the thing.

Starting point is 01:38:37 I think we all know real estate's good, and especially the levered debt side of it, when things are good. It's great. But it also can hurt you. If you have to use other people's money to afford whatever you're trying to do in real estate, you probably can't afford real estate.

Starting point is 01:38:51 That's why we love real estate. You know, we've talked about. We've done some decent amount of commercial real estate, but it's more of once you have a good financial stability underneath you, so that if your place sits empty or, you know, you have to make big repairs or put a new roof. It doesn't need to stress the system. Too many people try to get in way too soon.

Starting point is 01:39:11 Is now a good time to flip a coin for a house? Oh, my God. I still, it still seems that he did it. He did it. He was like, hey, and it was $1.9 million, right? Like, that was how much house was. Y'all said y'all are friends with him. Yes.

Starting point is 01:39:25 I wouldn't flip a coin. He's got to come see us because I want to meet his person. Because his personality is the polar opposite of my, I'm just too. I'm too risk-adverse to ever do anything off. He would probably do it. He did a whole financial audit with Caleb Hammer. What's the most amount of money that you would flip a coin? Would you flip a coin for a thousand bucks?

Starting point is 01:39:43 Yeah. 10,000. With you guys? Yeah. 100,000. How many views you think we could get if we did a full coin flip for $10,000? Do you flip a coin heads? No, not 100,000.

Starting point is 01:39:54 I would do $10,000 because I know it would be going to you and you would invest it. Okay. Fair enough. So I just thought that someone could do that for $2 million. Can I just seems high. You all are great in the, y'all are much better at the content space than us. Do you think sometimes we do those big transactions that do you, do the views cover the loss? No.

Starting point is 01:40:13 He spent, do you want me to call him? I'll call and ask him what's the most you would flip for. Oh, no, we're not doing that. He just flipped for a house. And I'm also, I am, I am better than I deserve on things that I'm just not crazy enough to do it. Okay. We'll see. We'll see if he answers.

Starting point is 01:40:30 Yo. Yo. No. Yo, we're on a podcast right now with the money guys, and you came up, and we had some questions, okay? Did you really flip a coin for a house? They don't believe that you flipped a coin for a house, so we need confirmation. You flipped a coin for a house and lost $1.9 million? $1.95 million on one coin flip.

Starting point is 01:40:51 Factually real, and I don't own that house anymore. So, okay. My friend, the guy lost it who gave me a revolt up, but then I crashed it. So I didn't get much of it. So if, okay, so if you would have won, you would have gotten cash or what would you have gotten? Cash. So he put up cash for my house. So I would have gotten one point nine.

Starting point is 01:41:10 So would it have really gone down? Like, if you flipped and you would have won, do you think he would have given you a $2 million? Gosh, that's just crazy. That's a different life. What's my best friend. Like, yeah, we, it's, you know, would you trust, you know, your friend that's sitting next to you to pay $2 million? Yeah, but if you're my best friend and we flipped a coin for the house and I felt like I was going to take you. your house, I'd probably be like, dude, I know, don't worry about it. Well, you know, two out of three or something.

Starting point is 01:41:34 Did the video at least make enough to like compensate to make that a worthwhile investment of $1.95 million? No, no, you have to understand this. Listen, ready? It's not like, I invested $1.9 million. I invested in the opportunity to make $2 million. The video didn't, this is facts. It's not about the video ROI. Maybe the video R-O-I made like, realistic the $300,000. Okay, it did make $300,000. So I really, really, I made $300,000 on the video, and a 50% chance of making $4 million is worth $2 million. So I made $2.3.

Starting point is 01:42:11 It just on paper, it don't look like that. That mathematics only works if you do it over and over and over again. For a single outcome, you can't do that same sort of statistical math. You wanted to do it again? You have to flip. If you were to flip a hundred times and a hundred times you were to do that, in theory that your math would hold. But one time...

Starting point is 01:42:30 be a bunch of nerds about it. All right. Last question. What's the most you would flip a coin for? Honestly, as much as I joke about it, that was mildly traumatized. Okay. There we go. There we go.

Starting point is 01:42:46 All right. Today, in my life position today, I would do $400,000. I'm not comfortable doing it anymore. Hey, can I ask a question, though? And you don't have to disclose this. What is your liquid assets, like, invest? I'm just trying to figure out how deep 1.9 was into your bench. This is funny.

Starting point is 01:43:06 You're going to like this. Hold on. I just want to know. I need to have context. Assets right now. We have like, you know, maybe we have a crib that's a few million,

Starting point is 01:43:15 a bunch of floors. But I emptied the bank account, no investment. This is my only asset right now. This fucking parlay that just hit for $1.4 million dollars. I got to go cash it in and two days. Holy crap. What do you bet on?

Starting point is 01:43:28 We put 600,000 on PSG to win two nights ago. So that's why I'm in Paris. We went to watch the game with cash. Name five players on PSG. Couldn't name more on that. Oh, my gosh. That tells me everything I need to. That is wild man.

Starting point is 01:43:47 That is so awesome. Thank you for answers to the questions. I appreciate it, man. That's wild. There you go. That's wild. Man. He's as real as they come.

Starting point is 01:43:57 That's brutally honest, too. Yeah, that's, I... He's a guy you could trust with your life. He's a man by... But what if someone else like, hey, I'll flip you for Bo's life. You'd probably take that, you know what I mean? That was all. I mean, holy cow.

Starting point is 01:44:12 But you know what? In friend groups, I would probably want to hang out with somebody like that. Because I'm always looking for opposites. Because I'm wired so the opposite of that, that it'd be interesting. I always love going to the casino when my buddies go in the high stakes room. No kidding. I just get to kind of watch them. That's...

Starting point is 01:44:27 I get utility from that. Oh, it's exhilarating. We went with Steve Will Do It into one of the back rooms and we saw there betting a $100,000 a chip. That's wild. And in a hand,

Starting point is 01:44:38 you could lose $100,000, make $100,000. He was up a few hundred thousand dollars. But it was just, to me, I got the same feeling as if I were doing it myself. Oh, yeah, but it wasn't your money, which is great.

Starting point is 01:44:50 You got to do same experience, not the same cost. That's why I like to have friends that have boats. So in order to afford property, how much money must you be making these days? For a primary residence? Oh, I think it depends, right?

Starting point is 01:45:03 You know, it's interesting. You mentioned the affordability of housing as, but I think right now, if you look at the median home price in this country, relative to the median income, it's like four point eight times. It's the highest it's ever been. So housing is that as unaffordable of a rate relative to the median house what it's been. So I think it's very much person dependent.

Starting point is 01:45:20 In our opinion, when it comes to buying a house, we think that three things should hold true. You don't have to put down 20. I think that a lot of people say you have to put down 20%. When your first house, you don't put down 20%, you don't put down as little as 3 to 5%, depending on the type of line you're getting. We do want you to be in the house at least for five to seven years, but we don't want your total housing costs to exceed more than 25% of your gross income.

Starting point is 01:45:42 So I think that's where the barrier lies. Like what income do you need to be able to buy a home? It depends on the prices of homes in your area that you're looking at, and you need the income that would substantiate, the housing is not more than 25% of your... There are two asterics I'd put with. that. If you live in high cost of living area that has public transportation, you might be able to boost that, you know, juice that number up 8% because you don't have a car loan. You know, most people have car loans. The other thing is if you're in a half-flying career like, let's just say you're right out of school or you're an attorney or an accountant or somebody who's your career trajectory over the next three years is going to go up, you can use some projections to go probably, you know, to skew a little higher. And I don't think you have to own a home. I think there's a conventional idea that you have to be a homeowner, have to be.

Starting point is 01:46:29 You can be incredibly wealthy, incredibly successful, and build towards financial independence as a renter. It's a very personalized decision based on where you live. Look at the market because, like, some markets, you're crazy if you buy. I mean, we have a number of clients. Silicon Valley. It's cheaper to rent. Way cheaper. Than it is to buy.

Starting point is 01:46:48 And then you just go retire somewhere. So why are people buying there? I think some people use it as a holder. of value. You know what I mean? You know, if you have... I just told you the majority of Americans, the only wealth they build is in their house. And so it's like a four-set. And also you have outside resources. You know, you know, the international money, there's, you know, corporate money. There's others that are using real estate as a holder of value when you're in competition with that. And if you're, you know, you're getting married, you have kids,

Starting point is 01:47:14 you want to start a family, you want to set roots. Your family is there and you think, oh, well, I want to be a homeowner, but I'm not going to leave this area because everyone's here. There's a lot of things that pull people towards that. But if you're going to make that decision, you recognize it, it can be hugely detrimental to your long-term well-being if it's a poor financial decision. And I don't know if I might have misunderstood your question is because I think rent is so cheap in those places because a lot of those people have mortgage. I mean, if they have mortgages on the property, it's sub 4%. Because then they also, the prices were probably a third to a quarter. Yeah.

Starting point is 01:47:46 Because it wasn't that long ago that these property was much more affordable. That's very true. So renting is easier. Do you still think real estate's a good way to build one? wealth. Yeah, I mean, it would be crazy. In like your primary residence? Yeah, I would say so. Over the long term, that's where you're holding period. I know we said our checklist is five to seven years. Me personally right now, just giving an opinion, I love the rule. Five to seven is traditionally right, but I think you have to elongate your holding period because there could be

Starting point is 01:48:13 some crazy volatility, but just buying. How long? Because the average person, I think, holds their house for 11.8 years. 12 years, yeah. I think that would probably work. I think it's at least 10 years. But why does it build value? Well, most people buy a home, it's a levered property, right? So you're borrowing money, you have small amount down, but the entire value of the property, on average, is going to increase at about the rate of inflation. So if you assume the rate of inflation is somewhere between 3 to 4 percent, my home value is going to increase every year at 3 to 4 percent. And because I've levered, I am now amplifying the actual rate of return. So if my house, for me, cash on cash return can make, you know, 8, 10, 12 percent over a long time period, then yeah, it's going to build wealth, but you can't eat your house. I wouldn't bank on that being the way that you're going to pay for your retirement living, but it's not, it shouldn't surprise people that wealth can still be built. What about this argument that you're going to have a lot of boomers going into these nursing homes and having to sell their house and all of these homes flooding the market at a time when millennials cannot afford it?

Starting point is 01:49:17 Well, you never, never bet against the system could change to a degree. Think about this. I've heard several proposals. What if all of a sudden, you know, capital gains right now are capped at 500,000 on being tax-free for married couples, 250 for individuals, they could index that for inflation. They could change it. They would probably, you'd probably have a lot more houses hit the market. And you know, because it would be tax-free gains, potentially index, people might be willing to give a little bit. That can maybe make affordability even help out a little bit because more houses would, because it's a supply-and-demand-demand thing, too.

Starting point is 01:49:49 say supply and demand. If all these houses hit the market, it's going to naturally drive down prices as inventory increase as prices come down. Well, now all of a sudden, it's affordable for millennials or for Gen Z or whoever. And then even the SBA is now made where residential construction qualifies for some of these favorable deals that they offer, where these lines of credit are dirt cheap. I mean, I don't think residential construction has always been considered eligible for some of those SBA loans. So I know there was a huge headline that came out probably four months ago. I sent every. one of my home building friends. I was like, hey, you might want to go check this out. It's just like when we bought this building, the SBA was a big part of the driving factor of that is because,

Starting point is 01:50:28 you know, sometimes, you know, they're trying. I feel like, look, I don't think the government is overall a creator of economic growth, but I do think that they can help subsidize and, you know, spark things to a degree. You need to pay attention to what those incentives are. I'm going to show you this. What do you think about this as a strategy to pay your mortgage? I just last week bought $250,000 a stretch. And the reason I did it, one was just to sort of go through the experience, which I enjoy doing. But the second is I have monthly obligations. And I said, well, I have a 1.75% 30-year mortgage, right? And if I can, instead of paying down that mortgage, put it into an instrument that pays me 11.5%, that's 10x my mortgage rate.

Starting point is 01:51:12 I'm essentially making money by taking the money, putting it into stretch, getting 11.5% and paying off my 1.7%. 5% moreish. And where is that yield coming from? Since again, you're not selling Bitcoin. Yeah, the yield comes from us issuing shares typically into the market. So on the back end, what we're doing is MSTR are common, right? High liquidity stock, the highest liquidity stock in the stock market period, we're issuing shares and we're using that proceed to basically pay off our dividend. And as long as we're issuing shares above net asset value, that's a to our common shareholders. And it's good for Bitcoin and it's good for stretch.

Starting point is 01:51:54 But haven't we seen this story play out, though, with others, because there's, we, we reacted to some content where people were going out there and buying massive houses and then doing the, was it stable coins or other things or these strategies? And then they all kind of, if they imploded upon themselves. I remember that. I saw, I could probably go pull. It was Teril Luna. Because I remember seeing a TikTok where someone said, I'm going to borrow from here.

Starting point is 01:52:19 And then I'm going to make 20% a year from over here. It's free money. Why is it everyone doing this? You know, what's funny is how full circle, because we're not unique. We all are trying to figure out how we can make money easier than everybody else. But it's back to the, if the market really lets you do that, I just don't believe it's possible. But let's step away from the actual investment that he was suggesting that one. Yeah, if you're someone who has a two and a half, I mean, he said 1.75, but two and a half, three and a half, four and a half percent mortgage, it's a really difficult thing to justify paying that.

Starting point is 01:52:49 mortgage off early because that capital likely could be better utilized somewhere else. Even if you're just buying a boring old index fund that's going to make, you know, nine, 10 percent annualized, if I can make nine or 10 percent over the long term and I'm only paying over here, three and a half, four and a half, even five and a half percent, his strategy still works. It's not 10x, but it's still, you know, a two X rate of return or whatever that number may be. I don't know about the actual investment he's suggesting, but the idea that if I have low interest debt, I shouldn't be super aggressive and paying it off. Makes all the sense of the world.

Starting point is 01:53:22 It's why in the financial order of operations, the very last step, step nine for us would be prepaying low interest debt. I leave that as long as possible so my money can work for me as hard as possible. I get nervous when somebody talks about how stable or safe something is, but then tells me it's going to make 11%.

Starting point is 01:53:37 I mean, it just doesn't pass the sniff test. I mean, I've been around long enough for the Bernie-Madoff's conversation. I mean, one of my, I've been doing content since 2006. I remember one of my favorite shows. It never was really popular, but you were involved with this too. It was we did the,

Starting point is 01:53:51 I pulled Bernie Madoff's regulatory filings. There were so many red flags in there. If you just go read his ADV. What did you see? Well, it was just like... When you deposit your money, you deposit it to Bernie Madoff Securities, and then the statements you received

Starting point is 01:54:06 were from Bernie Madoff securities, and then the reporting that he gave was Bernie. There was no check in balance. There was no fidelity, Vanguard, Charles Schwab. And there were certain disclosure you were signing off on. There wasn't any sort of marked a mark market reporting required. It was the small accounting firm that he was the accounting firm listed it. It wasn't one of the big four at the time. I think it was still big four back

Starting point is 01:54:28 instead of big six, but there's no of the household name accounting firms that you typically see with public companies or big companies. It was just all kind of weird stuff that he was doing. The only reason people were doing it is because a little bit of greediness that, hey, this guy was making greater than 10% every year. And it felt like it was somewhat guaranteed. So why not get in there and get some of that. You turn a blind eye when something seems too good to be true and you experience it for a moment. You let your rationality and logic fly out.

Starting point is 01:54:57 I can understand how the S&P 500 is average 10% a year because there's risk and reward tied to it. When somebody tout something on its safety and then tells me the same return as the S&P 500 that has risk associated with it, it makes my spidey senses go. So what do you think is the ideal risk-free return? Are you just looking at the Treasury?

Starting point is 01:55:18 And we're talking like, you know, three to five percent is. We're talking three to five percent, depending on where we are with inflation and the treasuries. Really good proxy. Whatever you're making on your cash and a good high yield is a pretty good proxy for what the risk-free rate is. Because I would argue that's about as close to risk-free as you're going to get. Yeah. Now, in terms of retirement, how important is it that you own your house? You know, we have a lot of clients who, for their entire working career, they owned a home, they had, they retired.

Starting point is 01:55:46 And they said, hey, I want to go be in Florida. I want to go be in Arizona. And they sell their house and they decided, I'm just going to rent in different markets for, and that works totally fine. So I'd argue for them, the necessity of homeownership doesn't exist at all. They have a very small footprint. They're able to kind of bounce around. That's totally okay. People can do it and be successful. And other people love having a home base. Hey, I'm going to buy my house. I'm going to have it paid off. I'm going to live here. This is where I'm going to age into a ripe old age. There's not a right or wrong answer. It is personal finance is so personal. It depends on the unique thing that you're trying to accomplish. I do like people to be

Starting point is 01:56:17 debt-free in retirement, but it's not a necessity. The thing I always try to remind people, you know, we have this concept. We talk about the wealth multiplier. That's why I get heartbroken when I find out a 32-year-old is paying down their mortgage. It's 4% instead of funding their Roth IRA because they're debt crusading versus I don't get mad when I find out like a 58-year-old is paying down a 2.5% mortgage is because they have assets. Assuming they have assets is because they might be deciding that the arbitrage or the delta on what they're making is just not worth it. The squeeze of the fruit or the risk is not worth it when what they're trying to do overall. So I like de-risking because I kind of alluded to this earlier.

Starting point is 01:56:58 When you retire, meaning you're living off the money you've now saved or a pension or whatever, it stresses you out when you see all this geopolitical or economic stuff because a lot of us, I think we have this cope that we do is when the market goes down, we're like, it's okay. I'll just put down my nose. I'll work harder. Maybe I'll even save a little bit more to hedge against it. When you leave the workforce and you go into full retirement, you don't get that comfort. Now you have to say, holy cow, I'm not only living off these assets, but I'm watching the volatility decay, what took me decades to build. So it just hits different. So if you can do other things in your life, like take out debt and other things that create obligations or things that you have to do, it's a true. version of freedom and retirement. Is $1 million enough to retire in 2026? Can you live off of $40,000 a year? How old are you? 60 years old. Okay, 60 years old. What that means is Social Security is likely going to come your way. 60 year old with a portfolio. If you assume somewhere between a

Starting point is 01:57:59 4 to 5% annual withdrawal, right, you're going to be able to pull 40 to $50,000 off of that, assuming you never been into the principle, but in reality and retirement, you can get into the principle. Did you say put Social Security on it too? So then I was going to say, once you have that $40,000 or $50,000, then you put Social Security on top of that, which for a lot of folks is another 30, 40 grand? Four or five grand a month, yeah, maybe. What if you're 40 years old? No.

Starting point is 01:58:19 Will a million be enough when you get to retire? I'm going to say no. You want to retire at 40. He's going to answer. I'm going to say no. It's because they're, and I'm not going to call them out by names, but there have been other fire movement people who've retired super early, like 35, 40. And then they've come back and they're still, they're really good people and they've done

Starting point is 01:58:38 great content. But if you're being honest, once they start having kids and they're always, holy cow, these kids are a lot more expensive than I ever thought. And they usually have to go figure out, because it's just they didn't have enough life figured out to truly call yourself retired at 40 years of age because a lot of life is still going to happen to you. I think a lot of times in retirement, you need to, you need to be set to a degree. So you kind of really can measure out what your expenses are going to be in the future. If you're doing this at 35 or 40 years old and you don't, like for you, Jack, you're not married, right? Don't have kids. Do you know

Starting point is 01:59:11 how much life is going to change for you? If you tried to say, now I'm done. I've got enough. I just don't know that you have enough of your life tied down. What is the realistic retirement amount for someone who wants to have a family of four? I want to make sure I understand your question. Are you asking, can a 40-year-old with a million dollars retire today, or can a 40-year-old today get to a million dollars by retirement? No, can a 40-year-old with a million dollars today retire? Yeah, I think that'd be hard. And so what is the realistic amount? Because health insurance, too. What is the realistic amount that someone who is 40 years old needs to retire to support a family of four?

Starting point is 01:59:48 It depends on their living expense. I know it's a really hard answer to give, but depends on living expenses. Some families of four can live off of $3,000, $4,000 a month. Some families of four requires $9,000, $10,000 to live. Well, the retirement portfolio necessary to satisfy both of those enterprises, very, very different. So it's hard to, like, give like a hard and fast number. I wouldn't even sniff around it unless I had $3 to $5 million. At the age of 40.

Starting point is 02:00:14 Yeah, 40. What would you say FU money is? 10 million. Yeah. We've talked to it. I think we kind of covered it because I think 10 million is a good number because your money earns what is a great life,

Starting point is 02:00:26 even if you took very little risk. What if the market underperforms, like Vanguard says? Yeah, but 10 million or general? That's the beauty of the 10 million is because it's so, even if you use the safe withdrawal, I mean, if you use the, you know, risk-free rate of return of, like, cat, you know, of treasuries.

Starting point is 02:00:43 I mean, it's still $400,000. I mean, you're talking about $400,000 or $500,000, spend upon what money? What do you think is the ideal safe withdrawal rate? What age? 40. I mean, three and a half percent. Three and a half.

Starting point is 02:01:00 What is the amount? And I wouldn't retire with that. I would want to do a still running Monte Carlo simulation and stress it. I've done so many calculations on this, and it determined that if you want to retire at the age of, I can't remember if I put 36 or 40, it was one of those, and you lived to the age of 95, assuming that average lifespans are going up.

Starting point is 02:01:20 It told me that to be able to account for the Great Depression, so basically you're retiring the day before everything collapses, it said 2.75 to, I believe it was 3.2 at the very most, a variance between that. And it said you could actually do a little more if you had a year of expenses in addition to that saved and cash. We'll see, but I think with three and a half, you're still young enough and able-bodied, you can go subsidize it if you really got squeezed. And I want to be, this is something important for the audience to hear in our mind, safe with draw rates or napkin math, right?

Starting point is 02:01:55 So like what we're doing, we're talking about, like, I would never tell someone, oh, based on a three and a half percent draw rate in this pot of money, you can retire. What I'd want to do is say, okay, you want to retire age 36. How much are you going to spend from 36 to 50? What are you going to spend from 50 to 65? What are you just, like, I'd want to actually not just factor in an estimate of the things you think that will happen between 36 and 95, but realistically put some teeth to it. Okay, do you have daughters? Great. Are you going to pay for their wedding? How much you think a wedding is going to cost today's dollars? What do you project that wedding? How often do you replace automobiles? Do you replace them every seven years? What kind of automobile? Okay, you want to travel. How often do you want to travel? Do you think you'll be traveling when you're 93? And we would try to, and this would do for our clients, get as granular as possible on the things that we can

Starting point is 02:02:42 realistically estimate. And then we would reverse engineer using money car analysis. Does this get there? Because what actually ends up happening is it's not a static 3.5% safe withdrawal rate every year. There may be a season where the safe withdrawal rate's 9.5. 10%. But then something changes, spending changes, lifestyle changes, and other income source enters. And then the safe withdrawal rate drops down to 2% or something like that. So it's way more dynamic in practice than it is in like academic theory around safe withdrawal rates. How common is that the people run out of money in retirement versus safe too much? But it's always, you know, that's the save too much, because I think I'm out at the stage with money that you try to figure out, you look back over your life and go, which were the dollars that actually turned into this dollar and which decision was it?

Starting point is 02:03:30 And it was the culmination of all the good decisions together that I don't have regret that I'm going to probably, without a doubt, I'm not going to leave this planet broke based upon all the good stuff. But I don't have regrets or felt like I left something on the tape. I know that's not really answering the question, but I'm trying to get to the mindset that I think you have to be careful when, because so many, so few Americans actually save what they need to for retirement, even though we showed you with our wealth multiplier,

Starting point is 02:03:59 would take very little, just a little bit of discipline when you're younger to do it, that people aren't even, like 60-year-olds on how, you know, what was it 100? And when we did the book tour, it was like $110,000 for it was the average, you know, investments for somebody in their 60s, that's way below what they should be. So since we have a problem,

Starting point is 02:04:16 that nobody has the money. I don't want to say there's, you know, the risk is you're over, you're going to have too much. It's just a, you're a rounding error statistically that that's probably not the message I'd want to put out.

Starting point is 02:04:28 And then on the flip side of your question, um, are there a lot of people that would run out of money in retirement? What often ends up happening is nobody, most people aren't like living life, living life, living life, everything goes to zero. What ends up happening is it kind of goes down. And they begin having to make sacrifices they might not want to make.

Starting point is 02:04:45 Hey, I had a house. but we can't afford this house anymore, so we gotta sell it. Hey, I was living on my own, but I can't afford the bill, so I'm gonna move in with family. And if it gets really dire,

Starting point is 02:04:55 it'll evolve in the situation. I don't really have any assets, but I've got Social Security. I'm gonna figure out how can I live on whatever my Social Security check is. I think that's more the reality, because I think the number was something like 60% of retired Americans right now,

Starting point is 02:05:08 the majority of their retirement income is Social Security. Yeah. Yeah, some number around there. Which is sort of a wild thing. to think about. So how often do people have to make concessions in retirement they didn't want to make? I think that probably happens more often for the average American who realize because I think the average American is not preparing for retirement the way they ought to.

Starting point is 02:05:31 What about lifestyle creep? Do you see that as being an issue over time? Is just spending a little more like doing the $200,000 cruise? And then pretty soon, I got to do the $500,000 Chris. Well, look, lifestyle creep gets a bad rap. This is a hot take. Lifestyle creep is not bad. We actually want lifestyle creep.

Starting point is 02:05:47 We want for most people to have a nicer lifestyle in our 30s than we had in our 20s, a nicer lifestyle in our 40s and our 30s, nice from 50s and 40s. That's your lifestyle creeping. What you can't let happen is let your lifestyle outpace your savings, outpace your building. So so long as you're continuing to save and continue to grow your pot of money and to continue to build for the future, there's nothing wrong with you buying the nicer home, buying the nicer car, going on the nicer trips, assuming you're doing all the other stuff that you're supposed to. I think far too often people forget that second part,

Starting point is 02:06:20 and they just let the lifestyle create. I would like to give some old man knowledge, though, on something. You know, you hear, we talk about on our show, the hedonic treadmill, is good things that happen in your life. You should try to spread those out as much as possible so you can squeeze every ounce of dopamine and good will or good experience from it, and then bad stuff you should stack up.

Starting point is 02:06:39 And what I mean by that is, like, you always hear about lottery winners, they go broke. if lottery winners would learn, hey, let's start off with 10% or something of what you win, you and maybe you buy a house and that's it. But usually they want to go buy the house. They want to buy the vacation property. They'll have speedboats. They want to buy the new car. They do it all. And then they find out they're numb. All you did was you shot your system because you numbed it. You didn't give yourself any time to absorb and process it. So I always tell young people, as you start making money. Don't shoot for the global, you know, international business class, do it to the

Starting point is 02:07:15 nine when you're in your 20s. Go do something. You know, go go do Europe cheap because you're at the stage with that's the best. So that way you save something, leave a little bit, meat on the bone for your 30s and 40s. And if you can think about your life in creating success and achievements and experiences that way, I think you'll find that you have an appetite for and your happiness and fulfillment will be much better than if you just go run yourself in debt, do the most exotic and luxurious vacation, you know, you might be setting yourself up for just a life that is just not set up right because you did too much too fast. What's the best thing to spend money on? I mean, I look, I'm at this age where experiences family, you know, I'm the sentimental guy that

Starting point is 02:07:59 tells everybody they should be having a gazillion kids because I only have two, but I also waited five years into my marriage to have kids. And now looking back, because my oldest is graduating, leaving the house. I wish we'd had more. I mean, because it's just kids are, they're hard. Now, I don't want to misplay because you're in the messy middle. You have littlees in your house. It's easy for me at my age to say it's not hard.

Starting point is 02:08:19 But I love experiences and memories and doing things like that. Travel is awesome, especially when I can get loved ones. I'll bribe the heck out of my oldest daughter to get her to do vacation with us. You have to bribe her to go on vacations? No, I don't know. I just meant he wants to go on vacations that she wants to go on. I planned on. And here's, here's a compliment.

Starting point is 02:08:38 went to her. She graduated high school. We took her to Paris to celebrate graduate. She graduated college. I said, where do you want to go? And I'll write a check, you know, and we've even had more success. I was thinking she was going to choose. She just wants to go to Disney. So, I mean, I was like, I was shocked. Because we go to Disney all the time. So, but it showed me that that's where, you know, you worry about lifestyle creeping stuff. People, if you want to know the secret to happiness is, is the people that you surround yourself in. You know, all the research and happiness usually comes down to spirituality, relationships, friends, not doing commuter traffic and things like that. That's why it's not necessarily the exotic house and the car.

Starting point is 02:09:17 The biggest thing that shocked me once I got really what I could think would people look at my net worth on paper, they'd be like shock and awe is that I realize how empty the stuff was. I mean, you and I've talked enough that I think, have you experienced you that? I mean, it's the money. No, but I really don't buy that. I know, but that's the thing. You don't buy that much because you could.

Starting point is 02:09:41 You could buy anything. I could buy, you could buy any exotic car. You could buy any exotic watch. I just find that I don't get much out of that stuff. I mean, and that's what, it's funny. We've done coverage on this. The billionaires look like they're almost homeless. It's the aspirational people that are typically out there, you know, blinging it up.

Starting point is 02:10:00 Yes. Because they're trying to let people, they want people to look at them. I think there's something when you have it, it doesn't feel like it's doing as much for you. And you almost are a little embarrassed if you wear some of those trinkets. Yeah. I think the best thing to spend money on

Starting point is 02:10:14 is stuff that creates memories and experiences. My favorite thing to spend money on is stuff that creates convenience. I just love convenience in my life. So if I can outsource something or add some sort of efficiency, I'm willing to, like, spin money for that thing. That's what Jack has really been trying to hammer in me.

Starting point is 02:10:31 I remember this stood out where you say, I was, it sounds so dumb. I was comparing two dentists. One of them was expensive, but was really close by. I could do everything in one visit. The other one was half the price, but I'd have to go back twice. And I was, because they had to do X-rays.

Starting point is 02:10:48 And also explain, let's do this one. Let's talk. So how much was the more expensive one? $300 more expensive. I would go to the one that could do it all for $300. And then the other one, how far away was it? Oh, an extra 15 minutes. 15 minutes.

Starting point is 02:11:00 Yeah, but it's 30 minutes twice. Yeah, it's with two visits on two separate occasions. And then one is how far? Eight minutes away. Eight minutes away. So, and one visit and it's $300 more. If I can afford the convenience, I'm going to go with the convenience. Yeah, I went with a more expensive one.

Starting point is 02:11:17 Great experience. Your time is worth a lot of money. Value of your time is worth a lot. That's the other thing I've learned is that, you know, when you're younger, you are literally trading your time for wages. And as you get older and successful and you realize, holy cow, I don't have that much time left. you are you understand the value of your time so you're willing to trade your money for time you trade you definitely trade your money for the time and that's why the experiences and other things

Starting point is 02:11:42 is because it's not forever and it goes quick i mean i called a dear friend of ours his birthday was yesterday um and we talked on the way in and he's like yeah man he feels like the the the years go faster and faster the older you get he's in his 70s yeah and um so i i i cherish the time i get to spend with people i care about and that's why i'm on the old man tour now. Like I go on a spring training with my high school buddies. I go, I'm trying to get my college buddies. It's a little, it's an act of Congress to get my college buddies to get together. But then I, every year, I go on a golf trip. I play golf once a year. It's with my old neighbors from Georgia. We go down to Florida and we play rounds of golf together. It's, it's important

Starting point is 02:12:23 to make time for memories. Graham, you should show them your portfolio. Now you guys are going to react to all of Graham's investments. Obviously, no numbers. Just say, say how, say what you think. After You're seeing how you, I hope you, did you keep track of what you gave on the previous score? Yeah, I gave him a seven and a half eight. Because I can see how Jack and Graham are, they're going to, they're going to be mad at whatever. Whoever loses is going to feel slighted. I already know you guys are going to agree more so with Graham. And it's okay.

Starting point is 02:12:52 But why are you doing that? Like, we were not. I'm not upset. Yeah. Like, I'm actively choosing every day when I wake up to have a portfolio that looks like this. So it's, I'm not, I'm completely. You're way ahead of the curve. I'm completely unbound.

Starting point is 02:13:04 By the way, I'll go ahead and tell you. If you want us to give you a prospect kit, we'll give you a prospect kit right out in the lobby as you leave today. He just said he's one of those lifetime do-it-yourself. I know. I know. Look, I'm open to any. I love it. Okay, this is, now you can open up and see all the different accounts.

Starting point is 02:13:18 Here's this is the biggest one? No, here's the first investment account. Oh, this is all of it. This is, this is him playing around. All right. There's some stuff. Robin Hood, you're basically, that's your speculative play account. Yeah, for the most part.

Starting point is 02:13:30 A lot of, a lot of, a lot of, guys getting in on this. Go to the big stuff. Go to the big stuff. It's just an interesting to note. Here's a $1 position. Here's a $1 position. Here's a $6 position. Those are probably the free trades that they gave them.

Starting point is 02:13:42 Those are the free trades, aren't there? There's a $6 position and U.S. dollars. There's a $7 position. There's a $12 position. So one of the things I'd probably do is clean up a bunch of the single-digit dollar positions. Oh, some of those I can't close out because they're worth so little that I tried to sell them and they won't let me sell them. So I actually have to go and request this thing from Robbenon. Or donate them or something?

Starting point is 02:14:01 Yes. 0.0.0.5 share. Okay. Just ignore those. But look at it as big stuff. We're assessing the whole. You have to look at the whole picture. That's the thing. Your big assets are the same thing. I mean, they're in trot and true stuff.

Starting point is 02:14:15 And you can be a little... But I think this is making our point, because everybody here, we have decent investment portfolios, everybody at the table, and we're all behind the same similar market type stuff. And that ought to be something for the audience to take a big note of. It's to be like, here we are having all these

Starting point is 02:14:31 pontifications on the investment marketplace, but if you actually look at what money we're going to live off of in the future, it's the broad markets. So you just have like a number of different accounts that could likely be consolidated. I'm sure there's some strategy of that. I'm taking a bit the investment accounts?

Starting point is 02:14:46 Yeah, there's like just a couple, like there's a couple of different investment accounts. Did you have like affiliations or do programs with some of these things? Because you do have a lot of different companies. Yeah, I use them all and I've just kept the investments in there and they've grown since 2017. Is that because you were curiosity or you did something with these companies?

Starting point is 02:15:00 No. a lot of those were me just trying out different brokerages because back in like 2017, I would go and make accounts with every single brokerage out there. Yeah. Yeah. And I would use them and I'd drive you crazy. It drove me crazy. I had accounts at every single. Because I closed them all out. I won't more simplicity of my life. I'm merging a few of these, but I have different accounts for different purposes. Okay, you've got a hellsaves account. Love HSA's, right? You have like $3,600 a cash in your HSA? I just forgot to invest it. But that's, he's going to have a hard time.

Starting point is 02:15:33 I'm being seven and a half, eight. You know what I mean? I know. But it is, it is the same. I mean, because I was going to pick on because I was like, man, it's a round, no, for that account size, that's actually a pretty decent size. That's a lot of cash. There's no, there's no positions in this one. So is that just cash?

Starting point is 02:15:47 It's your, it's your Roth. There's no positions in here. I didn't probably translate over from that brokerage. Okay, we'll make sure. That's what I'll talk about that. That's V-FiEx in the Roth. Oh, is all of it? Okay, great.

Starting point is 02:15:59 The entire thing. Perfect. Okay. That's great. The Acorns account can't see. any, cannot see any holdings in that one either. Yeah, that's four ETSs in that account.

Starting point is 02:16:09 Good ones or bad ones? Good ones. Okay. Yeah. They're all like vanguardic. Okay. All right. That's fine.

Starting point is 02:16:16 That's fine. You don't even classify yourself as an exotic. Talk about a snooze fest, right? Yeah. Actually, I probably, I mean, it could just, it could be a little bit cleaner.

Starting point is 02:16:27 Like, I just feel like there's some account consolidation. Like, if you were inclined, I'd be like, hey, why do you have all these different accounts? Why do you have all these different positions? it might be easier get your head wrapped or anything and not because what's it what's interesting is okay oh i forgot to invest that $3,600 of cash well $3,600 a cash can turn into $13,000 a cash just because

Starting point is 02:16:43 it did 13th that turn into 30 30 30 can turn into 100 like it just it happens that way pretty quickly if you have so much stuff that's hard to keep an eye on where everything is it's also easier to compare to no annualized performance or how well you're doing when things are consolidated because you got stuff i mean it now i'm sure these things go spit out a report somewhere on here where it would tell you but it's just There's a lot of scrolling. Yeah. I have like 12, 1099s from different.

Starting point is 02:17:08 And like, is that, does that, like, bother you a little bit? I keep track of them all and then an account. Of course you do. I think you're naturally good at this stuff, but that doesn't, just because you have a way of doing this, I don't know that I think it's the most efficient use of your time either. Now, that's a, okay, so that's a big one. It seems like maybe not enough to total net worth, but it's like you're pretty bullish on crypto. Yeah. Yeah, but it's still under, I think, 12%.

Starting point is 02:17:35 So how much is he up? Does it show how much he's up? Because we don't have to give the number, but it was, does it, you know how much you're up? Total, I'm up maybe right now at these levels, like 6%. Okay. Maybe 10. Which is surprising because it's a decent size holding to hear you're only up 6% kind of surprises me. Yeah, because I have a lot that I bought in 2017 and then a lot that I was buying in 2021 to 3, 4.

Starting point is 02:18:03 more like dollar cost average. So do you think Bitcoin's going to change the world? I would, for the term of like... I think there's an asymmetric upside that it will do better than it will do worse. What about all the quantum stuff that people are out there throwing out there is risk? Bitcoin would be able to change the way it's secured to be quantum resistant. I don't think it's going to be a risk. And I'm not saying that's a risk.

Starting point is 02:18:27 Because banks are going to have to update this too. We all have these headlines thrown across our, you know, our, our feeds. And I just... Well, banks would have to update it. as well. So it's like, you know, would banking be a risk? Yeah. It's just a lot of... And those computers don't necessarily exist yet. Yeah. Like, you have some positions that are like pretty substantial.

Starting point is 02:18:44 And then you have some positions that are just very small, relative, right? Like, it's more of a wrangling issue for you, Graham. I just, I got some thoughts on that. Yeah. So what would you rate my portfolio out of 10? You get, now, remember, you gave, you a jacket seven and a half. I have a number. I think you want to say, and I'm curious. Don't do it because you gave me a seven and a half. Just do it independent of me. But you have to know where the scale is. I like your overall allocation much better. Like I think it seems to be a more well-thought-out, more robustly diversified portfolio,

Starting point is 02:19:14 but it's a little bit sloppier in terms of like cleaning up some stuff, right? So. Well, when he says that, I think, well, I'll let you be, because I would skew it. I was talking about the quilts of life. Yours is out of choice, is that you have assets all over the place, you know, different providers. And you said that you went on a journey, trying out all the big providers. And I think from a content creation standpoint,

Starting point is 02:19:37 that was great. But just ongoing, I would probably try to consolidate to simplify your life so you own more of your time. And by that, you're saying closed down a lot of these brokers. Yeah.

Starting point is 02:19:49 If you don't have a business relationship with them and you don't, you know, then why make it where you have to do more compliance for accounting purposes and more just keeping up with it, worried about access and everything else that comes from having working.

Starting point is 02:20:03 True. Was there a retirement account in there? I don't remember seeing a retirement account. There was, no. Was there a solo? There was just a Roth IRA that I had set up. No.

Starting point is 02:20:13 What are you doing? I just figured. You won't pay your taxes. My honest, my honest thought was I think that, you know, I didn't want to do a 401K because I just think taxes

Starting point is 02:20:25 are going to be going up substantially by the time I retire, and I would rather just pay the tax today. Okay. In terms of like a Roth 401K. Roth 401K. I just, Which I don't think makes sense for you.

Starting point is 02:20:35 But if you're going to take that stance, do a Roth 4-1K. Because you know what's cooler than taxable assets? It's completely tax-free assets. I thought about it. And then I was just like, well, I just kind of want access to it now if I wanted to. Maybe that just makes you. So right now, you literally said you don't touch it. And right now, right now, you have access to capital.

Starting point is 02:20:55 Like, we just saw your accounts. You have access to capital. So starting today, starting yesterday, it'd be. sort of insane not to start building up 401k solo 41K assets you got to give me a rating okay this is what i want to say i'm gonna give yours an eight solid sell wow i'm only point five higher than no i was thinking the exact same number i didn't want to color his answer but i was thinking the exact same thing a seven and a half because yours feels a little more emotional seven and a half is great emotional meaning you love your portfolio like you make your

Starting point is 02:21:32 decisions based on emotion. You said every morning I choose to, that's not a negative thing. Your emotion is I like being. Only for a small portion, by the way, is we've just got. I completely disagree with it. And then yours is a little more well thought out, but it's just a little bit sloppy. It could be consolidated. Both of you just are missing some tax opportunities. Like there are like some huge opportunity. So that's not really a portfolio rating. It's more like a financial planning rating. Man, there's some stuff that you could be taking. The only thing I should be doing on that, though, is just not the Roth 401K. Well, I think there's probably a case in May that you could do not only a solo 401K,

Starting point is 02:22:08 not only load that up, but you could also look at some sort of cash balance plan, which is another way to defer hundreds of thousands of dollars. I think taxes are going up, though. So, like, I don't want to defer anything. Like, I'd rather just pay the taxes now. Like, I can do the Roth. Yeah. You don't want to go as big as these numbers we're talking about.

Starting point is 02:22:25 But from a legacy standpoint, you could still do some Roth plan. Okay. Let's assume for the moment that tax rates are going to go up. Yes. do you think that so we work in a, we operate in a progressive tax system and to a lot of people think,

Starting point is 02:22:39 okay, well, tax is going to go out. That seems likely. Do you think that you're always going to be in a position where even if tax rates go up in mass, you're going to always be in the highest tax bracket? Yes. I think with appropriate and proper planning, that doesn't have to be the case,

Starting point is 02:22:56 only because we have clients that live in that world. The only thing I was, like, Because I do think at the level Graham's at that he is probably going to be in the higher tax brackets. But it's more of the opportunity cost of what you could do with the money yourself versus giving to government right now. Because that's really what also we're talking about. If you could save a few hundred thousand dollars off your taxes now, that's money you get to keep in your back pocket and deploy if you want to. Now, you don't, that's the thing. I still don't have the why I figured out for you because I think that, you know, I would want to have a lot of discussion on what you're trying to build for.

Starting point is 02:23:30 He's too busy to be a real estate professional right now, but maybe at some point in the future, if his work slows down that he could become a real estate professional, take a bunch of paper losses. And that's when he could decide. Oh, I never want to touch real estate ever again. I'm done with that. You really think you're done with real estate, which is so interesting to me. It really is. Nope. I want nothing to do. What soured you so much? a lot of besides the timing yeah a lot of Los Angeles the illiquidity of it like right now I'm in the process of listing and selling two properties and the amount of time and work it's taking

Starting point is 02:24:00 to be able to get those ready to list because I don't want to list a place that's like not to say falling apart but sloppy but I don't want people to go in and there's like peeling paint like I'm spending maybe 80 grand

Starting point is 02:24:16 this month fixing up these places just to get it ready to sell Just to get it ready to sell. And it's not only that, but it's also dealing with contractors and dealing with, oh, what's a staging quote coming in? Are they doing this? Or that that should have been done. I caught a few things that should have been done that weren't.

Starting point is 02:24:32 It was different when I was 25 and I had the free time and all I was doing was real estate. It was really not difficult for me to manage these properties. Like I was in the areas anyway. Well, so money was so much less expensive. Oh, yeah. The prices were so much. The economics were so different. Totally.

Starting point is 02:24:48 And for my time, it was valuable. Like, I showed up every single day to every job site. And I was there at 9 a.m. And when they weren't there, I'd give them a call. Where are you? Why aren't you here? I'd be stopping by it, like, after work. And I loved it.

Starting point is 02:25:01 I had so much fun. Now that's a pain in the ass. Like, now I couldn't. It's a young man's game. Yeah, exactly. So is there anything you'd recommend me doing differently besides opening up a Roth 401k? I didn't do the math. Because you had so many accounts, it was difficult for me to the mental accounting of how much of your portfolio is, like risk on, risk off.

Starting point is 02:25:18 Right? Like I saw some risk off more conservative positions, but I didn't have like a good asset mix. I'd want to be able to figure out what those numbers were. Under 12% is risky. So under 12% is risky. Yeah. That's basically the crypto ETF. So different definition. So I would say like risk off more would be like fixed income, bond, bond, holdings, that sort of stuff. Like, you know, is your is your portfolio? It's 75% equity's real estate, 25% treasuries. Okay. So. So. that's, you know, given the size of the portfolio, probably not crazy, maybe even a little bit more conservative than I would have thought at your age, but not awful. I didn't see a clear performance metric for the one of you across the whole portfolio.

Starting point is 02:26:00 So one of the things we like for our clients to be equipped with is like every report they get or even on the portal they see, they can see exactly what their portfolio, the whole thing, all of the accounts have done year to date for the last one year, last three years, last five years, since the day they started working with us.

Starting point is 02:26:14 So even though we see the portfolios as they exist today, what was not clear to me looking at it is how effective of an investor have you been over the last five years? Yeah. I actually don't know how to create that with Schwab because I had all of my money spread across a few brokerages,

Starting point is 02:26:29 but then about eight months ago, I consolidated everything with ACATs transfers into Schwab. And so it's kind of hard to track my actual performance. Yeah, they count that is like your gain. Exactly. And every time I monthly control. Well, they reset it. I mean, it seems like in their system.

Starting point is 02:26:42 Because what they do is a lot of these brokers that focus so much in short-term performance. I will show you what you're doing for the day. what you're doing this quarter so far. We want our folks to have a much longer term view. Hey, how much did I start with? How much have I put in? How much have I pulled out?

Starting point is 02:26:55 The other thing is talking, too. You can't tackle principle. We help our clients, yeah, because we're tracking all that stuff. Yeah, Schwamp is good about tracking bases. But if you're consolidating. Performance is lacking. They include the principle. Yes.

Starting point is 02:27:11 Which I wish you could just toggle that off. Yeah, I wish, I wish, too. Yeah. Charitable giving. I didn't know, I didn't see a deal of donor. ever consider donor advised funds? Because I saw gains in there. You could do donor advised funds if you're charitably minded.

Starting point is 02:27:22 I forgot to look for a loss position. I was so blinded by the $3 positions that I didn't look for losses to see. Well, there's also a lot of it. If we had gone through every one of your accounts, so this would have been a full three-hour audit. I mean, there was a lot of accounts there. It really was.

Starting point is 02:27:36 I mean, it was scrolling. But you're both, by and large, you're both doing the big things right. Neither one of these were dumpster fire portfolios. Neither one of things would give us a whole lot of points. We could give both of you prospect kits and feel really good about it. So Jack and I are actually working on a side business

Starting point is 02:27:50 because for us to be in front of the camera all the time, definitely, it's just, it's not going to happen, it's not feasible. So we want to build something outside of the ice coffee hour. And we were spitballing back and forth a while ago what good ideas are. And one of the things that we kept coming back to is the fact that people who open credit cards

Starting point is 02:28:06 have these rewards that they are either unaware of or they just never utilized. Like, there's like a SACS credit and like a Dell credit. And they all, expire on different time horizon. So you have one that expires, let's see you get two per month. Maybe you get one every three months. Maybe you have one semi-annually, one annually for all of these different websites for different amounts. And so what we decided to do was consolidate every single credit card bonus, credit discount benefit all into one dashboard. And then it'll

Starting point is 02:28:36 send you notifications when something is expiring according to your liking. So if you want notifications, like a lot of notifications, very little notifications, it'll just kind of tell you based off your preference. Hey, by the way, here's a link to Sacks Fifth Avenue. Just click it and use this card at checkout because you have $50 free bucks that's expiring in a week. How difficult will it be to keep up with a rapid change is that take place? It's very easy.

Starting point is 02:28:58 There are already things that exist online that can scrape all of that data. And just immediately, yeah, yeah. So it's 99.9.9% accuracy, the software that we're using for that. But the main idea is that people will pay $900 a year for like the MX Platinum or whatever it costs, but not use. Rezi credit that comes $100 every single quarter, $400 or Uber. That's true. I've fallen for all the time.

Starting point is 02:29:24 What I do is at the end of every single month, I'm like, oh, crap, I have an Uber credit. And so I just Uber eats some food because I'm like, even know I don't even need it because I want to use it. Same thing. I forget that my Amex gold has benefits. So what is this a membership thing? It would be a membership thing. Yeah. So people could link, as of right now, the concept, people could link a few cards for free to be able to try it out.

Starting point is 02:29:43 and then if they want to link more than that, there'll be a small fee with that. But it'll also tell you which cards you should be using for certain purchases and it'll look through your transactions and tell you how much you missed out in rewards by not using the appropriate card. And will update like rotating categories,

Starting point is 02:29:59 like some carless go over and rotating so you'll rack. If you go through the Chase portal with different Chase credit cards, you know how they have like the discounts and promotions tab. So like if you're expiring at the end of the month, you get 10% back at Lulu Lemon up to $50 back to,

Starting point is 02:30:13 total, so $500 total expenditure. So it'll also determine, hey, on this card, you're spending Lulu Lemon quite often. But on this card, if you just click and, what is it, like, accept the feature web. Exactly. You have to opt in. And that's the thing. When you look at the offers on Amex, there are hundreds of them. And you never go through.

Starting point is 02:30:31 It's like, oh, Home Depot is offering $5. And it doesn't tell you, hey, you shop at Home Depot and you didn't opt in. Exactly. I have the Amex plan. It could also just link you and say, hey, just opt into like these 30 because you shop at these 30 places across these cards and then like it'll just yeah interesting so we bought the website extra dollar like extra dollar dot com nice i like it we're working on it so we're working on it so if anyone wants to sign up for the wait list and get first access to be able to try it out it's extra dollar

Starting point is 02:30:59 dot com e x or the letter x t r a yeah like actually written out extra dollar dot com love that because you get to save an extra dollar or more terms of lines Extra dollar flasked I've got out. Cool. Well, thank you guys so much for coming on the ice coffee hour. It's always a pleasure. Thank you for the team

Starting point is 02:31:19 for all sitting in on this. Thank you for letting us use all of your equipment. This has been such a blast. I love it. I've been looking forward to this. Me, Casa, Sue Casa. We always have a blast, really. And you guys, I love the dynamic.

Starting point is 02:31:29 I mean, I think Bo and I pick on each other, you guys also pick on each other. We were joking earlier. We were saying, like, Jack and me. Oh, yeah. That's kind of the way it works. All righty. Well, thank you guys.

Starting point is 02:31:41 Thank you guys so much for watching. we would not be here. Not for you. We flew all the way out here. Okay. The flight were expensive because gas prices are gone up like crazy.

Starting point is 02:31:49 They were expensive. The flight was twice as much as it usually is. So if you appreciate that, just hit the like button, subscribe. We'll link to all of your information down below in the description as well.

Starting point is 02:31:57 Thanks, guys. We always have a blast. By the way, if you enjoy this episode, we just posted our next one early for members. So if you click the join button, you could literally begin watching

Starting point is 02:32:07 our next episode right now. Really hope you enjoy it.

The Iced Coffee Hour - The #1 Investment That Will Make You RICH In 2026! | The Money Guys

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