The Ramsey Show - App - What Is a Bear Market and How Long Will We Be in One? (Hour 1)

Episode Date: June 29, 2022

Dave Ramsey & George Kamel discuss: How to handle a large settlement, Moving 401k investments, What is bear market and how long will we be in one, Preparing for twins, The risk of employee stock options.   Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. We help people build wealth, do work that they really love, and create actual, amazing, real relationships. George Campbell, Ramsey Personality, host of the Fine Print podcast on Ramsey Networks, is my co-host today. As we take your questions about your life and your money, open phones at 888-825-5225. Aaron in Lexington, starting off this hour. Hi, Aaron. How are you?

Good. First time caller. Well, we're honored to have you. How can we help? Well, we just came in with a little bit of money as a settlement that I'm sure they're going to have to pay taxes on. It's about $210,000.

So, just trying to figure out what we should do with it. We've already debt-free. We've used your plan over the years, not faithfully, but we've used it, and everything we've got is paid off, and the mortgage is paid off, and so I'm just trying to figure out what to do with this, and what's the best way not to pay taxes on it, because obviously I think on this,

it's going to put us over another tax bracket that we're going to have to pay a lot of taxes on it. Yeah, well, I mean, what was the settlement for? Just a previous work that was disclosed. Well, I mean, was it like a workers' comp type situation? There was a past employer. A past employer? Yeah.

Were you hurt physically? Yeah, it's going to be taxed. It will be taxed on it. How do you know? Well, they were already in town. We should get a 1099 for it. That doesn't matter. How do you know it's, they were already in town. We still get a 1099 for it. That doesn't matter. How do you know it's going to be taxed?

Them giving you a 1099 doesn't mean that you are taxed. There's two types of settlements. There's punitive and compensatory. Compensatory is compensation. If this is lost wages or compensation that they're paying you on or back wages that they didn't pay you accurately, then that's going to be taxable. Punitive may or may not be taxable, and so you need to talk to your tax advisor to be sure. Your old company or your lawyer shouldn't be giving you

tax advice. You need to go get that on your own, number one. But let's pretend it is taxable. We need to calculate what the taxes are going to be, and the first thing we're going to do is set the taxes aside out of it so that the money's sitting there next April and you're ready to go, right? You write the check. Right. And then that leaves you the rest of it to do something with. But you don't have medical bills due to an injury as associated with this, right? No.

Okay. All right. Well, you said you're out of debt completely. You don't have a payment in the world, including your house, which means you've got all the options in the world. And so there's only three things you can do with this money. You can give some, you can save some, you can spend it. And I would encourage you to do all three. If this is just kind of fun money now, you have to use at your disposal. So maybe you spend a little bit of it, but I would encourage you to give some as well and maybe invest some of that because that can turn into a whole bunch more money down the road in your retirement.

George is exactly right. So Aaron, when we're dealing with people in Baby Step 7 and sometimes very wealthy people that are in Baby Step 7, which is where you are, and they get a check, maybe it's an NFL player, maybe it's an author like me that gets a royalty check in the mail and it's a big big old check like that then you have to say before the check comes i'm going to set aside a percentage for giving a percentage for enjoyment and a percentage for investing and to encourage me to do all three of those things. And then, like, in my case, Aaron, what I do is I just apply that percentage that I figured out to every check I get now. I mean, above my living expenses, which are moderately low, okay? But, I mean, I get my income coming from several sources.

I just get a check in. I go, okay, what I do is I'm a Christian, so I give a tenth tithe to my local church. I've got to set aside 40% because I'm wealthy and I must be punished by the federal government. So that's the 40% for taxes. And so that's 50% of the check's gone right there. That leaves me another 50% to divvy up among more giving, some lifestyle enjoyment, and some investing. And I would encourage you to do minimal lifestyle investing or lifestyle maximum investing and something that might feel even a little bit heavy to you on the generosity side. You don't owe anybody anything.

Where this money came from or the result of whatever it came from doesn't really matter to me you still should apply it to those three things does that make sense to you yes sir yeah but make sure you set your taxes aside before we start having any of this discussion or if you're going to do it like me you're going to set aside 40 for taxes i set aside 10 for my local church my tithe i'm an evangelical christ, and then I got half of it left. Here we go. That balance helps, though. You feel good about it.

It's automatic. It's automatic. I don't have to think about it. I can enjoy the percentage that I set aside for enjoyment because I know I was like a grown-up with the rest of it, and I know I'm not messing up something, right, and I'm not avoiding investing. And so, yeah, that's what you always

want to do. And by the way, that's what we teach little kids. Parents teach little kids. Oh, yeah. We have our Give, Save, Spend piggy bank over there, and you can teach these principles at a very young age. Exactly. Exactly. Awesome. Tim is in Hartford, Connecticut. Hi, Tim. How are you? Good, Dave. How are you? Better than I deserve. What's up?

I'm a longtime listener and a first-time caller, so it's hard to start the call with telling you you're wrong. But if you'll hear me out for one second, people say, how are you? And you say, better than I deserve. With the amount of people you have helped, with the amount of lives you have changed, giving people encouragement and changing their lives,

you're not better than you deserve. You are deserving of everything you have, and I thank you for all you've done. You're very kind, sir. You're very kind. It's a theological statement. I deserve hell, and I'm not going because of Jesus, okay? So it's a statement of grace, but yeah, I appreciate it. Absolutely. Yeah, and it shows your humility, but thank you for changing our lives. I've got a 401k question for you. I understand the 401k's plan is for the long term, and we don't freak out right now because the market's down and that kind of stuff.

However, knowing that we're in a bear market, why wouldn't I put a big hunk of my 401k into kind of a guaranteed fund to stop these losses for X number of months until the market turns around so that when it does, I'm starting to build again on a higher balance, not a lower balance. The problem is if you knew when the market was going to turn around, you would be running Wall Street. True, true. And I know you can't time the market, but obviously. Which is exactly what you're trying to do.

Yeah, agreed. But I think everybody's in agreement that it's not going to recover in the very near future who's in agreement i don't know if you mean if you mean by friday i agree with you if you mean by september i'm not sure if i know that yeah yeah true no we don't know that for sure but uh you know there's the losses are so big now, I just keep looking back and saying, had I put it in this guarantees fund, I'd be $200,000 ahead in my 401k. Yeah, but every dollar you're buying now, when it comes back, you're going to be $200,000 ahead with. You'll have more regret on that side.

You're going to go, man, I should have left it in there and bought more when it was on sale. It's on sale, man. True, true. I would be foregoing the growth. The answer to your question is, I personally have not touched my 401k. Have you, George? Same. Leave it alone. I'm loading it up.

I am tempted to actually put more into the market right now, but I, as a matter of principle, don't try to time the market, so I'm not going to do that. But I think the market's on sale. I think it's a great buy right now, and I'm kind of excited. This is The Ramsey Show. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working

parents and a couple of young kids. Each has debt and a struggle to make ends meet, but they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference. If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to zanderinsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does

make you the hero of your story, and it puts you on course for better things ahead. Well, on July 14th, we're going to be hosting a free live stream called the Real Estate Reality Check. People are scared. They're mad about the prices, the interest rates, what's going on with the housing market. And based on all of their emotions, some of them, some of you have made incorrect conclusions, which are going to harm you if you act on them. So we're going to help you with that. We're going to talk you through what's happening with the housing market, what is real. The pain is real.

The frustration is real. The anger and the fear is real. But there are also facts and data that affect this. The housing market is not going to crash. Mark it down. I said it here. I've said it a bunch of times in the last several weeks. I'm going to say it again with charts and graphs.

That's a first. On the 14th. Yeah, I'm going to do something I don't like doing, but I'm going to actually show you the actual data and, you know, teach you so that you can calm your butt down in some cases. So if you want to know what's going on with the real estate market, George Camel, Rachel Cruz, and I will be doing this event. We're going to go through what is really happening under the hood of the real estate market so then you can you can draw your own conclusions after we teach you if you agree

with the here's the actual data here's the facts now you agree with our conclusions or not based on that can you disagree with data i guess you could try uh people do all the time yeah they're called democrats so all right open phones at 888-825-5225 you can sign up for this reality check ramsey solutions.com slash reality ramsey solutions.com slash reality uh on uh july the 14th it's a free live stream so i've got a buddy of mine that's a democrat that's running for office that's why that was top of mind oh nice i hope he's listening he and i love each other and we love to argue with each other i would love and so he always i did that kind of for him because he listens and i know he'll he'll call me now and he'll give me a hard time that was basically a

shout out for him so i could i couldn't resist just throwing a little grenade over the over the radio waves so the rest of you that are democrats and now you're all pissed off you missed the point it was not a pissed off thing that was that's called humor and it's just for my buddy and their sarcasm detector isn't working dave well it's i i sometimes i don't hit the note you know i don't hit the sarcasm note uh and i don't use the font correctly when i'm writing sometimes there's a sarcasm font i think is that there should be when we're writing comic sans so george back to our last caller for a second, because that is also a point of concern out there. The bear market. And if we want to be sarcastic and funny, we can say scary bear.

Scary, scary bear. Because the bear market, the stock market's down 20%. So he said he lost $200,000, so he's lost, he had a million dollars in his 401k. Last caller, probably. Somewhere in that neighborhood. Yeah, makes sense and he hasn't lost 200 000 bucks unless he sold it uh because there's two two types of gains there's recognized and realized recognized as i recognize that my balance is down but until i sell it i didn't lock

in the loss it hasn't become reality it's not it is not realized it's just we're just recognizing and from tax purposes we use that terminology accounting purposes but it also is kind of a factual thing that you know like during the drop of 2008 and the market went from 13 000 to 6 500 it went in half it went down 50 percent people were interviewing warren buffett mr buffett didn't you just lose 83 billion dollars and he said no i didn't lose anything haven't sold anything haven't sold anything i just it's just riding down ride it back up and of course it went down from 6500 to 13 000 and then back to 39 000 from there 3x above so turns out mr buffett was right to both the stock market and the real estate market

perspective is what keeps you from making poor decisions. So when you look at that perspective and go, oh, it went back up to 39%, probably should have stayed in the market. $39,000. Yeah. The $39,000. When you pan back and you see history, it can calm you down. That's a good thing to do. It helps me. And so let's talk about actual history and data on bear markets.

A bear market is any time that the stock market goes down more than 20% in value, which we're in the middle of a bear market. Since World War II, post-Great Depression, there have been 14 bears. That's a lot of bears. Yep. We have had a bear problem. And the average length of a bear market during those 14 is 13 months, and the average time to recover back to ground zero,

back to where it was before the decrease started, is about 24 months. 26 months, 23 months, I've read three different articles. But it's right in there, right around two years. And so if we go back to the first of the year, which is where we're measuring the decline from and you go out two years from january 1 of 22 that'd be january 1 of 24 the average is it will have recovered by then wow which means this there's a chance to recover sooner and there's a chance it could recover later. That's the average of 14 different events. And so you've got a lot of actual data to look at. The chances of this one being drastically different, I don't see that happening.

Well, it's not as extreme as 2008. And, of course, the more extreme it drops, so far it's not. The more extreme it drops, the longer it would take to recover, typically, unless it just shot back up due to some kind of a magical economic pill or something. So here's the story. You're 52 years old, and you're panicking because your retirement lost $200,000 of your million. I don't know how old that guy was. I'm making this up, okay? At 54, you'll be back on average. Chance you'll be back by 53. Chance you'll be back by 55. The chances at 65 of you

being down based on historical data are precisely zero. Calm your butt down. Okay. That's what that says. I'm getting ready to be 62. I'm not going to be using my money that's in the stock market in my 401k or my other mutual fund investments. Maybe ever, unless I used it to buy some real estate. But mean i uh so i easily can let it sit there till death and uh you know but i mean the chances of me statistically i'm healthy at 62 zero medication uh on average moderately good condition on average uh the actuarial table say i'm gonna live to 90 okay so i've got 28 years to ride this out not 28 months so i'm real comfortable with putting more in right now while it's down because it's on sale if you keep that perspective and you've got a long-term vision and you know so you pan back like you said perspective

gives you hope people lose hope when they lose their perspective and the joke that we always used was one of my daughters didn't get asked to the prom by one of those boys and that night it was a long night there was wailing and gnashing of teeth it was so very sad and her mother and i were supposed to go in and comfort her in her moment of heartbreak but we were having trouble not laughing in the hallway because it was so dramatic that it was funny? Well, because we've been to our 20-year class reunion, and we know when she sees him, then she'll be glad.

We have the perspective of time, right? We know that this heartbreak is not the end of the world, although it is the end of the world for her at this moment, but she does not have the perspective of time because she's a newbie. Can you tell us which daughter this is? No, not a chance. I'm just going to guess it was Rachel. No, no, no. Just a guess.

I have a great poker face, George. I'll never reveal that. It was bad enough that I told the story to start with. That's fair. But the point being, you lose perspective. When you lose perspective, there's a good chance you lose hope. In order to think that the world is coming to an end, you have to have a fairly short window that you're looking at

because there's no long-term window data that indicates that. Only the panic of the moment, the flavor of the week here at Baskin-Robbins. But, you know, that's what we're dealing with, right? Yeah. And when you look at the data, you know, you kind of get what you're looking for. If you're looking for panic, you'll probably find it in the headlines. You'll probably find doomsday. But if you look at the charts and the graphs and history

and you live your life by these principles, you can kind of just breathe easy. The weight's not there when you start looking for that. You know, if you're in in bitcoin there is reason to panic absolutely i could tell you stories for days dave really sad stuff happening with the crypto bros out there are the crypto bros are they're hurting they were declined for prom let's say we're gonna there's the analogy they've been rejected throwing temper no date for the prom sorry crypto bro no date for the prom. Sorry, Crypto Bros.

Crypto Bro, no date for the prom. I don't think they're going to prom, Dave. They're not the type. Oh, sad. We need to form a support group for them. We should. A Dave Ramsey Crypto Bro support group. Make that happen, guys.

You know, I would think that one would sign up. Maybe one. Because they just wouldn't be looking for a lot of mercy, right? This is the Ramsey Show. george camel ramsey personality is my co-host today that's not right can you put that back on hopefully thank you i screwed that up all right all right jamie and deborah are with us in ge in Georgia now that I pushed the right button to do a debt-free scream. What's up, guys? Hey, Dave.

Welcome. How much have you paid off? We've paid off $245,655.71. Whoa! How long did this take? 64 months. Good for you. And your range of income during that time?

79 to 110,000. Excellent. Well, I'm guessing with the length of time and the amount of money that you paid off your house. Yes, we did. Woo! Talking to weird people! Yes. How old are you, weird people? 49 old are you weird people 49 and i'm 48 almost 49 and you have paid for a house you're not even 50 no sir what's this house worth about 160 000

phenomenal well done so the 246 was the house and other stuff that's right yeah we had to pay off the irs a little bit we paid for my car um we had 15 credit cards that we paid off we paid off a timeshare and a loan in a distar mortgage wow crap y'all were normal yes sir oh man way to go this is a big turnaround. Five years and four months of busting it, huh? Uh-huh, yeah. Whoa. How's it feel to be free? It's the best feeling in the world. It's just incredible.

Tell us the story of what happened and how you got plugged into the Ramsey stuff. Well, so I'm a nerd, and I would lay awake at night, and I wondered, you know, how were we going to keep paying all of our payments? How could we keep our time share? What's going to happen when the credit cards are maxed out? So we knew enough about your program to know that we needed more income. So we downloaded EveryDollar and we went to work. For the last 64 months, we've been cleaning offices, doing laundry, worked at the grocery store deli, worked at a honey store, did product demonstrations, and for the last year of our payoff, we sewed masks during the pandemic. And that's in addition to our full-time job. Oh, my goodness.

Whoa. Y'all been busy. So out of all these side hustles, what was the one that paid the most? The office cleaning, definitely cleaning definitely yeah that's big money yeah so much money you make selling masks um we oh goodness that's one thing i don't have on my piece of paper but that's okay enough to pay off our last few credit cards okay great so you made a few hundred bucks at least that's awesome because i mean that's that's a that's a business that is no more yeah temporary please jesus please jesus it is no more yeah

really oh my gosh somebody run that alien falchi out of town okay anyway the uh all right so wait well i'm glad you guys i mean i'm happy for the people in the plexiglass business they made some money so it's good way to go you guys so man you guys you just rolled up your sleeves and hustle hustle hustle so like your mom and dad were people who said work hard oh yes and our grandparents too that that whole generation what was on the other side of this thing that you guys were kind of aiming towards the vision that you had the why where you went this is why we're doing this well we have our have our 18-year-old son, Parker, with us here today. We were doing all of this for him.

He's been our biggest cheerleader and our biggest reason that we've been doing all of this. Yeah, you modeled that sacrifice for him, and that's ingrained in him now. Absolutely. He bought his first car with cash. Yay! We're very proud of him. Yeah, now we're passing down weirdness as a family trait i love it good for you guys well done okay outside the three of you who was cheering you on

well our family and our friends and our co-workers our sunday school class at church we've got a great network of cheerleaders that's good that. That's good. Sounds like you've got good friends that are wishing good things for you all the time, not running you down. Yes, sir, we do. That's good. Very cool, guys. Very cool. All right, what do you tell people the key to getting out of debt is, 246,064 months?

Well, I would say that hard work pays off. Make a budget, make a plan, and stick to it. Keep Christ in the center of the home and in the family. And I would say use the EveryDollar app, and don't stop tithing while you're getting out of debt. Amen. Amen. So this whole exercise was very much a spiritual exercise for you all. Oh, yes, absolutely.

The whole idea of stewardship, managing God's resources well, had to play a part with the language you're using. He has blessed us, and we give him all the praise and glory for it. Amen. Amen. Well done, you guys. You're rock stars, heroes. You have a paid-for house, and you're not even 50. Thank you. Thank you so much. Did you ever dream, for house you're not even 50 thank you thank you so much did you ever dream

like when you got married that you were going to be there by the time you're 50 no way no you know a lot of us got married uh you know fit that are in our 50s or 60s now and we just thought it's mortgages for your whole life we thought that was the definition of the word you're always gonna have a car payment i heard that my whole life we did little man can't get ahead you're always gonna have a car payment like eeyore is your spirit animal or something right yeah that's out there man it's out there so you guys busted that chain i'm proud of you thank you so much well done we got a copy of baby steps millionaires for you that's the next chapter in your story go on and become millionaires and continue to be generous and outrageously generous as well.

And, of course, a copy of the Total Money Makeover for you to give away. And we're going to send you a gift card for the one-year subscription to Financial Peace University to the membership to that. The brand-new videos are on it. If you haven't been through the class, it's a chance for you to go through it or give it to someone either way uh we're giving you all these things you enjoy them give them away help other people with them you guys are incredible you're gonna inspire a lot of people with your story amen awesome both it's a great great story all right jamie and deborah in georgia 246 000 paid off in 64 months that's their house and everything they're not even 50 they're rocking it did it making 79 to 110 and 83 side hustles way to go county guy on guys let's hear a debt-free scream

three two one we're debt-free Yeah! That's how it's done, boys and girls. That's how it's done. This is a decision. It's a decision you have to live with. Man, beautifully done. Davey is in Louisville. Hi, Davey. Welcome to the Ramsey Show.

Hey, thanks, Dave. How are y'all doing today? Better than we deserve. What's up in your world? Well, so short version is my wife and I, brand spanking new newlyweds. We've been at this for three or four months now. So short that I can't keep time. And then not too far into our wedding, the Lord decided to bless us with not one, but two babies on the way.

Oh my goodness. Party. Yeah. into our wedding, the Lord decided to bless us with not one, but two babies on the way. Oh my goodness. Party. Yeah. Let me tell you. Uh-huh. Uh, and so we've been, you know, we're in baby, well, we, yeah, we're in baby step two. Uh, but you know, so my, my wife's a teacher and I'm a seminary student. I work part-time, but I just got my life insurance license. So hoping, you know, that I hit the ground hustling and that takes off. But my question really is, you know, like, how do we pause as far as, like, you know, paying down debt and snowballing versus saving up for the babies uh they're not due until december january but with two of them you know there's a lot of excitement on the way well you're going to be making minimum payments and kind of pausing the debt snowball until we can stack up enough cash and mom and the babies come home safe and then

when that big pile of cash is sitting there we throw it at the debt anytime you're facing a an emergency situation a potential layoff a baby on the way that kind of thing we always tell you to push pause push the pause button and that means you pay minimum payments you still live on beans and rice and you but all the cash that you're going to be throwing at your debt extra at your debts you pile it up what george just said and we want to have as big a pile of cash as possible mom and babies come home in december everybody's good we didn't need any of the cash hospital covered what is our insurance covered what is supposed to everything's good um when we take all that money we throw it at the debt and we push play again but in the meantime you've've got this nice cushion. Yes. I like to call it storm and storm. Which you're brand new, married, and two

babies on the way. That is storm and stork. There's a lot going on there. Wow. Stork and storm. Very exciting times. Oh my goodness gracious. Happy for you guys. Wow. That's going to be amazing. But yeah, if you need a big pile of cash, it'll give you some peace right now. This is The Ramsey Show. Thank you for joining us, America.

We're glad you're here. This is The Ramsey Show, where common sense is for your dollars and cents. George Campbell, Ramsey personality, is my co-host today. Sarah is with us. Sarah is in Atlanta, Georgia. Hi, Sarah. Welcome to The Ramsey Personality, is my co-host today. Sarah is with us. Sarah is in Atlanta, Georgia. Hi, Sarah. Welcome to The Ramsey Show. Hey, thank you.

So my question, my husband got some stock options from a company he was working for a few years ago. The money has gone from about $100,000 to just got valued at $1 million a couple weeks ago. So we're trying to decide how much to pull out of the company and how much to leave in. We anticipate it'll keep doing pretty well, but also don't want to be messed up if we're wrong. Wow. What's your total net worth? Probably like $600 and then this, $600 besides this. Oh, wow.

So way over half is in this one company. Yeah, yeah, we have a lot in it. Yeah, it's very dangerous. Yeah. Okay. Because, in other words, you bet the farm on this one company. You went to a horse race and you put your daddy's deed for his farm on one horse. Yeah, that's right.

Yeah, that's scary. That's what they mean by bet the farm. Yes, it is. Yeah, you don't want to do that. So I don't buy single stocks at all because of the risk of what we're talking about, the lack of diversification. If someone is in love with their company and their company stock and they want to buy some, I recommend they not have more than 10% of their net worth tied up in company stock. And that means you would have no more than $160,000 tied up in this.

Okay. That didn't sound like to me you were going to sell. 60,000 tied up in this. Okay. Okay. That didn't sound like to me you were going to sell. That okay didn't sound like you were going to sell 800,000 to me. That should sound like I will try to convince my husband or that's what we should do. That's the tough part. He's getting starry-eyed going, but what if this turns into 1.5 or 2? I mean, this is our retirement.

Yeah, exactly. So that's where we we've been and it's been working out but it's getting a little big that's what they said about bitcoin um so the uh another way you can talk to him about it then because that's what you're trying to do is to figure out how to discuss this logically the uh harvard investment newsletter about 20 something years ago had a beautiful article in it called sunk cost analysis and the danger of someone in your situation is that when you're analyzing you have a million dollars in a stock and when you're analyzing whether to keep it that way or do something different you are bringing into the analysis the fact that you only paid $100 and some change for it, and it's grown to a million over many years.

It feels like found money in a sense. Okay? And that is an improper analysis by anyone in the investment world, even people that disagree with me will tell you that's an improper analysis the proper analysis goes like this pretend like you had a million dollars piled in the middle of your kitchen table right now in cash and you did not own this stock what would you do with that million dollars? Would you go buy this stock with a million dollars off your kitchen table? No.

You see how that feels different than what I said earlier? You need to get it down to 160. And what that does is, here's what that triggers in your brain. Here's the part of your critical thinking skills that that forces. And you can go ahead and discuss this whole thing with your husband, or play this back for him. Okay? It makes you, when you look at it that way, it makes you analyze nothing about the past and only the future and you say what what immediately goes through your head before you went well no i wouldn't do that

what went through your head was something like this okay i don't want that much of my net worth tied up in a single stock number one the second thing is um i'm not that sure that this company is that great that i would put it all in this one company um and uh you know and you know i don't know i mean maybe i would rather do something else with it and all of a sudden the possibilities of other things come across your eyelids rather than just uh oh, I own this and it's awesome. Okay. So you can say, you know, it makes you look forward. The only proper analysis of an investment is forward-looking,

not looking at how you got here. Where you got the money is irrelevant. What it does in the future is the only thing you're analyzing when you analyze whether I keep it or not. Does that make sense? Yes, that does make sense yeah that is a good argument i might get somewhere with that that's the sunk cost analysis in other words whatever you paid for it doesn't matter let's pretend you paid pretend you paid two million for it and now it's worth a million the same question will keep you from, you know,

because that stock, if it went from $2 million to $1 million, might go to $200,000. It could go on down, right? Now, that's not happening with this company, but this is the reverse side of that same argument. If you're looking at $1 million and you're going, well, I'm going to wait until it comes back up because I paid $2 million for it. A lot of people say stuff like that, right?

And if you do that that's sunk cost analysis that's a bad analysis instead you say okay what do i really think this is going to do only in the future oh god i'm pretty sure it's going to go down well then why would you buy it and by keeping it one more day you just bought it again you know it's the same has the same exact effect on your balance sheet so yeah if i'm in your shoes knowing what i know from 30 years of building wealth and and i don't own any single stocks i'm not mad about it i just don't buy them i don't get tempted to count on my own ego for picking one stock that's going to be a home run i don't own any but if i did i would not own more than 10 of my net worth in a

single stock so in this situation dave this is going to create a big taxable event if she sells off this many shares. Probably. You obviously work with a tax advisor on this, but is there a strategy to go, we're going to stagger this out so it doesn't shoot us into a million-dollar income a year? I mean, you can split it over two years, but other than that, no. You're going to get taxed on it so you just put aside a big chunk of that money to pay the tax you know if you want to split over two years you can to reduce the pain and so sell something now sell some more january 2 but i mean you're waiting from now to january 2 in this current market that thing could go down yeah it

scares me i i if i woke up this morning in her shoes i I'd be done with $800,000 of it by morning. Well, it feels a little bit like you're at the casino and now you're up $900,000. Exactly. We're crushing it. Let's keep going. And then all of a sudden, it can turn on a dime. So that does scare me. Me and you don't like losing money at the casino.

We'll leave that to other people. It's easy for me to not lose money at the casino because I don't go. So, but the, you know, it's not the casino because it's not gambling. This is actually investing. But it can turn on you that fast with a certain company. And with a single stock. There's stuff going on at a company that size that no one knows except five people that could. The news comes out tomorrow on the CEOo dot dot dot did this or that my god all of a sudden the things shareholders get spooked your millions a half million yeah

you know i uh one of the saddest things i ever saw in this was there's a procter and gamble which is a wonderful company and i have no idea what their stock is doing these days but years ago i had a a widow that had worked for procter and gamble 38 years i was coaching on money and um she came in and she was just crying and she had put all of her 401k money in png stock and it was down 38 and so her 750 000 looked like you know it looked like 400 000 and uh it was awful and she had lost basically half of her retirement almost because she had bet it all and she it's a wonderful big company retirement almost because she had bet it all and she is it's a wonderful big company but that doesn't mean the stock is wonderful and it certainly doesn't mean

it's a great vehicle for you to build wealth with you can have a good company and even a stock that's okay or that has a good potential future but um none of them are good enough that i want to bet my half of my net worth on them. Yeah. That's tough. Scares the crap out of me. You're never going to go public, Dave, are you? No one's going to see the Ramsey stock hit the market anytime soon. Because then that means you've got to report to the shareholders.

That means a lot of stuff that I'm not going to do. Yeah. So sorry, folks, if you're looking forward to the Ramsey stock. It's not happening. I can assure you it's doing okay. It's doing just fine. Thank you very much. You get all the voting around here.

That's it. I am the sole arbitrator of stupidity and genius, both. So there it goes. It's worked out. At least we know whose fault it was, right? One person in charge, one person to blame. There we go. George Campbell, Ramsey Personality, my co-host today.

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