Speaker 1: Welcome to How to Money. I'm Joel, I'm Matt and
Speaker 1: today we're talking practical and beautiful investing advice with Callie Cox.
Speaker 2: Yeah, so it is time to dive in deep on
Speaker 2: investing during turbulent times. Joel, and we are fortunate to
Speaker 2: be speaking with Callie Cox, who is a part of
Speaker 2: the Ritholtz Wealth management team. Before that, we met her
Speaker 2: back in the day when she was with Ally invest
Speaker 2: E Toro. After that, and now she's also the author
Speaker 2: of Optimistic Cali, her newsletter where she seeks to deliver
Speaker 2: sane and rational advice to every day investors just like us,
Speaker 2: just like you and me.
Speaker 1: Man.
Speaker 2: She works tirelessly day and day out to make investors
Speaker 2: feel confident and informed about their money. And we've got
Speaker 2: a lot to talk about when it comes to investing.
Speaker 2: Folks don't realize that investing like it seems like all
Speaker 2: we talk about, but not to the level at which
Speaker 2: we're going to talk about it today. We're gonna, I
Speaker 2: don't know, We're really gonna get into it with you.
Speaker 2: And I'm excited for this conversation.
Speaker 3: Yeah, I'm psyched too. Thanks for having me.
Speaker 1: Of course. Yeah, you you eat breathe and sleep it.
Speaker 1: We I don't know, we think about a lot more
Speaker 1: than just investing, but so were you're curious to pick
Speaker 1: your brain because we're in interesting times right now. First though,
Speaker 1: we have to ask you what your craft beer equivalent is.
Speaker 1: What do you explore John, even though obviously you're investing
Speaker 1: solidly for your future.
Speaker 3: Well, I told y'all, and so the audience knows. I've
Speaker 3: thought a lot about this, But I my husband and
Speaker 3: I spent a lot of money on food and wine,
Speaker 3: which is a pretty typical answer. I feel like you
Speaker 3: get a lot of foodies. But you know, with us,
Speaker 3: we became obsessed with wine after we went to NAPA
Speaker 3: in twenty twenty one. Of course, during the pandemic, a
Speaker 3: lot of us had nothing better to do than drink
Speaker 3: us So as y'all probably leaned more into bore that out. Yeah, yeah, yeah,
Speaker 3: it's true. It's true. As you guys lean more into beer,
Speaker 3: we leaned more into wine, and after NAPA we were hooked.
Speaker 3: So we're not we're not serious wine collectors, but we
Speaker 3: do like exploring different wines and we love just you know,
Speaker 3: eating out and you know, exploring all the different restaurants
Speaker 3: in Charlotte, and I love to cook. I really like
Speaker 3: getting quality product and you know, cooking at home too,
Speaker 3: So I feel like that's our niche. You know, where
Speaker 3: we lean in when we're leaning out on other things
Speaker 3: like cars. I drive a nine year old camera. It's
Speaker 3: not there are areas that we lean into, areas we
Speaker 3: lean out music.
Speaker 1: I love it. I will say the wine habit too.
Speaker 1: While it can be very expensive similar to graft beer,
Speaker 1: it's not as bad if you're drinking it at home
Speaker 1: and you're making your own food, right, I mean, if
Speaker 1: you're going out, the markup on bottles when you visit
Speaker 1: a nice restaurant is significant. So yeah, drinking that bottle
Speaker 1: at home is going to save you money.
Speaker 3: Yeah, that's absolutely true. There even and I know this
Speaker 3: differs from state to state, but they're even bring your
Speaker 3: own beverage restaurants, bring your own wine restaurants. And we
Speaker 3: have a few good shops in Charlotte where you can
Speaker 3: go and buy wine at retail and they'll serve it
Speaker 3: with you, serve it to you with your dinner.
Speaker 2: But then but then you charge that corkage fee, and
Speaker 2: that just to me feels like a total slap in
Speaker 2: the face. They're like, sure, you can bring your fancy
Speaker 2: stuff from home, but we're going to charge you to
Speaker 2: open it.
Speaker 3: You gotta find a place that doesn't have a corkage fee.
Speaker 1: I know those exist. This is why Calli brings her
Speaker 1: own corkscrew keeps and just pulls it out as neat.
Speaker 1: She's got a little spout.
Speaker 2: They're like, ma'am, what that spout coming out of the
Speaker 2: bottom of your of your bag there, crickler, she's filling
Speaker 2: her glass up under the table. Callie, what is one
Speaker 2: winery next time I happen to go to Napa or
Speaker 2: Sonoma that we got to check out.
Speaker 1: You're a fan of.
Speaker 3: Okay, so Chapole very good. They are a national distributors,
Speaker 3: so I can find a few of Chapoli's bottles in Charlotte.
Speaker 3: So that's that's an accessible one that also has a
Speaker 3: really good tour, really good wine. We also went to
Speaker 3: one called Barnett. It's in the mountains of Napa, and
Speaker 3: Mountain wine has a more like smoky, almost like I
Speaker 3: don't even know how scotchy, kind of scotchy like earthyy
Speaker 3: taste to it because the soil is a little different.
Speaker 3: I think the grapes have to struggle more. But Barnett
Speaker 3: has an incredible wine called the Rattlesnake, and it's a
Speaker 3: little more expensive. It's definitely a splurge for us. But
Speaker 3: the gosh, the mouth feel, I hate saying that. The
Speaker 3: mouth feel and the experience of it is just really
Speaker 3: really complex.
Speaker 2: Okay, I'm speaking about language a winery up in the mountains.
Speaker 2: That sounds incredible.
Speaker 1: So struggling great.
Speaker 2: Yeah, and the views literally wrote that down for some
Speaker 2: time or the future when we might head out there.
Speaker 2: But you know, I didn't mention your title there at
Speaker 2: Red Holts. You are the chief market strategist. What is like,
Speaker 2: what do you actually do? And uh, I've also got
Speaker 2: to think that regardless of what you do, that your
Speaker 2: job might be a little more difficult in times like these.
Speaker 3: Yeah. So I get a lot of questions about that,
Speaker 3: and I totally understand them because they are strategists in
Speaker 3: every industry, and you know, a strategists, we do strategy.
Speaker 3: What does that even mean? I try to describe my
Speaker 3: role as a resident market NERD type role, and of course,
Speaker 3: you know I think about markets a lot, I eat, sleep,
Speaker 3: breathe investing. I know our portfolio is inside and out.
Speaker 3: I talk to clients all the time about how their
Speaker 3: money is invested and how how market moves are affecting
Speaker 3: their money. But in a way, it's also a strategic
Speaker 3: comms role. I'm telling a story, for lack of a
Speaker 3: better phrase, about what's happening in markets, and you know
Speaker 3: why that matters to everyday investors like you and me,
Speaker 3: and thinking about how to tell that story to a
Speaker 3: wide range of audiences.
Speaker 1: At one point recently, so you write a blog, which
Speaker 1: is part of where you do some of the storytelling,
Speaker 1: and you wrote practical advice is a good foundation, but
Speaker 1: everybody needs a bit of beauty. And that's just interesting
Speaker 1: to think that, Oh I need beauty inside of my
Speaker 1: investment portfolio. So I'm curious, why what do you mean
Speaker 1: by that? And what does beautiful investing look like?
Speaker 3: Well I got thinking of this because I read a
Speaker 3: blog from Morgan Housel. So I can't take credit for this.
Speaker 3: I can't take credit for all of this, but Morgan
Speaker 3: wrote a really great blog about magazine architects or architects
Speaker 3: that create these beautiful buildings, ones that you see in
Speaker 3: magazines and architects digest, you know, ones that we all
Speaker 3: drool over because we don't have to live in them,
Speaker 3: but they're really not functional. You know, they don't have
Speaker 3: they don't have the size of the garage that you
Speaker 3: need to like actually you know, keep your car there,
Speaker 3: or you don't. You don't have the right functionality to
Speaker 3: actually live there. And I think the concept of that
Speaker 3: is true for a lot of different areas of our lives.
Speaker 3: And one area that people never talk about that for
Speaker 3: is investing, because all we get is stay invested, stay
Speaker 3: the course, put your money in an index fund, and
Speaker 3: hold it, hold it until you die type advice. And
Speaker 3: you know, I agree with that. I think it's hard
Speaker 3: to make the argument against it. But I also think
Speaker 3: that there's just an ocean of nuancewe queen staying invested
Speaker 3: and you know, you know, kind of being haphazard with
Speaker 3: your money, and that's really important. That's something we talk
Speaker 3: about a lot with our clients here, the fact that
Speaker 3: you know, you have to stay invested. You're investing for decades,
Speaker 3: but we want to make sure that you stay invested,
Speaker 3: and there are things like you can do that kind
Speaker 3: of go against that traditional logic. But I also think
Speaker 3: about it in my own world because like, yes, I
Speaker 3: talk about the benefits of index funds, but even I
Speaker 3: have targets in my portfolio. I sell according to those targets,
Speaker 3: and you know, I am a little bit more active active,
Speaker 3: even though I'd consider myself a long term investor looking
Speaker 3: at retirement.
Speaker 2: What that does it just allows room for humanity and
Speaker 2: like kind of going back to the Morgan househole analogy, like, yeah,
Speaker 2: the reason those look spaces look cool is because they don't.
Speaker 2: Actually they couldn't actually house somebody in real life, or
Speaker 2: the practical needs of a family with a toddler running
Speaker 2: around with sharp edges everywhere, whatever it might be. And
Speaker 2: I think what you're speaking to is the abilit to
Speaker 2: maybe be a bit flexible when it comes to our portfolios,
Speaker 2: as opposed to completely grinning it, bearing it, never checking it,
Speaker 2: because it's really hard to ignore all the news that's
Speaker 2: popping up on our phones that we hear people talk about.
Speaker 2: On that note, can you speak to the current state
Speaker 2: of things? I guess all the volatility that we've felt.
Speaker 2: It feels like we lived a couple of years just
Speaker 2: in the past few months. Can you catch us up
Speaker 2: to speed on let's say, the Trump the initial Trump bump,
Speaker 2: but then the subsequent deflation. Why all this has happened?
Speaker 3: Yeah, well, how much time do we have here? Where
Speaker 3: do I start?
Speaker 1: Seriously, this is a podcast, so many hours?
Speaker 3: Yeah, yeah, we can go as long as it takes, right, So,
Speaker 3: I guess where we'd have to start is in the
Speaker 3: middle of last year. And I think it's important to
Speaker 3: understand where the economy was before we headed into this
Speaker 3: year and had to digest all these policy changes. But
Speaker 3: actually you'd probably have to back up to COVID, but
Speaker 3: I'm not going to do that. Interest rates are actually
Speaker 3: quite high right now. They've come down a little bit
Speaker 3: since the middle of last year, and we've been in
Speaker 3: before this year, we were in this spot with the
Speaker 3: economy where you know, the job market was incredibly resilient.
Speaker 3: We had a year or two where, you know, if
Speaker 3: you're an employee, you had employers begging for you to
Speaker 3: join their companies because demand was way too high. You know,
Speaker 3: if you weren't switching your jobs, then you probably had
Speaker 3: a lot of negotiation leverage at the table. And you
Speaker 3: know that that leverage, that employee power fell more and
Speaker 3: more and more, but at a gradual pace because the
Speaker 3: FED put the brakes on the economy. Interest rates were
Speaker 3: super high, mortgage rates were super high. We were all
Speaker 3: thinking about saving instead of investing and borrowing. And that
Speaker 3: really put us in a place in the middle of
Speaker 3: last year where the FED and when I say the FED,
Speaker 3: I'm talking about the interest rate nerds up in DC
Speaker 3: that you know, basically pull the levers on interest rates.
Speaker 3: The FED looked at the economy and they said, Okay,
Speaker 3: we think there's a risk to going too far here.
Speaker 3: Interest rates are putting a lot of pressure on the economy,
Speaker 3: and we're seeing that pressure bleed into the job market.
Speaker 3: So the FED started bringing rates down. The job market
Speaker 3: got a little bit better at the end of the year,
Speaker 3: but the economy was in a bit of a fragile state.
Speaker 3: And then we moved into this year, and you know,
Speaker 3: we've all seen the headline since then, right. A lot
Speaker 3: of tariff policy that's been put out there, speculated, put
Speaker 3: into place, walked back, put back into place, a lot
Speaker 3: of snip snap decision making. And businesses, both businesses and
Speaker 3: Americans are watching this happen and they're like, I have
Speaker 3: no idea what the future holds. So instead of investing,
Speaker 3: instead of spending my money on big ticket items like
Speaker 3: cars and houses, which by the way, still costs a
Speaker 3: lot of money because interest rates are still high. They've
Speaker 3: decided to stop, and I think that I think the
Speaker 3: pivot point, the big pivot point was April second Liberation Day,
Speaker 3: where we got the list of pretty wide ranging tariffs
Speaker 3: for a lot of different countries and there was a
Speaker 3: lot of back and forth there, but that's really when
Speaker 3: the stock market started dropping like a stone. It was
Speaker 3: down about ten percent up to that point, but in
Speaker 3: the week after that, we saw historical swings, like biggest
Speaker 3: swings that we've seen since the COVID crisis in the
Speaker 3: financial crisis, as people really tried to process what huge
Speaker 3: reciprocal tariffs could mean for their lives, their portfolios, their businesses.
Speaker 3: And that's kind of where we are. We're still processing it.
Speaker 1: Yeah, the reciprocal tariffs that weren't really reciprocal and that
Speaker 1: have been pulled back but not fully rolled back. I
Speaker 1: guess I'm curious too, do you think this new political
Speaker 1: approach and new policy priorities do you think that is
Speaker 1: mostly what we're seeing or it feels like there was
Speaker 1: a lot of talk about an overinflated stock market even
Speaker 1: before Trump took office. Do you think part of what's
Speaker 1: happening to the stock market is a natural pullback that
Speaker 1: occurs when stocks are overvalued.
Speaker 3: I think it's a little bit of both. And I
Speaker 3: hesitate to say that stocks are overvalue because I think
Speaker 3: it's really hard to judge that. So when you're talking
Speaker 3: about valuation, I'm going to make an assumption, but you're
Speaker 3: probably talking about the price to earnings ratio, or where
Speaker 3: earnings are expected to be over the next year and
Speaker 3: where a stock or an index is trading relative to
Speaker 3: those earnings. Right, Yeah, Okay, so pe price to earnings
Speaker 3: ratio is a really it's a good way to judge
Speaker 3: how stocks are valued, but it's hard to say. I'm
Speaker 3: trying to think of the right way to say this.
Speaker 3: It's hard to it's hard to say where they should
Speaker 3: be valued because that price to earnings ratio can price
Speaker 3: in a lot of hope, you know, a lot of
Speaker 3: dreams about AI, a lot of optimism about.
Speaker 1: The future, and values in the eye of the beholder.
Speaker 3: A little bit value is in the eye of the beholder.
Speaker 3: You know, there are designer shirts, there are shirts that
Speaker 3: you get off the rack at Walmart. They're made with
Speaker 3: the same fabrics, but you're paying different prices, right, same
Speaker 3: thing with the price to earnings ratio, And in most environments,
Speaker 3: a higher PE is actually okay. It's okay, tod, it's
Speaker 3: okay to think about where tech stocks could be going
Speaker 3: in the future. Just because the PE is high doesn't
Speaker 3: mean the market's about to crash. The problem is when
Speaker 3: you start to see economic cracks, right, and that's when
Speaker 3: the optimism starts to fade. That's when you should probably
Speaker 3: expect the PE to start falling because because again, you know,
Speaker 3: expectations for the future start to fall, and then actual earnings,
Speaker 3: if it gets bad enough, will start to fall as well.
Speaker 3: And that's the moment that we're in right now, where yeah,
Speaker 3: you're probably looking back and saying, Okay, the stock market
Speaker 3: is probably richly valued or too high for what could
Speaker 3: be coming. But yeah, what you brought up is actually
Speaker 3: really important too. You know, the stock market sells off
Speaker 3: in healthy economies. This in a way is kind of
Speaker 3: part of the process. And we're coming off two incredible
Speaker 3: years in the stock market. I mean twenty percent back
Speaker 3: to back gains in the S and P five hundred.
Speaker 2: That's true, we're not going to talk about teriffs the
Speaker 2: entire time.
Speaker 3: But ken if you want.
Speaker 2: I feel like our listeners have had enough. I feel
Speaker 2: like I've had enough, to be honest, because I feel
Speaker 2: like so much if they haven't had enough with us,
Speaker 2: I feel like a lot of it is overblown, And
Speaker 2: at least at the time of this recording, we haven't
Speaker 2: yet feel like businesses are looking ahead because they're looking
Speaker 2: at quarters at a time, and especially small businesses and
Speaker 2: how they're impacted by terras and the foreign availability of
Speaker 2: goods that they need as inputs to run their businesses right.
Speaker 2: But as consumers, a lot of folks haven't seen significant
Speaker 2: increases when it comes to when it comes to prices,
Speaker 2: and that was one of the biggest things that the
Speaker 2: market was reacting to. Do you feel that the whole
Speaker 2: terrorist thing is overblown or is it just it's more
Speaker 2: complex and it's just going to take longer for it
Speaker 2: to trickle through the system before we start seeing the headlines,
Speaker 2: before we start seeing the lines of folks lining up
Speaker 2: at stores, that kind of thing.
Speaker 3: I think it's happening. So Liberation Day was April second,
Speaker 3: so there's been about four weeks between that initial announcement
Speaker 3: Trump with the poster and know us recording today. That's
Speaker 3: about the time it takes from a ship to move
Speaker 3: to go from China to the port of Los Angeles,
Speaker 3: for those goods to be unloaded and finally make it
Speaker 3: to their final destination. That stuff takes time. That's a
Speaker 3: long journey. So what we're seeing right now is that
Speaker 3: port volumes are coming down, which is concerning. That means
Speaker 3: that there actually is some There are inventory changes that
Speaker 3: are happening on the back of these dramatic tariffs, especially
Speaker 3: coming from China. And look, once that's happening, it's gonna
Speaker 3: roll through the system and you're gonna see it in
Speaker 3: some way or another, empty shelves, higher prices, mix of
Speaker 3: the two. That is anybody's guess. What worries me is
Speaker 3: that we're starting to see indications through company earnings reports
Speaker 3: and through more bird's eye view. Macro reports that a
Speaker 3: lot of companies feel comfortable passing along those prices, which
Speaker 3: means you and I when we go to the store,
Speaker 3: we're going to pay higher prices for those goods. The
Speaker 3: companies aren't just going to eat that cost.
Speaker 1: Yeah, yeah, I'm curious too, how much of an impact
Speaker 1: like foreign backlash against tariffs, Like what could the ramifications
Speaker 1: be there? We've already seen Canadians saying I'm not vacationing
Speaker 1: in the United States anymore, and just far fewer people
Speaker 1: from just north are are coming down, and it's you know,
Speaker 1: hurting our tourism industry. And you wrote something about I
Speaker 1: think foreign consumers can essentially cause a lot of pain
Speaker 1: for Corporate America. Do you think those boycotts from other
Speaker 1: countries because of the way we're acting could have other
Speaker 1: ramifications too.
Speaker 3: You know, I worry a lot about this because I
Speaker 3: think it's hard to quantify the eventual impact, but we
Speaker 3: know the impact could be big. And that's actually why
Speaker 3: I wrote the Boycott American newsletter. I wasn't saying boycott America,
Speaker 3: but what I was trying to do is put some
Speaker 3: numbers behind how interwoven foreign consumers, foreign tourists, foreign investors
Speaker 3: are in our markets and the travel. The travel part
Speaker 3: is interesting because we've already started to see data and
Speaker 3: really interesting color from travel companies on how foreign bookings
Speaker 3: are down. So we heard it from Delta, I believe
Speaker 3: we heard it from American in the past few weeks
Speaker 3: they've seen bookings come down, especially international bookings foreign tourists
Speaker 3: coming into the US. And I saw a report from
Speaker 3: a Canadian travel consulting company and like, look, this is
Speaker 3: this is one report, but it's backed up by a
Speaker 3: lot of color that we're seeing or that we're hearing.
Speaker 3: But this one report from the Canadian travel consulting company
Speaker 3: said that Canadian bookings of travel into the US are
Speaker 3: down seventy percent year every year, which is a huge number.
Speaker 3: It's a scary number. And I don't take one piece
Speaker 3: of data and you know, un run down a rabbit
Speaker 3: hole with that. I don't think that's smart for anybody
Speaker 3: to do, but it should, at the very least make
Speaker 3: you think a little bit about, you know, the second
Speaker 3: order consequences or the second order effects of what could
Speaker 3: be going on here and in markets. I don't know
Speaker 3: if a lot of people know this. I certainly wouldn't
Speaker 3: know if I didn't work in finance, but foreign investors
Speaker 3: have been major buyers of stocks and bonds over the
Speaker 3: past several years, primarily because we have the biggest and best,
Speaker 3: most innovative companies in the world. I mean, everybody wants
Speaker 3: to invest in Apple, right, but on the bond side,
Speaker 3: we also have an incredibly deep and incredibly rich and
Speaker 3: volume heavy marketing government det it's called the treasury market,
Speaker 3: and foreign investors have been turning more and more to
Speaker 3: treasuries to hedge their portfolios and to get a nice
Speaker 3: stable source of yield. So we have to step back
Speaker 3: and consider that some of that, maybe all of that
Speaker 3: could be at risk here.
Speaker 1: Yeah, and so much of that.
Speaker 2: It's a slow burn. I think that's what I'm coming
Speaker 2: to terms with. When it's between the news the headlines
Speaker 2: Trump making changes to tear us or to following through
Speaker 2: or pulling back in the stock market, it's incredibly reactionary.
Speaker 2: And we see day and now I mean not even
Speaker 2: day to day changes like minutes a minute, hour by
Speaker 2: hour sort of changes. But when it comes to some
Speaker 2: of these higher prices, and what you said is totally true, right,
Speaker 2: We've seen the reports of the empty cargo ships showing
Speaker 2: up at port because they're like, all right, we got
Speaker 2: to keep moving. And at some point, if there are
Speaker 2: no goods, we might be bound to see higher prices
Speaker 2: less availability of goods on the shelves. But from an
Speaker 2: investing standpoint, what should we do, Like how should folks
Speaker 2: respond to the different pieces of news that they come across,
Speaker 2: because kind of going back to the beginning of our conversation,
Speaker 2: you're talking about having beauty, you're investing being beautiful.
Speaker 1: I feel like a part of what you're.
Speaker 2: Saying there is to take into account the fact that
Speaker 2: there are going to be things that you're going to
Speaker 2: want to want to react to and to allow for
Speaker 2: some of that humanity to play out in our investing.
Speaker 2: Would you recommend that?
Speaker 3: Yeah, I think that's a good place to start, and
Speaker 3: I just want to add something else on that practicality
Speaker 3: versus beauty comment. You know, a lot of client conversations
Speaker 3: we have, and a lot of conversations I'm having with
Speaker 3: friends and family right now are what to do. And
Speaker 3: usually the options that they see in front of them
Speaker 3: are to sell everything and run for the hills, or
Speaker 3: buy everything and stay invested, because that's what the spreadsheet
Speaker 3: is telling me to do. Right and measures extreme measures,
Speaker 3: But in a way, people don't realize that they're extreme
Speaker 3: because I see, because I see different flavors of this
Speaker 3: every day, I can say that it's extreme. And by
Speaker 3: the way, if you feel that way, it's okay. You're
Speaker 3: human your brain is working as it should. It's supposed
Speaker 3: to alert you of risks, but as an investor, you
Speaker 3: have to take that in and you know understand how
Speaker 3: you should react in this moment based on how you
Speaker 3: feel in your gut, but also based on what you're
Speaker 3: going to do with your money and how much time
Speaker 3: you have in front of you. And it's this, it's
Speaker 3: this really tough, tangled mix of reality and feeling, and
Speaker 3: that's why finance is really hard. But to go back
Speaker 3: to your question, I mean, I think a lot of
Speaker 3: people have that middle lane and they don't realize they
Speaker 3: have it. So if it means, you know, looking at
Speaker 3: your portfolio saying that you're investing for a retirement and
Speaker 3: that means that you have a few decades ahead of you,
Speaker 3: then you know, maybe it means raising a little bit
Speaker 3: of cash, filling up your emergency fund, making sure you
Speaker 3: feel comfortable with where you are in case you will
Speaker 3: lose your job, because unfortunately, job loss is the reality
Speaker 3: of economic crises. That's one of the hallmarks of you know,
Speaker 3: why growth slows down and people stop spending money, and
Speaker 3: you know, trying to put yourself in a place where
Speaker 3: you're comfortable but you don't abandon your future self at
Speaker 3: the same time, because, like again, if you go back
Speaker 3: to the math, it makes a lot of sense to
Speaker 3: buy when the stock market is down ten or fifteen
Speaker 3: percent from highs if you have decades ahead of you.
Speaker 3: But that's not so easy in practice. And I certainly
Speaker 3: don't want to assume that it is easy with anybody
Speaker 3: I'm talking to, because I'm a human too, I understand
Speaker 3: how it feels.
Speaker 1: So you say you're a human, which I fully believe
Speaker 1: you when you say that. What you and actually you've
Speaker 1: alluded to this in some of your recent blocks. So
Speaker 1: you said you admitted to being a little scared, and
Speaker 1: you also have said like, hey, I'm kind of a
Speaker 1: type A person means I want more control. I'm curious
Speaker 1: how that mixture of being a little fearful because especially
Speaker 1: given the how much you've been around markets and how
Speaker 1: much history you've read about, you know, stock market gyrations
Speaker 1: like hey, you're pretty young, Kelly, Like why are you fearful?
Speaker 1: And how is your type A self responding to what's
Speaker 1: going on? Like what are you doing?
Speaker 3: You just painted me so well Type A and anxious
Speaker 3: about everything. Both of those comments are absolutely true, and
Speaker 3: I'm not. Look, I don't hide that, and I think
Speaker 3: Wall Street sometimes falls into this trap of, you know,
Speaker 3: hiding the fact that they're humans, because, Okay, I get
Speaker 3: part of it. Like you, you're managing a lot of money,
Speaker 3: and you don't want to lead on that you you
Speaker 3: might have an ounce of uncertainty, of feeling an ounce
Speaker 3: of uncertainty in yourself. I get why people move that way,
Speaker 3: but I try to approach these situations from a moment
Speaker 3: of empathy and if we're being honest here, like I
Speaker 3: don't know what the future holds. I down the rabbit
Speaker 3: hole sometimes a lot these days, not so much on
Speaker 3: the investing side, but you know, on the policy side,
Speaker 3: on the you know, living life as a human side,
Speaker 3: where could this go? Especially you know, the with the
Speaker 3: extremism of the headlines and policy that we all hear about.
Speaker 3: But I'm lucky that I have the investing background. I
Speaker 3: know how markets work, and I know how important a
Speaker 3: process is. So I'm not your listeners. So I want
Speaker 3: to be clear when I say this. I'm not making
Speaker 3: a recommendation. But I know that I am investing for
Speaker 3: retirement and I'm in my thirties, so I have decades
Speaker 3: ahead of me. And even if you're in retirement and
Speaker 3: you're living off your portfolio, yes, this moment feels scarier,
Speaker 3: but you're probably investing for decades too. God forbid, you're
Speaker 3: dying the day that you retire. I hope that doesn't
Speaker 3: happen to you. So I think you know, as somebody
Speaker 3: who leans back on numbers, I really try to sit
Speaker 3: back on the fact that I have a lot of
Speaker 3: time ahead of me, that if I do feel anxious,
Speaker 3: then I need to make sure sure my financial house
Speaker 3: is in order, so that can cull a little bit
Speaker 3: of my feeling there. And look, I leave it up
Speaker 3: to the numbers. I have targets for stocks, bonds, and
Speaker 3: crypto in my portfolio, and if my allocations move out
Speaker 3: of the target, I adjust. I also have pulled forward
Speaker 3: a few like monthly investing investing deposits that I was
Speaker 3: going to make, because I know that when stocks are
Speaker 3: down ten, fifteen to twenty percent, then that's often a
Speaker 3: good buying opportunity, even if it doesn't feel good at
Speaker 3: the moment. So there are little changes you can make
Speaker 3: on the margins, and yes, raising cash is okay on
Speaker 3: the margins if you don't go too far, but there
Speaker 3: are little changes you can make to tailor your portfolio
Speaker 3: to you and how you feel that don't necessarily doom you,
Speaker 3: you know, years down the road.
Speaker 2: That's that type a Cali stupat right there, overcoming anxiety
Speaker 2: calli oh and going back to market house numbers. Not
Speaker 2: to make this all about him, but like that's like
Speaker 2: the beatle full architectural home, but also there's a little
Speaker 2: bit of mess in there, you know, like there's a
Speaker 2: little bit or there's a random piece of art that
Speaker 2: doesn't quite fit the rest.
Speaker 1: Of the of the house.
Speaker 2: Because like that's the kind of thing that allows for
Speaker 2: there to be more of that sort of messy day
Speaker 2: to day living. It doesn't doesn't have to be all
Speaker 2: stoic and perfect and personal and yeah, emotionless, but you've
Speaker 2: got more sane and rational investing advice to get to.
Speaker 2: With Cali Cox in particular, we're going to talk about
Speaker 2: some of the things that some younger investors should keep
Speaker 2: in mind. We'll get to that and more right after this.
Speaker 1: Our we're back still talking with Calie Cox, talking about
Speaker 1: markets and Cally and just kind of what's happening right
Speaker 1: now from an economic perspective and the impact that's having
Speaker 1: on personal finance decisions. Kelly, I'm curious too, like, how
Speaker 1: do you think the current climate conditions and economic uncertainty
Speaker 1: should impact the personal finance decisions were made. I'm thinking about,
Speaker 1: in particular, something as big as buying a house, and
Speaker 1: I know that like Zillow has said, hey, we think
Speaker 1: that home prices are actually going to decline this year,
Speaker 1: and that might be welcome news from someone who's been
Speaker 1: trying to buy a home that it has been unable
Speaker 1: to But then they're like, well, but wait a second,
Speaker 1: my portfolio is down ten percent. I feel like I
Speaker 1: have less buying power now, so maybe it's not a
Speaker 1: win win. I don't know, how are you thinking or
Speaker 1: how are you advising people think about some of those
Speaker 1: bigger buying decisions right now.
Speaker 3: Yeah, that's a really good question, And of course it
Speaker 3: all boils down to your own situation, your own goals.
Speaker 3: I know you're going to hear that everywhere, but I
Speaker 3: just want to emphasize that that's really important. I don't
Speaker 3: know how much money you have in your bank account,
Speaker 3: I don't know why you're investing your money. Those facts
Speaker 3: are really important when you're making these decisions. The first
Speaker 3: thing I'll say there is that interest rates sit at
Speaker 3: the heart of a lot of these decisions. And that's
Speaker 3: why a few minutes ago I was talking about the
Speaker 3: Federal Reserve and where they're setting their policy rate. It's
Speaker 3: not the Fed's policy rate doesn't directly impact the mortgage
Speaker 3: rate that you're going to be paying on a new house,
Speaker 3: but it has a pretty heavy hand and those mortgage
Speaker 3: rates that you're seeing, So to a certain extent, you
Speaker 3: have to know where interest rates are and where they're going.
Speaker 3: And right now, interest rates are still quite high, which
Speaker 3: means that you're getting really nice savings rates on your
Speaker 3: savings account. And if you're not, please switch banks. I
Speaker 3: know you can. I know you can get a good
Speaker 3: rate there. But at the same time, what you're giving
Speaker 3: up is the fact that you borrowing has become more expensive,
Speaker 3: and we have these seven percent mortgage rates and ten
Speaker 3: percent auto loan rates that you have to contend with.
Speaker 3: So know that in this moment, from the financial side,
Speaker 3: it may not be the best moment to step out
Speaker 3: and buy a house. But then again, that's a personal decision,
Speaker 3: so you just have to know the risks that you're
Speaker 3: taking on when you're you know, making these huge life
Speaker 3: altering decisions, and unfortunately the FED isn't on your side.
Speaker 3: They might be down the road, but the problem is
Speaker 3: the FED will probably is that the FED will probably
Speaker 3: cut interest rates because we start to see some weakness
Speaker 3: in the economy and that weakness could affect you in
Speaker 3: one way or the other. So I would just take
Speaker 3: a step back, you know, understand what you want to
Speaker 3: do in the next one year, two years, three years,
Speaker 3: write it down on a piece of paper, keep yourself
Speaker 3: honest there, and prepare for an environment where it does
Speaker 3: cost a little bit more and you can't, you know,
Speaker 3: rely on a steady income. I mean, I hate to
Speaker 3: be I hate to paint the worst case scenario here,
Speaker 3: but I think it's important to make these decisions with
Speaker 3: all options in mind.
Speaker 2: Yeah, I think that's wise. Yeah, we can't. I thought
Speaker 2: you were going to say this, but we can't bank
Speaker 2: on those rate cuts for you to go ahead and
Speaker 2: buy now while balances are a little bit higher, assuming
Speaker 2: that those rate cuts will come and you have the
Speaker 2: ability to refinance.
Speaker 1: Sure, he had dropping interests. It feels like had been
Speaker 1: promised by people, especially in the real estate industry for
Speaker 1: the last couple of years, and they haven't meant to.
Speaker 2: Like they're common.
Speaker 1: It's like, well, actually we haven't not yet by the
Speaker 1: home you can always refin.
Speaker 2: Well, let's get back to investing, Kelly, because I want
Speaker 2: to talk about the younger generation. There are there have
Speaker 2: been a lot of folks who have become more accustomed
Speaker 2: to being on their phones where they're trading regularly on
Speaker 2: apps like Robinhood. Do you think that this is a
Speaker 2: positive trend overall or are you worried that they're going
Speaker 2: to get the wrong idea about investing and they're going
Speaker 2: to get burned because of the availability. Like, on one hand,
Speaker 2: the availability availability is obviously good the democratization of investing,
Speaker 2: but on the other hand, talk to us about maybe
Speaker 2: the false pretenses in which a lot of younger folks
Speaker 2: are investing.
Speaker 3: Yes, unequivocally this is a good thing, and I believe
Speaker 3: pretty strongly in this, And of course I have a
Speaker 3: brikerage background, so I am a little biased here. But
Speaker 3: when look the history of our country is built, what
Speaker 3: has been built on walls around capital markets, you know, investing.
Speaker 3: You and I, of course we didn't have cell phones
Speaker 3: before the two thousands or so. But you and I
Speaker 3: investing without having to call up a broker wasn't possible
Speaker 3: until the late nineteen nineties. There was that natural moat
Speaker 3: where it was incredibly hard to invest and some people
Speaker 3: didn't have the ability to invest because you know, a
Speaker 3: lot of this talk was happening behind closed doors. We
Speaker 3: couldn't be further from that environment these days. I mean, gosh,
Speaker 3: you said it, but you can get on your phone
Speaker 3: swipes are swipe you buy a stock. I think that's
Speaker 3: a good thing. I think investing should be accessible to everybody,
Speaker 3: and I think every American should have the power to
Speaker 3: build wealth the way that they want. It's your money.
Speaker 3: I'm not going to tell you what to do with it.
Speaker 3: You know, if you bring it to red Holes, I
Speaker 3: can help advise you on it. But you know, ultimately,
Speaker 3: you do what you want to do, and you should
Speaker 3: have the power to be able to do what you
Speaker 3: want with your money. And we're there. We are at
Speaker 3: a point where I think a lot of investors are
Speaker 3: learning hard lessons, which is okay. Sometimes that's the best
Speaker 3: way to grow and learn. But I'm glad that investors
Speaker 3: are jumping into the sandbox and you know, trying out
Speaker 3: different markets, especially when they're younger, when they can afford
Speaker 3: to take on this risk, and you know, when they can,
Speaker 3: you know, start to feel better about about, you know,
Speaker 3: investing larger sums of money. I always said this at
Speaker 3: Ally and E Toro, and I firmly believe this too.
Speaker 3: Sometimes the best way to learn how to invest is
Speaker 3: to invest. It's dipping your toe on the water. It's
Speaker 3: opening that breakerage account, getting over that initial hump, you know,
Speaker 3: maybe throwing ten dollars in, putting it in a stock,
Speaker 3: putting it in a fund, and seeing where it goes.
Speaker 3: I really think learning is an experience that people underestimate,
Speaker 3: and a lot of Americans, especially younger investors, are getting
Speaker 3: that experience right now.
Speaker 1: Doing the thing, even if it's done imperfectly. I think
Speaker 1: you're right. I think that is overwhelmingly good. And we're
Speaker 1: seeing more. I've seen more evidence that investors, young investors
Speaker 1: seem to be understanding investing a little bit more, especially
Speaker 1: when you see the market drop, and I feel like
Speaker 1: what I'm seeing in Respet is less panic selling and
Speaker 1: more buying the dip. How do you think about that?
Speaker 1: What's your take on that?
Speaker 2: Approach.
Speaker 1: Is it are they taking the war and Buffett being
Speaker 1: fearful when others are greedy, being greedy when others are
Speaker 1: fearful sort of adage? Or or are these yeah, are
Speaker 1: young individual investors becoming a little more sophisticated.
Speaker 3: They're definitely becoming more sophisticated. This goes back to the
Speaker 3: learning by experience, right, you know, maybe selling into us
Speaker 3: into a stock market drop and then realizing that price
Speaker 3: rebounded on you, maybe feeling that pain more acutely through options.
Speaker 3: I think investors have learned a bit of a reflex
Speaker 3: over the past decade or so, which I think can
Speaker 3: get a little tricky because I don't think that same
Speaker 3: reflex will work in this moment. But I mean I
Speaker 3: think investors are aware of, you know, what can happen,
Speaker 3: especially with the FED being as powerful as it is
Speaker 3: in markets these days. And I don't necessarily think that's
Speaker 3: a bad thing. I mean, we talk about staying invested
Speaker 3: in how hard it is to stay invested all the time,
Speaker 3: and you know, younger investors are out here saying by
Speaker 3: the dip and then going into markets, going into markets
Speaker 3: without a second thought. Honestly, if you are if you
Speaker 3: have decades ahead of you as a twenty something year old,
Speaker 3: then you're doing the right thing. I just think you
Speaker 3: have to be a little careful about that. And again,
Speaker 3: it's your money, you do whatever you want with it.
Speaker 3: But you know, I don't think in a high interest
Speaker 3: rate environment, when inflation is a problem, and when unemployment
Speaker 3: is a real risk too, I don't think by the
Speaker 3: dep works as works as well as people think it will.
Speaker 2: I feel that I feel like Kelly might be like
Speaker 2: a closet libertarian jewel.
Speaker 1: I hear a lot of her saying.
Speaker 2: You be you, you do you, it's.
Speaker 1: Your money, don't reveal her political affiliations. Man, No, Obviously,
Speaker 1: personal responsibility fastly important. We're talking about taking risks though,
Speaker 1: and like when you are investing, that is inevitable. But
Speaker 1: what are some of the bad, risky moves that you
Speaker 1: are seeing folks make. Especially we're kind of focusing on
Speaker 1: younger investors here. I don't even want to say younger cohorts.
Speaker 2: It's just online folks because sometimes they're older folks, yeah,
Speaker 2: who obviously spend way too much online. But it seems
Speaker 2: like that there tends to be a following of different trends,
Speaker 2: which can lead to poor outcomes. So maybe that's the question.
Speaker 2: What are some of the negative, risky trends that you
Speaker 2: see more folks jumping on these days.
Speaker 3: Well, I want to talk about the social aspect first,
Speaker 3: because I don't think the social aspect is that bad either.
Speaker 3: We do lots of different things for many different reasons.
Speaker 3: I think it's okay to invest because your friends are
Speaker 3: investing and you want a sense of community. Again, that's
Speaker 3: my brokerage background speaking. I used to work for a
Speaker 3: social investing platform. But I truly don't think that's a problem.
Speaker 3: If you want to learn and build community through your money,
Speaker 3: it's your money. You do whatever you want with it.
Speaker 3: I think the trouble comes when younger investors or investors
Speaker 3: of any age come in and they learn a hard
Speaker 3: lesson and then they just don't trust cop markets ever again.
Speaker 3: And I see that happening for investors of all ages.
Speaker 3: I mean, gosh, we have brikerige customers that I talk
Speaker 3: to that really wrestled with this, And what I hate
Speaker 3: about that is, you know, piles of data have shown
Speaker 3: us that capital markets are the way to build wealth
Speaker 3: in America. That is a fact that you can't argue
Speaker 3: against and sometimes you just have to, you know, lean
Speaker 3: in and kind of ride the coattails of America's best companies.
Speaker 3: You know, sometimes that's the easiest and most accessible path
Speaker 3: for you. So I think education is really important here.
Speaker 3: I think it's smart to remind people that stocks go
Speaker 3: up and down. You have different layers of risk when
Speaker 3: it comes to single stocks, and you're magnifying those risks
Speaker 3: sometimes with options. You know, people need to be equipped
Speaker 3: with how they're investing. But ultimately, I think it's a
Speaker 3: trust thing. If people start to lose trust in capital markets,
Speaker 3: then you're going to have a lot of problems in society.
Speaker 3: And I worry that we're moving toward that point.
Speaker 1: So you just said people need to be reminded stocks
Speaker 1: go up and down. Do you think in one sense,
Speaker 1: we as a population investor population got used to kind of, hey,
Speaker 1: markets go up. Hey, this is just guaranteed returns that
Speaker 1: far exceed what I'm going to get inside my high
Speaker 1: yield savings account. It's it's kind of like a high
Speaker 1: old savings account, but on steroids. So I just need
Speaker 1: more and more stock exposure and that maybe those people
Speaker 1: and when you look at like the last fifteen years,
Speaker 1: returns have been better than average, and we have had
Speaker 1: fewer downturns like an extended bowle market. Did we just
Speaker 1: get used to something that isn't the norm.
Speaker 3: I don't think we necessarily got used to it, because
Speaker 3: we had the Great Financial Crisis, we had the COVID crisis,
Speaker 3: we had a painful, painful twenty twenty two where it
Speaker 3: felt like no market was going up, and in reality
Speaker 3: a lot of tangible investment investments were going up with inflation,
Speaker 3: but stocks and bonds weren't working and people felt that.
Speaker 3: So I wouldn't necessarily think that's the case. I think
Speaker 3: what it comes down to, at least over the past
Speaker 3: decade or so, has been a lack of options. Looking
Speaker 3: at a bank account, seeing that I'm talking about pre
Speaker 3: twenty two here, looking at your bank account, seeing that
Speaker 3: you're getting paid nothing on your savings account, you know,
Speaker 3: looking at the fixed income market, seeing that you're getting
Speaker 3: paid two percent to lend money for ten years down
Speaker 3: the road, and you know, wondering how you build wealth.
Speaker 3: Oh and I'll add too, looking outside of markets into
Speaker 3: a corporate world where you know, wage gains were pithy,
Speaker 3: were awful because the incentives were all off after the
Speaker 3: Great Financial Crisis, and a lot of companies were they
Speaker 3: felt like they were in survival mode. They weren't necessarily
Speaker 3: investing back in their employees, they were, they were paying
Speaker 3: more attention to their shareholders, especially as that worked over time.
Speaker 3: So I mean, picture a millennial investor, Picture you and
Speaker 3: me sitting here wondering what our options are to build
Speaker 3: our wealth and seeing the stock market and basically nothing else.
Speaker 1: Then yeah, it feels like the only game in town.
Speaker 3: Yeah, exactly. And that's that's to a t what Wall
Speaker 3: Street was saying back in the mid twenty tens. Stocks
Speaker 3: are the only game in town, and they were right.
Speaker 3: I think we're seeing the other side of that. And again,
Speaker 3: like I said, not necessarily a bad thing. I think
Speaker 3: it led to some skewed incentives. But yeah, we had
Speaker 3: to lean on the stock market. That's you know, that's
Speaker 3: really what we grew up with in our teens and twenties.
Speaker 3: And to a certain extent, that's good because you know,
Speaker 3: like I said, it's been it's been really hard to
Speaker 3: invest for way too long. But on the other hand,
Speaker 3: I think now we have some options. Wage growth is
Speaker 3: finally healthy, especially especially for you know, lower level jobs.
Speaker 3: We have bonds that are actually paying out yield. We
Speaker 3: have savings account rates that you know, hover between three
Speaker 3: and four percent above inflation, and you know, we're like, Wow,
Speaker 3: this is a whole new world. I don't I don't
Speaker 3: really know what to do with it, but I do
Speaker 3: know the stock market works, so maybe let me lean
Speaker 3: into that. And that's not always that's not always a
Speaker 3: quick immediate source of dopamine or help or gains.
Speaker 2: Yeah, yeah, no, I get that. What do you have
Speaker 2: an opinion on the fire movement? This is kind of
Speaker 2: a somewhat weird pivot, but I mean, I guess you
Speaker 2: mentioned the twenty tens as well, and I'm just like
Speaker 2: something else that kind of was birthed in the twenty tens.
Speaker 2: That makes me think of all the folks who are like, oh,
Speaker 2: the fire movement, financial independence, retiring early. Do you have
Speaker 2: an opinion there? Do you think that most folks who
Speaker 2: ascribe to the fire movement are equipped to handle prolonged
Speaker 2: downturns You mentioned twenty twenty two when basically like no
Speaker 2: market was doing well in twenty twenty two. The view
Speaker 2: towards work and being productive in society, i'd love to
Speaker 2: get your thoughts on fire.
Speaker 3: So I think the fire movement is interesting. It's not
Speaker 3: a path that I'm going down. I love what I do.
Speaker 3: I actually find a lot of value in my work.
Speaker 3: It lights me up. I have a passion around it,
Speaker 3: and I'm really lucky to feel that way. I think there.
Speaker 3: I think that there has been a little bit of
Speaker 3: a boost to that movement just because markets have done
Speaker 3: so well, and I'm not sure enough people realize the
Speaker 3: reality of living on your portfolio and how painful it
Speaker 3: can be when stocks are selling off and bonds are
Speaker 3: selling off, which unfortunately is the scenario that some of
Speaker 3: us are in right now. I generally advise against looking
Speaker 3: to extremes. I feel like fire is a bit of
Speaker 3: an extreme decision, and if it's if it's a decision
Speaker 3: that works for you, that's great. I'm not sure it
Speaker 3: works for a bunch of different people. Even though we
Speaker 3: can all I think at times we can all agree
Speaker 3: that it would be fun to retire and travel forever
Speaker 3: and you know, live off of your portfolio.
Speaker 1: It also might get old. Let's be honest.
Speaker 3: I worry about that.
Speaker 1: Who can travel forever?
Speaker 3: I mean, like you said, I'm type and anxious. I
Speaker 3: was in Costa Rica for a week and I had
Speaker 3: a great time, but towards the end, I was like, Man,
Speaker 3: I really miss my normal life. I miss the routine.
Speaker 3: And I think a lot of people realize once they
Speaker 3: retire at any age, that that routine and that sense
Speaker 3: of purpose is really important. I actually think Coast Fire
Speaker 3: is really interesting. I learned about Coast Fire about a
Speaker 3: year ago, and it's the movement where you don't retire immediately,
Speaker 3: but what you know is that you could live off
Speaker 3: your portfolio if you have to, if you didn't contribute
Speaker 3: any more to your portfolio, and you have like a
Speaker 3: retirement age ahead of you that you're aiming for. I
Speaker 3: think that's a really cool psychological hack, and I think
Speaker 3: it's more realistic for the majority of people who do
Speaker 3: learn about the Fire movement.
Speaker 1: Do you think do you think some of the people
Speaker 1: in the Fire movement maybe made rosy projections of future
Speaker 1: stock market increases based on historical realities, based on recency bias,
Speaker 1: and that maybe especially when you look at predictions from
Speaker 1: places like Vanguard and they're saying over the next decade,
Speaker 1: returns are going to be pretty tepid. Do you think
Speaker 1: some of those folks might find that the ways they
Speaker 1: assumed their portfolio would perform, well, maybe it doesn't perform
Speaker 1: in that way, and they're left in a much more
Speaker 1: tenuous situation.
Speaker 3: I'm sure there's a little bit of that, because you know,
Speaker 3: we all make different assumptions. I don't love the forecasts
Speaker 3: that come out of the Vanguards and Goldman Sachs's of
Speaker 3: the world where they say, you know, we think stocks
Speaker 3: will make X over the next ten years. Like that's
Speaker 3: as good of a guess as me licking my finger
Speaker 3: and sticking it in the air and trying to tell
Speaker 3: you where the wimbile blow. It's not. It is based
Speaker 3: on some math, but it's it's ultimately marketing, right, It's
Speaker 3: ultimately getting an interesting opinion out there for an audience
Speaker 3: that you're trying to reach. That's all it is. It's
Speaker 3: not a great assumption to go off of. I don't
Speaker 3: know if you remember, but Goldman actually put out a
Speaker 3: report six months ago or so where they said that
Speaker 3: they think and I'm I'm not sure which stock index
Speaker 3: they targeted, but they said stock they think stocks will
Speaker 3: return an average of three percent over the next ten years.
Speaker 3: And I had so many friends and family ask me
Speaker 3: about that report. I think because there was a tangible
Speaker 3: number in it and it was Goldman, it got a
Speaker 3: lot of news pick up. But I was like, are
Speaker 3: you kidding me? Like what makes you think that even
Speaker 3: Goldman has a crystal ball and can see into the
Speaker 3: future and where markets are going. I think the twenty
Speaker 3: tens are the perfect example of you know, why forecasts
Speaker 3: are forecasts are ultimately bunk. You know, they they're good
Speaker 3: at teaching you how to think differently, Like, sure, they're
Speaker 3: good at spurring discussion, but I think you can, you know,
Speaker 3: fall on the wrong side of forecasts that are too
Speaker 3: high and forecasts that are too low, and generally it
Speaker 3: makes sense to be a little more conservative in your
Speaker 3: own portfolio, Like you can't assume, you can't assume twenty
Speaker 3: percent returns forever more and more. I hope that happens,
Speaker 3: but I don't think that's very likely. But at the
Speaker 3: same time, I don't think it serves you to go
Speaker 3: to conservative or to listen to the more pessimistic forecasts
Speaker 3: around that, because nobody really knows.
Speaker 1: Don't listen to the pestimist, listen to optimistic. Cali I
Speaker 1: like that. You have just a few more questions to
Speaker 1: get to with you, Cali, including with let's talk about stagflation,
Speaker 1: a term we're hearing more and more about. We'll get
Speaker 1: to that right after this.
Speaker 2: We're back from the break with Callie Cox.
Speaker 1: Cali.
Speaker 2: Something you said before the break, you said it can
Speaker 2: be painful to live off of your portfolio. And I
Speaker 2: think one of the things you're speaking to there is
Speaker 2: like the reality of knowing that the numbers point to
Speaker 2: of fairly rosy future even with conservative estimates, right like
Speaker 2: not even the most aggressive expecting the most aggressive returns.
Speaker 2: There's a difference between knowing that, but then the lived
Speaker 2: reality of seeing, you know, maybe objectively dumb decisions being
Speaker 2: made on a pop when it comes to policy and
Speaker 2: how that impacts our government. Is there some sort of
Speaker 2: I don't know, like rule of thumb or some sort
Speaker 2: of test that folks can put on themselves to help
Speaker 2: them to analyze whether the decisions that they're making in
Speaker 2: regards to their portfolio is more of an emotional knee
Speaker 2: jerk reaction versus them trying to reevaluate the new basically
Speaker 2: the new.
Speaker 1: Rules of the game.
Speaker 2: Right, Like, there's a difference between just like without even
Speaker 2: looking anything, just completely reacting, versus saying, Okay, well, actually
Speaker 2: maybe I can't handle this type of risk and what
Speaker 2: I need to do here is rebalance my portfolio or
Speaker 2: lean a little bit more in a conservative direction.
Speaker 1: Is there a way to know whether.
Speaker 2: Or not somebody is making the moves that they're making
Speaker 2: for the right reason.
Speaker 3: I feel like I could talk about this specific question
Speaker 3: for an hour plus, but I'll try to boil it
Speaker 3: down because this is actually giving me an idea for
Speaker 3: a newsletter.
Speaker 2: All right.
Speaker 3: I think it depends. It depends the worst answer ever,
Speaker 3: it depends on who you are, and I think the
Speaker 3: test is different for everybody. But some general guidance I
Speaker 3: would give around that is how quickly you make a decision.
Speaker 3: So let's say a bad headline crosses the tape, another
Speaker 3: tariff headline, and you know it feels painful, and you say, ah,
Speaker 3: I feel like I should sell stocks. If you feel
Speaker 3: that reaction immediately, you probably can't trust it. And I
Speaker 3: know that's a hard thing to say, because I want
Speaker 3: I want people to feel like they can trust themselves.
Speaker 3: But there's a difference between between a reaction and a
Speaker 3: sound decision and when when both of them are overlapping,
Speaker 3: or when the sound decision comes quickly, I think you
Speaker 3: need to question it at the very least. Again, I
Speaker 3: like to lean on numbers, So when I have a
Speaker 3: nicky type of anxious reaction, I always go back to
Speaker 3: my numbers. I remind myself that, Okay, my portfolio is
Speaker 3: this size. X percent is in stocks, and this is
Speaker 3: why X percent is in bonds, and this is why
Speaker 3: X percent is in crypto. This is why, and that
Speaker 3: usually writes my path. But I know that I eat, sleep,
Speaker 3: breathe this stuff, so it's a little it's a little
Speaker 3: little bit easier for me. I think about this a lot.
Speaker 3: The other thing I'd throw out there is, you know,
Speaker 3: there are certain processes that work for different people, but
Speaker 3: the process is the important part when you have those feelings.
Speaker 3: Knowing how to center yourself, So even if it's like
Speaker 3: touching the table in front of you, or sipping a
Speaker 3: cup of hot tea or touching grass or something, knowing
Speaker 3: how to get back into yourself and then calmly evaluating
Speaker 3: what's going on is really smart. And knowing what that
Speaker 3: process is for you is very important. So you can
Speaker 3: get to a point that you can think through this
Speaker 3: sound decision that you're about to make. And again it's
Speaker 3: not easy. But everybody talks about having an investing plan.
Speaker 3: This is when an investing plan is really important. I
Speaker 3: invest when I get my paycheck and maybe not outside
Speaker 3: of it, although I think you could be a little
Speaker 3: fluid with that. And I will put X percent of
Speaker 3: my money into stocks, ex percent of my money into bonds,
Speaker 3: ex percent of my money into crypto if that's suitable
Speaker 3: for you, and knowing when you'll eventually need that money
Speaker 3: so you can make a plan to take it out.
Speaker 1: So we're hearing the term stagflation thrown around a lot
Speaker 1: these days, which is a throwback to the nineteen seventies
Speaker 1: when none of us were born.
Speaker 3: Are you saying you know how old I am.
Speaker 2: Well, you referred to us as millennials, that we are
Speaker 2: barely millennials, Cali, So that tells me that you are
Speaker 2: younger than that's true.
Speaker 3: I did tap my hand there.
Speaker 1: So stackflation is the thing that only our parents remember.
Speaker 1: But is that something you're truly worried about? Is that
Speaker 1: something we can or should be preparing for? How would
Speaker 1: we react?
Speaker 3: I'm worrying about it more. I wouldn't say that I'm
Speaker 3: certain it will happen. I'm certain nothing will happen. Nobody
Speaker 3: knows what the future holds, but I worry. So I'll
Speaker 3: explain what stackplation is first, and then I'll talk about
Speaker 3: where we are now. So stackflation is this economic phenomenon
Speaker 3: where unemployment is going higher, people are losing their jobs.
Speaker 3: Prices are also going higher, so inflation and economic growth
Speaker 3: is stagnant. And those three conditions together are really hard
Speaker 3: to reach, especially these days. But when you do get there,
Speaker 3: like in the nineteen seventies, it can be incredibly painful
Speaker 3: because when we think about the economy, we think about
Speaker 3: it in terms of affordability. How much money am I making?
Speaker 3: What can I afford? In a period of sagflation. You
Speaker 3: fall behind so quickly when it comes to affordability, especially
Speaker 3: if you lose your job and if prices are moving higher,
Speaker 3: you can't afford things and you're not making money. That's
Speaker 3: the worst trench to be in. We're not broadly, we're
Speaker 3: not there yet right now, and I think the bar
Speaker 3: is really high to get there for a few really
Speaker 3: nerdy reasons, but mainly because the FED exists and it
Speaker 3: has this dual mandate this two part job where it
Speaker 3: has to watch inflation and it has to watch the
Speaker 3: job market. And I think the Fed's hands are tied
Speaker 3: right now. They're not sure what side to focus on more.
Speaker 3: But if we do get further into this and there
Speaker 3: is some economic damage, I think the side to focus
Speaker 3: on will become abundantly clear and they'll be able to
Speaker 3: do something about it. Something that a lot of people
Speaker 3: don't know is that the Fed's dual mandate actually came
Speaker 3: out of the nineteen seventies and the stagflation that we
Speaker 3: saw in the seventies that was ultimately that ultimately went
Speaker 3: into the eighties and was kind of smothered out by
Speaker 3: Paul Volker. Congress actually passed an act after that that
Speaker 3: set the Fed's dual mandate. So we have this like
Speaker 3: natural stabilizer there that wasn't there in the nineteen seventies.
Speaker 3: So I say all this to say, stagflation I think
Speaker 3: is still far away. You might feel inklings of it
Speaker 3: here and there, but the true conditions of awful stagflation
Speaker 3: that affects that affects a large swath of the population,
Speaker 3: are still far away. And I think that there are
Speaker 3: some counterbalances.
Speaker 2: Nice, awesome, Well, CALLI, thank you so much for taking
Speaker 2: the time to speak with us, everything from trading on
Speaker 2: your phone to stagflation, retirement finding, calm touch. I like
Speaker 2: how you're just even touching the table in front of you.
Speaker 3: I like sipping hot tea. That's actually why I brought
Speaker 3: it up. When I feel anxious, I get a cup
Speaker 3: of tea and I just sip it and I meditate.
Speaker 3: And I think sounds corny, but that's what I do.
Speaker 1: No, I think it like what you pointed to earlier,
Speaker 1: you need out of that is knitting.
Speaker 3: Now you're saying I'm old.
Speaker 1: Okay, then you're my grandma.
Speaker 2: You will be ready for a retirement at that point, Calli.
Speaker 2: But that's how we know. Yeah, No, seriously, we really
Speaker 2: appreciate taking the time, and of course we'll point folks
Speaker 2: over to your substack optimistic CALLI. But yeah, thank you
Speaker 2: for hanging out with us today.
Speaker 3: Yeah, thanks for having me. This was a lot of
Speaker 3: fun and hopefully the next conversation we have will be
Speaker 3: a little cheerier.
Speaker 1: Awesome, Thanks Cally. All Right, Matt, good convo with Calli,
Speaker 1: and uh yeah, a lot of good information and hopefully
Speaker 1: just all about investing, I know, and hopefully just some
Speaker 1: a calming effect for the people out there who are
Speaker 1: worried about the future. And let's be honest, it's hard.
Speaker 1: It's hard not to be at least somewhat worried about
Speaker 1: the future, a.
Speaker 2: Little bit anxious. Yeah, and wonder how much hot tea
Speaker 2: Cali drinking these days. She's like, oh, I've noticed my
Speaker 2: my hot tea intake spiked significantly over the past three
Speaker 2: months exactly.
Speaker 1: But still there's a lot of reasons to be calm
Speaker 1: and to be excited about the future too. So what
Speaker 1: was your big takeaway from this combo?
Speaker 2: Well, I guess speaking to that, it's all about And
Speaker 2: something she said was to find comfort with whatever plan
Speaker 2: it is that you as an individual have come up with.
Speaker 2: And you know, she said, write it down, she said,
Speaker 2: she said, having hot tea that's a part of her plan. Like,
Speaker 2: I would love to see that written down somewhere as
Speaker 2: part of her you know, her twelfth step process to
Speaker 2: talk herself down from the ledge if she's feeling a
Speaker 2: little bit anxious about the markets, and you know how
Speaker 2: her investments are doing. But you find that comfort, but simultaneously,
Speaker 2: you don't abandon the overall plan that you know is
Speaker 2: going to lead to your financial future. Like it's a
Speaker 2: it's like our own personal forget the FED, this is
Speaker 2: our own personal dual mandate that we have to somehow
Speaker 2: find a way to navigate, to find comfort, to not
Speaker 2: freak out at every headline or tweet or truth that
Speaker 2: gets pushed out there, to be able to stay the
Speaker 2: course and maybe be able to respond thoughtfully, but at
Speaker 2: the same time knowing that over the long haul, this
Speaker 2: is this is what we gotta do.
Speaker 1: Yeah. Yeah, I like that a lot, and that that
Speaker 1: involves having a plan, right, So yeah, it's a good
Speaker 1: idea if you don't have one, to have one and
Speaker 1: to write it out so that you know what to
Speaker 1: do first, that you're not just like knee jerk making
Speaker 1: bad decisions because you're emotional. And I get it. It's
Speaker 1: it's hard not to be emotional sometimes, so you need
Speaker 1: the plan to help you avoid the worst impulses. I
Speaker 1: think my big takeaway was when she was like, I
Speaker 1: don't really pay attention to those predictions to the pessimist,
Speaker 1: and it's really hard when there's like a name like
Speaker 1: Vanguard or Golden Sacks attached to it, and.
Speaker 2: You're like JP Morgan, right, Jamie Diamond again, here he
Speaker 2: goes all.
Speaker 1: Right, yeah, And all I can think sometimes when I
Speaker 1: read those is like, there's a pool of highly paid
Speaker 1: people who wear much nicer suits than I do, because
Speaker 1: I literally have one suit that I don't wear very frequently.
Speaker 1: And my assumption is like, they know more than I do.
Speaker 1: I'm an idiot by comparison to the hive mind that
Speaker 1: they've got going on in these fancy New York office buildings.
Speaker 1: But that's not even true, that's not actually true. It
Speaker 1: feels like that's true, but it's not. And so those
Speaker 1: predictions pessimism also sells like it's easier to trust somebody
Speaker 1: who has a dour prediction than someone who's like, I
Speaker 1: think things are going to be great. You just sound
Speaker 1: like an idiot when you say I think things are
Speaker 1: going to be great. But the truth is so much
Speaker 1: of the time, especially when it comes to markets, things
Speaker 1: are pretty good. So maybe we should listen to the
Speaker 1: optimists like Callie a little bit more less to the pessimists.
Speaker 1: It's not that bad things can't happen, and we should
Speaker 1: be prepared for those things, but it's also hey, maybe
Speaker 1: maybe don't assume that only bad things are in our future,
Speaker 1: because there's a lot of good stuff coming around the
Speaker 1: bend too.
Speaker 2: That's right, man, all right. The beer that you and
Speaker 2: I got to enjoy during this episode was called Pineapple
Speaker 2: Vanilla Milkshake IPA by whistle Hoop Brewing Company. What did
Speaker 2: you think of this one, buddy, I'm gonna say this
Speaker 2: one was okay.
Speaker 1: It was okay.
Speaker 2: Yeah, I'm with you. Yeah, and those one was not
Speaker 2: my favorite.
Speaker 1: I picked this one up at the Physical Brewery in
Speaker 1: in Ashville. The Physical Brewery really cool, A great place
Speaker 1: to take kids. I've into this place. Yeah, they got
Speaker 1: little soccer nets and a little mini miniature golf course.
Speaker 2: So it's called whistle Hop in the whole places train theme. Yeah,
Speaker 2: so there's literally a train car that you can get
Speaker 2: up in and we actually had the most fun sitting
Speaker 2: up what's it. I'm sure there's some train nerds out
Speaker 2: there where you like climb up the little ladder and
Speaker 2: you're kind of sitting on the second floors looking out
Speaker 2: the window.
Speaker 1: Love that did you get to sit out there? I
Speaker 1: don't know what that's called, but yeah, they loved it.
Speaker 2: It's a it's a cool feature of a mode of
Speaker 2: transportation that we no longer take advantage of. But the
Speaker 2: hackers also go to Europe with the actual beer. Beer
Speaker 2: was left something to be desired. Yeah, and I had
Speaker 2: a good sour beer when I was there that I enjoyed.
Speaker 1: This one I just didn't enjoy as much. And I
Speaker 1: guess the pineapple maybe felt a little fake to.
Speaker 2: Me, a little heavy handed. And the milkshake I pas
Speaker 2: is a style that I've never been the biggest fan
Speaker 2: of personally. Yeah, I was trying to go into it
Speaker 2: with an optimistic forecast, but I was mo even wrong.
Speaker 1: It happens. It happens. You can't win them all. And
Speaker 1: still cool brewery, definitely worth visiting, absolutely worth checking out,
Speaker 1: and good beers that I enjoyed my other beers, but
Speaker 1: this one not my favorite. All Right, that's gonna do it.
Speaker 1: For this episode. We'll link to Calli's blog and some
Speaker 1: of the other resources we mentioned on this episode up
Speaker 1: in the show notes at how to money dot com.
Speaker 2: You know it, buddy, So until next time, best Friends Out,
Speaker 2: Best Friends Out.