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Speaker 1: Welcome to Trillions. I'm Joel Webber and I'm Eric Baltunis.

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Speaker 1: You've been on this book reading binge, Eric ever since

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Speaker 1: you published your book, and we have an author here today,

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Speaker 1: who would you bring us? Yeah? When I published my book,

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Speaker 1: there's always a cold books like below that says people

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Speaker 1: who bought this like this one, you know that thing,

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Speaker 1: and this one is always there. And it's somebody I

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Speaker 1: know from um Riddholtz and it's Nick Julie and his

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Speaker 1: book is called just Keep Buying, which is somehow I

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Speaker 1: feel linked to the book I wrote, which was I mean,

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Speaker 1: there's no way Jack Bogel would disagree with this premise.

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Speaker 1: And what I liked about it is it's very practical.

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Speaker 1: It's a really good book. It explains why you want

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Speaker 1: to invest, how to invest in. It splits between savings

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Speaker 1: and investing, and savings actually is important as well. It's

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Speaker 1: half the battle, and I just it's really laid out

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Speaker 1: very well. I like some of the anecdotes, and I

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Speaker 1: also think I've come My theory is that we're an

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Speaker 1: in an investor Enlightenment era and the first phase was

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Speaker 1: just to get the friction out of the way. Low costs,

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Speaker 1: index funds. The second phase of this era is behavior,

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Speaker 1: and there's a lot of behavior in here. You know,

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Speaker 1: once you understand why you're investing, how it works, what

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Speaker 1: to use, it's very easy to behave. If you don't

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Speaker 1: know any of that, your emotions take get the best

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Speaker 1: of you. So I think that's a big part of

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Speaker 1: this book as well. And um, but this year is

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Speaker 1: a crazy year for the market, So I think it's

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Speaker 1: a good it's an interesting title just keep buying for

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Speaker 1: this year. Maybe it's even more important title this year.

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Speaker 1: So yeah, I thought we'd be cool to dig into

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Speaker 1: this um and get kind of practical. So joining us

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Speaker 1: on trillions this time we've got Nick Mjuli, who's the

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Speaker 1: chief operating officer and data scientists that Ridholt's wealth management

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Speaker 1: this time on trillions. Just keep buying, Nick, Welcome to Trillians.

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Speaker 1: Thanks guys harving me on. Okay, So three word tie

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Speaker 1: I said a few times already, just keep buying. Uh,

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Speaker 1: what else do I need to know? Because that's what

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Speaker 1: I'm doing, man, I'm just I just keep buying. What what?

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Speaker 1: What could you possibly feel in a book other than

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Speaker 1: those three words? I mean, that's it's saying if I

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Speaker 1: can only give you three words, there's are the three

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Speaker 1: words I can give you, right, there's the three words

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Speaker 1: I would give you, but um to expand on that.

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Speaker 1: It's the you know, continual purchase of a diverse set

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Speaker 1: of income producing assets, if I could give you a sentence.

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Speaker 1: But then beyond that, the books not just about dollar

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Speaker 1: cost averaging. Obvious. Some people just like, oh, that's obviously,

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Speaker 1: I'm not gonna read it. Like, no, there's a lot

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Speaker 1: more to it. There's a lot pieces of savings about

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Speaker 1: personal finance, things like how do I save for a house?

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Speaker 1: You know, am I saving enough for retirement? How much

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Speaker 1: should I say for retirement? You know, why should I invest?

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Speaker 1: You know? What should I think about market volatility? Et cetera?

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Speaker 1: All those types of things. Okay, so I said your

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Speaker 1: job title chief operating officer and data scientists. What did Barry,

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Speaker 1: who's a frequent guest, What did Barry say when you

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Speaker 1: were like, Hey, I'm gonna write this book. Uh he was.

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Speaker 1: I kind of just told him after I was already

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Speaker 1: writing it actually, Like it's like I said, get a proval.

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Speaker 1: I was like, hey, I was like, yeah, I'm writing

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Speaker 1: a book. Barry's like, Okay, great. Yeah, He's like, you

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Speaker 1: put out enough stuff now, I think you can probably

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Speaker 1: come up with something like Okay, cool, thanks appreciate that Berry.

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Speaker 1: So yeah, and I did, basically, But no, he's he's

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Speaker 1: always been supportive. I mean, I love Barry. I'm obviously,

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Speaker 1: you know, not just because he's like one of my bosses,

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Speaker 1: but because you know, Barry is just a great guy

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Speaker 1: to be around. And you know, I believe in the

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Speaker 1: vision that we're building there. So yeah, um, just how

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Speaker 1: did you get the title? I love there's a little

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Speaker 1: anecdote in here, and I love that you were able

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Speaker 1: to find this title through something you saw. Can you

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Speaker 1: go through that story how the title came to you? Yeah,

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Speaker 1: So there's this so Casey and I said, it's like

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Speaker 1: a YouTuber And you guys may have heard of him

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Speaker 1: used to. I think I don't know if he YouTube

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Speaker 1: as much now as he used to be used to

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Speaker 1: like a daily vlog. And he was in New York

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Speaker 1: City and he had a he had a video called

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Speaker 1: three words to get to three million subs right, And

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Speaker 1: there's another YouTuber named Roman Atwood and gave him this advice.

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Speaker 1: He said, if you want to get to you want

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Speaker 1: to really grow your audience. You know, I'm just gonna

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Speaker 1: give you three three words of advice. Just keep uploading.

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Speaker 1: And so his that was his mantra every day and

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Speaker 1: need upload a video every day, and need to upload

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Speaker 1: a video. He kept doing it, and Casey and I

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Speaker 1: sitting now was like one of the biggest YouTube wars ever. UM.

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Speaker 1: And actually I used that. UM. I remember hearing that

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Speaker 1: right around the same time. I was doing some analysis

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Speaker 1: on the stock market and I realized, like, wait, just

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Speaker 1: keep up, just keep buying. It kind of fits. It's

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Speaker 1: a it's a catchier way of saying dollar cost average

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Speaker 1: becahen you say dollar cost averaging, people's eyes glaze over.

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Speaker 1: I think this is a catchier way and actually is

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Speaker 1: a more aggressive investment allocation approach. And really this actually

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Speaker 1: that intro chapter kind of came from a blog post

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Speaker 1: I wrote literally, you know, uh, five years to the

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Speaker 1: day before the book came out. It was just by

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Speaker 1: chance that happened. As origin the book supposed to go

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Speaker 1: on earlier, but due to supply chain stuff, we had

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Speaker 1: to push it a couple two months. In the paper

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Speaker 1: Short had the great paper Short once that was sorted out,

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Speaker 1: though I realize, like, oh my gosh, that's weird. Like

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Speaker 1: literally five years to the day before the book came out,

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Speaker 1: like that was when I wrote the blog post just

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Speaker 1: keep Buying, which is arguably my first post that really

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Speaker 1: kind of like went did well for me as a blogger,

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Speaker 1: right when I didn't really have an audience and kind

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Speaker 1: of kind of blew up a little bit relative to

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Speaker 1: to my audience at the time. People, Yeah, went from

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Speaker 1: twelve people like fifty people. I was like, wow, this

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Speaker 1: is got here. You've dropped a phrase their dollar cost averaging.

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Speaker 1: Break that down because that's not something that we've really

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Speaker 1: ever talked about on the on the podcast. But so

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Speaker 1: the issue I have an issue with this word because

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Speaker 1: there's two different definitions out there, and if you're not careful,

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Speaker 1: you'll use both of them without realizing it. So the

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Speaker 1: traditional definition, which Benjamin Graham I think came up with,

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Speaker 1: was just buying over time. Right, So, if you have

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Speaker 1: a four wing K, you're making contributions every two weeks

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Speaker 1: every month whatever that's considered dollar cost averaging. You're investing

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Speaker 1: as soon as you get the money. That's what it's about.

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Speaker 1: There's another definition, this is a definition I do not like,

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Speaker 1: and I try not to use this definition, which is,

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Speaker 1: let's say you just got an inheritance of a hundred

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Speaker 1: thousand dollars and you slowly kind of average that into

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Speaker 1: the market, so you don't put it on. You don't

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Speaker 1: buy not worth of stocks. Now, now you don't lump

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Speaker 1: some you you Dollar cost averaging is what they would say.

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Speaker 1: I do not like that definition. I do not use

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Speaker 1: that term. I don't use dollar cost averaging for that

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Speaker 1: term because I think it's so confusing. You can see,

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Speaker 1: those are very different things. Buying as soon as you

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Speaker 1: have the money, even in small increments is very different

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Speaker 1: than taking a large amount of money and slowly averaging in.

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Speaker 1: And they're very different strategies. And that second strategy, the

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Speaker 1: averaging in UM, is subpar across the board. I've tested

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Speaker 1: it every way to Sunday and it just does not

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Speaker 1: outperform relates to lottery winnings. Also that that term is

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Speaker 1: just for most normal people. It's it sounds financial and

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Speaker 1: it's boring. Yeah, for some reason, dollar cost averaging, but

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Speaker 1: it's it is powerful UM. Let's you broke this book

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Speaker 1: down into two parts. The first half is on savings.

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Speaker 1: And I like the way at the beginning he's like, look,

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Speaker 1: if if you have enough money saved, just go to

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Speaker 1: the second part. I won't be offended. Um. Yeah, I

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Speaker 1: which the second part is investing, which is investing. Yeah,

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Speaker 1: but here's a line in here that sounds it stuck

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Speaker 1: out to me. It almost sounds harsh, but it's true,

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Speaker 1: which is saving is for the poor and investing is

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Speaker 1: for the rich. Um. And you go to explain that,

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Speaker 1: but I guess, just talk about what that means. You know,

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Speaker 1: if you're have if you're young, or don't make a

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Speaker 1: lot of money, investing might not be as uh the

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Speaker 1: ticket you think it is early on, And I guess

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Speaker 1: just explain that that dynamic there. I just think that,

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Speaker 1: I mean, we can just do this with a simple example.

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Speaker 1: The issue was just like investing is on that impactful

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Speaker 1: when you don't have that much money invested, for example,

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Speaker 1: And I the story I tell in the first chapter.

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Speaker 1: I was twenty three years old, I had a thousand

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Speaker 1: dollars to my name. I was analyzing my investments every

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Speaker 1: way possible. I was like, you know, oh, what should

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Speaker 1: I have five percent bonds? Ten percent bonds? I was

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Speaker 1: neurotic basically. But the end of the day, I only

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Speaker 1: had a thousand dollars invested, even if I got a

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Speaker 1: ten percent return on my portfolio, which is like a

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Speaker 1: good year. You know, what is that a hundred bucks?

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Speaker 1: Like I was at the same time, I was going

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Speaker 1: out with my friends in San Francisco and blowing that

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Speaker 1: hundred dollars on dinner, drinks, you know, uber home whatever.

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Speaker 1: Like it was very easy to blow that hundred dollars.

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Speaker 1: So you can see that my investment returns didn't really matter,

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Speaker 1: but my spending in a given day mattered a lot more, right,

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Speaker 1: And I'm not not saying that tell you not to

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Speaker 1: go out with your friends, And that's not the point

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Speaker 1: of that. The point of that story is to say,

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Speaker 1: when you don't have a lot of money to invest,

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Speaker 1: it doesn't really matter. We should be focusing on is

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Speaker 1: your career and how much you can save. And then

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Speaker 1: once you have some money saved up and ready to

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Speaker 1: invest or you've invested already. That's where let that lever

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Speaker 1: matters more so. It's about it's about just like where

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Speaker 1: you focus your attention and where you kind of get

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Speaker 1: the biggest return for your use of time. And so

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Speaker 1: I think for when I say savings for the poor

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Speaker 1: investings for the rich, I mean that on a absolute

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Speaker 1: and a relative sense, Like I wouldn't consider myself a

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Speaker 1: poor person. As a twenty two year old living in

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Speaker 1: San Francisco, I was not poor, but I was poor

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Speaker 1: relative to my future self. And that's kind of how

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Speaker 1: I want you to think about it, Not like I

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Speaker 1: was an abject poverty. I'm not trying to say that

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Speaker 1: at all, um, but just think about that, like whether

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Speaker 1: you're poor on absolute level or on a relative level

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Speaker 1: to your future self. That's how I want you to

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Speaker 1: think about that problem and how you make decisions. First

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Speaker 1: of all, I just love that simplicity of that breakdown, right,

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Speaker 1: Like you can't invest until you save, you can't save

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Speaker 1: until you actually figure out how to make more money,

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Speaker 1: and and actually you know, be diligent in your savings,

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Speaker 1: and there is sort of that that transition between your

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Speaker 1: younger self and an older self that might be able

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Speaker 1: to to get there, but you still have to figure

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Speaker 1: out a way to start investing. Right. And so I'm

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Speaker 1: curious in the book, like how do you write about

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Speaker 1: turning that corner and going from somebody who might not

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Speaker 1: be able to save to actually being able to like invest,

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Speaker 1: because I think that that's there's a huge financial literacy

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Speaker 1: component there where people are just intimidated not in the market,

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Speaker 1: not in the market, and speaking very broad terms, because

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Speaker 1: the last year has been insane and a lot of

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Speaker 1: people did get in and bought high and have witnessed

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Speaker 1: the carnage. But how do you talk to how do

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Speaker 1: you talk talk to people in general about that switch

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Speaker 1: to becoming investors. I mean, I think the main thing

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Speaker 1: is obviously you're right once you have some money to invest,

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Speaker 1: Like I think actually, if I had written this book

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Speaker 1: in tween, I think that question would have been a

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Speaker 1: lot more it had been a lot more difficult to

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Speaker 1: answer because they're you know, investing wasn't as forefront as

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Speaker 1: it is now due to Robin Hood. It just became like, yeah,

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Speaker 1: everybody's armchair. Everyone kind of knows. I think not everyone.

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Speaker 1: I mean, of course there's still people that don't. There

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Speaker 1: are people unbanked, all that stuff, but I think most

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Speaker 1: people have heard of Robin would have heard of things.

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Speaker 1: So the issue isn't with robin Hood. It's what you're

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Speaker 1: buying on robin Hood, right, It's like you can buy

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Speaker 1: e t s, you can buy all the stuff that

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Speaker 1: a lot of you know, people would say is prudent

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Speaker 1: investment management. So it's not the tools necessarily, it's just

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Speaker 1: how you're using them. So I would say it's like, oh,

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Speaker 1: most you will probably hurt of robin Hood, like, oh,

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Speaker 1: have your robin Hood account and instead of buying things

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Speaker 1: like GameStop, maybe you buy something like I don't want

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Speaker 1: to give a ticker out, but just a index fund

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Speaker 1: of something. Okay, I did not say that. I can

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Speaker 1: say I can't recommend tickers, but I don't. I don't

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Speaker 1: think that's a great ticker. Let's I'll say I can't.

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Speaker 1: I can't recommend it or deny it. But that's all

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Speaker 1: I'm gonna say is like tickers out there for broad

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Speaker 1: based index funds that you can buy that are very

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Speaker 1: good and very cheap. Right, And so that's an example.

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Speaker 1: Eric just gave an example of one of them that

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Speaker 1: you can choose from. So yeah, I agree, I mean

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Speaker 1: robin Hood does they are motivated to get you to

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Speaker 1: trade more with the confetti dropping and that it's like

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Speaker 1: a casino mindset there. But you're right, you can get

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Speaker 1: that stuff there. People just tend to go to Robin

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Speaker 1: to do other things. But I like the idea of

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Speaker 1: the focusing on saving and your income ability when you're young,

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Speaker 1: because it's also a motivating factor. There was a sort

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Speaker 1: of get rich quick easy way with the Robin hood

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Speaker 1: game stop thing that was a big thing. And by

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Speaker 1: saying well, look, you should really focus on your earning

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Speaker 1: you can control that early on, is a good message.

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Speaker 1: Now when it comes to retirement savings, you have this

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Speaker 1: really interesting UM case stud or experiment they did which

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Speaker 1: I love this. Listen to this um Individuals who saw

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Speaker 1: the older versions of themselves right through an age progressed

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Speaker 1: rendering like you know when you digitally aid yourself on

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Speaker 1: that app, they allocated about two percent more of their

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Speaker 1: pay on average to retirement versus people who didn't see

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Speaker 1: such photos. I explain that, and I might use that.

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Speaker 1: I might put a picture of my seven year old

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Speaker 1: self up on my mirror. You know how Rocky had

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Speaker 1: that picture of club laying up there. I might. I

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Speaker 1: might put my seven year old self up there, just

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Speaker 1: to give myself a little extra motivation. Do you have

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Speaker 1: an old picture of yourself around? No? No, I do not.

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Speaker 1: I do not use that because I mean, there's actually

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Speaker 1: other research in that in that chapter where I talked

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Speaker 1: about they asked that asked a bunch of people. You

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Speaker 1: know what motivates people to say? They found like, is

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Speaker 1: it like a vacation? Is your children? All this stuff

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Speaker 1: besides emergencies, which people do want to say for once

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Speaker 1: that's out of the way, once your emergency funds done,

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Speaker 1: the only thing that motivates people to save is themselves. Actually,

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Speaker 1: so really like, if you want to say for your future,

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Speaker 1: you have to be selfish. And so I think that

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Speaker 1: the idea of using that face app or would have

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Speaker 1: to see an old version of yourself is you realize

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Speaker 1: you're going to be an old person. You want to

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Speaker 1: take care of that old person. So that's what investing

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Speaker 1: is supposed to do. Right, You're supposed to be replacing

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Speaker 1: your income when you can no longer or don't want

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Speaker 1: to work anymore, and you replace that income with your

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Speaker 1: investment income. Right, it's the kind of the whole idea there.

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Speaker 1: And so be selfish. It's okay to be selfish in

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Speaker 1: that case, isn't that so true? Like you know, there

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Speaker 1: was I've read a book. I think it might have

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Speaker 1: been um think and grow rich. Forget it was. You

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Speaker 1: put something up where you see it every day. Like

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Speaker 1: when I wrote my book, had a whiteboard where I

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Speaker 1: just clock time that I've spent writing, and that thing

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Speaker 1: in my face every day. I'm telling you it really

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Speaker 1: just putting something up there to motivate you. I think

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Speaker 1: it really it's interesting. I'm not surprised that works, um,

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Speaker 1: but I would. I'm kind of curious to see an

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Speaker 1: old version of Joel. I mean he already looks seven. Yeah.

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Speaker 1: Remember remember my brother sees me. He's like, hey, you're

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Speaker 1: coldest sex in your forehead? Are looking really strong? Power alleys?

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Speaker 1: Uh So, So Nick, let's talk a little bit more

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Speaker 1: about the dusting aside. Because once you're in the market

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Speaker 1: and you you have that exposure, it's common sense just

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Speaker 1: to keep buying. So what what added value do have

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Speaker 1: for us? For those of us who are active participants

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Speaker 1: and are already doing what the title of your book suggests.

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Speaker 1: I mean, I think you know, if it for some

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Speaker 1: people that it's easy to do, yeah, just keep doing

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Speaker 1: what you're doing. I think the the issue is like

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Speaker 1: that's not easy for everyone, Like, especially in a year

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Speaker 1: like this where we have high inflation, there's geopolitical risk.

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Speaker 1: You know, even bonds are declining by a large amount,

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Speaker 1: so even things that were considered safe or not as

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Speaker 1: safe as they were. Um, so there's a lot of

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Speaker 1: things like that going on, where like we have acid declines,

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Speaker 1: high inflation, and people are worried. So in those cases,

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Speaker 1: like just keep buying. It's it's much harder to do it.

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Speaker 1: And so, like I know, people a lot of people

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Speaker 1: joked like, of course this book will come out at

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Speaker 1: the end of a bolt marker. I just keep buying

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Speaker 1: at the top. But actually by the time it came out,

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Speaker 1: you know, in April of this year, like the market

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Speaker 1: was down, like pretty good timing. Yeah, yeah, so it's

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Speaker 1: like I actually wrote it more for a bear market

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Speaker 1: than the bowl market. And so that's my favorite chapter

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Speaker 1: in the books, chapter seventeen, which is about like how

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Speaker 1: to think about buying during a market crash, which is

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Speaker 1: a much much different. I have a different framework for

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Speaker 1: looking at that because I think it's the only way

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Speaker 1: to really kind of get through these dark times. We'll

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Speaker 1: walk us through that because like we are we are

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Speaker 1: there or so it feels like, yeah, well I would

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Speaker 1: say this is a more minor of mark. I mean

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Speaker 1: that happened much more regularly. I think what I'm talking

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Speaker 1: about is a much worse crash. But either way, like

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Speaker 1: is the same. Yeah. Yeah, So for example, I'll give

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Speaker 1: you the math and what happened in COVID nineteen in March.

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Speaker 1: So at the time, I think at the bottom, we

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Speaker 1: were down thirty three percent going into that Monday, which

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Speaker 1: is March, and so being down roughly thirty you know,

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Speaker 1: this is just simple math. To get back to even

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Speaker 1: you have to go up fifty percent. And I'll just

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Speaker 1: run the numbers for you. Let's say you know Indexes

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Speaker 1: at hundred goes down to sixty six. To from sixty

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Speaker 1: six back to a hundred, you have to go up

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Speaker 1: roughly thirty three, which is half of six six fifty

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Speaker 1: percent gain, right, And so you just do that math.

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Speaker 1: The larger the decline, the bigger they gain to get

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Speaker 1: back to even. So now once you know that, right,

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Speaker 1: that's just simple math. Once you know that, you can

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Speaker 1: actually kind of back out. You can say, okay, how

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Speaker 1: long do I think the markets don't take to recover?

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Speaker 1: You come up with a fair estimate. You know, you

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Speaker 1: can ask other people as well, and then you can

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Speaker 1: back out the markets expected return from this point back

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Speaker 1: to the high. Right, And so at the time I think,

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Speaker 1: I asked Twitter, and you know the media answers two

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Speaker 1: to three years. So if we're down fifty percent, Remember

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Speaker 1: this is not exact math. You have to do compounding,

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Speaker 1: and I'm just gonna make this linear. So let's say

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Speaker 1: you know, you know, divided by two, that would be

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Speaker 1: about tent a year. Divided by three, you're looking at

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Speaker 1: seventeen eighteen percent a year, like annualized returns to get

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Speaker 1: back to the Like, those are great returns, Like who

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Speaker 1: wouldn't want to buy it? Then? Like, when you look

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Speaker 1: at it from that perspective, you're like, wait, this is

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Speaker 1: a huge deal, right, Like if I buy right now,

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Speaker 1: I'm gonna be You're gonna give me seventeen percent returns

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Speaker 1: to get back to even, like just to get back

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Speaker 1: to even, Like that's amazing. And so of course there's

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Speaker 1: always the case where it takes longer. But my point is,

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Speaker 1: let's say you're getting those seventent anialize returns to get

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Speaker 1: back to even. That's a huge return. And that's why

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Speaker 1: when you reframe it, you're like, wow, Like why wouldn't

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Speaker 1: I be buying right now? It's clearly a bargain. And

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Speaker 1: what actually happened within six months here at all time

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Speaker 1: highs and it was like a hundred and six percent

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Speaker 1: annualized return or something so absolutely absurd what happened? No one,

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Speaker 1: I think expected that, not even even as optimistic as

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Speaker 1: I was. I thought I was gonna take like maybe

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Speaker 1: two years to recover. But that's kind of how I

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Speaker 1: look at it. So right now, if we're down what

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Speaker 1: our fourteen percent, and that's not a big enough amount

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Speaker 1: for me to like, you know, think about all we

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Speaker 1: can do the math. Okay, what is it to get

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Speaker 1: back to even maybe fifteen percent? Let's say it takes

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Speaker 1: two years, you're still looking at like what seven percent

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Speaker 1: returns roughly, So like that's like an average year, right

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Speaker 1: if you were by right now, you're basically gonna expect

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Speaker 1: average returns if it takes two years to get back

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Speaker 1: to a high. So that's not bad, right considering all else.

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Speaker 1: So as you're talking and you talked about people, Oh,

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Speaker 1: of course this book comes out after a little market,

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Speaker 1: like there's this this the Bears on Twitter there, I

399
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Speaker 1: can see this title kind of just pissing them off

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Speaker 1: a little like, oh, you're just easy. The FED was there,

401
00:16:42,480 --> 00:16:45,480
Speaker 1: YadA YadA, or the be the best one. Now do Japan.

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Speaker 1: That's when everybody puts out charts of like how great

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Speaker 1: stocks are overtime, like, well, now do Japan, because Japan

404
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Speaker 1: has done nothing right. In your book, you pointed out

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Speaker 1: since the market has been basically flat, what would you

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Speaker 1: say to somebody who's like, what if we are Japan

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Speaker 1: for the next thirty years. I mean, that's, of course

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Speaker 1: it's plausible. No one knows if that's going to happen

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Speaker 1: or not. But I I addressed this in that chapter.

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Speaker 1: In chapter seventeen, I address this. I say, let's say

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Speaker 1: you'd put a dollar to the Japanese stock market every

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Speaker 1: day starting and yes, there are times when you're underwater,

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Speaker 1: But if you look because your dollar cost average and

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Speaker 1: you're buying over time, it's very different. You're saying this,

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Speaker 1: the market has done nothing for thirty years. That's true

416
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Speaker 1: if you put in a lump sum right at the peak,

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Speaker 1: But how many people are investing like that? Maybe there's

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Speaker 1: a Japanese businessman that sold his business and eight said, oh,

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Speaker 1: I'm not worried, and then someone commits okay, you just

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Speaker 1: put it all on the market, and then he puts

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Speaker 1: a hundred percent of Japanese equities and eight nine. Okay,

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Speaker 1: think about how crazy it is does that and then

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Speaker 1: is yeah, that person underwater. But how many investors put

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Speaker 1: all of their wealth into one asset, one purchase, one time.

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Speaker 1: It's very rare. So I'm saying if you had been

426
00:17:45,560 --> 00:17:48,560
Speaker 1: owning other asset classes you've been if if you're a

427
00:17:48,600 --> 00:17:51,280
Speaker 1: Japanese mister, you're diversified all those things, that would have

428
00:17:51,320 --> 00:17:54,600
Speaker 1: completely changed the conclusion. So I the saying that Japanese

429
00:17:54,600 --> 00:17:57,000
Speaker 1: market has done nothing for thirty years. That's using snap

430
00:17:57,040 --> 00:17:59,600
Speaker 1: you know, snapshot judgments, and really you're really kind of

431
00:17:59,680 --> 00:18:01,600
Speaker 1: cherry I think I agree it's correct, but also at

432
00:18:01,600 --> 00:18:03,960
Speaker 1: the same time, it's cherry picked. If you're buying over time.

433
00:18:04,160 --> 00:18:06,280
Speaker 1: The Japanese market has not done nothing for thirty years.

434
00:18:06,320 --> 00:18:08,040
Speaker 1: That hasn't been great, don't get me wrong, but it's

435
00:18:08,080 --> 00:18:10,840
Speaker 1: not zero. And I think that's the takeaway here. And

436
00:18:10,880 --> 00:18:13,560
Speaker 1: I will say, you know, um, this kind of reminds me. Obviously,

437
00:18:13,600 --> 00:18:15,720
Speaker 1: I just spent two years in plan at Bogel and

438
00:18:15,800 --> 00:18:17,760
Speaker 1: he was not a fan of international investing. Or he

439
00:18:17,800 --> 00:18:20,120
Speaker 1: just said you don't need it because US has enough

440
00:18:20,200 --> 00:18:23,879
Speaker 1: overseas um connection that you're going to get some of

441
00:18:23,880 --> 00:18:26,919
Speaker 1: that anyway. And in addition, a lot of American companies

442
00:18:26,960 --> 00:18:30,040
Speaker 1: seem to be really the drivers across the world, the Apples,

443
00:18:30,040 --> 00:18:32,960
Speaker 1: the Microsoft, etcetera. So I guess, do you even need

444
00:18:33,000 --> 00:18:37,040
Speaker 1: international and is this just keep buying? Actually, obviously now

445
00:18:37,080 --> 00:18:39,399
Speaker 1: do Japan wouldn't it will now do. Europe isn't going

446
00:18:39,440 --> 00:18:43,080
Speaker 1: to be as applicable because the companies in America tend

447
00:18:43,119 --> 00:18:47,920
Speaker 1: to be really massive leaders relative to other companies in

448
00:18:48,000 --> 00:18:50,840
Speaker 1: the world. I mean, that's that looks true now. But

449
00:18:50,880 --> 00:18:52,920
Speaker 1: I mean, like, so from two thousand ten to twenty nine,

450
00:18:53,840 --> 00:18:55,679
Speaker 1: you want to look at it, like the US clearly

451
00:18:55,680 --> 00:18:59,120
Speaker 1: outperformed international, emerging whatever. But look at the decade before,

452
00:18:59,119 --> 00:19:01,439
Speaker 1: look at two thousands thousand nine. I mean it's a

453
00:19:01,560 --> 00:19:04,879
Speaker 1: very different story. Emerging crushed the US. So I'm not

454
00:19:04,920 --> 00:19:07,360
Speaker 1: saying that's going to happen again. We don't know the future,

455
00:19:07,440 --> 00:19:11,280
Speaker 1: but to only bet on American companies, I don't necessarily

456
00:19:11,280 --> 00:19:13,720
Speaker 1: agree with that because I think things can mean revert,

457
00:19:13,760 --> 00:19:16,200
Speaker 1: things can change, and so while the US is on top, now,

458
00:19:16,240 --> 00:19:18,439
Speaker 1: who knows what's going to happen. And I think the

459
00:19:18,480 --> 00:19:21,439
Speaker 1: best example of this is imagine a Russian investor, you know,

460
00:19:21,680 --> 00:19:24,320
Speaker 1: at the beginning of two right, they're like, oh, look,

461
00:19:24,320 --> 00:19:26,439
Speaker 1: I most of my stuff in Russia. Russia's great, all

462
00:19:26,440 --> 00:19:28,920
Speaker 1: this the market drops a month. Now, I don't think

463
00:19:28,920 --> 00:19:30,680
Speaker 1: that's going to happen in the United States. We would

464
00:19:30,680 --> 00:19:33,480
Speaker 1: have much bigger problems than our investment portfolios. But my

465
00:19:33,560 --> 00:19:36,800
Speaker 1: point is someone who's not diversified out of their domestic

466
00:19:36,840 --> 00:19:39,400
Speaker 1: market is probably going to see some sort of pain

467
00:19:39,440 --> 00:19:41,399
Speaker 1: at some point. And so I'm willing to take a

468
00:19:41,440 --> 00:19:44,320
Speaker 1: little bit of under performance now by owning international stocks,

469
00:19:44,480 --> 00:19:47,160
Speaker 1: if that means in periods where the US is struggling,

470
00:19:47,200 --> 00:19:49,760
Speaker 1: I have a little bit more of you know, outperformance

471
00:19:49,760 --> 00:19:52,040
Speaker 1: relative to the US market. So I'm curious just to

472
00:19:52,040 --> 00:19:53,520
Speaker 1: bring it back to sort of the here and now,

473
00:19:53,960 --> 00:19:57,720
Speaker 1: what do you think changed in how you wrote the

474
00:19:57,720 --> 00:20:00,040
Speaker 1: book or what you put in the book if it

475
00:20:00,119 --> 00:20:03,520
Speaker 1: was before time, before times book like before the pandemic,

476
00:20:03,840 --> 00:20:07,639
Speaker 1: versus what actually wrote? What what changed during COVID that

477
00:20:08,040 --> 00:20:10,840
Speaker 1: you brought into the book. I don't actually think the

478
00:20:11,280 --> 00:20:13,080
Speaker 1: best thing that helped the book for COVID was that

479
00:20:13,119 --> 00:20:14,720
Speaker 1: we had the COVID crash. That was something I could

480
00:20:14,760 --> 00:20:17,080
Speaker 1: just use. Hey, it's in everyone's memory. It's otherwise to

481
00:20:17,359 --> 00:20:20,520
Speaker 1: talk about, Like like myself, I was, you know, eighteen

482
00:20:20,560 --> 00:20:23,840
Speaker 1: years old. I was, you know, entering college at the time.

483
00:20:23,880 --> 00:20:25,600
Speaker 1: Like I didn't have a job, I didn't have to

484
00:20:25,600 --> 00:20:28,680
Speaker 1: worry about income. I literally started school in oh eight,

485
00:20:28,720 --> 00:20:31,520
Speaker 1: so I remember like starting, you know, going my first

486
00:20:31,520 --> 00:20:33,720
Speaker 1: week of class right before classes started, and I remember

487
00:20:33,760 --> 00:20:35,719
Speaker 1: like seeing the market drop and everything. In economics one

488
00:20:35,720 --> 00:20:37,720
Speaker 1: on one was really popular at the time because of that.

489
00:20:38,119 --> 00:20:40,399
Speaker 1: But I think like because it was so old, it

490
00:20:40,440 --> 00:20:42,879
Speaker 1: wasn't in recent memory, but because we had that crash,

491
00:20:42,880 --> 00:20:44,600
Speaker 1: it really helped the book. I could talk about something

492
00:20:44,600 --> 00:20:47,720
Speaker 1: that's really recent. Everyone everyone investing now remembers that, right,

493
00:20:47,720 --> 00:20:49,719
Speaker 1: It's unless you're like sixteen and you kind of just

494
00:20:49,720 --> 00:20:52,920
Speaker 1: started investing like today, like everyone remembers COVID and kind

495
00:20:52,920 --> 00:20:54,439
Speaker 1: of the effects that had. So I think that's what

496
00:20:54,520 --> 00:20:57,280
Speaker 1: helped the book. Other outside of that, I haven't changed much.

497
00:20:57,320 --> 00:20:59,600
Speaker 1: The only thing if I could have re you know,

498
00:20:59,720 --> 00:21:01,760
Speaker 1: re written the book or done something differently, I think

499
00:21:01,760 --> 00:21:04,119
Speaker 1: I would have emphasized inflation a little bit more because

500
00:21:04,119 --> 00:21:05,600
Speaker 1: you have to realize at the time. Remember all my

501
00:21:05,640 --> 00:21:07,960
Speaker 1: data is to the end of inflation was lower and

502
00:21:08,040 --> 00:21:11,000
Speaker 1: was going lower in twenty I'm like, I talked about inflation.

503
00:21:11,000 --> 00:21:12,960
Speaker 1: I do discussed in the book, but I didn't realize

504
00:21:13,000 --> 00:21:15,040
Speaker 1: I had no clue that, Okay, by the time this

505
00:21:15,080 --> 00:21:16,359
Speaker 1: thing comes out, which is going to be you know,

506
00:21:16,400 --> 00:21:18,639
Speaker 1: a year and a half later after writing and everything,

507
00:21:18,640 --> 00:21:21,320
Speaker 1: that the inflation data was going to come in termines,

508
00:21:21,320 --> 00:21:23,000
Speaker 1: We're going to be all over the house. Yeah, I didn't.

509
00:21:23,000 --> 00:21:24,600
Speaker 1: I had no idea that was going to happen. And

510
00:21:24,640 --> 00:21:26,959
Speaker 1: so a lot of people like, he doesn't even discuss inflation, like,

511
00:21:27,200 --> 00:21:28,879
Speaker 1: look at the data I had coming into this, like

512
00:21:29,000 --> 00:21:30,879
Speaker 1: inflation was going lower when I had the data, I'm

513
00:21:30,920 --> 00:21:33,280
Speaker 1: like finishing this up, like inflation was not. You read

514
00:21:33,320 --> 00:21:36,120
Speaker 1: the comments so well, of course you got read comment.

515
00:21:36,240 --> 00:21:38,879
Speaker 1: What would you what would you be saying or how

516
00:21:38,880 --> 00:21:41,080
Speaker 1: do you respond to that? That's that's a that's a

517
00:21:41,119 --> 00:21:43,760
Speaker 1: double edged sword. Yeah, we can get into that. But

518
00:21:43,800 --> 00:21:45,680
Speaker 1: how would you how would you respond and what would

519
00:21:45,680 --> 00:21:47,760
Speaker 1: you have put in? How would you have expanded your

520
00:21:48,000 --> 00:21:51,840
Speaker 1: your inflation wisdom. I just would have included more inflation

521
00:21:51,880 --> 00:21:53,960
Speaker 1: stuff like I've done analyzes since I've just been a

522
00:21:54,000 --> 00:21:56,560
Speaker 1: lot more folks on inflation. It's just because like you know,

523
00:21:56,640 --> 00:21:58,520
Speaker 1: at the time, like you know, we haven't had it really,

524
00:21:58,640 --> 00:22:00,800
Speaker 1: I mean since the really seventies eighties last time we

525
00:22:00,800 --> 00:22:02,120
Speaker 1: had and so we haven't had such a long time.

526
00:22:02,119 --> 00:22:03,919
Speaker 1: I could talk about it, but it's like people like,

527
00:22:03,920 --> 00:22:05,800
Speaker 1: why did you spend so much time talking about something

528
00:22:05,880 --> 00:22:07,920
Speaker 1: that doesn't really happen anymore. And it's not that I

529
00:22:08,280 --> 00:22:10,720
Speaker 1: never expect inflation to happen ever again, but I address it.

530
00:22:10,760 --> 00:22:12,680
Speaker 1: I just would have put more emphasis on because people

531
00:22:12,680 --> 00:22:14,960
Speaker 1: would have cared more, they would have thinken, they would

532
00:22:14,960 --> 00:22:16,760
Speaker 1: have thought that, um, you know, I had, you know,

533
00:22:16,800 --> 00:22:18,040
Speaker 1: thought through it more. And so that was the only

534
00:22:18,080 --> 00:22:19,520
Speaker 1: thing I just didn't know that was gonna happen because

535
00:22:19,520 --> 00:22:21,560
Speaker 1: people are I mean, everything is recently by, so inflation

536
00:22:21,600 --> 00:22:23,360
Speaker 1: is crushing everything. And I'm not talking on inflation learning

537
00:22:23,359 --> 00:22:25,320
Speaker 1: to think I'm an idiot and I'm gonna and I'll admit, like, yeah,

538
00:22:25,359 --> 00:22:27,199
Speaker 1: I didn't try to write a ton about it. So

539
00:22:27,240 --> 00:22:28,680
Speaker 1: that was kind of the only thing I think I

540
00:22:28,720 --> 00:22:30,879
Speaker 1: could have. It's just hard to anticipate the future. I

541
00:22:30,880 --> 00:22:32,639
Speaker 1: had no idea We're gonna see a percent inflation. I

542
00:22:32,640 --> 00:22:35,320
Speaker 1: was completely shocked by that, you know, so, yeah, I

543
00:22:35,359 --> 00:22:37,520
Speaker 1: mean I think everybody was. Um. You know, you have

544
00:22:37,600 --> 00:22:40,120
Speaker 1: a section here where you talk about in the investing

545
00:22:40,160 --> 00:22:43,520
Speaker 1: part about income producing assets, and this is clearly in

546
00:22:43,560 --> 00:22:45,520
Speaker 1: the Bogel buffet mindset. You want to invest in things

547
00:22:45,520 --> 00:22:48,440
Speaker 1: that produce income. Right, makes sense, money that works for you.

548
00:22:49,040 --> 00:22:51,240
Speaker 1: The crypto crowd, obviously you don't have cryptosn't here. You

549
00:22:51,280 --> 00:22:54,200
Speaker 1: have stocks, bonds, investment, property, reads, farmland, and small businesses.

550
00:22:54,440 --> 00:22:58,239
Speaker 1: No crypto. Um, this was this is a big debate. Right,

551
00:22:58,280 --> 00:23:03,240
Speaker 1: Crypto doesn't produce anything. You are basically hoping somebody buys

552
00:23:03,280 --> 00:23:05,320
Speaker 1: it from you from more than you pay. That's pretty

553
00:23:05,400 --> 00:23:08,720
Speaker 1: much the deal. The crypto crowd. Sometimes they'll go after

554
00:23:08,920 --> 00:23:12,720
Speaker 1: the SMP five index fund, and I don't understand that.

555
00:23:13,040 --> 00:23:16,280
Speaker 1: I mean, that is an interesting gap. I wonder how

556
00:23:16,359 --> 00:23:20,119
Speaker 1: many young people actually understand the difference between an income

557
00:23:20,160 --> 00:23:23,320
Speaker 1: producing asset and and one that doesn't like crypto, because

558
00:23:23,320 --> 00:23:25,199
Speaker 1: it does seem the young crowd the message in the

559
00:23:25,280 --> 00:23:28,680
Speaker 1: narrative of crypto it seems even more seductive and interesting

560
00:23:28,720 --> 00:23:30,680
Speaker 1: to them than the message of a boring SMP five

561
00:23:31,000 --> 00:23:33,439
Speaker 1: index fund. Yeah, I mean, what's the question is, do

562
00:23:33,480 --> 00:23:35,520
Speaker 1: you know do you want to do something fun or

563
00:23:35,520 --> 00:23:36,760
Speaker 1: do you want to get rich? I mean that's kind

564
00:23:36,760 --> 00:23:38,359
Speaker 1: another question. And like I have like one of the

565
00:23:38,359 --> 00:23:41,320
Speaker 1: most boring asset allocations out there, but it's working right,

566
00:23:41,320 --> 00:23:43,320
Speaker 1: and it's like that's the key. Now. I'm not saying

567
00:23:43,359 --> 00:23:45,080
Speaker 1: not to own any crypto. I actually own some crypto.

568
00:23:45,119 --> 00:23:49,120
Speaker 1: But like I say, incomptucing acts your portfolio, the other

569
00:23:49,119 --> 00:23:51,800
Speaker 1: ten percent is safe for things like crypto, gold, art wine.

570
00:23:52,040 --> 00:23:54,840
Speaker 1: I go through the you know, uh, through the gamut

571
00:23:54,840 --> 00:23:56,360
Speaker 1: of those type of assets. I'm not saying they don't

572
00:23:56,359 --> 00:23:58,040
Speaker 1: hold any place in a portfolio. I just keep them

573
00:23:58,080 --> 00:24:00,880
Speaker 1: as a smaller proportion of my portfolio. That was my point.

574
00:24:00,920 --> 00:24:03,200
Speaker 1: I was in a debate with somebody from that world

575
00:24:03,240 --> 00:24:06,000
Speaker 1: and I was like, you guys should just pitch yourself

576
00:24:06,040 --> 00:24:08,760
Speaker 1: as a compliment to the boring vanilla. Let us be

577
00:24:08,840 --> 00:24:11,280
Speaker 1: some exciting hot sauce to your boring meal rather than

578
00:24:11,320 --> 00:24:14,000
Speaker 1: your meal sucks. Yeah. Yeah, I agree, but that's not

579
00:24:14,160 --> 00:24:16,440
Speaker 1: that's not going to gain you followers to think like, oh,

580
00:24:16,480 --> 00:24:19,760
Speaker 1: we're in bed with the traditional finance. Yeah we're you know,

581
00:24:19,800 --> 00:24:21,520
Speaker 1: we were in with the old world. Like, no, you

582
00:24:21,520 --> 00:24:23,800
Speaker 1: want to sound like you're against that old world. There's

583
00:24:23,800 --> 00:24:25,800
Speaker 1: a new world World World. It just has it more.

584
00:24:25,920 --> 00:24:27,600
Speaker 1: It's more appeal to do that. But I mean the

585
00:24:27,720 --> 00:24:29,879
Speaker 1: rational approach is like, no, there is a place for crypto.

586
00:24:29,960 --> 00:24:32,000
Speaker 1: Like I believe that, you know, people should generally get

587
00:24:32,000 --> 00:24:33,760
Speaker 1: off zero. I don't think everyone should be at zero

588
00:24:33,760 --> 00:24:35,199
Speaker 1: on crypto. But at the same time, I don't think

589
00:24:35,240 --> 00:24:37,800
Speaker 1: you should have anything more than five percent. Even then

590
00:24:38,040 --> 00:24:40,080
Speaker 1: that's a lot because how volatile it is. That's so

591
00:24:40,160 --> 00:24:42,359
Speaker 1: I have two percent and I even then, like, you know,

592
00:24:42,359 --> 00:24:44,040
Speaker 1: some people wouldn't be comfortable with that, so I'd say,

593
00:24:44,040 --> 00:24:46,159
Speaker 1: like just put a very very small percentage and kind

594
00:24:46,200 --> 00:24:48,000
Speaker 1: of just wait and let's wait and see what happens

595
00:24:48,040 --> 00:24:50,680
Speaker 1: with this thing. So so just keep buying. Related question,

596
00:24:50,800 --> 00:24:54,200
Speaker 1: what should you not buy? And that's a very personal question.

597
00:24:54,200 --> 00:24:56,439
Speaker 1: That's like whatever you can't sleep at night with. That's it,

598
00:24:56,520 --> 00:24:58,720
Speaker 1: Like I can't. There's certain assets I won't buy, Like

599
00:24:58,760 --> 00:25:00,680
Speaker 1: I don't generally buy gold, But don't think that I

600
00:25:00,720 --> 00:25:02,400
Speaker 1: should say that no one should buy gold. I think

601
00:25:02,400 --> 00:25:04,840
Speaker 1: for certain people there's definitely cases to be made for gold.

602
00:25:04,880 --> 00:25:06,159
Speaker 1: I think gold is more of a trade than a

603
00:25:06,160 --> 00:25:08,480
Speaker 1: long term hold. There's just I mean, there's a period

604
00:25:08,520 --> 00:25:11,320
Speaker 1: of you know, twenties something years of negative real return

605
00:25:11,359 --> 00:25:13,080
Speaker 1: on gold, and it's really tough to kind of hold

606
00:25:13,080 --> 00:25:15,040
Speaker 1: that for me, So you know, I can't. It's hard

607
00:25:15,040 --> 00:25:16,399
Speaker 1: for me to hold an Aska for twenty years and

608
00:25:16,440 --> 00:25:18,520
Speaker 1: see it go absolutely nowhere. You know, there are exceptions

609
00:25:18,520 --> 00:25:19,879
Speaker 1: to that. Maybe I could do that with you know,

610
00:25:19,960 --> 00:25:22,720
Speaker 1: equities and an emerging market or something, but for like

611
00:25:22,800 --> 00:25:25,639
Speaker 1: something like gold, where there's no intrinsic cash flows, no income,

612
00:25:25,680 --> 00:25:27,280
Speaker 1: it's really tough for me to believe like, oh, the

613
00:25:27,280 --> 00:25:29,439
Speaker 1: story is gonna flip and everything's gonna be okay. You know.

614
00:25:29,520 --> 00:25:38,080
Speaker 1: I think that's why it's tough for This is an

615
00:25:38,080 --> 00:25:40,280
Speaker 1: ETF podcast. We've got a long time and we have

616
00:25:40,359 --> 00:25:42,440
Speaker 1: not talked about et F specifically. What are you gonna

617
00:25:42,600 --> 00:25:44,440
Speaker 1: what are you gonna ask? Sure, Yeah, I'll go there.

618
00:25:44,480 --> 00:25:47,840
Speaker 1: So yeah, this is definitely sort of I think a

619
00:25:47,880 --> 00:25:49,520
Speaker 1: lot of in your book, you say I like index

620
00:25:49,520 --> 00:25:51,720
Speaker 1: funds and ETF. You basically are flat out he you know,

621
00:25:51,840 --> 00:25:54,560
Speaker 1: just Um says what he does and you don't have

622
00:25:54,600 --> 00:25:56,000
Speaker 1: to do that. You know, you can go active. I'm

623
00:25:56,040 --> 00:25:58,280
Speaker 1: not I'm not trying to be overly rigid with this,

624
00:25:58,359 --> 00:26:02,200
Speaker 1: but Um, in the book I wrote I write a

625
00:26:02,200 --> 00:26:05,399
Speaker 1: little section about behavior, and I think the index fund

626
00:26:05,440 --> 00:26:07,520
Speaker 1: that the idea of a cheap index fund or on

627
00:26:07,560 --> 00:26:10,040
Speaker 1: ETF that traps tracks the broad market for three or

628
00:26:10,040 --> 00:26:13,840
Speaker 1: four basis points is one of the most underrated UM

629
00:26:14,000 --> 00:26:16,800
Speaker 1: contributors to good behavior because you read this book and

630
00:26:16,840 --> 00:26:19,400
Speaker 1: you're like, I wonder how this would all play out

631
00:26:19,520 --> 00:26:21,240
Speaker 1: if there was no such thing as a cheap index

632
00:26:21,240 --> 00:26:23,560
Speaker 1: fund and all you had was like a eight basis

633
00:26:23,600 --> 00:26:28,399
Speaker 1: point blend manager versus a small cap growth manager. UM,

634
00:26:28,440 --> 00:26:30,959
Speaker 1: it's a little harder to behave sometimes, especially if that

635
00:26:31,040 --> 00:26:33,960
Speaker 1: manager starts under performing. And I think that mess people

636
00:26:34,040 --> 00:26:36,000
Speaker 1: up in the eighties and nineties a little bit because

637
00:26:36,040 --> 00:26:38,639
Speaker 1: their fun all of a sudden was underperforming. They panic

638
00:26:39,000 --> 00:26:40,919
Speaker 1: and just keep buying. Is a lot easier when you

639
00:26:40,920 --> 00:26:43,560
Speaker 1: know you're locking into that market beta and there's a

640
00:26:43,640 --> 00:26:46,000
Speaker 1: nice resignation to that. So I guess i'd like to

641
00:26:46,000 --> 00:26:48,480
Speaker 1: get your thoughts on the impact that just having a

642
00:26:48,560 --> 00:26:53,360
Speaker 1: near free beta exposure product has done for this concept.

643
00:26:53,600 --> 00:26:56,439
Speaker 1: I think the main takeaway here is like that, you know,

644
00:26:56,760 --> 00:27:00,760
Speaker 1: passive vehicles have benefited investors because as they're cheap and

645
00:27:00,800 --> 00:27:03,200
Speaker 1: because it's easy to stick with them, and more importantly,

646
00:27:03,240 --> 00:27:05,480
Speaker 1: it's like the default choice now, right, Like if you

647
00:27:05,600 --> 00:27:07,159
Speaker 1: if you talk to anyone says, yeah, the default is

648
00:27:07,200 --> 00:27:09,240
Speaker 1: like you buy a passive index from like the Spire

649
00:27:09,359 --> 00:27:12,240
Speaker 1: or something, and so every deviation from that and this

650
00:27:12,240 --> 00:27:14,000
Speaker 1: this kind of goes back to what we're discussing with

651
00:27:14,000 --> 00:27:15,600
Speaker 1: the crypto people and why don't why don't they just

652
00:27:15,640 --> 00:27:17,320
Speaker 1: okay with like saying, hey, you know, we can be

653
00:27:17,359 --> 00:27:20,080
Speaker 1: a compliment to you guys, because no, it's an identity argument,

654
00:27:20,080 --> 00:27:22,240
Speaker 1: and so a lot of active investors it's an identity

655
00:27:22,280 --> 00:27:24,920
Speaker 1: I'm not a passive person. I'm I'm not. I don't

656
00:27:24,920 --> 00:27:26,320
Speaker 1: want to be average, even though it puts through the

657
00:27:26,359 --> 00:27:28,119
Speaker 1: eighth percentil we can put that aside from it. But

658
00:27:28,200 --> 00:27:29,800
Speaker 1: I don't want to be average. I'm gonna pick my

659
00:27:29,800 --> 00:27:31,480
Speaker 1: own stocks and I'm gonna set my own destiny, and

660
00:27:31,480 --> 00:27:33,320
Speaker 1: there's all that kind of piece to it. I think

661
00:27:33,320 --> 00:27:35,960
Speaker 1: what passive has done is saying, like, here's the default option.

662
00:27:36,040 --> 00:27:38,080
Speaker 1: And so when the market declines, it's not your fault.

663
00:27:38,080 --> 00:27:39,760
Speaker 1: You didn't make a bad decision, that's just the market

664
00:27:39,840 --> 00:27:41,760
Speaker 1: rights outside of your control. Right. It's like a hurricane

665
00:27:41,800 --> 00:27:44,320
Speaker 1: came financial hurricane. There's nothing you can do but once

666
00:27:44,359 --> 00:27:47,600
Speaker 1: you start deviating from you know, market cap passive way

667
00:27:47,640 --> 00:27:49,760
Speaker 1: to portfolios. That's when you're making active choices, and that's

668
00:27:49,760 --> 00:27:51,080
Speaker 1: when you start to get in your head of like,

669
00:27:51,359 --> 00:27:53,119
Speaker 1: oh man, maybe I shouldn't have only went in on

670
00:27:53,160 --> 00:27:55,360
Speaker 1: tech stocks, or maybe I shouldn't have, you know, went

671
00:27:55,400 --> 00:27:57,639
Speaker 1: in on these biotechs or whatever it is, or energy

672
00:27:57,680 --> 00:27:59,600
Speaker 1: stocks or so that's the whole point. I think. Another

673
00:27:59,600 --> 00:28:02,119
Speaker 1: big so this is identity, and so what passive has

674
00:28:02,160 --> 00:28:04,920
Speaker 1: done it has removed the identity piece from investing, which

675
00:28:05,080 --> 00:28:07,000
Speaker 1: allows you to kind of not worry about That's why

676
00:28:07,000 --> 00:28:09,080
Speaker 1: I went markets down twenty Even when the market was down,

677
00:28:09,880 --> 00:28:12,320
Speaker 1: I wasn't panicking. I really wasn't like, oh my gosh,

678
00:28:12,440 --> 00:28:14,080
Speaker 1: my my portfolio is like I'm not going to be

679
00:28:14,160 --> 00:28:15,639
Speaker 1: using that money for a long time. This is going

680
00:28:15,680 --> 00:28:17,679
Speaker 1: to happen. It will recover eventually. It might take a

681
00:28:17,680 --> 00:28:19,840
Speaker 1: couple of years, but that's the nature of the world

682
00:28:19,840 --> 00:28:22,199
Speaker 1: and we've gotta we'll roll with the punches. And it

683
00:28:22,440 --> 00:28:25,120
Speaker 1: recovered way more quickly than I expected, right, But that's

684
00:28:25,160 --> 00:28:26,600
Speaker 1: kind of the idea, is that you're going to see

685
00:28:26,600 --> 00:28:28,600
Speaker 1: this stuff happen. You're going to see more crashes, We're

686
00:28:28,600 --> 00:28:31,119
Speaker 1: gonna see I almost guarantee my lifetime we'll see a

687
00:28:31,119 --> 00:28:33,879
Speaker 1: ten year period of sp is you know, has not

688
00:28:34,040 --> 00:28:36,199
Speaker 1: performed as you know, flat or below where it was

689
00:28:36,240 --> 00:28:38,240
Speaker 1: ten years prior. Yeah, I don't know, but I do

690
00:28:38,320 --> 00:28:40,480
Speaker 1: think there it is nice to have that resignation that

691
00:28:40,600 --> 00:28:42,960
Speaker 1: I've got, I've got a great deal. There's no reason

692
00:28:43,000 --> 00:28:46,200
Speaker 1: to shift to switch it around because if let's say

693
00:28:46,320 --> 00:28:48,800
Speaker 1: that market cap it wasn't it was an active fund

694
00:28:48,840 --> 00:28:52,239
Speaker 1: and it's underperforming that I think that's that makes you

695
00:28:52,280 --> 00:28:54,160
Speaker 1: think should I be in something else? And then you

696
00:28:54,240 --> 00:28:56,440
Speaker 1: jump ship go there, and I think there's a resignation.

697
00:28:56,680 --> 00:28:58,160
Speaker 1: What am I gonna do? I'm I gonna just I'm

698
00:28:58,160 --> 00:29:02,160
Speaker 1: gonna switch all these investments every two years, screw it um.

699
00:29:02,320 --> 00:29:03,920
Speaker 1: And that is I think when we talk with Gino

700
00:29:03,960 --> 00:29:08,280
Speaker 1: Martin Adams last two weeks ago, that she talked about capitulation,

701
00:29:08,320 --> 00:29:09,920
Speaker 1: and I'm like, I don't think those investors are ever

702
00:29:09,920 --> 00:29:13,480
Speaker 1: going to compitulate. The passive people are really strong. They're

703
00:29:13,520 --> 00:29:16,320
Speaker 1: the strong hands. They are not the weekends that people say.

704
00:29:16,320 --> 00:29:18,040
Speaker 1: And I think once that you haven't here, which is

705
00:29:18,080 --> 00:29:22,240
Speaker 1: fascinating is the best performing four percent of companies explained

706
00:29:22,240 --> 00:29:24,400
Speaker 1: the net gain for the entire U S stock market.

707
00:29:24,400 --> 00:29:28,960
Speaker 1: Since so if you pick those four percent, I mean

708
00:29:29,080 --> 00:29:31,280
Speaker 1: your love and life, But which four I mean which

709
00:29:31,320 --> 00:29:34,360
Speaker 1: four percent? So I think that's another one is you

710
00:29:34,400 --> 00:29:37,200
Speaker 1: get your your hands on everything and you get those

711
00:29:37,240 --> 00:29:39,160
Speaker 1: at least you know you lock in those four percent.

712
00:29:39,240 --> 00:29:41,960
Speaker 1: You don't get all of it though. Um, this this

713
00:29:42,000 --> 00:29:43,640
Speaker 1: is why I embarrassed E. S G a little bit

714
00:29:43,880 --> 00:29:47,800
Speaker 1: because the on the four percent includes x on Mobile, Apple, Microsoft,

715
00:29:47,800 --> 00:29:50,840
Speaker 1: General Electric, IBM, etcetera. E. S G. What do you

716
00:29:50,840 --> 00:29:53,600
Speaker 1: think of this? Like this is you wouldn't get x

717
00:29:53,680 --> 00:29:56,040
Speaker 1: on you probably you know, so there are an tesla

718
00:29:56,200 --> 00:29:59,880
Speaker 1: is now not in the SMP S G. Um, Is that,

719
00:30:00,200 --> 00:30:04,240
Speaker 1: in your eyes just another active active management in disguise

720
00:30:04,680 --> 00:30:06,280
Speaker 1: or do you really think this is a better way

721
00:30:06,320 --> 00:30:09,240
Speaker 1: to invest in your just keep buying premise? I mean

722
00:30:09,800 --> 00:30:11,720
Speaker 1: I think so. I think what the industry is gonna

723
00:30:11,720 --> 00:30:14,640
Speaker 1: eventually move towards something like, you know, a direct indexing

724
00:30:14,760 --> 00:30:17,040
Speaker 1: or someone we'd call custom indexing where you get to

725
00:30:17,280 --> 00:30:19,760
Speaker 1: pick and choose kind of based on your personal beliefs.

726
00:30:19,840 --> 00:30:22,360
Speaker 1: And so I understand why people would do that. At

727
00:30:22,400 --> 00:30:24,680
Speaker 1: the end of the day. The counter argument is, okay, well,

728
00:30:25,080 --> 00:30:27,080
Speaker 1: if you're doing these E s G type moves. What

729
00:30:27,160 --> 00:30:30,000
Speaker 1: if all the companies you don't buy end up outperforming

730
00:30:30,040 --> 00:30:32,240
Speaker 1: because no one else is buying them. So in theory,

731
00:30:32,240 --> 00:30:34,800
Speaker 1: you're under allocating capital for some reason relatives of the

732
00:30:34,800 --> 00:30:37,560
Speaker 1: market portfolio. So someone else is gonna overallocate and they're

733
00:30:37,560 --> 00:30:40,120
Speaker 1: gonna outperform you. And so the question is do you

734
00:30:40,160 --> 00:30:42,560
Speaker 1: want to take that money and grow it to as

735
00:30:42,600 --> 00:30:45,800
Speaker 1: much as possible and then donate to cause you care about,

736
00:30:46,000 --> 00:30:47,640
Speaker 1: you know, or do you want to just not invest

737
00:30:47,680 --> 00:30:49,880
Speaker 1: in the underlying companies? And those are the two ways

738
00:30:49,920 --> 00:30:51,840
Speaker 1: you can do it, and I think they're both valid.

739
00:30:51,840 --> 00:30:53,360
Speaker 1: And it's a question of some people like, oh, I

740
00:30:53,360 --> 00:30:55,120
Speaker 1: don't want to give my money to a gun manufacturer.

741
00:30:55,120 --> 00:30:56,800
Speaker 1: It's like it's not technically going to them. But in

742
00:30:56,840 --> 00:30:59,080
Speaker 1: theory they could buy backstock, they can sell stock, and

743
00:30:59,120 --> 00:31:01,920
Speaker 1: so the equity could be used for that purpose. So yeah,

744
00:31:01,960 --> 00:31:04,000
Speaker 1: I don't I don't have a great answer there, but

745
00:31:04,160 --> 00:31:06,360
Speaker 1: I think we're gonna see this area evolved as like

746
00:31:06,440 --> 00:31:08,560
Speaker 1: kind of custom indexing comes in, where people are gonna

747
00:31:08,560 --> 00:31:10,920
Speaker 1: be able to allow their choices to be dictated in

748
00:31:10,960 --> 00:31:13,520
Speaker 1: their pols. So I will say customer indexing embarrassed on it.

749
00:31:13,520 --> 00:31:15,120
Speaker 1: I'll just get on the record. I think anything you

750
00:31:15,160 --> 00:31:17,360
Speaker 1: trying to dislodge the three basis point in X fund

751
00:31:17,760 --> 00:31:20,560
Speaker 1: has it to it's a very tall hill to climb.

752
00:31:20,560 --> 00:31:22,800
Speaker 1: I think for very wealthy individuals it might work, or

753
00:31:22,880 --> 00:31:25,520
Speaker 1: hardcore hippie s G types, But that's not E s

754
00:31:25,560 --> 00:31:28,800
Speaker 1: G investing because a lot of these companies that you

755
00:31:28,840 --> 00:31:32,280
Speaker 1: would think in your perception are not good, like Xon,

756
00:31:32,720 --> 00:31:35,320
Speaker 1: they actually score pretty well on E s G scores.

757
00:31:35,800 --> 00:31:40,120
Speaker 1: Um It, perception of people. People's perception is not really

758
00:31:40,320 --> 00:31:43,320
Speaker 1: the same as an E s G scoring system. Um

759
00:31:43,360 --> 00:31:45,800
Speaker 1: but I agree with you. At least it's customed to

760
00:31:45,840 --> 00:31:48,280
Speaker 1: your liking. I just think in ten years, if that

761
00:31:48,640 --> 00:31:52,160
Speaker 1: custom portfolio and it performs, you're gonna have a seller's

762
00:31:52,240 --> 00:31:55,360
Speaker 1: buyer's remorse. Um Plus. I just think dislodging three basis

763
00:31:55,400 --> 00:31:58,520
Speaker 1: point beta is just people love that stuff, man. I mean,

764
00:31:58,560 --> 00:32:01,800
Speaker 1: it's it's like such a good deal. So but anyway,

765
00:32:01,840 --> 00:32:04,480
Speaker 1: I debated this with Josh and Michael vat Nick on

766
00:32:04,520 --> 00:32:07,680
Speaker 1: an episode of The Compounding Friends Van Wants to Listen to.

767
00:32:07,680 --> 00:32:10,440
Speaker 1: We had a nice, long, lengthy debate on direct index

768
00:32:10,520 --> 00:32:13,080
Speaker 1: thing We've gotta get, Uh, we have to do an

769
00:32:13,120 --> 00:32:15,040
Speaker 1: episode on that soon, Joel, that's gonna be a good

770
00:32:15,040 --> 00:32:18,240
Speaker 1: one out of two lists. Okay, so earlier he said

771
00:32:18,600 --> 00:32:21,400
Speaker 1: you can't recommend a ticker, but that doesn't mean that

772
00:32:21,480 --> 00:32:25,080
Speaker 1: we can't ask you for your favorite et F ticker um,

773
00:32:25,120 --> 00:32:27,960
Speaker 1: which is a question that we always ask. I guess, okay,

774
00:32:27,960 --> 00:32:30,480
Speaker 1: if I have to, my favorite is v O of

775
00:32:30,480 --> 00:32:33,360
Speaker 1: the Woo. Of course. My dad, my dad is this

776
00:32:33,440 --> 00:32:36,160
Speaker 1: funny thing. He says, I'm hedging my my video exposure

777
00:32:36,160 --> 00:32:37,640
Speaker 1: with s p y And I'm like, I was like,

778
00:32:37,680 --> 00:32:39,720
Speaker 1: I couldn't hand. I was like, what is Like, I

779
00:32:39,720 --> 00:32:41,800
Speaker 1: didn't know that was possible. I know, it's just wait

780
00:32:41,840 --> 00:32:43,840
Speaker 1: a second, my head hurts. He says, I'm hedging my

781
00:32:43,960 --> 00:32:46,600
Speaker 1: vieoo exposure with sp y. Right, it's like that that's

782
00:32:46,640 --> 00:32:50,640
Speaker 1: basically like issue we're hedging. Yeah, it's it was a

783
00:32:50,720 --> 00:32:52,680
Speaker 1: joke more than anything. Yeah, he's like, oh, I just

784
00:32:52,680 --> 00:32:55,120
Speaker 1: hedged my viewo with us. Yeah, like you're all in, Yeah,

785
00:32:56,320 --> 00:32:57,840
Speaker 1: I would say to yeah, of course. Yeah. He's just

786
00:32:58,040 --> 00:32:59,760
Speaker 1: he's on the just did he do? Does he do? That?

787
00:33:00,080 --> 00:33:01,400
Speaker 1: Is a year ord you get that from him? No,

788
00:33:01,720 --> 00:33:03,960
Speaker 1: he does it because you know I obviously wrote about

789
00:33:03,960 --> 00:33:05,680
Speaker 1: and stuff, but he like edits my blogs every week

790
00:33:05,680 --> 00:33:08,840
Speaker 1: he reads, Yeah, you didn't edit the book. We actually

791
00:33:08,840 --> 00:33:10,640
Speaker 1: got a professional, but he's edited a lot of the

792
00:33:10,680 --> 00:33:12,400
Speaker 1: posts on the material that went in there, roughly half

793
00:33:12,440 --> 00:33:14,280
Speaker 1: of its old material. Halfs knew I would say. So

794
00:33:14,480 --> 00:33:16,440
Speaker 1: I gotta say I felt like when I read this,

795
00:33:16,520 --> 00:33:19,000
Speaker 1: I was sitting with rid holes advisors and almost like

796
00:33:19,000 --> 00:33:21,200
Speaker 1: getting some of the secret sauce on how you talk

797
00:33:21,240 --> 00:33:24,080
Speaker 1: to clients. Is that is that fair? I mean a

798
00:33:24,080 --> 00:33:26,239
Speaker 1: lot of the ideas that you know I have and

799
00:33:26,280 --> 00:33:28,480
Speaker 1: they have are very s already aligned already. That's why

800
00:33:28,480 --> 00:33:29,720
Speaker 1: it works so well. I didn't have to come in

801
00:33:29,760 --> 00:33:32,080
Speaker 1: and like rethink everything. Oh I don't agree with this,

802
00:33:32,120 --> 00:33:34,000
Speaker 1: And I'm saying we're not a hund percent line on everything,

803
00:33:34,000 --> 00:33:36,239
Speaker 1: but a lot of the core ideas are there, and

804
00:33:36,240 --> 00:33:37,640
Speaker 1: like that's we would agree on on a lot of

805
00:33:37,680 --> 00:33:39,640
Speaker 1: the stuff there, doesn't Does that mean we agree on everything? No,

806
00:33:39,760 --> 00:33:42,200
Speaker 1: there are certain things where we may not agree perfectly

807
00:33:42,240 --> 00:33:44,240
Speaker 1: on um and I and I've I've gone back and

808
00:33:44,280 --> 00:33:45,760
Speaker 1: forth on some of these things, you know, whether that

809
00:33:45,800 --> 00:33:48,000
Speaker 1: means stuff like trend following, whether it's how we allocate

810
00:33:48,040 --> 00:33:50,160
Speaker 1: the crypto all sorts of stuff like that where I can.

811
00:33:50,280 --> 00:33:52,360
Speaker 1: I don't think our firms do anything incorrect or bad

812
00:33:52,440 --> 00:33:53,959
Speaker 1: or anything like that. But where we may not be

813
00:33:53,960 --> 00:33:56,120
Speaker 1: in a hundred percent agreement, that's fine. Like not everyone agrees.

814
00:33:56,120 --> 00:33:58,040
Speaker 1: Like for example, I have a whole chapter on don't

815
00:33:58,040 --> 00:34:00,400
Speaker 1: buy individual stocks, right, and I know they're people in

816
00:34:00,440 --> 00:34:03,160
Speaker 1: my UM at my firm that own individual stocks, not

817
00:34:03,200 --> 00:34:04,440
Speaker 1: the it's not the bulk of their money. It's a

818
00:34:04,440 --> 00:34:06,640
Speaker 1: small percentage, but still it's like something that I generally

819
00:34:06,640 --> 00:34:08,560
Speaker 1: don't do. And once again, you know, that's kind of

820
00:34:08,560 --> 00:34:10,120
Speaker 1: how I think about. It's like, let's think about the

821
00:34:10,200 --> 00:34:12,160
Speaker 1: overall picture and are we do we agree on the

822
00:34:12,200 --> 00:34:14,040
Speaker 1: core tenants and we do, and then so that's where

823
00:34:14,120 --> 00:34:16,520
Speaker 1: if you feel like that, that's because we generally agree

824
00:34:16,520 --> 00:34:18,000
Speaker 1: on a lot of Like if someone goes to red

825
00:34:18,000 --> 00:34:19,960
Speaker 1: Holtz and they're sitting down, you kind of go over like, well,

826
00:34:20,040 --> 00:34:22,560
Speaker 1: let's say, first let's look at that. You know, you've

827
00:34:22,560 --> 00:34:25,120
Speaker 1: got to go over that. What depends where they are, right,

828
00:34:25,120 --> 00:34:26,799
Speaker 1: if you're if you're if you're seventy five years old

829
00:34:26,800 --> 00:34:28,480
Speaker 1: and retired, saving he's not gonna out. It's oh, you

830
00:34:28,560 --> 00:34:30,320
Speaker 1: have a huge nestake. Let's figure out how to protect that.

831
00:34:30,360 --> 00:34:33,680
Speaker 1: So it's once again the ideas here can be applied generally.

832
00:34:33,719 --> 00:34:35,560
Speaker 1: But yes, I kind of agree with what you're saying.

833
00:34:35,680 --> 00:34:39,800
Speaker 1: So Nick Majuli, thanks for joining us and Trillians. Appreciate, appreciate,

834
00:34:40,120 --> 00:34:46,640
Speaker 1: thank thanks for listening to Trillions until next time. You

835
00:34:46,680 --> 00:34:49,360
Speaker 1: can find us on the Bloomberg terminal, Bloomberg dot com,

836
00:34:49,480 --> 00:34:53,080
Speaker 1: Apple Podcast, Spotify, and wherever else you'd like to listen.

837
00:34:53,640 --> 00:34:55,879
Speaker 1: We'd love to hear from you. We're on Twitter, I'm

838
00:34:55,960 --> 00:34:59,440
Speaker 1: at Joel Webber Show. He's at Eric Faltunas. This episode

839
00:34:59,480 --> 00:35:02,759
Speaker 1: of Trillions is produced by Magnus Hendrickson. Francesca Levie is

840
00:35:02,800 --> 00:35:13,880
Speaker 1: the head of Bloomberg podcast Fibers. M m m m

841
00:35:14,080 --> 00:35:18,240
Speaker 1: hm hm