Speaker 1: Welcome to How the Money. I'm Joel and I'm Matt,
Speaker 1: and today we're discussing timing this stock market. Joel, you
Speaker 1: and I got to go on a double date recently
Speaker 1: with our wives. It never freaking happens in our wives.
Speaker 1: We've been kind of busy past few weeks and our wives.
Speaker 1: Uh surprised this a little bit at our local group
Speaker 1: hub wrecking bar. That was so sweet, man, that was awesome.
Speaker 1: We we neither of us knew. I don't think until
Speaker 1: a very last second. I thought we were just kind
Speaker 1: of having like a dinner hang at our house. Yeah,
Speaker 1: and uh, and I got home and my wife surprised me,
Speaker 1: like last second, like, hey, we're doing We're doing this.
Speaker 1: We're going out, all four of us, and we're hiring
Speaker 1: a babysitter, which we don't normally do because babysitters are
Speaker 1: crazy expensive. That kind of expensive. But it was so
Speaker 1: worth it, man, it was so to get past that.
Speaker 1: It took me a second as well. I was just like,
Speaker 1: we're doing what I was like, and we're going out?
Speaker 1: Is it in the budget? I don't know, but yeah,
Speaker 1: that was totally worth it. We had a blast. It's
Speaker 1: fun to like reconnect as as adults, you know, like
Speaker 1: we've talked about before, how you guys, how we each
Speaker 1: have a date night. And so one night, you guys,
Speaker 1: you and Emily will go out and then I come
Speaker 1: over and babysit your girls and vice versa. Next week
Speaker 1: will be me and Kate and we go out. But
Speaker 1: it's rare that we Yeah, like you said that we
Speaker 1: all get to get together all for adults and get
Speaker 1: some good hangs in, you know, have a have a
Speaker 1: couple of beers and talk about life and kind of
Speaker 1: catch up without feeling like we have to attend to
Speaker 1: the children right away. It's nice, man, Yeah, man, seriously,
Speaker 1: so great. Loved it. By the way, I wanted to
Speaker 1: tell you that I was like pulling out of work
Speaker 1: the other day on my bike. Uh. And the weirdest
Speaker 1: thing about riding my bike to work is that the
Speaker 1: only place to park at work is this giant, enormous
Speaker 1: parking garage and I have to go through three gates
Speaker 1: in order to like a normal car. Yeah, exactly, it's
Speaker 1: so weird. And uh, I was pulling out the other
Speaker 1: day and taking taking my bike down the amp and
Speaker 1: I pulled up next to a guy in his car.
Speaker 1: Uh one of the sales guys at work, and he said, uh, Joel,
Speaker 1: I don't know if you heard this, but they actually
Speaker 1: make cars now. Um, just like kind of making fun
Speaker 1: of me. Was he joking at all or was he
Speaker 1: just kind of was he actually giving a hard time?
Speaker 1: I think a little bit of both. You know, It's
Speaker 1: kind of one of those jokes that I kind of
Speaker 1: wanted to say something. I just sped off because he
Speaker 1: had to wait for the lift gate to go, but
Speaker 1: I kind of wanted to say something about the fact
Speaker 1: that he Yeah, I kind of wanted to say something
Speaker 1: about the fact that he would be sitting in traffic
Speaker 1: for quite a while wait home. Well, I was completely
Speaker 1: avoiding it, but I did not. I was hoping that
Speaker 1: he would have sped off first, and then you would
Speaker 1: have ridden up and just like punched a slide view
Speaker 1: mirror off, like zoomed off off the sidewalk or something
Speaker 1: like that. I'm not against a little bit of social
Speaker 1: disobedience here and there, but that probably wouldn't be cool
Speaker 1: to a co worker. But I just, you know, I
Speaker 1: wanted to say that not everyone has to be into biking.
Speaker 1: That's totally cool, and I know the guy was probably
Speaker 1: pretty much joking but no offense taken, right, But like,
Speaker 1: you don't have to be into biking, but you know what,
Speaker 1: instead of knocking it, give it a try, think about it. Uh.
Speaker 1: And that was again, Matt, that was the first episode
Speaker 1: we ever recorded, because you and I think biking is
Speaker 1: really important. We think it's important because it's good for
Speaker 1: your health. It's good exercise, right, it's good to get
Speaker 1: you out there in your town. There's like so many
Speaker 1: reasons that biking is a social community aspect of it. Yeah,
Speaker 1: you're more connected with your neighbors. And of course it
Speaker 1: saves you money as well. The cost operate a bike
Speaker 1: as compared to a car. You can't compare the two
Speaker 1: bike contests. Bikes are way more affordable as far as
Speaker 1: that goes. Man, I hope he's listening right now, buddy. Yeah,
Speaker 1: I just I wanted to get that out there. You
Speaker 1: don't have to be a bike lover. But if you're
Speaker 1: not currently riding a bike or and you haven't thought
Speaker 1: about it in a while, and you haven't listened our
Speaker 1: first episode, maybe you're a more recent listener to the show.
Speaker 1: You just kind of started listening. Consider listening to episode
Speaker 1: one and thinking about how great bikes are, because I
Speaker 1: gotta say, I just kind of felt bad for him
Speaker 1: that he had to sit in traffic on the way
Speaker 1: home in this box that like makes your back hurt
Speaker 1: and stuff like that and you kind of hate life.
Speaker 1: And for me, I mean, I was getting fresh air
Speaker 1: and enjoying this ride home without sitting in traffic. And
Speaker 1: so I just want to let people know, think about
Speaker 1: listening to episode one if you haven't heard it yet.
Speaker 1: What if he was driving to his gym to sit
Speaker 1: on a bike station, Like, what's what's the fancy exercise bike? Now?
Speaker 1: You see guys peloton? Yeah, I think it's like folks
Speaker 1: are getting them up for their houses now. It's like
Speaker 1: the new It's like the bow flex of the twenty
Speaker 1: or something like that. But you know, I would be
Speaker 1: willing to guess that maybe half the people from your
Speaker 1: building are leaving too, and maybe going to drive somewhere
Speaker 1: to go work out, going to a gym, or going
Speaker 1: to do cross fit, even which is great, it's awesome,
Speaker 1: but still you're driving there. Why not combine the two
Speaker 1: and save money and do something that's better for your city?
Speaker 1: All right, Matt Beer for the day that you and
Speaker 1: I are going to be drinking was sent in from
Speaker 1: a listener. Kevin in North Carolina sent us a few
Speaker 1: awesome beers that I'm super excited to try, and the
Speaker 1: one that we're drinking on this episode is Heist Brewery
Speaker 1: Uber Quenchal imperial I p a Quenchell quench All. All right,
Speaker 1: so let's keep it a crack, hey, Kevin. Two things,
Speaker 1: First of all, you rock, And second, shoot me a
Speaker 1: message on Twitter to let me know how many beers
Speaker 1: you sent Joel to make sure he doesn't like save
Speaker 1: three or four of these in his beer seller is
Speaker 1: the only one he said. Sorry, yeah, I believe that.
Speaker 1: But bhil, Kevin, thank you so much. We really appreciate it.
Speaker 1: We're gonna enjoy this as we talk about timing the
Speaker 1: stock market. But we're gonna save our tasting notes for
Speaker 1: the end, so stick around for that. That's right, Matt,
Speaker 1: So timing the stock market. The first thing I thought of,
Speaker 1: Matt when I was thinking about timing the stock market
Speaker 1: that timing the market is like the equivalent of being
Speaker 1: a Miami Marlins fan. And you're gonna have to explain
Speaker 1: the sports to me, buddy, because you know, I want
Speaker 1: to watch soccer, So all right, I got you back here.
Speaker 1: So the thing is that Miami Marlins have been essentially
Speaker 1: terrible pretty much got their whole history. They were an
Speaker 1: expansion team that launched in like the nineties, and they
Speaker 1: won a World Series in and I think in two
Speaker 1: thousand three, So they've won two Worlds areas randomly, but
Speaker 1: they're these like super random occurrences. Other than that, they've
Speaker 1: just been really bad and they are always every time
Speaker 1: they do have a good team, they essentially sell off
Speaker 1: all their good players the very following year. And so
Speaker 1: being a Miami Marlins fan, let's say you're jumping on
Speaker 1: the bandwagon, you don't know when to route for them
Speaker 1: because you don't know if they're gonna be good that
Speaker 1: year or not. You don't know if you're gonna pick
Speaker 1: that random good year where they're actually gonna do something meaningful,
Speaker 1: you know, in the sport, or if you're just gonna
Speaker 1: be are along for that terrible ride of many years
Speaker 1: where they're just completely awful. Yeah, So what you're saying
Speaker 1: is that it's completely random, uh, and you can't plan
Speaker 1: for it, right. I guess what I'm trying to say
Speaker 1: is you don't know who the man, what the management
Speaker 1: of the Miami Marlins is gonna do. You don't know
Speaker 1: if it's gonna be a good year or it's gonna
Speaker 1: be a bad year, And so you have to be
Speaker 1: you can't just be a bandwagon fan. And just like
Speaker 1: with the stock market, right, it's really hard to decide
Speaker 1: I'm gonna jump in now. Now is the time? Right?
Speaker 1: So we're gonna kind of go through a thought process
Speaker 1: of why timing the market is actually ultimately more harmful
Speaker 1: to your portfolio. And just like being a Marlins fan,
Speaker 1: you kind of have to be in it for the
Speaker 1: long haul, through thick thin to catch those good years, right,
Speaker 1: And the same thing, you don't know when they're going
Speaker 1: to show up, exactly stock market, similar kind of thing.
Speaker 1: And we'll get into more reasons why all it is
Speaker 1: that our friend Patrick got himself on Marlin's hat when
Speaker 1: they rebranded and kind of did that whole sort of
Speaker 1: South Beach to look with the new colors. Has he
Speaker 1: burned it yet? Was that like five six years ago? Yeah,
Speaker 1: something like that. Had they been good since then? Okay?
Speaker 1: Because I'm pretty sure I remember that year because I
Speaker 1: watched some baseball back then, but I remember there being
Speaker 1: reports and shots from the stadium and it was like
Speaker 1: completely empty. Yeah, that's not about right pretty much. They're
Speaker 1: one of the worst attended teams in all of sports.
Speaker 1: So the stock market is actually kind of like the
Speaker 1: opposite of the Marlins though right Like, so essentially, the
Speaker 1: stock market does well most years and there are only
Speaker 1: a few bad years where the Marlins, right, that's the
Speaker 1: exact opposite. And the question right now is, well, the
Speaker 1: stock market is up, and a lot of people are
Speaker 1: wondering if if it's time to sell, or like it's
Speaker 1: too hot, should get out of the kitchen? And the
Speaker 1: other question people are asking is how can I put
Speaker 1: more money into the stock market because it's had a
Speaker 1: fever pitch and they can only see things continuing to
Speaker 1: go up at the same I'm right. And so another
Speaker 1: reason we're talking about this as well is because you'll
Speaker 1: hear in the news how we're entering this long period
Speaker 1: of growth that the stock market is seen. And what
Speaker 1: you've heard is that we're in a bull market where
Speaker 1: the market has been growing. And so it might be
Speaker 1: worth mentioning to the difference between a bear market in
Speaker 1: a bull market. A bull market means that stuff growing,
Speaker 1: stuff doing awesome, prices are going up. It's a good
Speaker 1: time to own stocks in a bull market, whereas a
Speaker 1: bear market it means things are taking things are going down.
Speaker 1: And the reason behind that too is is they say,
Speaker 1: is that like when a bear fights, like he's got
Speaker 1: the call out, the close up, and he's like swiping down,
Speaker 1: whereas the bowl like lifts up with the horns. There
Speaker 1: we go. So that's like, I guess that's how you're
Speaker 1: supposed to remember it. That's some nice insight. That's why
Speaker 1: I keep you around here, buddy. That's pretty good. It's
Speaker 1: pretty bo bull market versus bear market. Yeah, so people
Speaker 1: have been thinking, right for a few years now at
Speaker 1: this point, and we've been in this bull market, and
Speaker 1: match just explain to you what that is. It's just
Speaker 1: essentially this rise in stock prices, and we've been in
Speaker 1: one of the longest prolonged bull markets in US history.
Speaker 1: But yeah, the longest as of a few weeks ago. Yeah,
Speaker 1: so it's been like ten years almost tonight and a
Speaker 1: half years, and so people are thinking, well, they can't
Speaker 1: markets can't keep going up like this, can they? So
Speaker 1: maybe I should sell or on the other side, there's
Speaker 1: this boundless optimism that what goes up must keep going up,
Speaker 1: which is not scientifically possible. And so the answer is no.
Speaker 1: Corrections are always inevitable. But the answer to whether or
Speaker 1: not you can time the market is also no. And
Speaker 1: so let's go into that. Here's a quote from Peter Lynch,
Speaker 1: uh really savvy investor who worked for Fidelity for a
Speaker 1: lot of years. He said, far more money has been
Speaker 1: lost by investors preparing for corrections or trying to anticipate
Speaker 1: corrections then has been lost in corrections themselves. And I
Speaker 1: think that's really a stoop point. So if you are
Speaker 1: in that place where you're thinking, man, I think things
Speaker 1: are about to drop, and so I should position myself
Speaker 1: a little bit differently in order to time the market
Speaker 1: well so that I can then reallocate after the dip
Speaker 1: and do even better right with my investments. Well, I
Speaker 1: think or Lynch's advice here is something we should all
Speaker 1: take into account that preparing for a correction or trying
Speaker 1: to anticipate one and getting in and out of investments
Speaker 1: is actually going to be a place that will ultimately
Speaker 1: hurt us in all likelihood as opposed to help us. Yeah,
Speaker 1: Man and Peter Lynch. He used the fund manager for
Speaker 1: Fidelity of the most successful mutual fund in the history
Speaker 1: of the world, where for thirteen years he'd be a
Speaker 1: big deal. Yeah, that's huge man. For thirteen years that
Speaker 1: fund was earning over So this guy, he knows the stuff,
Speaker 1: he knows what he's talking about, and even him and
Speaker 1: that's the cool thing. You know. We're gonna refer to
Speaker 1: Peter Lynch and we're gonna refer to Warren Buffett in
Speaker 1: this episode. And those two guys, two of the most
Speaker 1: successful investors of all time. They seem to say the
Speaker 1: same thing about timing the market and about a lot
Speaker 1: of other investing strategies, but in timing the market, they
Speaker 1: both seem to say, no, it's not a good idea.
Speaker 1: That's right, man, you can't time on the market. And honestly,
Speaker 1: that's the opposite of typical behavior. Investors are attempted to
Speaker 1: buy more as the market rises. They'll do that thinking
Speaker 1: it will continue at the same pace. Like we mentioned,
Speaker 1: there's a sort of a fear of missing out fomo effect,
Speaker 1: and this leads to an opportune buying and selling and
Speaker 1: almost always ends with a bad result. So that makes
Speaker 1: me think of this Matt. Back in two thousand nine,
Speaker 1: one of my co workers was super nervous about the
Speaker 1: stock market. Right, we were pretty much bottom of the barrel,
Speaker 1: and oh yeah, things have been taking for for years.
Speaker 1: Completely we lost the stock market had lost its value.
Speaker 1: That's called a bear market, yes, And so my co
Speaker 1: worker was super worried, even though he's relatively young, right,
Speaker 1: he was in his late thirties, and he was nervous
Speaker 1: that what am I gonna do? Man, all my you know,
Speaker 1: investment portfolio. You know it's halfway gone. What am I?
Speaker 1: What should I do? And you know, I told him,
Speaker 1: stick with it, You'll be fine, and we'll post a
Speaker 1: link in the show notes to a graph that kind
Speaker 1: of helps you actually see and visualize. It was really
Speaker 1: helpful for me. The history of bowl markets and bear markets,
Speaker 1: and the bowl markets are usually pretty long with lots
Speaker 1: of growth in the bear markets are usually pretty short
Speaker 1: with you know, certainly an impactful amount of losses, but
Speaker 1: they don't usually occur for all that long, and the
Speaker 1: losses aren't nearly as steep as the gains are in
Speaker 1: the bull market. But so I talked to my friend.
Speaker 1: I was like, no, listen, stick with it. You'll be fine.
Speaker 1: This is a long term play. You know, you shouldn't
Speaker 1: reallocate any investments right now. He didn't listen. He sold
Speaker 1: a fair amount of his equity of his stock investments
Speaker 1: and decided to go into cash. And the tough thing
Speaker 1: about that is you don't know when to put it
Speaker 1: back in as the stock markets going up. Are we
Speaker 1: out of the bear market? Are we in the bull
Speaker 1: market now? I don't know, because it's easy to see
Speaker 1: now right where we what happened, But it's really hard
Speaker 1: in the middle of it in two thousand nine to
Speaker 1: know when to put things back. And so ultimately that
Speaker 1: came back to buy him, and he missed out on
Speaker 1: a lot of the run ups of the bull market.
Speaker 1: And if you pulled out at the bottom, I'm sure
Speaker 1: he was afraid to, like you said, buy in, and
Speaker 1: so he was probably missing out on a huge gains
Speaker 1: and huge growth over the next couple of years. Yeah, completely,
Speaker 1: And just missing out on a few months or even
Speaker 1: a couple of days in a bull market can have
Speaker 1: long term adverse effects on your investment portfolio. And that's
Speaker 1: why we think timing the market is such a bad idea.
Speaker 1: It just has these adverse consequences really if you eat,
Speaker 1: dabble in it, or try it at all. Yeah. Man,
Speaker 1: it makes me think of the thing that like mutual
Speaker 1: funds have to say where they say, like past performance
Speaker 1: is not indicative of future results, because that's the mindset
Speaker 1: that consumers, well I say consumers, but investors. But maybe
Speaker 1: we are kind of going into it with like a
Speaker 1: consumer mentality. But you see something taking or you see
Speaker 1: something skyrocketing, and you think, oh, that's just what's gonna
Speaker 1: always happen, you know, But again, yeah, that's not the case,
Speaker 1: and you can't time it. Warren Buffet has got an
Speaker 1: awesome quote where he says, my favorite time frame is forever.
Speaker 1: And that is so incredibly important to keep in mind, man,
Speaker 1: because we're not just looking for the performance of our
Speaker 1: portfolio of our retirement savings to boost in a particular
Speaker 1: year or like just this year or just next year.
Speaker 1: But we're looking at it with a long view. Our
Speaker 1: goal is for the long term, and what we want
Speaker 1: to see is our overall portfolio and our overall wealth
Speaker 1: to increase. But you know, if there's months here and
Speaker 1: there and even years where there's a decline that's not
Speaker 1: something that you want to try to manipulate and take
Speaker 1: advantage of necessarily because you just don't know what the
Speaker 1: market is going to do. Yeah, Matt, that's great. So
Speaker 1: we've kind of established the fact that we think market
Speaker 1: timing is bad. There's this fear of missing out effect
Speaker 1: that people get, and so they decide, all right, i'm
Speaker 1: gonna try it right, I'm gonna sell or i'm gonna buy,
Speaker 1: or i'm gonna do something. Goofy, Now let's do it exactly.
Speaker 1: So if that's not the answer, what is the answer,
Speaker 1: we'll get into that right after the break, all right, man,
Speaker 1: So well back from the break. So then the next
Speaker 1: thing that we want to talk about is what to
Speaker 1: do next. And the number one thing you can do
Speaker 1: is to not pay attention to the financial news when
Speaker 1: they're talking about the stock market because it doesn't matter.
Speaker 1: The crazy thing is they want to make it seem
Speaker 1: like the stock market and what's happening with earnings or
Speaker 1: it's and all these things they matter and see how
Speaker 1: to exact stay tuned. There's a seven news cycle for
Speaker 1: investment news now you know, Well that's their product, you know,
Speaker 1: and I understand that, like that's what they have to
Speaker 1: push and to them that's important. However, to you, as
Speaker 1: an investor at home, that is not important. And instead,
Speaker 1: what we would recommend that you focus on doing is
Speaker 1: something called dollar cost averaging. If you're not familiar with
Speaker 1: dollar cost averaging, it is an investment technique of buying
Speaker 1: a fixed dollar amounts of a portfolio investment, so either
Speaker 1: a stock or a mutual fund or a bond, but
Speaker 1: to do that on a regular schedule, regardless of the
Speaker 1: share price. And so what that means then in the
Speaker 1: long term is that your dollar purchases more shares when
Speaker 1: prices are low, and then fewer shares when prices are high,
Speaker 1: effectively averaging out the cost. Pretty straightforward, right, Yeah. And
Speaker 1: the great thing, Matt, is that dollar cost averaging actually
Speaker 1: works out most easily for most people. So for most
Speaker 1: of us that get a paycheck through an employer, we
Speaker 1: can have a certain amount taken out of our paycheck
Speaker 1: every two weeks and we can choose the investments inside
Speaker 1: to the four oh one k that we, you know,
Speaker 1: want our money to go into, and we go into
Speaker 1: that just a little bit more. In previous investment episodes,
Speaker 1: in particular, retirement investing is simpler than you think. But
Speaker 1: dollar cost averaging is actually kind of the default easiest
Speaker 1: thing for most people to do, even if you don't
Speaker 1: have a four oh one K through your work, setting
Speaker 1: up a roth IRA through an individual low cost brokerage company,
Speaker 1: and that's pretty simple too. And the easiest way to
Speaker 1: go about contributions to something like an IRA or roth
Speaker 1: ira is to have it automatically deducted from your checking
Speaker 1: account once a month. So, in effect, your dollar cost averaging,
Speaker 1: whether you're getting it taken out of your paycheck or
Speaker 1: whether you're getting it taken out of your checking account
Speaker 1: once a month, you're essentially doing that. You're buying shares
Speaker 1: at the same time every month or every two weeks,
Speaker 1: and so there's no need to overthink it. Your dollar
Speaker 1: cost averaging right there by default, right Definitely. One of
Speaker 1: the benefits of being employed by the man is having
Speaker 1: a steady paycheck. One huge downside being self employed is
Speaker 1: that with income being variable, I can't do that because
Speaker 1: we might have what with my worry being more seasonal.
Speaker 1: There's periods of time, there's months where I'm you know,
Speaker 1: we're raking it in and there's periods of time where
Speaker 1: I don't have hardly any money at all, and so
Speaker 1: it wouldn't really work out if I had an auto
Speaker 1: draft set up. But what I do know is that
Speaker 1: our goal for the year for retirement giving is eleven
Speaker 1: thousand dollars each and so I know that if I
Speaker 1: take that eleven grand and divide it out by twelve months,
Speaker 1: that's n sixteen dollars that we are setting aside. And
Speaker 1: but we still have to manually do that. That's the
Speaker 1: big downside, right, It's it's more of a mental sort
Speaker 1: of step. You know, there's something about actually having to
Speaker 1: make that purchase right as opposed to it automatically happening.
Speaker 1: There's like there's a mental hurdle there that you have
Speaker 1: to overcome. Yeah, you know, somebody who has a four
Speaker 1: one K that they automatically contribute to via their employer.
Speaker 1: They don't have to overcome that mental hurd They just
Speaker 1: have to do it once, essentially, set it up and
Speaker 1: make sure that you know, they're contributing enough to get
Speaker 1: at least the match and hopefully more, and after that
Speaker 1: it's done right. It just happens every two weeks and
Speaker 1: they don't really have to think about it. That's the
Speaker 1: that is the beautiful thing of of the four oh
Speaker 1: one K, And I feel bad for people that are
Speaker 1: self and bloy. It takes a little more discipline to
Speaker 1: make it happen, you know. Yeah, there's a slight temptation
Speaker 1: there to think, oh, maybe I should hold off. Things
Speaker 1: do seem kind of crazy right now, you know, like
Speaker 1: there's like you said, there's that hurdle. Yeah, it just
Speaker 1: kind of sucks. So let's talk about the four biggest
Speaker 1: reasons the potential screw ups that you can make in
Speaker 1: trying to time the market. The first mistake that you
Speaker 1: can make is when you try to time the market,
Speaker 1: you have to get it right, not just once, but twice.
Speaker 1: And that's really difficult. Let's say you've got a hundred
Speaker 1: thousand dollars in your four oh one k right now,
Speaker 1: and you say, man, it looks really hot. I think
Speaker 1: I'm gonna bed on the stock market not doing well
Speaker 1: over the next year, and you decided to put all
Speaker 1: your holdings into cash. Well, let's say the stock market
Speaker 1: does have a little bit of a decline. It's really
Speaker 1: hard to know when you're at the apex or the
Speaker 1: trough of a market. So trying to time it just once,
Speaker 1: but that's really hard to do. But trying to time
Speaker 1: it well twice, man, that's even harder, that's right, Chell. Secondly,
Speaker 1: missing out on certain days, the few days where the
Speaker 1: stock market does make some major gains, you can miss
Speaker 1: out on a huge amount of growth in your portfolio.
Speaker 1: The market doesn't just gradually increase over the course of
Speaker 1: the year. You know, it's not slow and steady. There's
Speaker 1: huge ups and there's huge downs a lot of times
Speaker 1: in over the course of the year. And if you're
Speaker 1: sitting out during those few days where there are pretty
Speaker 1: huge spikes, you're gonna be missing out, like I said,
Speaker 1: on a lot of growth. Yeah. I mean, if you're
Speaker 1: out of the market for just ten days out of
Speaker 1: the year, of the ten days out of that year
Speaker 1: that have the highest gains, you can actually end up
Speaker 1: losing money that year in in the stock market, Like
Speaker 1: if you had the worst timing in the entire world, right, right, right,
Speaker 1: I feel bad for that guy exactly. Yeah, you're the
Speaker 1: dude who backed out on the day before the spike
Speaker 1: and then you put your money back in and then
Speaker 1: it went You know, it's just a terrible if you're
Speaker 1: doing everything wrong man, stop right. It's just amazing though
Speaker 1: that so much of the progress of the stock market
Speaker 1: happens on so few days during the year. And so
Speaker 1: if you decide that you're gonna be cute and try
Speaker 1: to time the stock market, well, if you miss out
Speaker 1: on one or two of those days, well that could
Speaker 1: be a big loser for you and actually have really
Speaker 1: long term implications because of the way money works over time.
Speaker 1: And plus you just feel like a dummy exactly. And
Speaker 1: the third point, Joel is somewhat related to missing out
Speaker 1: on the gains, but the opportunity cost that's associated with that.
Speaker 1: And so the SMP goes up roughly two out of
Speaker 1: every three years. And so if you have sold at
Speaker 1: what you suppose is the top and you're sitting there
Speaker 1: with cash you want it to be liquid for some reason,
Speaker 1: you are losing out. You're missing out on those gains,
Speaker 1: uh those two out of three years. The thing is
Speaker 1: is that you don't know when those two of the
Speaker 1: three years are going to be and so to think
Speaker 1: that you can time it and that you know exactly
Speaker 1: when the market is either going to plateau or when
Speaker 1: it's gonna start dipping again, you're fooling yourself. It's almost
Speaker 1: like thinking that just because Roulette wheel fell on red
Speaker 1: eight times in a row, that it's going to be
Speaker 1: black the next time. Right, there's still a fifty each time.
Speaker 1: And investing in the stock market is not gambling, You're
Speaker 1: you're maybe we should have said at the very beginning,
Speaker 1: it's not gambling. You're investing in American capitalism. You're investing
Speaker 1: in American company, So it's not gambling. But in the
Speaker 1: same vein, you don't really know where the economy as
Speaker 1: a whole is going. None of us do. None of
Speaker 1: us are really smart enough to say, you know what,
Speaker 1: next year, I think is going to be a bad
Speaker 1: year for American capitalism as a whole, And we don't
Speaker 1: really know the things that are actually going to trigger
Speaker 1: decline in the stock market. We could continue to see
Speaker 1: another bowl market for two or three more years. We
Speaker 1: just don't really know. But then all of a sudden,
Speaker 1: something could happen in regards to diplomacy or tax law
Speaker 1: or something else that's like super wonky that I don't
Speaker 1: even understand or that we have zero control over completely. Yeah,
Speaker 1: and so those kind of things can happen and trigger
Speaker 1: a bull market, But I don't know when that's gonna be.
Speaker 1: I don't know what the trigger is going to be,
Speaker 1: and so I just know what history looks like with
Speaker 1: the stock market, and I just see that the opportunity
Speaker 1: cost of potentially sitting out thinking that I know better
Speaker 1: and can time the market is actually a fool's Errand
Speaker 1: I mean, I think it's a good point that you
Speaker 1: brought a gambling because on the flip side of the coin,
Speaker 1: timing the market is gambling. It is speculation because you
Speaker 1: have no clue. I love what you said about investing
Speaker 1: in the stock market is investing in our country essentially,
Speaker 1: Like you believe in the companies and the ingenuity and
Speaker 1: the progress of our nation. And we have ups and
Speaker 1: downs as a country, but overall we're optimistic and we
Speaker 1: believe that we've got great things ahead of us. And
Speaker 1: that's what you invest in when you invest in the
Speaker 1: stock market. Yeah. Completely, last thing on potential screw ups
Speaker 1: when trying to time the market. Timing the market can
Speaker 1: lead to tax triggers. So let's say that you are
Speaker 1: not inside of a retirement account, but you're investing in
Speaker 1: a brokerage account. If you buy and sell stocks inside
Speaker 1: of a brokerage account. Those moves can trigger tax consequences
Speaker 1: whatever vehicle you're using to invest, make sure you know
Speaker 1: the tax consequences of buying or selling stocks and bonds
Speaker 1: inside of that, because rebalancing, selling and buying can actually
Speaker 1: end up generating a tax bill for you at the
Speaker 1: end of the year that you weren't expecting. That's right, man,
Speaker 1: and taxes suck. We're gonna take a quick break, but
Speaker 1: right after that we're gonna touch on how we like
Speaker 1: to invest in the stock market. Alright, so we're back
Speaker 1: from the break, and now let's talk about how we invest.
Speaker 1: A more passive approach is better for your money, it's
Speaker 1: better for your portfolio, and it's way way easier. Try
Speaker 1: to imagine trying to time the market and all the
Speaker 1: time and energy that goes into that versus spending that
Speaker 1: time with your family instead, or if you want to
Speaker 1: be productive, take that time and actually build something. You know,
Speaker 1: like we just talked about side hustles a couple episodes ago.
Speaker 1: Pursue something that you're passionate about, something that you can
Speaker 1: see uh scale, where you're helping people and that you're
Speaker 1: able to provide a service for people that's something I
Speaker 1: would much rather spend my time on versus sort of
Speaker 1: staring at the charts and thinking, Okay, is it time
Speaker 1: to sell? Is it time to buy? Who the heck knows? Yeah?
Speaker 1: And that's the thing, Matt, we don't know, right, and
Speaker 1: Warren Buffett, Peter Lynch, these investors that are essentially like
Speaker 1: the Barry Bonds and Hank Aaron of investing. Sorry another
Speaker 1: sports reference, Um, I know those guys. Okay, alright, good
Speaker 1: say Babe Ruth and Babe Ruth too old old Babe
Speaker 1: Ruth and Mickey Mantle. There we go. Yes, So these
Speaker 1: guys are essentially, you know, the m vps in the
Speaker 1: Hall of Fame of investing, and and they're saying, don't
Speaker 1: time the market. They're saying, do as I say, not
Speaker 1: as I do. Well because they know how unique they are.
Speaker 1: And I think that's why small time investors like us
Speaker 1: right can have a hard time just sticking with dollar
Speaker 1: cost averaging, where you you're just sort of following a schedule,
Speaker 1: or you're not even thinking about it, like you said earlier,
Speaker 1: you sort of you said it and forget it, or
Speaker 1: you just follow this monthly schedule where you know that
Speaker 1: you're setting aside this much money to invest. The reason
Speaker 1: that's not appealing is because it's not appealing, right, It's
Speaker 1: just not exciting. It's not at all sexy. You don't
Speaker 1: strike it rich quick like that, right, Yeah, there's no
Speaker 1: there's no excitement at all, and it's just boring and dull.
Speaker 1: And that kind of flies in the face of the
Speaker 1: American mindset of I'm gonna start this new company, I'm
Speaker 1: gonna have an I p O. Just all these sort
Speaker 1: of fancy financial things that you think, oh, that's how
Speaker 1: you get rich. Oh, real estate, you know, Like we
Speaker 1: talked about real estate a good bit, but it's not
Speaker 1: in the sort of speculations, get rich quick sort of mentality.
Speaker 1: And I think that's why dollar cost averaging suffers is
Speaker 1: because it just doesn't seem like this fun thing to do,
Speaker 1: because it's not it's not cool. It's not cool it's
Speaker 1: all at all. And and so much of America is
Speaker 1: the sort of rugged cowboy of like, I'm gonna figure
Speaker 1: this out on my own, you know, like like going
Speaker 1: and going into it with that mentality. What if we
Speaker 1: can get like Colin Kaepernick to do a commercial for
Speaker 1: dollar cost averaging with that help made me make you cool.
Speaker 1: I don't know. We'll just say, just do it dollar
Speaker 1: cost average. Just do it right. Yeah, I mean, for
Speaker 1: me to one of the best reasons for dollar cost
Speaker 1: averaging is that it's easy. And I'm kind of lazy,
Speaker 1: and so the fact that I can set it up
Speaker 1: once and just kind of let it go right start investing,
Speaker 1: it keeps going. Money gets deducted for my paycheck and
Speaker 1: from my checking account every month or every two weeks,
Speaker 1: and it's gone. Like there's something really nice about that
Speaker 1: about not having to actually do much myself, and for me,
Speaker 1: as a slightly lazy dude, I really enjoy that. I
Speaker 1: really like not having to think about it, and I
Speaker 1: think like that's another really good reason for people to
Speaker 1: consider this do it the easy way. I love the
Speaker 1: idea that you can be building wealth over the long
Speaker 1: haul without actually taking much action, right, without actively having
Speaker 1: to think about it, and without it taking up mental space. Yeah,
Speaker 1: this is something we've talked about, man, Like how the
Speaker 1: more responsibility we have, the more limited bandwidth that we have,
Speaker 1: at least me. You know, I'm speaking for myself for sure,
Speaker 1: but I've just got so many other sort of things
Speaker 1: going on to think that like, okay, I also now
Speaker 1: have to keep in mind with the stock markets doing
Speaker 1: and with the financial news outlets are saying, these aren't
Speaker 1: things that I need to be concerned with, you know.
Speaker 1: And and my energy and my efforts in my time
Speaker 1: are much better spent doing other things, especially the things
Speaker 1: that only I can do, like be a father or
Speaker 1: a husband. You know, I'll take care of your kids. Oh,
Speaker 1: I know you will. Yeah, man, I think too. If
Speaker 1: we've been watching CNBC or these financial channels, reading some
Speaker 1: of these financial outlets enough, we start to think that
Speaker 1: they're discernible patterns that we can make out in the
Speaker 1: stock market, and we start to think that we know
Speaker 1: more than we actually do. And timing the market can
Speaker 1: often be an emotional decision that cloud's good judgment. And
Speaker 1: ultimately the fact is slow and steady wins the race
Speaker 1: and it's a way easier and I love that it, dude,
Speaker 1: what's not to like? It's better results and easier. I
Speaker 1: love it all, right, Matt. Back to the beer. Yea again,
Speaker 1: this is Heist Brewery. Have you ever been been up
Speaker 1: to Charlotte to visit any breweries before? I don't know
Speaker 1: what their beer seems like up there. No, they actually
Speaker 1: have a decent spot in the airport where you can
Speaker 1: buy some beers, and so I do remember like snagging
Speaker 1: a can of something last time I was in the
Speaker 1: Charlotte airport, but I've never actually been to Charlotte to
Speaker 1: do some brewery tour. So I was really really excited
Speaker 1: that Kevin from Charlotte ended up sending us some of
Speaker 1: these beers. And man, this Heist Brewing double I p
Speaker 1: A was really really good. Man. It's a bigger beer
Speaker 1: at eight point two percent. It's got that hazy New
Speaker 1: England style to it, so it's got that sort of
Speaker 1: sharp hop character that I love so much. But at
Speaker 1: the same time, it doesn't finish out too bitter because
Speaker 1: it's kind of got that juicy, juicy freshness to it.
Speaker 1: And it's yeah, most definitely my favorite I p A
Speaker 1: style right now, maybe even my favorite beer style at
Speaker 1: all right now. I feel like it's the beer style
Speaker 1: of which I could drink every night the most of Yeah, exactly.
Speaker 1: I think it's probably not my favorite overall beer style
Speaker 1: because on those occasions where I have one of my
Speaker 1: favorite styles that's hard to come by, I love it,
Speaker 1: but I could drink, you know, one of beer like
Speaker 1: this every night and not get tired of it. This
Speaker 1: this one was no exception. It was really good and
Speaker 1: if they were close to me, I would totally add
Speaker 1: it to my weekly lineup of Hazy I PA most
Speaker 1: definitely thanks a lot, Kevin, We appreciate it. Man. Alright, Matt,
Speaker 1: final thoughts on timing the stock market. I just gotta say,
Speaker 1: there's been so many articles because of this raging bull
Speaker 1: market we've had. It's it's historic history. Right now, we're
Speaker 1: in the longest bull market that there has ever been,
Speaker 1: so there's there's a good reason to pay attention to it,
Speaker 1: and everyone's got an opinion. Everyone's got a reason to
Speaker 1: buy or a reason to sell. And that's kind of
Speaker 1: why we felt the need to make this episode, because
Speaker 1: if you're listening to the financial news and the opinions
Speaker 1: of people on TV, then you might decide now it's
Speaker 1: the time either to buy more stock or to sell
Speaker 1: what you've got. And the answer to that is no,
Speaker 1: you shouldn't be timing the stock market. It's a bad
Speaker 1: idea for a lot of reasons. Instead, you want to
Speaker 1: be focusing on dollar costs averaging and the reason for
Speaker 1: this is because you can't predict the market, and so,
Speaker 1: for instance, if the market is high, you might think
Speaker 1: that you should go ahead and sell because you want
Speaker 1: to buy low and sell high. Right. However, what if
Speaker 1: the market continues to rise, you'd been missing out on
Speaker 1: all of that. You can't predict the market. So the
Speaker 1: easy approach is a passive approach, where you set it
Speaker 1: and forget it. Where you make your contributions recurring thing,
Speaker 1: whether it's in your four oh one K, through your
Speaker 1: employer's paycheck every two weeks, or you have a recurring
Speaker 1: deduction from your checking account into an i RA. Either way,
Speaker 1: the passive approach is the best because you'll be dollar
Speaker 1: cost averaging by default, and you won't be tempted to
Speaker 1: be swayed by the financial news and make an emotional
Speaker 1: decision that could impact your long term wealth building in
Speaker 1: a major way. Slow and steady wins the race. That's
Speaker 1: right man, All right, everyone, thanks so much for listening.
Speaker 1: Our home on the web is how to money dot com.
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Speaker 1: Until next time, Best Friends Out, Best Friends Out,