00:00:02 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News, Bloomberg Money. 00:00:12 Speaker 2: This is the Bloomberg Money Podcast. I'm Tom Keen with Scarlet Foo. Join us each week for a smart look if the force is shaping your financial life. On personal finance, on retirement and wealth management. We will explore how people are earning, investing and building wealth. We are live Fridays at noon Eastern on Bloomberg Television. Subscribe to the podcast wherever you listen, and as always on the Bloomberg terminal and the Bloomberg Business app. We start strong. This has become hugely successful for us. Different voices from Bloomberg News with us this morning. Isabelle Lee is with us. We're thrilled that she could join. And louis with us as well here, Thank you so much for joining. Joe Matthew is with us here as he looks to radio and television. Following on here with balance of power as well. To me the arch theme and lessons learned of this week, But for everyone riveted in the nation by affordability, is going to be the turnout on the elections plural to come. Do you have any visibility on the turnout of the midterms in Wilmbert. 00:01:24 Speaker 3: We have conventional wisdom, which is that the energy is with the Democrats. The question is are they running for something or are they simply running against Donald Trump? And that's going to help to animate that turnout as to what in the world it is that he says at the last minute here, because leave and look at Texas, where you saw Democrats turning out ahead of Republicans in primary elections. We're going to be in Florida on Tuesday. That's a little bit less significant in this particular conversation. But where's the price of gas on election day? It's still four years mc gallen. Right now, we're at four fourteen here in New York, and I check that todaycause the going to Garden City. You know Garden City. Sure, it's only eighteen miles from here, and it bears no resemblance to this city. He'll be surrounded by first responders and he's not going to be talking about affordabilities. 00:02:11 Speaker 4: He's talking about cris in. 00:02:13 Speaker 2: Garden City is resounded by people who dowt a BMW and Mercedes in the garage. 00:02:17 Speaker 4: The Republicans can't win with that audience. Ken, Well, so why is he going there? 00:02:21 Speaker 3: Is a big question today because the affordability argument has not been landing. He calls it a democratic hoax. You're looking at the data, Tom, you know better. 00:02:29 Speaker 5: Well, we're looking at the data, and the data showed that retail sales for the month of July fell unexpectedly. Lillly Meyer, you cover specialty retailers for Bloomberg News, and you cover a lot of the big aspirational brands. Does what you see in this retail sales report mesh with what you've been reporting on when it comes to these specific companies. 00:02:47 Speaker 4: Yeah. 00:02:48 Speaker 6: So we reported just a few weeks ago that under Armor saw softness and trends, and we've been seeing, you know, kind of a mixed consumer picture over the last few months. Many of the retailers still are yet to report, so it'll be really interesting to hear if they say a similar thing and are seeing softness. But yes, under Armer said they were seeing softer demand. So I'm curious to see what other retailers will say and if they act. 00:03:11 Speaker 5: It absolutely And I'm wondering as well as we see this K shaped economy, you know, the divide growing ever wider. You've also been reporting on how even when it comes to people's hobbies, those that can afford it are splurging big time. The running culture, for instance, has gone way upscale. 00:03:26 Speaker 6: Yeah, we wrote a story about, you know, high end running spending. So you know, instead of shopping at places that are a little bit more affordable, like your Nike's, your Didas, shoppers are buying three hundred and fifty dollars running shorts. 00:03:39 Speaker 7: Beck. 00:03:39 Speaker 4: The world's different. 00:03:40 Speaker 2: When you were Base college, it was a road trip of twenty five miles to go to Freeport, Maine to. 00:03:45 Speaker 4: Go to ll being drunk at two am in the morning. Well, don't tell me you've never done that. Twenty four Okay, it's like twenty four miles. 00:03:51 Speaker 2: You know, over you go shopping power shopping two am in the morning. That retail day is gone, isn't it. Everybody wants to go fan now. 00:04:00 Speaker 6: Yeah, it's a totally different retail scene. And I think running is a really good example. You know, people are spending wild amounts of money to sweat in these items. And you know, a four hundred and fifty dollars running vest or one hundred and fifty dollars T shirt that has holes in it, So people want idea. 00:04:17 Speaker 4: I knew it was a fourteen. 00:04:20 Speaker 3: That's LSU from Fight Lead Space and a Burton Eye Record from LLB exactly. 00:04:25 Speaker 5: So let me bring you into this conversation because what you've been writing about is as folks are spending three hundred and fifty dollars on Nike Mesh shorts or perhaps higher brands, you have a lot of wealth advisors and influencers using social media to really talk of how the wealthy the rich are saving a lot of money on taxes. And that's something that ordinary people are basically eating up. 00:04:48 Speaker 8: Ordinary people maybe because they want to buy one hundred dollars Lula Limon pants when they go through their yoga classes. 00:04:53 Speaker 1: They want more money in their pockets. 00:04:55 Speaker 4: A tax alpha. 00:04:56 Speaker 8: That's the strategy used for usually reserved for the ultra high networth and hedge funds. Basically think of tax helf as maximizing your after tax return. 00:05:04 Speaker 1: It's not your pre taxes. 00:05:05 Speaker 8: So if someone tells me they're making five hundred thousand dollars a year, I'm like, but how much of that. 00:05:10 Speaker 2: The mind accentag in your is steam coming out of my ears. We're managing money to make losses. 00:05:16 Speaker 1: That's what some people do so. 00:05:17 Speaker 8: Now these strategies are being marketed to retail investors in TikTok and YouTube and on Instagram, and retail investors are eating this up. Some firms are lowering as much as one thousand, as little as one thousand dollars. But you have some people saying that it's not worth it. 00:05:31 Speaker 1: That's million dollars for. 00:05:33 Speaker 4: The Bloomberg money cork in my mouth. 00:05:35 Speaker 8: I know, because you do manufacture losses so that you will have more take home. 00:05:40 Speaker 5: Hey, but you know, this whole strategy ties people ever closer to their wealth advisors because these are not easy strategies. 00:05:46 Speaker 1: These are complicated sts. 00:05:47 Speaker 8: They're very complex strategies. Some include shorting stocks, some include borrowing money because you have to again manufacture the losses. And this is a story done by my great colleagues Charlie Wells, and. 00:05:56 Speaker 1: They need to Tachovia. 00:05:57 Speaker 8: And we talk to some people and some of them are really into it, but some are like, no, it's not the worth it if you don't have a million dollars at. 00:06:03 Speaker 1: The very least, you know. 00:06:04 Speaker 5: I come back to the idea that really is about inflation. For you know, whether you're at the top of the income spectrum or the bottom of the income spectrum. And Joe, we had data this week that showed inflation slowed, but it's still above three percent. We know cost of living is top of mind for voters. I'm not sure where it ranks for the President, who's obviously trying to end the war in Iran and wants a perpetrator for what's going on with the reflecting pool. Is it a priority for the rest of the Republican Party's priority. 00:06:29 Speaker 4: Yeah. 00:06:29 Speaker 3: We're going to talk to Mike Flood later on Main Street Caucus, Nebraska. 00:06:32 Speaker 4: It's the only thing he's worried about. 00:06:34 Speaker 3: He's hoping I'll ask him about the housing bill that they got past the President refused to sign. There's a massive disconnect here, as the President suggests that affordability is a democratic hoax and has previously said that they won on affordability. The part I don't get is after that tape this week, we didn't hear anything from the President. There was no victory lap. There wasn't even a statement from a boring statement from the Communications Office. So you almost get the sense the White House has stopped caring about it. 00:07:02 Speaker 2: I got to ask because it's such news front and center, and that is the war in the Eastern Mediterranean. Joe, you and Kayley are just hardwired into this. Should we expect news this weekend? 00:07:13 Speaker 3: No, I look, I am getting a little bored of the let's wake up Monday and see if we're back at war routine. There's a reluctance to go along into the weekend because you're asking me about this som But the President says we're easing back, We're low keying it, and this looks like it's going to be a long term economic strangle as opposed to a kinetic military. 00:07:33 Speaker 4: Can we rip up the script? We get lucky here? 00:07:35 Speaker 1: Yeah? 00:07:35 Speaker 4: Okay? Joe Matthew of course. 00:07:36 Speaker 2: Foundation with David Brudnoy in Boston, the Fenway Sports Group of Boston announces they're unloading Liverpool in some form. 00:07:44 Speaker 4: Will that money go directly to save the middle relief of the Boston. 00:07:47 Speaker 3: Red Well, I'm sure that you would like to see that. 00:07:50 Speaker 4: I would like to see that. 00:07:51 Speaker 3: I'm not sure David Brudnoy would have done that with the money, though. Can't you do something better in Massachusetts at the bottom of the k. 00:07:57 Speaker 4: We'll have to see it. 00:07:57 Speaker 2: It's a sale Bezos picks up of British soccer. 00:08:01 Speaker 1: Yeap Bezus has another brands. 00:08:03 Speaker 4: John Pharaoh to make me smarter. I have no idea what I'm talking about here? Now, where's the dog coss a Fenway Park? Right now? I don't know. Six dollars and fifty cents? What's a hot dog costs at Costco? 00:08:11 Speaker 1: Lily, it's a good question. 00:08:13 Speaker 4: It's like a dollar. 00:08:17 Speaker 1: This is I wonder. 00:08:18 Speaker 2: Thank you Joe Matthew of course, Lily Myer as well, and Isabelle also writing up an important article on TikTok. 00:08:25 Speaker 4: Coming up an important conversation. Mike Wilson. You know him for his acuity at Morgan Stanley buch More. 00:08:31 Speaker 2: Mike Wilson here on the Path to the proper retirement. 00:08:39 Speaker 1: Social's TikTok. It's also Instagram. It was also YouTube. 00:08:43 Speaker 4: Did you ever go from Bates to Freeport? Mean you did? 00:08:56 Speaker 2: Bloomberg money from New York City Sconland fou in tone, he thinks so much for being with us today. 00:09:03 Speaker 4: I mean, this is what it's about, folks. 00:09:05 Speaker 2: We get somebody in really really quite good scarlet and they write a seven page, really really detailed paper. But what's it mean about my non retirement. 00:09:15 Speaker 5: What does it mean for the stocks that do you have in your portfolio? For we get the fixed income or. 00:09:18 Speaker 2: The bitcoin in my portfolio, there's none in mycoin. I'm in triple lovers doll cash. That's a different story. We are honored to bring you Mike Wilson, Pride of University of Michigan, Chief US Equity Strategists, an investment officer of a small shop, Morgan Stanley this morning, how you doing? 00:09:35 Speaker 4: How's your year? Ben? Doing great? Ben? 00:09:38 Speaker 9: It's a bull market, you know, summer has been pretty good to me. And do you feel like you do you feel like the market? You've got the market right if you underestimated its durability. Now, I think we probably were the first one to talk about this earnings recovery, and even we underestimate the strength of it. So yes, we did underestimate the power of it, but directly. 00:09:58 Speaker 4: I think we were right on that. 00:09:59 Speaker 9: I think where we've been surprised is probably the durability of the AI campax and just how much that has accelerated and how much, quite frankly, how much the market has been willing to absorb on the issuance. 00:10:11 Speaker 4: The reason credit next. 00:10:12 Speaker 2: Well, the reason you've been good at that is, Jim Carron, it's got nothing to do with the equity side of the shot. Bring up the chart right now. This is the emotion many of you have forgotten this stocks. You can go down in stocks, it's a shot. Now this chart ends in twenty twenty two. But there's XPIS. It's wonderful, great, wonderful, COVID and all that. And then there's a big rollover in twenty twenty one twenty two. Where are you brave enough to catch the falling knife when the market rolls over like that and my personal finance is troubled, How do I get back into the market? 00:10:44 Speaker 4: How with the margin do you buy when you see the sweat of that chart. 00:10:48 Speaker 9: Well, the really challenging thing of twenty twenty two, as you know for retirees, was that stocks and bonds went down for the first time in really our lifetime, and that so there was no head So even though the decline inequities wasn't as severe as it was an eight or in one or two, your sixty forty portfolio was down the same. So that was a change, and that I think that was one of the things that made investors apprehensive to step in. It was like, holy smokes, I'm getting hit on both my defensive stuff and my offensive part of my portfolio. 00:11:19 Speaker 4: So I think people froze up. Now. 00:11:21 Speaker 9: Our job is to remind people that there's value at some point, and I would say we navigated the twenty twenty one top extremely well. In the twenty two downturn, we probably overstayed our welcome a bit in twenty three and got back on board in twenty four under the story that we're telling now. But like I mean, as a as a person who has their money in the market for retirement or long term investor, you really should avoid being shaken out on both the top and the bottom. So in the words, chasing stocks is as damaging as selling stocks at the bottom in my view. So that's why we like dollar cost averaging. So we do like still like diversified portfolios. Twenty two is the challenge on that it ended up working out for folks who stay fully invested. 00:12:01 Speaker 5: And for those who stay fully invested, their faith in equities has been restored, maybe for bonds not as much, given that the performance has not been as great. Is there a way to get all your defense of your bond like exposure within equities. I've heard some people talk about the idea of swearing off fixed income completely and perhaps owning insurance companies as proxies for bonds. You get the price appreciation, you get the dividend. It's kind of like a win win. 00:12:24 Speaker 4: Yeah. 00:12:24 Speaker 9: Well, what I would say is that these asset classes are now more closely correlated, so they're just not going to offer that natural diversification benefit that they have historically. 00:12:32 Speaker 4: So that means you need to do other things. 00:12:34 Speaker 9: So there are other types of investments you were mentioning earlier, gold or maybe even bitcoin or some of these things that can defend against inflation. So we've been a very big advocate of gold, not so much as a yielding instrument, but as a defensive asset. That doesn't mean you abandon fixed income, but it does mean you reduce your duration. So there are things you can do within your fixed income portfolio to make it more valuable. It still provides some diversification benefit without taking too much risk on the duration side. 00:12:59 Speaker 5: So when you talking about gold, gold was acting like a meme stock at the beginning of this year. I mean, was that just kind of a unique one off period or can we return to things like that? 00:13:07 Speaker 9: Well, I would say that gold has been in a bowl market for twenty five years. 00:13:11 Speaker 4: I mean people kind of woke up to this. 00:13:12 Speaker 9: Idea more recently at the beginning of the year, and this probably is a good place to kind of, you know, kind of gravitate to you for the rest of the discussion. For this year, I would say, we've had basically one big commodity rotation, so coming into this year. If you remember, at the end of last year, the FED started printing money again right with this reserve management program, and that led directly to gold and. 00:13:31 Speaker 4: Silver stacks taking off. 00:13:33 Speaker 9: Then we went into rare earths and metal stocks, then energy stocks, and then semiconductors. 00:13:38 Speaker 4: Now where do all those have in common? 00:13:40 Speaker 9: They're all commodities, Okay, So it's kind of interesting to me that that's what's been going on, and that may be exactly. 00:13:45 Speaker 4: What people are doing. 00:13:46 Speaker 9: They're looking for things that are not stocks, but a commodity, like to offset the risk to have in their portfolio with equity like risk. 00:13:53 Speaker 2: Michigan, there's Stephen Ross and there is this idea of arbitrage pricing theory. 00:14:00 Speaker 4: I want you to bring it over to somebody's. 00:14:01 Speaker 2: Retirement where we talk about factor based investing, discuss momentum and the other factors there that lead to successful personal finance. 00:14:11 Speaker 9: You know, well, first of all, we have to understand that people, you know, the retail vestor gets a bad rap, and the retail investor, I think is navigated the last fifteen years extremely well. Is a good lead into your question, which is in the GFC. When the FED started printing money the first time, all the smart people were like, oh, this is a disaster. It's going to be inflationary. And what did the retail person do. They bought bonds because like, we don't see inflation and by the way, this is just filling in holes. It's a different type of que Then when COVID happened, they sold their bonds and they bought stocks because they realized this, actually, this kind of qiui where you actually print money and send checks out to people is extremely inflationary. So I would say the average retail person has essentially the vers has done a really good job of diversifying their portfolio away from things that are anti fragile to inflation. And so that's why we've been doing this same thing and our recommendations, whether it's goal, whether it's alternative investments, things that can provide balance to the portfolio without having pure equity like risk. 00:15:08 Speaker 5: We talked a little bit about how when you look for some defensive qualities, perhaps you go into gold, for instance, or look at other alternatives. Is that how you diversify your portfolio? 00:15:18 Speaker 1: Are you going into gold? 00:15:20 Speaker 5: What do you do to make sure that you don't You're not overly loaded up on equities? 00:15:24 Speaker 4: Yeah, well, I'm. 00:15:25 Speaker 9: Probably not a great example. I'm much more tactical than I would recommend most individual investors be like I'll trade in it out, I'll even short things as my defensive heads. But that's not practical for most people. Okay, So I would recommend that we recommend for most retail investors or evenstitutional investors in downmans is you have to have a plan, Okay. And then what people don't do a good job of is rebalancing. So when I not worry about so much, but I think what I see out there right now is a lot of unbalanced portfolios, not just in equities, but in certain equities. 00:15:55 Speaker 4: Okay, and as you tilted towards something, yeah, there's just you've got. 00:15:58 Speaker 9: Too much exposure to single assets because nobody wants to pay taxes. 00:16:02 Speaker 4: And I hear this all the time. 00:16:03 Speaker 2: What do you say to the people that I'm afraid of Mike Wilson's world. I'm loaded to the boat in cash. Should they be looking at two and three year Jim Karen like money? 00:16:12 Speaker 9: Well, look, I mean everybody should have some cash, and you're getting paid for your cash now. The biggest change the sense really COVID quite frankly, is that you're getting a positive real return now in your fixed income. So I'm not as barish on fixed income nearly as we were ten years ago. I mean, particularly for things that are three four years in, you're getting a real return that's quite respectable now. Everybody has their own I like, everybody has their own risk tolerance. Okay, some people like to hold thirty percent cash, some people like to hold five percent cash, whatever. 00:16:39 Speaker 4: That number is. 00:16:40 Speaker 9: But you're getting paid for it now. So cash is a good asset. Mid tier sort of duration bonds is a good asset. Infrastructure type bonds is a good defensive asset. 00:16:49 Speaker 4: Certain equities are. 00:16:50 Speaker 9: A good defensive asset, whether it be utilities or maybe staples and things like that. So there are many things you can do from a stylistic standpoint that you can protect yourself. 00:16:58 Speaker 4: Once again, when I think. 00:16:59 Speaker 9: People have loaded up on now is you know, large camp grossdocks, and those have been great, and that's why they want to continue to own those. 00:17:05 Speaker 4: But just understand it. 00:17:07 Speaker 9: You're unbalanced, Okay, so you better make sure you're going to be right for the next three, four or five years. 00:17:11 Speaker 5: This week, one of our stories that we feature is the American dream of owning a home. It is alive, at least in Grand Rapids, Michigan. Almost half of all new homeowners in Kent County are younger than thirty five, because the area is a high concentration of affordable homes and plentiful job opportunities. Paulina Caucro has been following the story and she joins us now, so why is Grand Rapids kind of bucking this trend, the national trend of first time homeownership being out of reach for so many young people. 00:17:38 Speaker 1: Yeah. 00:17:39 Speaker 10: I think what's really unique about Kent County, Michigan, is that there's a relatively favorable ratio between home prices and income. So nearly half of its homeowners in twenty twenty five, where thirty five years or younger. And that's pretty amazing if you consider that the average first time home buyer today is forty years old across the US, and that's the old and data going back to nineteen eighty one. So it helps that Grand Rapids, you know, has a really diversified economy. 00:18:06 Speaker 1: Its population has. 00:18:07 Speaker 10: Been growing, and there's a lot of opportunities for young workers who are earning enough to buy a home. You know, while across the US, I would say, you know, workers under thirty five, that price of a home is three point six times their income, but it's much in Grand Rapids, it's too much lower than that. 00:18:27 Speaker 5: Okay, it's much lower than that, but you wonder how it's going to stay that way because affordability is already eroding. You look at the prices at Grand Rapids and it's up a third and five years. So could you make the argument that Grand Rapids is just a few years behind everyone else every other city. 00:18:42 Speaker 10: Yeah, there's definitely a lot of pressure on the market. We've seen prices go up about thirty four percent in five years, as you mentioned, and inventory is still roughly thirty percent below pre pandemic levels, and this is an issue we're dealing with across the US housing supply shortage. And actually what we're seeing in Grand Rapids is they're building homes at a slower pace, at five point three percent compared to seven percent. 00:19:05 Speaker 2: Now, what are people doing in Grand Rampids? I mean, what the you know, I think of nineteen sixty three fruit loops, fooit loops were pretty much like. 00:19:15 Speaker 4: And all that. 00:19:15 Speaker 2: Yeah, in Grand Rapids and Battle Creek and all that. What are they doing in Grand Rapids in this boom? 00:19:23 Speaker 1: We've seen that the wages have you know, kept up. 00:19:26 Speaker 10: It's like thirteen percent higher than the rest of the state. So I think that, you know, being able to keep home prices relatively low while incomes are growing and there's a relatively young population has helped people be able to afford buying homes. It's not just about having cheap homes, it's having the economic opportunities to afford them as well. 00:19:44 Speaker 5: All right, Paulina Cochero, thank you so much. She's a member of our Bloomberg Money team covering stories that affect your money. 00:19:51 Speaker 2: I think it is great right now, this is important. Kristin Bitterly holds court full time at the City Group shop in wealth management how to global wealth at work, it really really focused on retirement. I look at ARISUS seventy four as a failure. There's a huge percentage of America that's not getting retirement done. What's the biggest thing they could do to solve that other than just save more money? 00:20:16 Speaker 11: Well, I would say there's two things. One, we have to realize that we're living longer. So when you look at average life expectancy, it is increasing. The population above eighty is expected to triple by twenty thirty, and the population above sixty five is expected to double. So people are living longer, which means your money has to work for you longer. So the second kind of I would say error that a lot of people make is not investing early on so saving. 00:20:40 Speaker 1: We do see. 00:20:41 Speaker 11: Savings rates that they've increased if you're not investing that money. And I heard Mike Wilson earlier today talk about the fact that yes, there is an attractive yield on cash and short dration fixed income. But when you're thinking about what is my life expectancy, how long does that money have to work for me If I don't invest I'm going to be behind. 00:21:00 Speaker 5: Just investing, it's also taking advantage of tax efficient vehicles and fee efficient vehicles. Like people think investing means just putting it into an account or putting into your four to one k and kind of forgetting. 00:21:09 Speaker 11: Absolutely absolutely so, I would say the first thing about being too overweight cash, we need to make sure that we're putting that to work. And one in that right amount in cash is ten percent, fifteen percent, We've seen those slightly elevated. 00:21:19 Speaker 1: It shouldn't be thirty percent. But you're absolutely right. 00:21:22 Speaker 11: Taking advantage of any type of tax advantaged account or tax deferred account. Making sure that your well structured in the right way is also critically important. And then also there's there's more tax efficient investments. So if you're invested in fixed income and you're a US investor, look to the muni market, look to some of these areas where your after tax and after fee returns are going to be more profitable for you. 00:21:44 Speaker 5: There's some people who take this to the extreme right. There's the fire movement of financial dependence retire early people. 00:21:51 Speaker 1: Who see it. 00:21:52 Speaker 4: I'm out of that movement. Work. 00:21:55 Speaker 1: I think you're a. 00:21:55 Speaker 5: Little bit you and I are pass our prime. When it comes to the. 00:21:57 Speaker 4: Cask it's right, surveillance caskets right over. 00:22:00 Speaker 1: Yes, yes, that's right. 00:22:01 Speaker 5: I mean the idea is to be able to retire in your thirties, forties and fifties and live your best life. But I'm sure there's traps that people fall into when they pursue fire at all costs. 00:22:11 Speaker 2: Yeah. 00:22:11 Speaker 11: I would also say though, the investors that we work with and the clients we work with, they are in specialized industry. 00:22:17 Speaker 1: So we work with lawyers, we work. 00:22:19 Speaker 11: With professional services, asset managers, pre ipopost Ipo companies. A lot of our clients they like to work like this is part of like they enjoy their profession, their ambitious and so what we see is actually something different. They want to work longer and even in retirement. There's a great organization that's called Luster where it's founded by very successful women. And what they do is they say like this is actually like I'm going to live my best life in retirement. I'm not fading into the background. I'm not giving up on my intellect and professional ambitions. I may do something different my time, but I'm still very active and very business. 00:22:53 Speaker 4: Well, when I see day after day. 00:22:54 Speaker 2: This is a beautiful quote from Citigroup and Kristens bring it up, and it's about the inertial force. 00:23:00 Speaker 4: It's out there in our bad behavior. 00:23:02 Speaker 2: I'm as guilty as this as anyone leaving excess capital. Idling cash, hoarding cash far beyond the threshold seriously penalizes long term growth inflation. It silently erodes a purchasing power of uninvested capital. 00:23:19 Speaker 4: Why do we do the start with it? I mean, you're expert at this. 00:23:22 Speaker 2: Why do what's the why why we sit with cash up to hireables? 00:23:27 Speaker 11: First thing is we don't teach people to invest. So when you think of our education in the US, yeah, you may be a business major and maybe you have some type of coursework in college, but many people grow they could go to the best universities in the world and not actually understand financial planning, a state planning, and how to invest. So part of it is like we are not educated to do that. Loss of version is also a very very powerful heuristic bias where people tend to think that it's safe. Cash feels safe. And the last thing that I would say is people are busy. The inertial part is actually very real. So Mike talked about this that you're kind of you could have the inappropriate allocation because you don't understand the outside kind of positions in your portfolio. You have to have a more proactive to the challenge. 00:24:13 Speaker 2: Show with Mike, which we could also show with Kristen. Is there issue here, Scarlet, we're addicted to a bull market or we don't have to think? 00:24:20 Speaker 1: Right to me, that's a lot of it, right. 00:24:22 Speaker 4: I hope there's the sweat with the Vicks of fourteen. The sweat's not out there, so. 00:24:26 Speaker 5: I guess the question is how do you go de risking your portfolio? Mike talked about, you know, having too much concentration in the growthy parts of the market and it's okay to actually take some profit and you know put it aside and sometimes right the uncle Sam, even though everyone's scared to death of doing it, how do you go about de risking your portfolio day in and day out because it's something people don't want to do. They're comfortable with seeing that number grow. 00:24:49 Speaker 11: Yeah, So this inertial concept that's actually on two different fronts. It's one on being too overweight cash. So that's then an element of how do I actually put capital to work, and I think that's easier. Actually, if you're two overweight cash, the idea that you can leg in you can use dollar cost averaging. I think that's probably an easier psychological component on the front of okay, I need to rebalance, and potentially that. 00:25:10 Speaker 1: Does have tax impacts. 00:25:12 Speaker 11: One of the things that I would say is if tax is a major deterrent, that should not be the major turrant. However, there are hedging strategies. There are a number of different strategies that you can employ where you creick off some of the downside risk without triggering a taxable event. So I would encourage people who have really large embedded gains to speak to their advisor about that. 00:25:30 Speaker 2: And now we go over few tread Kristin bitterly. One of the gimmicks is option writing. I bring in an income to get an enhanced income and I give up some of the future capital gain. 00:25:42 Speaker 4: Is it a sound strategy option overwriting? 00:25:45 Speaker 1: Absolutely? 00:25:46 Speaker 11: Look, I grew up in derivatives, so I probably have a bias in the options market. I think options are a double edged sort when you use them for a leverage, when you don't understand what your max downside max upside is and the risk return profile. Clearly, some people can get on the wrong side of that trade. If you are long in equity position and you think it's going to be relatively sideways, you don't want to sell out of it because you like the company, and you're finding ways of a more tax efficient augmented yield by selling listed options or covered calls against it. That can be a way to enhance your income stay in the stock not trigger. 00:26:18 Speaker 1: A taxable gain. 00:26:19 Speaker 5: You mentioned how people are not educated on investing. Are we also not educated on debt in the role that debt plays because you've pointed out that the way people look at debt is they're either scared to death of it or they have too much in it. They're carrying high interest personal loans, and there's never any in between. 00:26:36 Speaker 11: It's so interesting because I think this is a very cultural component as to how you were raised that what you see is there are many people who were taught growing up like debt is bad, that any type of debt is bad. Clearly, there are some types of debt that are really high interest bearing debt that are your credit card, for example. The idea that you're very disciplined about that because it's a very high interest rate. However, we were just talking about mortgages earlier. If you're someone who locked in a thirty year fixed mortgage at maybe a three percent two percent level, that is probably one of the that's kind of the trade of the century if you think about it in terms of very cheap financing. That is also there's a tax emicion element to it that is intelligent leverage, intelligent net that helps you actually achieve your goals. 00:27:18 Speaker 2: Thank you so much for coming in today. Thanks for having me again soon like before the year end. Krista Biddley, thank you so much. With City Wealth, had a global wealth at work. I noticed a thirty year mortgage six point seven seven percent. 00:27:30 Speaker 1: You keep high to seven percent. 00:27:32 Speaker 2: Well, I'm wondering how the world stops at seven percent, but there it is. I mean, it's a it's a big statistic. 00:27:37 Speaker 4: What fun last night Field of Dreams Netflix at the ball out of the park over. 00:27:43 Speaker 2: The cornfield last night, we thought we'd do a baseball moment for you coming up. 00:27:48 Speaker 4: Scarlett has a chiller book. It's Bloomberg Money Good after do. 00:27:54 Speaker 1: I like how you stress the work clip that's going to come up. 00:27:58 Speaker 4: That's magic. 00:27:59 Speaker 5: I remember the movie Field of Dreams about Field of Dreams Truelisto Jackson. 00:28:13 Speaker 2: Spectacular was one of the rarest things where the movie was better than the book. 00:28:16 Speaker 5: Kevin Costner starring Kevin Costner, nineteen eighty nine. Last night there was a Field of Dreams game that it took place in Iowa. 00:28:23 Speaker 4: Rying full disclosure tears the whole thing. 00:28:25 Speaker 5: Twins versus Phillies on Netflix. This was It had been a couple of years since the last one, but both teams were throwback uniforms, which I love. 00:28:34 Speaker 2: Yeah, and the corn was not being hied. By the fourth of July. It was spectacular. The Phillies and Twins delivered. Major League Baseball delivered and all that. We thought we'd just take a look at this across the iconic movie The Hall of Famers coming out, Mike Schmidt there from. 00:28:48 Speaker 1: The Phillies until the very end. 00:28:49 Speaker 2: No, I did not watch the whole thing because I have to get up and do a date, you know, the early morning gig. 00:28:53 Speaker 1: But I notice that one Roger Clemmoran is there. 00:28:56 Speaker 2: Roger clements at the end was playing catch with his son, who's on the Twins. You know. The whole thing was just a huge, huge success. To say, at the least we wanted over to books. Here's the book for those younger who are like Field of Dreams. I don't get it. It's fossil TV. Shoeless Joe Consola did it and I'm sorry. This was the first of the books. WP cansella shoeless Joe. It's different than the movie. The movie is better than the book, but the book is a rite of passage for anybody that wants to understand the twentieth century in America. We have a producer from New Zealand grew up on a sheep farm, doesn't get it. 00:29:30 Speaker 4: Totally doesn't understand Field of Dreams. 00:29:32 Speaker 1: It's all now. 00:29:33 Speaker 5: The movie has Kevin Cosser, has Ray Liota, a sleepless Joe killed it. 00:29:36 Speaker 4: Rale, Burt Lancaster. 00:29:39 Speaker 2: I think his last movie it was just to watch Bert Lancaster up in Minnesota as the Doctor's Worth. 00:29:44 Speaker 4: It tell us about the Bronx is burning well. 00:29:46 Speaker 5: My book is also about baseball, but it's the opposite of gauzy and feel good. 00:29:50 Speaker 1: It's gritty and chaotic. 00:29:52 Speaker 5: It's about the nineteen seventy seven New York Yankees when Billy Martin was feuding with George Steinbetter, Reggie Jackson was dominating. And the title first of what Howard Kosel said on air after a fire broke out in a school near Yankee Stadium. There it is ladies and gentlemen, the Bronx is burning. Remember in nineteen seventy seven, summer of Son of Sam was on the loose. Yeah, you had a blackout. The looting that happened across New York City. Ed Kach versus Mario Cuomo fighting for the mayoral. 00:30:21 Speaker 2: Talked as a malaise, and of course in New York City it was front and center. And you think of Mayor Giuliani and those following that pulled us out of it. But your book is brilliant of attention there from another time, away from the magic and nostalgia field. 00:30:35 Speaker 5: It's gritty, it's New York, it's history, it's spaceball, it's all that, and it's I must read. All right, So let's talk about sports, because we're going to stay on this. Then even into personal finance. 00:30:45 Speaker 2: My people briefly, we don't talk to each other before the show, and my people briefed what they learned from Scarlett's people. 00:30:52 Speaker 4: This is upsetting. 00:30:53 Speaker 1: It is upsetting. 00:30:53 Speaker 5: And this is a story that Bloomberg News wrote this week on our money platform. It's centered on how sports betting is entering wealth management plans financial planning for gen Zers. Sujasong joins us now to discuss. So the idea here is that certain members of the gen Z cohort see sports betting as a legitimate alternative to investing or see it as a form of investing. 00:31:15 Speaker 7: Yes, exactly, So one in four gen Z investors actually consider sports betting as part of their deliberate, ongoing component of their long term financial plans. And I think this really is related to how fast sports betting industry has grown, and along with it, it's the prediction market's rapid expansion where companies kind of brand themselves as investing platforms, and this is changing how gen Z and younger Americans are thinking about wealth building and financial planning. 00:31:43 Speaker 5: Now, some of the people who do this say that they approach sports betting with kind of the dispassionate eye that they would look at investing, which I find really fascinating. Like they say they don't get let emotion get caught up in any of this. 00:31:55 Speaker 7: Yeah, that's what they say. And we talked to some long term sports betters actually, and they said they've gotten increasingly analytical in their approaches. They would do research on sports teams and then they would like maybe section off a part of their money to just put in sports betting. One person actually won some twenty five hundred this year and was able to fund their entire vacation to a bet shot. 00:32:19 Speaker 4: Okay. 00:32:20 Speaker 2: I just went to you know, I went to AI and all that to look at this. How many people make money at Keelshiet, how many people make money at fan Duel on the left field wall out at Field of Dreams last night. 00:32:32 Speaker 7: That's a really good question. Is actually, over the long term, consistent profitters off these platforms are the top maybe one or two five percent. 00:32:41 Speaker 4: Okay, so let's be charitables. Five percent. 00:32:42 Speaker 2: You're telling me ninety five percent of people lose money and we're calling it a financial plan of our personal finance. 00:32:49 Speaker 1: Over the long term. 00:32:50 Speaker 7: Yes, they are not profitable ninety five percent, But I think it really is has to. 00:32:54 Speaker 4: Do what do you laughing at? 00:32:56 Speaker 1: For us? 00:32:57 Speaker 4: I'm the fossil here for a certain. 00:32:59 Speaker 5: Covert, they're thinking, you know what, I'm gonna be the one that beats the odds, and you know you got. 00:33:04 Speaker 1: To go big. 00:33:05 Speaker 4: Come on last night, I mean, what'd you think? Did you watch Field of Dreams last night? The baseball game? Are you telling me? It's like it's like the Netflix ratings will be huge. 00:33:14 Speaker 2: The Hall of Famers are coming out of the cornfield shoeless joke came out of there's a fan duel. 00:33:19 Speaker 4: Sign on the left field sign. I mean, that's what. It's your fault. 00:33:24 Speaker 5: It's a dose of twenty twenty six on your Field of Dreams. Tom can be helped. 00:33:28 Speaker 4: We'll have to see. 00:33:30 Speaker 1: All right. Well, so John, thank you so much. 00:33:31 Speaker 4: Too upset to talk. 00:33:32 Speaker 5: You really really appreciate it. It's it's fascinating this idea. Because we talk about the financial nihilism among younger people. 00:33:38 Speaker 1: This is kind of a an offshoot of that. 00:33:41 Speaker 4: I strongly agree money what are you crying? 00:33:50 Speaker 1: Why are you crying? 00:33:50 Speaker 4: They're going to college? Said, it's just terrible. Here, it's the door. What your hurry joining us? 00:33:58 Speaker 5: Lisa? 00:33:59 Speaker 4: Are you going to go to college? 00:34:01 Speaker 2: No? 00:34:02 Speaker 1: I have like two weeks. 00:34:03 Speaker 12: I'm at my It's going to be difficult, but one thing I don't have to worry about and this is what a lot of parents are going to be spending their money on this weekend is Southern sorority Rush. Tom. I know you're familiar with mid Day. It is huge down there. Okay, So this is for the past week. Girls have gone to school early. These are all girls who want to go to these Southern schools, Okay. 00:34:24 Speaker 1: And they've been on Instagram and TikTok. 00:34:25 Speaker 12: And all the things picking out which organization they want to go to. And so they've been going through the interview process, they've been going to the events. They've been wearing the dresses, the makeup, just to make sure that they get into the sorority of their choice. And this week and they're going to find out if they do or not. But the money behind this is because there are parents out there who are paying get this sorority rush consultants in order for their. 00:34:49 Speaker 5: Kids to get into the have they consult with them. They're not like they're not outreaches for these organizations themselves. 00:34:57 Speaker 12: They're kind of out and He's like some of them are women who did pledge and so they're giving advice. So they're charging these parents as much to get the inside scoop anywhere from three thousand. 00:35:05 Speaker 1: To twelve thousand dollars. 00:35:07 Speaker 12: What's something to go over to go over their resumes, to get their headshots done, to go through their social media feed, to make sure they talk correctly. 00:35:14 Speaker 1: Where the right thing say the right thing? 00:35:16 Speaker 4: Girl talk? Okay? 00:35:18 Speaker 2: Ten twenty five fifteenth Street, Boulder, the Tridel House. The way you got ready to rush is you got a six pack of three two cores beer. 00:35:26 Speaker 4: I think really the rich girls had a quarter keg out front. Of course that's what you did. 00:35:31 Speaker 1: That that's not but it's a use. 00:35:38 Speaker 12: And what's make this story bigger is because it's finally becoming big in the Northeast, in the Midwest, in the West where it wasn't popular before. So now you have all these outsiders coming into this little community. 00:35:48 Speaker 4: Does any Cornell did they do this? 00:35:51 Speaker 5: I mean, I don't know about sorority rush consultants. I don't know the amount of money that people are spending. But that's you know, when I went to school, that was ancient history. 00:35:58 Speaker 2: Well to me, the number one thing here is a dad. Is anybody going to school? Is anybody taking so. 00:36:06 Speaker 5: Wait, wait, but this is why this is happening. Before the semester begins. Lisa made that clear. People are going, oh. 00:36:11 Speaker 4: They have the first day of school, yes. 00:36:13 Speaker 12: Yes, and then they have to pay the dues after they pay the consultants. So we have any the does it can be anywhere from five thousand semester to ten thousand semester, depending on if you want the housing and the room. 00:36:22 Speaker 1: And board of them. Incredible. This is the story on the Bloomberg terminal. By the story in Bloomberg. 00:36:25 Speaker 12: Yes, you have to check it out. It was fascinating going through. 00:36:29 Speaker 5: And I'm telling you there's a lot on social media about this. 00:36:32 Speaker 12: There is a ton of it. But thankfully, yes, my daughter's not involved in me. 00:36:35 Speaker 5: Okay, well, let's let's get back to the calendar events. 00:36:37 Speaker 1: What's coming up next week? 00:36:38 Speaker 5: Because we've been talking about the consumer, they say to the consumer, retail sales number came out today which were disappointing. We get more of an inside read on retail companies, right, Yes. 00:36:47 Speaker 12: A lot of retail companies. 00:36:48 Speaker 1: So let's go through it. 00:36:49 Speaker 12: We'll start it with on Tuesday, you have home Depot, that's a big one. 00:36:52 Speaker 7: Right. 00:36:52 Speaker 12: Then you get to Wednesday, Sday, Lauder, Target, Lows, TJX, and then we end off on Thursday with Walmart and Ross stores too, so a big week for retail earnings. 00:37:02 Speaker 1: Next week. 00:37:02 Speaker 2: This is the Bloomberg Money Podcast, bringing you a smart look at the forces shaping your financial life. 00:37:10 Speaker 4: I'm Tom Keen with Scarlet Food. 00:37:12 Speaker 2: You can watch the show live on Bloomberg TV every Friday at noon Wall Street Time. Subscribe to the podcast on Apple, Spotify, or wherever you listen, and is always on the Bloomberg Terminal and the Bloomberg Business app.