1 00:00:05,720 --> 00:00:06,440 Speaker 1: What can I Chillians. 2 00:00:06,440 --> 00:00:09,119 Speaker 2: I'm Joel Webber and I'm Eric Belchunas. 3 00:00:11,039 --> 00:00:14,000 Speaker 3: Eric a friend of the show who's also on Bloomberg 4 00:00:14,120 --> 00:00:17,200 Speaker 3: Radio and does podcasts here like Masters in Business. That's 5 00:00:17,239 --> 00:00:19,680 Speaker 3: a new book. His name is Barry Whittholts and the 6 00:00:19,720 --> 00:00:21,680 Speaker 3: book is How Not to Invest. 7 00:00:23,000 --> 00:00:23,280 Speaker 4: Yeah. 8 00:00:23,360 --> 00:00:26,560 Speaker 5: No, he's one of a kind. He was on this show, 9 00:00:27,160 --> 00:00:28,200 Speaker 5: I don't know, a couple of years ago. 10 00:00:28,320 --> 00:00:33,080 Speaker 3: We've had him on the podcast at least twice, but 11 00:00:33,159 --> 00:00:33,479 Speaker 3: he was. 12 00:00:33,400 --> 00:00:34,880 Speaker 5: The only one where we had to do a double 13 00:00:34,960 --> 00:00:37,800 Speaker 5: episode because it was so long. Yeah, and so use 14 00:00:37,840 --> 00:00:41,560 Speaker 5: your disillusion, use your dissolution one and two, and this 15 00:00:42,040 --> 00:00:44,519 Speaker 5: time we definitely got a like you could see, we 16 00:00:44,560 --> 00:00:47,760 Speaker 5: could have gone on and on and on. He's so interesting. 17 00:00:47,840 --> 00:00:50,440 Speaker 5: This book is chock full. It's basically called How Not 18 00:00:50,560 --> 00:00:53,840 Speaker 5: to Invest. I read it and found a bunch of 19 00:00:53,880 --> 00:00:58,160 Speaker 5: passages that were really interesting, some funny lot of Malcolm 20 00:00:58,200 --> 00:01:00,840 Speaker 5: Gladwellian kind of little factors. 21 00:01:00,240 --> 00:01:02,360 Speaker 4: In there that are metaphors for the market. 22 00:01:03,160 --> 00:01:04,720 Speaker 2: Just a lot to unpack and chew on. 23 00:01:05,120 --> 00:01:09,280 Speaker 3: Also, we're going to disclose that this interview was recent 24 00:01:10,240 --> 00:01:12,920 Speaker 3: and there have been a lot of things happening in 25 00:01:13,240 --> 00:01:17,399 Speaker 3: markets of late What's interesting about Barry, though, is he's 26 00:01:17,400 --> 00:01:19,000 Speaker 3: seen a lot of stuff, so he can kind of 27 00:01:19,000 --> 00:01:21,200 Speaker 3: go a little bit more high altitude. So this is 28 00:01:21,560 --> 00:01:25,360 Speaker 3: actually maybe the perfect year to be talking about a 29 00:01:25,360 --> 00:01:28,319 Speaker 3: book like this. Joining us on this episode Barry Ritholtz, 30 00:01:28,680 --> 00:01:34,120 Speaker 3: co founder, chairman and chief investment officer of Ritholt's Wealth Management, 31 00:01:35,920 --> 00:01:38,959 Speaker 3: this time on Trillions, How Not to Invest? 32 00:01:40,760 --> 00:01:42,160 Speaker 1: Berry, welcome back to Trillions. 33 00:01:42,319 --> 00:01:43,399 Speaker 4: Well, thanks for having me. 34 00:01:43,600 --> 00:01:45,320 Speaker 1: So this book is not small. 35 00:01:45,640 --> 00:01:48,760 Speaker 3: I think it's like approximately it's more than an inch 36 00:01:48,760 --> 00:01:49,440 Speaker 3: maybe less than. 37 00:01:49,320 --> 00:01:49,960 Speaker 1: Two inches thick. 38 00:01:50,280 --> 00:01:55,440 Speaker 4: It's deceptive. There's a few one hundred end notes, and 39 00:01:55,720 --> 00:01:57,960 Speaker 4: the chapters are really short. They're page and a half 40 00:01:58,000 --> 00:02:01,160 Speaker 4: two pages, three pages, so there's a lot a blank space. 41 00:02:01,600 --> 00:02:04,120 Speaker 4: I had to argue with the publisher not to start 42 00:02:04,160 --> 00:02:07,840 Speaker 4: each chapter in the middle. I made them started at 43 00:02:07,880 --> 00:02:10,560 Speaker 4: the top of the page. Otherwise it'd be like, you know, 44 00:02:10,680 --> 00:02:13,799 Speaker 4: Barbarer Streisan's photobiography being nine hundred and fifty pages long. 45 00:02:13,919 --> 00:02:16,320 Speaker 4: So not your first book. Not my first book. The 46 00:02:16,400 --> 00:02:20,120 Speaker 4: last one was Bailout Nation, was fifteen years. I crank 47 00:02:20,160 --> 00:02:24,000 Speaker 4: them out, every fifth sequel to this twenty four. There's 48 00:02:24,000 --> 00:02:24,839 Speaker 4: no stopping that time. 49 00:02:24,840 --> 00:02:27,920 Speaker 1: I possessed you to write How Not to Invest. 50 00:02:28,240 --> 00:02:30,840 Speaker 4: So you know, it has been a while since the 51 00:02:30,919 --> 00:02:33,760 Speaker 4: last book, and in between, we just happened to launch 52 00:02:33,800 --> 00:02:36,480 Speaker 4: a firm and have been growing it over the past, 53 00:02:36,600 --> 00:02:39,040 Speaker 4: you know, twelve years, and I've had a number of 54 00:02:39,080 --> 00:02:43,000 Speaker 4: friends and publishers and people kind of noticing me to 55 00:02:43,040 --> 00:02:46,960 Speaker 4: do another one. And my answer was, we've had hundreds 56 00:02:47,000 --> 00:02:50,359 Speaker 4: of thousands of books over the past century telling people 57 00:02:50,400 --> 00:02:54,280 Speaker 4: what to do, and most investors are still pretty mediocre. 58 00:02:54,960 --> 00:02:59,080 Speaker 4: And you know, I came home one vacation between Christmas 59 00:02:59,120 --> 00:03:01,720 Speaker 4: and New Year's, those few days to kill before everybody 60 00:03:01,760 --> 00:03:03,960 Speaker 4: goes back to the office, and I just started thumbing 61 00:03:04,000 --> 00:03:09,320 Speaker 4: through some old quarterly calls and market commentary and research notes, 62 00:03:09,360 --> 00:03:12,400 Speaker 4: and it seems like every other thing I wrote was 63 00:03:12,639 --> 00:03:17,160 Speaker 4: debunking some nonsense or another. And you know, I just 64 00:03:17,240 --> 00:03:21,760 Speaker 4: happen to start channeling Charlie Ellis, who wrote Winning the 65 00:03:21,800 --> 00:03:25,079 Speaker 4: Losers Game, where he compared tennis to investing, and it's 66 00:03:25,120 --> 00:03:28,000 Speaker 4: two games in one. Instead of trying to score points, 67 00:03:28,000 --> 00:03:30,919 Speaker 4: how about just make fewer errors and you come out 68 00:03:30,960 --> 00:03:31,520 Speaker 4: way ahead. 69 00:03:32,320 --> 00:03:32,680 Speaker 1: All right? 70 00:03:32,720 --> 00:03:36,240 Speaker 3: So, this book, as Eric mentioned, filled with hot takes. 71 00:03:36,680 --> 00:03:39,040 Speaker 3: We've got a few that we've plucked. 72 00:03:38,920 --> 00:03:40,440 Speaker 6: And we want to discuss them with that all right, 73 00:03:40,600 --> 00:03:43,480 Speaker 6: By the way, I don't think they're hot takes because 74 00:03:44,400 --> 00:03:48,880 Speaker 6: everything in there I've kind of discussed, granted in much 75 00:03:49,000 --> 00:03:50,119 Speaker 6: much shorter format. 76 00:03:50,880 --> 00:03:55,040 Speaker 4: Some stuff like the Cisco Fortune cover. I first wrote 77 00:03:55,080 --> 00:03:58,200 Speaker 4: about that in the year two thousand to Crickets, So 78 00:03:58,640 --> 00:04:01,440 Speaker 4: it might have been a hot take then, but nobody knew. 79 00:04:01,320 --> 00:04:03,280 Speaker 1: Who would appreciate your humility. We're gonna call him. 80 00:04:03,560 --> 00:04:06,040 Speaker 5: If we went to an RIA conference, these would not 81 00:04:06,160 --> 00:04:09,120 Speaker 5: or bogel Heads conference, these wouldn't be necessarily hot takes. 82 00:04:09,440 --> 00:04:12,600 Speaker 5: But inside a media apparatus as big as Bloomberg, a 83 00:04:12,600 --> 00:04:17,039 Speaker 5: lot of these are somewhat controversial and definitely challenge a 84 00:04:17,040 --> 00:04:18,960 Speaker 5: lot of the things you hear out there. 85 00:04:19,040 --> 00:04:21,040 Speaker 1: For instance, number one, number. 86 00:04:20,760 --> 00:04:24,279 Speaker 2: One, nobody knows anything. This is what you say. 87 00:04:24,279 --> 00:04:26,400 Speaker 5: Your one of your favorite qutes from William Goldman, who's 88 00:04:26,400 --> 00:04:29,039 Speaker 5: a Hollywood guy. I think he directed The Exorcist. 89 00:04:29,480 --> 00:04:30,560 Speaker 4: No, he is a scriptwriter. 90 00:04:30,640 --> 00:04:31,080 Speaker 2: Scriptwriter. 91 00:04:31,240 --> 00:04:33,800 Speaker 4: He won two Oscars, one for All the President's Men, 92 00:04:33,960 --> 00:04:37,080 Speaker 4: the other four I'm drawing a blank on it. Maybe 93 00:04:37,120 --> 00:04:39,680 Speaker 4: it was Butchcasting and The Sundance Kid. He wrote The 94 00:04:39,720 --> 00:04:44,640 Speaker 4: Marathon Man and famously wrote The Princess Bride, which later 95 00:04:44,680 --> 00:04:48,200 Speaker 4: became a Rob Ryner cult favorite. A buddy mine gave 96 00:04:48,240 --> 00:04:51,039 Speaker 4: me a copy of that book decades ago. I loved it. 97 00:04:51,520 --> 00:04:55,280 Speaker 4: And when I moved my blog in two thousand and 98 00:04:55,360 --> 00:05:00,919 Speaker 4: three from Yahoo GeoCities to six apart Type AD, I 99 00:05:01,000 --> 00:05:03,920 Speaker 4: needed a name. And his new book had just come out, 100 00:05:04,240 --> 00:05:07,760 Speaker 4: William Goldman's new book, and it was called The Big Picture, 101 00:05:07,760 --> 00:05:08,920 Speaker 4: and I'm like done. 102 00:05:08,960 --> 00:05:12,800 Speaker 5: So in this overall section, there's a really cool thing 103 00:05:12,839 --> 00:05:16,279 Speaker 5: on the Beatles Jrol where Ed Sullivan turned them down twice. 104 00:05:16,360 --> 00:05:16,919 Speaker 2: I didn't know that. 105 00:05:17,440 --> 00:05:19,600 Speaker 5: And then after they were on the Ed Sullivan Show, 106 00:05:19,600 --> 00:05:21,120 Speaker 5: which is how they made it, and you know how 107 00:05:21,120 --> 00:05:24,560 Speaker 5: they got exposed in America. All the papers were basically 108 00:05:24,600 --> 00:05:27,440 Speaker 5: like criticizing them. They're like, you know, this isn't going 109 00:05:27,520 --> 00:05:30,080 Speaker 5: to last, that they aren't good. He's basically laying the 110 00:05:30,120 --> 00:05:34,200 Speaker 5: groundwork that Hollywood misses a lot, the music industry misses 111 00:05:34,240 --> 00:05:36,520 Speaker 5: a lot, financed misses a lot. Then he goes into 112 00:05:36,520 --> 00:05:39,440 Speaker 5: people like Larry Summers and Michael Burry, which I thought 113 00:05:39,480 --> 00:05:42,400 Speaker 5: was interesting because Burry had that one big call, but 114 00:05:42,440 --> 00:05:45,760 Speaker 5: then you listed about ten other times he was yeah, 115 00:05:46,240 --> 00:05:50,480 Speaker 5: and you know, you talk about how nobody knows anything. 116 00:05:50,560 --> 00:05:51,800 Speaker 2: I mean it just. 117 00:05:51,800 --> 00:05:55,400 Speaker 5: Elaborate a little bit like sure what that really challenges 118 00:05:55,440 --> 00:05:57,839 Speaker 5: a lot of the whole complex. 119 00:05:57,960 --> 00:06:01,280 Speaker 4: Well, stop and think about Wall Street training program, of 120 00:06:01,320 --> 00:06:03,640 Speaker 4: which there are fewer and fewer these days. It's about 121 00:06:03,640 --> 00:06:05,800 Speaker 4: a year long training program at least it used to be, 122 00:06:06,200 --> 00:06:09,159 Speaker 4: and about a week of it is modern portfolio theory 123 00:06:09,160 --> 00:06:12,360 Speaker 4: and acid allocation, and then fifty one weeks is essentially 124 00:06:12,480 --> 00:06:15,760 Speaker 4: advanced sales training. And there's this very much fake it 125 00:06:15,920 --> 00:06:19,080 Speaker 4: till you make it attitude. I mean, we've all kind 126 00:06:19,120 --> 00:06:21,560 Speaker 4: of been there. You walk into a room, it's filled 127 00:06:21,600 --> 00:06:24,080 Speaker 4: with people who have been doing this longer, no more 128 00:06:24,120 --> 00:06:27,359 Speaker 4: than you, and nobody wants to say I don't understand this, 129 00:06:27,440 --> 00:06:31,120 Speaker 4: I don't know. So that in finance is pretty endemic. 130 00:06:31,200 --> 00:06:35,159 Speaker 4: But when you step back and objectively look at what 131 00:06:35,240 --> 00:06:38,560 Speaker 4: do we really know, when do we know it, what 132 00:06:38,600 --> 00:06:42,000 Speaker 4: do we know about the presence, it's pretty clear most 133 00:06:42,000 --> 00:06:46,159 Speaker 4: of us are pretty misinformed about the present. What we 134 00:06:46,279 --> 00:06:51,320 Speaker 4: recall are mostly you know, rose tinged nostalgia in the past, 135 00:06:51,640 --> 00:06:54,520 Speaker 4: and what we're looking for is, you know, one part 136 00:06:54,560 --> 00:06:57,599 Speaker 4: guess work, one part wishful thinking. And so when you 137 00:06:57,800 --> 00:07:02,480 Speaker 4: use the examples of how many studios passed on Raiders 138 00:07:02,480 --> 00:07:05,599 Speaker 4: of the Lost Ark Star wars Et. The list is endless. 139 00:07:05,600 --> 00:07:08,320 Speaker 4: When you look at squid Games couldn't get made for 140 00:07:08,440 --> 00:07:13,800 Speaker 4: ten years. John Wick, despite a stellar cast and the 141 00:07:13,840 --> 00:07:18,240 Speaker 4: guys who did the stunts and special effects on the Matrix, 142 00:07:18,280 --> 00:07:21,240 Speaker 4: which was a giant franchise. Canna Reeves had to write 143 00:07:21,280 --> 00:07:24,480 Speaker 4: a check out of his own pocket to finish the movies. 144 00:07:24,800 --> 00:07:27,960 Speaker 4: I'm assuming he got points. This is now a two 145 00:07:28,000 --> 00:07:31,160 Speaker 4: billion dollar franchise. Nobody wanted to make it, nobody wanted 146 00:07:31,200 --> 00:07:33,240 Speaker 4: to show it. People had no idea what was going 147 00:07:33,240 --> 00:07:37,080 Speaker 4: on with it. So I am probably the wrong messenger 148 00:07:37,240 --> 00:07:41,800 Speaker 4: for the concept that finance and investing requires more humility 149 00:07:41,840 --> 00:07:44,520 Speaker 4: than we bring to it. But as you're reading all 150 00:07:44,560 --> 00:07:49,280 Speaker 4: these things, it's pretty obvious that we really don't have 151 00:07:49,400 --> 00:07:52,360 Speaker 4: a good idea of what's happening now. We know even 152 00:07:52,480 --> 00:07:56,440 Speaker 4: less about what's coming next month and next year. Is 153 00:07:56,520 --> 00:08:01,240 Speaker 4: such a long period of time that randomness disrupts even 154 00:08:01,280 --> 00:08:05,520 Speaker 4: the most thoughtful forecast. Think about who was forecasting a 155 00:08:05,560 --> 00:08:10,440 Speaker 4: pandemic in December twenty nineteen. Who was forecasting either double 156 00:08:10,480 --> 00:08:13,040 Speaker 4: digit losses in stocks and bonds in twenty twenty two, 157 00:08:13,520 --> 00:08:16,960 Speaker 4: the fastest five hundred basis point increase in FED hikes, 158 00:08:17,360 --> 00:08:19,640 Speaker 4: the Russian that this is just one year, the Russian 159 00:08:20,000 --> 00:08:25,120 Speaker 4: invasion of Ukraine, the Gaza attack, and the response of 160 00:08:25,200 --> 00:08:29,000 Speaker 4: Israel to Haamad, Like nobody was talking about these things happening, 161 00:08:29,280 --> 00:08:32,720 Speaker 4: and so whatever your forecast is, it's really easy to 162 00:08:32,800 --> 00:08:36,560 Speaker 4: be derailed. And if your investing requires you to see 163 00:08:36,559 --> 00:08:38,360 Speaker 4: the future, you're in trouble. 164 00:08:38,559 --> 00:08:40,719 Speaker 5: So when I was writing my ETF book, I had 165 00:08:40,720 --> 00:08:43,120 Speaker 5: this same premise. I was like, and I asked your 166 00:08:43,160 --> 00:08:45,640 Speaker 5: colleague Josh Brown, who you work with, and he's on 167 00:08:45,960 --> 00:08:46,680 Speaker 5: the other channel. 168 00:08:46,679 --> 00:08:48,120 Speaker 2: We won't name the channel. 169 00:08:48,800 --> 00:08:52,400 Speaker 5: But I said to him, why, you know, why even 170 00:08:52,400 --> 00:08:55,080 Speaker 5: have a media like a TV station at all, like 171 00:08:55,120 --> 00:08:58,160 Speaker 5: if all of it means nothing, And he said he 172 00:08:58,240 --> 00:09:00,480 Speaker 5: basically said something like, well, look, if you turn on 173 00:09:00,679 --> 00:09:03,720 Speaker 5: ESPN just because they say, you know such and such, 174 00:09:03,840 --> 00:09:05,959 Speaker 5: this player is washed or this team is not good, 175 00:09:06,679 --> 00:09:12,360 Speaker 5: nobody's acting on that. It's just basically like more information entertainment. Yeah, 176 00:09:12,440 --> 00:09:16,440 Speaker 5: it's basically somewhat entertainment. And that's the general idea behind 177 00:09:16,480 --> 00:09:18,720 Speaker 5: a lot of financial media. It's just to give you 178 00:09:19,440 --> 00:09:23,200 Speaker 5: information around these things, but not necessarily investment advice. That 179 00:09:23,280 --> 00:09:26,240 Speaker 5: was his take, because I did find he has the 180 00:09:26,280 --> 00:09:30,120 Speaker 5: same opinion, but he also goes on and talks about stocks, right, and. 181 00:09:30,040 --> 00:09:32,280 Speaker 4: He talks about stocks in his personal accounts. It's not 182 00:09:32,320 --> 00:09:36,240 Speaker 4: how we manage money. We're not stock pickers. So essentially, 183 00:09:37,000 --> 00:09:39,280 Speaker 4: you know, you go back to when I was a kid. 184 00:09:39,880 --> 00:09:42,880 Speaker 4: Once a week on Friday night was Lewis Rukeiser for 185 00:09:42,960 --> 00:09:43,280 Speaker 4: an Now. 186 00:09:43,240 --> 00:09:44,160 Speaker 1: Yeah, Wall Street Week. 187 00:09:44,320 --> 00:09:44,880 Speaker 2: That was it. 188 00:09:44,960 --> 00:09:49,120 Speaker 4: That was the entirety of the financial media escape. Yeah, 189 00:09:49,200 --> 00:09:51,320 Speaker 4: you had the Wall Street Journal and you had barons 190 00:09:51,320 --> 00:09:55,160 Speaker 4: on weekends. I remember sitting out in my backyard at 191 00:09:55,200 --> 00:09:58,200 Speaker 4: the picnic table with a cup of coffee, thumbing through 192 00:09:58,240 --> 00:10:01,200 Speaker 4: barons because hey, I was starting on a training desk 193 00:10:01,240 --> 00:10:03,200 Speaker 4: and I wanted to learn what the hell was going on. 194 00:10:03,600 --> 00:10:06,160 Speaker 4: When you're young, you consume everything, and as you get 195 00:10:06,200 --> 00:10:09,680 Speaker 4: older and older, you learn to filter everything and just 196 00:10:09,840 --> 00:10:13,200 Speaker 4: select the best of what you can select. So you 197 00:10:13,240 --> 00:10:16,640 Speaker 4: know the concept that it's just entertainment, if that's all 198 00:10:16,679 --> 00:10:20,359 Speaker 4: it is. Then you got to wonder why the advertisers 199 00:10:20,400 --> 00:10:23,400 Speaker 4: are getting such big bucks. The reason we went at 200 00:10:23,400 --> 00:10:27,520 Speaker 4: one point we were peak financial media landscape when they 201 00:10:27,520 --> 00:10:31,640 Speaker 4: were I want to say four so there was CNN, CNBC, Bloomberg, 202 00:10:32,480 --> 00:10:36,559 Speaker 4: Fox Business, CNNfn to say nothing about a whole bunch 203 00:10:36,600 --> 00:10:39,480 Speaker 4: of other shows, And now we're down to two and 204 00:10:39,520 --> 00:10:43,199 Speaker 4: a half three channels. You know, I kind of liken 205 00:10:43,280 --> 00:10:48,240 Speaker 4: it to somewhere between ESPN seven and the Weather Channel. 206 00:10:48,920 --> 00:10:52,360 Speaker 4: If you're really into Australian rules Rugby, you know where 207 00:10:52,400 --> 00:10:52,920 Speaker 4: to find that. 208 00:10:53,000 --> 00:10:55,679 Speaker 1: It's ESPN plus now, I think, right, yeah. 209 00:10:55,200 --> 00:10:58,280 Speaker 4: But the Weather Channel is when there's a storm a coming, 210 00:10:58,840 --> 00:11:01,160 Speaker 4: we all flick to the Weather Channel. And that's what 211 00:11:01,280 --> 00:11:05,080 Speaker 4: financial television has really when their ratings go up, when 212 00:11:05,160 --> 00:11:08,880 Speaker 4: everything is clicking for them, it's in response to a storm. 213 00:11:09,559 --> 00:11:13,920 Speaker 4: Always ask yourself a simple question. Anybody who's sharing financial 214 00:11:13,960 --> 00:11:17,000 Speaker 4: advice with me, what are they selling? If you don't 215 00:11:17,040 --> 00:11:20,600 Speaker 4: ask that, then you're a little gullible and a little naive, which, 216 00:11:20,640 --> 00:11:23,600 Speaker 4: by the way, I very much was early in my career. 217 00:11:24,040 --> 00:11:26,559 Speaker 1: Well, disclaimer, because you are selling something other than a 218 00:11:26,559 --> 00:11:27,360 Speaker 1: book too, so. 219 00:11:27,440 --> 00:11:28,560 Speaker 4: And I put that in the book. 220 00:11:28,640 --> 00:11:28,840 Speaker 3: Yeah. 221 00:11:29,040 --> 00:11:31,960 Speaker 4: I actually out myself as hey, listen, I run an 222 00:11:31,960 --> 00:11:35,400 Speaker 4: asset management farm, I have a podcast, I have a blog. 223 00:11:35,760 --> 00:11:39,560 Speaker 4: I want your time, attention and money. It's pretty straightforward, 224 00:11:40,040 --> 00:11:42,560 Speaker 4: but I try and be honest about it and say here, 225 00:11:43,080 --> 00:11:46,240 Speaker 4: it's right here. It's very public. Now. Our business model 226 00:11:46,360 --> 00:11:49,760 Speaker 4: is a little weird because we're very on Wall Street. 227 00:11:49,840 --> 00:11:51,800 Speaker 4: It's like, hey, you could do it yourself. Here's how 228 00:11:52,160 --> 00:11:54,720 Speaker 4: knock yourself out. And the point oh one percent of 229 00:11:54,720 --> 00:11:57,200 Speaker 4: you that don't want to do it yourself. We don't 230 00:11:57,200 --> 00:11:59,880 Speaker 4: have any minimums. We're happy to take your cash and 231 00:12:00,000 --> 00:12:02,480 Speaker 4: and we have some other things we do along with it, 232 00:12:02,960 --> 00:12:05,760 Speaker 4: tax and estate planning and all the fun bells and 233 00:12:05,760 --> 00:12:11,160 Speaker 4: whistles that go around wealth management. But essentially everything we 234 00:12:11,360 --> 00:12:16,160 Speaker 4: produce in the firm individually is all here's how to 235 00:12:16,200 --> 00:12:18,439 Speaker 4: do it better than you've been told. 236 00:12:19,120 --> 00:12:21,440 Speaker 5: And you know this He kind of stole thunder from 237 00:12:21,440 --> 00:12:23,480 Speaker 5: the second point, which is he says the majority of 238 00:12:23,520 --> 00:12:25,040 Speaker 5: what the media turns out is irrelevant. 239 00:12:25,679 --> 00:12:26,760 Speaker 2: Let's dig into this a little bit. 240 00:12:26,800 --> 00:12:27,360 Speaker 1: We've hit this. 241 00:12:27,559 --> 00:12:30,800 Speaker 4: Yeah, well, the word is a ephemeral. It's ephemeral, and 242 00:12:30,840 --> 00:12:33,720 Speaker 4: that means it has a very short shelf life. 243 00:12:33,760 --> 00:12:35,719 Speaker 5: One of the areas I was fascinated by, and I 244 00:12:36,000 --> 00:12:39,240 Speaker 5: see this a lot, is denominator blindness. Yeah, this is 245 00:12:39,240 --> 00:12:43,160 Speaker 5: a really interesting concept about purposely leaving out the denominator 246 00:12:43,640 --> 00:12:45,640 Speaker 5: to make it sound more sensational. 247 00:12:45,800 --> 00:12:49,040 Speaker 4: So if you hear somebody a company laid off ten 248 00:12:49,080 --> 00:12:53,199 Speaker 4: thousand workers, what does that mean? Is that a lot 249 00:12:53,280 --> 00:12:55,320 Speaker 4: or a little? Is it a regional company with thirty 250 00:12:55,360 --> 00:12:58,560 Speaker 4: thousand employees laying off thirty three percent of your staff 251 00:12:58,600 --> 00:13:02,120 Speaker 4: is giant? Is it Walmart? That means one person every 252 00:13:02,240 --> 00:13:06,240 Speaker 4: five stores is losing their job, which probably happens every 253 00:13:06,280 --> 00:13:11,280 Speaker 4: day randomly anyway, So you need the context. Then you know. 254 00:13:11,320 --> 00:13:15,000 Speaker 4: There are some really funny examples of denominator blindness in 255 00:13:15,040 --> 00:13:18,440 Speaker 4: the book. So the three things I always talk about layoffs, 256 00:13:18,880 --> 00:13:19,920 Speaker 4: stock sell offs. 257 00:13:20,280 --> 00:13:22,360 Speaker 5: We'll talk about that for a minute. So the Dow 258 00:13:22,440 --> 00:13:25,360 Speaker 5: in points thing, which drives me crazy. Stock sold off 259 00:13:25,400 --> 00:13:28,000 Speaker 5: five hundred points today. Well, if it's the S and 260 00:13:28,040 --> 00:13:30,559 Speaker 5: P five hundred, that's a ten percent drop, and. 261 00:13:30,600 --> 00:13:33,760 Speaker 4: Holy cow, that's a giant whack. If it's the Dow, 262 00:13:34,320 --> 00:13:37,360 Speaker 4: it's less than a half a percent, and you know 263 00:13:37,880 --> 00:13:39,280 Speaker 4: that's normal daily trading. 264 00:13:39,360 --> 00:13:40,160 Speaker 2: Why do we care about that? 265 00:13:40,280 --> 00:13:42,840 Speaker 5: Do you think that they purposely leave it out in 266 00:13:43,000 --> 00:13:44,080 Speaker 5: order to get the clicks? 267 00:13:45,040 --> 00:13:47,360 Speaker 2: Is it ignorance or clickbait? 268 00:13:47,400 --> 00:13:50,839 Speaker 4: I'm not quite In the full Conspiracy X files, there 269 00:13:50,880 --> 00:13:55,040 Speaker 4: are no such things as coincidences. But you know, as 270 00:13:55,200 --> 00:13:57,400 Speaker 4: you know this, I always have to tell this to 271 00:13:57,440 --> 00:14:01,040 Speaker 4: people when you write a column. Sponsored for all these 272 00:14:01,080 --> 00:14:04,760 Speaker 4: things except the headline, right, The editors write the headline, 273 00:14:04,920 --> 00:14:08,160 Speaker 4: and so the editlers want there to be reads, they 274 00:14:08,160 --> 00:14:11,120 Speaker 4: want there to be clicks. No one is going to 275 00:14:11,160 --> 00:14:15,120 Speaker 4: read the headline zero point one percent of Walmart's employees. 276 00:14:14,679 --> 00:14:15,200 Speaker 1: Were let go. 277 00:14:15,400 --> 00:14:18,920 Speaker 4: Nobody's going to read that. But ten thousand people fired 278 00:14:18,920 --> 00:14:20,240 Speaker 4: at Walmart is a big headline. 279 00:14:20,240 --> 00:14:21,040 Speaker 2: And this is something I. 280 00:14:21,040 --> 00:14:21,400 Speaker 4: Deal with that. 281 00:14:21,440 --> 00:14:23,960 Speaker 1: You're coming for me as the as an editor here. 282 00:14:24,600 --> 00:14:26,880 Speaker 2: So there's a lot of subtext going on here. 283 00:14:27,040 --> 00:14:31,440 Speaker 4: I know you should see that. Okay, Going back and 284 00:14:31,480 --> 00:14:33,560 Speaker 4: forth between these two guys, it's really. 285 00:14:39,400 --> 00:14:44,520 Speaker 3: We also have three words, the most important words in investing? 286 00:14:45,120 --> 00:14:45,760 Speaker 1: What are they? 287 00:14:46,120 --> 00:14:49,960 Speaker 2: According to Barry? And I think I agree. I don't know. 288 00:14:50,760 --> 00:14:52,600 Speaker 5: I remember interviewing you once, I don't know, make ten 289 00:14:52,680 --> 00:14:55,040 Speaker 5: years ago when I first met you really something like that, 290 00:14:55,080 --> 00:14:56,800 Speaker 5: and you said something. I'm like, yeah, this guy's on 291 00:14:57,080 --> 00:15:01,400 Speaker 5: I love this, he goes. He goes, I said something 292 00:15:01,440 --> 00:15:04,280 Speaker 5: about this dichotomy of having an opinion but then also 293 00:15:04,320 --> 00:15:08,320 Speaker 5: saying but I really know, and he said, but saying 294 00:15:08,360 --> 00:15:12,200 Speaker 5: that the future is inherently unknowable. You will not get 295 00:15:12,240 --> 00:15:15,440 Speaker 5: you on television, right, just you can't go on there 296 00:15:15,480 --> 00:15:18,240 Speaker 5: and say I don't know. And so there's this motive 297 00:15:18,320 --> 00:15:20,120 Speaker 5: to not say I don't know. 298 00:15:20,600 --> 00:15:21,040 Speaker 2: Yet. 299 00:15:21,160 --> 00:15:22,440 Speaker 5: I think at the end of the day, a lot 300 00:15:22,520 --> 00:15:25,160 Speaker 5: of people would admit they don't know and the future 301 00:15:25,240 --> 00:15:25,920 Speaker 5: is unknown. 302 00:15:26,400 --> 00:15:28,800 Speaker 4: So I think that's a given. By the way, are 303 00:15:28,840 --> 00:15:31,040 Speaker 4: any of these hot takes that are controversial yet? I 304 00:15:31,080 --> 00:15:32,040 Speaker 4: don't think any of these are. 305 00:15:32,160 --> 00:15:35,280 Speaker 1: It's elegant bs okay. 306 00:15:35,000 --> 00:15:38,600 Speaker 4: So here's a little pushback that I thought was kind 307 00:15:38,640 --> 00:15:43,720 Speaker 4: of fascinating. Someone asked me, A client asked me, so 308 00:15:44,440 --> 00:15:49,360 Speaker 4: the whole COVID nineteen thing. Was that a design biochemical 309 00:15:49,440 --> 00:15:54,280 Speaker 4: biowarfare weapon that escaped the lab? Or was it something 310 00:15:54,320 --> 00:15:57,280 Speaker 4: that trans species hopped from the wet market? And I 311 00:15:57,960 --> 00:16:01,640 Speaker 4: perfect teachable moment. I'm like, not only do I not 312 00:16:01,760 --> 00:16:06,560 Speaker 4: have the slightest idea, I'm aware that I have no 313 00:16:06,720 --> 00:16:09,000 Speaker 4: national security clearance, so I don't know what those guys know. 314 00:16:09,320 --> 00:16:12,560 Speaker 4: I'm not a virologist, I'm not an epidemiologist. But here's 315 00:16:12,600 --> 00:16:13,640 Speaker 4: the important thing with. 316 00:16:13,880 --> 00:16:16,160 Speaker 1: But I did watch financial television this morning. 317 00:16:16,160 --> 00:16:20,040 Speaker 4: Right, I stayed at a Hampton's Inn. But why do 318 00:16:20,080 --> 00:16:23,800 Speaker 4: you feel that anybody outside of a tiny sphere of 319 00:16:23,840 --> 00:16:27,920 Speaker 4: experts should even profer an opinion about that. It's not 320 00:16:28,080 --> 00:16:30,600 Speaker 4: just that you don't know, because if you remember during 321 00:16:30,640 --> 00:16:35,920 Speaker 4: the pandemic, we had this rotating cycle of fake experts. Right, 322 00:16:36,280 --> 00:16:38,960 Speaker 4: First you're an expert in vaccination, then you're an expert 323 00:16:39,360 --> 00:16:42,720 Speaker 4: in constitutional law, then you're an expert in war strategy. 324 00:16:42,760 --> 00:16:45,080 Speaker 4: Then you're an expert and it's like, here's an idea. 325 00:16:45,760 --> 00:16:49,840 Speaker 4: I understand the American school educational system is built on 326 00:16:49,960 --> 00:16:54,280 Speaker 4: standardized testing, but you're not obligated to have an opinion 327 00:16:54,320 --> 00:16:58,400 Speaker 4: on everything. And I really like the way Warren Buffett 328 00:16:58,480 --> 00:17:01,800 Speaker 4: describes it in you could stand at the plate with 329 00:17:02,040 --> 00:17:05,120 Speaker 4: your bat on your shoulder. There are no cult strikes. 330 00:17:05,119 --> 00:17:07,600 Speaker 4: You could just wait for your pitch. I think that 331 00:17:07,680 --> 00:17:10,760 Speaker 4: includes when you go on TV. You don't have to 332 00:17:10,840 --> 00:17:13,800 Speaker 4: and you are an expert in a given space, you 333 00:17:13,920 --> 00:17:18,320 Speaker 4: don't have to engage in epistemic trespass and opine on 334 00:17:18,440 --> 00:17:23,280 Speaker 4: areas of which you have zero expertise. I do annual 335 00:17:23,320 --> 00:17:25,760 Speaker 4: MEA culpers every year. And here's what I got wrong. 336 00:17:26,280 --> 00:17:29,080 Speaker 4: I can't tell you how often when I get something wrong, 337 00:17:29,119 --> 00:17:31,880 Speaker 4: it's because I kind of ventured out of my area 338 00:17:32,400 --> 00:17:36,320 Speaker 4: where I have expertise and allowed myself to wander into 339 00:17:36,359 --> 00:17:39,760 Speaker 4: areas where really I have no business speculating or a 340 00:17:39,840 --> 00:17:45,200 Speaker 4: pining and that is a relatively rare perspective in finance. 341 00:17:45,240 --> 00:17:47,399 Speaker 5: I also think I don't know, in my opinion, if 342 00:17:47,440 --> 00:17:51,200 Speaker 5: you brought it out to politics, religion, there's so much 343 00:17:51,840 --> 00:17:54,560 Speaker 5: A little I don't know goes a long way towards 344 00:17:54,640 --> 00:17:59,000 Speaker 5: just soothing a lot of division, like people get stuck 345 00:17:59,000 --> 00:18:02,760 Speaker 5: in these rigids and it just creates all kinds of friction. 346 00:18:02,880 --> 00:18:05,240 Speaker 5: I think, so I don't know to me is almost 347 00:18:05,280 --> 00:18:09,240 Speaker 5: like a philosophical outlook that I think is very positive. 348 00:18:09,320 --> 00:18:12,320 Speaker 4: Go back to Socrates, go to Aristotle. I think was 349 00:18:12,400 --> 00:18:14,520 Speaker 4: Socrates who said the only thing I know is how 350 00:18:14,520 --> 00:18:18,440 Speaker 4: little I know. And so that's three thousand years ago. 351 00:18:19,040 --> 00:18:21,720 Speaker 4: None of this is new, which just sort of placed 352 00:18:21,800 --> 00:18:24,520 Speaker 4: in a different context. And when you look at the 353 00:18:24,600 --> 00:18:27,480 Speaker 4: example I like is Therahnose, when you look at how 354 00:18:27,480 --> 00:18:32,720 Speaker 4: many people from outside of medical field devices biotech were 355 00:18:32,760 --> 00:18:36,040 Speaker 4: on their board, none of those guys had any clue 356 00:18:36,200 --> 00:18:39,399 Speaker 4: what was going on, and how are they capable of 357 00:18:39,440 --> 00:18:43,080 Speaker 4: identifying if it's a fraud or not. They just saw 358 00:18:43,240 --> 00:18:47,320 Speaker 4: the coverage everybody relied on everybody else's. You know, they 359 00:18:47,400 --> 00:18:50,640 Speaker 4: must have done their due diligence, and apparently nobody did. 360 00:18:51,520 --> 00:18:54,160 Speaker 5: There's another quote that was in this section. I don't 361 00:18:54,160 --> 00:18:55,840 Speaker 5: think it's totally really, I don't know, but it kind 362 00:18:55,840 --> 00:18:58,280 Speaker 5: of is a little bit. It's from Eddie Elfenbeinin, who's 363 00:18:58,320 --> 00:19:01,639 Speaker 5: a famous thought picker and has an ET. Anyway, he says, 364 00:19:02,520 --> 00:19:05,040 Speaker 5: somebody says this or market, This market reminds me of 365 00:19:05,119 --> 00:19:08,199 Speaker 5: nineteen eighty seven. The response is, really, you think the 366 00:19:08,240 --> 00:19:11,359 Speaker 5: market will return thirty fivefold over the next thirty seven years? 367 00:19:12,240 --> 00:19:13,119 Speaker 1: That's your voice. 368 00:19:13,359 --> 00:19:17,280 Speaker 5: No, that's Eddie saying it, but he couldn't. It's irresistible. 369 00:19:17,400 --> 00:19:19,680 Speaker 5: I see why I had so good right That. 370 00:19:19,640 --> 00:19:20,680 Speaker 2: Reminds me of right now. 371 00:19:20,720 --> 00:19:23,200 Speaker 5: There's a lot of like ugh, and I'm like, I 372 00:19:23,240 --> 00:19:27,159 Speaker 5: think a lot of people have settled into not selling, 373 00:19:27,200 --> 00:19:29,480 Speaker 5: and I think the Bogel give him a lot of credit. 374 00:19:29,560 --> 00:19:32,840 Speaker 5: Vanguard cheap index funds. People can get married to that 375 00:19:32,920 --> 00:19:35,960 Speaker 5: product and they're like, you know, I can't market time, 376 00:19:36,560 --> 00:19:38,840 Speaker 5: and if I do, I'll sell the and they just 377 00:19:38,960 --> 00:19:40,639 Speaker 5: like the hell with it. And I'm not going to 378 00:19:40,640 --> 00:19:43,720 Speaker 5: go to an active manager. So the passive money which 379 00:19:43,840 --> 00:19:46,960 Speaker 5: you are a part of Never Sells, and I think 380 00:19:47,520 --> 00:19:50,840 Speaker 5: has seen through some of this stuff and is like, yeah, 381 00:19:51,119 --> 00:19:52,320 Speaker 5: I don't really care what you say. 382 00:19:52,359 --> 00:19:55,159 Speaker 4: And I think the passive money found its way to 383 00:19:55,680 --> 00:20:00,240 Speaker 4: Blackrock and Vanguard not because of an emission of I on. No. 384 00:20:00,880 --> 00:20:04,160 Speaker 4: My pet theory and you could see it post financial 385 00:20:04,240 --> 00:20:07,920 Speaker 4: crisis is think about the decade leading up to the GFC. 386 00:20:08,359 --> 00:20:11,000 Speaker 4: So you had the analyst scandal and the IPO scandal, 387 00:20:11,000 --> 00:20:14,160 Speaker 4: and you had all these crazy things going on. That's 388 00:20:14,240 --> 00:20:17,720 Speaker 4: before you know, the financial crisis, and before Madeoff and 389 00:20:17,760 --> 00:20:20,520 Speaker 4: all this stuff, and it just got to the point 390 00:20:20,520 --> 00:20:22,880 Speaker 4: where it felt like mom and Pop took their ball 391 00:20:22,960 --> 00:20:25,439 Speaker 4: and went home. And by ball I mean money and 392 00:20:25,440 --> 00:20:27,920 Speaker 4: by home I mean Vanguard. That's kind of Hey, you 393 00:20:27,960 --> 00:20:29,640 Speaker 4: know what I need to invest for the future. I'm 394 00:20:29,680 --> 00:20:33,719 Speaker 4: saving for buying a house, paying for the kids, college, retirement, whatever. 395 00:20:34,240 --> 00:20:36,760 Speaker 4: But I don't want to pay high fees and I'm 396 00:20:36,760 --> 00:20:41,040 Speaker 4: not confident that anybody who's picking stocks for me is 397 00:20:41,080 --> 00:20:43,080 Speaker 4: doing a good job. So I'm just going to own 398 00:20:43,119 --> 00:20:45,280 Speaker 4: the whole market see in thirty years. 399 00:20:45,359 --> 00:20:46,960 Speaker 2: By the way, that was he gave me that quote 400 00:20:46,960 --> 00:20:49,359 Speaker 2: for the bogal effect. You got like olies, but goodies. 401 00:20:49,400 --> 00:20:53,080 Speaker 5: I think that was not so it's you know that's 402 00:20:53,560 --> 00:20:55,920 Speaker 5: in my book, which I interviewed him saying the same 403 00:20:55,960 --> 00:20:59,440 Speaker 5: thing about four years ago. But real quick, yes that's true. 404 00:20:59,480 --> 00:21:02,600 Speaker 5: And you see the our team has this phrase called 405 00:21:02,600 --> 00:21:03,399 Speaker 5: the vanguard put. 406 00:21:03,560 --> 00:21:03,960 Speaker 1: Uh huh. 407 00:21:03,960 --> 00:21:05,600 Speaker 5: So there's the FED put the Trump put in the 408 00:21:05,680 --> 00:21:07,680 Speaker 5: vanguard put. I think Josh calls it the relentless bid, 409 00:21:07,760 --> 00:21:10,879 Speaker 5: the relentless bid. You're a vanguard investor, or, like it, 410 00:21:10,880 --> 00:21:13,679 Speaker 5: you're an index fun investor. Can anything happen over the 411 00:21:13,720 --> 00:21:16,840 Speaker 5: next you know, seven eight months that would get you 412 00:21:16,920 --> 00:21:19,080 Speaker 5: to like take all your money out of the US 413 00:21:19,440 --> 00:21:20,119 Speaker 5: stock market. 414 00:21:20,280 --> 00:21:23,240 Speaker 4: You know, the only time I've done that was the 415 00:21:23,359 --> 00:21:26,680 Speaker 4: end of seven And I was pretty public about talking 416 00:21:26,680 --> 00:21:28,760 Speaker 4: about we were short a bunch of companies. Is back 417 00:21:28,960 --> 00:21:31,359 Speaker 4: when I was on an institutional shop, we were short 418 00:21:31,359 --> 00:21:34,760 Speaker 4: a bunch of companies. Pretty famously got into a yelling 419 00:21:34,800 --> 00:21:38,960 Speaker 4: match with Charlie Gasparino of being Shortlyhman Brothers. He did 420 00:21:39,000 --> 00:21:41,280 Speaker 4: me a giant favor. Who you gonna believe, right, Altzer 421 00:21:41,359 --> 00:21:44,400 Speaker 4: Dick Fault And it turned out that clip. I wish 422 00:21:44,440 --> 00:21:48,160 Speaker 4: that clip was still around. But what made that kind 423 00:21:48,200 --> 00:21:54,119 Speaker 4: of unique is how unbelievably obvious. It was if you 424 00:21:54,280 --> 00:21:57,840 Speaker 4: looked at it from just the right perspective, you had 425 00:21:57,840 --> 00:21:59,520 Speaker 4: a squint, you had it was almost like a three 426 00:21:59,600 --> 00:22:02,280 Speaker 4: D poster that you know, you had to catch it 427 00:22:02,400 --> 00:22:05,240 Speaker 4: just right. If you looked at it from traditional things, Hey, 428 00:22:05,280 --> 00:22:09,600 Speaker 4: the market was trending higher, profits were still relatively high. Yeah, 429 00:22:09,600 --> 00:22:14,000 Speaker 4: there's some problems over real estate, but it's contained, so 430 00:22:15,320 --> 00:22:18,240 Speaker 4: I would never say never. And we're not just so 431 00:22:18,320 --> 00:22:21,879 Speaker 4: you know, we're not pure index investors. First, you know, 432 00:22:21,960 --> 00:22:26,520 Speaker 4: that should be the core, whether it's VTI of Vanguard 433 00:22:26,560 --> 00:22:30,960 Speaker 4: Total Market or black Rock. Pick your poison and that's 434 00:22:31,119 --> 00:22:34,040 Speaker 4: the tree, and you decorate it with ornaments and garlands, 435 00:22:34,080 --> 00:22:39,520 Speaker 4: and some people like shareholders yield Momentum Japan, India. My 436 00:22:39,640 --> 00:22:43,840 Speaker 4: favorite example is emerging markets small cap value. If you 437 00:22:43,880 --> 00:22:46,800 Speaker 4: want to hang that on your tree, knock yourself out. 438 00:22:47,119 --> 00:22:50,640 Speaker 4: But as long as you know, you'll never get alpha, 439 00:22:50,960 --> 00:22:53,919 Speaker 4: if you don't even get beata, And that's kind of 440 00:22:53,960 --> 00:22:58,600 Speaker 4: why indexing should be. Pick a number fifty sixty percent 441 00:22:58,640 --> 00:23:01,439 Speaker 4: of your portfolio. That's your core, and then whatever you 442 00:23:01,440 --> 00:23:04,080 Speaker 4: want to do around that, knock yourself out. 443 00:23:04,359 --> 00:23:09,160 Speaker 3: I'm writing that quote town you can't get out. 444 00:23:08,400 --> 00:23:11,160 Speaker 4: Right, good, stop and thinking about that. Wait, you're trying 445 00:23:11,160 --> 00:23:13,560 Speaker 4: to outperform the market. You're not even getting what the 446 00:23:13,600 --> 00:23:16,960 Speaker 4: market's getting. You're underperforming. And by the way, I love 447 00:23:17,040 --> 00:23:19,440 Speaker 4: the research, and I think the chart of use was 448 00:23:19,520 --> 00:23:23,560 Speaker 4: JP Morgan's chart. I love the research shows showing not 449 00:23:23,640 --> 00:23:28,560 Speaker 4: just that investors underperform the market, they underperformed their own investments, 450 00:23:28,600 --> 00:23:32,320 Speaker 4: which sounds impossible, but it just means they're buying high 451 00:23:32,640 --> 00:23:37,399 Speaker 4: and chasing stuff. And you know, ARC, I think Kathy 452 00:23:37,440 --> 00:23:41,480 Speaker 4: woods get is both overly fetted and gets a bad 453 00:23:41,640 --> 00:23:45,840 Speaker 4: rap unfairly because she put up one of the greatest 454 00:23:45,920 --> 00:23:49,840 Speaker 4: years in mutual funds and ETF history. It's not her 455 00:23:49,920 --> 00:23:53,919 Speaker 4: fault that ninety two percent of ARC investors decided to 456 00:23:54,040 --> 00:23:57,720 Speaker 4: buy after a three hundred percent move up. That she 457 00:23:58,000 --> 00:24:01,879 Speaker 4: picked some great things and they went straight up. Everybody 458 00:24:01,920 --> 00:24:04,640 Speaker 4: piled in late. That's human nature. That's not her fault. 459 00:24:06,840 --> 00:24:08,280 Speaker 1: Okay, the next hot take. 460 00:24:08,920 --> 00:24:10,320 Speaker 2: I tweeted this out. This's got a lot. 461 00:24:10,320 --> 00:24:12,959 Speaker 5: It's got a lot of people going, Okay, the dollar 462 00:24:13,080 --> 00:24:15,960 Speaker 5: has lost ninety six percent of its purchasing power over 463 00:24:16,000 --> 00:24:20,040 Speaker 5: the last century. That says, says idiots, you say, it's 464 00:24:20,080 --> 00:24:24,280 Speaker 5: the most misleading claim in all of finance, and you 465 00:24:24,320 --> 00:24:26,399 Speaker 5: say the dollar was not meant to be a store 466 00:24:26,400 --> 00:24:28,919 Speaker 5: of value. It's a medium of exchange, isn't it. I 467 00:24:28,960 --> 00:24:30,840 Speaker 5: put this out and I don't know if you know, Joel, 468 00:24:30,880 --> 00:24:33,440 Speaker 5: but I've got more crypto followers these days. Yeah, and 469 00:24:33,520 --> 00:24:35,320 Speaker 5: a lot of people did not like it. They were 470 00:24:35,560 --> 00:24:36,960 Speaker 5: they said, oh, what's hold on? 471 00:24:37,000 --> 00:24:38,720 Speaker 4: I say, can you tell me people who have a 472 00:24:38,800 --> 00:24:42,040 Speaker 4: vested interest in an alternative currency to the dollar are 473 00:24:42,080 --> 00:24:44,600 Speaker 4: not happy with me calling them out on their BS sales? 474 00:24:44,640 --> 00:24:46,120 Speaker 4: Pitch go figure. 475 00:24:46,920 --> 00:24:48,000 Speaker 2: This is my favorite reply. 476 00:24:48,119 --> 00:24:52,160 Speaker 5: Ready, I really like Barry, but I think he's institutionalized 477 00:24:52,200 --> 00:24:53,720 Speaker 5: in a failing system. 478 00:24:54,760 --> 00:24:57,560 Speaker 4: Yeah, of all the things I've had people tell me 479 00:24:57,640 --> 00:25:01,760 Speaker 4: I should be institutionalized, I get that. But here's the reality. 480 00:25:01,840 --> 00:25:03,840 Speaker 4: By the way, let's start with a meme and then 481 00:25:03,880 --> 00:25:07,359 Speaker 4: we'll go back to the past century. The meme really 482 00:25:07,600 --> 00:25:11,320 Speaker 4: that I love, which shows up on TikTok Investors, which 483 00:25:11,400 --> 00:25:12,400 Speaker 4: is fantastic. 484 00:25:12,560 --> 00:25:12,879 Speaker 2: I love that. 485 00:25:12,960 --> 00:25:17,360 Speaker 4: I love that fantastic feed is they show Kevin from 486 00:25:17,400 --> 00:25:20,600 Speaker 4: home alone and if you remember, he goes to the 487 00:25:20,640 --> 00:25:24,320 Speaker 4: supermarket by himself. Are you here by yourself? No, I'm 488 00:25:24,359 --> 00:25:26,280 Speaker 4: eight years old. Do you think my mother would let 489 00:25:26,359 --> 00:25:28,760 Speaker 4: me come here and he buys twenty dollars and fifty 490 00:25:28,800 --> 00:25:33,000 Speaker 4: two cents worth of groceries In nineteen ninety, I think 491 00:25:33,000 --> 00:25:36,880 Speaker 4: that's when the Year movie came out, and then the Goldbugs, 492 00:25:36,960 --> 00:25:39,760 Speaker 4: the crypto people, a lot of people like today buy 493 00:25:39,800 --> 00:25:43,760 Speaker 4: that same thing today is fifty seven dollars. And I'm like, well, 494 00:25:43,880 --> 00:25:46,760 Speaker 4: let me ask you the obvious question. It's twenty twenty five. 495 00:25:47,240 --> 00:25:50,199 Speaker 4: Are you working, yes, So when you buy groceries, are 496 00:25:50,320 --> 00:25:54,520 Speaker 4: using twenty twenty five dollars or using nineteen ninety dollars? 497 00:25:54,760 --> 00:25:58,359 Speaker 4: Because why would you put fifty seven dollars away in 498 00:25:58,480 --> 00:26:02,080 Speaker 4: nineteen ninety. I'm good going grocery shopping in twenty twenty five. 499 00:26:02,080 --> 00:26:04,760 Speaker 4: That's number one. Number two. You talked a little bit 500 00:26:04,800 --> 00:26:09,679 Speaker 4: about denominator blindness. Hey, if this is how much groceries went, Well, 501 00:26:09,720 --> 00:26:12,320 Speaker 4: we work for a living and we buy groceries with 502 00:26:12,359 --> 00:26:15,560 Speaker 4: our wages. How have wages done over the same time. 503 00:26:15,720 --> 00:26:18,159 Speaker 4: And as it turns out, wages have gone up about 504 00:26:18,200 --> 00:26:21,320 Speaker 4: one hundred and ten percent of how much the groceries 505 00:26:21,359 --> 00:26:24,720 Speaker 4: went up, according to BLS data. In other words, over 506 00:26:24,760 --> 00:26:27,879 Speaker 4: the past thirty five years, the groceries have gotten a 507 00:26:27,960 --> 00:26:32,720 Speaker 4: little cheaper relative to the median income. But my favorite 508 00:26:32,720 --> 00:26:36,760 Speaker 4: example there is if you would have instead of putting 509 00:26:36,800 --> 00:26:40,359 Speaker 4: the twenty dollars and fifty two cents away to wait 510 00:26:40,400 --> 00:26:43,399 Speaker 4: and come by it groceries in twenty twenty five for 511 00:26:43,520 --> 00:26:45,720 Speaker 4: almost triple the amount you put it in the S 512 00:26:45,760 --> 00:26:48,199 Speaker 4: and P. Five hundred, Well, guess what it's worth almost 513 00:26:48,520 --> 00:26:50,800 Speaker 4: I don't even remember the number from the book, thousand dollars. 514 00:26:50,800 --> 00:26:53,400 Speaker 2: I think it's like six figures. In the percentage of return. 515 00:26:53,440 --> 00:26:56,880 Speaker 4: It's way way over what so cost is. And that's 516 00:26:56,920 --> 00:26:57,720 Speaker 4: the whole point. 517 00:26:57,880 --> 00:27:01,920 Speaker 1: So how not to invest? M don't eat, just invest. 518 00:27:02,160 --> 00:27:06,400 Speaker 4: No, The point is, don't you know Joan Robinson, one 519 00:27:06,400 --> 00:27:10,480 Speaker 4: of the most famous female economists of the twentieth century, 520 00:27:11,080 --> 00:27:15,119 Speaker 4: said we study economics not to learn about the economy, 521 00:27:15,160 --> 00:27:18,439 Speaker 4: but so as to not be fooled by economists. This 522 00:27:18,600 --> 00:27:21,919 Speaker 4: is a classic example of all right, you have to 523 00:27:21,960 --> 00:27:24,800 Speaker 4: show both sides. If you're showing me the consumer spending 524 00:27:25,119 --> 00:27:27,320 Speaker 4: double entry accounting, you have to show me the earnings 525 00:27:27,520 --> 00:27:31,440 Speaker 4: of income. But reality is, you get paid today. 526 00:27:31,640 --> 00:27:32,760 Speaker 2: What do you do with that money? 527 00:27:33,160 --> 00:27:36,920 Speaker 4: You pay your rent or mortgage, You buy food, medicine, clothes. 528 00:27:37,320 --> 00:27:41,640 Speaker 4: Occasionally some entertainment, vacation, healthcare, and you pay your taxes 529 00:27:41,880 --> 00:27:44,240 Speaker 4: and then whatever's leftover you invest in the market, You 530 00:27:44,280 --> 00:27:46,959 Speaker 4: invest in your business. You invest, you don't put it 531 00:27:47,000 --> 00:27:50,600 Speaker 4: away for a century. Yeah, because that's what a medium 532 00:27:50,640 --> 00:27:53,840 Speaker 4: of exchange is. It was never supposed to be a 533 00:27:53,880 --> 00:27:54,679 Speaker 4: store of value. 534 00:27:54,800 --> 00:27:57,480 Speaker 5: So the one pushback to that is some of the 535 00:27:57,480 --> 00:28:00,720 Speaker 5: comments were, this is an elitist take because half of 536 00:28:00,760 --> 00:28:02,680 Speaker 5: the country doesn't invest, and. 537 00:28:02,680 --> 00:28:04,880 Speaker 4: If most of the country doesn't invest, and so they're 538 00:28:04,920 --> 00:28:05,560 Speaker 4: absolutely right. 539 00:28:05,560 --> 00:28:07,879 Speaker 5: I think out of the money printing in debt really 540 00:28:08,040 --> 00:28:10,440 Speaker 5: is a if you owned thoughts, you've gotten totally rich. 541 00:28:10,800 --> 00:28:12,200 Speaker 5: So some of the people consider a lot of the 542 00:28:12,200 --> 00:28:15,119 Speaker 5: money printing was actually a regressive tax on poor people. 543 00:28:15,160 --> 00:28:17,840 Speaker 4: You're not gonna get a push So Number one my 544 00:28:18,080 --> 00:28:21,360 Speaker 4: argument in Bailout Nation in the last book was there 545 00:28:21,359 --> 00:28:24,960 Speaker 4: are these beautiful buildings downtown with these tall columns, and 546 00:28:25,000 --> 00:28:28,240 Speaker 4: that's where all these banks should have gone to declare bankruptcy. 547 00:28:28,600 --> 00:28:33,240 Speaker 4: The reason we had monetary repression and ZURP and everything 548 00:28:33,280 --> 00:28:36,280 Speaker 4: else that came along post financial crisis was, hey, we 549 00:28:36,400 --> 00:28:38,760 Speaker 4: just spent trillions of dollars bailing out the banks and 550 00:28:38,800 --> 00:28:43,120 Speaker 4: all these things. Let's not cause them to run into problems. 551 00:28:43,240 --> 00:28:45,600 Speaker 4: We have all these assets on their balance sheet. If 552 00:28:45,600 --> 00:28:49,280 Speaker 4: we normalize rates, I don't mean raise them, just normalize them, 553 00:28:49,640 --> 00:28:52,640 Speaker 4: all this paper defaults and we have a problem. I 554 00:28:52,840 --> 00:28:57,320 Speaker 4: think they're right. I advocated doing exactly that, taking these 555 00:28:57,360 --> 00:29:00,960 Speaker 4: banks down. Uncle Sam does a prepackaged bank you sent 556 00:29:01,080 --> 00:29:04,160 Speaker 4: all these However, here's where I'm going to push back 557 00:29:04,200 --> 00:29:06,840 Speaker 4: a little bit on the elitist thing. You can't say 558 00:29:06,840 --> 00:29:12,160 Speaker 4: to me investing in stocks as elitist, Buy golden bitcoin instead. 559 00:29:12,640 --> 00:29:16,520 Speaker 4: I mean, we're talking about keep in mind something like 560 00:29:16,680 --> 00:29:20,520 Speaker 4: the top ten percent of Americans hold eighty seven percent 561 00:29:20,520 --> 00:29:24,640 Speaker 4: of all the stocks and bonds. Right, It's only since 562 00:29:24,760 --> 00:29:30,640 Speaker 4: the sixties that finance has been slightly democratized, but it's 563 00:29:30,680 --> 00:29:35,600 Speaker 4: still a pyramid, and the top decile owns a lot. 564 00:29:35,800 --> 00:29:41,680 Speaker 4: That said, if you want to say that there's inflation, 565 00:29:41,960 --> 00:29:46,920 Speaker 4: you have to explain why you're going back one hundred years, right. 566 00:29:47,520 --> 00:29:50,000 Speaker 4: It just none of it makes any sense if you 567 00:29:50,360 --> 00:29:53,120 Speaker 4: just look at it for a moment and say, well, 568 00:29:53,160 --> 00:29:57,080 Speaker 4: I don't care. I don't get paid in nineteen seventeen dollars. 569 00:29:57,400 --> 00:30:00,080 Speaker 4: I get paid in twenty twenty five dollars, and and 570 00:30:00,280 --> 00:30:03,520 Speaker 4: I try and spend the money before it loses its value. 571 00:30:03,560 --> 00:30:05,920 Speaker 4: I spend it, I invest it, I pay my taxes 572 00:30:05,960 --> 00:30:06,239 Speaker 4: with it. 573 00:30:07,120 --> 00:30:08,960 Speaker 5: I don't know why they put him in a bitcoin 574 00:30:09,000 --> 00:30:11,440 Speaker 5: person on TV and just hit the record button. 575 00:30:11,440 --> 00:30:14,760 Speaker 4: I'd watch that, by the way, ten seconds on bitcoin 576 00:30:15,320 --> 00:30:17,600 Speaker 4: the way. And I think I mentioned this in the book. 577 00:30:17,640 --> 00:30:21,520 Speaker 4: The way I try and contextualize bitcoin is it's a 578 00:30:21,600 --> 00:30:25,200 Speaker 4: technology company, a little bigger than Facebook, a little smaller 579 00:30:25,200 --> 00:30:28,400 Speaker 4: than Google. Suddenly, it's not a brand new asset class. 580 00:30:28,440 --> 00:30:32,800 Speaker 4: It's not a new currency. It's a you know, it's 581 00:30:32,800 --> 00:30:36,720 Speaker 4: a solution to certain types of problems that haven't become 582 00:30:36,800 --> 00:30:41,400 Speaker 4: widely adopted yet. I think that's a fair description. And 583 00:30:41,480 --> 00:30:45,280 Speaker 4: I own some We own a little bitcoin in ethereum personally. 584 00:30:47,240 --> 00:30:51,719 Speaker 1: Hot take number five if you're counting. 585 00:30:51,840 --> 00:30:53,520 Speaker 5: Yeah, this one's a little we kind of cover this, 586 00:30:53,600 --> 00:30:55,280 Speaker 5: but there's something inside of it that I want to 587 00:30:55,320 --> 00:30:57,560 Speaker 5: bring up. Okay, so if you want to be there 588 00:30:57,600 --> 00:31:00,880 Speaker 5: for the good times, you must suffer through the bad times. 589 00:31:01,000 --> 00:31:01,400 Speaker 4: Next. 590 00:31:01,880 --> 00:31:04,240 Speaker 2: Yeah, I mean most is an interesting word here. I 591 00:31:04,360 --> 00:31:05,240 Speaker 2: kind of agree with you. 592 00:31:05,240 --> 00:31:07,880 Speaker 5: You know, Morgan Housel, who wrote your forward, had this 593 00:31:07,960 --> 00:31:11,000 Speaker 5: great way to frame it of volatility and down markets 594 00:31:11,040 --> 00:31:14,719 Speaker 5: are the price of admission. Yeah, because the other thing is, oh, well, 595 00:31:14,720 --> 00:31:17,320 Speaker 5: I'll just time around it, which I just does anybody 596 00:31:17,360 --> 00:31:20,680 Speaker 5: really believe that's possible. If you resign the fact that 597 00:31:20,720 --> 00:31:23,959 Speaker 5: it market timing is almost impossible, then you have to 598 00:31:24,040 --> 00:31:26,520 Speaker 5: just hang in there pretty much. And that's sort of 599 00:31:26,520 --> 00:31:27,480 Speaker 5: the cost of admission. 600 00:31:28,080 --> 00:31:31,360 Speaker 4: So two things. First, I more or less got the 601 00:31:31,440 --> 00:31:34,000 Speaker 4: top right of the financial crisis and then went on 602 00:31:34,040 --> 00:31:36,720 Speaker 4: TV the day before the bottoms and said cover your 603 00:31:36,720 --> 00:31:39,280 Speaker 4: shorts and go long here. And I'm the first guy 604 00:31:39,360 --> 00:31:42,360 Speaker 4: to admit I can't tell if that was skill o'lock. 605 00:31:42,440 --> 00:31:45,360 Speaker 4: You could ask me the same question thirty sixty nineties 606 00:31:45,400 --> 00:31:47,400 Speaker 4: before after I would have given you the same answer, 607 00:31:47,720 --> 00:31:50,640 Speaker 4: at least in terms of the bottom. So if I'm 608 00:31:50,680 --> 00:31:53,440 Speaker 4: not willing and I think a lot of people miss that, 609 00:31:53,560 --> 00:31:56,040 Speaker 4: and if I'm willing to say I don't want to 610 00:31:56,040 --> 00:32:00,280 Speaker 4: rely on my gut to sling billions dollars around. 611 00:32:00,160 --> 00:32:02,640 Speaker 5: COVID, I think was like everybody's like, oh, it's over. 612 00:32:03,320 --> 00:32:05,360 Speaker 5: And then like if you sold in like late March, 613 00:32:05,720 --> 00:32:08,560 Speaker 5: you got screwed. You missed the whole rebound because who 614 00:32:08,600 --> 00:32:10,960 Speaker 5: knew that fed was? I mean, you don't know these things. 615 00:32:11,040 --> 00:32:14,640 Speaker 4: The most amount of pushback to any Bloomberg column I 616 00:32:14,680 --> 00:32:19,360 Speaker 4: ever wrote was April first, twenty twenty, which was don't 617 00:32:19,360 --> 00:32:22,280 Speaker 4: assume COVID end of the secular bull market and there 618 00:32:22,320 --> 00:32:26,040 Speaker 4: was no great insight. I based this on something Gary B. 619 00:32:26,200 --> 00:32:29,920 Speaker 4: Smithwork wrote on TheStreet dot Com in two thousand and 620 00:32:29,960 --> 00:32:32,160 Speaker 4: one post nine to eleven. And if you go back 621 00:32:32,160 --> 00:32:35,120 Speaker 4: and look at all the externalities that shook the market, 622 00:32:35,400 --> 00:32:38,600 Speaker 4: everything from World War two and Pearl Harbor jfk assassination 623 00:32:38,760 --> 00:32:42,640 Speaker 4: to nine to eleven, what happens. Market's wobble, that's your 624 00:32:42,680 --> 00:32:46,440 Speaker 4: emotional reaction. Some rationality comes back in, and then that 625 00:32:46,600 --> 00:32:49,400 Speaker 4: sends them back to resume their prior trend. So when 626 00:32:49,440 --> 00:32:53,720 Speaker 4: you have something from outside of the stock market, the economy, 627 00:32:53,720 --> 00:32:56,200 Speaker 4: what have you, the assumption is, hey, we're still in 628 00:32:56,240 --> 00:32:59,760 Speaker 4: a bull market. Why would you assume that this temporary setback. 629 00:33:00,080 --> 00:33:02,160 Speaker 4: Now I spend a lot of time why twenty percent 630 00:33:02,240 --> 00:33:04,960 Speaker 4: is not a bear market? It's nonsense. So down thirty 631 00:33:05,000 --> 00:33:08,840 Speaker 4: four percent wasn't the reason to be out of stocks, 632 00:33:09,240 --> 00:33:11,640 Speaker 4: and that was a very fast down thirty four percent. 633 00:33:12,040 --> 00:33:15,280 Speaker 4: But hey, you know, if you can look through and 634 00:33:15,320 --> 00:33:17,720 Speaker 4: say it looks like a vaccine is coming, it looks 635 00:33:17,720 --> 00:33:20,840 Speaker 4: like fiscal stimulus is coming. There's another side of this. 636 00:33:21,000 --> 00:33:23,680 Speaker 4: Don't just assume this is over. That turned out to 637 00:33:23,720 --> 00:33:27,320 Speaker 4: be a good call, But it really wasn't a call. 638 00:33:27,360 --> 00:33:30,200 Speaker 4: It was I don't know what happens next, but here's 639 00:33:30,240 --> 00:33:32,080 Speaker 4: what happened every time we had something like this in 640 00:33:32,120 --> 00:33:35,400 Speaker 4: the past. And the point was, if you can just 641 00:33:35,440 --> 00:33:38,440 Speaker 4: put these things into context and take a deep breath, 642 00:33:38,920 --> 00:33:41,440 Speaker 4: you know, you don't have to run around and have 643 00:33:41,480 --> 00:33:45,840 Speaker 4: an emotional response. And every time we see a panic, 644 00:33:46,480 --> 00:33:49,880 Speaker 4: it's a panic, is pure emotion. So I'm sorry to 645 00:33:49,920 --> 00:33:53,080 Speaker 4: I've interrupted. I just wanted to. That was the most 646 00:33:53,240 --> 00:33:56,080 Speaker 4: hate mail I've ever gotten, and it was delightful. 647 00:34:02,800 --> 00:34:06,600 Speaker 5: One point three percent of public companies in the United 648 00:34:06,600 --> 00:34:09,320 Speaker 5: States account for all of the market gains. 649 00:34:09,719 --> 00:34:13,000 Speaker 4: Right, So there's two numbers in here. One is four percent. 650 00:34:13,640 --> 00:34:17,480 Speaker 4: Three numbers four percent, two point three percent overseas one 651 00:34:17,480 --> 00:34:20,719 Speaker 4: point something in the US you kind of have to 652 00:34:20,760 --> 00:34:24,279 Speaker 4: take out a bunch of other but in shurance, non 653 00:34:24,360 --> 00:34:28,040 Speaker 4: trades minority, right, that's why they did it all. Henry 654 00:34:28,400 --> 00:34:33,040 Speaker 4: Bessenbinder from Arizona State University did this study looking at 655 00:34:33,080 --> 00:34:36,200 Speaker 4: the difference between long term returns of stocks and bonds, 656 00:34:36,719 --> 00:34:41,280 Speaker 4: and this was an accidental discovery that you know, most 657 00:34:41,320 --> 00:34:44,600 Speaker 4: stocks are not important. You have some that are up 658 00:34:44,640 --> 00:34:46,680 Speaker 4: a little, some that are down a little, they cancel out. 659 00:34:46,960 --> 00:34:50,080 Speaker 4: You have the ones that eventually go to the pink sheets. 660 00:34:50,400 --> 00:34:53,000 Speaker 4: So we'll remove all those. You left with a tiny 661 00:34:53,040 --> 00:34:57,359 Speaker 4: handful of stocks and the big drivers. If you don't 662 00:34:57,360 --> 00:35:00,400 Speaker 4: own those, you were going to underperform only. 663 00:35:00,239 --> 00:35:03,320 Speaker 1: One point three. And then we're talking historical here. 664 00:35:03,600 --> 00:35:07,320 Speaker 4: That I think the data went back to nineteen I 665 00:35:07,360 --> 00:35:09,960 Speaker 4: don't remember, it's twenty nine or fifty. It's in there somewhere. 666 00:35:10,120 --> 00:35:12,879 Speaker 5: Morgan Housel's book had something very similar, and I've heard 667 00:35:12,880 --> 00:35:14,880 Speaker 5: this so many times, and this is I think one 668 00:35:14,920 --> 00:35:16,320 Speaker 5: of the strongest cases for indexing. 669 00:35:16,320 --> 00:35:16,520 Speaker 4: Well. 670 00:35:16,440 --> 00:35:18,040 Speaker 1: Well, I was going to say there's no way, no 671 00:35:18,080 --> 00:35:19,000 Speaker 1: way to get it right. 672 00:35:19,360 --> 00:35:21,560 Speaker 4: Well, that's not true. That's not true. There is a 673 00:35:21,560 --> 00:35:24,920 Speaker 4: way to get it one. As we've seen the rise 674 00:35:24,960 --> 00:35:29,120 Speaker 4: of quants and hedge funds, some of that school of 675 00:35:29,440 --> 00:35:33,560 Speaker 4: approach is using model to identify stocks that are going 676 00:35:33,600 --> 00:35:35,640 Speaker 4: to perform well in the future by looking for the 677 00:35:35,680 --> 00:35:38,240 Speaker 4: traits that have performed well in the past. The problem 678 00:35:38,239 --> 00:35:40,640 Speaker 4: with that is the assumption that the future will look 679 00:35:40,680 --> 00:35:43,600 Speaker 4: like the past, and so sometimes it works, sometimes it doesn't. 680 00:35:43,960 --> 00:35:45,960 Speaker 4: There are two types of screening. You can either screen 681 00:35:46,280 --> 00:35:48,600 Speaker 4: in for the stocks that are going to be in 682 00:35:48,640 --> 00:35:52,320 Speaker 4: that one two three percent, or you could screen out 683 00:35:52,560 --> 00:35:54,600 Speaker 4: the stocks that are the worst of the worst, in 684 00:35:54,719 --> 00:35:57,960 Speaker 4: the bottom fifty percent, and either of those give you 685 00:35:58,040 --> 00:36:04,080 Speaker 4: a shot at creating alpha. But still, despite that, the 686 00:36:04,120 --> 00:36:07,279 Speaker 4: people who outperform the market few and far between. It 687 00:36:07,280 --> 00:36:10,120 Speaker 4: it's not a majority. Each year. When you look at 688 00:36:10,200 --> 00:36:12,880 Speaker 4: a twelve month process, you go to five years, eighty 689 00:36:12,880 --> 00:36:15,320 Speaker 4: three percent fail to beat the benchmark or the market. 690 00:36:15,560 --> 00:36:17,520 Speaker 4: Ten years it's over ninety percent, And when you go 691 00:36:17,560 --> 00:36:21,279 Speaker 4: to twenty years, it's virtually nobody. Net of fees, it's 692 00:36:21,320 --> 00:36:24,239 Speaker 4: a handful of names that we know because they are 693 00:36:24,280 --> 00:36:27,320 Speaker 4: the exceptions that test the rule. It's buffet, it's Lynch, 694 00:36:27,680 --> 00:36:29,719 Speaker 4: it's go down the list of I don't know a 695 00:36:29,800 --> 00:36:31,839 Speaker 4: dozen or two outliers. 696 00:36:32,560 --> 00:36:34,960 Speaker 5: Speaking of fund managers, one thing in here that I 697 00:36:35,080 --> 00:36:36,880 Speaker 5: did not know, and I thought this was interesting, is 698 00:36:37,200 --> 00:36:39,400 Speaker 5: fund managers are good at buying but bad at selling. 699 00:36:39,480 --> 00:36:41,040 Speaker 1: So you're saying this is the next hot take. 700 00:36:41,080 --> 00:36:42,439 Speaker 2: By the way, this is the next hot take. 701 00:36:42,680 --> 00:36:45,160 Speaker 5: It's based on a study you read, but I thought 702 00:36:45,160 --> 00:36:47,359 Speaker 5: it was interesting because I hadn't really heard of it, 703 00:36:47,440 --> 00:36:51,120 Speaker 5: And basically, they're good at identifying good stocks, they're just 704 00:36:51,239 --> 00:36:55,640 Speaker 5: horrible at selling them, and random selling actually outperform their 705 00:36:55,680 --> 00:36:56,400 Speaker 5: own funds. 706 00:36:56,520 --> 00:36:58,799 Speaker 4: That's what's so crazy about it. So first, if you 707 00:36:58,880 --> 00:37:01,600 Speaker 4: just stop and think about it, when you were selecting 708 00:37:01,600 --> 00:37:04,560 Speaker 4: a stock, you were making a logical decision based on 709 00:37:05,280 --> 00:37:10,040 Speaker 4: your expectations on products and revenue and profitability, and it's 710 00:37:10,080 --> 00:37:14,600 Speaker 4: a pretty reasonable thought process. When you're selling a stock, 711 00:37:15,239 --> 00:37:19,080 Speaker 4: it's somewhat emotional because it's either oh, they're in trouble 712 00:37:19,120 --> 00:37:22,360 Speaker 4: and I have to get out, or no, this is nothing, 713 00:37:22,360 --> 00:37:24,280 Speaker 4: I'm not going to sell and you watch it collapse, 714 00:37:25,000 --> 00:37:28,400 Speaker 4: or oh, these guys disappointed again, I've had enough, And 715 00:37:28,960 --> 00:37:33,080 Speaker 4: those all seem like very emotional decisions. And the way 716 00:37:33,120 --> 00:37:35,680 Speaker 4: the study did it is they would look at each 717 00:37:35,719 --> 00:37:39,600 Speaker 4: of these managers' portfolios and every time they sold, they 718 00:37:39,640 --> 00:37:43,000 Speaker 4: would take a different stock in their portfolio and randomly 719 00:37:43,080 --> 00:37:46,480 Speaker 4: sell it and ran the parallel portfolios. And it was 720 00:37:46,520 --> 00:37:48,520 Speaker 4: worth I think it was worth about one hundred base points. 721 00:37:48,560 --> 00:37:51,640 Speaker 4: Fifty to one hundred base points. That's a giant number 722 00:37:52,000 --> 00:37:54,439 Speaker 4: when you're looking for seven eight nine percent a year. 723 00:37:54,560 --> 00:37:59,040 Speaker 4: It's bonkers. But they're surprisingly good buyers. They're just terrible sellers. 724 00:37:59,280 --> 00:37:59,719 Speaker 1: I get that. 725 00:37:59,760 --> 00:38:03,800 Speaker 3: I mean, but if you're like mostly the Vanguard crowd, 726 00:38:03,960 --> 00:38:06,839 Speaker 3: you would be just like put money in and never sell. 727 00:38:07,440 --> 00:38:09,799 Speaker 3: So why would you expect them to know how to sell? 728 00:38:10,000 --> 00:38:13,680 Speaker 4: You sell individual stocks. They don't know how to sell 729 00:38:13,680 --> 00:38:17,319 Speaker 4: individual stocks. And I think that's pretty clear. The Vanguard 730 00:38:17,360 --> 00:38:20,719 Speaker 4: holders or the black Rock holders, they sell when they 731 00:38:20,760 --> 00:38:23,040 Speaker 4: need the money. They sell when they're buying a house 732 00:38:23,200 --> 00:38:26,600 Speaker 4: or retiring or you know, generational wealth transfer, all that 733 00:38:26,640 --> 00:38:30,680 Speaker 4: fun stuff. So it's pretty there are reasons to sell. 734 00:38:31,239 --> 00:38:33,279 Speaker 4: But the question is are you selling a fund or 735 00:38:33,280 --> 00:38:35,800 Speaker 4: an ETF or you saying I'm going to sell x 736 00:38:35,920 --> 00:38:39,560 Speaker 4: y Z. Usually they're selling XYZ in response to some 737 00:38:39,680 --> 00:38:44,440 Speaker 4: external stimuli or suddenly, who's the new shiny thing at 738 00:38:44,440 --> 00:38:47,400 Speaker 4: the dance. Let's sell XYZ and buy ABC. 739 00:38:50,000 --> 00:38:50,680 Speaker 1: Next hot take. 740 00:38:51,480 --> 00:38:54,279 Speaker 5: Politics and investing don't mix. I think you make a 741 00:38:54,280 --> 00:38:56,960 Speaker 5: good case here. I remember, I just want to make 742 00:38:57,000 --> 00:38:59,000 Speaker 5: sure we're clear that this is you agree with both 743 00:38:59,000 --> 00:39:01,239 Speaker 5: sides of the coin, because I find that Let's talk 744 00:39:01,239 --> 00:39:04,520 Speaker 5: about esgifman, I remember when the anti ESG ETFs came out. 745 00:39:04,600 --> 00:39:05,879 Speaker 2: You trash them. 746 00:39:05,920 --> 00:39:08,560 Speaker 5: It's like you were triggered over them and then but 747 00:39:08,719 --> 00:39:12,560 Speaker 5: you didn't really talk about the esgtfs. I think they 748 00:39:12,560 --> 00:39:14,920 Speaker 5: are the two sides of the same coin. It's active 749 00:39:14,960 --> 00:39:17,719 Speaker 5: management disguise, and if you trash one, you kind of 750 00:39:17,760 --> 00:39:18,560 Speaker 5: have to trash the other. 751 00:39:18,760 --> 00:39:20,040 Speaker 2: Oh you agree, totally agree. 752 00:39:20,040 --> 00:39:22,080 Speaker 4: But let me give you a little twist to that. Okay, 753 00:39:22,400 --> 00:39:27,359 Speaker 4: So we're big direct indexers also primarily for people who 754 00:39:27,360 --> 00:39:31,200 Speaker 4: have concentrated stock positions and they're managing around a potentially 755 00:39:31,239 --> 00:39:34,399 Speaker 4: giant capital gains tax. And part of the reason this 756 00:39:34,440 --> 00:39:37,520 Speaker 4: is the canvas product that was originally O'Shaughnessy. It's now 757 00:39:37,520 --> 00:39:40,319 Speaker 4: part of Franklin Templeton, and I want to say about 758 00:39:40,320 --> 00:39:43,200 Speaker 4: a billion five of our five and changes in that product, 759 00:39:43,400 --> 00:39:47,360 Speaker 4: and we've gotten really good results. I was originally completely 760 00:39:47,400 --> 00:39:51,520 Speaker 4: wrong about it. I assumed that would be for to 761 00:39:51,640 --> 00:39:57,240 Speaker 4: quote Meyer Statman, to have the investors' values be reflected 762 00:39:57,280 --> 00:40:00,040 Speaker 4: in their portfolios, which is kind of what you I 763 00:40:00,040 --> 00:40:03,680 Speaker 4: heard leading into that. Really the main request we get. 764 00:40:03,719 --> 00:40:06,319 Speaker 4: I don't want guns. I don't want tobacco. That's the 765 00:40:06,440 --> 00:40:09,359 Speaker 4: big twist out of that. But it's not and that's 766 00:40:09,400 --> 00:40:12,120 Speaker 4: for I don't believe in these things. They're doing damage 767 00:40:12,160 --> 00:40:14,960 Speaker 4: to the country, and I just don't want it, says 768 00:40:15,000 --> 00:40:17,680 Speaker 4: some people. By the way, if you talk to the 769 00:40:17,680 --> 00:40:20,680 Speaker 4: folks at the Canvas Group, they'll tell you the portfolios 770 00:40:20,680 --> 00:40:24,480 Speaker 4: they run for the New York Bishop's Retirement Planning, Like 771 00:40:24,520 --> 00:40:27,120 Speaker 4: you can tune, Hey, we don't want any of board 772 00:40:27,120 --> 00:40:30,279 Speaker 4: efficients or anybody that's paying for You could tune it 773 00:40:30,560 --> 00:40:32,799 Speaker 4: with great precision and take out what you don't want 774 00:40:32,880 --> 00:40:36,680 Speaker 4: in that. So there are ETFs like Blessed and MAGA. 775 00:40:37,520 --> 00:40:40,640 Speaker 4: It's Callie Cox's our market strategy. She ran a study 776 00:40:40,880 --> 00:40:44,160 Speaker 4: and said, here's how much one hundred dollars invested in 777 00:40:44,200 --> 00:40:48,200 Speaker 4: the market since nineteen fifty it under Republican presidents, under 778 00:40:48,239 --> 00:40:51,000 Speaker 4: democratic presidents, and under all of them, and I'm doing them. 779 00:40:51,040 --> 00:40:53,120 Speaker 4: It's a chart in the book. It's like fifty seven 780 00:40:53,160 --> 00:40:57,680 Speaker 4: dollars under Democrat Republican pregnant presidents, and seventy two dollars 781 00:40:57,800 --> 00:41:01,360 Speaker 4: under Republican presidents unles I'm gonna have, and like twelve 782 00:41:01,480 --> 00:41:05,279 Speaker 4: hundred dollars under all presidents. And so just making that 783 00:41:05,440 --> 00:41:09,000 Speaker 4: bet seems to be really foolish. Another great study in 784 00:41:09,040 --> 00:41:11,640 Speaker 4: there is looking at zip codes and seeing how people 785 00:41:11,880 --> 00:41:14,880 Speaker 4: traded in response to presidential So you could tell us 786 00:41:14,920 --> 00:41:18,120 Speaker 4: it a red or a blue zip code, and if 787 00:41:18,120 --> 00:41:20,120 Speaker 4: it's a blue zip code and a red person is 788 00:41:20,160 --> 00:41:23,279 Speaker 4: elected president, they move to cash. If it's a red 789 00:41:23,360 --> 00:41:25,919 Speaker 4: zip code and a blue president is elected, they moved 790 00:41:25,920 --> 00:41:31,960 Speaker 4: to cash. Partisan bias that hurts portfolios knows no party. 791 00:41:32,480 --> 00:41:35,920 Speaker 4: It's just human nature making bad emotional decisions. 792 00:41:36,719 --> 00:41:39,399 Speaker 1: Very else, how about to invest? Thanks for joining us. 793 00:41:39,320 --> 00:41:48,000 Speaker 3: On trillions, Thank you for having me, Thanks for listening 794 00:41:48,000 --> 00:41:48,600 Speaker 3: to Trillions. 795 00:41:48,960 --> 00:41:49,600 Speaker 1: Until next time. 796 00:41:49,600 --> 00:41:52,320 Speaker 3: You can find us on the Bloomberg terminal, Bloomberg dot com, 797 00:41:52,440 --> 00:41:54,719 Speaker 3: Apple Podcasts, Spotify. 798 00:41:54,760 --> 00:41:56,759 Speaker 1: Or wherever else you'd like to listen. We'd love to 799 00:41:56,800 --> 00:41:57,239 Speaker 1: hear from you. 800 00:41:57,320 --> 00:42:00,399 Speaker 3: Hit us up on social I'm at Joel webershow at 801 00:42:00,520 --> 00:42:04,560 Speaker 3: Eric Balcinis. Trillions is produced by Magnus Henrikson. Brendan Newman 802 00:42:04,719 --> 00:42:07,440 Speaker 3: is our executive producer. Sage Bauman is the head of 803 00:42:07,440 --> 00:42:08,360 Speaker 3: Bloomberg Podcast