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Speaker 1: Welcome to How to Money. I'm Joel and I am Matt,

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Speaker 1: and today we're talking about peering inside the finance industry

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Speaker 1: with Josh Brown. That's right. Our guest today has been

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Speaker 1: called one of the greatest financial writers of all time.

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Speaker 1: That's actually from in Front of the show, Morgan Housel.

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Speaker 1: He's a pretty smart guy as well. But it's no

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Speaker 1: wonder because Josh Brown. He started his original blog, The

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Speaker 1: Reformed Broker, back in two thousand and eight. He now

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Speaker 1: writes over at downtown Josh brown dot com and his

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Speaker 1: latest book just came out yesterday. It is titled You

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Speaker 1: Weren't Supposed To See That Secrets Every Investor Should Know.

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Speaker 1: He also co hosts the Compound of Friends podcast where

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Speaker 1: they discuss the current market trends, they discuss financial strategies

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Speaker 1: and when he's not busy with all of that, so

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Speaker 1: the CEO of Ridholt's Wealth Management, which is an investment

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Speaker 1: advisory firm up there in New York City. So we're

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Speaker 1: excited to really dive into the finance industry with you,

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Speaker 1: Josh Brown. Thank you so much for talking with us today.

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Speaker 2: How are we doing, boys? Everything good, feeling great?

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Speaker 1: Could be better. We're drinking a beer, hanging out, talking finances.

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Speaker 1: It's what we do do best, or at least enjoy

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Speaker 1: most well. And I'm going to share too. Josh felt

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Speaker 1: a little bit left out because he saw our beers

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Speaker 1: when we said hey before we started rolling, is he

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Speaker 1: cracked one? He fell left us, so he cracked open

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Speaker 1: his own Modela over there up there in New York.

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Speaker 1: I appreciate the commitments.

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Speaker 2: Yes, we got to get on the same level as

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Speaker 2: you guys.

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Speaker 1: Yes, down to the same level. Right, So our first

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Speaker 1: question we got to ask you, We ask everyone who

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Speaker 1: comes on the show, is what's your craft beer equivalent?

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Speaker 1: Matt and I we'd like to splurge on the fancier

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Speaker 1: craft beers, but we're still, you know, being smart, saving

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Speaker 1: investing for our future. What's what's that sports for you?

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Speaker 2: I think it's restaurants. I I really only will go

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Speaker 2: to like the best places, and I I'll be going

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Speaker 2: out to dinner and lunch less than I do. But

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Speaker 2: I got the way I feel is like, if I'm

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Speaker 2: going to have two hours on a Saturday night somewhere,

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Speaker 2: it has to be awesome.

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Speaker 1: And no Applebee's for Josh Brown.

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Speaker 2: Dude, I eat at dope places and it's all over

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Speaker 2: my Instagram and I don't apologize for it. And there

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Speaker 2: are other I'm not like a car guy. I drive

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Speaker 2: like the same car I've been driving for six years.

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Speaker 2: I don't have a country club membership for me, like

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Speaker 2: the experiences that I have when I'm with friends and family,

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Speaker 2: Like I don't eat at chain restaurants, and I don't

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Speaker 2: eat at places that are not like memorable enough unless

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Speaker 2: it's like a go to, like local place. So that's

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Speaker 2: my big splurge.

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Speaker 1: If you're looking for something quick, yeah.

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Speaker 2: No, of course, of course, but just saying like if

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Speaker 2: you come out, if you come out to lunch with me,

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Speaker 2: like if I. People are always like, oh, we should

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Speaker 2: do lunch, we should do drinks, and they say like

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Speaker 2: say casually. I'm like, oh no, I have a reservation

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Speaker 2: at TARESI two wednesdays from now. It's at t Want

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Speaker 2: to meet me there. I do it like, oh wait,

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Speaker 2: this guy's not getting around. So I'm not in Manhattan

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Speaker 2: as much as I used to be because of all

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Speaker 2: the things that I'm doing. But when I do lunch,

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Speaker 2: I like really do lunch, and I put a lot

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Speaker 2: of thought into who I'm going with where it's going

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Speaker 2: to be. I mean, it's New York City, so it's

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Speaker 2: impossible to keep up with all the things that are

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Speaker 2: opening and oh yeah, but I try to like keeps

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Speaker 2: as up to date as I possibly can as a

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Speaker 2: as a forty seven year old man who lives in

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Speaker 2: the suburbs doing I'm doing Okay, I love it.

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Speaker 1: I think that's great. And especially given the fact you

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Speaker 1: mentioned that you've mixed the country club, you're not driving

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Speaker 1: the fancy car, Like those two things alone can afford

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Speaker 1: you so many fantastic meals out with and especially I

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Speaker 1: love what you're saying there the commitment to community and

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Speaker 1: the ability for y'all to have some of those shared

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Speaker 1: memories together like that.

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Speaker 2: Yeah, and listen, no disrespect to the boat guys, the

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Speaker 2: car guys, the country club, like everybody has. Everybody has

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Speaker 2: their thing.

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Speaker 1: Nice. Well, Josh, this is the first time we've talked

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Speaker 1: with you. We've talked with a lot of folks there

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Speaker 1: at your but we want to get to know you

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Speaker 1: a little bit more. During our conversation here what sparked

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Speaker 1: your interest in money and then like essentially, how did

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Speaker 1: you turn it into a career. We want to kind

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Speaker 1: of dive back into your history a little bit here.

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Speaker 2: So I have to be honest, I have no interest

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Speaker 2: in money. I'm really fascinated by investment, and so I'm

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Speaker 2: not a personal finance person. My wife is like the

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Speaker 2: CFO of my home. I don't touch the money. I

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Speaker 2: don't log into the bank, I don't pay bills, I

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Speaker 2: don't comparison shop for airline tickets. I don't do any

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Speaker 2: of that stuff. I am really primarily focused on markets

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Speaker 2: and tangentially the economy as it relates to markets. And

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Speaker 2: the thing that really turns me on is just this

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Speaker 2: idea of time passing and money compounding and being part

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Speaker 2: of the growth of these incredible businesses and entrepreneurial stories

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Speaker 2: and now forming my own business eleven years ago and

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Speaker 2: having that grow, and like, I really get turned on

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Speaker 2: by the investing process and the rise and fall of

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Speaker 2: products and companies and CEOs. So that's really what my

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Speaker 2: main thing is. It's it's not so much like money itself,

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Speaker 2: which I almost I sometimes find like almost too tedious

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Speaker 2: to be paying any attention.

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Speaker 1: To it all.

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Speaker 2: And I know, like that remark sounds like privileged or whatever.

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Speaker 1: This blasphemy to Jelge I was like, wait, you're not

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Speaker 1: comparison shopping. I'm cutting this communication off right now.

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Speaker 2: But my wife is an accountant's daughter, boom, and she

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Speaker 2: has an alacrity for this. She's great at it, and

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Speaker 2: she really does pay close attention. And she loves, you know,

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Speaker 2: booking something a day before the price jumps ten percent,

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Speaker 2: and she like, that's what she that's her focus. And

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Speaker 2: my focus is more on like how do we grow

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Speaker 2: the money or how do we allocate it? And she's

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Speaker 2: more how do we spend it? And how do we

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Speaker 2: make sure we're stretching it as far as it can go.

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Speaker 2: So I think we work really well together.

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Speaker 1: Yeah, that's a good tandem.

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Speaker 2: You know. I don't veer into her lane and and

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Speaker 2: you know, just like randomly like drop in and start

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Speaker 2: calling the shots. And she doesn't veer into my lane

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Speaker 2: except when when the markets drop a lot and she'll

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Speaker 2: just be like, hey, are you screwing something upwards? Just

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Speaker 2: what's going is this? Just what's going on?

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Speaker 1: You can have someone to hold your feet to the

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Speaker 1: fire a little bit, but yeah, no, I think and

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Speaker 1: then that can be what makes a couple tick. Lots

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Speaker 1: of times it's like, hey, this is what I'm good at,

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Speaker 1: this is what you're good at, and we trust each

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Speaker 1: other to kind of hold up our endo the bargain well.

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Speaker 2: And then the other. The other thing is that it's

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Speaker 2: essential that if you're in a long term relationship with

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Speaker 2: a husband and wife, a boyfriend or girlfriend, like, there

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Speaker 2: has to be there has to be like some baseline

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Speaker 2: agreement of how you're breaking up these these things that

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Speaker 2: need to take place. Somebody has to be thinking about

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Speaker 2: the long term, and then somebody has to be focused on, hey,

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Speaker 2: we got a credit card bill this morning, and you know,

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Speaker 2: I think you have to have these issues worked out

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Speaker 2: in advance for multiple reasons. And one of the reasons

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Speaker 2: is there were gonna be rough patches. And when I

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Speaker 2: first got married, I had no money, like literally no money,

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Speaker 2: negative money, and you know, we had to communicate and

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Speaker 2: survive that period, you know, And I wasn't a high

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Speaker 2: flying Wall Street financier. I was just a guy that

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Speaker 2: was doing retail brokerage not particularly well, and the world

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Speaker 2: was coming to an end like in six o seven

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Speaker 2: oh eight, Yeah, and we had to survive. We had

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Speaker 2: to survive that period, and so we couldn't have these

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Speaker 2: like grandiose conversations about allocating assets.

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Speaker 1: It was like, how do we it's just about getting by, Yeah,

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Speaker 1: how do we.

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Speaker 2: Like pay a tax bill? A property tax bill?

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Speaker 1: So totally so that makes me I wonder too. I

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Speaker 1: mean the S and P. If you look at it

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Speaker 1: over like basically when you first started writing, like, we've

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Speaker 1: seen an increase over like six hundred percent. How much

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Speaker 1: do you think that your interest in investing has been

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Speaker 1: because of what we've seen over the past almost twenty

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Speaker 1: market yeh, yeah.

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Speaker 2: I gotta tell you, guys. There's a scene in the

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Speaker 2: last Batman film where Bane tells Bruce Wayne, you have

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Speaker 2: merely adopted the darkness. I was born in it. My

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Speaker 2: first ten years in the business featured two almost back

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Speaker 2: to back fifty percent crashes in the S and P

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Speaker 2: five hundred so I got Series seven licensed in ninety seven.

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Speaker 1: Oh geez.

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Speaker 2: And within the first three years, the dot com bubble

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Speaker 2: had peaked and crashed. I watched the Nasdaq fall ninety percent,

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Speaker 2: everyone I knew in the business get wiped out. And

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Speaker 2: then just as we were recovering from the dot com crash,

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Speaker 2: the Enron and WorldCom scandals unraveled, and just as we

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Speaker 2: were recovering from that, it was nine to eleven. So

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Speaker 2: that was my first three years in the business. Okay,

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Speaker 2: five years later we had the Great Financial Crisis with

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Speaker 2: the end of bear Stearns and Lehman Brothers and Washington

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Speaker 2: Mutual and AIG and the bailout of Merrill Lynch and

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Speaker 2: Morgan Stanley and Goldman Sachs just as that was unraveling.

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Speaker 2: So that's all inside of my first ten years in

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Speaker 2: the business. Guys, So I would not say that I'm

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Speaker 2: a good time Charlie and the market's up, and you know,

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Speaker 2: that's why I remain interested. I have witnessed some of

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Speaker 2: the sickest, most destructive capital markets activity anyone has ever seen,

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Speaker 2: and I think I'm a better version of the professional

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Speaker 2: that I am as a result of those experiences. It's

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Speaker 2: not that you need to lose a lot of money

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Speaker 2: to be a good investor, but I think it helps

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Speaker 2: to witness stuff like that and go through it personally

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Speaker 2: and not just read about it in a book.

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Speaker 1: Yeah, it makes me wonder if younger investors are somehow

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Speaker 1: potentially too wearing rose colored glasses, because like the financial

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Speaker 1: independence movement, for instance, the fire movement has grown rapidly

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Speaker 1: as this bowlmark mar has increased, and it makes me wonder, Okay,

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Speaker 1: if we sustain some sort of prolonged downturn, to those

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Speaker 1: early thirty somethings maybe not have the stomach to stick

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Speaker 1: with it because they we've had relatively quick market corrections

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Speaker 1: and relatively small dips.

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Speaker 2: I don't really understand the fire movement stuff. To be

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Speaker 2: honest with you, I think because the career that I'm in, Like,

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Speaker 2: I love what I'm doing and I don't want to stop.

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Speaker 2: But if I were in a different sort of work

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Speaker 2: situation where every day I couldn't wait for the day

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Speaker 2: to be over, I would probably be able to relate

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Speaker 2: to that better. But I think this idea of deprivation

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Speaker 2: for twenty years just to be done working for the man,

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Speaker 2: I'm not going to say that I don't understand it

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Speaker 2: at all. I'm just going to say, like, I feel

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Speaker 2: like it's a focus on the wrong thing. The focus

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Speaker 2: should be like improving the career situation, and I know

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Speaker 2: for everyone that's not possible. So I don't want to

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Speaker 2: speak out of turn on something that like I can't

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Speaker 2: really relate to. But I disagree that the people who

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Speaker 2: in that fire movement, haven't seen any volatility or haven't

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Speaker 2: seen enough. Like twenty twenty two was absolutely harrowing. The

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Speaker 2: highest price for the market for the year was on

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Speaker 2: January first. It was literally all downhill from day one

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Speaker 2: that year. So if you are in your thirties and

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Speaker 2: you live through that, that's not nothing. That's it should

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Speaker 2: be a badge of honor for the fire people in

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Speaker 2: your audience or the people that have been allocating. But

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Speaker 2: they're young and they haven't been through a lot yet

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Speaker 2: they have they don't even realize.

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Speaker 1: It, maybe some of the younger audiences, and maybe that's

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Speaker 1: kind of honestly just a bias on our part just

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Speaker 1: in how we see investing in how we're kind of

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Speaker 1: always looking back over a longer period of time that

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Speaker 1: it kind of looks. I mean, obviously in the moment

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Speaker 1: it's out, yeah, but when you zoom out and you

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Speaker 1: look take that bird's eye view, it's it looks pretty

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Speaker 1: looks pretty swell. But as we're talking about, I guess

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Speaker 1: younger investors makes me think of in your book, you

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Speaker 1: said that gen Z sees markets like a video game

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Speaker 1: that can be beaten or a puzzle that can be

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Speaker 1: and like you weren't talking smack, You're you're a kind guy.

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Speaker 1: But how do you think that this has impacted how

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Speaker 1: the younger generation, how it is that they.

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Speaker 2: Invest I didn't say that as a dis no, not

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Speaker 2: at all, saying that in a complementary way. So I

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Speaker 2: think millennials are more fearful than Gen Z, and millennials

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Speaker 2: are more fearful than my generation Gen X. But we

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Speaker 2: were not ever afraid of the stock market, and we

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Speaker 2: were not ever like uh, We didn't have the formative

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Speaker 2: experiences that would have turned us off from the stock

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Speaker 2: market or the potential for volatility. For the millennials, it

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Speaker 2: was different. The millennials in high school watched their parents

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Speaker 2: get wiped out in the dot com bubble, and then

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Speaker 2: they graduated college directly into the teeth of one of

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Speaker 2: the worse recessions of all time from the global financial crisis,

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Speaker 2: and as a result, they put off household formation, they

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Speaker 2: put off getting married, they put off having babies. We

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Speaker 2: had an epidemic of young adults living at home with

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Speaker 2: their parents. That's the millennial generation. And it really took

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Speaker 2: them until the pandemic period. It took them a really

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Speaker 2: long time to discover the stock market. They just demonstrated

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Speaker 2: very little interest in opening brokerage accounts, in trading and investing.

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Speaker 2: They did four to one case stuff because they kind

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Speaker 2: of felt like they had to, but really it took

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Speaker 2: the millennials a long time. Gen Z is really different.

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Speaker 2: Gen Z embraced gambling and trading very very early, and

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Speaker 2: they absolutely are more engaged investors than prior generation. All

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Speaker 2: of the data suggests that they are speculators first, and

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Speaker 2: that's okay. They're at the right age where that's what

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Speaker 2: they should be doing. They do look at it as

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Speaker 2: a hackable activity and something where there are tricks and

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Speaker 2: loopholes and shortcuts that they are in pursuit of. They're

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Speaker 2: much more exhibitionist in the way they take losses. They

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Speaker 2: tell people about how much money they lost, they post

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Speaker 2: their l's, so to speak, in a way that a

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Speaker 2: millennial would never And it's a really big distinction is

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Speaker 2: that they want to talk about their investments in a

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Speaker 2: way that prior generations were taught. You don't talk about money.

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Speaker 2: Our boomer parents told us, never talk about money over

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Speaker 2: the dinner table. That's all This generation talks about good

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Speaker 2: or bad wins or losses, and I think that's the

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Speaker 2: biggest distinction between millennials and gen Z And it's really

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Speaker 2: fascinating as being neither of those two things, watching that

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Speaker 2: generational divide start to become apparent to everyone in the

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Speaker 2: very early stages.

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Speaker 1: All right, Josh, you just said they should be speculating.

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Speaker 1: And I heard you say that, and I couraged a

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Speaker 1: little bit, not gonna lie, and I'm just so I'm

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Speaker 1: just curious to hear from you. Am I just being

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Speaker 1: a prude because when you look at the numbers and

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Speaker 1: just even those little bits that people are can allocate

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Speaker 1: in their late teens, Like my daughter literally just had

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Speaker 1: her first babysitting gig yesterday, and I'm you know, I'm

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Speaker 1: not like, hey, let's throw it into a roth ira

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Speaker 1: and to an S and P five hundred indext fund yet,

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Speaker 1: but like that day's coming soon, But like how powerful

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Speaker 1: that can be just starting at a young age and.

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Speaker 2: Doing gimme break, she's going to compound her babysitting money

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Speaker 2: into a million dollars how how many centuries? What she

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Speaker 2: needs is formative experiences, and what she needs is to

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Speaker 2: work out the mechanics of how to buy a stock,

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Speaker 2: how to sell a stock, if you're doing that with

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Speaker 2: nineteen dollars you earned from babysitting, it's not a big deal.

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Speaker 2: You know her, her career ambitions are way more important

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Speaker 2: than what she does with her spare cash in her teens.

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Speaker 2: When we speak as pedantically as we do the Royalty,

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Speaker 2: all of us in the personal finance world, When we

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Speaker 2: speak as pedantically as we do about the power of

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Speaker 2: compounding and the importance of retirement, say and blah blah blah.

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Speaker 2: It's not that it's not true what we're saying. It's

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Speaker 2: that sometimes we don't leave room for something that's really important,

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Speaker 2: which is people making mistakes or people determining that they

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Speaker 2: might want to be more hands on with their investments

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Speaker 2: than what the experts say they need to be. So

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Speaker 2: not everybody is going to want a default to an

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Speaker 2: index approach, or to a set it and forget it

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Speaker 2: or a target date. There are people that are going

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Speaker 2: to take an interest in how this stuff works and

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Speaker 2: want to touch it. And if that means that they

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Speaker 2: lower their returns as a result of this excess activity,

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Speaker 2: so be it. Because there's also a chance that they

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Speaker 2: increase the weight of their returns. You could cite all

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Speaker 2: the academic literature you want, But you can't tell somebody

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Speaker 2: who bought five hundred years of Nvidia ten thousand percentage

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Speaker 2: points ago in twenty seventeen that they did something wrong, can't.

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Speaker 2: You can't. You could say, in theory they did something wrong.

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Speaker 2: You could say, well, what you did is not repeatable.

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Speaker 2: They still have the money, guys, you know what I mean.

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Speaker 1: They've still got the money. No, I totally. And the same.

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Speaker 2: Applies to Tesla and to bitcoin, and to Apple and

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Speaker 2: to Amazon. So this idea that everyone has to that

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Speaker 2: everyone has to accept this kind of calvinist strict you know,

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Speaker 2: interpretation of the book of Jack Bogel, and if anyone debates,

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Speaker 2: they're an apostate. For me, it's really lame and it's

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Speaker 2: counterproductive because the net effect is it turns people off

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Speaker 2: from learning how to do this stuff, even if you

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Speaker 2: don't approve of the way that they're learning. The more

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Speaker 2: you try to talk people out of taking any kind

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Speaker 2: of risk, the more you're just going to turn them

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Speaker 2: off from the process overall. So I leave, I leave

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Speaker 2: a little bit more room, and I'm a little bit

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Speaker 2: less doctrinaire then maybe I used to be, you know,

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Speaker 2: prior to the pandemic. I used to write about stuff

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Speaker 2: as the what We're scripture too, and I think I've

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Speaker 2: loosened up a little bit. And I think people should

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Speaker 2: have fun when they're nineteen twenty, twenty one, twenty two,

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Speaker 2: their prop betting on all the apps, they're doing football

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Speaker 2: bets in game and doing all this stuff. Anyway, let's

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Speaker 2: not pretend that the impulse doesn't exist. Let's just try

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Speaker 2: to guide people around it instead.

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Speaker 1: You're really gearing that for a longer conversation if you

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Speaker 1: want to combine Calvinism and investing with Joel right here.

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Speaker 1: But I think we can absolutely agree in that it's

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Speaker 1: better to.

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Speaker 2: Be disrespect I could have said orthodox, no totally, but

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Speaker 2: you get You get.

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Speaker 1: My total here, Josh, if you want to. But I

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Speaker 1: do think we get. We totally agree with the ability

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Speaker 1: for especially kids to make some of these mistakes earlier

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Speaker 1: on with where there's less less money on the line.

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Speaker 1: But we're kind of diving into your investing philosophy, and

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Speaker 1: we got more that we want to talk with you about, Josh.

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Speaker 1: We're going to talk about, yeah, some active versus passive

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Speaker 1: investing as well. We'll get to all that right after

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Speaker 1: the Break. I were back with the Break still talking

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Speaker 1: with Josh Brown, and you work inside the finance industry.

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Speaker 1: I want to touch your new book just came out.

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Speaker 1: The title of the book is you weren't supposed to

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Speaker 1: see that? And you're basically revealing certain things that I

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Speaker 1: guess certain people don't want you talking about. What weren't

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Speaker 1: we supposed to see? What are you revealing in this

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Speaker 1: book that we need to know?

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Speaker 2: So it's important to point out I work in finance,

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Speaker 2: but I started out as an outsider, and I know

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Speaker 2: nobody would look at me today and be like, oh, yeah,

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Speaker 2: you're an outsider. I get it. I'm in on the joke.

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Speaker 2: But my form of experiences writing about the industry and

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Speaker 2: the markets was that like I really was beholden to

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Speaker 2: no one because I was no one. I was like

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Speaker 2: a retail broker working at third tier broker dealers. I

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Speaker 2: had no pedigree and so as a result, I had

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Speaker 2: a very interesting perspective. It was interesting to the readers

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Speaker 2: in that I could pretty much say anything as long

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Speaker 2: as it was true. So I had compliance and I

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Speaker 2: had to adhere to industry standards, but outside of that,

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Speaker 2: there was nothing that I couldn't say, and that freed

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Speaker 2: me to, you know, kind of just say like be like, look,

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Speaker 2: I understand that so and so said this, and this

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Speaker 2: person said that. But here's the truth. And a lot

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Speaker 2: of what I ended up writing about was incentives. And

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Speaker 2: I think Charlie Munger said that, you know, with every

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Speaker 2: passing year, the more he believes that incentives drive everything,

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Speaker 2: the more like even he was underestimating that that power.

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Speaker 2: So much of what people need to know about what

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Speaker 2: goes on on Wall Street boils down to who's getting paid,

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Speaker 2: how they get paid, who pays them, and why. And

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Speaker 2: so if you like really look at, you know, the

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Speaker 2: substance of what I have spent the last fifteen to

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Speaker 2: seventeen years writing, it's really boiled down to that. And

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Speaker 2: so I think I was able to do that really effectively.

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Speaker 2: And I think a lot of what I had written,

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Speaker 2: it's not like I had been in possession of that

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Speaker 2: knowledge for years and years and years. It's like these

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Speaker 2: epiphanies that I had been having along the way, and

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Speaker 2: the willingness to say it out loud, so you weren't

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Speaker 2: supposed to see that. As the book title I think

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Speaker 2: encapsulates that idea. It's like Oh, you weren't supposed to

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Speaker 2: know that this actually works this way, but I'm telling

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Speaker 2: you anyway. And you know, I did that for a

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Speaker 2: long time, and I think it really helped the readers

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Speaker 2: understand what they were truly interfacing with when they were

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Speaker 2: dealing with investment industry stuff.

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Speaker 1: I think when people when I listen to your podcast

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Speaker 1: and when I read what you write, I am reminded

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Speaker 1: typically you're looking out for your reader, your listener, that

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Speaker 1: your viewer. But there's a lot of people out there

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Speaker 1: in the industry. Is this what you're getting at? That

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Speaker 1: there's a lot of people who might say one thing

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Speaker 1: and actually maybe not mean it, but be trying to

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Speaker 1: profit off maybe talking hyping up the fear, and in

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Speaker 1: the background, they're trying to make a trade that profits

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Speaker 1: off you being scared. I get it makes me think

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Speaker 1: of the was it the Bill Ackman Hell is Coming

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Speaker 1: sort of comment or something like that. I mean, this

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Speaker 1: sort of thing happens all the time in the finance industry,

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Speaker 1: where people say one thing publicly, but then behind the

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Speaker 1: scenes are trying to profit. Is that is that kind

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Speaker 1: of what you're getting at?

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Speaker 2: Yeah? So I think I used to be like on

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Speaker 2: a crew, a one man crusade early on, where it

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Speaker 2: would be like somebody would say something I disagreed with

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Speaker 2: and I would like, go to war. I don't care

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Speaker 2: that people are doing that anymore. I just feel like

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Speaker 2: I want to give the public an alternative to the

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Speaker 2: noisemakers and the people who get paid, you know, to

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Speaker 2: get you to subscribe to something, or the people who

433
00:22:46,080 --> 00:22:49,159
Speaker 2: predict crashes every week. I don't want them to not

434
00:22:49,280 --> 00:22:52,960
Speaker 2: say that like maybe this is cynical, but like it's

435
00:22:52,960 --> 00:22:58,520
Speaker 2: actually good that those people exist, because my career is

436
00:22:58,560 --> 00:23:01,880
Speaker 2: about saving the audience from those people, and I've been

437
00:23:01,880 --> 00:23:04,840
Speaker 2: doing it for I don't know, almost twenty years now.

438
00:23:05,359 --> 00:23:08,439
Speaker 2: If people are like, what have you done? Like, what

439
00:23:08,480 --> 00:23:12,760
Speaker 2: has your career been about? I hope that it's obvious

440
00:23:13,119 --> 00:23:16,399
Speaker 2: to the majority of people who've been paying attention that

441
00:23:17,119 --> 00:23:21,000
Speaker 2: I have served as a counterbalance to some of the

442
00:23:21,000 --> 00:23:27,240
Speaker 2: worst actors who are preying on the information asymmetry totally

443
00:23:27,520 --> 00:23:32,320
Speaker 2: and the fear and the ignorance that quite frankly are

444
00:23:32,520 --> 00:23:35,879
Speaker 2: ubiquitous amongst the American public. Like I want to be

445
00:23:36,000 --> 00:23:38,960
Speaker 2: seen as the person, not like it's not like a savior,

446
00:23:39,119 --> 00:23:42,119
Speaker 2: but it's more like, hey, I was somebody saying the

447
00:23:42,560 --> 00:23:42,879
Speaker 2: other thing.

448
00:23:42,960 --> 00:23:45,399
Speaker 1: Yeah, Josh is part certainly part an investment firm, but

449
00:23:45,440 --> 00:23:47,800
Speaker 1: also part like labor of love as to what it

450
00:23:47,880 --> 00:23:49,159
Speaker 1: is that you're doing. And one of the things that

451
00:23:49,200 --> 00:23:52,760
Speaker 1: you wrote about in your book, you're talking about how

452
00:23:52,800 --> 00:23:55,439
Speaker 1: traditional money management firms they make their profit from the

453
00:23:55,480 --> 00:23:58,480
Speaker 1: belief of investors that they can do better than just

454
00:23:58,520 --> 00:24:02,679
Speaker 1: buying the index. We're talking about the difference between active

455
00:24:02,800 --> 00:24:06,080
Speaker 1: versus passively managed funds. What is going on right now

456
00:24:06,119 --> 00:24:08,600
Speaker 1: in the passive versus active debate right now?

457
00:24:08,720 --> 00:24:11,200
Speaker 2: Yeah, it's a good question. I think the debate is dead.

458
00:24:11,600 --> 00:24:14,280
Speaker 2: I think we've basically settled on the idea that for

459
00:24:14,359 --> 00:24:18,320
Speaker 2: most people, the bedrock of the portfolio is going to

460
00:24:18,320 --> 00:24:22,920
Speaker 2: be passive, and then it's like core and explore. So

461
00:24:22,960 --> 00:24:26,080
Speaker 2: the core of most people's portfolios at this point is

462
00:24:26,160 --> 00:24:29,760
Speaker 2: some version of passive. It might be an SMA, it

463
00:24:29,840 --> 00:24:33,000
Speaker 2: might be a direct index, probably going to be an ETF,

464
00:24:33,440 --> 00:24:36,560
Speaker 2: maybe it's a mutual fund. But I think for most

465
00:24:36,960 --> 00:24:41,600
Speaker 2: wealth management clients, the advisor they work for, they work

466
00:24:41,640 --> 00:24:46,879
Speaker 2: with is doing some version of low cost, low fee,

467
00:24:47,600 --> 00:24:50,280
Speaker 2: low turnover, unless it's direct index. But we'll get to

468
00:24:50,359 --> 00:24:55,000
Speaker 2: that later. But that is where the industry, the wealth

469
00:24:55,040 --> 00:24:59,720
Speaker 2: management industry, has for the most part settled out, and

470
00:24:59,800 --> 00:25:05,359
Speaker 2: that there are these like sleeves or satellite holdings within

471
00:25:05,440 --> 00:25:10,600
Speaker 2: these portfolios that are either trying to capture something thematic

472
00:25:11,280 --> 00:25:13,560
Speaker 2: or trying to add a little bit of alpha as

473
00:25:13,600 --> 00:25:17,359
Speaker 2: a layer, or trying to do something more concentrated, or

474
00:25:17,400 --> 00:25:20,440
Speaker 2: trying to do something more tactical, or maybe something that's

475
00:25:20,440 --> 00:25:23,679
Speaker 2: a different asset class, like bitcoin or private equity. But

476
00:25:24,160 --> 00:25:26,199
Speaker 2: I think where we are as an industry is that

477
00:25:26,840 --> 00:25:29,760
Speaker 2: all right for my equities, I don't believe in active

478
00:25:29,800 --> 00:25:33,159
Speaker 2: management per se, and then I want to have something

479
00:25:33,200 --> 00:25:37,560
Speaker 2: else in addition to that. Though that kind of expresses something,

480
00:25:37,800 --> 00:25:40,800
Speaker 2: some kind of a view or some kind of a proclivity.

481
00:25:41,760 --> 00:25:45,760
Speaker 2: So for some people it's gold, you know, but it's okay,

482
00:25:46,000 --> 00:25:50,320
Speaker 2: Like every advisor doesn't have to agree with every other advisor.

483
00:25:50,600 --> 00:25:52,800
Speaker 2: It should be it should be a market. And again,

484
00:25:53,640 --> 00:25:57,160
Speaker 2: if somebody said ten years ago, actually I'm overweighting tech

485
00:25:58,040 --> 00:26:02,320
Speaker 2: because I think invation the earning innovation are going to

486
00:26:02,320 --> 00:26:07,800
Speaker 2: outpace the rest of the global stock market, and you know,

487
00:26:07,840 --> 00:26:11,320
Speaker 2: the purists would say, well, that's a heresy. And by

488
00:26:11,359 --> 00:26:14,080
Speaker 2: the way, you're paying an above market multiple for that

489
00:26:14,240 --> 00:26:19,399
Speaker 2: tech exposure. So not only is it a heresy against

490
00:26:19,400 --> 00:26:24,160
Speaker 2: the academic literature and diversification, but it's actually a heresy

491
00:26:24,200 --> 00:26:28,480
Speaker 2: against Warren Buffett. And you know, the idea of like,

492
00:26:29,080 --> 00:26:33,200
Speaker 2: you know, buying buying cheap, selling expensive. Somebody who had

493
00:26:33,200 --> 00:26:35,480
Speaker 2: done that for their clients ten years ago has absolutely

494
00:26:35,480 --> 00:26:39,480
Speaker 2: crushed it. Text the rate of return on a tech

495
00:26:39,520 --> 00:26:42,600
Speaker 2: heavy portfolio, even if you just think of Nasdaq versus

496
00:26:42,680 --> 00:26:47,000
Speaker 2: S and P, the differential is massive. So the problem

497
00:26:47,040 --> 00:26:49,399
Speaker 2: is ten years ago, a lot of people would have

498
00:26:49,400 --> 00:26:52,600
Speaker 2: felt uncomfortable even expressing that idea out loud. In two

499
00:26:52,680 --> 00:26:58,600
Speaker 2: thousand and fourteen, every financial commentator in blogger was talking

500
00:26:58,600 --> 00:27:02,679
Speaker 2: about how activist for idiots, So it just, you know,

501
00:27:02,800 --> 00:27:05,600
Speaker 2: so it goes back to what kind of active and

502
00:27:05,840 --> 00:27:07,600
Speaker 2: are you gonna get it right or not? And that's

503
00:27:07,640 --> 00:27:11,359
Speaker 2: the hard part. And so I think like not being

504
00:27:11,400 --> 00:27:15,880
Speaker 2: too doctrinaire these days and not being too heavy handed

505
00:27:16,240 --> 00:27:18,760
Speaker 2: with my opinion on every topic under the sun. I

506
00:27:18,840 --> 00:27:21,800
Speaker 2: don't really care what people say. We have our answer.

507
00:27:21,800 --> 00:27:24,239
Speaker 2: It works for us, it works for our clients, and

508
00:27:25,160 --> 00:27:27,280
Speaker 2: you know, somebody else could have a different answer, and

509
00:27:27,359 --> 00:27:28,919
Speaker 2: I don't have to go to war with that person

510
00:27:28,920 --> 00:27:29,520
Speaker 2: on the internet.

511
00:27:29,640 --> 00:27:32,240
Speaker 1: Yeah, so somebody who's like solidly in the wealth building

512
00:27:32,240 --> 00:27:34,879
Speaker 1: phase of their life, how like what percentage of their

513
00:27:34,920 --> 00:27:38,080
Speaker 1: portfolio would you dedicate towards that explore part of their portfolio.

514
00:27:38,119 --> 00:27:40,679
Speaker 2: So I can't give you a mathematical answer to that,

515
00:27:40,800 --> 00:27:44,680
Speaker 2: because so much of this is about personality. And if

516
00:27:44,720 --> 00:27:48,040
Speaker 2: I have to give you a portion of your portfolio

517
00:27:48,240 --> 00:27:52,960
Speaker 2: dedicated towards something that I wouldn't necessarily want to, but

518
00:27:53,040 --> 00:27:55,119
Speaker 2: I have to do that in order to keep you

519
00:27:55,200 --> 00:27:59,480
Speaker 2: focused on the big picture. Like I'll as an advisor,

520
00:27:59,800 --> 00:28:03,280
Speaker 2: I'm a fiduciary, I'll do that. I might try to

521
00:28:03,320 --> 00:28:05,720
Speaker 2: talk you out of it. So if you're one of

522
00:28:05,720 --> 00:28:09,119
Speaker 2: these people that just no matter what you came to me,

523
00:28:10,359 --> 00:28:13,840
Speaker 2: you have a huge position in Apple, and in my

524
00:28:13,880 --> 00:28:16,560
Speaker 2: opinion it should be smaller. But then it goes up

525
00:28:16,560 --> 00:28:20,000
Speaker 2: another five hundred percent and I forced you to sell

526
00:28:20,040 --> 00:28:22,760
Speaker 2: out of it just so that your portfolio would align

527
00:28:22,840 --> 00:28:26,720
Speaker 2: with my other seventy clients. You're never going to forgive me.

528
00:28:27,600 --> 00:28:30,480
Speaker 2: So part of my job is a fiduciary is to say, Okay,

529
00:28:30,520 --> 00:28:34,400
Speaker 2: look here's the situation. You have this concentrated position, you're

530
00:28:34,400 --> 00:28:37,480
Speaker 2: definitely taking more risk than you need to. It's been

531
00:28:37,720 --> 00:28:41,680
Speaker 2: rewarded risk in the recent past. But we're going to

532
00:28:41,760 --> 00:28:45,160
Speaker 2: work out a plan by which we divest of a

533
00:28:45,160 --> 00:28:48,000
Speaker 2: certain amount of this concentrated holding. And it could be meta,

534
00:28:48,040 --> 00:28:50,760
Speaker 2: it could be whatever. We're going to do this methodically

535
00:28:50,800 --> 00:28:52,760
Speaker 2: over time. We're not going to be emotional about it.

536
00:28:53,000 --> 00:28:55,560
Speaker 2: We're going to try to offset the gains with tax

537
00:28:55,640 --> 00:28:59,960
Speaker 2: losses elsewhere, and by the end of this period of time,

538
00:29:00,640 --> 00:29:03,520
Speaker 2: your portfolio will be more imbalanced with what I think

539
00:29:03,560 --> 00:29:06,920
Speaker 2: your risk reward is. But you're not going to hate

540
00:29:06,920 --> 00:29:10,320
Speaker 2: my guts if this stock price troubles. What I've just

541
00:29:10,360 --> 00:29:13,960
Speaker 2: described is the essence of financial advice. It's not just

542
00:29:14,320 --> 00:29:18,160
Speaker 2: what's the best portfolio for mister Anderson, it's what's the

543
00:29:18,200 --> 00:29:23,120
Speaker 2: best portfolio given mister Anderson's goals and given what I

544
00:29:23,240 --> 00:29:25,160
Speaker 2: think he and his wife can live with.

545
00:29:25,360 --> 00:29:27,480
Speaker 1: Well, there's so much behavior too, right. That's one of

546
00:29:27,480 --> 00:29:30,240
Speaker 1: the big selling points of a financial advisor, is kind

547
00:29:30,240 --> 00:29:33,360
Speaker 1: of helping people through difficult times, whether it's a life

548
00:29:33,400 --> 00:29:37,200
Speaker 1: circumstance or whether it's a macroeconomic circumstance. That is one

549
00:29:37,200 --> 00:29:39,240
Speaker 1: of the main roles of a financial advisor. And you

550
00:29:39,360 --> 00:29:42,280
Speaker 1: just mentioned taxes too, Josh, which is something that doesn't

551
00:29:42,280 --> 00:29:45,800
Speaker 1: get talked about enough, but tax savings from smart portfolio

552
00:29:45,840 --> 00:29:50,479
Speaker 1: management can be substantial. How important is tax efficiency and

553
00:29:50,600 --> 00:29:54,520
Speaker 1: walking clients through preferential tax treatment strategies in what you do.

554
00:29:54,600 --> 00:29:57,760
Speaker 2: It's a huge component to the value add that we

555
00:29:57,880 --> 00:30:01,560
Speaker 2: bring to clients. It's not instead of investing. It's really

556
00:30:01,600 --> 00:30:05,520
Speaker 2: an important piece of the investing process is understanding the

557
00:30:05,600 --> 00:30:08,840
Speaker 2: tax ramifications for the things you're doing. At the high

558
00:30:08,920 --> 00:30:11,920
Speaker 2: high end, when you have clients come to you and

559
00:30:11,960 --> 00:30:15,640
Speaker 2: they have fifty eight different investments in private equity, and

560
00:30:15,680 --> 00:30:19,760
Speaker 2: they have like a state things going on, and like

561
00:30:19,960 --> 00:30:22,760
Speaker 2: you have to be able to speak that language in

562
00:30:22,880 --> 00:30:26,200
Speaker 2: order to effectively advise it. Because at the high end

563
00:30:26,400 --> 00:30:29,960
Speaker 2: it's no longer a nice to have, it becomes mandatory.

564
00:30:30,000 --> 00:30:33,240
Speaker 2: If you can't speak tax fluently and help people with

565
00:30:33,320 --> 00:30:36,720
Speaker 2: their tax related issues, you cannot do wealth management at

566
00:30:36,720 --> 00:30:39,720
Speaker 2: that level. And so I think the firm of the future,

567
00:30:39,880 --> 00:30:43,960
Speaker 2: the aria of the future, maybe they'll outsource it, but

568
00:30:44,200 --> 00:30:47,040
Speaker 2: I think the really successful firms are going to build

569
00:30:47,040 --> 00:30:50,560
Speaker 2: it into what they're doing for clients day and day out.

570
00:30:50,800 --> 00:30:52,560
Speaker 1: That makes sense, I mean, and I think you run

571
00:30:52,560 --> 00:30:55,000
Speaker 1: in your book too, that it's something like if you

572
00:30:55,040 --> 00:30:58,760
Speaker 1: are able to increase performance by ten thousand dollars crease

573
00:30:58,800 --> 00:31:01,719
Speaker 1: your returns for somebody with an investment, that's equal to

574
00:31:01,760 --> 00:31:04,120
Speaker 1: saving them one thousand dollars. Like there's like a ten

575
00:31:04,360 --> 00:31:07,840
Speaker 1: x multiplier when you save somebody money with taxes because

576
00:31:07,840 --> 00:31:10,040
Speaker 1: of the fact that like it's guaranteed, Like that's just

577
00:31:10,080 --> 00:31:12,479
Speaker 1: money that you no longer have to pay the government.

578
00:31:12,560 --> 00:31:14,080
Speaker 1: So it's like a slam dunk.

579
00:31:14,200 --> 00:31:16,720
Speaker 2: It's a weird thing. If a client is owed to,

580
00:31:17,480 --> 00:31:20,480
Speaker 2: you know, is owed something back from you know, their

581
00:31:20,520 --> 00:31:23,480
Speaker 2: state or something for like a thousand dollars, that's like

582
00:31:23,520 --> 00:31:26,240
Speaker 2: the equivalent of making them ten thousand dollars in the market,

583
00:31:27,040 --> 00:31:29,800
Speaker 2: because the ten thousand dollars you make them in the market.

584
00:31:30,200 --> 00:31:32,040
Speaker 2: Like you didn't do that, The market did that. You

585
00:31:32,160 --> 00:31:33,160
Speaker 2: just facilitated it.

586
00:31:33,200 --> 00:31:35,040
Speaker 1: Well, and it's still fluid, it's still liquid. You could

587
00:31:35,280 --> 00:31:37,360
Speaker 1: it depends where the market goes after that. But it's

588
00:31:37,360 --> 00:31:39,840
Speaker 1: just a fascinating psychological computer to.

589
00:31:39,840 --> 00:31:43,200
Speaker 2: Find an error in somebody's like tax situation and you

590
00:31:43,280 --> 00:31:45,920
Speaker 2: tell them, hey, you're making a really big mistake here

591
00:31:46,400 --> 00:31:50,400
Speaker 2: that your accountant should have picked up on. That that's

592
00:31:50,480 --> 00:31:51,640
Speaker 2: that pays dividends.

593
00:31:51,640 --> 00:31:54,000
Speaker 1: Oh yeah, they'll financial Yeah, they can give you a

594
00:31:54,040 --> 00:31:59,000
Speaker 1: big old kiss. Hey, Josh, you mentioned direct indexing earlier.

595
00:31:59,120 --> 00:32:00,680
Speaker 1: It seems like it's the hot new trade. Can you

596
00:32:01,040 --> 00:32:03,040
Speaker 1: define it? Tell us why it's coming on so strong.

597
00:32:03,320 --> 00:32:06,400
Speaker 2: So direct indexing is really a thirty some odd year

598
00:32:06,400 --> 00:32:10,960
Speaker 2: old concept. It's it's what's what I think has thrust

599
00:32:10,960 --> 00:32:13,880
Speaker 2: it into the limelight in the wealth management space is

600
00:32:14,000 --> 00:32:17,600
Speaker 2: the advent of commission free trades. If you wanted to

601
00:32:17,600 --> 00:32:20,800
Speaker 2: do direct indexing for a client and for the listener

602
00:32:20,840 --> 00:32:24,680
Speaker 2: who's not familiar. Direct indexing is this idea of Okay,

603
00:32:24,960 --> 00:32:28,000
Speaker 2: i'll get us and P five hundred exposure, but rather

604
00:32:28,080 --> 00:32:31,200
Speaker 2: than give it to you in the spy ETF, I

605
00:32:31,240 --> 00:32:34,760
Speaker 2: will actually give you the five hundred holdings and will

606
00:32:34,760 --> 00:32:38,040
Speaker 2: buy those stocks proportionately to the index, and then we

607
00:32:38,120 --> 00:32:41,400
Speaker 2: will trade them so that it keeps pace with the index.

608
00:32:41,880 --> 00:32:44,000
Speaker 2: What is the purpose of doing that? Like, why is

609
00:32:44,040 --> 00:32:47,920
Speaker 2: that better than the ETF wrapper? For many clients, it's not.

610
00:32:49,280 --> 00:32:52,080
Speaker 2: You really have to beat a certain dollar level where

611
00:32:52,200 --> 00:32:52,920
Speaker 2: it makes sense.

612
00:32:53,160 --> 00:32:54,200
Speaker 1: This is high end clients.

613
00:32:54,400 --> 00:32:57,840
Speaker 2: Yeah, I think so. I mean, I know, like Fidelity

614
00:32:57,840 --> 00:33:01,280
Speaker 2: and Schwab, they want to they want to go downstream

615
00:33:01,320 --> 00:33:03,400
Speaker 2: with it and bring it to like retail. But I

616
00:33:03,440 --> 00:33:07,880
Speaker 2: think for wealth clients, one of the ideas that makes it,

617
00:33:07,920 --> 00:33:09,480
Speaker 2: one of the things that makes it so powerful is

618
00:33:09,480 --> 00:33:12,640
Speaker 2: the ability to tax loss harvest and so have index

619
00:33:12,760 --> 00:33:18,160
Speaker 2: level returns, but be able to harvest losses through replacing

620
00:33:18,360 --> 00:33:21,080
Speaker 2: different securities. And you can obviously you're not going to

621
00:33:21,080 --> 00:33:23,600
Speaker 2: be able to do that in an ETF rapper that

622
00:33:23,720 --> 00:33:27,320
Speaker 2: just owns the index. I think the ability to screen

623
00:33:27,360 --> 00:33:32,280
Speaker 2: out certain securities for ESG. Purposes or you know, corporate

624
00:33:32,320 --> 00:33:38,560
Speaker 2: governance reasons or whatever, or even concentration. So like if you, guys, Matt,

625
00:33:38,600 --> 00:33:41,440
Speaker 2: if you called me and said, hey, my net worth

626
00:33:41,480 --> 00:33:43,920
Speaker 2: is eight million and six million dollars of that is

627
00:33:43,960 --> 00:33:47,640
Speaker 2: in Facebook stock, if I buy you the triple cues,

628
00:33:47,760 --> 00:33:50,800
Speaker 2: it's almost malpractice, like I'm just giving you more of

629
00:33:50,840 --> 00:33:53,239
Speaker 2: the exposure that you already have too much of. So

630
00:33:53,720 --> 00:33:57,200
Speaker 2: that I mean that is just revolutionary for the wealth industry.

631
00:33:57,240 --> 00:34:01,280
Speaker 2: I don't think it's applicable necessary for like, you know,

632
00:34:01,360 --> 00:34:05,960
Speaker 2: retail one hundred thousand dollars in under accounts and we're

633
00:34:06,000 --> 00:34:08,520
Speaker 2: certainly not using it for that purpose. We love ETFs.

634
00:34:08,560 --> 00:34:12,040
Speaker 2: But the reason why all of a sudden it's taken

635
00:34:12,080 --> 00:34:14,600
Speaker 2: the industry by storm is three reasons. The first is

636
00:34:15,280 --> 00:34:18,960
Speaker 2: there hasn't been There hadn't been any innovation there for decades.

637
00:34:19,480 --> 00:34:23,480
Speaker 2: It was a pre existing technology. There was kind of

638
00:34:23,520 --> 00:34:27,319
Speaker 2: one company that that you know, had pioneered it and

639
00:34:27,360 --> 00:34:30,120
Speaker 2: really owned it, and they were a division of you know,

640
00:34:30,200 --> 00:34:34,000
Speaker 2: some other brokerage firm, and it just like kind of

641
00:34:34,040 --> 00:34:38,040
Speaker 2: sat there and it was this curiosity. And then all

642
00:34:38,040 --> 00:34:41,799
Speaker 2: of a sudden, in twenty nineteen, Schwab and then TD

643
00:34:42,080 --> 00:34:47,000
Speaker 2: and then Fidelity dropped their trading fees on stocks to zero,

644
00:34:47,320 --> 00:34:49,600
Speaker 2: and then all of a sudden, it's like, well, wait

645
00:34:49,600 --> 00:34:52,799
Speaker 2: a minute, this is crazy. So now if I'm an

646
00:34:52,840 --> 00:34:55,879
Speaker 2: advisor and I want to do direct indexing, I don't

647
00:34:55,920 --> 00:35:00,000
Speaker 2: have to negotiate asset based pricing with my custodian because

648
00:35:00,360 --> 00:35:02,960
Speaker 2: all the stocks are going to trade free. So now

649
00:35:03,040 --> 00:35:07,480
Speaker 2: this strategy, which I know is great, has the chance

650
00:35:07,600 --> 00:35:10,839
Speaker 2: to be super efficient a lot cheaper, and I can

651
00:35:10,880 --> 00:35:14,720
Speaker 2: actually do this. So Vanguard and has a direct index

652
00:35:14,760 --> 00:35:17,759
Speaker 2: and now everyone in the industry has a version of it,

653
00:35:18,160 --> 00:35:22,280
Speaker 2: and advisors are becoming very adept at incorporating it into

654
00:35:22,600 --> 00:35:24,360
Speaker 2: how they allocate their client's assets.

655
00:35:24,560 --> 00:35:26,680
Speaker 1: Nice Josh we got a few more questions, including we

656
00:35:26,719 --> 00:35:28,520
Speaker 1: want to know what keeps you up at night. We'll

657
00:35:28,520 --> 00:35:30,799
Speaker 1: get to a few more questions with Josh Bright after this.

658
00:35:38,400 --> 00:35:38,520
Speaker 2: Ow.

659
00:35:38,560 --> 00:35:40,400
Speaker 1: We're back from the break, so we'll talk about Josh Brown.

660
00:35:40,480 --> 00:35:43,120
Speaker 1: We are speaking behind the curtain of the finance industry,

661
00:35:43,280 --> 00:35:46,200
Speaker 1: and Josh, you are quoted in the book What Went

662
00:35:46,280 --> 00:35:50,160
Speaker 1: Wrong with Capitalism. The premise of that book is that

663
00:35:50,600 --> 00:35:53,799
Speaker 1: government and fed over each are doing damage to the

664
00:35:53,800 --> 00:35:57,759
Speaker 1: future of the market. Basically, bailouts, loose monetary policy are

665
00:35:57,840 --> 00:36:01,200
Speaker 1: going to have this blowback effect at some point in

666
00:36:01,239 --> 00:36:03,759
Speaker 1: the future on the stock market. I'm curious to hear

667
00:36:03,760 --> 00:36:04,360
Speaker 1: your thoughts on that.

668
00:36:04,600 --> 00:36:07,200
Speaker 2: So you know, we have this chart that we show

669
00:36:07,239 --> 00:36:12,440
Speaker 2: people and it's earnings growth plotted alongside the S and

670
00:36:12,480 --> 00:36:15,239
Speaker 2: P five hundred its price return, and they were in

671
00:36:15,320 --> 00:36:20,000
Speaker 2: lockstep with each other. So yeah, for sure, like when

672
00:36:20,040 --> 00:36:23,799
Speaker 2: there's loose monetary policy, definitely people take more risk, and

673
00:36:23,840 --> 00:36:28,120
Speaker 2: maybe that's good for stock market multiples, but that's like

674
00:36:28,160 --> 00:36:31,040
Speaker 2: in the very short term. Over the long term, the

675
00:36:31,120 --> 00:36:33,400
Speaker 2: most important thing you need to understand about the returns

676
00:36:33,400 --> 00:36:36,160
Speaker 2: of the market is that they almost perfectly match the

677
00:36:36,239 --> 00:36:40,920
Speaker 2: gains in corporate profits. In earnings. So this idea that

678
00:36:40,960 --> 00:36:45,080
Speaker 2: the market is only up because of the government's intervention. Again,

679
00:36:45,520 --> 00:36:48,920
Speaker 2: in March of twenty twenty, can we say that the

680
00:36:48,960 --> 00:36:52,080
Speaker 2: market bottomed because of government intervention? Yeah, of course we can, like,

681
00:36:52,400 --> 00:36:56,759
Speaker 2: of course, But now it's August of twenty twenty four,

682
00:36:57,440 --> 00:37:00,400
Speaker 2: So would we say the stock market doubled as a

683
00:37:00,400 --> 00:37:02,719
Speaker 2: result of what they did in March of twenty twenty. No,

684
00:37:03,400 --> 00:37:05,600
Speaker 2: And the Fed has been raising rates and has kept

685
00:37:06,840 --> 00:37:10,279
Speaker 2: generationally high interest rates for now eighteen months, and the

686
00:37:10,280 --> 00:37:12,400
Speaker 2: stock market has continued to rise. So what are you

687
00:37:12,400 --> 00:37:16,319
Speaker 2: going to attribute that to? So I don't play this

688
00:37:16,480 --> 00:37:23,120
Speaker 2: game where I look for culprits from why investments went

689
00:37:23,200 --> 00:37:25,400
Speaker 2: up or didn't go up. I feel like in the

690
00:37:25,480 --> 00:37:30,000
Speaker 2: long run, interest rates and earnings are the two most

691
00:37:30,040 --> 00:37:34,839
Speaker 2: powerful factors affecting markets. Economic policies come and go. You

692
00:37:34,880 --> 00:37:38,120
Speaker 2: get Republicans, you get Democrats, you get Congress controlled by

693
00:37:38,160 --> 00:37:40,640
Speaker 2: one party or the other, you get to split Congress,

694
00:37:40,640 --> 00:37:43,279
Speaker 2: you get every permutation. But one of the things that

695
00:37:43,360 --> 00:37:48,239
Speaker 2: doesn't change is that corporate executives and boards of directors

696
00:37:48,800 --> 00:37:52,840
Speaker 2: wake up every day thinking about only one thing. How

697
00:37:52,880 --> 00:37:58,640
Speaker 2: do we increase the profitability and hence our compensation of

698
00:37:59,080 --> 00:38:02,160
Speaker 2: this company, and that is what the stock market is

699
00:38:02,200 --> 00:38:05,759
Speaker 2: really about. And yes, of course things change around it.

700
00:38:05,800 --> 00:38:08,320
Speaker 2: But like in the end we talked about incentives a

701
00:38:08,360 --> 00:38:12,360
Speaker 2: few questions ago, the number one incentive that drives American

702
00:38:12,400 --> 00:38:16,680
Speaker 2: style capitalism is get the stock price up. Do whatever

703
00:38:16,719 --> 00:38:18,600
Speaker 2: you have to to get the stock price up. And

704
00:38:19,239 --> 00:38:21,160
Speaker 2: I don't think it matters who's in the White House.

705
00:38:21,680 --> 00:38:27,040
Speaker 2: That impulse is not going to change. So talented corporate

706
00:38:27,680 --> 00:38:31,640
Speaker 2: executives all over America, in every industry, we'll figure out

707
00:38:31,680 --> 00:38:33,719
Speaker 2: a way to get things done, figure out a way

708
00:38:33,760 --> 00:38:37,520
Speaker 2: to improve processes, figure out a way to enrich themselves

709
00:38:37,560 --> 00:38:42,040
Speaker 2: and their fellow shareholders. And almost nothing, almost nothing can

710
00:38:42,040 --> 00:38:44,440
Speaker 2: stop that over the long term. So if you believe

711
00:38:44,440 --> 00:38:47,680
Speaker 2: in that, if you believe in that, then you don't

712
00:38:47,680 --> 00:38:51,080
Speaker 2: worry so much about how interventionist the government is being

713
00:38:51,080 --> 00:38:52,280
Speaker 2: in any given year. Yeah.

714
00:38:52,320 --> 00:38:54,759
Speaker 1: No, And I appreciate your how optimistic you are and

715
00:38:54,760 --> 00:38:57,240
Speaker 1: how optimistic you encourage your listeners and viewers to be, because

716
00:38:57,200 --> 00:39:00,960
Speaker 1: I do think optimism is warranted. Actually, you know, when

717
00:39:01,000 --> 00:39:02,399
Speaker 1: you look at history and when you look at kind

718
00:39:02,440 --> 00:39:04,600
Speaker 1: of the type of economy we have here in the

719
00:39:04,680 --> 00:39:06,920
Speaker 1: United States, and the incentives that are at play for

720
00:39:06,960 --> 00:39:10,520
Speaker 1: business owners. You just mentioned though, this focus on share price.

721
00:39:10,800 --> 00:39:12,319
Speaker 1: Do you think there's been more of a focus on

722
00:39:12,360 --> 00:39:15,879
Speaker 1: share price from some of these larger companies and maybe

723
00:39:15,960 --> 00:39:19,080
Speaker 1: less of a focus on longevity of a company. I

724
00:39:19,120 --> 00:39:22,080
Speaker 1: guess is there any downside to companies thinking too much

725
00:39:22,480 --> 00:39:25,239
Speaker 1: about what shareholders are going to experience in the next

726
00:39:25,239 --> 00:39:27,800
Speaker 1: six months versus what their customers are going to experience

727
00:39:27,840 --> 00:39:28,760
Speaker 1: over the next six years.

728
00:39:28,840 --> 00:39:33,280
Speaker 2: I think there's a paradox inherent in that question. Right now,

729
00:39:34,400 --> 00:39:39,000
Speaker 2: So much of the way a company is perceived amongst

730
00:39:39,080 --> 00:39:42,640
Speaker 2: its employees and its vendors and its suppliers and its

731
00:39:42,640 --> 00:39:48,080
Speaker 2: customers is wrapped up in what the stock price is doing. There,

732
00:39:48,800 --> 00:39:53,120
Speaker 2: you know, there is no there is no doubt that

733
00:39:53,200 --> 00:39:56,360
Speaker 2: the share price and the sheer size and scale and

734
00:39:56,520 --> 00:40:00,760
Speaker 2: market caps of companies like Meta and Alphabet that plays

735
00:40:00,760 --> 00:40:05,279
Speaker 2: in their favor as they move and shake and throw

736
00:40:05,280 --> 00:40:09,319
Speaker 2: their elbows around the negotiations, like it's not a thing

737
00:40:09,400 --> 00:40:12,719
Speaker 2: that can be easily disintermediated, like let's just focus on

738
00:40:12,760 --> 00:40:14,640
Speaker 2: the business and not the share price. A lot of

739
00:40:14,719 --> 00:40:18,120
Speaker 2: times the share price is the business. And one really

740
00:40:18,200 --> 00:40:20,880
Speaker 2: great example of that is what we witnessed last spring

741
00:40:20,920 --> 00:40:27,680
Speaker 2: with Silicon Valley Bank, you had this self reinforcing cycle

742
00:40:27,880 --> 00:40:31,960
Speaker 2: where people would write an article that they're concerned about

743
00:40:32,000 --> 00:40:34,040
Speaker 2: the bank, the share price would fall, and even more

744
00:40:34,040 --> 00:40:36,480
Speaker 2: people would be concerned about the bank, which would prompt

745
00:40:36,520 --> 00:40:39,239
Speaker 2: another wave of articles which would prompt the share price

746
00:40:39,280 --> 00:40:41,879
Speaker 2: to fall even more, and that process plays out until

747
00:40:41,880 --> 00:40:46,160
Speaker 2: it's game over. So in financials, this is actually one

748
00:40:46,160 --> 00:40:48,239
Speaker 2: of the few areas of the markets, but not the only.

749
00:40:48,719 --> 00:40:50,360
Speaker 2: Financial is one of the few areas of the market

750
00:40:50,400 --> 00:40:53,840
Speaker 2: where actually the share price affects the fundamentals, or the

751
00:40:53,880 --> 00:40:58,800
Speaker 2: share price affects how potential customers think about the safety

752
00:40:59,280 --> 00:41:04,320
Speaker 2: of dealing with that financial institution. So we can't divorce

753
00:41:04,400 --> 00:41:06,879
Speaker 2: these two things. One of the things that we can say,

754
00:41:07,600 --> 00:41:10,400
Speaker 2: go back and read what Larry Fink wrote in his

755
00:41:10,480 --> 00:41:14,040
Speaker 2: annual letters to black Rock shareholders this spring. He talks

756
00:41:14,040 --> 00:41:17,520
Speaker 2: about these conversations that he had with world leaders and

757
00:41:17,560 --> 00:41:23,040
Speaker 2: they all looked at what the differences between America and

758
00:41:23,239 --> 00:41:26,720
Speaker 2: all of these other countries since the Great Financial Crisis

759
00:41:26,840 --> 00:41:32,239
Speaker 2: or even since the end of the pandemic. Why have

760
00:41:32,360 --> 00:41:37,200
Speaker 2: we recovered so much better than everywhere else? And one

761
00:41:37,280 --> 00:41:41,120
Speaker 2: of the key attributes of our system versus all of

762
00:41:41,120 --> 00:41:44,680
Speaker 2: these other economic systems around the world is the strength,

763
00:41:45,160 --> 00:41:50,279
Speaker 2: the depth, the breadth of our capital markets. And Larry Fink,

764
00:41:50,400 --> 00:41:56,320
Speaker 2: I think, wrote very eloquently, very succinctly on this idea

765
00:41:56,520 --> 00:42:00,359
Speaker 2: that world leaders, like in France and in Japan and

766
00:42:00,360 --> 00:42:04,439
Speaker 2: in China, they're all enacting these reforms to unshackle their

767
00:42:04,440 --> 00:42:07,520
Speaker 2: own stock markets and build up the strength of their

768
00:42:08,120 --> 00:42:12,680
Speaker 2: domestic capital markets in order to compete in the new era.

769
00:42:12,760 --> 00:42:16,280
Speaker 2: And what that translates into is we need higher stock prices,

770
00:42:16,719 --> 00:42:20,080
Speaker 2: we need more investors, we need higher valuations for our

771
00:42:20,160 --> 00:42:24,440
Speaker 2: publicly traded assets, we need more institutional activity. We just

772
00:42:24,520 --> 00:42:27,239
Speaker 2: need to be more like America because one of the

773
00:42:27,239 --> 00:42:30,320
Speaker 2: things that we do better than anywhere else is provide

774
00:42:30,719 --> 00:42:35,239
Speaker 2: incredible capital markets that enable the creation of companies, the

775
00:42:35,360 --> 00:42:38,759
Speaker 2: underwriting of risk, the ability for somebody with a great

776
00:42:38,800 --> 00:42:41,440
Speaker 2: idea to be connected to somebody with excess capital, like

777
00:42:41,480 --> 00:42:45,640
Speaker 2: we do that better than any country. So you can't

778
00:42:45,640 --> 00:42:49,319
Speaker 2: divorce what's happening with your share price with the fundamentals

779
00:42:49,320 --> 00:42:52,520
Speaker 2: of your business, and on a more global level, on

780
00:42:52,600 --> 00:42:55,880
Speaker 2: a country by country basis, you can't say the stock

781
00:42:55,920 --> 00:42:59,200
Speaker 2: market is not a great barometer for how a country

782
00:42:59,239 --> 00:43:02,320
Speaker 2: is doing economics as badly as you want to, because

783
00:43:02,320 --> 00:43:04,920
Speaker 2: the truth is, the stock market is the mood ring

784
00:43:05,480 --> 00:43:09,920
Speaker 2: of how the working and investor class are truly, not

785
00:43:10,040 --> 00:43:12,919
Speaker 2: how they feel politically, but how they are actually doing.

786
00:43:13,400 --> 00:43:16,800
Speaker 2: And from that standpoint, we want to make sure that

787
00:43:16,840 --> 00:43:20,640
Speaker 2: we recognize that connection and not try to sever Hey,

788
00:43:20,680 --> 00:43:22,720
Speaker 2: I just run my business. The West takes care of itself.

789
00:43:23,000 --> 00:43:27,080
Speaker 2: Not true. Not true. The business is reflected in the

790
00:43:27,120 --> 00:43:30,000
Speaker 2: share price, and the share price reflects back upon the

791
00:43:30,040 --> 00:43:30,760
Speaker 2: health of the company.

792
00:43:30,840 --> 00:43:32,160
Speaker 1: Based on what you just said, it makes you want

793
00:43:32,200 --> 00:43:35,799
Speaker 1: to get a screaming bald eagle tattoo on my back

794
00:43:36,040 --> 00:43:37,880
Speaker 1: and pledgely just the American flag, and it makes you

795
00:43:37,920 --> 00:43:40,400
Speaker 1: want to invest only in American stocks. What do you

796
00:43:40,440 --> 00:43:43,120
Speaker 1: think about the difference between based on what you just said,

797
00:43:43,760 --> 00:43:46,160
Speaker 1: is there a home country bias in investing mostly in

798
00:43:46,239 --> 00:43:48,280
Speaker 1: US stocks and US in foreign stocks?

799
00:43:48,320 --> 00:43:50,200
Speaker 2: You know, if you would ask me that question in

800
00:43:50,239 --> 00:43:52,319
Speaker 2: two thousand and nine, I would say it's a big

801
00:43:52,360 --> 00:43:54,919
Speaker 2: mistake to have a home country bias. Because the US

802
00:43:55,000 --> 00:43:57,799
Speaker 2: stock market, the S and P five hundred experienced the

803
00:43:57,840 --> 00:44:02,520
Speaker 2: last decade, it returned zero percent over ten years from

804
00:44:02,520 --> 00:44:04,879
Speaker 2: two thousand and two thousand and nine, and We talked

805
00:44:04,920 --> 00:44:07,120
Speaker 2: earlier about the reasons why you had two fifty percent

806
00:44:07,160 --> 00:44:10,000
Speaker 2: crashes in the SMP during the course of that decade.

807
00:44:10,480 --> 00:44:14,040
Speaker 2: But while that US stock market stagnation took place, people

808
00:44:14,080 --> 00:44:17,759
Speaker 2: made money in China and Mexico and Brazil and the

809
00:44:17,800 --> 00:44:21,440
Speaker 2: brick theme and small caps went up, and hits went up,

810
00:44:21,480 --> 00:44:24,839
Speaker 2: and there were a lot of things that worked while

811
00:44:24,880 --> 00:44:28,359
Speaker 2: the S and P five hundred didn't. So you know,

812
00:44:28,600 --> 00:44:30,799
Speaker 2: we're going to have these periods of time where just

813
00:44:30,840 --> 00:44:33,800
Speaker 2: because we're America, that doesn't mean you're gonna have positive

814
00:44:33,800 --> 00:44:38,480
Speaker 2: returns in the SMP. And there are stock markets all

815
00:44:38,520 --> 00:44:40,520
Speaker 2: over the world. In any given years, some of them

816
00:44:40,520 --> 00:44:43,520
Speaker 2: do outperform the S and P. It's been harder lately

817
00:44:44,200 --> 00:44:47,000
Speaker 2: because we have these tech giants and most countries don't.

818
00:44:47,520 --> 00:44:50,040
Speaker 2: But that's not I don't think that'll be forever. Maybe

819
00:44:50,040 --> 00:44:52,439
Speaker 2: it will be, but I don't know that I would

820
00:44:52,440 --> 00:44:55,399
Speaker 2: make that bet. And in the press in the last

821
00:44:55,440 --> 00:44:58,680
Speaker 2: few weeks a lot of stories about the venture capital

822
00:44:58,719 --> 00:45:02,240
Speaker 2: scene in Paris, around the Paris Olympics and in France

823
00:45:02,400 --> 00:45:05,839
Speaker 2: and McCrone going out of his way to try to

824
00:45:05,880 --> 00:45:08,520
Speaker 2: make the stock more Only three percent of people in

825
00:45:08,560 --> 00:45:11,080
Speaker 2: France own shares of stock three.

826
00:45:11,320 --> 00:45:11,760
Speaker 1: Wow.

827
00:45:11,920 --> 00:45:14,279
Speaker 2: In the United States, it's like sixty something. Do you

828
00:45:14,280 --> 00:45:16,680
Speaker 2: know why? Because they don't need to take risk. They

829
00:45:16,719 --> 00:45:20,879
Speaker 2: have a pension guaranteed. That's their system. But that's also there,

830
00:45:20,920 --> 00:45:24,960
Speaker 2: so that sounds nice, but that's also their long term downfall.

831
00:45:26,120 --> 00:45:29,360
Speaker 2: Why there's a lack of dynamism in their economy. It's

832
00:45:29,440 --> 00:45:35,440
Speaker 2: why the national sport is protesting. You know. One of

833
00:45:35,480 --> 00:45:38,040
Speaker 2: the things that the French have recognized is exactly what

834
00:45:38,360 --> 00:45:41,359
Speaker 2: Larry Fink wrote about. And now all these articles are

835
00:45:41,400 --> 00:45:45,759
Speaker 2: coming out about their AI sector, and France has some

836
00:45:45,960 --> 00:45:50,120
Speaker 2: incredible AI startups and they are raising money at the

837
00:45:50,200 --> 00:45:54,480
Speaker 2: scale and level of their counterparts in Silicon Valley, and

838
00:45:54,520 --> 00:45:57,560
Speaker 2: they recognize, all right, we missed the Internet, screwed that up.

839
00:45:58,000 --> 00:46:01,800
Speaker 2: We missed wireless too. Oh well, maybe let's not miss

840
00:46:02,000 --> 00:46:05,960
Speaker 2: AI software. The dynamism of the American economy and the

841
00:46:06,000 --> 00:46:11,719
Speaker 2: innovation of our technology companies probably explains the majority of

842
00:46:11,800 --> 00:46:17,360
Speaker 2: the discrepancy between returns that we've experienced in other countries,

843
00:46:17,400 --> 00:46:20,200
Speaker 2: and other countries are going to figure it out. You

844
00:46:20,239 --> 00:46:24,080
Speaker 2: think the Netherlands doesn't understand how much better off they'd

845
00:46:24,120 --> 00:46:27,080
Speaker 2: be if they had five companies like ASML and not

846
00:46:27,160 --> 00:46:30,080
Speaker 2: just one. You think the British don't feel stupid for

847
00:46:30,160 --> 00:46:34,080
Speaker 2: allowing armholdings to be listed in the United States and

848
00:46:34,239 --> 00:46:37,480
Speaker 2: for a period of time owned by a Japanese holding company.

849
00:46:37,560 --> 00:46:41,360
Speaker 2: Of course they feel stupid. This is being figured out,

850
00:46:41,480 --> 00:46:44,040
Speaker 2: and I do think. Look, I'm going to show you

851
00:46:44,120 --> 00:46:49,719
Speaker 2: stock Mercado Libre Meli. This is the largest company now

852
00:46:49,880 --> 00:46:52,120
Speaker 2: publicly traded company in all of Latin America. Did you

853
00:46:52,160 --> 00:46:57,160
Speaker 2: know that? No, Basically it's eBay and PayPal combined. I

854
00:46:57,200 --> 00:47:01,520
Speaker 2: would say Amazon, eBay and PayPal, so it's and then

855
00:47:01,520 --> 00:47:04,320
Speaker 2: they have this payment app which is wildly popular. I

856
00:47:04,360 --> 00:47:08,359
Speaker 2: think they have two hundred million users. The company is

857
00:47:08,719 --> 00:47:14,200
Speaker 2: Delaware incorporated, but headquartered in Uruguay. I'm assuming it's the

858
00:47:14,200 --> 00:47:19,040
Speaker 2: biggest company in Uruguay. It's one hundred billion dollar market cap, guys,

859
00:47:19,160 --> 00:47:21,560
Speaker 2: or one hundred and ten billion dollar market cap, and

860
00:47:21,680 --> 00:47:24,000
Speaker 2: if you look at the returns of that stock, it

861
00:47:24,080 --> 00:47:27,080
Speaker 2: blows away the performance of almost every US tech stock.

862
00:47:27,800 --> 00:47:31,800
Speaker 2: So I don't accept this idea that the United States

863
00:47:31,800 --> 00:47:34,480
Speaker 2: will be the only country that has large tech giants.

864
00:47:35,000 --> 00:47:37,440
Speaker 2: It's just that we have a really great headstart, yea,

865
00:47:37,680 --> 00:47:41,720
Speaker 2: and we have a really great political and capital system

866
00:47:41,840 --> 00:47:44,880
Speaker 2: to support these things. So you're probably always going to

867
00:47:44,880 --> 00:47:47,880
Speaker 2: be overweight America to some extent. I don't think you

868
00:47:47,920 --> 00:47:49,560
Speaker 2: want to be one hundred percent anything.

869
00:47:49,800 --> 00:47:52,040
Speaker 1: Yeah, it's hard to argue with free markets and as

870
00:47:52,080 --> 00:47:54,520
Speaker 1: proponents of investing in the total US stock market as

871
00:47:54,520 --> 00:47:56,520
Speaker 1: well as the SMP five hundred. I think this is

872
00:47:57,239 --> 00:47:59,560
Speaker 1: a great note to end it on. But Josh, where

873
00:47:59,600 --> 00:48:01,759
Speaker 1: can folks learn more about you in your book? If

874
00:48:01,800 --> 00:48:03,040
Speaker 1: they're interested in buying it, you.

875
00:48:03,000 --> 00:48:06,239
Speaker 2: Could buy it everywhere Barnes and Noble, Amazon, probably airports

876
00:48:06,239 --> 00:48:08,839
Speaker 2: and stuff. But here's the last thing I want to say.

877
00:48:09,520 --> 00:48:11,399
Speaker 2: I put my heart and soul into this book. It's

878
00:48:11,400 --> 00:48:14,600
Speaker 2: my fourth book. The last two books I wrote I

879
00:48:14,640 --> 00:48:17,520
Speaker 2: had a co author, but those were like projects. I

880
00:48:17,560 --> 00:48:21,840
Speaker 2: was more of an editor. This book was like literally

881
00:48:21,880 --> 00:48:25,279
Speaker 2: all of me, Like I put everything. Yeah, I like

882
00:48:25,360 --> 00:48:28,880
Speaker 2: put everything I have into this thing. So if you

883
00:48:29,120 --> 00:48:32,360
Speaker 2: like me, you're going to love the book. Don't like me, don't.

884
00:48:32,160 --> 00:48:33,480
Speaker 1: Worry about it.

885
00:48:33,600 --> 00:48:36,200
Speaker 2: A lot of days I don't like me either. But

886
00:48:36,400 --> 00:48:40,239
Speaker 2: if you really want to understand what it's been like

887
00:48:40,840 --> 00:48:44,400
Speaker 2: to be a professional investor over the last fifteen years,

888
00:48:44,840 --> 00:48:47,799
Speaker 2: and we live some of the highs and lows and

889
00:48:48,440 --> 00:48:53,480
Speaker 2: really absorb the biggest, most important lessons that I have

890
00:48:53,640 --> 00:48:56,400
Speaker 2: learned throughout the course of my career. This is the

891
00:48:56,480 --> 00:49:01,239
Speaker 2: right book for you, and load it like in a

892
00:49:01,360 --> 00:49:06,080
Speaker 2: really personal way, and I hope people appreciate that, and

893
00:49:06,480 --> 00:49:08,040
Speaker 2: I hope they enjoy it well.

894
00:49:08,160 --> 00:49:10,320
Speaker 1: Four thumbs up for Matt and Joel over here, Josh,

895
00:49:10,360 --> 00:49:12,680
Speaker 1: we appreciate you, man, and we'll linked all the to

896
00:49:12,680 --> 00:49:14,200
Speaker 1: where people can buy the book in the show notes

897
00:49:14,200 --> 00:49:15,839
Speaker 1: as well. Thank you so much for joining us today.

898
00:49:15,880 --> 00:49:17,680
Speaker 2: You guys are awesome. Thank you so much for having

899
00:49:17,760 --> 00:49:18,879
Speaker 2: me and keep doing what you do.

900
00:49:19,280 --> 00:49:22,840
Speaker 1: All right, Joel. It's refreshing, I think to talk with

901
00:49:22,920 --> 00:49:26,520
Speaker 1: somebody who just is so deep into this one thing,

902
00:49:26,880 --> 00:49:30,880
Speaker 1: like Josh Brown is a specialist and his specialty is investing,

903
00:49:31,200 --> 00:49:34,000
Speaker 1: and that is all he does. He doesn't compare uson shop,

904
00:49:34,160 --> 00:49:36,439
Speaker 1: so I don't know if y'all can be friends. Yeah,

905
00:49:36,600 --> 00:49:38,799
Speaker 1: the fact she had his wife on too, maybe she's

906
00:49:38,800 --> 00:49:41,279
Speaker 1: maybe so will have her next week. But now, it

907
00:49:41,280 --> 00:49:43,600
Speaker 1: really was fascinating to talk with another one of the

908
00:49:43,600 --> 00:49:46,200
Speaker 1: fellas over there at Ritholtz. There are a lot of

909
00:49:46,200 --> 00:49:48,319
Speaker 1: great minds over there who are thinking about investing in

910
00:49:48,360 --> 00:49:50,000
Speaker 1: a I think a really healthy way. But what was

911
00:49:50,000 --> 00:49:52,399
Speaker 1: your big takeaway wow for the conversation today. Yeah, First,

912
00:49:52,440 --> 00:49:54,160
Speaker 1: I just love what he said, we're an alternative to

913
00:49:54,160 --> 00:49:55,840
Speaker 1: the noisemakers. That's what you and I strive to be

914
00:49:55,920 --> 00:49:58,840
Speaker 1: here totally too. But I actually liked it in the

915
00:49:58,840 --> 00:50:02,320
Speaker 1: beginning when we were talking about dabbling in alternative investments

916
00:50:02,440 --> 00:50:05,680
Speaker 1: or having some wiggle room to the explore portion of

917
00:50:05,719 --> 00:50:07,840
Speaker 1: the pot when he said he said, leave room for

918
00:50:07,960 --> 00:50:11,200
Speaker 1: mistakes and desire. And you definitely you don't have to

919
00:50:11,719 --> 00:50:14,200
Speaker 1: learn from your mistakes. You can learn from other people's mistakes.

920
00:50:14,239 --> 00:50:15,839
Speaker 1: You can learn from the books you read, you can

921
00:50:15,920 --> 00:50:17,759
Speaker 1: learn from the podcast you listen to. But I do

922
00:50:17,800 --> 00:50:22,239
Speaker 1: think it's okay if especially you are interested in pursuing

923
00:50:22,600 --> 00:50:25,280
Speaker 1: some different ways of investing with a portion of your portfolio,

924
00:50:25,600 --> 00:50:27,160
Speaker 1: and even if you fall flat on your face with that,

925
00:50:27,160 --> 00:50:29,600
Speaker 1: and again that's why we suggest a smaller portion of

926
00:50:29,640 --> 00:50:32,080
Speaker 1: your portfolio to do that with, so that you're doing

927
00:50:32,080 --> 00:50:34,560
Speaker 1: the smart thing with the bulk of the majority of

928
00:50:34,640 --> 00:50:36,880
Speaker 1: your assets. But I think if that hands on approach

929
00:50:37,239 --> 00:50:41,440
Speaker 1: actually creates even more of a desire to be a

930
00:50:41,440 --> 00:50:44,320
Speaker 1: savvy investor and to be involved in markets moving forward,

931
00:50:44,480 --> 00:50:46,080
Speaker 1: I think that's ultimately good thing. So think Josh is

932
00:50:46,080 --> 00:50:47,640
Speaker 1: actually kind of right on that. We probably disagree on

933
00:50:47,680 --> 00:50:50,040
Speaker 1: some of those little details, but I think ultimately, directionly

934
00:50:50,080 --> 00:50:52,920
Speaker 1: he's right on. There's an overall desire to keep the

935
00:50:52,960 --> 00:50:55,680
Speaker 1: majority of your portfolio on track, and if you need

936
00:50:55,719 --> 00:50:58,080
Speaker 1: to have this little pressure release valve that allows you

937
00:50:58,120 --> 00:51:00,360
Speaker 1: to stay this the straight and arrow with the majority

938
00:51:00,360 --> 00:51:03,000
Speaker 1: of your funds by kind of exploring and dabbling a

939
00:51:03,040 --> 00:51:04,719
Speaker 1: little bit on the sides. Yeah, I feel like that

940
00:51:04,880 --> 00:51:07,319
Speaker 1: gives us license to continue to say at least, hey,

941
00:51:07,800 --> 00:51:09,399
Speaker 1: at least what we talk about here on the show,

942
00:51:09,440 --> 00:51:12,359
Speaker 1: five percent or less of your overall portfolio. But this

943
00:51:12,360 --> 00:51:14,160
Speaker 1: doesn't mean that you have to do that, right, And

944
00:51:14,200 --> 00:51:16,399
Speaker 1: so with Josh, he's talking about how he's just really

945
00:51:16,400 --> 00:51:21,320
Speaker 1: fascinated with product releases and CEOs who migrate through different

946
00:51:21,520 --> 00:51:24,600
Speaker 1: organizations and how they impact the success and the stock

947
00:51:24,640 --> 00:51:26,720
Speaker 1: price of those companies. But not everybody has that interest,

948
00:51:26,800 --> 00:51:28,799
Speaker 1: and so I don't want people to think that, oh,

949
00:51:28,880 --> 00:51:31,239
Speaker 1: well I should be doing that and start if you

950
00:51:31,239 --> 00:51:33,080
Speaker 1: don't have any interest in doing that, well don't do that,

951
00:51:33,120 --> 00:51:36,160
Speaker 1: And you could just invest in the overall SMP. But

952
00:51:36,400 --> 00:51:37,799
Speaker 1: one of the things he was pointing out, I guess

953
00:51:37,800 --> 00:51:39,879
Speaker 1: when he was talking about or we were talking about

954
00:51:40,320 --> 00:51:43,280
Speaker 1: your daughter earning some money, and he was kind of jabbing,

955
00:51:43,280 --> 00:51:44,719
Speaker 1: you know, elbing you a little bit as far as

956
00:51:44,719 --> 00:51:47,319
Speaker 1: investing her earnings. But I think the bigger lesson to

957
00:51:47,320 --> 00:51:49,920
Speaker 1: take away there from that comment was the fact that, hey,

958
00:51:49,960 --> 00:51:51,960
Speaker 1: if you're going to make mistakes, make mistakes when you

959
00:51:52,000 --> 00:51:54,120
Speaker 1: are younger as opposed to older. And so what I

960
00:51:54,160 --> 00:51:57,040
Speaker 1: see there is and he commented on gen z their

961
00:51:57,080 --> 00:52:02,320
Speaker 1: ability to more freely take gamble, to take bigger risks

962
00:52:02,400 --> 00:52:05,200
Speaker 1: than maybe the millennial generation has taken before, but the

963
00:52:05,239 --> 00:52:07,440
Speaker 1: ability to take those risks early on where there are

964
00:52:07,440 --> 00:52:11,120
Speaker 1: a fewer zeros behind those numbers as supposed to say,

965
00:52:11,120 --> 00:52:13,200
Speaker 1: in your thirties or forties, when you're thinking, oh, no,

966
00:52:13,280 --> 00:52:14,480
Speaker 1: this is what I need to do in order to

967
00:52:14,480 --> 00:52:16,400
Speaker 1: make sure I've got enough set aside for retirement. I

968
00:52:16,440 --> 00:52:17,960
Speaker 1: think there's a whole lot that you can learn, like

969
00:52:18,000 --> 00:52:21,600
Speaker 1: you said, through that life experience, especially early. On flip

970
00:52:21,600 --> 00:52:23,160
Speaker 1: side of the coin, we've also seen some of our

971
00:52:23,200 --> 00:52:25,280
Speaker 1: listeners say, hey, listen, I went a little too heavy

972
00:52:25,400 --> 00:52:29,120
Speaker 1: in that direction in kind of the speculative trading mentality.

973
00:52:29,200 --> 00:52:32,040
Speaker 1: A couple of years ago, and I'll also give in money.

974
00:52:32,040 --> 00:52:34,000
Speaker 1: Now I'm starting from scratch again, trying to build wealth

975
00:52:34,000 --> 00:52:35,279
Speaker 1: through my future. I want to do it kind of

976
00:52:35,320 --> 00:52:37,240
Speaker 1: the prudent way. So I think there's a difference between

977
00:52:37,239 --> 00:52:39,399
Speaker 1: prudent and prude. We don't want to be prudes here

978
00:52:39,400 --> 00:52:40,719
Speaker 1: on the show, but we do want people to be

979
00:52:40,760 --> 00:52:43,759
Speaker 1: prudent and to be thoughtful about their money because, yeah,

980
00:52:43,840 --> 00:52:46,759
Speaker 1: I guess airing too hard in that direction can create

981
00:52:46,760 --> 00:52:48,520
Speaker 1: some misery too so, but at least I mean a

982
00:52:48,560 --> 00:52:49,960
Speaker 1: lot of those hooks are younger though. I guess that's

983
00:52:50,000 --> 00:52:51,799
Speaker 1: what I'm saying is the time to the cover. Yeah. See,

984
00:52:51,840 --> 00:52:54,480
Speaker 1: folks make those errors early on while they still have

985
00:52:54,560 --> 00:52:57,560
Speaker 1: decades of ability to continue to earn money and invest

986
00:52:57,600 --> 00:53:00,239
Speaker 1: and be set for their future, versus taking more of

987
00:53:00,239 --> 00:53:02,680
Speaker 1: that mindset later on in their career. That would be

988
00:53:02,840 --> 00:53:06,280
Speaker 1: potentially catastrophic to their finances. But uh yeah, really fun conversation.

989
00:53:06,600 --> 00:53:09,280
Speaker 1: The beer you and I enjoyed today was called Solid.

990
00:53:09,680 --> 00:53:13,000
Speaker 1: This is a pilsner by Burial Beer Company. As it

991
00:53:13,000 --> 00:53:16,040
Speaker 1: looks like a collab with shilling out of what is

992
00:53:16,040 --> 00:53:18,919
Speaker 1: that Littleton, New Hampshire. What do you think about this beer?

993
00:53:19,000 --> 00:53:21,640
Speaker 1: Didn't love it not my favorite really well yeah, I mean,

994
00:53:21,760 --> 00:53:24,680
Speaker 1: Josh mentioned, I think, or at least before we started recording,

995
00:53:24,680 --> 00:53:28,080
Speaker 1: that he likes pilsners, he doesn't like IPAs, and I

996
00:53:28,280 --> 00:53:30,200
Speaker 1: like IPAs, and I don't love pills rs as much.

997
00:53:30,239 --> 00:53:32,000
Speaker 1: Although I kind of am down with the laid back

998
00:53:32,000 --> 00:53:33,440
Speaker 1: pills er, this one was a little more bitter and

999
00:53:33,480 --> 00:53:35,399
Speaker 1: off putting though to me, I don't know why. Yeah, yeah,

1000
00:53:35,520 --> 00:53:37,399
Speaker 1: not my favorite. You do sound like you're a little

1001
00:53:37,400 --> 00:53:39,560
Speaker 1: stopped up. Maybe you're not tasting it to the you

1002
00:53:39,640 --> 00:53:41,560
Speaker 1: getting all the flavors there, Joel, maybe not. I thought

1003
00:53:41,560 --> 00:53:43,800
Speaker 1: it was super solid, so I totally disagree with you.

1004
00:53:43,920 --> 00:53:48,479
Speaker 1: Kay tasted crisp fresh, didn't have any notes that felt

1005
00:53:48,480 --> 00:53:49,600
Speaker 1: like that they're out of place or whatever.

1006
00:53:49,760 --> 00:53:49,920
Speaker 2: You know.

1007
00:53:50,200 --> 00:53:52,000
Speaker 1: It wasn't like some amazing Most of the time when

1008
00:53:52,000 --> 00:53:53,640
Speaker 1: we drink a hazy ipa or something like that, we're

1009
00:53:53,680 --> 00:53:55,839
Speaker 1: just like, oh, yeah, that's great. So I don't know,

1010
00:53:55,840 --> 00:53:58,440
Speaker 1: maybe with this, I'm like, all tasted refreshing, and it

1011
00:53:58,480 --> 00:54:01,919
Speaker 1: was also very non offensive, which maybe in my book

1012
00:54:01,920 --> 00:54:04,760
Speaker 1: that that's a solid pillsoner. But either way, it doesn't

1013
00:54:04,760 --> 00:54:06,600
Speaker 1: really feel like work when we get to enjoy beer

1014
00:54:06,719 --> 00:54:08,960
Speaker 1: while we talk with somebody about money for sure, talking

1015
00:54:08,960 --> 00:54:12,120
Speaker 1: to cool people. All right, we'll link to Josh's new book,

1016
00:54:12,160 --> 00:54:14,400
Speaker 1: his website and all the like up on our website

1017
00:54:14,400 --> 00:54:17,399
Speaker 1: at howtomoney dot com. But Matt, until next time, Best

1018
00:54:17,400 --> 00:54:19,080
Speaker 1: friends out, Best Friends Out,