Investing Fundamentals and What Is Attractive Now
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Walking the money for the rest of us. This is a personal financial on money, how IT works, how to invest in and how to live without worrying about IT. I'm your host, David stein.

Today is episode four seventy three is titled investing fundamentals and what is attractive. Now today's epsom is an edited version of a conversation I had with financial advisor josh jelen sky. The interview originally aired on josh's financial quarterback radio show and podcast.

The radio show is broadcast each saturday on W O R seven ten in new york city. In the episode, josh and I cover a number of topics on investing fundamental including benchmarking, portfolio portal, folio, construction and factor exposure, growth versus value investing, behavioral finance including managing regret, investing in leverage, loans, closed and funds. We talk about china esg investing, dividing investing and retirement investing.

Just jilin sky is the founder, CEO chief investment officer and portfolio manager at jinky advisory group. Josh found that his firm in two thousand and five, with the aim of helping people put together a financial game plan to maximize wealth, reduce risk and protect their lifestyle in retirement. I hope you enjoy this conversation on a variety topics that josh jelen, sky and I had.

Hy, everybody, this is josh, jill lansky, the financial quarterback, or joined by legendary podd David stein, founder of money for the rest of us. So in twenty fourteen, uh, I had a guy who had a podcast on finance, uh, million downloads like you since two thousand and nine. Everybody wants a podcast now. But I was not easy to do IT kind of a new thing. So describes your origin story in podcasting, David?

sure. So I left the institutional investment business in twenty twenty. Manager s the targes retired, called myself retired bit in my mid forties.

But this teaching, I work with a lot of endangered foundations, institutional assets, and and was a guest on a podcast called some money matters and realized at the time people are getting these these data plans on their phones and and as a result, all in data without, well, i'd like being a guest when when we launch a podcast and see how that works. And and timing was good and much Better timing back then. That is podcast now.

definitely. So what about your working institutional money? I described that yet. How many .

years I teen years joined called, it's called F G advisors now. And they were traditional sort of pension, often working most of enough for profits. And then now we started, we launched one of the first outsource after management businesses in two thousand three.

So I I sort of put that product together, me in a few partners. We launched a track record. And so I ran that for just a about a decade before leaving in in twenty two open. Sorry, we had asked to manage in terms of just sort of with these not for profits taking direction, you know, within the confind to their policy statements. And there is premature and active allocation approach, multi asset classes and and they continue to run that the product today, as you know, multiple billion of dollars in in that service.

Do you miss IT .

managing money? No, not not at all. It's hard to do because you're you're very much compared to a benchmark every month. And and I just got tired of of the the rat race so that so I don't know I am much prefer doing what I do know .

what's think about benchmarking now and I do want to talk about what you do now benchmarking um the average person money for the rest of us they hear bench. No, most people don't even benchmark. You know what benchmark is? No the benchmark benchmark to the wrong thing. Talk about that alright.

But within the institutional space, you have these and say typical university and downe ters and investment committee. And every quarter, they're getting report and showing.

Here's how we did and here's our analyze turn for our downwind and here's a market benchmark made up of indexes that usually some type of waited index made up of C M A, C I N, dec on the stocks side, bloomberg indices on the bonds and or could be other asset classes, including in that and the goal, I mean, these committee members measure success. Did the portfolio or perform that, that index over a quarter year three or five years, they're also measuring against their peers. I had to other and downers do.

And so as new because we don't do that and in which I thinks a good thing because we care about making money, did did our speciality to grow and are we onna meet our our retirement savings goals. And so but the institutional world, because you just have volunteers coming, they are very focused on before paying fees to advisers, did they end value above a basically managed index? Most individual investors are already, you know they using etf or or saying index fund. And so it's less of an issue. And it's certainly isn't the mindset of individuals a death.

So how do you get out of the F, G. World layoff? S.

no. So we I joined in ninety five and became a partner and and and on our executive team by ninety eight. We sold the firm to help help our founding partners accident in two thousand two.

And then we bought IT back in two thousand five. That what we sorted for and you in the leverage buyout. So twenty eleven dish, my retirement number had been hit IT, was that I was just ready to move on. So my partners got me on.

Did you do some of the things you talk about on a weekly basis on money for the rest of did you do those tips then? Or have you kind of emerged?

no. I mean, how how I teach investing now is how we managed assets at F, T, G, especially the outsource management division. So IT was very much active allocation, making maybe two, three changes a year, focusing on portfolio drivers, expect a returns.

And now we were you know, back in two thousand and three, we we were using etf to implement our portfolio. And when you actually get push back from institutions like, you know, E, T, S, that's a retail product and and now institutions use E T S all the time. And so we were ahead of the current terms of u using E T S.

And really the empties of that product was, no, we were traditional consulting, selecting active managers and and I got the the idea two thousand, two days. What if we just took the best ideas from our best managers? And you know, these are managers on a recommendation, is so a an equity product.

And we just get the top five, the top ten foldings and work put together portfolio will key program and run this portfolio best ideas, high conviction ideas. And so I spent a summer, and I was the summer two thousand and two back testing and will use bar a software at the time, which was really a way test and control your risk and be there was in any excess return. There was no alpha in this product.

And in that was incredibly discouraging because either we were loud at picking managers, there was something else going on. And what that something thing else was is you much of what's considered x best return or outperformance from an active manager is not due to security selection. It's due to their factor exposure.

You what there is a very is a momentum to yield. And by combining a hundred stocks in a portfolio and constraining the rest, we basically diversify all that factor exposure to where we couldn't exceed the benchmark net fees. And so that's when we say, well, we can develop our fact exposure using et and and that's what we did. We could put a value tide on or or just focus on, you know what were the areas the market most attracted back in, in two thousand, three, four? Was emerging markets a small cap and that was enough to and access return and and we attracted, uh, a good following and grow really good, uh, solid businesses.

congratulations. What would be your drivers for access return now that you say? Because I think some of this is like, you know, you see the french farmer and the dimensional people. Some of me thinks that all of these things that people for access return in the last ten years will be different in the next ten years.

Well, the first of I benchmark portfolio anymore h which is good because had i've been benchmarking, I mean, I know what factors are performed that on the past tech decade has been growth and moments and U S, which is why any manager that was focused on value, nine us. Dave lender performed. And so I don't grateful i'm not managing benchmark.

You know we went some model portfolio on our membership community is an adapt of portfolio versus in a static. And the adaptive ves had much lower risk, but they're also had a to and because that, you know going forward, you know what's driving the outperformance growth. Let's say the U S uh name S U S A growth index over the past decade has certainly the earnings growth is coming around six percent for that.

But there has been additional three percentage point annual return just because to place the announce ration, they have got more expensive. Other words is just it's the p getting expensive is added three percent of points alyse to U S. Growth performance over the past decade. And so if you are overweight wth you do very, very well as investors willing to pay more and more for that perspective, learnings growth. And now with the A I sort of boom IT you're seeing and even more.

does anything worry you about portfolio s being so tilted towards the seven magnificent seven had two experiences .

in the last three months where financial advisors that that I wasn't working with them but they were working with frends of mine. They recommended overweight growth in at the client portfolio, which the last time I saw that was, uh, kind of late nineties. Some investors got very hurt because but again was doing so well, couldn't fail until that we had internet bubble burst in two thousand.

And that's where you you saw value then out perform for the next really eight years, nine years until we've had this extended growth thing. And again, women growth is growing faster than value. The question is, how much do you pay for that growth?

Are you more of a growth guy or value? Or would you would you discover .

your most of value agnostic? I I have both. I had more people, but I I added some growth in my personal portfolio summer because I realized with A I that IT, there's something there that could dramatically increase productivity across the global economy.

I don't mind putting money in growth just in case like to participate, but it's not going na be the book of my portfolio. Think that improving. So having both in some ways to manage regret, right? So I have ever doing this in the year two thousand.

It's like we were value tilted. I remember adding some growth. You know that the two most expense, the growth stock I could find, just in case the world really was different, this type. And and they got obliterated. But you know IT was .

um respond .

because one was J D S face the other one no, no, no. I know that .

was infrastructure.

确 yeah IT ah but .

IT in some .

ways yeah in the U S。 A growth index is selling at A P E of thirty eight, right? That's almost two stand stand deviation more than its long term average of twenty two. And so and that's being driven by the the major cap stocks and bubble. And we saw back in ninety nine bubbles can go on for a long time.

And maybe in the way that I think about stock investing is via index fund E T, F and india, the only way that stock is going to outperform is if IT does Better than what everyone expects. The consensus on the earnings front and granted in its recent earning released IT IT was Better than everybody expected. But will that continue for the next ten years? And will I do Better than everyone expects? Or in the overall growth index with the P E F thirty eight, we we know what happens when a growth stock IT IT, plumet.

And so IT isn't a question of and this is what I taught. You're back in two thousand and I wrote a paper for our clients on this because I wanted to know, you know, is value dead or should we just be doing growth? And and you realized no.

And the studies show and in the theory is that IT isn't about whether something thing is growing and what you're paying for IT and whether IT will do Better than what everybody expects because that's what stock market is. It's a consensus wearing mechanism and it's gotta do Better than it's already Priced in. And right now, there's some pretty exubera expectations Priced into the big cap growth stocks.

Take the U. S, outside the U. S. In the markets actually barely reasonable Price, but U.

S. Growth is definitely expensive right now. And maybe I will do Better than everybody expects.

I don't know why I still want some. Before we continue, let me pause and share some words from this week. sponsors.

What about you have just thinking out of call from my friend. I'm going to do pod guest on this google S. C.

O. guy. We wait about an hour conversation on what he believes to be the decline of google.

Think about this kids now. I went to the on my daughter. And my daughter is like a national forensic debate team.

And I just pulled out, uh, what's that microsoft copilot? And and the debate was, should rationalism be valued higher than imperious? One of these are heady debate topics.

And I plug the resolution in the ChatGPT while microsoft s version of IT. And out came, this was like what I used to write for a report, or what you probably write for a report in high school or college. I got for free.

And as I heard the kids at the debate, IT wasn't like when they were google. So when I went to, as everyone was, google was a debater s best friend. And I did kind of amateur rs, I was in on the college debt.

Am, I did like a amateur kind of debate thing. And i'm amazed at how google basically developed because kids in their teens and twice replaced the library with google search. And of the hit, my google search is gna be replaced by OpenAI tragedy. B T. So I do think when when we put so much on the seven stocks, what if google gets cut and have you know?

But I think it's a sure it's a huge risk. I will ask ChatGPT first before I I go to google because I just want the answer and I I want a dialogue. Now I trust ChatGPT a hundred percent, just like I don't trust google hundred percent.

But I I think investors that are companies that are I C O based companies and uh nor wallet, for example, there are just sort of our financial media. And if your business is depending on algorithm, that worries me in the sense of driving traffic and and you know we look to structure our business. We don't want to be dependent on how to for success and is hard to compete on. Don't you can control your destiny?

They're changing the levers like this. S O guy was even telling me they're changing things which may pretend that they're struggling. So you're the founder of money for the rest of us. What are you doing lately that's occupying your studies for the podcast?

It's exciting you right now ah you mentioned back in twenty fourteen, typically there were maybe fifty thousand new podcast year and in twenty twenty, there was a million new podcast created and another million and twenty twenty one. And so this this is a medium where the supply of podcast is growing faster than listeners.

And you're seeing IT in and rates, you're seeing IT in download episode and then the podcast companies are struggling because apple change their APP. And so what are not automatically download up? And and so when we look at what's exciting us, it's not podcasting and at any for the rest of I love podcasting, but it's not a great business.

We launched uh, a fin tech started back in july called acid camp, where we're taking basically where we build an maps so where an individual vest can analyze stock index funds and E, T, S, and understand the driver. So do you attend your attribution and figure out and just like I did with with growth, the U. S.

growth. And next one percent of the ten year return with by dividends, one percent was driven by earnings spread, one percent was driven by valuation changes and currency impact. And this is tools that is institution stor is used to have in, but they cost tens, tens of thousand dollars for year.

And investors even even investing in index, they don't really understand what the buy or just the basic, you know, what's under the hood of an index earning A T in terms of dividends and earnings growth in evaluation is IT cheap? Is that not how I rebaLance? And what exercise is providing tools to individuals that were previously only available to institutional investors and combining with the education so that we can help individuals?

That's funny that that excites you to me. That would be a top for business.

No, because in some later in the same business, like we've always run a premium membership education along with the podcast. So you know the podcast it's been going going on for ten years and you know there's a free version, but we also do a paid version you know with the kind of A Q N A epo de by as part of their membership community.

We we subscribe to a number institutional research services, but uh, we couldn't show A P H R of the merging markets right without getting permission from one of our providers. And so what we built was came out of frustration as we just to be a way to show the type of charge that I saw all the time is an institutional invest. I think how many standard deviations is that some segment of the market to, to its average. And so it's still a subscription business as an education business is just giving subscribers more tool so they can do more to work themselves and they can check the work and and compare to kind of what we're seeing. I supposed to just being fed whatever in our view of the months.

what are your favorite tools or indicators other than obviously what you're building an asset camp? Like what are you or what or what research is influencing asset came.

well, sorry, we were long you know in long term subscribers to net Davis research is very much focused on in a combining valuations with trends and market internals. And and that's how i've always managed money. So that that's we look at we look at where are valuations and you know what is the consensus for earnings grow.

And but IT seems to be as at an extremist, it's not even if is especial manager, we we would make a couple trades years. So we're not because the location, we are not picking individual securities or stocks. It's an allocation decision.

And so you can be patient that way as an investor. You know how do you making changes all the time? And so no, we're we're looking out ten years when we invest in what what's attractive.

And so your changes are slow. I an example, we we looking yields all the time in the last years the most attractive time to enter into treasure inflation, protection, security. And we've seen in a decade because finally, the real return, the real yet a positive. And so we're looking at all asset classes and just looking at what are the chanel and what is the cash low being generated, what is the cash allow growth, what investors paying for the cash low. And so it's sort of back the basics, understanding the underlying drivers of asset classes.

What what asset classes do you like now? You mention treasure inflation.

protected and secure, you know way like tips. Now if we certainly like non U S, if you look at sort of you know what, tikki cheap non U S small cap is a very attractive right now, as you know, as somebody was going to add IT. And if we looked at six months ago, merging market america, that the dividing year was over ten percent.

And so we really like reads back equity reads back in october, november, the cheapest i'd been really since two thousand and nine. And in other, still attracted to going form these pockets of super inexpensive as a class. That doesn't happen very often.

And so we're mostly investing now. You know where you have equal exposure. We have your tips exposure.

They are leveraged loans. Space bank loans are still attractive. You can get a yield of over nine percent.

And you you want to use a manager that's a little more conservative leverage loans. These are bank loans been syndicated into the market. They trade in secondary market.

They're variable, eight deaths. So it's tied to short term interest rates. We don't see the fed cutting rates dramatically over the next next year.

And so these things will continue to yield eight to nine percent over the next year. So and if to falt rates, or let's say three percent, which is what S M P S. Predictor, you know, that brings the return down, is still six seven percent. And if you have a good active manager is more conservative than you can learn eight nine percent and not worry about rates getting higher because it's variable death.

You like close and funds etf here on the front?

No, we we have a course and side and close and friends. We talked about IT on the podcast. I like close and funds. The problem is that the best time to buy them is when everything sort of selling off because closed and funds are primarily held by retAiling investors and a panic when things are looking dc. And so then they sell the fund.

And in a close and fund, there isn't a mechanism like A, T, F, for its Price to stay close to the value, other underlying asset to the net asset value. So you need T, F. There's a mechanism in place.

For uh an open and you to find IT IT trade at the that aside, but a closed and fun can sell at a twenty percent discount to the net activate or at twenty percent of premium. And so the time to buy close and funds when the discount is, is bigger than average. And so yeah, we like close and funds, but selective.

Ly, I added, for example, in the leverage loan space, the black rock that strategies fund the issue, right? Well, I was at a ten percent discount two years ago at a time, and the federal I was raising rates and and but now it's selling at a three percent premium. So I excited and embodied plain leverage lan etf.

And so I always enjoyed close and funds. But you kind of have to know you C, E, F, connected your sort of screen discounts and you want to make sure the discounts greater than average. But IT is one of the few areas as retail investors that we can get an advantage over institutions because there is only A A certain mental liquidity enclosed and funds.

So big institutions can it's probably a product that shouldn't exist. But because you can actually see the discount, you can pick up some good deals. Cally.

a fantastic. He mentioned overseas investing overseas. Everybody always is at a guy on and David ran in a few weeks ago know he was loving emerging markets. He was saying, you know argentina and what what foreign markets, uh, do you like?

There isn't necessary one particularly we sort of like what's not in the U. S. Because it's so much more attractive.

There is a benefit to country diversity. And so one interesting country that is looking more, more attractive is china. China's market has gone to the exact ops of the U. S. Market now that we did a podcast about five months on some of the demographic headwinds, uh, that china is facing. But sometimes asset get you know even give in headwinds, they get too cheap in china from that perspective is looking at least on evaluation basis, is looking more, more attractive. But you know i've not i'm not ready to jump in and is got a good even cheaper yet.

China and particularly china attack IT has just been obliterated. And right, I would tell people, like a good values, you get alibaba trading cheap, get different chinese internet tech etf cheap, and nobody wants, I think, something that is the x factor of giving money to a communist country. People, funny, people are more OK with chini even know they were communist like a couple years ago than they are today. Just talking to retail investors is .

a oh no yeah. If you you look at the trAiling two months Price and instruction, the china, the M S. China, it's ten and a half.

Compared with long term marriage of fifteen is the cheapest country in the world on A P, E basis right now are are one of the cheapest. The other areas that are to similar emerging markets like american emerging markets, value both close to ten P. E. So yeah, that is finally, china is much more attractive than IT was a few years ago because I I agreed this kind of x factor but you never know yeah .

I think it's funny people and careers much a few years ago don't but now there like well and I really do not own any chance know when we .

they are index. There's emerging markets x china index. And we had one of our basic camps describes IT.

Can you add this index? Because I really have forty six index, is the thousands we could use. You start to see people I don't want to invest china at yeah .

IT almost like become like cigaret stocks. I don't want you know we always you will have a part for our clients to put you know exclusions. And probably the number one is now china followed by cigarettes.

Only people talk about the E I. I don't see that as a big driver for our clients. I see like I don't want to be in we've got we've had some. I don't want to be in bud wise or I don't want to be in disney.

I don't want to be. No, it's almost the politics.

E funny out of a the guy who ran for president vivid, uh, he owned the company. That does. I guess none in market that that is non woke etf did. Did you follow .

this at all? I haven't.

But IT IT doesn't surprise. Owns all the same stuff as I V V or so, like a five hundred with no d but IT is all the same stuff. I V V O S R V O O yeah I R view .

on S G that unless people change the behavior of what they're doing, then just buying a stock or excluding a ck because of IT IT for what IT does doesn't really make an impact on. In fact, there's an argument and you look at full of more of these other companies that they get cheaper because people don't want to own them, but there are still smoking. And as he said, they still do very, very well and make even more money for investors.

The way if there's an issue that you're opposed to, the way to actually have an impact on the company sales, like counting at getting other people not to pursue that behavior, that will definitely impact the stock return. But just not owning IT in your portfolio doesn't really do anything other than make you feel Better that you don't own IT, but you're in a duck in the secondary market. I I mean, as you know, this money is not going to the company says you're not getting potential dividends from a company.

And we saw this with no our intentional clients. They they would have S G. Mandates and some do. But to really impact on a esg basis is focus on what the company does, not how their stock is trading.

Yeah, I think the Better thing would be getting like the I guess, vote and get on the boards and use your proxy voting powers but right .

yeah but .

many people don't really do that. But it's in the esg thing. I want people Young like it's kind of not a time, but people think that the money is going to the company's pocket.

And all right, exactly that, that that you buying a stock and they're just giving them money.

And esg has been around for years, been around and .

we we did IT for years at our institute. M but IT has suddenly gotten very political to wear, and I guess things just do. But now, yeah, thirty one guard and getting too powful because they are I shares bick rock because they that those big fun companies were studdenham king a more active as role because they owned a large percentage of these stocks, because iran in next one, and they stepped out and started being more active.

And suddenly S G particular, the climate front esg so of became much more political. And you've seen black rock and bangguo become much less active because now it's hurting your business because they are getting push back from some of their clients like we don't want you to do esg or take positions. And so IT IT ths come and go. So we talked .

about some investing themes. You like this. You're any ones that we didn't mention, you want to mention?

No no. Um I I think now we spend a lot of time on and on our podcast and community and locking in our IELTS. So where we're add a position where you can example pick up a ability T F, where you can lock in over five percent looking out five, six years later, say, an investment grade corporate bond.

So there's a set maturity date and and now is a great time. Yids are still high and they're still attractive. And we can lock the yields in those products to do that to where there's even tips body T S to wear your investors, you get that, that cash with there. And so you don't to worry about if rates fall, then you have have the opponent to cell early. But if rates rise, if you own an individual born on ability to, then you know your your game is still locked in because you've locked in that yield.

And so it's it's an interesting time for investing because for the first time in many years, we can actually get yields to where we can take less risk on in the stocks side because you are earning five, six percent on the bond is very different than three, four years ago when you are earning two percent on bonds and you were forced to take more risk on the stocks side. The bar is higher now to take on big stock risk because much low risk investments have attractive yields. And and that's really a big shift we've seen in the last two years. And now welcome shift.

You'd like any a divided pink stocks right now or divided pink stocks. E T S.

Um we just we did an absurd recently is dividend investing dead and you go back twenty five years and see dividend growth have outperformed non different pink stocks. But over the past ten years, non diving pink stocks have outperformed dividend stocks and stocks that in a brother dividends and it's again because of gross stocks, but also gross stocks are much higher return on equity. So they done a very good job growing earnings more than enough to offset the lower dividends.

IT is interesting. I think it's a negative. yeah. Do you think it's a negative that shows this one time on the radio show that you are? And I talked about how, back in the day, like your grandmother, your mother, your father had X, Y, Z stock that paid a dividend and encourage wise investment behavior.

I think of people over the years, clients, you've had jersey resources or p, you know, P S, C, N, G and y've had IT for forty years, and they've had those dividends and they've invested the dividends or content. And those clients were so smart that they were regular people invested for forty years. They did nothing.

They did drip programs. They built very nice networks. Now we have mean stocks and crypto and people their twenties and thirties, they're not really getting the good education other than places like your podcast and others where it's like the current growth stock craze. It's almost like encouraging bad behavior.

Comment on that, right? exactly. And we talk a lot about on our show, the different twin, investing and speculating.

And speculating is where there's disagreement with the right Prices. So gold, bitcoin, commodity futures are that that's speculating. And I can have a role in a portfolio.

But the true workforce of of a portfolio should be cash low, which means dividends for stocks or for equity reads or what we can get on the credit side and that that's portfolio management. And yeah, you can have some mean stocks or a crypto currency. And I am cyp to currents.

I have three years, but I don't want my investment success to be dependent on and ask where we can even see what it's worth because there is no cash on in the beauty of dividends is illicit can value a company or you can value the asset class. And so when I say I don't own. Divided pink talks I do what I what I meant was I haven't added new dividend paying, but I ve an emerging markets a dividend know the wisdom tree.

One of the merge Marks value dividend PK talks. And the key to dividend is I just don't buy IT just because IT has a high dividend, but there needs to be some type of screen is whether the dividend is sustainable. So there are E, T, S out there that combine both.

So they're looking at the tractive divided, but also doing some type of quality screen or momentum screen and make sure not buying stock that has a really high divided because its its struggling and this is about to cut the divide and and have and so there there's a way to do IT, but I agree with you own investors where you could just buy company and take away. But now we have etf to make IT much, much easier and cost of fetor to do that with a lot work. And that's why I generally been a more, much more focus on E T, S. And closed in funds in terms of managing assets.

Great the rise of the four one k million airs C M B C just study on this. Ah what do you think about the study? I mean, to me it's just a symptom.

but I think that it's a natural outgrowth of the decimation uh uh define benefit pension plans IT. There should be a probably way, way more for in k millionaire are because if you retire with a million dollars and you spend four percent as you're spending rate your first year, that's forty thousand dollars. Now let's say you get another twenty and so security.

If you can live on sixty thousand dollars year, that's great. But there is a lot of areas in the country people can live on that and they haven't for for a long time. And so we want a lot of for when k million aires because we don't have defined pension plans we use to or define benefit pension plans.

Yeah, that's one of the things actually, we're seeing more and more businesses go to define benefit plans. Again, IBM just said, hey, we're getting back to that. I think that's a good thing because the average person we have one in our company, I mean, the average person doesn't save for retirement. I mean, that's the true oh, no.

they don't know. It's sort sad that I know place to work with pension plans in the reason when they got rid of them because they didn't want to to take the risk anymore and IT was cheaper for them to do A N K plan and just let the employees figure out there are some benefits to scale and and pension plans have scale and a professional management if they're done well and they're pulling the risk.

And that's not what you get with the following k plan. You you don't get scale and you don't get to pull the risk and you're stuck with whatever choice you made, what the market did. And which is why most individual investors, when they retired, should look at immediate annuities, you know look at something where they can get something that's pension, like get guaranteed income for life through some type of poled vehicle where the risk is mutualized ed and put together and so IT isn't just I couldn't imagine going in the retirement complete dependent on the statement .

yeah in the tension or unity. It's not about whether you could make more on on the S M P. Five hundred versus that particular product. It's it's really about making sure you can live with the results because with four one k you know I don't know how many people told me, hey, march of I sold everything my four one can I regret IT and they're still in cash like today, all these people .

there are still in cash from two thousand eight. They never returned to the stock market because we're human and we have regret and that you know, back in two thousand eight, and I am not insurance expert like we've managed ed money and but I remember we manage money for financial planners.

And I remember going and I think this fall two thousand a going to me with these planners, clients and bolt more, and they were shell shock these client because they on the market was down forty, fifty percent. And I thought, this is stupidity. This might be a Better way to manage your retirements, not to be in the stock.

Marine, I didn't know any media. I knew what he was, but I know I book a ticket to insurance conference and started figuring out like what product is actually out there that can help people the right to know. I can make sense because IT brings piece of mind.

And i've been saw. I saw some trailer for some movie, I I guess the guy tra l cells movie, but the guy goes all around the country, kind of popped up on my phone and he's interviewing people who have an unity versus s those who don't have a unity. And apparently there's this tom hadnt talks about, you know there's this psychic benefit or because you're not worried you can actually have your money in the market, you let IT grow because you're getting paid every month. You you get getting male box money .

so can take you yeah I I just recorded to show for previous members this this morning the member was asking, what framework do you use? Figure out what what percent of your retirement you put an annuity, in my view, is and the weight far academic with a book on this safety first retirement in the idea to cover the bare minimum basic expenses with social security and annuity.

So you know that that your logging and your food is covered and health care and what that does, the trees up the rest your portfolio c to invest more aggressively. So you you have the piece of mind and then you can you know have more fun with the rest of portfolio and then cover you know cost of living things down the road. But there is i've definitely seen now with family members, you know there are much more relax now they didn't have to worry about what the stock markets yeah .

that sounds like why would you want to spend your home retirement already about your money watching sem?

Bc, I will buy an an annuity at some point when I retire. And I love investing and I but my wife doesn't love investing. So what if you know, I passed before her or we get to the point where, yeah, we don't want to deal that anymore. So there's that if you thirty years retirement at a long time and and things change, a luck in some guardie income can to make make .

sense if you have a margin of safety initially. So I came from nothing. So my my biggest thing was I wanted x dollars safe forever. Even I remember when I acquired IT because to me, I want x number on from the market and then I risk the rest is a similar type concept and and IT IT IT as you IT causes, you have a Better life. You not looking at your portfolio because when you look at your portfolio, even even if you're an institutional investor, you do this for living. You get without t i've had some of my smartest clients make the dust decisions on selling because they were keenly aware of the risks of the present day.

Oh yeah, because are a humans. So the seem nicless taller route about this in his book, for by animals, the fact that losing money feels worse than making money. So the same amount you lose hundred thousand dollars versus gaining a hundred thousand dollars, losing IT feels way worse than the pleasure to get from gaining hundred thousand dollars.

And so because markets have a degree, random, if you if you're looking at every day and sometimes it's down, sometimes it's up, sometimes it's down big, that sort of like putting worse feelings all the time. You're always gonna worse when it's down and you feel good when it's up. And that can lead to very short term behavior to try to get ali, I can't stay on the pain anymore.

I got to get out. And so it's Better. We tell our members like look once a month, that's what I I look at microphone o once a month 就是 because I I share my percent weight with our members， so I have to compile the data. But looking at a daily, I think psychologically is just too intense for most of us because of just way IT feels worse when things happen with the same with time. I know I don't look at reduce for my book or for my podcast because you remember the band we use way more than you remember .

the good I right the read thing you you have to reach, you still think reach a good idea yeah.

then i'm in there. They're yielding four percent and is IT is a equity rate. Some in these these are realistic Operating companies that own kind stores, the on cell tower, on sell story, on single family homes, and there a very efficient way to get exposure to well run commercial estate.

And people say, well, about what's going on the office. Well, if you buy a weak etf or index one, IT IT owns all the sectors and these things change over time. So office is less than ten percent of the equity reindeers.

And there there is all types of other things. And so we like equity reach because it's you know most of us can't go invest in an institutional private real estate fund. And so I could reach to the very liquid way to get exposure to commercial realist day in the U. S. And around the world.

Yeah you could also own, you know cloud computing rates and health care reads and all these know is a read for anything, you know .

pretty much I went a way to change based on how the marketing walls and and it's not really managers their smart, right? You think you look at what's going on with a mouse space for years in a mouse. This is off of about mouse change.

There's a more here in two sons, they tore half of the down to redevelop its own by a more company. And so IT really state changes. And this is how we participate in that. We can pick up that four percent yard. And then if IT, they can grow earnings know three percent or so that's a seven percent turn return per retes per year over the next deck and .

do not make you any more land.

Where are you know and that's where yeah the land not gone in where? And so the uses for what's built on the land changes over time, and that's know as long m investors we can participate in that which is why we invest in you know index funds N T S in the stock market.

the market of vows over anything you didn't mention that you think you know about.

No, it's it's been enjoyable discussion just so it's talk in the number point. I think the kid investing is to be patient, to understand the fundamental to definitely diverse. fine.

I think it's fine to participate in more speculate positions via crypt to currency, gold, meme stocks, but gently less than ten percent in one's portfolio. And just because we want our we want more control over our retirement outcome and retirement savings outcomes. And we do that by focusing on cash generating assets, be a bond stocks, sara, and then be mindful of what what the valuations of those are.

Don't we don't want to be naive, passive investors. We can use passive vehicles like index. We wanted understand what's under the red and where we are, what is the current market temperatures so that we can make educated rebalancing decisions or reduce risk and appropriate or take advantage of opportunities because the markets gradually change in opportunities is and we know how to smart other people to take advantage that.

We that's the last thing we want. That's why I don't invest in individual stocks because it's an auction market and I have to know more than whoever selling me that stock, and I I don't. So I would rather benefit from the collections of stocks. So it's driven by the cash lows and the cash of growth. What's going on the economy.

Will this stock do Better than what everybody expects? And do I know more than everybody else so that IT will do Better and surprise the website and do very, very well and that we want our investing to be the depending on underline driver, not outsMarting. Other investors .

will thank you so much. David destine money for the rest of us. Working people go to find out more about your community.

I think of money for the rest of us. Dot com is where our community is. And then our second, your allies as a camp dot com. We provide data tools and education on the street market.

Sounds citing to camp also get his book money for the rest of us ten questions to master successful investing, really enjoy the interview. Thank you so much for joining us.

thanks. trust.

Everything we've discussed in this episode is for general education. We've not considered your specific risk situation or provided investment advice. This is simply general education on money investing in the economy. Have a great week.