It’s an action packed pod starting with some big logistical news about Capitol Retirement Strategies! From there we recap the winner of the Dave/AI versus Steve/Human Brain NCAA Pool competition, and end with a review of the book “1929”. But we promise you won’t be in a Great Depression after you listen to episode 128 of Plan For Life Now!
Steve:
Welcome to Plan for Life Now, episode 128. Dave, we wasted some good content there before we were recording.
Dave:
We did. We’re hurting for content and we had a whole little spiel about … It seems like we just did our hundredth anniversary.
Dave:
And we’re not one of those podcasts that does episodes all the time. We do them basically monthly.
Steve:
We’re trying to … I just think we’ve been better this year about doing it once a month, I think.
Dave:
I think we have, because a hundred was not almost three years ago. There’s no way.
Steve:
No
Dave:
Way. So we must be doing one every three weeks now.
Steve:
It feels to me like 100 was about six months ago, but that can’t be right.
Dave:
Yeah. I want these things to slow down as I approach. Well, I’ve already hit 64. I’m approaching. Am I approaching … After July, since my birthday is in January.
Steve:
Oh, so you’d be age nearest to 65?
Dave:
Yeah.
Steve:
That’s the way insurance companies love to calculate things.
Dave:
Exactly. And then I can go and start dealing with Medicare as I just age behind the clients. Thank God we’re in this business where a lot of our clients always say to me, no matter what age I’ve been, that you’re young, you’re so young.
Steve:
Well, you know what? I think it’ll be good to have that personal experience dealing with Medicare because we get to hear a lot of clients talk about it and we do have resources and people we say, “Hey, if you need help, you can call here.” But for you to go through it personally, I’m looking forward to it. I
Dave:
Know. It’s better you than me, I’m sure is what you’re thinking. But yes, I will be forced to be the guinea pig for our firm. Correct.
Steve:
Absolutely. All right. Can you hear
Dave:
That beeping in the background?
Steve:
Yeah, I sure can. All
Dave:
Right, don’t worry about it. Just let it go. It’s the trash. We’re doing the show in the office, which is so bizarre that we do the show in the office, yet I’m still in my part of the office next to the back of the office, which is the trash area.
Steve:
Hey, should we announce now that … I didn’t even think about this till right now that we- Of course we should.
We are going to be moving offices in about a month, hopefully a little less than a month if all the construction, the build out gets done. But I’ve shared this with some people. It’s certainly not a secret. Unfortunately, we have been in this office here in Gaithersburg in the Kentlands for 16 years. So we’ve been in this building for 16 years, and we have rented the office space from the dentist who is below us. Now, all of our Virginia clients who have never come here or across the country, they’re just thinking, “I have no idea what you’re talking about. ” But most of our Maryland clients have been here and they know that Dr. Kelly’s dental practice is on the ground floor and we’ve got the second floor here and very nice space and very happy here. Dr. Kelly, just as a side note here, Dr. Kelly actually sold the practice a while ago to some other dentist.
And that other dentist, his wife is some sort of attorney and she wants to take over the space. And it’s a very nice space. Those of you who’ve been here, it’s nicely decorated and all that. So unfortunately, Dr. Lev, he can’t tell his wife no, and he can tell us no.
Dave:
And that’s right. And we were stunned. You were stunned, but I was also stunned when we said, “Yeah, we’re going to … What do we do? Three year leases? Yeah, we’re going to do our release again.” And they were like, remember, look at what’s going on in commercial real estate. When you have a client like us, we just pay what we do. We don’t cause any trouble. I would think we’re the kind of commercial real estate tenant you would love to have. So it was stunning when they said, “Yeah, no, you can’t.
Steve:
What?” So that was a bit of a bummer, but trying to put a spin on it, we’re moving into a new space a little bit more. It’s also in the Kentlands. So if you know the area where we are, we’re just going to be across the street over closer to where Lowe’s is. There’s a professional, very small professional office building there. It’s got other finance people, attorneys. I think there’s a chiropractor in there, some other people in there. So not a big move, but of course it’s a big pain for us. We got to get movers and do all that stuff. But here’s what I’m excited about. First of all, we got to pick all the design stuff for the build out. So even if you’re not really into it, it’s kind of fun to pick out new paint and flooring and carpeting and blah, blah, blah.
But the other thing that I think is a good thing long-term is that we will have an elevator in the building. So I have gotten that comment before. We’re on a second floor walk up here where people say, “It’s a little hard for me to get to your office there because of that. ” And I think parking is easier over there too, Dave.
Dave:
Parking looks a lot easier for, I mean, I feel like concerned about the clients. The elevator’s more important. Remember, our clients are saying, “Dave, you’re so young. I’m 64.” We need an elevator at this point for the people who are going to meet us in the office if that’s the comment that you have coming our way. So I agree with you. I think that’s a really good thing. And you know what? Maybe it’s just good in general to have a change of scenery once every 20 years or so.
Steve:
Okay. That’ll be our threshold. Next time we move, I will be turning 65 and then that’ll be good. And we’ll be wheeling you in.
Dave:
Right. I’ll be in. Yeah, yeah. Don’t mind that guy. Whatever he’s saying. Yeah. Good. And we were able to get through the annoying beeping of the trash trucks through. And I also used, I’m a pretty skilled mute button user for these things, so hopefully.
Steve:
Usually it’s your dog barking, but-
Dave:
That’s right.
Steve:
… this time, the beeping. Okay. So of course we will be sending out emails and notices and we’ll put stuff at the bottom of our email, “Hey, our address has changed,” all that stuff. So hopefully you’re not showing up at the wrong spot, mailing paperwork to the wrong place, all of that. Okay. So I think that it makes sense to go through a little recap of what’s gone on in the market because we did a podcast a month ago and things change so quickly nowadays. It’s crazy. You blink and everything has changed. So what went on in March was basically all the conflict in the Middle East, all the stuff with Iran, oil prices were crossing. I think they got north of $110 a barrel and the stock market started to pull back. And I should say this was sort of in conjunction with a lot of the fears about AI essentially putting a lot of, for the most part, software companies, but just making them obsolete and putting them out of business.
So you kind of had those two things going on at once. So you saw a lot of these big software names, companies like Microsoft and Salesforce and ServiceNow, I mean, a lot of their stocks were down 30, 40, 50%. And peak to trough, we saw the S&P 500 down around 7.5%, the NASDAQ, which is more tech heavy down over 10%. And the interesting thing about the market decline this time, Dave, there’s this saying in the markets that the market takes the elevator down and takes the stairs back up, meaning it goes down very quickly and then it sort of gradually grinds its way higher. This time was just the opposite. The market sort of took the stairs down. In all of this, we didn’t have a day where the market declined more than 2%. So no big swings. It was all chip, chip, chip, down 1%, down half a percent, but then all of a sudden things turned basically with the turning of the calendar, flipped over to April.
The market’s up 12% since the beginning of April, and we are now hitting new all- time highs in the market now.
Dave:
Yeah, mainly because it’s all been about the strait of hormones and oil prices. So now I could just look at oil, at least during when all this stuff was going on. That was a great explanation of what was going on by you, by the way. But the bottom line is, yeah, so the strait of Hormouse closed for business, similar feel, but less of a market reaction to the tariff announcement.
Steve:
Yep, exactly.
Dave:
And then it’s opened again according to Trump, but not Iran. But when it sounded good, it just sounded better. And then it’s also, we’re discussing things, we’re not discussing things, we’re discussing things- We’re enough to keep track. We’re not discussing things, and in general, pops back up to a brand new high. My analysis of it is the stock market still wants to be a bull. We have a market that is feeling bullish with a headwind of a real short-term event like this war.
Steve:
Here’s why the stock market wants to continue to be bullish. We went into the year expecting 14% earnings growth. Now we’re projecting 17% earnings growth on the S&P 500. That’s despite everything that’s gone on with oil prices and the straita hormones and all of that. Dave, just by the way, you know how you always love to talk about things that you can say at cocktail parties to your friends to sound smart, like tax loss harvesting and things like that. You’ve got to throw in there, well, the impact of closing the straight of hormones, that’s really going to mess with the global supply chain there.
Dave:
I actually don’t throw that in because it’s just never going to compare to tax loss harvesting.
Steve:
You’re right.
Dave:
And rebalancing. There are certain things that rebalancing is a great … Also, it sounds like you work on tires, but at the end of the day, you’re doing things that people might not agree with if they didn’t know what rebalancing meant. Hey, I’m actually buying stocks right out of your portfolio while the market is down. If we called everybody and said that, they would say, “Well, I don’t know, but okay.” But when you say, “Oh yeah, we’re just rebalancing.” So of course you’re rebalancing. I expect you to rebalance.
Steve:
Right. If you had to said, “Hey, everything looks pretty crappy right now. I’m going to take some of the stuff that’s doing well and I’m going to buy the things that are crappy.” You don’t sound so smart saying that, but-
Dave:
So I would use the straight of hormones as basically you don’t want to watch the news at all. And any of you who don’t want to pay attention or watch the news at all, I compliment you.
Speaker 1:
Yeah.
Dave:
Smart. But you don’t want to watch the news at all, but you don’t want to sound stupid. So all you say is, “Ugh, straight ahor moves.” That’s all you got to do.
Steve:
Just say it and be a real exasperating. No,
Dave:
It’s noise like disgusting noise. Ugh, straight of horror moves. That’s all you need to do.
Steve:
So I saw this tweet from some market commentator I follow, this guy, Sam Roe, and he posed this question and gave his own personal example. He came into a lump sum of money and he invested this lump sum of money early in 2025. And this was right before Liberation Day. So he put this money in, the stock market promptly went down 19%, recovered, came back, all the recent stuff going on, stock market’s down another 7.5%. He took a look from when he invested, which just seemed like terrible timing, and it was, and he’s still up 15%.
You invested right before Liberation Day, you got all those downs, the ups, the downs, the ups. You’re still up 15%. And he posed this question that I’ll paraphrase is, is investing always supposed to feel this crappy, this bad? Is it supposed to be fun or is it supposed to feel this bad? And I think the general reaction from people was, “Yeah, it’s not supposed to be just lots of fun. Hey, this is great. I feel good about it. ” Because a lot of the time when the market’s up, we spend time worrying about, “Ooh, when’s it going to go down?” And when it goes down, we worry about, “Oh my gosh, it’s going to go lower.” Nobody ever sits there just feeling like, “Man, I guaranteed it’s going to go up from here.” Nobody feels that.
Dave:
Nobody feels that. I mean, you know what? People who like, “I’m just going to look at my portfolio when things hit all- time highs and I’m going to ignore everything else.” I feel like that might be psychologically just the best way to go.
Steve:
Oh, absolutely. You
Dave:
Look at your all- time high portfolio, you say, “Awesome.” Then you’re done for a while and you don’t worry about it, but the long-term is good and short-term is betting. What more can you say? I mean, short-term is anybody’s guess. Look at what’s been going on lately. But you know what? Speaking of predicting now, having said that you can’t predict anything, I’m now going to be a hypocrite of what I just said. I’m loving my … I forgot what show it was, episode one, but I love my beginning of the year personal prediction that the market would do well up until the midterm election, and then there’ll be a feeling of the party is over so that ultimately the year will be positive, but not like it was pre the midterm election. And I could be a hundred percent wrong on that, of course, but I’m loving the way it’s going so far, that prediction.
I
Steve:
Thought when you started to say, speaking of predictions, as you were going to talk about my huge victory, my dominating victory, my just destruction of you AI loving people that used AI to predict your NCAA brackets.
Dave:
It’s your job. Let’s move on to that. It’s your job to talk about your own predictions.
Steve:
All right.
Dave:
But that’s a good thing to talk about.
Steve:
Here’s what it came down to. Dave used ChatGPT to pick his NCAA bracket. I used just my brain to do it. And I was in third place going into the championship game, I think. And by the way, this is only a bracket of me, Dave, and his son, Eric. So not a big bracket here, but you get all the bragging rights and I think $10 to go with it. So I believe I was in third place going into the championship game, or maybe it was just going into the final four because what needed to happen is on one side of the bracket, you had Arizona playing Michigan and what was on … I’ve already forgotten. Who were the other teams? Illinois and Bobby Hurley, not Bob- Connie. Wasn’t Connecticut in there? Connecticut, Yukon. Yeah. Now, who’s it? Danny Hurley. He’s a lunatic on the sidelines there.
He just goes crazy all the time. So I needed Michigan to win. Your son, Eric, needed Arizona to win. Whoever won that game, that was it. We didn’t even have to worry about the championship game. It was over after that. And Michigan handled their business in a big way, and I won. And I think that’s two years straight now.
Dave:
It’s two years straight after a drought of the entirety of when we were doing the pool.
Steve:
Of a 14-year drought.
Dave:
But yeah, you know what? A, I think it mirrors. Our little experiment is mirroring what’s going on in the real world, in my opinion, and what might be helping the markets right now. Yes, AI is a tool. Most of us in the business world and in the other world of just living your life use that tool almost every day. But as we’re seeing how the tool really works, it is not the be all, end all. And it’s not the be all, which is positive, but it’s also not the end all and ending it all rapidly like jobs. I think we’re starting to see what’s being baked in even into the markets is this notion of it’s a tool, it is a disruptor, but it’s not the end of everything. And it’s starting to be baked in to what’s going on out there in the market over time.
And so yeah, I think that experiment was a microcosm of that, our little thing.
Steve:
I will say it was very cool. My daughter and I took a spring break trip visiting colleges all across Pennsylvania, Ohio, and Michigan. And we finished our tour. We finished our tour in Michigan that Friday before the Final Four, and it was really cool to be in Ann Arbor and just see how pumped up everybody was for the Final Four there the day before. I would’ve actually liked to be there the Tuesday after and see what that was like. But anyway, very cool. Speaking of AI, Dave, I listened to, because that’s how I consume 99% of books nowadays is I listen to them as audiobooks. I consumed this book a couple months ago, and so I had kind of forgotten about what it was about and the gist of it. But you mentioned that you just read, or maybe you listened to, the book 1929 by Andrew Ross Sorkin.
Dave:
Right. I read it old school. Well, not old school, that would be an actual book. I read it on my phone, but anyway, I read it.
Steve:
So like I said, I listened to it a couple months ago, so I had kind of forgotten. So before the show here, I fired up ChatGPT and I said, “Hey, give me a summary of 1929 because I kind of forgot what it was about. ” So give me your take on it. What did you think?
Dave:
My take on it is if I were not you or me, I would’ve actually found it even more interesting. I think you and I are so all over these things that we sort of know the story already better than people who aren’t in finance.
So I sort of read it from the point of view of someone, and you know this, I’m also really into politics and stuff like that. So with that background, to me, it was more of a lot of it was review and some stuff, obviously I didn’t know. I thought it was really well written for somebody for people instead of boring you with every detail of the financial part, it was just more of a story and the personalities of the people that bankers, really a lot of the bankers involved with the backdrop of Hoover and Roosevelt and things you just don’t know if you’re not going to sit there and really delve into it. I really liked it. It was one of those books. I’m not a big reader, but don’t confuse that with not being able to read. I was able to crush that book in about one plane trip over to Europe, went on vacation, and I really liked it.
And it still goes … But what I thought, it made me feel positive about what’s going on now. So since 1929 crash, we have so many basic laws in place and the banking system, I mean, they were like, wow, with all this going on, maybe we should guarantee people’s money in banks. What do you guys think? I mean, we are well past that right now.
Steve:
Right. Yeah. I mean, once again, like you said, it was kind of a reminder of all these things. And I agree, the way that it was written, it was much more of a character story using all these people to tell the story versus just a history book. But yeah, it talked about things like FDIC, guaranteeing deposit. Part of the problem with mortgages back then is they could be on demand recalled. So you had a mortgage with a bank and the bank decided that they needed that money back. They could call your loan in. Well, that’s a big problem.
So that’s changed dramatically. I mean, the levels of leverage that you were allowed to use, not that … I don’t want to say never, but I don’t think we’ve ever had a client where we’ve utilized margin or leverage to buy more securities, but it wasn’t uncommon for people to have 90% leverage. So just to use an example, let’s say you were buying a stock that was valued at $100 a share. You’d put down $10 and you’d borrow $90. Well, what happens when you use leverage? If the price goes up to 110 and you sell, well, you made $10 and you put in $10. That’s a hundred percent return. That’s fantastic. But what happens if the price goes from 100 to 90? Well, you just lost all of your money, totally wiped out. And that was just commonplace. Everybody could get 90%. Yeah,
Dave:
There was all that going on. But when you start … The other thing that I found positive, even though it’s negative, don’t get me wrong, when you actually look at the number loss, the percentage loss in regular stocks, they talk about how regular companies did and all that, and they got hammered
Dave:
Lot of them, but it did recover along the way. And I started to look at it like, this was an awful market. This is a disaster. But what about the portfolios we have now? Why do we say for people who, if you’re a little queasy, don’t have all your money in stocks, have your money in other things, have a diversified portfolio, make sure you have enough income coming in from other sources and develop methods for that. So if we have a loss like this, you could easily withstand it. And the reality is a lot of our clients could withstand this
Dave:
Now and still not have to panic. So I found that digging into the details of that to be extremely positive, but even having the FDIC and even other protections that we have now also make me feel good. When I saw Andrew Ross Sorkin on one of the morning shows talking about it, he’s selling it, making you scared that we’re going to have another 1929 because they’re trying to sell a book. But when I actually read the book, I’m thinking we did have another 1929. It was called 2008. And we now, instead of saying things behind the scenes, we all just say banks are too big to fail.
Steve:
We
Dave:
Just say it out loud.
Steve:
Well, that was the name of his book about 2008, Too Big To Fail.
Dave:
Right. So I feel like we’re in just a better position. The reality with markets are you’re in a market, your stock can go down to nothing because the company could, for whatever reason, and you can prepare for that now as an individual investor, not having to rely on the government or you could be speculative. It is what it is.
Steve:
All right, let’s end things there for a show where we didn’t think we had anything to talk about, I thought we did quite well. I thought that was good. All right.
Dave:
It’s amazing what we can do when we do a show once every three weeks. How we come up with that half hour, wow.
Steve:
I hope everybody got through tax day okay. All of that settled out. Nobody had too much of a shock there, and we’ll check back in with you maybe in another three weeks or so. Take care.