After a quick market recap (and a good one at that!), Steve and Dave get into a detailed discussion about the fine line between how an investment opportunity is advertised on radio and TV* versus how it performs in real life. Before you buy what your favorite media outlet is selling, you may want to listen to episode (whatever) of Plan For Life Now.
*The world is collapsing, so drop what you’re doing and get some gold
Steve:
Right. Welcome to Plan for Life now, episode 1 0 4, Dave, here we are in the beginning of August, August the second here when we’re recording this. And I’m gonna make the comment that everybody makes when they’re talking to people, making idle conversation this time of year, I can’t believe how fast the summer has flown by <laugh>.
Dave:
I, Hey, you could throw it out. I, you know, I’m basically in my ocean view Delaware place most of the summer and it flies. It really goes fast. You can’t get enough good things in in the summer, but you should try. Everybody should try. That’s part of retirement planning actually, is to make it so people who had to work the whole summer now can basically enjoy a very good time of year. So, yeah, I’m with you on that. Even though it’s small talk, and it’s a cliche,
Steve:
It, it’s true though. And it goes, seems to go faster and faster every year. Um, so here we are beginning of August and I wanna do a quick update on the markets. It’s been a phenomenal year to be an investor and what a contrast to last year, which was a horrible year to be an investor. Now, last year, essentially, if you looked at all of the major asset classes, they were all down. So you had stocks, of course, down international stocks, emerging markets, small cap, large cap bonds down. You know, that was a big story. Everything across the board, bonds were down everywhere. It was pretty much last year, unless you were invested in oil, I think that was about the only asset that was positive. Uh, and, and then this year everything’s been positive. So as we sit here, s and p 500 up around 18%, the Nasdaq absolutely on fire, up 33% last I looked.
And the Dow you know, struggling only up about six or 7%. <laugh> uh, you know, that’s, that’s not a bad year normally, but, you know, relative to everything else. So the thing that jumps out at me when we talk about this is how absolutely no one, none of these quote unquote experts can even throw ourselves in there. Although we’ve never claimed to know what’s gonna happen. But nobody at the beginning of this year said, you know, what, uh, looks like we might pull off this, uh, soft landing thing. Maybe don’t know. Uh, but let’s go risk on again. Let’s go all into technology stocks, let’s go for growth again. ’cause that’s where it’s gonna be. There were zero people saying that. No. And here we sit, you know, seven, eight months later. And, and, but
Dave:
Because you can’t, it’s impossible to predict these things. And when you predict things wrong, it’s very easy for some of these people to just sort of let it go. Like <laugh>, the friend of mine, <laugh>, who remain unnamed, who advisors have 10 keys in the market, when these 10 keys occur, or sometimes they even say if it’s eight of the 10 keys occur or whatever, they say, now it’s time to pull out of the market. And of course, never said when you get back in, but those keys occurred for this person somewhere around SS and p being at 3,800.
Steve:
Okay. So
Dave:
I don’t know what it is when you’re listening to this. I know today is a a down day, but still, I believe over 4,500.
Steve:
Yeah, I was gonna say 44 and change maybe.
Dave:
Yeah. So, yeah. Um, you can’t predict these things. You could have a million strategic keys, and when these all these things happen, then X is gonna happen with the market. But whoever invented that past performance is not indicative of future results type statement. Was was pretty much spot on.
Steve:
Yeah. But the problem is that that’s become such a, that’s become something people hear so much that it, it doesn’t mean anything. You know, you just, past performance is not indicative of future results, blah, blah, blah, blah. It just goes in one ear and out the other. Nobody, nobody actually says yes. Past performance is not indicative of future success. Um,
Dave:
But here’s something we can say, and we say it all the time. I don’t know who says it more than we do. There are people who are tied with us, but nobody is beating us and saying, no matter what, don’t sell your equities, your stock-based assets when they’re down.
Steve:
Yeah.
Dave:
Don’t do that. Don’t be in a position to have to do that. That is an axiom that you can live by.
Steve:
Absolutely. So, yeah, it just, it goes And who know
Dave:
What’s gonna happen the rest of this year, by the way?
Steve:
Oh, exactly. I mean, maybe, maybe the rest of the year all the gains are wiped out and it turns out we do go into a recession and, you know, inflation picks up again. I, I mean, there’s a million different things that can happen. Um, but I just think it’s so funny that so many people were wrong and so many highly paid, highly educated, best analysis in the world. You know, very visible analyst, uh, Mike Wilson from Morgan Stanley, he came out last week and did a big mea culpa. You know, he was very bearish and he, he came out and he said, Hey, we got this one wrong. We didn’t anticipate, you know, X, y, and Z. We didn’t realize blah, blah, blah. Um, so, you know, I guess credit to him for saying he was wrong, but I don’t know, it doesn’t really help his investors if they were banking on his bearish predictions at the beginning of the year.
Dave:
You know what, I’m in a predictive kinda mood right now.
Steve:
Okay.
Dave:
So I’m gonna throw out two things that are out there and one that I think beware of. And the other I’m very bullish on, I’ll start with the bullish one. Very bullish on, Hey, COVID is over. It’s a post covid world. Now Covid is not over, but you know what I mean. The worry about covid for the most part is over. Yeah. And I’m bullish on that personally. It could be wrong, could have another outbreak or something that changes things. But I’m just telling you what I’m bullish on that it’s over. And now we’re seeing a world, and I’m talking about the markets now and the economy. That is a post covid scenario, and we’ll see how, how that plays out. But, but you know, in my mind it’s like we’re not in anything in the realm of pandemic mode. We’re in the mode of pre pandemic. That’s my bullish prediction. My thing that people are bullish on that I think ooh, be a little bit of, uh, beware is AI is taking over the world and AI stuff’s gonna soar.
Steve:
Right?
Dave:
Okay. Definitely could be true. I don’t know. I’m not as bullish on it. So everybody has their <laugh> predictions
Steve:
That definitely has the feeling of, yeah, I’m sure it will be incredible and amazing, but there’s gonna be a lot of companies that, that don’t <laugh> make a ton of money. It’s, you know, it’s one of those.com type of things. Will the internet change the world? Absolutely. Does that mean everything with.com is pure gold? No, it certainly does. I think the same thing applies with ai. You’re, you are going to have phenomenal things come out of that, but it doesn’t mean that everything is pure gold.
Dave:
Yeah. You know, a football coach that you don’t remember. I’ll let you, don’t worry. You’re gonna segue soon. A football coach that, you know, George Allen, he was the coach of the Redskins when I was a boy. Absolutely. The first
Steve:
Coach,
Dave:
1971
Steve:
Back in black and white. Right?
Dave:
Uh, back in black and white days. Uh, the, he got rid of all our draft picks and got all these old veterans, but his saying was, the future is now. And I questioned that the future is AI is the future now,
Steve:
Right?
Dave:
Not sure.
Steve:
Well, I had amazing segue that you just stepped all over for your, your George Allen story, but that’s okay. Uh, I was like, speaking of pure gold, uh, let’s talk about this, uh, this article you sent me, which I, I feel like you and I kind of have noticed this many times before, but this is the first time I’ve seen it spelled out here. Um, do you want to talk about that or do you want me to?
Dave:
You, you set it up because I sent it to you and it was a while ago and I forgot all the details.
Steve:
<laugh>, and now I’ll have to pull it up here as I had it here somewhere. Um, but the gist of it here, here we go. Um, so a lot of our listeners, a lot of our clients have listened to W M A L in the past. And W M A L for those of you that remember, uh, is that conservative talk radio station that Dave and I were on first in the 6:00 AM Sunday hour, and then the eight to nine Sunday hour. And it’s, as a side note, it’s always kind of funny, the, the people that got upset when we moved from 6:00 AM to 8:00 AM because their schedule, they got to hear us at 6:00 AM and we moved to eight and they just were in church or doing whatever and they didn’t get to hear us. Um, so stations like that, we’ve noticed this before.
They often have a lot of advertisements for precious metals and in particular gold and gold coins. And you sent me this article in the Washington Post, how the right wing news Powers the Gold I r a industry Ads for Gold Coins have become a mainstay of Fox News, Newsmax and other conservative news outlets, even as regulators have accused some companies of defrauding elderly clients. And when we’ve talked about this in the past, you know, the, the real issue that I have with this is not the idea of investing in gold. And I don’t know the specifics of any of these companies, if they’re, you know, some complaints in here saying, oh, they’re taking really high commissions, you know, things as high as 33% commission on purchasing gold coins. My complaint really has to do with the idea of gold as a very conservative asset in your portfolio, because that’s how it’s pitched.
You know, when when they run these article articles, when they run these ads, when they’re pitching this, it’s, the world is going to hell. Everything’s falling apart, puts your money in gold ’cause it’s super safe and conservative and <laugh>, I understand why they do that, but I think they really play it up to this fear aspect. The world is ending, this is going to be the only thing left standing. So put it in here if you want to be safe. And the fact of the matter is that precious metals and gold and you know, whatever else you want to invest in, silver, platinum, they’re really volatile assets. I mean, they’re incredibly volatile, so they’re very, very risky assets, but people are buying them with a conservative mindset.
Dave:
Right. And I’m gonna throw in, when you look at the, these personalities, whether it’s tv, but really this is more on radio. Um, these radio personalities are the best in the business. And I’m not, I’m not talking about your politics here. I’m talking about the skill they have. Yeah. As broadcasters we’re talking the best they are that are are out there, right? Um, and when you’re the best at something, you are gifted. The segue, Steve and I did, we’re obviously not the best broadcast <laugh>, there’s one of the worst in broadcast history. <laugh>, they’re segues from what they’re talking about. Remember, look at the audience, you’re believing you’re into this personality. Yeah. And like you said, if it’s W M A L, it’s gonna be conservative people, older people who are conservative bent usually, but they’re, you’re listening to that personality and their transition into the commercial.
Yeah. Right. Which is a marketing thing. They’re transition into these, which I’ve listened to a lot is really good. I mean, brilliant, you know, so, but the reality is for then the audience to believe that what you just said about this as being a conservative investment or asset to believe it is not, I mean, I Why wouldn’t you believe it, quite frankly, when you’re listening to it. But the reality is, is you and I know we, we hear this stuff and we say, well, wait a second. Yeah, I’m not against you investing in something like that, but realize it’s volatile.
Steve:
Yeah.
Dave:
It’s a volatile situation, not what you’re thinking.
Steve:
Yeah. And I mean, you know, really the article goes one step beyond that, or it doesn’t even delve in really to, should you have gold in your portfolio or not. You know, I will say that we don’t typically have allocations to gold or precious metals in a portfolio, but we sometimes do have clients who want it in there. We talk through, you know, where it makes sense, why we don’t put more of it, but then we limit it to 5% of the overall portfolio. You know, I treat precious metals and gold and silver and whatever. I treat that like an individual stock, and I would not wanna have more than 5% of my portfolio in an individual stock. I just think that’s too risky. I don’t care how great you think, you know, apple or Amazon or Exxon or whoever is, um, you know, concentrating that risk in one place is not a great thing. And the same thing in my mind applies to, to the precious metals. Um, the article really goes a step further talking about some of these companies, uh, not regulated in any way, taking advantage of customers, taking huge commissions. I mean, that’s, that’s a whole nother problem,
Dave:
Right? That’s a whole other issue. Um, yeah. And, but just the issue of volatile versus a conservative asset nowadays, look at how people who might be duped by this stuff, where they could have had plenty of real conservative assets out there that are giving quite a return now with the higher interest rates. Yeah. It sort of magnifies that, well, that feeling of being burned.
Steve:
And there was even a quote in the article here, um, that, that talked about one of these guys who, you know, they, they got a 33% commission and you know, he, he was very upset about this. He basically thought, I’m trying to look for the quote here. Uh, regretful White, the guy who was lost money said he thought that Fox wouldn’t take a commercial like this unless the company was legitimate. Um, and I, I feel like a lot of people think that, you know, that, that they say, Hey, if, uh, W M A L or Fox or Newsmax or whoever is gonna put these people on, I imagine they’ve done at least, at least some due diligence to make sure they’re not fraudulent. And I wish that were the case, but it’s not.
Dave:
Okay. I worked in this business before I was in our business for a long time. Um, and yes, granted, I was on the broadcasting side, but I was, you know, I hung out with all the people, but the, I don’t care what your media company is, the lifeblood of that company is advertising dollar and, and, um, that’s the best way to put it. Ethics will be bent sometimes to get that advertising dollar.
Steve:
Yeah. I mean, there’s just, they’re just not, you know, saying, well, okay, we’ve got your check, but we’re not gonna cash it until we make sure that you’re on the up and up and you’re gonna treat your customers fairly. I wish they, I mean, that’d be great. It’s just not reality. Uh, they’re gonna cash the check and, and that’s just about it. So on the this, in this same vein, Dave, of, you know, we’re, we’re talking here about people who are advertising gold or gold coins or whatever types of investments that I’m going to assume for the most part are, are <laugh>. They’re not fraudulent for the most part, right? They’re, they’re selling these assets. You can have a debate about good or bad or whatever, but for the most part, people are getting what they’re expecting here. Let’s take things to another level, and I know we’ve talked about this before, um, but we’ve got, well, we’ve got a number of clients who will send us articles like this, um, but one in particular where he sends these things and he always says that his wife is very concerned about it.
And that could be true. You know, sometimes I, I think it’s, it’s that kind of thing where you ask a question, you say, well, asking for a friend, right? But you’re really asking for yourself. You just don’t wanna admit it. I, I think that might be true in this case, but, you know, maybe his wife really is upset. Um, but he sent a couple of these in the past couple of weeks, and they’re all the same. Um, is a digital dollar coming soon? Some financial experts warn it could be the next instrument of government control. And it, it basically talks about how money, money is going to be eliminated fairly soon. Um, and it’s, it’s really Biden and Nancy Pelosi and whoever else, uh, you know, taking control of, of everyone. I, I’m, you know, <laugh> I’m paraphrasing here, but it’s, this is not <laugh>, this is not saying, Hey, the Fed is looking at digital dollars, which is true.
And they might introduce something way far in the future that some sort of Bitcoin alternative. This is saying that all of your money in retirement accounts and banks is going to be worthless in the next couple of days. This is imminent and you need to do something about it now. And my response is almost always the same. You know, this is utter garbage. This is total garbage. I don’t know exactly what they’re selling, but whatever it is, they are taking maybe even a scrap of truth and trying to scare the bejesus out of people, and it’s just,
Dave:
Hey, and okay. And that’s what they’re doing. They’re selling, they’re using fear to sell whatever ultimately they’re gonna sell. And if you think this is just a Republican problem, no. When you talk about, let’s, let’s talk about the future for a second. Suppose Donald Trump wins the presidency in the next election. Yeah. You don’t think the ne the new targets will be Democrats. Oh, ly people they find are Democrats and they’ll say the same kind of thing. Now you’re not happy with what’s going on. That fear will be sold to the other side.
Steve:
Yep.
Dave:
There people are gonna take advantage of emotion to sell you something regardless of your political bent. Um, it is something to be very wary
Steve:
Of. And, and I mean it, you know, I, I respond with very similar things each time. Hey, look, if, if you are not hearing this, if the only place you’re getting this is from some website, newsletter, whatever, and you’re going on mainstream media, you know, using that term, but <laugh>, if you’re going on, uh, Fox News and c n n and you’re not seeing any mention of this, right? So there’s no mention of it anywhere across the political spectrum in the mainstream stuff, you know, this, it’s just garbage. Um, so it’s not like everybody else is just gonna hold out and not say anything about it, and all money is going to be confiscated in the next couple of days. But you know what, C n N or Fox, they really don’t wanna report on it. Um, so, you know, I always encourage people, most of the time people send us stuff and say, you know, Hey, this looks like garbage. Have you heard about this? Um, and quite honestly, most of the time it’s from three or four analysts that I’ve heard of before. And it is garbage.
Dave:
Yeah. I think, again, it’s another great argument. I mean, I, I’m, I’m of, obviously, I’m gonna say this, I feel like anyone who’s close to retirement or retiring should have a, a trusted financial advisor, whether it’s us or somebody else to bounce this stuff off. You know, you’re worried about something, that’s why you call us, you know, to get another opinion, hopefully an independent opinion, right. On this stuff. So, you know, it’s just another role I think the financial advisor plays, which is to be able to, you know, give an independent view of any question you have, especially, you know, ones that are really scaring you.
Steve:
Absolutely. And tying right into that, um, Dave, I, I saw this article and I’ll, I’m gonna post a link to this that had some of the greatest investment quotes of all time. And I, I mean, a lot of these, you know, I’ve seen before, but it’s, it’s pretty cool to have all of these put in one place here. And I can’t go through all of ’em, <laugh>, but let me pick out a couple that I, I thought were interesting, either I haven’t heard before or kind of, uh, really good ones to go over again. Um, <laugh> investing should be like watching Paint Dry or watching Grass Grow. If you want excitement, take $800 and go to Vegas
Dave:
<laugh>.
Steve:
And that’s good. You know, this, this is kind of to the idea that, you know, you should be able to set the investments, put a plan in place, and not be having to make these micro movement changes day to day, day trading in and out, things like that. That that should not be your investment plan. Um, how about, I don’t know, Paul Samuelson said that one. I’m not sure who he is exactly. Um, how about Sir Isaac Newton? I know who he is. Um, I can calculate the motions of heavenly bodies, but not the madness of men. Um, which is very true is, you know, you could be really, really smart, be able to figure out how planets move around, but trying to figure out the madness of the crowd is just, it’s, it’s, I don’t wanna say very hard. ’cause that makes it sound like it’s doable.
Dave:
Yeah, I was about to say, impossible, so, right. We’re on the same page.
Steve:
Yeah. Um, you know, Benjamin Graham, the investor’s chief problem, his worst enemy is likely to be himself. Um, you know, this is so often true that, you know, we’re able to, to talk ourselves into these ideas that that sound really good. You know, at the beginning of the year, it probably sounded really good to take all your money, put it into a 5% CD and just sit on it and, you know, pull your money outta stocks and okay. You know, stock market’s just gonna keep going down, all that kind of stuff. But, you know, here we sit six or eight months later and it, it doesn’t look as good as, uh, as we thought it would,
Dave:
Right?
Steve:
Uh, classic Warren Buffet, the first rule of investing is don’t lose money. The second rule of investing is see rule number one, <laugh>. Um, so, you know, I, we, we talk about this with a lot of people that I, I think a lot of people are, are focused on and know about accumulation planning, you know, accumulation planning being when you’re saving money and accumulating money, but they don’t really think about or know about distribution planning when you’re taking that money and you actually want to, to live off of it and get it to last a long time. Um, so I, I think more people need to have a focus on that than just on accumulation.
Dave:
Yeah. I don’t think I like that phrase by Warren Buffet. I don’t like that. My personal don’t lose money. Guess what? In the market, you’re gonna have times when you’re losing money and then the long run you make money. Yeah. So if you take that literally that’s, I don’t know, I, I, you’re right, I may have moved up the chart now <laugh>, I might be head of Warren Buffet.
Steve:
I
Dave:
Know what he’s saying, but I don’t like that when I think about regular people hearing that comment, let’s put
Steve:
That, no, I guess I hadn’t thought of it in that context. I’m thinking of it in the context of I’ve got bills to pay, um, whether it’s this year or later, you know, next year, sometime soon. I can’t afford to lose that money. Um, obviously Warren Buffet risks money and has long-term, you know, long-term, uh, investments that go up and down. Um, how about Will Rogers, not generally in the financial world, but <laugh>, uh, I’m more concerned with return of my principal than return on my principal. Um, that’s kind of same sort of thing. Gotta make sure that you’re getting that money back instead of just worrying about, you know, how big of a gain you’re going to make there.
Dave:
Uh, oh, interesting fact about Will Rogers. Yeah. Anyone, my oldest child who’s 31 age and younger has never heard of Will Rogers and never Will
Steve:
<laugh>.
Dave:
Fun
Steve:
Fact. And I barely kind of know
Dave:
<laugh>. I, I sort of, he was what is, we don’t really have too many of these left a humorist, they call it. Yeah.
Steve:
<laugh>.
Dave:
That job has gone outta vogue is to have humorous.
Steve:
All right, let me finish off with just two more, uh, quotes here. And, uh, Gary Shilling, I think he won a Nobel Prize or two. Um, the market can remain irrational far longer than you can remain solvent. And I, I would kind of reword that and basically say, yeah, the market can be wrong for a lot longer than you can hold out for. Um, so, you know, a classic example of this is people in 1996 that said, Hey, these technology stocks.com stocks, the valuations don’t make sense. You know, was that person, right? Yeah, they were right. But what did they have to put up with? They had to put up with 97, 98, 99 all up, 30 plus percent in the market, right? The market stayed irrational way longer than it should have. Uh, and that’s, you know, that’s what makes it so difficult. You can have a thesis that’s correct, but you’ve gotta have that timing right. And that’s, that’s just impossible to do.
Dave:
Yep.
Steve:
All right. Let me leave it there. There’s so many more good ones. I could go on forever here, but, uh, I’ll post a link to it and, you know, you guys can find your, your favorite quotes here. Uh, alright. All right. I think that’s all for now. Thank you for joining us. Hope everybody enjoys the rest of the summer. I’m gonna be on vacation next week. So Dave, you’re gonna be holding down the fort taking care of it. Yeah,
Speaker 4:
It’s fair.
Speaker 5:
All right. Thanks for joining us. We’ll check in.