Latest / The Personal Finance Club Show / The Trump Dollar, the Index Fund Bubble, and Tupac: Dead or Alive? | Ep 23

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The Trump Dollar, the Index Fund Bubble, and Tupac: Dead or Alive? | Ep 23 · The Personal Finance Club Show

0:12
Welcome back to the Personal Finance Club show.
0:14
Hey, John. What's up, Jer?
0:17
A lot. You know, I used to be super
0:20
frugal, like I was every like in my 20s and 30s.
0:25
I was so broke and every dollar that like left my account I kept
0:29
super careful track of. And if I ever wasted money like
0:32
in like a parking parking ticket or something, it like destroyed
0:35
me. And that has become less true
0:37
for me lately, or at least maybe it still destroys me.
0:41
But I'm feel like I'm becoming way more reckless with like just
0:43
money. I'm completely and utterly
0:45
burning. So I have a question for you.
0:47
Do you have a memory or of any time where you just have just
0:49
totally wasted money, just totally burning money, get no
0:52
value from it. Do you have?
0:54
Do you have anything like that? No value I mean.
0:59
By the list. Listen, I waste money all the
1:01
time, alright? I definitely used to waste money
1:03
all the time. So it could be a number of
1:06
things. The thing that comes to mind is
1:09
like, I, I feel like I was maybe like 19 and I paid for like an
1:14
acting class where they were just scamming.
1:16
They just like took head shots of you and like, taught you how
1:19
to act in like a week and like, taught you how to do makeup.
1:22
And like, it was clearly just like a little scam.
1:25
But like, I don't want, I don't, I can't say I got no value from
1:28
it. Yeah, it was just like a waste
1:29
of money. I feel like I have a long list.
1:32
So this one actually involves LA.
1:33
So I was, I don't know if you can, I don't know if you're
1:35
looking at the docs and maybe you can know this, but I was
1:38
driving I think to the like, we went to a a, a talk together.
1:43
What was it? For, oh, the spaces thing, for
1:45
passes, yeah, passes spaces and spaces.
1:49
And I was driving, I was driving my electric vehicle with like
1:52
the electric vehicle sticker on it.
1:54
And I was like, I was like, oh, I can go on the carpool lane,
1:56
right? And so I did.
1:57
And then I get AI get a bill in the mail.
2:00
Do you know how much that bill is for?
2:03
That's your guess. Well, what would you get pulled
2:05
over? For I didn't get pulled over, I
2:06
just went in the carpool lane because I thought I was, I don't
2:09
know, I don't know all the rules.
2:11
Yeah, I got like a ticket, like an invoice because I like drove
2:14
in the carpool lane and I was like, you know, I was like,
2:18
what's it going to be like? What?
2:20
What's your guess 2? 50. 200 No, no, no, it's not,
2:23
it's not, it's not a ticket, not like a violation.
2:26
It's more just like, hey, you didn't, you didn't pay.
2:28
So here's what you Here's what it cost to to drive in the
2:30
carpool lane. Is that not the same thing as a
2:33
ticket? No tickets like this is a
2:35
penalty because you didn't pay. Like there's no way I could have
2:38
paid because there's no toll booth or anything.
2:40
It just, it just grabs your license plate and then gives you
2:42
a bill for it. What do you think that Bill?
2:44
Yeah, that's a ticket 250. How much was it?
2:47
OK, it's $33. I thought that was outrageous.
2:49
Come on 250, I've gotten the 200 and plus dollar ticket in LA.
2:54
And that wasn't Was that wasting money?
2:56
No I was gagged because I've had like $60.00 tickets but like I
3:02
parked in a bus lane. See, no, you're confused.
3:06
Like, like you, you like on toll roads, you're supposed to just
3:09
drive through and then you just pay it later.
3:10
That's how tolls work these days.
3:11
And that that's what this was. But I thought it was like, you
3:15
know, because I was an HOV eligible car or whatever.
3:18
So I thought $33 was off. I thought a toll would be like
3:20
$2.00 or $5. I was by myself.
3:23
I was. It's an electric car.
3:25
HOV lane if you have you don't have someone else in the car.
3:28
Yes, you can. You can get the stickers it says
3:30
right there. It says like HOV eligible
3:31
because you're if you're an electric car, I know you're like
3:34
smog machine. You drive from like 1964 just as
3:38
trying to heat the oceans as fast as it possibly can.
3:41
But some of us care about the the future.
3:44
So we support Elon Musk and buy a Tesla I think.
3:50
I just let you dig your own grave.
3:51
I should just let you keep talking.
3:53
That all tracks, right? Actually, I think it's I think
3:54
it's actually true that you're better off driving a like a
3:57
smoggy old car than like buying a new one, just because the
4:00
process of building a new car is so destructive.
4:02
My Honda Civic passes the smog test every time, so leave her
4:06
alone. You're you're doing great, so
4:08
you're better than me. But anyway, the point we've gone
4:10
totally off the rails here. You don't know the difference
4:13
between a ticket and paying a toll.
4:14
I've burned so much money on stupid stuff.
4:18
I thought a $33 toll was outrageous and I didn't even get
4:21
I have a whole list of things. I paid my property taxes late
4:25
twice last year. If I was saying, even though I'm
4:27
like super organized and put it in my account, everything
4:29
somehow I missed it twice and I paid $350.00 in late fees.
4:34
So I don't know what it is. I don't know if it's like having
4:36
kids or having more money or just I'm losing it being old.
4:40
But I got I got I got locked in as the kids are saying.
4:43
We we said giving in the last episode.
4:45
Now I'm locking in. I got a lock in this lost money.
4:50
Lock in, James, let's. Get into our first segment,
4:52
John. OK.
4:53
We're back with our brand new segment, Hot Topics.
5:02
Hot topics. Not this, not the.
5:04
With Hot Topic. Not the cool kids mall store or.
5:08
Spencer's the other one. Did you ever go to Spencer's?
5:11
Actually, Spencer's was right up my alley, Man, that had all the
5:13
gadgets. I'm a gadget guy.
5:15
Yeah, all those gag gifts. OK, well, this is not the same.
5:19
It's not nearly as exciting as the Spencer's or Hot Topic, but
5:23
it is quite interesting. I pulled a post that says
5:27
Trump's chaotic governing style is hurting the value of the US
5:29
dollar and it's a dramatic graph where this green line is going
5:33
down and jagged lines. Tell us what that means and what
5:36
you think about it. It is a very dramatic graph.
5:39
Well, basically this is saying how many euros can you buy with
5:43
a dollar? And So what is a dollar worth
5:45
like? You know, how can you compare
5:47
that? You know, you can compare it to
5:49
what it was worth a while back. That's what inflation is.
5:51
You could buy less stuff with it today, or you can compare it to
5:54
other currencies of the world. So, so you could say how many
5:56
euros can I buy? And this is saying, hey, back on
5:59
Election Day, you could buy about 93 euro cents for the
6:04
dollar. So if I gave you a dollar, you'd
6:07
give me 93 euro cents. Then on Election Day, it was
6:10
actually up a little bit. You could get 96 euro cents.
6:13
I Googled ahead of time, what do you call a euro cents?
6:16
Do they have a different word for cents?
6:17
And they don't just called cents, so you have to say euro
6:20
cents. That's funny, I've never heard
6:22
that before. Yeah.
6:23
So you can buy 96 euro cents of the dollar and then that
6:27
dramatic green crash started and now if I give you a dollar,
6:30
you'd only give me €84 cents. So basically a dollar can buy a
6:34
lot less EUR. You can imagine eventually one
6:36
of these days if this trends continues, I'm going to give you
6:39
$2 just to give me €1.00. That means things like, you
6:43
know, assuming inflation in the countries is at the same rate.
6:46
If I fly to Europe and I'm now buying things in euros and
6:49
converting my money, I just spent a lot more dollars to buy
6:52
stuff in Europe and makes it more expensive to travel in
6:54
Europe. But that's not really the, you
6:56
know, main reason. I don't think.
6:57
I think that it's more to say, oh, the value, the dollar is
7:00
being devalued compared to other countries that are doing better.
7:03
And so, you know, and, and you know, the first word in this,
7:07
this post says Trump, which catches everyone's attention no
7:11
matter, you know, what side of the political aisle you find
7:14
yourself on. But it also only shows a kind of
7:18
tight window. And so whenever I see tight
7:20
window charts, I'm a little bit skeptical.
7:23
And also the wax, it doesn't start at 0 shows between $0.80
7:26
and a dollar. So it does look like it's much
7:28
more dramatic when it's really dropped from $0.93 to $0.84.
7:32
You know, it has dropped 10 to 13% relative to the euro,
7:36
depending if you count his Election Day or Inauguration
7:39
Day, whatever it is, but it has dropped.
7:41
But if you zoom out a little bit more, it's still in the range it
7:44
has been since the introduction of the euro.
7:48
We were at an all time high in 2022 where if I gave you a
7:52
dollar, you'd give me a dollar three in euros.
7:55
And so a dollar was actually worth even more EUR.
7:58
So it's up to a dollar three. And then an all time low was
8:01
back in 2008 during the financial crisis when I gave you
8:04
a dollar, you'd only give me €63 cents.
8:07
And so that's kind of been the all time range, $0.63 to a
8:10
dollar three. And in the in this first Trump
8:14
year ish, it's gone from $0.96 to $0.84.
8:18
So is that this historic crash? Not really.
8:22
It kind of doesn't look like that much is going on when you
8:24
zoom out in the chart. That said, why is it happening?
8:27
Well, you know, one of the main reasons that interest rates are
8:29
falling, which is good. If you're someone who's
8:31
borrowing money, if you're someone who wants to go buy,
8:35
borrow money from the bank, then you want a lower interest rate.
8:37
But if you're someone that has money and you want to get a rate
8:40
of return and Europe is paying 6% and the US is paying 3%, then
8:47
you might go move over to Europe and buy European bonds or hold
8:50
it in a European bank or whatever it is.
8:52
And that flow of funds from dollars to euros kind of reduces
8:57
the value of the dollar as more people are, you know, moving
9:00
that direction. Another trend has been the
9:02
global reserve. The, the US dollar is considered
9:05
the global reserve currency, which basically means when
9:09
different countries are transacting, they often transact
9:12
in dollars just because dollars are this consistent currency to
9:15
use. But there's kind of a trend
9:17
longer than this year that that's reduced, that's reducing
9:20
lately. And the euro is becoming more
9:22
common, even other countries, other countries currencies.
9:25
And as the dollar becomes less likely to be used as the global
9:30
reserve currency, that reduces the value of the dollar compared
9:33
to the euro. That's showing this chart.
9:36
Some people have concerns about the US market stability and
9:38
inflation. So we've long had this kind of
9:40
US safe haven premium, which basically means the US stock
9:45
market is very trustworthy, stable government, powerful
9:48
military, strong regulation. And some people maybe think
9:53
that's becoming less true these days, and they think maybe the
9:56
European markets are becoming better regulated.
10:00
And that's a flow of dollars going that way.
10:02
And so, you know, can you just, you know, pin this on Trump and
10:07
say you made the dollar drop by 10%?
10:10
You know, of course not. Markets are more complex than
10:12
that. But, you know, if there's one
10:15
person that has an impact, like the US president might be
10:17
someone that you point to and did his, you know, weaponization
10:22
of tariffs and erratic behavior, You know, I don't think anyone
10:27
on either side of the aisle can really say that that hasn't been
10:31
what's been going on. You know, tariffs up, tariffs
10:34
down. This country, that country, you
10:35
know, that can lose faith that the dollar is a safe place to be
10:38
held and that could push people away.
10:41
So that helped. Probably not, you know.
10:43
And so is this like a existential catastrophic drop?
10:48
Not yet. You know, if it went from $0.90
10:50
to $0.10, that would be, you know, we would suddenly not be
10:54
able to travel to Europe. We, you know, we might be
10:55
considered like a third world country relative to Europe.
10:57
And so it's not a trend you want to see continue for a long time.
11:01
But if this is just a normal fluctuation over time based on
11:03
rates and stuff, then that's not the big of a deal.
11:05
So what do you do? Well, what I do you know, we saw
11:09
the impact of this recently in a post I made where I showed how
11:13
the S&P 500 went up 17% in 2025, but as measured in U.S. dollars,
11:20
the other biggest economies of the world went up more.
11:23
Japan went up 24%, which was right above the US all the way
11:27
up to Canada went up 36%. And a big chunk of that gain was
11:32
because you're holding companies that are measured in non-us
11:36
currency. And so not only did they get,
11:38
you know, not not only did you as AUS dollars investor get the
11:41
gain of their company's value, but you got that gain of the
11:44
currency value too. So investing in companies that
11:47
are held outside the US actually helps diversify away your U.S.
11:52
dollar currency risk. I know it's all fancy talk and
11:56
I'm not a very fancy talking guy, but I think you know the
11:59
take away here is I invest in a diversified way.
12:02
I buy not only U.S. companies in AUS index fund, but I buy global
12:07
companies in a non-us index fund.
12:09
Do you have any dollar? Do you have any euros in your in
12:11
one of your drawers? Have you ever been to Europe?
12:13
Yeah, I have, but I don't. I have some.
12:16
I have some Kenyan money and I have what else do I have?
12:22
I think I kept a couple of dollars from when I went to
12:24
Cabo. Yeah, some Cabo or some Cabo.
12:29
But I don't think I have anything from York because it's
12:31
been a while. It's been like I was, I got
12:33
stuck in London on the way to Kenya for in 2022.
12:37
But since I've made like an official trip, it's been like
12:39
five years. OK, Yeah, yeah, I have a drawer
12:43
that has like whatever change I have left from trips from around
12:47
the world. And you know, I was like, I'm
12:48
going to use that next time I go to Indonesia.
12:51
And you know that that $0.75 worth of currency I brought back
12:54
with me might, might never get used.
12:58
I think I've got some mirrors. Every once in a while I find
13:00
like a A10 or A20. And I was like, oh, that's,
13:01
that's real money. I should try to get back to that
13:04
country and spend it. Well, I yeah, I don't keep
13:07
currency to use it. I usually keep it as like a
13:10
keepsake souvenir. Yeah, that too.
13:13
Anyhoo, all right. That's your hot topic.
13:16
Dollar's crashing, but maybe not that big of a deal.
13:19
A lukewarmish topic. That's pretty.
13:22
I think it's, I mean, you know, I don't think it's really being
13:24
talked about that much, but maybe it's not being talked
13:26
about that much because it maybe isn't that big of a deal yet.
13:29
So we'll see. Word.
13:31
OK next segment I was like not topic segment money money.
13:38
Can I ask a dumb one? All right, this is smart
13:41
questions for a dumb guy. What's the question today?
13:44
OK Shannon in Denison, TX asks. There is some information out
13:50
there on index funds becoming less of a good investment option
13:53
as they gain in popularity. Some articles talk about the
13:56
future of the market being where the majority of people are
13:59
passive investors with index funds and the active trading is
14:02
managed by AI bots. Can you give your thoughts on
14:05
the future of index funds given this information?
14:09
I'm not a big conspiracy theorist.
14:11
Are you a conspiracy theorist? Jen I.
14:13
Don't think so. I don't think so either.
14:15
We're so boring. Are there any conspiracy
14:18
theories that you kind of think are true?
14:22
Maybe Tupac might be alive. That's a good one.
14:26
Yeah, what about you? I feel like mine are too
14:31
political to say motherfuckas. No, I I, I have a not.
14:34
I have a not a political one. I actually do think that they
14:38
don't teach personal finance in high school because it just
14:42
doesn't benefit corporate America.
14:45
You know, having having 18 old graduate knowing they should
14:48
stay out of credit card debt doesn't help CEOs who are trying
14:51
to hit their next quarter's numbers and want people putting
14:54
money on their credit cards. And thus the cycle continues.
14:57
And so I think that, you know, maybe that's not a conspiracy,
15:01
Maybe that's just a fact. I don't know, but that's what I
15:03
think. But anyway, I think that a lot,
15:08
I guess maybe 1 conspiracy that I actually do think maybe is a
15:11
little bit true is I think that a lot of public sentiment is
15:16
shaped by powerful entities who are pumping bots into social
15:21
media conversations. So often on Twitter, threads,
15:24
Instagram, whatever, I click like I see some kind of
15:26
outrageous comment that's like, that is like a really absurd
15:29
thing to say. And especially in this world of
15:31
AI where you can make comments look really, really human.
15:33
And I click on it some like no post profile with like 20
15:37
followers and following 20 people.
15:39
And I was like, is this a real person or is this a bot who is
15:42
designed to like push a narrative?
15:44
And you know, that's for sure true in politics, I think.
15:48
But I think that this, you know, I'm this is a very long winded
15:52
way to say like, I think that this index fund bubble concern
15:58
is really driven more from special interests than a
16:04
legitimate fear or a legitimate concern of this.
16:08
And so, you know, Shannon from Denison, TX said, you know, the
16:13
majority of people are going to be in passive investors.
16:16
It's often described as a bubble saying, hey, basically the idea
16:19
is we've all become so dumb as investors.
16:22
Instead of carefully looking at stock prices, reading earnings
16:28
reports, deciding what stocks are worth it and what stocks
16:31
aren't, and buying carefully, we're buying in a sweeping big
16:35
old bucket in an index fund and paying whatever it costs.
16:40
Therefore, it's creating instead of a very carefully calculated
16:44
pricing of each of these stocks, it's creating this bubble that's
16:48
going to collapse one day when you know, the true value comes
16:51
in. And there's a little bit of, you
16:53
know, truth that in that just recently when you look at people
16:57
investing into funds, mutual funds, ETFs, things like that,
17:01
more than half the money is now invested in passively managed
17:04
funds. And so that was way not true.
17:07
Like in the 90s, like in the 90s, there was like 3% index
17:10
fund, something like that. And 97% of mutual, like 97% of
17:14
the money in mutual funds was going to active managers who are
17:19
carefully pricing stocks and buying the good stocks, not
17:21
buying the bad stocks. Index funds came in and
17:24
basically just buy all the stocks because those managers
17:26
are no better than random at picking stocks.
17:28
And therefore we can save the management fee.
17:30
A very good thesis in my opinion.
17:33
But now so many people have bonded that there's less than
17:36
half, half the money and funds is being actively matched.
17:40
So is this a concern? My answer is no.
17:44
I feel like this podcast is so boring because I was like, he's
17:47
going to say no, I was. Thinking I was like, I know what
17:49
he's going to say. He's going to say no, and I'll
17:52
tell you why. 1 is that, you know, index funds don't really
17:56
set prices because index fund behavior is generally buy and
18:02
hold behavior. And so when you look at the
18:03
price of a stock, you can see the volume to.
18:06
And so when there's, you know, a lot of activity happening in the
18:08
stock, you can see how many people are trading it.
18:10
And so while index funds represent more than 50% of
18:14
ownership in funds, what percent of the volume of trading does it
18:17
make up? And Jen, what's your guess?
18:19
I don't know if you've read this yet, but what's your guess come?
18:21
On I hate guessing. I know it's so unfair but that's
18:24
what makes it fun because the because the audience can live
18:27
through and be like. I had no idea either.
18:29
Jen, don't feel bad, just that Dick that makes me keeps.
18:31
Making things, you idiot. No, they're you always have good
18:34
guesses too. I.
18:35
Don't watch. Watch Now 5%.
18:40
That's, I mean perfectly usually like that's probably less than
18:42
50. It's probably not huge.
18:44
And so there's a Vanguard 2024 study that said trading value
18:47
has slowly increased from about 38 trillion in 2006.
18:52
So this is back 20 years ago to about 153 trillion in 2024.
18:56
So over those 18 years it's gone a lot, 38 trillion to 153
19:00
trillion. So basically massive trading
19:02
volume. This isn't saying everyone just
19:04
blanketly buying and holding whatever the price is saying.
19:06
There's lots of active trading. And so during that period,
19:10
active fund volume remained between 2 and 5% of total
19:14
trading volume. So that means the actively
19:16
managed funds are between 2 and 5%.
19:18
These are the mutual funds where there's a smart manager who's
19:22
picking and choosing stocks for the people inside of the fund.
19:24
Those funds represent 2 and 5%. And index fund trading volume
19:29
slowly grew from about .3% of total volume to 1.2%.
19:33
And so basically even today, 20 or 2024 when this, when this
19:37
study came out, you know, 98.8% of the trading volume is not
19:43
from index fund buys. It's from everything else,
19:46
active managers, traders, hedge funds, blah, blah, you know,
19:48
whatever it is not the index funds.
19:51
And so you know, that alone I think totally invalidates this
19:54
argument that there's an index fund bubble because very little,
19:57
the price discovery is coming, very little the volume is coming
20:00
from the index funds. Also, index funds represent
20:04
wrappers. You know a rapper, it's like a
20:06
bucket. It's like a.
20:07
Rapper like Tupac. Like rapper with AW West.
20:10
Side rapper Oh man OK, different kind of rapper.
20:13
Like a like a Tootsie Roll rapper.
20:18
Not a gotcha, not a not a potentially potentially living
20:21
rapper. Tupac.
20:23
I'm gonna keep my eyes filled out for him although.
20:26
You guys like to see him everywhere.
20:27
Yeah, based on my history of identifying celebrities you
20:31
pick, I don't think I could either identify a famous picture
20:33
of him, much less a 20. Walking down the street in San.
20:36
Diego yeah, 30 years later, whatever it is, I'm like, you
20:40
know what you are. I could probably really offend a
20:43
lot of I see 50 something. Black man in.
20:46
The grocery mill. Are you too?
20:48
Crazy questions, but are you too?
20:50
Hot. I don't know.
20:52
I know, I know I couldn't. I couldn't identify him when he
20:55
was in his 20s, but I'm sure I know what he looks like in his
20:57
50s and wearing flip flops and PB Vons.
21:02
Yeah, that's when I had a black eye during the next podcast.
21:06
I'm like, Jen, you told me to go find Tupac.
21:09
I'm pretty sure that was that was what you were implying.
21:11
I would. Pay to see that.
21:13
OK, anyway, Speaking of rappers, we have fully lost the path.
21:22
We are not going to get back to the index fund bubble.
21:24
Everyone tuned out to the said there's no index fund bubble.
21:26
Fine, I'm changing back to the Joe Rogan show.
21:29
No, please. Please don't come back to Joe go
21:33
come back OK anyway, so index funds they're rappers with AW
21:37
like a Tootsie roll rapper, meaning they're just a bucket of
21:40
stocks and they're not new demand.
21:42
You know, these are people who would have been buying stocks
21:43
anyway. And so it's not going to really
21:45
make a, a, a market wide bubble. It could just be an unevenness
21:51
thing. OK, the index funds aren't
21:53
pricing stocks correctly. So it's going to be putting too
21:56
much weight into large stocks and enough into small stocks.
21:58
But when you look at even though the valuations today are kind of
22:02
uneven in that the big stocks are worth too much and that I
22:06
don't think it's due to index funds.
22:07
I think that's due to unbridled enthusiasm.
22:10
So I think most of the mispricing of stocks, if there
22:13
is any, is due to the unbridled enthusiasm around AI stocks.
22:17
And so anyway, it's not about index funds just pricing these
22:21
stocks up. It's about the 98.8% of traders
22:24
who are deciding that NVIDIA really is the future, where
22:27
Tesla is an AI company or whatever it is.
22:29
And so, you know, back to my conspiracy theory, I think that
22:32
active fund managers, I think Wall Street, who makes their
22:35
money on charging fees to investors has an interest to
22:40
have people not be investing in index funds.
22:42
Because if you think index funds are risky, then you go back to
22:46
actively managed funds, wealth managers, hedge funds.
22:50
You know, this is the way that Wall Street makes their money by
22:52
charging fees to investors, not by getting you better returns.
22:56
And if they have you believing that index funds are riskier for
22:59
this bubble reason, that's what will happen.
23:01
So I feel pretty strong, Like if I'm a conspiracy theorist, this
23:03
is the conspiracy I'm buying into, which is I think these
23:06
stories are basically pushed by, you know, Wall Street interests
23:10
to scare people back into active management so they can, you
23:13
know, grow their businesses, not because if there's an actual
23:16
real risk of an index fund bubble.
23:20
OK, Shannon. Are you a rationally exuberant
23:23
about index funds or is it a rational exuberance?
23:26
Rational or irrational? Or an unbridled enthusiasm?
23:30
I mean, I have an. I have an unbridled enthusiasm
23:32
about index. Funds.
23:33
Yeah, you do? Yeah.
23:34
That's like, that's my whole brand, is my I, my index fund.
23:37
Unbridled enthusiasm. Yeah, I think I'm getting second
23:39
hand unbridled. That sounds dirty, but yeah, I
23:43
I'm getting that. Whatever that.
23:44
Oh. It's rubbing off on you.
23:46
Yeah, it's rubbing off on me. I'm getting really amped.
23:49
Great. OK.
23:51
Shall we move on to our next segments?
23:53
Let's do it. Scroll patrol in the house.
24:02
I've got a video from the Internet.
24:04
Jeremy has not seen it unless he cheated.
24:06
Lack of integrity has become a theme.
24:09
So it's possible, but I, I don't think he has.
24:11
And he's going to click on it now.
24:13
He's going to watch it, we're going to watch it together and
24:15
he's going to react and tell us what he thinks.
24:17
We're even going to score it so. All right, let's do it.
24:20
Scroll Patrol. I forgot to say scroll patrol is
24:22
an echo to you, but that's OK. That's all right.
24:24
You know what? We can all be perfect.
24:26
I'm. Caring my voice say that you are
24:28
caring as usual. As for you.
24:31
Jen 22 Jeremy won I that one good one.
24:35
All right, go ahead and click on that video.
24:37
One of the worst pieces of financial advice I'd ever been
24:39
given and ultimately contributed to my overconsumption problem
24:44
occurred in my 20s when I transitioned into tech.
24:47
And at that time tech was bananes.
24:48
You had a bunch of 20 something year olds, multimillionaires
24:52
whose prefrontal cortexes were not developed.
24:55
It was legit like Wolf of Wall Street.
24:57
So bottle service, private jets, the whole 9.
25:00
And there's somebody at the company that I really looked up
25:02
to because he's only a couple years older than me.
25:04
And I wanted to sit down and talk to him about, you know,
25:07
what are you investing in? Like what are some of the
25:09
strategies that you have? Because he lives in a penthouse
25:12
apartment. He had multiple luxury cars.
25:14
And I thought, you know, like, how do we get there?
25:16
I had just started making $100,000, which I thought was
25:19
pretty good at I think 26 ish years old as a first Gen. to go
25:24
to college and somebody who grew up low income.
25:26
And this is like 10 years ago. So adjusted for inflation and
25:30
this person practically get at like, how cute my question was.
25:35
He said, I don't save anything. I don't have anything saved.
25:38
I don't invest anything or have retirement because if I wanted
25:42
something, I just need to make more money.
25:44
And I said, what do you do when you're like, you know, 80 years
25:47
old or whatever? He's like, no, I'm going to make
25:48
so much money that I don't need a retirement plan.
25:52
And the other piece of advice he gave me was to dress for a role
25:56
that you want, not the role you have.
25:57
But he didn't mean like where nice clothes, which I agree with
26:01
dressing for the role you want. He meant I needed a different
26:04
pair of Louboutins for every single day.
26:05
So down the rabbit hole I went. And that's what started my
26:09
overconsumption. If I think about all the clothes
26:13
that I bought and all the stupid shit that I bought, and I would
26:17
have invested that instead, things would be very different.
26:21
And so that's why I always share the lesson of are you actually
26:24
going to be rich? Are you going to play rich?
26:29
Bam, she's dead on. Yeah, that tech pro douchebag
26:35
came for that stupid advice. It's just, you know, you know,
26:39
that guy, that guy's going to get fired in the round of
26:43
layoffs because tech doesn't care about you.
26:45
And then his, you know, $6000 a month penthouse rent's going to
26:49
come up and he's not going to be able to make it.
26:51
And he's going to be on the streets.
26:52
You know, maybe now, like probably a smart duty guy job at
26:55
a big tech company, maybe he'll be able to get a job somewhere
26:56
else. But yeah, not good advice.
26:58
You know, obviously that runs exactly counter to everything
27:01
that we do here, which is talking about living below your
27:04
means, investing to build that nest egg, to build that
27:07
financial independence. And so, you know this content
27:10
creator, you're rich. Auntie, Auntie, are you an aunt
27:13
person or an aunt person? Auntie Bella.
27:15
Auntie, Yeah. OK, I'm an aunt.
27:18
I'm from the best aunt we have, like the really nasally A's.
27:22
So I said you're auntie. But I understand that in
27:26
California that might not fly. I mean.
27:28
I'm not from California, OK? Well, we're in, we're, we're,
27:32
I'm not from California either. We're in California.
27:34
OK, you're right. You're right.
27:35
You're right. Yeah, although you're auntie is
27:38
giving this talk in front of a, you know, what appears to be a
27:42
closet full of fancy shoes and. So from the from those days.
27:45
Yeah, so maybe that's the lesson.
27:47
Yeah, this is like she. Was not living below her means.
27:49
This could have been her four O 1 K $1,000,000 thing behind her.
27:53
So yeah, you know, it's a. Difficult hook, right?
27:54
To be in front of shoes. But what are you about to talk
27:56
about, you know? Yeah, no, I mean she's exactly
27:58
right. And I think that, you know, and
28:00
I always say you can't out earn bad spending habits.
28:03
And that guy would have disagreed with me.
28:05
He's like, I'm absolutely out earning bad spending habits.
28:08
That's my whole plan. I was going to earn more and
28:09
more. And and she was right.
28:10
Like this bizarre world you live in where, you know, tech is just
28:15
giving these massive bonuses. And I think, you know, I even
28:19
like how she said the prefrontal cortexes aren't developed.
28:21
Because if that's all you've ever known, because you're 2
28:24
years old, because you're 24 and you graduate from college two
28:26
years ago and you've only seen two years of real world, you
28:28
think it's always going to be that way.
28:30
But things, you know, like a pendulum swing the other way.
28:33
And all of a sudden things signed up.
28:34
Take tech makes layoffs like not hiring, you know, wages go down,
28:38
whatever it is. And it's not going to always be
28:41
the way it is. And so that's why you want to
28:42
become rich yourself. And I like how she ended it too,
28:44
which is I think a lot of people like the guy she was telling the
28:48
story about look rich. And even her as a 20 year old or
28:51
whatever, she's like, oh, that guy looks rich.
28:53
I'm going to ask about investing.
28:54
But being rich is very different.
28:56
You know, looking rich is spending all your money.
28:59
Being rich is what you have leftover after you're spending
29:02
and being rich. You know, that guy, I'm sure
29:04
like this cute little, you know, girl came up to me.
29:07
He was trying to act cool, whatever it is.
29:09
And he was trying to like, oh, yeah, I spent all my money.
29:11
But like, I bet inside he was like pretty stressed.
29:13
He's worried about losing his job.
29:14
He's worried about interest rates.
29:15
He's worried about debt. He's worried about making
29:17
payments. He's worried about, you know,
29:19
spending all your money is not a happy centered place to be.
29:23
Having wealth is. And so yeah, I give, I give her
29:26
an A+. You know.
29:28
Her lesson's exactly right. I wish, just like her, she would
29:31
have, you know, invested more, spent less, and then I, you
29:35
know, wish the best for tech douchebag bro.
29:37
And you know, I say tech douchebag bro.
29:40
He's like my brethren. My, my, my Patagonia black vest
29:44
is sitting right next to me. I took it off just as proof here
29:49
to see like I'm one of us, one of I'm one of them, right?
29:54
I have a mass's computer science.
29:56
But I've seen both, you know, I'm like, you know, my friends
29:58
are all in Silicon Valley. You know, I, I, I, I know, I
30:03
know the, you know, the, the archetype or whatever.
30:06
But yeah, don't spend all your money.
30:08
People don't spend all your money makes me think of like
30:10
celebrity where they have to kind of keep up and you hear
30:14
like speaking, it's a big, it's a very rapper heavy episode.
30:18
Both R and WMC Hammer, how he like went broke.
30:22
A lot of people get caught up with taxes and stuff like that.
30:24
They don't they make a lot of money and they're not ready to
30:26
pay the taxes at the end of the year.
30:28
But like there's so many celebrities that try and keep up
30:31
and they buy these huge homes and like definitely not living
30:33
below their means. And like, that can work out if
30:35
you're Beyoncé, but might not work out if you are MC Hammer
30:38
and you only have like one hit in the 90s or like three hits.
30:43
So I think about that. Like, I was just listening to a
30:45
podcast with Keenan, who's been famous since I was a kid.
30:49
And he's like, went to buy a home and he had a bad financial
30:52
advisor who ran away with his money and he had to like, spend
30:55
the next 10 years making money back.
30:57
But luckily he's been famous for like 30 years.
30:59
But like, what if he never got another movie again?
31:01
Another show again? Wait, who's Keenan?
31:04
Remember Keenan and Kel like good Burger from from?
31:07
Do you ever watch Like all that? When we were little, like it was
31:11
like this. It was like the Nickelodeon
31:13
version of SNL. It was like kids, Keenan and
31:16
Kelly good. Burger.
31:17
I think I know who that is by confusing.
31:19
Welcome to Good Burger home with a good burger.
31:21
Can I take your order? We live in different worlds,
31:23
John, we really do. I was watching Animaniacs.
31:26
I did, I watched that too. But anyway, he was a child star
31:29
and but now he's been on SNL for over 10 years.
31:31
He's the longest running cast member.
31:32
Oh, him, Yeah, I know him. He was famous when we were like,
31:35
he had a show when he was like 12.
31:37
Oh, OK, I didn't know that. Yeah, he was famous when we were
31:40
kids. Yeah, I know.
31:41
I heard some stat that he's been in like he's been in like 40% of
31:44
SNL episodes like some. No, he's the longest running
31:47
cast member ever in history of SNL, but he like he had a show
31:51
when he was he was in the Mighty Ducks.
31:52
Remember that movie? He wasn't.
31:55
Oh, now that he. Was in both of them two.
31:59
He was in two, Yeah, Anyway, but point of it is that he he had
32:04
money since he was like a a young kid, big money and he
32:08
mismanaged it and had to like kind of start over.
32:11
And he was like, I was in the McDonald's drive through a
32:12
certain point. So it's like it's like you
32:15
always say it's not about like how much you're making.
32:17
It's like you can't, well you say you can't out run bats.
32:21
You can't earn bats spending habits, Yeah.
32:24
Yeah, that's such a, like, smart phrase because you really, you
32:27
really can't like, you know, like you could be making $6
32:29
million and if you spend $6 million, like you're broke
32:31
again, you know, which is like very possible if you're a
32:34
celebrity, you could buy a $6 million home easy.
32:36
Like that's nothing. The only thing I've heard people
32:39
say is that, like, if you can't manage $10,000, then you won't
32:42
be able to manage $10 million. And I think that's, you know,
32:45
and I think that's kind of where, you know, he was a kid
32:47
and I'm not blaming him, but I think people who say money is
32:50
too complicated, I'm just going to totally hand the keys over to
32:53
someone else. You do everything.
32:55
That's where they're at risk of getting burgled, you know,
32:58
getting stolen from because they're like, you know, and and
33:01
I always say no one will ever care about your money as much as
33:04
you do. Not your advisor and not your
33:07
not your money manager, not your wealth guy, not this insurance
33:09
salesman. Like, you know, they all are on
33:11
their agendas and sure, they have expertise, they can help.
33:13
They can be part of your team, but you got to be in charge your
33:16
own money. And so you know, I would never
33:18
hand over the keys of the castle.
33:20
Well, listen, you, like you said in the last episode, you have to
33:21
also make those mistakes, right? Because like.
33:24
Yeah, no one's batting 1000. On this.
33:26
Hopefully you'll get $10 million stolen from you.
33:28
I know. Unfortunately.
33:29
He was able to like make that mistake and make the money back.
33:31
Not everybody gets that opportunity, but like, you know,
33:33
at least you've made that mistake when you're 20 and then
33:36
like now he's 40 and like, obviously he's like, if you've
33:38
done SNL for that many years, he's probably rich.
33:41
I hope, hope anyway. All right, let's get on to our
33:44
last segment, Money, money. Jeremy had time today.
33:50
In the comments, people always blowing me up.
33:52
Actually people are really nice. That's our problem.
33:54
We need, I need to make like a lot more vitriolic posts or
33:57
something so people are mean to me.
33:58
But me people are usually nice. Although it depends.
34:02
Maybe we need to start pulling comments from like TikTok or
34:04
something because on Instagram I think most people who see the
34:07
stuff know me and you know, TikTok like random people see
34:10
your stuff. So they're like.
34:11
I gotta start stalking you on TikTok.
34:12
You have so many fake accounts on there.
34:14
People try and friend me all the time and I'm like Jeremy, I'm
34:16
like, wait, no. Yeah, they didn't verify me on
34:19
TikTok and so the fake accounts just go.
34:22
Well, it's really creepy. OK, so you have a post here from
34:26
Instagram. I like this.
34:27
I don't know what the style of like, like cartoon is, but I
34:31
like them. They're so cute.
34:33
So tell us what we're seeing. Yeah, it's like a little, they
34:36
call like a little emoji, like a little emoji.
34:38
Warren Buffett like leaning back on a pile of gold and, and cash
34:42
and coins and things like that. And it says Warren Buffett is 95
34:46
years old. He his worth, he's worth $143.6
34:51
billion. The.
34:53
Question is, would you, and I'm going to pose this question to
34:56
you, Jen, $143 billion is money you can't even comprehend.
35:03
You could buy the biggest house, the biggest yacht, the biggest
35:07
everything in existence and still have like $141 billion
35:11
left over it. You know, it's you can't even be
35:13
kind of, you know, I guess maybe Warren Buffett has out earned
35:16
any bad spending habits, but even he's a good spender because
35:18
he still lives in his original house in in Omaha, NE, right.
35:21
But the question is, would you trade places with him?
35:23
And I'm talking on fully, fully Freaky Friday trade places where
35:28
you're 95, you're a 95 year old Nebraskan white guy. 114.
35:32
Billion dollars, everything. You're him.
35:35
Yeah, I'm going to pass. What if you're OK?
35:37
What if? What if you're not a white guy?
35:38
What if you're a 9095 year old? Can I be me 95?
35:43
Yeah, you like snap your fingers, you Fast forward, you
35:46
you miss your entire life until 95, but you have $143 billion.
35:50
Would you do it? What I got, I got to be 95.
35:52
I miss like 60 years, no. Yeah, no, not quite 60, Jennifer
35:57
being actually maybe 55, I don't know.
36:04
You're in your 30s. Be like that.
36:05
Barely. All right.
36:08
No. So yeah, you say no, right?
36:09
Live my life. Exactly because you'd have to
36:11
essentially have a death wish. Like, you know people who you
36:14
know, people who say they would make that trade.
36:17
You could you'd only make that trade if your plan was to like
36:21
give the money away and then die and you're planning to kill
36:23
yourself anyway, right? Because 95 your life expectancy
36:26
is, you know, any day now. It's like measuring hours, you
36:29
know, I mean, I hope Warren Buffett lives to 105 or whatever
36:31
it is, but like he probably hasn't have 10 years and who
36:34
knows? Not many people lived in one O
36:37
5. And so so the so the post says a
36:40
billion dollars in 100 years is worthless balance, living in the
36:44
moment and saving for the future.
36:46
And So what does this commenter say?
36:48
Commenter says $1 billion in 100 years is not worthless.
36:52
It's $1 billion and we I see that like meme of like the
36:56
point, you know, and there's like the point going over
36:58
someone's test those. Words.
37:01
And then they're like, had a little laughing moment.
37:03
You're like, haha, you're so dumb.
37:04
You don't even know what a billion dollars is worth.
37:06
I'm like, OK, yeah, never occurred to me.
37:08
A billion's worth a billion, but yeah, obviously thank you John.
37:13
They're they're missing the point And and and and I guess to
37:16
their credit, my posted a billion in 100 years is
37:19
worthless. What I maybe should have said to
37:20
be more clear is a billion dollars is in 100 years is
37:23
worthless to you, you know, to you, Jen, if I said hey, hey,
37:29
Jen, give me your car and I'll give you a billion dollars in
37:32
100 years, would you make that? Trade.
37:33
It's a 2008 Honda Civic, so I might be like a billion in one.
37:39
But would you make that trade you?
37:41
Would you like you would? Yeah.
37:44
You would take a wait, you would you would give me your car and
37:46
I'd give you a promise to give you a billion dollars in 100
37:49
years. Oh, no.
37:49
I thought you said it right now. No, no, no.
37:50
OK. No, no.
37:52
OK. No, yeah, 100 years.
37:53
No, because like, because, you know, while it might be worth a
37:55
billion dollars, there's going to be one really, really
37:57
important difference. In 100 years, you're going to be
38:00
dead. Me too.
38:02
Basically everyone listen to this podcast right now.
38:06
Bad news. You're going to be dead in 100.
38:08
Years I might be alive and I know he listens every week.
38:10
The odds are actually Ty is listening.
38:12
Ty is still 0 for, you know, a couple more days here and
38:16
actually by the time you're listening to this, I think he's
38:17
officially one. Yeah, baby.
38:19
And so if he lives in one O 1, he has a slim chance.
38:22
I hope he does. And I mean, maybe a decent
38:23
chance with critical advances, everything.
38:25
But you know, most of us aren't going to be here in 100 years.
38:28
And so, you know, the point of this whole post that I think
38:32
this person, you know, missed is that we can't live our whole
38:37
life for someday. And I talk about this book a lot
38:41
die with 0, which basically says, you know, while there's
38:44
this one line, this on the chart of this compound growth, which
38:47
is like, oh, and when I, when I do my own compound growth chart
38:52
estimates the number at 90 is like insane, like over 100
38:55
million or something like that. It's like, it's just crazy
38:57
numbers because that's what happens over that much time.
39:01
But at 90, like we just decided like we wouldn't trade that
39:05
because you've missed your, your life sober, you don't have
39:07
anything left and your health has degraded.
39:09
You know, 90 year olds probably don't want to get on like
39:12
international flights and go like, you know, bonds between
39:15
European countries or like live in the jungle or go rock
39:18
climbing or go, go parasailing. You know, 90 year olds basically
39:22
are trying to get their medical care and be with family and you
39:25
know, you know, drive short distances or whatever it is.
39:29
And so I think some of us in the personal finance, especially
39:33
early retirement community are so focused on saving rates,
39:37
growth, compound growth long term, we forget to we forget
39:41
this other decay curve of our life, which is money becomes
39:43
worth less overtime. You know, Jen wouldn't make the
39:47
trade today to take $140 billion.
39:49
She could buy any house, any yacht, everything in the world
39:52
to be the 95 year old version of herself because you wouldn't get
39:55
to enjoy it much and your body wouldn't be the same and your
39:57
life wouldn't be the same. And so and likewise, I can
40:00
guarantee you Warren Buffett would give every penny of his
40:04
his net worth to be, you know, a 39 year old young girl living in
40:09
LA, right? Because, you know, time is
40:13
invaluable. And so.
40:15
Just got to remember that day-to-day and I use the word
40:18
balance. I kind of hate the word balance
40:19
because it's kind of like work life balance.
40:21
Like I hate that kind of thing. But you know, you go too far to
40:25
either side if you spend every single penny going to debt live
40:27
for the moment like Vegas weekend, you know, you know,
40:30
just like the the guy we talked about in the previous, you know,
40:34
the bottle service and Pantalus. If you go too far in this
40:38
direction, that's probably not a very happy life for you because
40:41
you're stressed out and worried too far The other direction
40:43
where you're just waiting till you're 90, that ain't maximizing
40:46
life either. So you got to find those
40:47
opportunities to spend money in meaningful ways where you're
40:50
buying experiences, you're buying members, you're buying,
40:53
you know, the things that are really important to you, that
40:54
bring you joy and richer life while also saving and growing
40:58
money for the future. That's what money is all about,
41:00
trying to maximize your life value, not just be the richest
41:04
dude in the cemetery. Wow.
41:07
I don't care what anybody says about you.
41:09
You are. You really got it going on.
41:12
You're getting great. People been saying things about
41:13
me. Why'd you say that?
41:15
About you. You said I don't care what they
41:17
say. Yeah, I don't care what they
41:19
say. All the hate.
41:20
Lots of people yeah, I should start bringing those comments.
41:24
Amazing. You crushed it as per Yuge great
41:27
episode. And that's it.
41:29
We got to the end, so thank you for listening.
41:32
We'll see you guys next week. Jeremy hit us with the rules.
41:35
Don't forget the 2 rules of Personal Finance Club.
41:38
Rule #1 Live below your means and rule #2 invest early and
41:41
often. We'll see you next week.
41:43
The Personal Finance Club show is produced by Jeremy Schneider
41:46
and Jed Mundia, music by Essa Balu and Homie.
41:49
Send your questions to podcast at personalfinanceclub.com.
41:53
The Personal Finance Club show is Co hosted by Jeremy Schneider
41:56
who is a co-owner of Nectarine and SEC registered Investment
41:59
advisor. The views expressed on this to
42:01
show are those of the hosts and guests and do not necessarily
42:04
reflect the views of Nectarine. Please refer to
42:07
hellonectarine.com for all relevant disclosures.
42:10
This podcast is for informational and educational
42:12
purposes only and should not be construed as personalized
42:15
investment advice or a solicitation to buy or sell any
42:18
security. Listeners should consult their
42:21
own financial, legal or tax professionals for advice
42:24
specific to their situation.