Latest / The Personal Finance Club Show / Trump’s Insider Trading, Jeremy’s Big Lie, and 4% or Bust | Ep 30

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Trump’s Insider Trading, Jeremy’s Big Lie, and 4% or Bust | Ep 30 · The Personal Finance Club Show

0:13
Welcome back to the Personal Finance Club show.
0:16
Hey, John. Hey, Jeremy, what's going on?
0:19
So much I Do you have any money, memories or money like old
0:24
habits that die hard in your life, things that you like have
0:27
been doing for a long time and you realize like, oh, it's kind
0:30
of weird that I still am really sensitive about that cut type of
0:33
spending. Do you have anything like that?
0:35
I mean, I probably have so many. I feel like, I feel like you're
0:40
going to have like maybe like things that even though they're
0:42
old habits die hard, they could probably help you.
0:44
Whereas I still have some old money habits that probably hurt
0:47
me. So like even like I feel like I
0:50
was broke for so long that I would be afraid to check my bank
0:53
account. I still have that fear sometimes
0:55
like opening my bank account. And I'm like, why do you have
0:58
fear? You know, you have money.
0:59
Like why are you still? Afraid that's an interesting
1:02
one. That's a good one.
1:03
Dot com, you know, yeah, I don't know, like there's something
1:06
about me that's always like, Oh my God, I'm going to get in
1:08
there. It's going to be negative, you
1:10
know, like that was just like always, like so broke.
1:13
That's such a common theme in, in personal finance, which is,
1:17
you know, just fear to look because you're worried about
1:19
what you'll see. Like with, especially with
1:21
things like debt where you're like, I talk to people who don't
1:24
even want to look at how much debt they have because just
1:27
facing it is so scary. That's a That's a good one.
1:31
Yeah, even like a random things, like I got some random music
1:33
money this morning and I was like, what is that?
1:35
Don't even worry about it. It's like, yeah, you need to go
1:37
find out what that is. So, you know, like where it came
1:38
from, like some of some of it's direct deposit.
1:40
And it's like even if it's positive, I'm like, don't worry
1:43
about it. Just it doesn't matter.
1:44
It's in the account already. Yeah.
1:47
It's crazy how you know, keeping a track of your own finances is
1:51
kind of like a little job and it's so easy to just let it go.
1:55
Even for me that like does this for kind of like a real job.
1:59
I let things go by the wayside and you're like, oh, how much
2:01
money is in my bank account? I used to, I used to like
2:05
balance my checkbook. Like I would keep my own record
2:08
of every single dollar and I wouldn't like sync it to the
2:12
online bank. And I did that for years and it
2:16
just became, you know, too burden.
2:17
So now I'm just like, kind of like, you're like, how much
2:19
money do I have? I hope the bank is right.
2:21
I think it's what everyone does these days.
2:23
Don't blame Alice and Wilberforce Mundia because they
2:26
have Immaculate money habits. Like they keep track of
2:28
everything to this day so I don't know where.
2:30
Those are your parents names. Yes.
2:33
OK, what'd what'd you say, Alice?
2:35
Alice and Wilberforce. Wilberforce.
2:38
Wilberforce Mandia, that's. All his first name.
2:42
That's his first name, Wilberforce O Musala Mandia.
2:45
Wow, I don't think I've ever heard you say his name before.
2:48
It's amazing. Yeah, it's a pretty It's a he
2:51
lives up to the name. He's a force to be reckoned
2:54
with. That's amazing.
2:57
I so I have a story. So this I think past weekend I
3:02
was, I bought this is how it started.
3:05
I went to Costco. I was like, oh, I need tomatoes.
3:07
I'm at Costco. I might as well.
3:08
But then Costco sells you like 12 tomatoes and I'm like, you
3:12
know, I don't really 12, I need like two or three.
3:15
And so none of these I use more tomatoes.
3:16
So I was like, OK, I'll make salsa because like that's a
3:19
really good thing to do with a lot of tomatoes.
3:20
And so I look up a salsa recipe and then like my heart sinks.
3:24
So I see this recipe because it's like, Oh, you need a food
3:25
processor and like, I don't have a food processor and you.
3:30
Probably get that at Costco. Well, but that's like, that's
3:34
the money habit. Like that's my money mentality,
3:36
which is like, I'm not a food processor kind of guy because
3:39
that's an expensive appliance that I, you know, don't have
3:44
disposable income for because that's what I would tell myself
3:48
for like years or decades. Like you can't, you can't buy a,
3:53
you know, like optional kitchen appliance Not and it was for
3:56
money reasons. You know, there's other reasons
3:57
not to, like, some people don't want to clutter their kitchen,
3:59
which is like totally legit, right?
4:02
And so I like, my heart sank. I was like, oh, what am I going
4:04
to do? Like, I just cut it up by hand
4:06
and have some kind of crappy salsa.
4:08
And then, you know, sitting there for a minute, I'm like,
4:11
wait a minute, how much can a food processor really cost?
4:14
You know, like this isn't like, you know, house.
4:16
Or like 30 bucks or something like that maybe.
4:18
Totally on Amazon, you can have it delivered same day for 30
4:20
bucks. I'm like, this is not like a,
4:22
this is not a show stop. I'm obviously it's like going to
4:24
be $30 sauce at this point, but then you'll have a, you'll have
4:27
it for next time. And so I bought a food
4:29
processor, you know, somewhat ironically, it got there like in
4:32
a 5 to 10 window and I wanted to make it before then.
4:34
So I just used like this little blender.
4:36
I had like a little smoothie blender, which worked fine.
4:40
And so now I might have returned the $30 food processor.
4:42
But the point is I like my, my heart literally suck was like,
4:46
oh, I'll never be food processor rich.
4:48
But then I'm like, wait a minute, I could totally afford a
4:51
food processor and I probably could have back then too, you
4:53
know, like, but now I can. But I, I do think it's like
4:56
important to question those, those money mentalities we all
4:59
have. I'm the opposite of you.
5:01
I'm I'm like more of an impulse buyer.
5:03
But what I've done now is I started to make lists and if
5:05
it's still in there like in a few weeks and like I've checked
5:08
prices and things like that, then I'll be like, OK, it's this
5:10
wasn't just like you needed this mic right now, you know, it's
5:14
like. I love that.
5:15
Yeah, I have a lot of things like saved in my Amazon cart.
5:19
So I mean the food processor is a good example.
5:20
It's like, do I really need this today or could I wait a week?
5:23
And a lot of those things that you're like, if you're like a
5:25
week later you're like, no, I still want this like yeah, go do
5:27
it. But I do like that save it for
5:29
later thing because maybe half the time you're like, oh,
5:31
actually that was like more impulse.
5:33
And then you save some money by not buying it just in that
5:35
moment. Yeah, now I have a list of like
5:37
gear that's just like been sitting there for years.
5:39
So I'm like, that's too much, you know, Like now it's like
5:43
kind of like, oh, like, you know, how can you not buy that
5:46
or whatever? So it's more of a game.
5:47
But yeah, we're the opposite for sure in terms of healthy money
5:51
happens, but I'm aware and I'm using tools to combat that.
5:57
Well, that's amazing. And that's what that's what it's
6:00
all about. Just like this little
6:01
incremental growth. No one, no one's perfect money.
6:02
Everyone makes money mistakes. And you know, if you can grow
6:06
from it, then great. I love it.
6:09
All right, should we jump in? What is our first topic?
6:12
We've got a very hot topic. All right, what do we got?
6:21
OK, so today's topic is from a CNBC Twitter post, although it
6:25
was probably on every platform. So the caption reads, S&P 500
6:30
futures and oil futures flashed an unusual burst of activity
6:34
early Monday, minutes before a market moving social media post
6:38
from President Donald Trump. The timing of the volume spikes
6:41
across both equities and crude caught the attention of traders,
6:44
particularly given the absence of an obvious catalyst at the
6:47
moment they occurred. So I saw this everywhere.
6:49
I immediately thought of you. And then I was like, wait, is
6:51
this fake news 'cause I think I saw it.
6:53
I saw it on Twitter first. So I was like, is this fake
6:55
news? Is this is this somebody like
6:58
blowing up situation that isn't that big of a deal?
6:59
Then it's really hard to decipher in the news what's a
7:02
big deal and nowadays. So then when I started seeing it
7:05
on Instagram ever face everywhere and then I was OK,
7:08
this is actually a big deal and I want to I can't wait to ask
7:10
Jeremy about it. So what does this all mean?
7:13
Great question. And so it's important to know
7:17
what we're looking at. So there's, there's two charts
7:19
that include in this article. And I think what we're most
7:22
often looking at when we look at a stock chart is basically the
7:26
price of something. So if you look at the Apple
7:28
stock price, you see this how much a share costs.
7:31
If you look at oil prices, you see how much oil costs.
7:33
But there's like a secondary chart shown here, which is the
7:37
volume. And volume means not only what
7:40
is it trading at and trading at is like the last trade that
7:42
occurred. How much did you buy a barrel of
7:44
oil for? How much did you buy a share of
7:46
Apple stock for? It also means how many people
7:49
are trading. And so did like 3 people buy a
7:52
share, you know, trade a share of Apple stock and anytime
7:54
there's a volume that means there's like one buy and one
7:56
sell. So there's got to be two sides
7:59
to every transaction to create a transaction.
8:01
And so you know, some people say, oh look there's a lot of
8:04
buys, there's a lot of sells. That's not actually true.
8:07
There's a lot of both. There has to be both or else the
8:09
transaction didn't take place. But if you know, for example,
8:13
the price spikes up and you see a lot of volume, that means like
8:16
buyers are basically rushing in to buy more and more and more.
8:20
And then sellers are getting convinced to sell based on these
8:22
new higher prices. And that's what the volume is
8:25
saying. And so this whole article is
8:28
saying, hey, at, you know, Trump made this tweet around.
8:32
I'm like trying to look at the chart here just after 7:00 AM,
8:36
but at like 6:45 AM, there's a spike in the volume that didn't
8:41
really have any explanation for it.
8:45
And the kind of obvious, very suspicious conclusion that you
8:52
draw from that is who made those trades and what did they know
8:57
that we didn't know 15 minutes beforehand?
9:00
And it doesn't take a massive logical leap to paint a
9:03
relatively nefarious picture in your head, which is, hey, what
9:07
if some people in the room where it happens knew what was about
9:12
to be tweeted in 15 minutes? And they went into their trading
9:16
platform and said, hey, I'm going to go make a trade.
9:20
Like I'm going to go buy, You know, So what happened is this
9:22
the, you know, the S&P 500 shot up and oil prices shot down
9:28
because Trump posted something, you know, positive about the
9:31
outcome of the war or whatever. And so if you knew that ahead of
9:35
time, you could make trades on that ahead of time and make a
9:39
bunch of money. And that's called insider
9:42
trading because that is something that's, you know,
9:45
material and non public. And when I worked for a publicly
9:49
traded company, they would hammer that into our heads.
9:51
If you have material, not material means significant.
9:55
It's not like, Oh, the CEO had Burger King for lunch today.
9:59
I'm going to go. I think that's good for the
10:00
company. Like that's not material because
10:02
like someone, and there's an argument it could be public if
10:04
they saw him, if, if he was eating it in public or whatever.
10:08
But if, if the, if the CEO pulls you aside and privately says,
10:12
Hey, tomorrow morning I'm making an announcement that, you know,
10:16
we're going out of business because we're about to go
10:18
bankrupt and no one knows. That's very material and
10:22
apparently it's very non public. And so if I then went to my
10:25
stock website and said, OK, I'm going to sell all my stock and
10:28
short the stock stock and buy a lot of puts and do whatever I
10:32
can to make money off of this news.
10:34
And then it happens and I profit.
10:36
That's insider trading. That's illegal.
10:39
And the reason it's illegal is because it hurts those people
10:42
who are trading honestly, you know, if I'm interested in that
10:46
company and that example I just gave you and I'm, oh, I might
10:49
buy it. I think they've got future
10:51
prospects. Oh, someone's selling, I'll go
10:52
buy their shares. Great.
10:54
And then the news hits 10 minutes later, like, oh, I kind
10:56
of just got conned into buying these, these like less valuable
10:59
shares now because that guy knew something I didn't.
11:02
That's not fair. And when there's that
11:05
unfairness, it creates distrust in the market.
11:09
And that can erode the foundations on which we all
11:13
enjoy this like very mature economic system we have where
11:17
banks and stock markets and things like that all work.
11:21
And so, you know, some people might think, oh, insider
11:25
trading's somewhat of a victimless crime.
11:28
It all just gets gets lost in the wash, which I guess to some
11:31
degree is true. But if you're the person who
11:33
made that trade, like, oh, I shouldn't have paid $80 a share
11:36
for this. I should have paid 60.
11:37
And now I'm out the money or whatever it is because I didn't
11:40
have the information. So, but what do we know?
11:45
We know only that there was like a spike 15 minutes before this
11:48
announcement. And sometimes spikes just
11:53
happen. You know, the article kind of
11:54
says this is like very early morning hours where there's very
11:57
little news happening. And so spikes are very unusual
12:00
in this case. But still, it even says
12:03
sometimes like algorithms can catch wind of a barometric
12:08
pressure change in New York, which is public information and
12:11
decide that's going to, you know, correlate with bad things.
12:14
And the algorithms go crazy and there's a little spike for no
12:16
reason. Is it that is it not?
12:18
And then, you know, they asked the SEC and they said, hey,
12:21
governing body that overseas this stuff.
12:24
Why is why are people trading right before Trump tweets?
12:27
It looks very suspicious. What is this?
12:29
And the SEC said no comment. And OK, can I can I ask a dumb
12:34
one in the middle of this? Oh my.
12:35
Gosh, can you ever? You.
12:37
Know we're out there yet? You're kind of.
12:39
I wanna order here. Sorry.
12:43
OK. I know that I saw some articles
12:45
that were saying who exactly was profiting off of this.
12:48
Is it just that we can see that there's a spike or is can we see
12:51
who's traded? Is that public at all?
12:54
To my knowledge, you can't just look up who's making trades.
12:58
I don't think that's publicly disclosed.
13:00
I think certain people's trades are publicly disclosed.
13:02
For example, you can go, you know, Google, Elon Musk, Tesla
13:07
trades and they are required, you know, you know, significant
13:10
insiders. There's reporting requirements
13:12
by law that says, you know, you know, trusts Musk has to
13:15
announce his trades, but I don't think he even needs to in
13:18
advance. I'm not fully sure.
13:20
Don't quote me on that. They they need to be made
13:22
public. So you know what they're doing.
13:24
But you know, if there's just rent, like it's just a random
13:28
Joe Blow with a Robin Hood account goes and trades.
13:30
I, I don't think you can like go look up his home address and
13:33
shake him down and be like, why did you buy it at 6:45 AM?
13:37
Right, right, right and. So, you know, I think the SEC
13:39
can do, you know, go subpoena Robin Hood and say, yo, why did
13:43
all these trades come in? And we need we're investigating
13:45
an insider trading suspicion. And maybe that's what's going
13:49
on, you know, declined to comment.
13:50
Who knows what that means. Like maybe there's an ongoing
13:52
investigation or maybe the bosses at the SEC says don't
13:56
look into that. You have to kind of ask
13:59
yourself, is this, you know, we know the Trump tweet happened.
14:03
So then you have to ask yourself, is the administration
14:05
or the people around him, is that a group of people who have
14:08
been very strictly driven by integrity as far as you know?
14:14
And I think your answer to that question price very strictly
14:16
depends on the news that you consume.
14:18
And some people will say yes and some people will say no.
14:22
You know, for me, I go back to things like early, this is like
14:25
early on 2016, first, first presidential run before Trump
14:33
ran, it was just status like status quo for every single
14:37
presidential nominee to release their tax returns to say, hey,
14:41
here's the the money that I am, you know, beholden to here's how
14:47
much I make, here's who's paying me.
14:49
It seems like the most easy transparent move in the world
14:52
for a presidential nominee to say this is who owns me or
14:55
whatever, or at least in so far as a tax return can can show
14:58
that. And Trump didn't.
15:00
He's like, I'm not doing that. And at the time he's like, oh,
15:03
well, cuz I'm under audit and I can't do it cuz I'm under audit.
15:06
And the IRS was like, you can do whatever you want.
15:08
You know, the audit didn't have an NDA associated with it.
15:13
But now we're here, you know, whatever that is 10 years later
15:16
and still he hasn't released. In fact, he's, he's sued people
15:19
several times who have attempted to release his tax returns or
15:21
leaked parts of it or whatever. And so, you know, it doesn't
15:24
strike me as the kind of financial behavior that screams
15:29
integrity or transparency. And so is that sort of thing
15:33
leaking down to the SEC and how they investigate these things?
15:36
I don't know. We don't know.
15:38
And so the the unfortunate part is, you know, all we know is
15:42
there's a spike and we don't know what it why it was
15:45
currently. I hope it gets sorted out
15:48
because I hope I we don't have trust about the market.
15:50
But the good news, I think for listeners of the show is you can
15:56
actually sleep very easy if you are not a trader.
16:00
You know, this is these these are like pre market moves and
16:03
you know what they called futures, which is basically
16:05
betting if the market or oil prices go up or down, you know,
16:09
that's like very sophisticated gamblers essentially who are
16:12
making those moves. And while erodes general trust,
16:16
trust in the market for an individual investor, something
16:19
like this has virtue no impact. You know, I slept through this
16:22
entire thing, my price before my price after don't care because I
16:26
wasn't trading on that in that window and I never would because
16:29
I'm buying for years and decades, not, you know, minutes
16:34
before the open of the market and and all that stuff kind of
16:37
comes out in the wash. I'm not saying it's not
16:39
important. It is, but you know, the price
16:41
adjusts and the people who got burned were the people who were
16:43
buying that second. You know, for sure, if you're
16:45
like buying an ETF in a specific window and there's insiders
16:48
operating in that window, it could exactly hurt you.
16:51
But if you're like periodically investing monthly over time and
16:54
holding for years, this stuff doesn't really directly matter
16:58
to you other than, like I said, erosion of trust in the, the
17:02
system. And so that's your specific take
17:06
away, which is kind of the always what I say, which is
17:08
don't really worry about these macroeconomic headlines.
17:11
You know, worry about what you worry about, which is can you
17:14
get a raise at work? Can you return that food
17:18
processor and get 30 bucks back and go buy half a share food
17:21
processor? Oh, she says.
17:24
Well this is much smaller than I realized.
17:25
Yeah, I kind of bought it very impulse and then I'd have to
17:28
make it the sauce on like 4 different segments.
17:31
So maybe I just need a bigger food?
17:32
Processor you need a bigger spend more.
17:34
Exactly. And they, they range, there's
17:36
like a $30 version and there's like a $200 version.
17:38
So I'm like, do I need a $200 food processor that I'm going to
17:41
use once every three years to make salsa?
17:45
The answer is maybe. Well, stay tuned for the next
17:48
episode, you'll find out. I'm on the edge of my seat.
17:51
Yeah, but you know, it's an interesting news story And, and,
17:55
and for, you know, I don't, I don't have a strong opinion on
17:59
what this is. I don't know.
18:00
You know, I think in fact, if you look at the rest of this
18:03
chart, there's like a few other spikes throughout the day that
18:06
look kind of similar that don't, you know, I, I don't know, maybe
18:09
Trump tweeted something that I haven't looked at every single,
18:12
every single hour by hour, you know, Trump tweet versus volume
18:16
chart. And he's not even on Twitter,
18:18
he's on true social, which I'll never get on.
18:20
So those have to be forwarded to me on like another social media
18:24
platform. And the algorithm knows better.
18:26
You just see them on CNBC when someone screenshots them.
18:30
But for sure, like you're not, Jen, but for sure traders are
18:33
right. Because if traders want to know
18:35
within seconds what Trump tweeted because I was going to
18:38
move markets, then, then they're going to be on Truth Social,
18:42
right? So.
18:43
Well I'm also not a day trader, so good for me.
18:46
Good, very good for you. And the good news is, in fact,
18:49
as we're filming, as we're recording this, the market's up
18:52
like 3% the last two days. I know that time it airs, there
18:55
will be a different market situation.
18:56
But you know, despite all the bad, you know, bad market stuff
19:01
happening lately, we've had two really good days and.
19:03
And great, because I'm going to sell a little bit every year for
19:07
the next 40 years and let the market continue to compound and
19:10
I don't need to worry about this day-to-day stuff.
19:13
Nice y'all be like Jeremy. He slept through.
19:15
He wasn't up for that 5:45 AM Trump tweet.
19:17
I was up for the 5:42 AM Thai crying though, which really hurt
19:22
my awakened future. You didn't immediately check the
19:25
stock market. I was worried about the diaper
19:29
market and the screaming my earrings.
19:32
Market. Exactly.
19:34
That's that market's a booming at the Schneider Jones
19:37
household. No, no, no, no, we don't need
19:40
that visual. Let's move on to money.
19:43
Money. Can I ask a dumb one?
19:47
All right, you're asking smart questions to a dumb guy.
19:51
What do we? Yeah.
19:52
That was a what I asked was a fake dumb one.
19:53
This is a real dumb question. This is a real this is a
19:57
question from a real listener K from I hope I'm saying this
20:00
right. Menominee Falls, Wisconsin,
20:03
which is such a fun name. Like let's go Menominee.
20:07
What's that song? Mahamana, What's that?
20:11
But you know. It's not.
20:12
Is that, is that Sesame? Yeah, I'm pretty sure that's
20:14
like Sesame Street. Yeah, Mahamana or the puppets
20:19
do. Do do do false do do do do do.
20:24
No, The Muppets. That's not Sesame.
20:25
That's Muppets. That's not, that's not the same
20:27
thing. Oh, that's a different Yeah,
20:28
Muppets. No.
20:29
Isn't like Miss Piggy and and like Oscar the Grouch?
20:32
Aren't they in different universes?
20:33
That's different, right? You're right.
20:36
I think so, right? Some reason I conflated the two.
20:38
Now I'm actually now I'm questioning my whole Sesame
20:41
Street. Yeah, because who are The
20:42
Muppets? Who's a Muppet?
20:44
So like Kermit the Frog, Miss Piggy, Beaker, Beaker.
20:48
And all them. And then Sesame Street's like
20:50
Big Bird, Bert, Ernie, I think those are different.
20:53
I don't think they know each other these.
20:55
Are different. It's like a.
20:56
Marvel DC thing, It's like Superman.
20:58
Although I feel like there's some is there?
21:00
No, let me not even get into that because I'll get in trouble
21:02
with the comic book nerds. Well, now you have to say it
21:06
well. I was going to say, isn't there
21:08
like some crossover now with like universes?
21:11
I do know this. You and I are the perfect two
21:13
people to have this conversation because I don't think we could
21:17
even possibly name for superheroes.
21:21
We're going to get through Superman.
21:24
Yeah, Batman. OK, give me three more.
21:27
Wait, what'd you say? Batwoman.
21:30
OK. Storm, I know a lot of.
21:32
Superheroes. OK, and now give me the
21:34
universes of those. I know Superman is oh shit now
21:38
we. Nope.
21:39
Iron Man is Iron Man is Marvel for sure.
21:42
Robert Downey Junior Is Marvel Down?
21:45
Right. Apologies.
21:48
We need to, we need to send a formal apology to all comic book
21:51
fans. Like what'd you say?
21:53
That's. All I know I said Black Panther
21:56
is Marvel recipe to Chadwick Boseman.
21:58
OK, so let's let's ask this question from Kay from Menominee
22:02
Falls. OK, she says after taking
22:05
Jeremy's course, I've started investing in BFORX Target
22:09
Retirement Fund since October. The market, the market has
22:13
fluctuated of course, and I currently only am about $500 up
22:17
from where I started. That's over three months.
22:19
I understand that the market does go up and down but has
22:22
historically grown at a rate of about 10% per year.
22:25
Once you become FIRE, should you have a year worth of expenses
22:28
saved up in cash to live off, then replenish it from the one
22:31
year worth of dividends from your target date funds
22:34
investment because it is clearly unreliable to get that 4% return
22:37
every month. These are kind of like 2
22:39
separate thoughts, but maybe she wants you to comment on the 1st
22:41
and answer the second. Totally.
22:44
So I mean, first of all, Kay, amazing work.
22:46
Congratulations on getting started.
22:49
You know, investing early and often in a target date index
22:52
fund like VFORX is, you know, essentially optimal investing.
22:57
You're doing incredible. The hard part now you know,
23:00
you've, you've essentially solved investing.
23:02
Like, you know, day trading futures based on Trump truths is
23:06
not how you get rich. That's how to stay broke for the
23:08
rest of your life. Doing what you're doing,
23:10
investing early and often and acquiring shares and letting
23:13
those compound over time. That's how you get rich.
23:15
So you've solved investing, but the hard part is sticking with
23:18
it, right? The hard part is being
23:19
consistent, letting time do its work.
23:22
And you're three months in, three months in is like baby,
23:25
baby, baby. That's like brand new.
23:26
Three months in. The chance of the market being
23:28
up in any three month period is like just over 50%.
23:32
You know, it's almost a coin flip.
23:33
And the fact that we're, you know, a month into a war and
23:37
you're still up a little bit is actually like kind of an amazing
23:39
thing. You know it could.
23:41
Easily be down probably from like four months.
23:45
OK. So yeah.
23:46
Well, never mind, Kay, you're currently down.
23:49
Sorry about that. But that goes to my point, which
23:51
is like early on, you know this, this 10% thing is not reliable.
23:56
Yeah, four months. OK, Sorry.
23:59
Yeah, well, you're currently down, probably.
24:02
Yeah, you're currently down because the market's down a few
24:04
percent this year so far. But, you know, but that's kind
24:08
of my point, which is the the market rarely returns 10%.
24:11
It's not like getting a pension payment or a bond payment or
24:14
interest in the savings account. The market sometimes returns 25%
24:19
a year, Sometimes it's -16% sometimes it's 2%, sometimes
24:23
it's 18%, sometimes it's -4%. And when you add up those, you
24:27
know, compound those over time. You can't just add them up and
24:30
average them out because you actually have to like multiply
24:31
them together to figure out where you're at.
24:33
It basically has a compound annual growth rate of around
24:37
10%, but you don't withdraw 10% per year in retirement.
24:41
That's too risky because you can't count on the 10%.
24:44
That's why, you know, the rule of thumb is 4% is like a
24:48
reasonable safe withdrawal rate. And so you know, let me say, let
24:52
me give you an example. Let's say you retire with a
24:54
million dollars, 4% of that is $40,000.
24:58
So your safe withdrawal amount is $40,000.
25:00
And the way that works is you take that $40,000 every year,
25:04
and you also increase it for inflation so that you don't need
25:06
to like live on less every year. You're kind of maintaining A
25:10
consistent level of living based on things becoming more
25:13
expensive. So like, let's say you're #1 you
25:16
retire with million, you take your 40,000 and the market goes
25:20
down 5% that year, with the market being down 5%.
25:23
And your $40,000 draw, your $1,000,000 broad strokes became
25:27
$910,000 -, 50% from the market going down -40 from the draw,
25:33
now you're down to 910. And so the market's down.
25:37
You took out your 40. Year 2, you take out another
25:40
$40,000. But let's say year 2, the
25:42
market's up 20%. Now at the end of year 2, you're
25:46
at one point O $4 million. So you're kind of above your
25:48
original million. And so that's kind of, you know,
25:52
those are like 2 hypothetical first two years, mark it down,
25:55
mark it up. And it just shows you're taking
25:58
out a little enough that the remainder can can be a little
26:01
bit volatile. And so it's not like you're
26:03
going to see a dividend payment or an interest payment that's
26:06
reliably 4%. It's just that you're relying on
26:11
this average 10% growth over long periods of time to continue
26:14
to be true, while you're taking out a small amount to not kind
26:17
of kill the the nest egg. And so, you know, do you take it
26:23
all in January for 12 months? Do you take it month by month?
26:27
And the answer to that is it doesn't really matter.
26:29
You know, you say it's unreliable, but it's not
26:32
reliable to only be living off the growth.
26:34
It's reliable to just trust the process and say, hey, even if I
26:38
have one or two or three down years in a row, I'm still going
26:40
to stick to the plan. Take my 4% of that original
26:43
amount adjusted up for inflation and trust that the market's
26:47
going to recover. And even if it has three bad
26:49
years, maybe it's going to have seven good years after that or
26:51
whatever it is, the market usually goes up.
26:53
You know, there's, if there's a bad year, it's usually by
26:56
itself. You know, 2 bad years in a row
26:57
is is unusual. Historically, no one knows the
27:00
future. We could get to buy an asteroid
27:01
and all this could be moot. But that's kind of what it's all
27:05
about. And so I say, OK, you're
27:10
crushing it. You've solved investing.
27:12
You're doing very well, but you're very, very early.
27:15
And the longer that you do this, the more comfortable it's going
27:18
to feel with volatility. You know, you're three months
27:21
in, you're like, I'm only at 500.
27:23
You know, as of airing of this, you're probably down a little
27:24
bit. That's OK.
27:26
Keep sticking to the process. Keep investing early and often.
27:30
Don't worry about your three month return.
27:32
Don't worry about your six month return.
27:33
Think about what the plan is for the next 40 years and you will
27:37
crush it. Nice, you did a good job of
27:41
explaining the what happens once you retire.
27:44
I like that. Yeah, I think a lot of people
27:47
just get too worried about, you know, the what happens if the
27:52
market's down? Well, if the market's down, you
27:55
don't sell everything and be like, oh, I lost the game.
27:57
I'm a, I'm a loser. No, no, no, you're still like,
27:59
if you retire at 65, you're still have maybe 30 years of
28:03
life on average left because 65 year olds usually live past the
28:06
normal average because you didn't die for the 1st 65 years
28:08
of your life. And so, you know, you have 30
28:12
years. So you, you're only taking a
28:13
little 4% out at 65 and a little 4% out at 66.
28:16
And whatever's happening those years doesn't really matter that
28:18
much. Yeah, no, that made it make a
28:21
lot of sense. And I feel like we talk about
28:23
what's happening now so much and I know we've done the 4% rule
28:26
and things like that, but that feels like the first time we've
28:29
like you've broken it down like quite like that.
28:31
That was T. OK, good.
28:33
OK, showing numbers in the microphone again.
28:37
It felt very manageable. I don't know what you did.
28:39
Differently. OK, good.
28:40
Let's move on to scroll Patrol. Scroll Patrol.
28:50
All right, I've got a video here.
28:51
I got it from the Internet. Ever heard of it?
28:55
Jeremy has not seen this video. We're going to click on it.
28:57
We're going to watch it together and Jeremy is going to give us
29:00
his very informed thoughts. All right, I have not seen this
29:04
video. I'm gonna watch it now.
29:06
Iran denies Trump's negotiation claims and stocks don't care.
29:10
Here's why. Stocks look like they were going
29:12
to absolutely vomit early this morning after four straight
29:16
weeks of selling off. Then Trump tweets.
29:18
We are in negotiation with Iran and stocks absolutely RIP higher
29:22
today. Now Iran claims there are no
29:24
talks. You have to separate politics
29:27
from markets because from a market perspective, it doesn't
29:30
matter whether talks are actually happening.
29:32
It matters what this message signals.
29:35
And the signal is the US is looking to deescalate.
29:39
That's why stocks rallied. Good investors separate noise
29:43
from signal. Hit follow to get smarter
29:45
financially. Yeah.
29:46
So that guy is named Taylor, and I actually know him in real
29:50
life. Kind of a funny story, which is
29:54
I met him, he was just some dude at Fincon with no social media
29:58
account whatsoever. And we were talking about what I
30:02
was doing and he's like, oh, how do you have so many followers?
30:05
And I kind of broke it down for him.
30:07
And so he started posting and now he has 300,000 followers on
30:11
Instagram, maybe even more on on Tiktok.
30:13
I don't know. But like, I little, you know, I
30:17
mean, he's obviously doing all the work himself and he probably
30:19
talked to a bunch of people at Fincon.
30:20
But I think if you ask him, he might point to that conversation
30:23
as like the core moment that he. So basically what you're saying
30:29
is you made him who he is. I made him, I made him and he
30:31
owes me everything and. I honestly, as we were watching
30:35
it, I was like, Oh my gosh, I'm glad you know him because I was
30:38
watching it and I was like, I'm getting to the point where I
30:39
don't know which videos are AI and which ones aren't still like
30:43
it's getting. And I was like, the way he
30:44
edited it kind of chopped you like that.
30:46
I was like, Oh my gosh, is he AI?
30:47
Is Jeremy going to roast me in a?
30:48
Second, damn, that's a scary time.
30:51
Like, you know, he's literally as a dude walking around with
30:53
his phone, you know, making these videos.
30:56
Yeah. And, you know, he's like a Wall
30:59
Street guy knows finance, you know, has, you know, pretty
31:03
thoughtful takes on this stuff. You know, I don't like, you
31:05
know, he's not like my best friend or anything.
31:07
I don't like necessarily endorse every single thing he posts.
31:09
I don't necessarily endorse everything anyone posts.
31:12
But yeah, he seems like he's a relatively thoughtful guy about
31:14
all this. And into the review of his his
31:20
little TikTok there, his little reel, you know, I think he's
31:23
essentially right, which is the market isn't reflecting reality
31:29
as of now. The market is reacting to
31:33
predictions to the future. And the little contrast he
31:35
pointed out was really funny, which is Trump said, oh, we're
31:39
in great talks with Iran and Iran's like, no, we're not.
31:44
And the market's like, we don't care.
31:46
If Trump thinks things are going better, then we're betting
31:48
things are going to go better. And so we're going to like
31:50
rally. And you know, there's an old
31:53
saying with a stock market, which is buy on rumor, sell on
31:56
news, which means if you hear something's about to happen,
32:00
it's time to buy. Once it actually does happen,
32:02
now it's too late. So you sell.
32:04
And in reality, the reality is buying on rumor is too late.
32:08
Like we literally just talked about in the last segment, you
32:10
need to buy before the rumor, right?
32:12
The rumor is Trump spreading this rumor that talks are
32:15
happening with Iran, which aren't happening.
32:17
Buying before the rumors how you actually make money.
32:19
And unfortunately what that leaves us normal non insiders
32:23
with is this impossible situation is by the time
32:26
anything hits your eyeballs or your ears, it's too late.
32:28
The market's already moved. You can't buy a rumor.
32:31
The rumor is already priced in by the time it's processed by
32:34
your brain because there are algorithmic traders trading
32:37
every thousandth of a second. And so it's all priced in the
32:40
market whenever a human is aware of it.
32:42
And so, you know, he's a much more active investor than I am.
32:46
He's not like a buy and hold index fund guy.
32:48
He's like a trying to break down the workings of individual
32:51
trades kind of guy. And I'm not.
32:53
And so I can gladly say, yeah, everything he said makes perfect
32:56
sense. I still don't do a single darn
32:58
thing about it. I do what I tell KK to do from
33:01
the last segment, which is, hey, I'm going to keep like just
33:06
trot, trot, trudging away. What's the word like marching
33:08
away? Yeah.
33:10
Trudging away. OK, then maybe that's the word.
33:12
Trudging away. Buying a few shares here, buying
33:14
a few shares there with my extra money every month, putting it
33:17
in. Not worrying about if it's rumor
33:18
and not worrying about if it's news.
33:19
Not worrying about what Trump says or what Iran says because
33:23
this whole Trump Iran headline is going to be way in the rear
33:26
view mirror in six months when it's a new scary headline that
33:28
I'm also going to not care about.
33:30
I'm buying the companies of the world that are to continue to
33:33
operate. And there's this amazing machine
33:36
that pumps the value of the companies of the world directly
33:38
into my bank account. God accept the volatility.
33:42
Guys like Taylor who are more active and moving the markets on
33:45
a daily basis, Don't worry about that.
33:47
That's just going to be part of the part of the trade off for
33:50
me. But I'm going to profit
33:52
handsomely over time because the companies, the world continue to
33:55
grow. And so, yeah, I, you know, I
33:58
give this video an A minus because, you know, I think
34:01
everything he says technically correct, but I just don't think
34:04
the take away is buying rumors, sell news.
34:07
I think the take away is ignore the headlines, ignore the news,
34:11
ignore the rumors. Buy, buy, buy, buy low, buy
34:14
high. Keep buying.
34:16
That's how you maximize your compound growth.
34:19
Nice K from Menominee 1, Taylor 0.
34:24
I feel like sometimes we review these people.
34:26
I'm like, there is no way on earth they will ever get this.
34:28
I think Taylor has like an outside chance he's going to
34:30
listen to. So hey Taylor, I hope I didn't
34:32
just offend you by. I'm glad you're not AI.
34:37
No shade, I'm just starting to get closer.
34:39
It's not you bro, it's. It's a scary, I mean, I don't
34:42
know, maybe maybe he has an AI perfect avatar that can just
34:46
pump out these videos. I I suspect he still is.
34:49
So as well, I feel like they don't have the mouth right quite
34:53
yet. Have you seen that video that's
34:55
going viral right now about the guy who put like a face over him
34:59
and he's in India, but he put a white face over him and they
35:01
asked him to put fingers in front of his face and he won't
35:04
do it. Oh yeah, he's like.
35:06
It's like a job interview. Doing a sales pitch or yeah,
35:08
some sort of financial and and he holds up three fingers over
35:11
here. But he knows that if it like if
35:13
he goes like this and messes with the filter, what's scary is
35:15
like it's super, you know, when I'm sitting there squinting,
35:19
looking at his face over this like Pixley Zoom recording or
35:22
whatever it is like, I wouldn't, I wouldn't have questioned it,
35:25
you know, until as soon as he went through it, Of course.
35:27
Like, OK, well, now you're obviously lying because there's
35:29
no look, I'm doing it right now, see, and.
35:31
Also, I feel like if you're a recruiter, they're dealing with
35:34
crazy amounts of like AI technology and like having to,
35:38
you know, like recruiter specifically where you're just
35:40
pumping out numbers day after day.
35:42
Maybe if you're like a company that only does interviews every
35:44
once in a while, you might not catch it, which is so crazy to
35:48
me. I could.
35:51
Have been AIII mean we, you know, we're small, we don't hire
35:53
that often, but you know, as a programmer, my I usually ask
35:57
programming questions and now we're to a point where you can
36:00
literally just take my programming questions, copy and
36:02
paste in one fell soup, put it in literally any AI and it gives
36:07
like a really, really good answer.
36:08
And so, you know, and you know, maybe that's OK because you know
36:14
it, it just means like that's not a good way to test them
36:16
anymore. And the question is OK, if I if
36:18
they can do that, then they can do that here at their job too,
36:21
which is fine. But then what, you know, what
36:23
skills do we need to be testing for?
36:26
It's more like understanding the stuff and, you know, it's kind
36:28
of like higher level thinking, which is just the world's a
36:31
change. And Jen.
36:32
Gosh, here we are. All right, we have one final
36:35
segment. Let's get into it.
36:37
Money. Money.
36:40
Jeremy had time today. We're in the comments section.
36:44
I am. Where am I?
36:45
I'm on. I'm on.
36:46
Instagram. Yeah, I got quite a roast.
36:50
The old grand. Firing.
36:51
Yeah, I'm back on Instagram. I I.
36:53
Most of his comments are exceedingly nice.
36:55
Yeah, exactly. I know they're almost all
36:57
accurate too, you know. Yeah, yeah, yeah.
36:59
So, so I'm curious about this one.
37:02
This is a post a carousel on Instagram titled How I Retired
37:06
at 36 includes several slides that show you how your net worth
37:10
increased over the years. Do you want to explain what
37:12
we're seeing before we get into the comments section?
37:15
Yeah, basically I made this little swipey carousel thing
37:17
that kind of walked through my, you know, every few years update
37:21
of my net worth and kind of what I'm doing in life.
37:25
And so, you know, back in 2010, for example, it said my net
37:29
worth was $41,000. I was, you know, I was, what
37:32
does it say, 30 years old at that time and paying myself
37:36
$36,000 a year driving a 1999 Ford Explorer.
37:40
And then, you know, Fast forward three years, now my net worth is
37:43
up to 110,000 still driving a 99 Ford Explorer.
37:47
And it kind of just goes to show like, hey, this is, this is my
37:50
path. This is how I got there.
37:54
Some of it was selling a company, some of it was
37:56
investing, some of it was Roth. I raise whatever.
37:58
And then this very thoughtful, reasonable commenter said.
38:03
How did your net worth grow from 41,000 to 110,000 in three
38:08
years, a $69,000 increase from 30 to 33 when you only put
38:12
15,005 thousand per year total and index funds?
38:16
Did the market do extremely well in those years?
38:20
That's a perfectly reasonable question and so and I went back
38:24
and fact checked myself to provide this answer.
38:28
Number one, I agree it doesn't make perfect sense with those
38:31
numbers if you go and part of that is because you know first
38:35
of all this was like 16 years ago and I am going based on the
38:38
record keeping I've done along the way.
38:40
And also that record keeping isn't like a perfect like
38:43
day-to-day tracking. I think the $110,000 was kind of
38:47
like my maximum net worth before, right before I sold my
38:52
company where the network shut up by $2,000,000.
38:55
And so it's a little bit hard to back into OK, if I on January
39:01
1st 2010 to January 1st, 2013. And I also think they're like
39:05
end of year numbers. And so you know, the numbers are
39:11
a little bit squishy is the first answer.
39:13
The second answer is the market did do extremely well like you
39:16
suggested. So if I go and put, I went back
39:19
and put my put these numbers into an S&P 500 calculator from
39:23
2011 to 2014 was kind of the end of year, you know the end of
39:27
year of those numbers and the market was up 15.4% annualized
39:31
over that time. If you take that plus my 41,000
39:34
plus my $5000 per year over the time it comes out to about
39:38
$87,000. And so, you know, most of that
39:42
was just the growth of the market during those two years.
39:46
And the bigger the number gets, the, the more it gets.
39:49
So, you know, we're still, you know, 8087 thousand, we're still
39:52
off by $23,000. Also during that time, you know,
39:58
part of that was just, it wasn't exactly 3 years, it was probably
40:01
3 1/2 years or whatever. Part of that was.
40:04
I think I took out some cash from my company.
40:08
The the transaction when I sold my company was like a.
40:11
No cash, no debt transaction. So we paid off all our debts and
40:15
drain the bank account. I think I might have gotten that
40:18
might be all of it right. There actually might be 20,000
40:20
from that or something. I also started a side hustle
40:23
during that period where I start another little website that was
40:26
actually cash flow positive. And so I might have had 10 grand
40:29
from that that ended up in in my investment accounts.
40:34
And then there's some small stuff too, like I sold, I sold a
40:37
car in there. I sold a.
40:37
You sold. A food processor.
40:40
I returned a food processor to Amazon for $30.
40:43
Add that, and then I sold a car for $6000 and I bought a new car
40:49
for $3000. I literally downgraded my car
40:52
and had a net cash influx of $3000.
40:55
And so, you know, the the answer is it's all these things.
40:59
It's like a little bit messier than you know.
41:01
I think all of our lives are a little messier than I put $500 a
41:04
month into an S&P 500 index fund and spend and earn no other
41:08
money anywhere else in life. I think everyone's situation is
41:11
a little bit more complex than that.
41:12
But for what it's worth, like these numbers are from my actual
41:15
spreadsheet where I track my net worth every year and I look at
41:18
them at the end of the year. And I think I think those are
41:20
the answers. And so, you know, you're very
41:22
right to say, hey, that doesn't quite add up.
41:24
And you're right, it doesn't quite add up.
41:25
But this isn't a track record of how did the market do over these
41:31
three years. It's a track record of how did
41:33
Jeremy do and Jeremy had some other stuff going on, as we all
41:37
do. Yeah, you need more haters
41:39
because these people are being too nice to you and.
41:41
They're also like usually right too, which is the most
41:43
frustrating part, you know, and they're usually like a lot of
41:47
these comments are like, OK, yeah, what about this?
41:49
And I'm like, yeah, it doesn't say that in there because it's
41:51
Instagram. And it's like, you know, 1000
41:54
pixels by 1000 pixels that I can let you know.
41:56
I can't put my. Yeah, but you have like 3
41:58
paragraph comments. You know what's up Jeremy?
42:00
Maybe your Maybe your captions need to be better.
42:02
Oh, the captions. Well, people don't read the
42:04
captions. I guarantee people only the
42:06
captions. And if I put them the caption
42:09
they still would comment that no, this person was super nice.
42:11
And that's a perfectly, perfectly nice comment.
42:15
Yeah, you need more haters also, because that will mean that
42:17
you're doing better, because that's how you know.
42:19
Yeah, that's true. You know you need like Michael
42:22
Jordan. He would create haters.
42:24
He would create haters. What does that mean?
42:26
Yeah, he wouldn't even have people who are really against
42:27
him and he would just be like, I've just made it up in my head,
42:30
watched it out. I thought he would like go like
42:33
push a little kid in the mud or something.
42:36
And be like, I took that personally.
42:37
Have you not seen that Michael Jordan?
42:38
Me. Or yeah, yeah, no, I definitely.
42:40
I definitely saw that, took that first.
42:41
Like what? I love that.
42:44
I mean, all right, I'm going to need to get more of a Jordan
42:47
mentality. Yeah, you need more haters so we
42:49
can get better comments. Well, thank you anonymous
42:51
commenter for your thoughtful comment and we actually have
42:55
made it to the end of the episode, believe it or not.
42:57
Yeah, thank you all for joining. It's been a blast.
43:00
And if you want to be like hey, and build a lot of wealth, you
43:03
gotta do what? You do nominee.
43:05
From Menominee we think it might be pronounced.
43:09
Thought you were saying it wrong the whole time.
43:10
You know, there it's I'm sure it's wrong.
43:13
I'm from the Midwest too. I feel like we have all these
43:14
like Native American names, like infiltrated in our but but I
43:18
think that's like I'm from Michigan and she's from
43:20
Wisconsin. You only know how like your
43:22
state crazy things are pronounced like Kalamazoo, OR.
43:27
How many different ways can you say Menominee?
43:29
Menominee. You started saying Menominee and
43:32
I went Menominee and so there's at least 2.
43:35
This is recording medium. We'll find out.
43:37
Yeah, let's replay that. Let's see who said it each way
43:40
first. Put it right in here, Sahil.
43:41
Menominee Falls, Wisconsin, which is such a fun name.
43:45
What's that song I'm bringing? Extra work.
43:48
I'm bringing receipts to the podcast from from 20 minutes
43:52
ago. Fine, OK.
43:53
But don't. Don't listen for who is in what
43:58
Marvel Universe, and don't listen for who's a Muppet and
44:01
who's a Sesame Street 'cause we, we really have no idea.
44:04
We are not, we are not experting that.
44:06
But I do know that if you want to build wealth, you got to
44:09
follow the 2 rules of Personal Finance Club.
44:11
Rule #1 live below your means and rule #2 invest early and
44:15
often. See you next week.
44:16
The personal finance club show is produced by Jeremy Schneider
44:19
and Jen Mundia, music by Essa Balu and Homie.
44:22
Send your questions to podcast at personalfinanceclub.com.
44:26
The Personal Finance Club show is Co hosted by Jeremy Schneider
44:29
who is a co-owner of Nectarine and SEC Registered Investment
44:33
Advisor. The views expressed on this show
44:35
are those of the hosts and guests and do not necessarily
44:37
reflect the views of Nectarine. Please refer to
44:40
hellonectarine.com for all relevant disclosures.
44:44
This podcast is for informational and educational
44:46
purposes only and should not be construed as personalized
44:49
investment advice or a solicitation to buy or sell any
44:52
security. Listeners should consult their
44:54
own financial, legal or tax professionals for advice
44:57
specific