More Knowledge, More Wealth - Ep. 163: Have No Fear
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[00:00:00] Gabe: Good afternoon. This is Gabriel Shahin, Certified Financial Planner and your host of More Knowledge, More Wealth here on every weekend, talking about all important topics of personal finance. My goal is to give you the knowledge you need to increase your wealth Now to the listener, you can always reach out to myself for any one of our colleagues here at Falcon Wealth Planning.
[00:00:19] Our phone number is (855) 963-2526. That's 8 5 5 96 f. Like the bird, or visit our website@falconwealthplanning.com. That's falcon wp.com for sure. Now I'm a principal of Falcon Wealth Planning. We are a fee only, not fee based. Folks. Stop saying that a fee only financial planning firm, we manage money as well.
[00:00:44] But folks, we. Focus on comprehensive financial planning that goes over where you are today, how retirement looks like. Talk about taxes, investments, insurance, estate planning, folks, you name it. Anything that involves a dollar sign, give us a call. We'd be happy to help. We are offering a free financial assessment, which are thousands of clients have participated in this.
[00:00:59] Our phone number is (855) 963-2526. That's 8 55 96 Fal. Like the bird folks, lots to go over with you today. As people are giving now their economic, uh, outlooks for 2023, where a lot of people say in the first half of the year, it's gonna look kind of dicey because the markets are gonna go all over the place because the rates are gonna continue to go up.
[00:01:26] Uh, and inflation is gonna continue. And then you're gonna see that. Is coming down towards the second half of the year talking about how the recession is gonna be long and drawn out, so on and so forth. Folks, we're going through that right now. I feel like we're hearing the same story for next year as this year.
[00:01:45] Now, here is my thought. Let me give you my spin on this. And it's Warren Buffet's old comment, and that is when those are fearful, be greedy. And when those are g. Be fearful, and you're hearing this all over the place now. People are scared of everything really. They're scared of real estate right now.
[00:02:02] You're seeing the affordability index getting destroyed with interest rates going through the roof. You're seeing inflation continuing to go up. You're seeing stocks continuing to do poorly along with bonds, along with crypto. We just talked about real estate folks. Everything seems to be going bad, so what do.
[00:02:19] This is the time people start looking for alternatives and other things. But you know what? There is a lot of proven data that suggests that when those are fearful to be greedy, you've seen as something as simple as bonds, where I've talked about in previous shows, when you look at the first 12 months and the first part of this year of how bonds have acted.
[00:02:37] It's the worst bond market in the history that we've. . Sure it was bad in 94 at a point of there, but this is worse by far worse, like three to four times worse than what it was back then. And that's just the normal inter the bond index, people call it the AG agg. So what am I trying to say to you? I'm trying to say, when you look at history, history, even though it has no guarantee on the future, historically this best performance happens after some of the worst time.
[00:03:08] I mean, we're not the only people that are aware of this. Everybody's like this, and you know what's proof of this? This is how you just know, okay. You know when somebody tells you to buy a stock, right? You're at a cocktail party, you're talking, you're like, Hey, how's it going? What do you do? Hey, and everybody, you're just chit chat.
[00:03:25] And then all of a sudden somebody's like, Hey, buy that stock. It's done great for me. You go on your phone, you're like, Wow, this thing is up like 400%. Why wouldn't I buy this? I can't afford not to buy this. This thing is amazing, but please, folks, tell me what happens when you buy the stock. Yeah. What happens when you decide to make that purchase?
[00:03:45] Yeah, you're right. When you decide to buy it, it crashes and tumbles. Oh, you know what I'm talking about. But guess what happens right after you decide to be like, Enough is enough and you sell it? What happens the day after you make the sale of that security? You, You know the answer to this. Don't be shy.
[00:04:04] Yeah. When you sell it, it goes up. Isn't that weird how that works? And there was a Nobel Prize that was given, I believe, in 2016 or 2018. Uh, and it was all based on that logic. And this was in finance. It was on behavioral finance. I wanna say it was Robert Thatcher. It should have looked it up prior to the show.
[00:04:25] And so with that, he's proven. That behavioral finance is real and you react emotionally because really everything you do in this world is emotion. Some of your favorite movies are based on emotion, cuz it was some of the happiest times in your life. And same with music when you were listening to those or watching those.
[00:04:44] And it's the same thing with stock. Where you act based on emotion and when you go back to Warren Buffet's core characteristic of when those are fearful, be greedy. That's one of the hardest things for you to do because you are scared, and I don't blame you for being scared. Look at your investment account.
[00:05:00] Your $10,000 might be only worth seven or $5,000, let alone if it was a million, that's maybe only worth 700,000 or 500,000 or whatnot, depending how you're invested. I know a lot of people are down 90%. , Yeah. That were buying the Zooms and Pelotons and Dropbox and all these other, uh, companies that were out there, all these tech companies.
[00:05:22] My point is this, I, you know, I, I'm gonna say something and don't take it the wrong way. And so, uh, for example, my brother lives in Arizona and he does, uh, like draft kings and things like this, which is on the ballot, by the way, for the state of California. Some of the states out there, as we have people listening all across the country, uh, they, they are legalized.
[00:05:43] Sports betting online. So like Draft Kings, there's a couple other that's out there, but for some reason that's uh, uh, sticking with me the most. And my brother who lives in Arizona, which is legal in Arizona, he is an avid, big, huge Phoenix Suns fan and Arizona Cardinal fan. And I said, Listen, you know, the world revolves around you.
[00:06:02] And even when they're favor to win, they find a way to lose. So I said, Why don't you just bet on the other team? Yeah. You know for sure they're gonna win until they lose. The Phoenix sons were in the uh, championships against the Milwaukee Bucks, Up. Two games to none. Two games to none. It was there.
[00:06:20] There's no way they were gonna lose. And what did they do? They lost. So I said, just start betting on the other team. Start betting against your logic, right? Because the home team bias, you always think your team's gonna win. You always. That that investment you're gonna have is gonna win. Hey, the lotto, what that like $2 billion.
[00:06:42] You could be a billionaire just by putting a $2 bet. Talk about that for a good investment, right? That's a joke. That is somebody is gonna win. It's just not gonna be you. I'll probably play just the simple fact that I mentioned it. So what am I trying to tell you though? I'm trying to tell you. From a logic point of view, go against your gut.
[00:07:02] If your gut is telling you that now is a good time to invest, it's probably a good time to not invest, right? Like last year, the year, you know, people, anybody can make money back then, so maybe we can argue it's not the best time to invest, but now when everybody's scared, everybody's fearful, this could be a great time for you to start.
[00:07:29] So this is where you have to look at the logic and it's of course extremely logical. And I said in previous shows where when interest rates go up, bond prices drop. But is it possible even for a professional like myself where bonds could make sense to purchase now? Like is that an option for us where that could be a good investment?
[00:07:51] And this is where you have to take a look at your. This is where you have to see if what you're currently doing right now makes sense. And this is where it makes sense to get a second opinion, to make sure you're not too reactive to what's going on, where it's important to be proactive. Where a 60% stock, 40% bond portfolio has historically done amazing.
[00:08:13] Where you need to start looking to see if you need to be doing. Else and or more importantly, to make sure you haven't made any radical changes into the account because this is not the. to do it. By the way, folks, if you're just joining me, you're listening to Gabriel Shahin, certified financial planner, and you're host the More Knowledge, More Wealth here on every weekend, talking about all important topics of personal finance.
[00:08:35] And today we are discussing the simple concepts of market timing, number one, and just being a, I don't wanna call it a contrarian, which is truly an investment philosophy, is to be a contrarian.
[00:08:49] So I know people that are like that, that are always opposite. I mean, I can go to Thanksgiving, one of my cousins coming up here, and no matter what I say, they're gonna say the complete opposite of that. That's just who they are. That's how they are. It's like, you know, some people say forsake of arguing.
[00:09:03] Yeah, those people are perak of argument. They just argue to argue and they love doing it. It's in their dna. It's who they are. It's what they like and love to do. And yes, it's quite frankly annoying and I, I don't know what else to say. So my point is from an investment philosophy, sometimes it could make sense to essentially argue with your.
[00:09:25] And these are the things that sometimes some people have a tough time doing is going against their logic because they say to themselves, Look how great I have done. Look at the things I've done. Because of my common sense, I've excelled in my professional and personal career. I've done amazing work because of my logic and common sense.
[00:09:43] Let me give you an example. Oil prices are going up. The stock should go. logic. Okay, well if the v see still, there's no end sight to the, uh, what's going on with Russia and Ukraine and we have an energy crisis that's happening in Europe right now with the winter coming up. Well, why would it not make sense to go ahead and purchase more oil and gas?
[00:10:04] Now, I'm not telling you to buy it, folks. My point is what may be extremely logical purchase, you might have your rear handed to you if you were to invest it. . And so this is where the logic and the idea comes from. Having everything efficiently priced and making sure you're doing what's right at logical and makes sense for you from a long term investment point of view and from a long term investment point of view.
[00:10:30] And the bond world has historically held its purpose, served its purpose, and fit into a portfolio. This may not be the time to deviate from. Folks, if you need help just understanding your situation where you are today, what you should be doing, folks, give us a call. We can help. Doesn't matter where you are all across the country.
[00:10:50] Our phone number is (855) 963-2526. That's 8 5 5 96 Falcon like the bird, or visit our website@falconwealthplanning.com. That's Falcon wp. Do. For sure. Folks, we're gonna go on a quick break. We want you to stay with us and we're gonna go over a handful of other items that can make a lot of sense for you to do, especially in this environment that we're in.
[00:11:14] We'll be right back after a few words.
[00:11:17] Welcome back folks. This is Gabriel Shahin, certified financial planner and your host, More Knowledge, More Wealth here on every weekend, talking about all important topics of personal finance. Now, today we are talking about just going against your common sense here, going against your logic when it comes to investing, and this is why it's so important to have a long term approach to how you want to invest money.
[00:11:38] Because if you don't, this could be detrimental by you trying to outsmart the market, which, oh by the way, nobody can outsmart the market. All you could do is stay disciplined and understand long term approaches. For example, we know the bond market is down. We know as interest rates have gone up, bonds have continued to drop.
[00:11:53] We also know that interest rates are gonna continue to go up until Q2 to Q3 of next year. So does that mean bond prices are gonna continue to drop? The logic would say. I'm not saying I know what's gonna happen. All I do know is this has been the worst bond market we've ever seen in history. And with that being said, is what does that mean for you?
[00:12:15] Could this be a good time to go into intermediate term bonds? You know, you got one to two year treasuries over four and a half percent right now. I mean, the savings accounts are getting you two, two and a half, and that's if you go the online route. So what I'm telling you is, is here's a time where you have open option and availability to you, especially if you're sitting on cash.
[00:12:36] If you're sitting on cash, literally earning zero point, nothing. Well now that's just no respect or regards to money because you can literally put your money now if it's green and for some reason you just have it in the safe. If doomsday happened, I get that. Even though I don't agree with it, I can at least respect that.
[00:12:52] My point is, is we're talking about cash. People that maybe sold a business, sold a property and have cash proceeds sitting in the bank earning zero point. , you could get your money into even a savings account at two to 3% a US treasury of four plus four and a half percent. So this is where you really have to be strategic folks and understand your situation and what you need to do.
[00:13:16] And this is why we're offering a free financial assessment. Get an opinion of somebody who deals with this on a daily basis. Myself and my team, we have offices all across. We help people nationwide. We would love to help. Our phone number is eight five five nine six three. 25, 26, that's 8 55 96 Falcon like the bird, where we can help put together a personal assessment to help relate this show to your specific situation.
[00:13:40] Because the thing is, is when people don't want to invest, that's the best time to invest. And right now, There is not a lot of positive lights that are going out there right now, and especially with midterms coming up, and we hear this all the time, do not, and I'm telling you this, do not mix politics and investments.
[00:13:59] Do not mix those two. Those are two things that should not even be in the same conversation. I know what you're thinking. The logic says, Well, this bozo goes into office. You. You see how I didn't say stays in office or will be into office if just whoever, whether you're a Republican, whether you're a Democrat, whatever the case is, whether you think one is right and the other is wrong at this point, I'm not saying that matters.
[00:14:20] All I'm saying is. From an investment point of view, it doesn't matter. Yeah. I guess the indirect matters because it matters of our politics, our how we feel as an American, how we feel as an investor, how we feel as a citizen, how we feel of certain laws being passed, how we feel about a lot of different things.
[00:14:40] Yes, that matters and it indirectly matters on the investment side, but it doesn't directly matter. And let me give you two points. Okay. Point of view. This is just. Simplistic Economics 1 0 1, which is a finance 1 0 1 view of things, the democratic view, whether you're boo or cheering. Right now, the Democratic opinion is, let's help those in need.
[00:14:59] Let's give those, let's create welfare systems to get people out of poverty so they can go to school, get educated, give 'em funding for a job so they can be better citizens. Okay? So it's to help those without, So let's take those, let's take money from those with and give it to. Without, and this could help them bring them out of the social economic, uh, negative situation they're in and get 'em into a positive situation.
[00:15:25] Okay? So that's a democratic way. The Republican way is like, listen, they're in that for a reason, the way they're thinking. Give it to those who've already prospered cuz they know what to do with the money. They'll reinvest the money they'll put into their business to hire more people to make the place a better place.
[00:15:38] This is the point of view, and this is yet again, from an extremely complicit point of. of how the two parties look at each other, and neither is right or wrong, even though you may favor one over the other. There's two different ways to skin a cat. The point is from an investment point of view, and if you're running a company, if you work somewhere today, will your job change?
[00:16:00] Depending on who's in office, whether Congress swings one way or another, whether it's a house, whether it's a. Are you still, Are you gonna use your phone any less? Are you gonna use your internet anymore? Are you gonna watch TV any less? Are you going to eat anymore? You get where I'm saying with this, the world spins no matter what.
[00:16:20] By the way, folks, if you're just joining us, you're listening to Gabriel Shahin, certified Financial Planner and your host of More Knowledge, More Wealth here on every weekend, talking about all important topics of personal finance. And today we are just discussing the simple concept of respectfully.
[00:16:34] Respectfully, who cares? Like, listen, it matters, right? There's prop propositions on the ballot that you want to acknowledge or certain measures you want to acknowledge and vote for. These are huge and it matters, but from a democratic or Republican point of view in regards to the impact on your investments, for example, certain states are putting on, uh, online gambling.
[00:16:57] Online sports Bettings. Okay? This has an economic, financial input. If you can invest, or excuse me, if you can, uh, bet now, and the tax dollars that are generated from that can help local and state governments and those publicly traded companies like Draft Kings could do a lot better if they pass, if more people are playing.
[00:17:17] So I, I get that from a micro point of view, but from a macro point of view, who's in office and who's not? Doesn't matter when we, the people are, . So stay disciplined to your investment approach. Don't buy individual stock. I wouldn't buy Draft Kings cause I don't know what's gonna happen with Draft Kings.
[00:17:34] And that's another stock that's got its rear handed to it in the past 12 months. So my comment to you is this, you should be staying disciplined with your finances. You should be staying disciplined in your situation and your long term goals. If your job is retired at 65, you don't need to hit home runs.
[00:17:51] You don't need to win the power ball. Hey, listen, it makes sense to play the power. It makes sense to have $2 billion by only putting in $2 to see if you can win, but it is not necessary to achieve the goals you may have. Now, you could have dreams. You know the difference between a dream and a goal, right?
[00:18:12] A goal is something you have quantifiable, you've written down of steps, how to get there a dream of somethings like this just to drain, Hey, I wanna go to the moon. Well, I'm not training to be an astronaut. You get what I'm. . So having a goal of a beach property, Okay, well, I'm gonna need a few million dollars.
[00:18:31] That mean I need to save this much money. I need to make this much money. You get what I'm saying? I need to hit these goals to achieve the big house on the beach. Now, that's just the classic provable goal that I don't really have. But the point is that stay disciplined of your situation. Don't let all this noise during political.
[00:18:54] during what's going on that you see on CNN or even Fox News or whatever the case is, don't pay attention to that. It's unnecessary for your long term goal. It's just gonna upset you, and that's what media seems to be designed to do these days. It's easy to fall into conspiracy theory. It's easy to fall in what's happening on Twitter and Elon Musk.
[00:19:12] It's easy to fall into what's happening with Pelosi and her family and what's going on with Trump and so on. But at the end of the day, that has very little. on you and your job and your family long term, if you really want to extrapolate that out, sure it can have an impact on it, but focus on what's in front of you today.
[00:19:33] It's you, yourself that needs to hold yourself accountable to achieve your goals. And it all starts with maintaining and controlling your emotion and staying disciplined on that goal. And we gotta help our youth to do this as well. Focus on things that you can control if it's not gonna affect you in five to 10 years.
[00:19:51] Then stop worrying about it and stop getting upset about it. Literally it, it happens. Things happen. That's a nice way of saying, You know what I wanted to say? Things, stuff happen, so just get over it. And part of being a good investor is not focusing on the negative, but focusing on the positive. For example, markets are down 20, 30 plus percent.
[00:20:13] This could be a great time to invest because in 20, 30 years from now when you may be needing the money, assuming you're retiring, You get called on to the next life, you'll still have that money that you'll be needing and forget 10, 20, 30 years from now, in five years from now, this is still a very good market to invest in, especially if you have longer than three years to go.
[00:20:36] Even if you're retiring in two, that doesn't mean you're dead right? When you retire, you get what I'm saying. This could make sense for you to start putting money to work, start putting money into your 401k again, start investing it out. Bothers me when people go in cash and they think they got it right, you can't just get it right once.
[00:20:51] You have to get it right twice. You have to have actually know when to invest. And we've talked about it multiple times on this show where if you just miss the top five trading days, 10 trading days of the year, you've lost over 25 to 50% of your annual. Earnings over the past 30 years. That's insane. You cannot afford to do that.
[00:21:12] This is why we're offering a free financial assessment to help just go over your situation and just explain it to somebody of what your goals are, and you can even talk about what your dreams are that you might not even think is possible. We would love to help. We can help you achieve those by quantify.
[00:21:29] We can let you know what's possible and what's not. Why could we do this all the time? And if you are a business owner, if you are somebody that really income is controllable by your efforts, we can help with that too by just solidifying what are the steps to help you achieve that Business consulting is part of what we help our people with cuz a lot of the people out there are business owners that really have unlimited options for help.
[00:21:52] If you want help with this, give us a call folks. We'd. To help out. Our phone number is (855) 963-2526. That's 8 5 5 96 Falcon like the Bird, or visit our website@falconwealthplanning.com. That's falcon wp.com for short. We'd love to help with your situation because here's. A lot of people out there, at the end of the day, they may say they're helping with your, uh, financial situation, retirement situation.
[00:22:25] They're maybe trying to give you a few little tidbits here and there, but at the end of the day, they're trying to sell you and manage your money. A lot of firms out there are investment firms that just so happens to do some financial planning, just enough to get you through the door so they start selling you.
[00:22:39] We are the exact opposite of that. We are a tax. Financial planning, wealth management firm. We focus on financial planning first. Outside of that, anything after that, that's where investments come in and that's, And we don't get commissions. Like I said earlier, we are the only, We only get paid directly from our clients.
[00:22:58] What makes us much different than our industry folks, give us a try. Give us a call. We'd love to help any one of our colleagues. Our phone number is (855) 963-2526. That's 8 5 5. 96 Falcon like the Bird. Folks, this was a fast show. We want you to enjoy your weekend. Have a great week and God bless.