Q&A: How to Choose Between Financial Freedom and a First Home

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32:02Welcome back. Our next question comes from Lindsay. Hi, Paula. My name is Lindsay, and I have a question about tax-loss harvesting. I have about$200 ,000 invested in a taxable account at Fidelity that's not part of my retirement account. I anticipate using it within the next 10 years, maybe sooner, probably to help pay cash for a house at some point. I had it invested in no-fee, large and mid-cap index funds, and a couple of individual stocks, until Fidelity suggested I switch to an individually managed account that would perform tax loss harvesting for me. Now this money is invested in a large-cap index strategy that includes tax loss harvesting, and Fidelity charges me 0.4 % per year to manage the account.

32:48This is costing me about$870 a year in fees for what Fidelity tells me is around$3 ,000 plus of estimated tax savings. I've been happy with the returns in the account, although I've always preferred a do-it-yourself, no-fee strategy. I definitely don't have the patience to do tax loss harvesting myself. However, I'm concerned that this current strategy will slowly increase the amount of short-term holdings I have in the account and potentially my short-term capital gains tax if I decide I need this money in the next couple of years. My income is around$100 ,000 a year right now, though that could drop if I change jobs, which I plan on doing.

33:25Is this worth the money I am paying for the tax loss harvesting? If not, what is a good strategy to transition out of this account and back into self-managed index funds? Thank you, and I appreciate so much all the resources you make available. Lindsay, I love this question, and I don't love it because of the question that you're asking. It's a great question for all of us to ask, but it's a question to ask before you get into the new product. And by the way, most people don't. So Lindsay, I'm not busting on Lindsay. This is everybody, people all the time. This book that I thought was okay when I first read it, that I keep referencing, Seven Habits of Highly Effective People.

34:12I can't even make it through the title without laughing because I've referenced this book so often. One of Stephen Covey's, the author's seven habits is when you pick up one end of the stick, you got to think about the other end too, right? You pick up both ends of the stick. And that is 100 % of what we're talking about here. You picked up one end of this new product stick. And now that you're in it, we have to talk about the other end of the same stick. What if we get out? I think I got a bunch of good news for you here though. The first thing is Paula, I think Lindsay, the product that you're in is the wave of the future.

34:55I truly 100 % do. I think you're a little bit ahead. I think the fees are also a little higher than they will be in the future. It's funny because everybody points to Robinhood as being the first company to make trades zero. M1 Finance was doing it before Robinhood did. So who knows who really did it? It wasn't Robinhood. Could have been M1 Finance. But when all the companies followed suit and trading costs became zero, all of a sudden it was like, why do I need to own an index fund that's made for the masses when mass customization now is so much easier? Between the automation that can happen, I can now take the S &P 500.

35:39I can sort it out the stuff that I don't like very easily. I don't pay any money for all of these trades anymore. So the average person, your ability to own an S &P 500 that is just yours, maybe it's the S &P 480, is great. And the thing that comes with it is what Fidelity is selling you this tax loss harvesting. Well, it was not that long ago that E-Trade was charging$7.99 every time you placed a trade. Right before that E-Trade, E-Trade, Paula, was the first company to go$29. I remember$29 a trade. Oh my God, that's great. Wow. I remember the eight bucks a trade. And even at that, that's$16 round trip to buy and sell.

36:28And so what that meant was that you couldn't have a small position in anything because if you had a$200 position and you're spending eight bucks to get in and eight bucks to get out, well, that$200 position just doesn't really make any sense. That part drove me nuts. The part that I liked about fees for trades, it turned us much more into investors instead of traders. I feel like too many people look at the stock market as a place to gamble because I don't have to pay a trading fee. That trading fee was just enough that you're like, I got to make up the eight bucks before I do anything. And it made you hold onto it just long enough that you're like, well, I might as well stick with this longer term, which you and I know is the better strategy.

37:15Fidelity Lindsay's not the only one doing this. I can hear in your voice that you think that this was a fidelity come on. Vanguard has a product. In fact, we had a gentleman from Vanguard on Stacking Benjamins maybe two years ago talking about this same thing. And we called it just the future of mutual funds and kind of where things are headed. Two years ago, a guy from Vanguard was talking about this. So Vanguard's doing it. I'm sure everybody else in the market is doing it. So this is not a fidelity come on. it isn't widely accepted i feel like this is would be like you and i talking about exchange traded funds back in the mid 1990s they were around but not many people used them lindsey's calling us then going i'm in the thing they recommend this thing called an exchange traded fund i'm not sure if it's cool or not the good news is you can tell so let's talk about the fees first the good news is you can tell if they're full of crap about the fees or not because you can see all the trades.

38:14So it is just a simple math exercise to look at when did you buy? When did you sell? Fidelity tracks all this stuff for you. You'll be able to then take your tax rate and see the amount of taxes that you got to put on your tax form. It frankly is a 10 minute thing to see if their numbers are baloney or not. Their numbers probably aren't 100 % right because they have to estimate because they don't know what your tax rate is. So they estimate for the average person. So they're saying, well, based on the average person, it might be, she said$3 ,000. $3 ,000, yeah. Yeah. You're saving$3 ,000 on this.

38:54I don't know if that number's right. It's probably in the ballpark. They're not going to be that far off. They don't want to get sued. If I look at$3 ,000 of savings and you can compare that to the point four they're charging you versus if you'd gone with an ETF strategy at 0.1 or whatever number, you can see which one wins. I don't think using this strategy, you end up with a significant amount of, I can see why you would think this, but if the stock has gains, these strategies will sometimes, and I'm not familiar with one versus another, so I can't speak directly to Fidelity's product. They will often just sell the losers to create your tax loss that you can report on your taxes.

39:41They will then replace it, by the way, to your point, they'll replace it with new stuff. But your whole portfolio is not turning over every 12 months. In fact, there is a stat that I believe Fidelity probably keeps for you called the turnover rate. And that number might be 30%, 40%. That tells you that 30 % of your positions are turning over every year, 40 % of your positions. That will also tell you then, depending on how much money you might need, because you said, what if I need this money? Now I'm paying short-term capital gains taxes on all of this. You can then see what percentage in an average year is going to be short-term versus long-term.

40:19Let's say it's 30 % turnover. That means that she has$200 ,000 invested,$60 ,000 then is short-term capital gains,$140 ,000 she has available at a long-term capital gain. You know, if Lindsay runs the numbers and decides that the juice isn't worth the squeeze with, at least with the Fidelity product, I mean, Wealthfront and Betterment also offer tax loss harvesting, but they charge 0.25%, 0.25 % or less. So they offer a similar service at a lower price point. Yeah, they do. I would either do it or not do it. The middle ground where I have ETFs, which is the Wealthfront and the Betterment products coupled with tax loss harvesting.

41:07I don't think then the tax loss harvesting is going to be significant enough to make the juice worth that. They highlight tax loss harvesting. I get why somebody would do Wealthfront or why they would do betterment. I think those products have a place in the market. I think the tax loss harvesting is they're marketing to the wrong audience for that. Like, why are you marketing to people Julio's age, which is largely who they talk to when tax loss harvesting is fantastic for somebody like Lindsay who has a couple hundred thousand dollars, you know? Um, so maybe, Maybe, I don't know. I think I would either do this or I'd go back to her index fund approach that she was talking about.

41:52The way out of this is difficult. Here's Lindsay. You've two options. Option number one is hold on to the stocks. So you own all these stocks, hold on to the stocks and drop the management, which means that you then divorce yourself from the fee. And now it's just you and these stocks. So now you have a garden of stocks that is not being weeded and you have to then pick every year what you sell and then divest them. If you want an orderly manner out of the exit and you want a lower tax bill out of the exit, every year you're going to pick some and sell and then pick some more and sell and pick some more and sell.

42:42And it's just going to dwindle over time. I think the way I look at that is that this is just a mutual fund. It is a mutual fund. It's just, you're seeing the guts of the mutual fund. It's the same thing your mutual fund would have owned. So had we been sitting here and you were asking, how do I get out of fund A and go to fund B? My only answer would have been, you just go to fund B and you rip the bandaid off and you go. The cool thing is you have this opportunity, but that's what we get in our own heads for something that wasn't an issue until we introduced the cool part of this product. So there's a big piece of me that says, find out what the tax is going to be to sell.

43:25If you think it's not the place to be, understand what that tax is and get the hell to the right thing. Because having all of this messiness in your portfolio that isn't pointed toward your goals might even be worse, end up worse financially than the tax that you would pay to get out. And we wouldn't be worried about any of this if we didn't see the guts of it like we do in this product. So that's the issue of getting out of this product is it creates all these hems and haws like you're hearing from me right now. This man. But I think the first thing to do is just to say, okay, what would the tax be if I just sold it and got up?

44:08The good news is, I don't think you need to though. I would look at the turnover first and I don't think it's going to be as high as you think it is. I think that you'll have enough money in capital gains. Maybe you didn't tell us how much money you might need this year right now to add to your emergency fund if things change. For me, that would be the reason why I wouldn't have this product if it's not a 10-year goal. Right, because if she's planning on using the money in relatively short order, like if she's risking the possibility of paying short-term capital gains, that's gonna be substantial.

44:43And that's gonna outweigh any benefits from tax loss harvesting because the short-term capital gains rate, especially at her income level, she makes$100 ,000 a year. Like she's in an income bracket where she's gonna be paying a steep fee for short-term capital gains. Sure. And at that point, it just adds to the injury because even if she were in an index fund, Paula, we'd say she's in the wrong place because of the volatility of the index fund. Right. Index fund goes down and she has short-term capital gains on some of her positions. Yuck. Well, Lindsay, I hope this gave you some positives about this product.

45:20I mean, there are many advantages to what you're in. The question is simply whether or not it's the right fit for you at this time. Absolutely. So thank you, Lindsay, for the question. We're going to take one final break to hear from the sponsors who make the show possible. When we return, we're going to address a philosophical question around whether or not we're heading for a dystopian future. Of course we are. And if so, what implications that has? Because you remember, I said on an episode recently that investing inherently is an act of optimism. Investing is necessarily the act of believing that tomorrow will be better than today.

46:06That is the fundamental premise that underpins the inherent act of investing. How do we square that with a dystopian future? We're going to address that next. Rinse takes your laundry and hand delivers it to your door. Expertly cleaned and folded. So you could take the time once spent folding and sorting and waiting to finally pursue a whole new version of you. Like tea time you. Mmm. Or this tea time you. Or even this tea time you. So did you hear about Dave? Or even tea time, tea time, tea time you. Mmm. So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great.

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47:58Welcome back. Our final question today comes from Greg. Hi, Paul and Joe. This is Greg from Colorado. Long-time listener, first-time caller. I've always wanted to call him with a question, but he's answered pretty much everything. So here's a philosophical one. For context, I've been listening with interest to your many podcasts about the efficient frontier. I've also been familiar with Charlie Merriman's work for years. Today, I'm almost 37 years old and I'm on the path to fire. I currently have a net worth of about$360 ,000, which is almost entirely in total stock market index funds. Way past Joe's recommendation to start getting more complex at$100K.

48:38Which leads me to my philosophical question. I've been a long-time sci-fi and fantasy nerd, and I think the one version of dystopian sci-fi that has a good chance of coming true is a future in which a small handful of ultra-powerful corporations are struggling for control. For well-known works that cover this, consider Ready Player One and Two. And if you haven't read the books, be sure to do so, as Ernest Cline has plenty of capitalistic commentaries that didn't make it into the Hollywood movie. In some ways, I think we're already there. And if so, that means we can't rely on the historical info used to create the efficient frontier itself.

49:13Instead, it would make the most sense to invest not in the S &P 500, but an ETF that holds the top 50 companies in the world or less, aka large cap growth. However, I know that VTI is cap weighted, so it seems a bit unnecessary. As further evidence, let's talk about small cap stocks. The core of Merriman's argument for holding small cap stocks, especially small cap value, is that there's more potential for massive multiples of growth than with large cap. And that's the one asset class he says to add to your portfolio. However, many of the most successful companies going public do so at massive valuations where they'd never be included in a small cap index to begin with.

49:48And let's think about a bunch of the small companies that are growing really fast, especially AI companies. These companies experience explosive gross, but then most of them have been snapped up by Google, Meta, Microsoft, etc. before ever being considered for listing on a stock exchange. That means that normal investors like myself don't have the opportunity to even buy the small, hot, growing companies before the massive corporations acquire them. So then why would I ever want to buy a small cap index? Also, I've worked for a few tech companies myself and have seen this on the front end, seen work for companies that have been acquired.

50:25So to keep it short, the essence of my question is, why should we trust the historical investing data and make our decisions based upon it in light of what's happening in the business world today? Thanks, guys. Greg, I love this question. All right. I'm going to start by addressing the piece that you asked about small cap value. Because small cap value, well, all right, first of all, I do want to acknowledge. IPOs are happening later in the business cycle, meaning a lot of companies are huge before they IPO. We're certainly seeing that privately held businesses who have not yet gone public or maybe who will never go public are getting bigger and bigger.

51:09And companies that are IPO-ing are doing so later and later. We're also seeing that big tech companies are snapping up potential competitors. The big companies are certainly on big acquisition sprees. We also see that the biggest companies, the largest of large cap, make up a huge proportion of the S &P 500. All of that is true. And all of that was also true in the days of Rockefeller and in the days of the major railroad companies, when it seemed as though a handful of small railroad companies were going to be the dominant players. And in this industrial era, it seemed as though the giants were giant.

51:55We had Carnegie, we had Rockefeller, we had Vanderbilt, and it seemed as though these big players could never be unseated. And what we know is that even the biggest behemoths ultimately end up unseated. The Dutch East India Company, which is responsible not just for being a highly profitable company, but for reshaping the globe, literally reshaping national borders, no longer exists. The Dutch East India Company. What we've seen throughout history is that even the big players who seem unshakable ultimately get unseated. What we've seen just recently is that Google, which we thought had the ultimate search monopoly, Google has lost its search monopoly.

52:43People use ChatGPT to search. Google is not even a – I mean, it's a powerful company still. But we thought that that search engine monopoly would never get disrupted. Funded in large part by Microsoft, who 25 years ago people thought was dying, was gone. They were the grandpa company. Then Google was the hot new thing. Yeah, exactly. Who would have guessed that Microsoft would unseat Google in search, but not through Bing, right? Through a completely different search mechanism that doesn't even take, it doesn't even direct you to a website anymore. So we see that society shifts in ways that we could never imagine.

53:27And so that leads me back to small caps. Because small cap value is not just about getting in on a company before it blows up into being the next Amazon or Google or Apple. Small cap value is also about buying regional banks. It's about buying REITs. It's about buying midsize industrial suppliers. It's about buying these small but profitable businesses that are not in the tech sector and that are not on the road to becoming a mega cap. But they're going to be a solid regional bank. You know, they're going to be the third largest regional bank of the Southwest. And you're going to own a stake in that too.

54:14That was part of what my remarks were going to be, Paula. But I really want to kind of end there. I'm excited about where you're at, but I think that we end up at that same place. But I think that's a really important point is that it's not just the tech companies, it's the other companies that are involved. I think for my remarks, though, I have to begin with the Efficient Frontier. Why do we use the Efficient Frontier? Specifically, the Efficient Frontier versus the total stock market index. Number one is, I'm going to say a lot of stuff. even if you disagree with everything that I say after this, even if you think the Efficient Frontier will not help you as much as just buying the 50 biggest companies that you think are going to take over the world, I will tell you this.

55:05The Efficient Frontier is better than VTSAX when you get over$100 ,000. It has been over and over and over and over again. And so by getting scientific historically you've won versus VTSAX. But the second thing is, and this is the important thing, because of the fact that you put it together yourself, it has proven to be stickier, meaning that when markets go down, you know why you own it. You know why it's there. It's part of a coherent strategy that you put together. I love that. I love the fact that you got your fingers a little bit dirty and you're like, oh, why would I sell this when the market's down?

55:46Now, there's a lot of people out there who every time we talk about this, they're walking the dogs. They're like, I would never sell when the market goes down. Why every time the market goes down, do we get so many calls about what do I do? The market's down over and over and over every time, every time we get those. So people do it. People who don't think that they will do it, you're much less likely to if you put it together yourself. This is the fun of planning is that your goals become much more tangible. So I like that. But with the science of the efficient frontier, the efficient frontier moves, moves.

56:24It isn't a static thing. So that's the first thing you have to know is that as the world changes toward this dystopian future that, I read Ready Player One. I didn't read Ready Player Two. But do I see a bunch of today in that? That's how fun a science fiction is. Of course I do. I mean, it is people doing science fiction are a lot like comedians. They can say these truths that you just can't say in a straightforward way. They can say this stuff. But the efficient frontier reflects that change. It will give you a more efficient portfolio over time showing that shift. Will it be 100 % on? No, it won't because it is going to reflect the past where it's been.

57:08So the second you put it together, it's out of date. But what's cool is, is it three years later when it moves or whatever you put in your investment policy statement so you're not reacting to the market, you have this machinery that you're building. If it says every three years, I'm going to go back and look at the efficient frontier again, you're going to drift with it. And it does that. It drifts because the change you're talking about, and I think this is what we need to be clear on, the change you're talking about is not new. It isn't new. We've always been headed that way, which is why I love, Paul, that you talk about the Dutch East India Company.

57:41Jeff Bezos talks about the biggest threat to Amazon is some company that will come. He didn't say it might come. Jeff Bezos has said it will come and it will destroy Amazon. They talk about Elon Musk and Elon Musk making huge inroads. You know why Elon Musk was able to make such huge inroads? Besides the fact that the whole concept of what he's doing is brilliant is that Ford and General Motors plants, These legacy plants that they've invested tons of money in are made for all of these suppliers. Elon was able to look at that and his new disruptive technology was, we're going to get rid of all this supplier third-party stuff.

58:19And now I can press a button and I can update all the electronics in your car. It's incredible. He's not going to keep that advantage forever. There will be another wave of the next Elon Musk. There will be the next Tesla at some point that's going to disrupt. This has been happening forever. Is there more consolidation? A hundred percent. So Paul, I totally agree with you there. Are there fewer IPOs and there are these monster IPOs? Yes, a hundred percent. But none of this is new. This has happened before. My favorite board game, Paul, you know how much I love board games. My favorite board game is a board game actually, Paul, that you've played.

58:59It's a board game called Acquire. and acquire is a game where you put these companies on this board and the guess what happens in acquire the bigger company swallows the smaller company and there's consolidation from the beginning of the game to the end of the game the entire game is about what you're talking about in this dystopian future it's about all these little companies on this board companies get bigger the bigger company swallows the smaller company you know how you win that game paula How? You win the game, not by owning the bigger company. You can, that rarely wins. You own the smaller companies that get acquired.

59:38You create these new companies that are hot, great, fantastic companies that get acquired. And then you end up with more money. So as we're consolidating, I would say, do I want to own the big boy, the big girl? Yeah, I want to own that. But I want to own those companies that might be acquired. And while venture capital certainly has deeper pockets and is holding on to these companies more often, they don't have a 100 % monopoly on these companies. There's still a ton of opportunities out there. And this is where the opportunity is that especially people in technology forget. The leading edge is always the technology player.

1:00:23It always has been. when they first came out with ships i'm sure it was the whoever made the new ship was the hot thing but the big ass the big huge ass change is the second wave ai companies right now are the hot thing to buy ai if you're making ai you're creating ai it's that thing to buy you know it's going to be hot five years from now if the past happens again it's the companies that use this to disrupt the publishing industry, the insurance industry, the healthcare industry, all of these. And you're going to see this reversion in the market because we always have with every technology where the companies that can disrupt using that technology, this is small compared to what's coming.

1:01:14It's going to be huge and it's going to be much more of a wide place. So, wow. Right, yes. Think about how AI is going to disrupt furniture manufacturing. It's incredible. It's going to disrupt the pet food industry. Right. Yes. So do I think all this is happening? Yes. My favorite game, to end this discussion, by the way, a big company, did you know when this game was created initially? No. 1963. mass market in 1964. The guy that created this game, Sid Saxon, was thinking about the same things you're thinking about in 1963, about isn't it going to just end up being a few companies? Yes, it will.

1:01:56The way you win the game, buy the companies that are being acquired. And I'll tell you when these companies do from time to time collapse upon themselves, General Electric used to be much, much bigger, right? It used to be much broader than it is today. IBM was bigger and broader. When you saw... Woolworths, Kmart. Yeah. When you see these companies get disrupted, what you've always seen is people talk about the 25-year-old entrepreneurs that changed the world. When you actually go back through history and you look at the entrepreneur who changed the world, it generally, Paula, is a woman or a man who's closer to 45 years old, who's been through it, who used to work for one of these big companies, was either downsized or left the company because they saw an opportunity to disrupt the big player.

1:02:52I don't think that's going away. I don't think it's going away. That makes sense to me because at 45, you're old enough to have experience, but young enough to have energy. Yes. Yeah. I can agree with everything, Greg, that you're saying. I can agree with everything, but I don't think it's new. I think it's in a different way. What's that deal? The past doesn't repeat itself, but it rhymes, right? So this isn't exactly the same, but this stuff has happened before. During the first wave, companies gobbling up these AI companies before they go public, 100%. That furniture manufacturer in Nebraska that nobody's talking, everybody's talk about furniture, Nebraska furniture, I think everybody knows what that is.

1:03:38I should choose a different state, uh, in, uh, Utah. Wait, are you talking about Berkshire Hathaway? Is that what you're thinking when you think Nebraska? No, Nebraska furniture mart is this huge company. It is a huge furniture manufacturer. So off the top of my head, I said, you know, some, I was trying to think of a random place where people don't think about furniture. And I'm like, oh my God, of course I said Nebraska. Oh, I, I literally have never heard of the Nebraska Furniture Company. Welcome. Furniture Mart, not Furniture Company. Utah or Rhode Island. Let's go Rhode Island. Okay. Rhode Island.

1:04:09Some furniture manufacturing, Rhode Island. Nobody's heard of. Small cap stock, right? Just sitting there. Company's going to buy them up. It's that second wave that is much harder to predict is where small cap value ends up being a fantastic place to be. Well, and Joe, you mentioned shipping. Think back to the days when shipping first became a thing. Imagine the power of being able to cross an ocean, being one of the few manufacturers that can build the vehicle that crosses the ocean, which is the only way that you can get from landmass A to landmass B. There was a tremendous power in that. Nobody ever imagined that we'd be able to fly like the birds, that there would be that level of disruption.

1:04:55That didn't come until centuries later. But you think about the power that shipping companies had back in the day, because they had the monopoly on the only way that you could have intercontinental commerce. And then you think about the unexpected thing that came out of that was insurance. The insurance industry, the concept of insurance as an idea, that all came out of shipping. If there was no shipping, there would be no insurance industry. Because you had a huge amount of money invested in this thing, making it across this ocean. Right. Right. Which is subject to storms and Poseidon, right?

1:05:37The wrath of Poseidon. You've got to make sure that it gets there. And if the ocean decides to swallow you up, you need some way of covering the cost of everything that you put on that boat. And that's where insurance originally came from. And you look at how big the insurance industry is today. And that was a completely unexpected, unplanned consequence of figuring out how to make wood float on water. And that's how technological innovation and technological disruption creates, not only does it get surpassed by things that we can't imagine, nobody in the era of shipping ever imagined that humans would be able to take flight.

1:06:22But also, nobody in the era of shipping imagined that this would create a brand new concept that had never been around before and that that concept would grow into an industry that would be worth a tremendous amount of money and that would have a tremendous amount of power. You know, you used to load your camel up with all of your riches, but if you got robbed by a marauding caravan, you had no way of covering that. You were done. Yeah. Fire existed and your home could burn down, but there was no insurance coverage that would secure you against that. You know, and if we look even more broadly, it might be hard to see, Paula, what we're talking about in the United States as big companies get better and better all the time at defending their turf, defending their territory, learning from history.

1:07:23But this is where, as we become more global every day, we then look at developing economies, right? Because even if you go, yeah, I don't believe you, Paula and Joe. I don't believe in the US. I think that it's the top 50 companies in the world. Let's talk about Vietnam. Let's talk about Indonesia. Asia, let's talk about, heck, let's get even closer to home to a developed economy that's surrounded by a lot of developing economies, India, and the excitement of some of the explosion in India. I get very excited when we talk about India. So even if you think that the US is going to become more and more dystopian, there's so much change still to come to get to what, Greg, you're talking about.

1:08:15Well, and let's look at the area with the highest concentration of young people, Africa. Africa has more young people than any other continent. And with access to internet and access to AI becoming more ubiquitous, and with Gen Z and Gen Alpha growing up as digital natives, very comfortable with technology from early childhood. Imagine the innovation that's going to come out of Africa in the next 50 years. And Paula, some of that innovation is already happening in Africa and it began in Africa. And I think a lot of people don't know. Using Venmo now is something that we all do. We think of Venmo and Zelle.

1:09:02That first became publicized in Africa. That got big in Africa first before anywhere else. And the reason was there wasn't an established banking system to slow it down. Here in the United States, it slowed down a lot because the established banking system was like, oh, how the hell are we going to roll that out? Right. It rolled out big time in Kenya very quickly. Namibia that has a fantastic tech revolution that's been going on for the past 15 years. yeah the excitement in africa around technology again just makes me go oh my goodness there's so so much cool stuff happening and it's the reason why you know early this year i spent a good part of the first six months of this year on stacking benjamins refuting this thing that i'd heard over and over at the end of 2024 which was should i get rid of my international stuff should i the international looks like it's dead.

1:09:59I feel like whenever everybody's talking about something's dead. Yeah. Or if your cab driver talks about how much money they made in X, those are like my buy and sell unofficial signals. If my Uber drivers high five in me about how much money they made in some tech stock, I'm like, I got to get that a lot of that. And no, I'm not throwing shade at Uber drivers. I'm just using that as an example of if it's ubiquitous that we all think that this is a great buy. That's when I start questioning whether we should be there or not. Fun question, Greg. Paula, you said earlier on that buying stocks is intrinsically optimistic.

1:10:44Yeah. Investing generally. Investing is optimistic. Investing is intrinsically optimistic. Because you're putting your money in a place that you think is either going to A, grow or B, sustain, right? Yeah. You are inherently betting on the future every time you invest. Yeah. We have these talks, I think, as does everyone, where you ask, well, what if everything just goes downhill? What if XYZ happens? And I remember Cheryl and I were having this discussion in the car just recently. And I said, well, think about this. the biggest companies in the United States. Like, what do you think? Do you think Coca-Cola is going to go under in the next five years?

1:11:23And she goes, no, no, that's not going to happen. That's what needs to happen for this collapse to happen that some people worry about. Just think of all the different, I'm sitting here looking at an Apple computer right now. Do you think that Apple's going to go bye-bye in the next five years? No. You've got the smartest people in the world that run these companies. And certainly anything can happen and they could go under. But imagine these brains get together and think about how do they protect their own livelihood. And it's going to be to make a better product, remain relevant. And on the small company side, it's how do I become attractive to be acquired?

1:12:10Most of these fintech companies that I've chatted with their founders over the years, I know Paula and you know, these fintech founders are like, I would love to become a huge company, but at the very least, I would love to be attractive enough that I get eaten. Even then there's this optimism. Right. Built to sell. When I play the game Acquire, my goal is to invest in the companies I think are going to get eaten. I don't always win, but I win a ton. So if it works at a board game, it must work in real life. Thank you for the question, Greg. That was a fun discussion. I think my optimism is a contrarian position.

1:12:53I also don't think you have to be 100 % optimistic. I think you just have to be optimistic enough to think that it's going to continue. that the economy will continue. You can still think, Greg, there's going to be a dystopian future. Oh, I am way beyond that. I am massively optimistic about the future. We can save that for a different episode, but I think our current lives are going to look primitive from the point of view of somebody in 21, 25, 100 years from now. I think I have a healthy amount of pessimism. I think I'm widely optimistic. But I also think that even if today seems primitive, are people going to be happier?

1:13:39But that's a whole different topic. We can get into that in a different episode. If someone wants to ask a question around that to cue that discussion, I would love to have that. Please don't. Please do. Somebody please call in with that one. Oh, man. I got to keep my mouth shut. Because I can make the case. I'm going to make the case that our lives in 100 years in the United States will be substantially better than they are today. I think we'll be better. I don't know that we'll be happier. How could I be happier than being here with you right now? Oh, well, thanks, Joe. Joe, I think we've done it again.

1:14:18Where can people find you if they'd like to hear more of your happiness? This is a big week, Stacky Benjamins, because every week we celebrate Halloween with a whole week of Halloween goodness. On Monday, Chuck Jaffe joins us every year. He has this economic game that he plays with trick-or-treaters and we hear about his new game this year. So instead of kids just getting the trick-or-treat, they get an economics lesson. Would you rather do A or would you rather do B? And it is so fun and it's always kind of marks the week. On Wednesday, as kind of a bam, bam to what you're doing here on Afford Anything.

1:14:54We're talking to Heather and Doug Bonaparte, but we're turning the conversation around the scary discussions and the horrors of having bad communication, exploring how do we stay away from the negativity, which is a great way, a fun way for us to handle it. If you know Doug and Heather from Paula's interview, you'll know how fun it's going to be with them. And then third on Friday, our roundtables talking about horror stories, about financial horror stories in their life. So all things scary and money over at the greatest money show on earth, Stacking Benjamins. Wonderful. Well, Joe, thank Thank you again.

1:15:40And thanks to all of you for being afforders. If you enjoyed today's episode, please do four things. First and most importantly, share this with the people in your life, friends, family, neighbors, colleagues, anyone who has ever recommended Ready Player One. You took mine. How could you take mine? I came here with one thing. Oh man. You know, I've never read the book. For people with Ready Player Two. Okay. Wait, should I read the book? If somebody cues this discussion that you and I are going to have around the future 100 years from now, I should read Ready Player One before we have that conversation, yeah?

1:16:18I mean, I don't know that it's going to help with that discussion, but I think it's a great read. It's a very good read. Yes. And to Greg's point, the movie doesn't do it justice. The book is so much better. All right. You know what? If someone prompts us to have the optimism versus nihilism discussion. I'm not going to take the nihilism part, just to let you know. The complete over-the-moon optimist with the healthy dose of pessimism. But I will read that book in advance of it, just so I've got the basis. You'll like it. It'll be really fun. All right. Well, so share this with the people in your dystopian book club.

1:16:56That is the single most important thing that you can do to spread the message of FIIRE. Number two, open up your favorite podcast playing app and please leave us a review. And while you're there, of course, hit the follow button so you don't miss any of our upcoming episodes. Number three, subscribe to our newsletter, affordanything.com slash newsletter. And number four, join the community, affordanything.com slash community, where you can have conversations about these episodes with like-minded folks. Thank you so much for being part of this community. I'm Paula Pant. I'm Joe Salcihai. And we'll meet you in the next episode.