Q&A: She's Broke. He's Rich. And You're Asking About AI Stocks.

28:51Thanks so much for your guidance. I always learn so much from you both. Daniel, thank you for the question. And first, congratulations on buying the home. I'm very happy to hear that the last time you called in, we gave you advice that helped you buy a home. Now, to address your question about what to do with your surplus cash, I want to talk about the aspect of your question in which you discuss the possibility of paying off the mortgage. And here are a handful of thoughts on that. Number one, as you point out, the mortgage is 3.5%. Inflation, as we all know, is right around 3 % currently. The Fed is shooting for a target of 2%, but they've been struggling to get there.

29:35Given that the interest rate is pretty darn close to the rate of inflation, that is one data point. It's not a complete argument, but it is one data point in the don't pay off your mortgage early camp. But there are a few other things that we should consider. Number one, you mentioned that you want to retire early in about 10 years. I am very much a proponent of the idea that, if possible, have a mortgage paid off before you've retired. If you were to hold on to this home, that would be an argument in favor of paying off the mortgage. On the other hand, you've also mentioned that you don't plan on holding on to this home, which means that if you're going to sell this home in four or five years, I'm not super excited about you paying off the home.

30:28You know, if you were going to hold onto this home forever, I'd say, hey, given that you want to hold onto it forever, given that you want to retire in 10 years, why not jump that amortization clock? But given that you're planning on selling this home and using the equity to buy a different home, the home that I want you to pay off is the home that you own when you go into retirement. And in order to facilitate that goal, putting this money in a taxable brokerage account or putting this money in a high-yield savings account, we can talk through the pros and cons of those two options in a moment.

31:06But putting this money in some type of a liquid account and then using this money to buy the home that you are going to own at the time that you go into early retirement, that's what I'm far more interested in. because the benefit that you get from jumping the amortization clock goes away once you sell the property. Now, you also asked, is there a certain interest rate at which my decision would change? You know, is that interest rate 5 % or 6%, 6.5? That would definitely influence my answer. You know, the wider the delta between the inflation rate and the interest rate, that certainly has an influence on the answer.

31:47But the bigger piece of my answer is not going to be based on the interest rate, but rather based on your specific career goals. Because if you had said, I am a tenured professor, meaning I have job security, and I love what I do and I want to stay in this role until I'm 100, then I'd say, hang on to that mortgage because you can arbitrage that. But that's interesting, Paula, because I don't necessarily feel that way. Even if he, imagine tenured professor, job security, wants to stay in the job to the age of 100. Yeah, still may pay it off, but I can get to that. Yeah. Versus somebody who would call in and say, hey, I'm an entrepreneur or a small business owner, therefore I have very volatile income, and also I want to retire in 10 years.

32:36All right. That all paints a case for pay it off. Security of cash flow is your rubric. Exactly. Exactly. Much more so than the interest rate. For me, it truly comes down to Daniel timelining his goals. You've never heard me say that before, Paula, because I don't know if he's ahead or behind for his retirement goals. And I think for me, that shades this whole question. If he's ahead of the game, if he's already ahead of the game, then why not secure the mortgage as well? If he can do whatever he wants to do and he'll be financially independent, then you know what, let's make it easier on him and just pay off the mortgage.

33:16And again, it's funny, but for a different reason, I also agree that the interest rate doesn't matter as much because people that are happy during their retirement years just have no debt. And at that point, Paula, it's a little bit of a flex because it's not so much an interest rate decision or have more money decision as it is a happiness decision. I think I arbitrage the interest rate when I need to do that. If I don't need to arbitrage the interest rate and my goals are funded, then I just have less debt, which is also why looking at his three options here, brokerage account, pay off the mortgage or cash bucket, I will eliminate 100 % the cash bucket idea because it's 10 years away.

34:09Why am I going to build three years of cash when I'm 10 years away? Now I might put some money in a 10 year investment or a seven year from now investment that I'm going to change to a cash bucket later on. This is where the arbitrage to me makes sense. Why would I put money in cash that you just told me I'm not going to use for 10 years. I wouldn't do that. So cash bucket, no. Putting money in investment, almost like we told Veronica with a car fund, right? To buy the next car or for the car repairs, I might segregate some money that is my three-year cash 10 years from now, but put it in appropriate investment based on seven to 10 years from now.

34:51I'm all about that. But again, it also depends on, is he ahead or is he behind? Does he already have enough money to do that? So if he has enough money now that he can transfer some money that's for financial independence and transfer that into that three-year cash bucket that he's going to want later, then I wouldn't do that. I'd pay off the mortgage or I'd do the brokerage account, depending on which way he decides to go there. I don't know. What do you think? You've got this look of consternation on your face. Well, I'm thinking that his two biggest ticket goals coming up, one is to buy a home in the next four to five years, and the other is early retirement in about 10 years.

35:31Now, buying a home in the next four to five years is going to be partially or entirely funded by the sale of the current home. And then early retirement is, of course, funded by his portfolio and his investments. Yeah, 457, all the stuff he talked about. Exactly. That would be a reason for the cash bucket, by the way. I could get behind that cash bucket if there's a shortfall in the house goal and it's four or five years from now. Even then, it sounded like, and maybe this is my interpretation of his question, but it sounded like it was a soft four or five years. I had the same one, which is why in my head, I immediately discounted it, Paula.

36:13Right? Exactly. Exactly. I really got the impression that when he said four or five years, that's an ish. And it was a pretty soft and flexible date. And so for that reason, I would bias towards putting this money into a taxable brokerage account, into some type of investments that could grow. Because put the money in now, in 2025. and if by 2029 or 2030 it has gained in value, cool, you can empty that out and use it towards that home purchase. But let's say that in 2029 or 2030 we have a recession. The impression that I got from his question, and Daniel, I want you to, only you know if this is a correct impression or not, is that if we had a big market recession in 2029, 2030, I get the impression you'd be okay with delaying the home purchase by a year or two until the markets recover.

37:14And I like those goals that are flexible like that because you can be a little more aggressive with your investments. Right. You can go ahead then and wait for them. If it takes a little longer for the apple to mature, you can wait on the apple and you're going to be okay. So you get to five years, you're like, okay, my investments aren't doing that well. I'll just wait. I'll just wait it out. And if you can afford to wait, then you can definitely put your investments in a place which historically have had a higher rate of return. Yeah. A fixed timeline requires more conservative investing. Which is a nice segue, I think, into the brokerage account question.

37:53Because part of what I was confused by was when Daniel said, I'm putting money into my HSA and my 457. So is the - Does that cover the taxable brokerage portion? Yeah, I was confused by that too, because how would that be taxable? Yeah, if the 457 is a Roth, then the money you could put in, you can take out flexibly. And certainly he talked about having receipts, so then he can reimburse himself for the HSA because there's no timeline on when you reimburse yourself for that money. So now he has some flexibility. Assuming that, Daniels, what you're talking about, that your 457 is a Roth and the HSA, that's why you mentioned that you keep receipts.

38:32I would still say no. And the reason I would say no, Paula, is because I really like that money, this tax-free, potentially tax-free money to offset tax brackets during your later years. So then, and as an example, with the Roth, with a Roth, they have these rules that you can use the Roth for college expenses. And I used to have clients that would go, well, I'm going to save into the Roth for college expenses versus a 529 plan. And while you can do that, the Roth for me is such a great weapon to use during later years to offset pre-tax money that you might have. So Daniel, what I'm talking about is this, let's say in the future, trying to live on$100 ,000 a year and the tax bracket line is at 80 ,000 bucks.

39:22You take out$80 ,000 from that pre-tax position. And then the other 20, you take out of that Roth. So if you leave the Roth there, you leave the HSA money there, you're now living in the bracket that's below 80 ,000. Well, excuse me, you're living in the bracket that's above 80 ,000, but the government thinks you're living in the bracket that's below 80 ,000. So you're getting the flexibility to play the tax bracket gain during retirement. Not as hard as it sounds, really easy to set up for once a year. You take a look at what the new brackets are going to be and just adjust the amount coming out of your pre-tax plan one time per year.

40:04And then that changes everything. Not hard, but for me, that's what the Roth and the HSA are for. Not for those early years. I would use brokerage money for those early years. Right. I agree. The Roth is an incredible tool for retirement withdrawal strategies, and I would not want to lose that capability. How often do you hear that, Daniel? Paul and I say, we agree. I know, right? Scary. Scary. Versus if you put some money in a taxable brokerage account and then you want to tap that money five years from now, assuming that the account has grown in value, it's pretty straightforward. Well, and here's the cool thing.

40:46And it's ugly. The first part of the sentence, Paul, is ugly. But let's say that it hasn't grown in value. Things have gone bad. But you've had some of life's kick in the gut, like we just heard from Veronica. Yeah. Even if it's lost money, it's still available for you to go get. It's not what you want to do, but it still is in a place where, you know what, if I really, really need cash. And the other thing is, well, we're having this discussion with the cost basis of everything starting in 2025. But the reality is he and not just you, Daniel, but everyone listening, most people likely have some investments that you've made in 2017, 2018, 2019, 2020.

41:28Those investments have grown in value. And so let's say that you make an investment in 2025 and that by 2029, that investment has lost money. If you have to harvest that, harvesting that loss can offset some of the taxes from harvesting the gains from investments that you made earlier. Wow. Yeah. There are plenty of tax planning moves you can make inside that brokerage that'll minimize your tax burden. And I feel like just in general, Paula, on that note, that we overthink the tax burden of the brokerage account anyway. Yeah. Like if you're in low-cost index funds, the true tax friction isn't nearly as high as it is between our ears when most of us think about it.

42:18I got to make sure I tax shelter this. The turnover in an S &P 500 fund, still not that high. The taxable portion, even in a great year, it's not going to be that high. Right. And if you're harvesting long-term capital gains, I mean, Heck, just think of that as additional side hustle income in terms of its tax treatment. Yeah. Cha-ching. To summarize, Joe, it sounds like you and I are both on the put the money in a taxable brokerage account. Don't pay off the mortgage early train. Well, maybe. Oh, okay. Okay. Maybe. Again, if those goals are funded, if those goals are funded and do what he wants to do, my next priority then is just pay off debt.

43:02Interest rate doesn't matter. Pay off the debt. And so much for the agreement. Okay, then we sort of agree, but sort of disagree, which makes for the best answers. But as you know, Daniel, I'm right. And I'm left. I did not see that coming. What a change in direction that was.

43:28Thank you, Daniel, for the question. Please call back and let us know what you decide.

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47:25Our final question today comes from Anonymous. Hi, Paula and Jo. Everything I'm reading in the news is saying that AI stocks are in a bubble, much like the dot-com bubble in the 1990s. If the AI bubble is expected to burst at some point, is there a safe way to cash in on that? I know that selling short is a very risky and dangerous thing to do, so I don't want to try that. Are there other ways to make money when you expect a bubble to burst? I heard that another possibility is to buy a put option. What can you tell me about them? Are they a safe way to make money if the AI bubble bursts? I know that nothing is guaranteed, but I would like to hear your insights.

48:10Thank you very much. Anonymous, thank you so much for the question. And before we begin the answer, we have to give you a name. Oh boy. Since your question relates to AI, I've, I've never seen the movie her, but it was a 2013 film about a man who developed a relationship with an AI and that AI was played and voiced by Scarlett Johansson. So in honor of the movie her and your question about AI, we will name you Scarlett. Awesome. So your initial thought, Paula? First, any predictions made by the financial media should always be taken with a massive grain of salt because the financial media is never held accountable for the predictions that they create.

49:04When people in the media don't have anything to talk about, they fill airtime by speculating. And they're never held accountable for whether or not that speculation comes to pass. And if you want to speculate on how a future might play out, there are an infinite number of possibilities that you can talk about. And many of those you can build a reasonable case for. So given the need to fill airtime, given the fact that negativity sells and negativity generates more eyeballs and clicks. It is incredibly common for the financial media to prophesize doom and gloom, to prophesize negativity, because that's what grabs people's attention, which therefore grabs advertising dollars.

49:53That isn't to say that all predictions fail, but it is to say that there is a negativity bias and that pessimism is predicted more often than it comes to pass. If you predict a pessimistic outcome 100 times and that pessimistic outcome comes to pass 10 out of those 100 times, well, great. Then you've called 10 out of the last one recession. Yeah, I think this is why some people still are in the news, even though you kind of wonder why they are. And I'll call out somebody, Robert Kiyosaki. You know, at the beginning, I like a lot the book Rich Dad Poor Dad. I like the meaning of it now, investing all in micro cap stocks and some of his types of real estate ventures.

50:44I don't know about that. But the early parts of the book about saving money versus just living on a paycheck and the difference in taxation you have, it's a great way to get that through our heads about how important it is to be an investor and not just a worker. But Kiyosaki, since that book, has just missed her negativity and the sky is falling, the sky is falling, the sky is falling because… He's totally off the deep end. Yeah. And he's endorsed products that are made based on fear. Right. So he profits from you being fearful. But this guy called it this February when the market went up. He called it again this summer when the market went up.

51:28And now he's calling it again. And I saw a pretty decent sized publication still giving him credence. And I'm like, why are we making Kiyosaki headlines when Kiyosaki is wrong nonstop? All the market's done has gone up and up and up. And all Kiyosaki says is that the sky is falling tomorrow. It's going to fall tomorrow. You know, if you want to understand what people believe, don't listen to what they say. Look at how they invest. And unfortunately, with a private investor like Robert Kiyosaki, his portfolio is private. So we don't actually know how he invests. People can say whatever they want.

52:05What they believe shows up in the way that they manage their portfolio. Which is why the friction in this discussion and why this is, you know, is this quote different? Is that, as we said at the top of the show, Paula, we've got Michael Burry now, famous. The average person knows who Michael Burry is now because of the movie The Big Short. He's the investor who was played by Christian Bale, who bet that the housing collapse was coming. And by the way, what is interesting is that Burry has put money behind a lot of stuff that hasn't come true. And yet, because of one really, really good call, I think Michael Burry put it.

52:45Well, and Paula, in this case, one point one billion with a B dollars on the downfall of AI is a lot of money, even by Burry standards. So we have a variety of perspectives. And as I mentioned at the Open, we've got Michael Burry, who is, to his credit, putting his money where his mouth is. And I respect that because, again, never listen to what people say. Look at where they put their money. We also have Andrew Ross Sorkin. He just came out with a book called 1929. It's a deep, deep study of, of course, the Great Depression and all of the factors leading into it. And so as a scholar of the Great Depression, his take on AI is that AI itself as a technology is transformative and is, you know, history will be clearly defined as pre-AI and post-AI.

53:46It is that much of an inflection point in the history of the human species, the history of our civilization. Right. We will be remembered by future generations as those people that existed before AI in the same way that we look back and say, oh, those were the people that lived before electricity or those were the people that lived before airplanes. but truly actually in a way that's even much bigger than that because every technology that we have had up until this point and Yuval Noah Harari makes this point quite beautifully every technology that we have had prior to this is one that we ourselves have had to operate airplanes nuclear warheads every piece of technology has the central decision maker and the central operator has been human.

54:43And now for the first time, we have created a technology that itself can think, that itself can make decisions, that itself can execute operations. That has never happened before. That is what makes this such a game changer. And we are on the verge of probably soon creating an AI that is more intelligent than us. Back away. Than you? Than all of us. I mean, clearly me, but you? Come on. And when that happens, as several people have talked about, there is the risk that we become the equivalent of house cats in terms of our relative level of intelligence. You know, you think about a house cat, they are utterly dependent on external circumstances that they do not understand.

55:36And that they could not understand. So you're saying the Pixar movie Wall-E is now coming to life. I've never seen that. You've never seen that movie. Why did I do it? Why did I even make the, yeah. In Wall-E for people like Paula who are Neanderthals and have not seen this beautiful film, people, humanity pretty much gets carted everywhere. And AI kind of does everything for us. We just kind of sit in a chair and sip drinks and you have food brought to us and we pretty much do nothing. While the robots of the world, aka WALL-E and other robots, do all the heavy lifting. And that movie is a little bit of funny.

56:22It's a kid's movie, but it's a little bit of a commentary about what we're talking about. There's a little bit of looking ahead. Maybe the future is not so far away. You know what, Paul? It strikes me, and I'm glad that you're making this point, that two things. Number one is I look back at the big downturns and I think about profiting during those downturns. And during both of these, I was a financial planner, not only guiding my money, but helping other people guide their money. And I'm thinking if I'd had a different view from 2000 to 2002, was there some way I could have profited on this versus minimizing losses?

56:59And it strikes me that, you know, because Scarlett brings up that timeframe, 2000 to 2002 and the dot-com bubble. And I think to myself, did the internet go away? Was it something that was a fad and ended? No, it cleared out companies that truly weren't competitive or that people had invested too much money in. But the long-term issue was it stayed around. We look at the crisis of 2008. That fueled by real estate prices in the big short, has real estate gone away? Has real estate investing not been a thing? Of course, it's still a thing. So the problem that I have with this whole discussion is we get into this predicament where I'm betting against it until I have to bet for it again.

57:57There has to be a time when I change my viewpoint, if I think, so if I think AI is going away and it's ridiculous, well, heck, I want to bet against that. Like there was a time that if I were smart and, and, and this could have been at the very beginning, cause I remember saying this out loud as I was enrolled in movie pass. And I think most of us remember movie pass by the same token, I was saying out loud, this is the dumbest thing of all time. I don't understand how they make money on this deal. I understand how me as a user comes out ahead on this deal, but I don't understand how MoviePass makes money.

58:34That was a single company that was built on a pretty fun idea that was a house of cards. AI is not something that broadly, I don't know that I want to bet against. Because now what I'm forced to do, which I would have been forced to do back in 1999 and in 2008, I would have had to bet in 1999 which web companies were going to succeed and which ones were going to fail. Right. Exactly. You'd have to distinguish between Amazon versus pets.com. And think about this. Think about Google as an example, which succeeded and excite.com, which did not succeed. Excite.com and Yahoo, which is still around, but is a ghost of what it used to be.

59:22Excite and Yahoo were brought by the founders of Google. They were brought before Google was even a big deal, their plan. And their plan was, let's get people a search engine where we very quickly remove them from the site. and Excite and Yahoo made money by keeping you on their site as long as possible. AOL, the AOL model, right? Keep people in the ecosystem. So back in 1999, if you would have told me that the winner of these three was going to be the company that gave away the most money and set you away from their profit center as quickly as they possibly could, I would have said in 1999, there's no way in hell Google's going to be exciting Yahoo because exciting Yahoo are going to have so much more money because they get paid by keeping you on the site, reading their articles, doing their stuff.

1:00:23And Google won. Google clearly won. So can I bet who's going to win? I mean, the problem with AI right now, I believe, is that the field is so full of players. The bubble is there's five bajillion players now fighting for what's going to end up being, And I don't know, look at tech today, 10 big players, 20 big players, and then a bunch of medium-sized players below that. You know, we can even maybe say four or five huge players, right? And then a bunch of medium-sized players. Who's going to be the big players? Do we know? Do we know that OpenAI is going to beat Claude? I don't know. For me, I don't know that I want to play this game.

1:01:04Right. I mean, it would require, you remember, all the search engines, Dogpile, Ask Jeeves. Ask Jeeves. Ask Jeeves, right? That's a great idea. And in fact, that company actually still clung to life. They eventually went on to buy about.com, which led, of course, to the joke, what happens if you ask, ask, about, about? We're here all weekend, folks. Tip your weight, Steph. But right, in the days of Dogpile and Ask Jeeves and Google, with all of these being equally viable options, you would need an inordinate amount of talent to know which ones would crater, which ones would sort of bump along, but as shells of what they could have been, and which ones would be the runaway winners.

1:01:51So it's not something that you'd want to bet on. And going back to the broader discussion about, you know, is AI overall in a bubble? I mean, so you've got kind of a montage of various takes, right? So you've got the Andrew Ross Sorkin take where he says, look, this is a game changer for our society, but there may be overinvestment in specific companies, right? So his is a little bit more of a tinged with pessimism, kind of leaning slightly more towards the maybe these companies are overvalued. That's his take. Again, he's the guy whose expertise is 1929 in terms of his latest work. But then you've got Jerome Powell, the Fed chair, who says this is absolutely not comparable to the dot-com bust because during the dot-com bust, there was an inordinate amount of investment in companies that did not have earnings or profits.

1:02:49And so those weren't actually companies, they were ideas. Whereas today, the investment is going into real companies that already have earnings, that already have profits, that already have a business model, it isn't that money is being flooded into ideas in a speculative manner. Money is being flooded into companies. And the only question is, is there too much money relative to an earnings multiple of these companies? But if you're asking that question, if you're asking, is this earnings multiple too high, then necessarily you are talking about a company with earnings, which was not the case during the dot-com run-up.

1:03:32To directly answer the question, if Paul and I cannot, Scarlett, talk you out of speculating on this, I'm with you selling short. You can lose an infinite amount of money, so I would not sell short, meaning that you profit specifically when shares go down. So the way that selling short works for people that don't understand this, I, as an investor, don't own shares in an AI company. I borrow shares from my broker and I sell them to Paula. So I borrow shares. Now there is a cost of borrowing shares, whatever the value is that the shares that I borrow, my broker charges me an interest rate on those much like a credit card.

1:04:17Right. So I'm going to have an interest rate that I pay during the time that the shares that I borrow. So I borrow them. I sell them to Paula. What I'm hoping for is that Paula, the value of those shares go down during the time that they go down, I buy them back. Now for purpose of illustration, I'm going to say I buy them back from Paula. Well, it's a huge market and there's lots of people, but I'm going to buy them back in the market so that I can repay the loan. So what happens is this, I borrowed the shares, I sell them to Paula, I immediately get money in, right? So I get a bunch of cash today And then later on, what I'm hoping is, is that as those shares go down in value, that then I buy those shares back and I get to profit the difference between the share price when I bought it lower than the share price when I sold them away.

1:05:12That's what selling short means and people make money then. And the reason you can lose infinite amounts of money is if the shares are selling at$3 a share, and I believe it's going to go down to two and the shares go up to 100. Every share now I owe another$97 on top of the$3 that I was given early on when I sold the shares that I didn't own. I don't have to repay a hundred, even though I only sold them for three. Oops, big problem. So you can lose infinite amounts of money. So that's why Scarlett, we totally agree with you. You can lose tons of money. Now buying a put is an interesting option strategy here.

1:05:58And it is a finite amount of money that you can lose. So you can pick an AI company and you can also pick an amount of time. So if you're going to define this downturn is, I think six months from now, the price of AI company X or AI index X, now that we have ETFs, you can do this with a lot of exchange traded funds as well. Pick an AI index or an AI stock. I believe six months from now, it's going to be lower than it is today. I will buy a put. Now, a put is an option to sell. So let's say it's trading at$100 today. I will buy that option, which is going to cost me an amount of money that adds to the amount of money I'm going to need that stock to lose for me to break even.

1:06:48So I want to sell it for a hundred and I'm going to keep that option open for six months. At some point during that six month period, if it goes lower, I need to exercise my option. That means I need to pick a day, pick a time. I need to exercise the option, which means I am going to sell these shares for 100 that now are trading at 95. So it's trading at 95. I buy the shares at 95. I go and I buy the shares at 95. I exercise my option to sell at 100. Boom. I profit$5 per share. Well, not quite$5 per share because I also had to pay the premium to buy the option in the first place, but almost$5 a share.

1:07:32That is a much lower cost way, but it's still betting. This is not investing. This is a way to bet on AI going lower over, let's say, a six-month period or the next year. You can do two years, three years, two months, whatever timeframe you want. You look at this thing in your brokerage account called the options chain. You pick the stock, you find a little window that said options chain, and it will give you the different puts and different prices. And you will notice that the pros, we talked about this when we talked about options recently, the pros have priced this really well, really, really, really well.

1:08:11Because anything that on paper looks like it might make sense, once you see the price of doing this, usually convinces you that you're not going to make any money. So I wouldn't do either of those. What I would do if you are truly concerned that AI is overvalued, which is not necessarily a premise that I would agree with, but if that is your position, I would ask the question, assuming that the value of these major tech companies that have invested heavily in AI tank, assuming NVIDIA tanks, assuming Google tanks, assuming the Mag 7 plummet, what are the companies that will be least affected? And what are the companies that would be best positioned to use that as an opportunity?

1:09:06And then I would, instead of betting against those companies, I would make bets on the sectors that I think would be least impacted. So for example, maybe I'd be directing more money towards a utilities sector or railroads. P &G. Yeah. And don't get me wrong, P &G is using and railroads are using AI. Right. But they're more on the customer end. They're the customers of these companies that are just focused on whether AI booms or not. Right, exactly. Which I think ultimately, Paula, is where, which is why AI is not going away. Because during the first run-up, everybody is thinking about the companies that are involved in the building of the web.

1:09:53As an example, Cisco Systems, right, was huge in the 1990s because they were kind of the plumbing for the entire web system. Cisco Systems has been a good company since then, but it's not been nearly the darling like NVIDIA that is kind of the first wave. Cisco was a first wave because they were building out the initial internet then. But what ended up happening was a ton of companies that you don't associate with the internet. We'll take Procter & Gamble as an example. The true money was in Procter & Gamble then got to have an internet presence in all kinds of crazy ways. The Pop-Tart website for a while was kind of the hottest thing online.

1:10:31I remember for a while. The Pop-Tart website? The Pop-Tart website was badass. They had so many fun games and things you could do. Wow. And the Pop-Tart marketing team was amazing. But it truly is. How are people using the web now in different ways, right? And all these companies, fashion companies, theme park companies, companies selling soup, whatever it might be. these companies that use the web then and that are going to use AI, those companies are the companies I think you start looking under the hood at. If you're really going to speculate, that to your point, Paula, is where I'd be speculating.

1:11:10What's a company that is going to profit from AI, but the market hasn't thought about it yet? Is the funeral home industry going to profit from AI? And are there companies in the funeral home industry? I'm grasping here, but you know what I mean? What are some of these areas? Well, yeah. You think about how much work goes into optimizing a cemetery grounds for burial plots, right? Because you need plots of very specific sizes. And then the grounds have, especially if there's a hill, there's all these slopes and there's a runoff. And it's actually an incredibly complicated thing to try to figure out how to maximize a piece of land with all of its terrain for the optimal number of burial plots.

1:11:57And AI could probably, at a minimum, review your work, but perhaps improve upon it and make that land use more efficient. Just in case you're wondering, this is not investment advice. We're making it up as we go right now. But there are a lot of people, Paula, dying to get into those places.

1:12:19That's the second want-want of the episode. In fuego. It's my finest moment, Afforders. Finest moment. Like you, Paula, I think that's a much better bet. Right. And you know what? Then I'm not betting on when it ends. Then I'm not against it until I'm for it again. Right, right, right. Right. And if NVIDIA collapses, the collapse of NVIDIA, with the exception of the overall reverberations across the market, the collapse of NVIDIA would not have huge impacts on the funeral home industry. Hypothetically. Yeah, probably. I'm guessing. And so rather than short selling, rather than puts, if I were to start making bets against AI, which I'm not endorsing that viewpoint, But if I were to do that, yeah, I would be making bets for the companies that would be least affected by a collapse or the industries rather than choosing specific companies.

1:13:19I would be going sector wide and choosing industries that would be least affected by the collapse. I would also, by the way, be looking at countries. If I'm going to invest in a country-specific ETF, I'd be looking at the countries that have so far been the laggards in the AI space. Oh, this is my favorite. Right. You shouldn't have a favorite, and you know my favorite. I've said it, emerging markets. I mean, yum. Right. But what are the countries, what are the specific countries that have just really been behind the ball here? And again, not investment advice when I say emerging markets. Loving emerging markets the way I do.

1:14:00It says more about me as a guy who likes to travel and a guy who likes to think about the future than about investment results. Because as you know, Paula, emerging markets from time to time has kicked my ass. Right. Well, there are a lot of issues with emerging markets. I mean, you take a look at Nepal, a perfect example. We just had our whole government just collapsed. Oh, big deal. You know, so sometimes that happens. Politicians helicoptering out is not a – Right, exactly. It doesn't generate investor confidence. Yeah. But if you want to inoculate your portfolio from what you think might be an impending AI collapse, I would look there.

1:14:45And of course, I would also look to bonds. Clever reach for the inoculate, by the way. Nice job. Thank you. Thank you. That's a lot of points on the Scrabble board. Oh, the board game industry. Board game industry would probably be relatively safe from an AI collapse. Yeah, but you look at the board game industry right now. Sorry, I'm going to nerd out for a second. We shouldn't have brought that up because tariffs are smoking the board game industry. I've seen so many companies collapse because the cost of building a board game in China, or actually even in Europe where there's some infrastructure versus in the U.S.

1:15:23where there has never been any because U.S. made board games after Monopoly and Life. I mean, not a lot of people. And even those board games ultimately were made in China. Now that tariffs have come about, this beautiful cottage industry is kind of collateral damage to the tariff thing. Which is interesting just from a different perspective. I mean, look at what we just there. We were talking about AI, yes, but if we talk about funeral homes or we talk about the board game industry, it's very easy to get myopic and only look at one issue and go, ooh, AI hasn't hit that yet. And yet I just gave you a whole different thing.

1:16:07I mean, when you look at an industry, you really got to look at all the different factors. Yeah. I mean, okay. So you think about caskets. Now let's say that there is some type of infection that runs through a set of trees and it impacts forestry, right? Anything that impacts the lumber industry would likely impact casket production, which in turn would then have impacts on the funeral home and the cemetery industry. And this, I think your job is your job if you're a sector investor, you're an individual stock investor. And the reason why we tell so many people not to do it is because of the fact that your goal is to figure out what your Achilles heel is.

1:16:50And every industry has an Achilles heel, just like every financial plan has an Achilles heel. And if you as an investor investing in something and you say to yourself, there is no Achilles heel, you haven't looked hard enough. there's no investment that doesn't have one and the last thing you want as an investor is to have the big surprise when something comes out of the blue and you think i didn't see that coming is you want to try to eliminate that as much as possible when you make an investment so that when something bad happens at the very least you go okay all right i get it i knew that could happen and it happened.

1:17:31And then you can think ahead of time too, how would I respond if this does happen? But that's so much more work than VTSAX. Right. Yeah, exactly. And with how much more juice are you going to get? If you do a fully diversified portfolio, are you going to get by doing all this legwork versus go ask your boss for a raise and make more money? Yeah. Or if you are worried about the market, just have a slightly higher bond allocation. If the evaluation of equities is making you queasy, maybe just have a slightly higher bond allocation and call it a day. I'm sitting here wondering if cemeteries or funeral homes are publicly traded or if they're all, well, because they're more likely held by private equity, right?

1:18:19They are a hundred percent. I spoke to a friend of mine. He was actually a great resource for stacking Benjamins, Paula, Scott Mueller sold his funeral home to private equity. Minneapolis to private equity. And he had this horror story of all the bad stuff that happened and he ended up going back in and buying it back. Oh, good for him. He bought his funeral home back. By the way, he sent me a t-shirt because Scott has a wonderful sense of humor that says I'd rather be seen than viewed.

1:18:47And if you know funeral home directors and just a phenomenal joke, but I wear it from time to time because it's such an inside joke. I can see when people see that t-shirt, they're like, I don't know. What are you talking about? Apparently, funeral home humor is dying. On that note. But wait, I'm just starting. Well, thank you, Scarlett, for the question. Thank you for the discussion it generated. These are my favorite questions because of these types of discussions. Paul's like, but we got to go quick. Joe, where can people who are on this side of the topsoil find you? Coming up is one of my favorite weeks, Thanksgiving week at the Stacky Benjamin Show.

1:19:32We have a phenomenal lineup every year. On Monday, Regina Conway from Slick Deals comes on. And what I love about Slick Deals, and again, I have no affiliation with them. I don't get any money from them. But it's this community, Paula, of people who know how to stack these Black Friday deals. So if you take this credit card and you take this coupon and you take this store offering and you add those all together, you get half off this thing that you wanted in the first place. So we talk about responsible shopping and Black Friday on Monday. Then on Wednesday, Bridget Carey from CNET joins us. She's done this the last eight years, I think, nine years.

1:20:07Regina, like the last five or six on Monday. On Wednesday, though, Bridget with CNET talks about there's always new hot tech for the holidays and people go and they buy the hot doorbuster TV. and it turns out not to have enough HDMI ports or it turns out to not have any of the connectivity. And it was three quarters off for a reason that you didn't know. So Bridget always gives us the good, the bad, and the ugly of tech on Wednesday. But Friday, while everybody else is spending money, I, every year, because nobody was listening to Stacking Benjamin show, they were all spending money on Black Friday.

1:20:44So I said, all right, this one's for me. And now it's one of our most downloaded shows, most streamed shows every single year. It's our annual board game episode. I bring in somebody from the board game industry and they give me two top fives. The first one is top five games that have either money or an economic engine. They don't necessarily teach you money, but they appreciate it and get you involved. And you love being in the money slash business culture. And then the second top five are most people that don't love board games the way that I do. This is the time of year they go to Target or Walmart and they pick a game based on the cover art.

1:21:22And that game sucks. And it was a waste of money and a waste of time when you're with your friends and your family. So these board game insiders do a second top five, top five games to play with friends and family over the holidays where you won't waste your money. And that episode every year is fantastic. And this year we have board game store owner, Kylie Primus, who has one of the top TikTok channels for board games. And he is a board game store owner in Pittsburgh, a store called Games Unlimited. And Kylie knows more by far about board games than most people that you know. And it's just such a warm, fun guy.

1:22:02He actually won Paula industry awards for innovation in game stores because of the fact that he's on TikTok talking board games and it's a fun channel. So anyway, Kylie's going to join us on Friday. So big, we got a big Black Friday, Thanksgiving week coming up on Stacking Benjamins. That is incredible. Wow, I can't wait to hear that. Nice. Well, thank you, Joe, for all of that. And thank you to everyone listening for being an afforder. If you enjoyed today's episode, please share it with anyone you know who's pessimistic or optimistic about AI. to the funeral home directors in your community.

1:22:41And the cemetery groundskeepers. Oh, and your friends at Greenpath Financial. Ooh, yes. And anyone you know who makes a car payment to themselves. Yes. To the person at the bank when you're paying off your mortgage because Joe's right on that one. To the people you know who have a side hustle that's bringing in enough to lead to the question, hey, what do I do with my side hustle money? Great people to pass it on to. Right? Yeah, share this with all of them because that is the most important way you spread the message of F-I-I-R-E. F-I-I-R-E, find out what it means to me. I just made that up. Oh, share it with whoever created the want-want sound effect.

1:23:24If you would please be so kind, also open your favorite podcast playing app and leave us a review. Write a few sentences about what you enjoy about this show because those are incredibly meaningful. I'll be reading them over the holidays with some turkey and some pumpkin pie. Make sure that you're following the show in your favorite podcast player and subscribe to our newsletter, affordanything.com slash newsletter. Thank you again for being an Afforder. I'm Paula Pant. I'm Joe Salcihai. And the words that I have said on this podcast many times, these are the words that I want written on my tombstone.

1:23:59I'll meet you in the next episode.

1:24:05Thank you.