Bloomberg Money: 'Gold Has Been in Bull Market for 25 Years'

19:40Mike Wilson:Certain equities are a good defensive asset, whether it be utilities or maybe staples and things like that. So there are many things you can do from a stylistic standpoint that you can protect yourself. Once again, what I think people have loaded up on now is large-cap growth stocks. And those have been great. and that's why they want to continue to own those. But just understand it, you're unbalanced, okay? So you better make sure you're going to be right for the next three, four, five years. This week, one of our stories that we feature is the American dream of owning a home. It is alive, at least in Grand Rapids, Michigan.

20:10Almost half of all new homeowners in Kent County are younger than 35 because the area is a high concentration of affordable homes and plentiful job opportunities. Paulina Cachero has been following this story and she joins us now. So why is Grand Rapids kind of bucking this trend, the national trend of first-time home ownership being out of reach for so many young people? Yeah, I think what's really unique about Kent County, Michigan, is that there's a relatively favorable ratio between home prices and income. So nearly half of its homeowners in 2025 were 35 years or younger. And that's pretty amazing if you consider that the average first-time home buyer today is 40 years old across the U.S.

20:50And that's the oldest in data going back to 1981. So it helps that Grand Rapids has a really diversified economy. Its population has been growing. And there's a lot of opportunities for young workers who are earning enough to buy a home. While across the U.S., I would say workers under 35, the price of a home is 3.6 times their income. But it's much, and Grand Rapids, it's much lower than that. Okay, it's much lower than that. But you wonder how it's going to stay that way because affordability is already eroding. You look at the prices at Grand Rapids and it's up a third in five years. So could you make the argument that Grand Rapids is just a few years behind everyone else, every other city?

21:33Yeah, it's there's definitely a lot of pressure on the market. We've seen prices go up about 34 percent in five years, as you mentioned. And inventory is still roughly 30 percent below pre-pandemic levels. And this is an issue we're dealing with across the U.S. housing supply shortage. And actually, what we're seeing in Grand Rapids is they're building homes at a slower pace at 5.3 % compared to 7 % nationally.

21:56Mike Wilson:What are people doing in Grand Rapids? I mean, I think of 1963, Froot Loops. Froot Loops were pretty much like Kellogg's and all that in Grand Rapids and Battle Creek and all that. What are they doing in Grand Rapids in this boom? We've seen that the wages have kept up. it's like 13 % higher than the rest of the state. So I think that being able to keep home prices relatively low while incomes are growing and there's a relatively young population has helped people be able to afford buying homes. It's not just about having cheap homes, it's having the economic opportunities to afford them as well.

22:36All right, Paulina Cacero, thank you so much. She's a member of our Bloomberg Money team covering stories that affect your money.

22:42Mike Wilson:Oh, thank you. This is great. Right now, this is important. Kristen Bitterly holds court full-time at the Citigroup shop in wealth management and had a global wealth at work. It really, really focused on retirement. I look at the risk of 74 as a failure. There's a huge percentage of America that's not getting retirement done. What's the biggest thing they could do to solve that other than just save more money? Well, I would say there's two things. One, we have to realize that we're living longer. So when you look at average life expectancy, it is increasing. The population above 80 is expected to triple by 2030, and the population above 65 is expected to double.

23:22So people are living longer, which means your money has to work for you longer. So the second kind of, I would say, error that a lot of people make is not investing early on. So saving, we do see savings rates that they've increased, but if you're not investing that money, and I heard Mike Wilson earlier today talk about the fact that, yes, there is an attractive yield on cash and short duration fixed income. But when you're thinking about what is my life expectancy, how long does that money have to work for me? If I don't invest, I'm going to be behind. And it's not just investing. It's also taking advantage of tax efficient vehicles and fee efficient vehicles.

23:55Like people think investing means just putting it into an account or putting into your 401k and kind of forgetting about it moving on. Absolutely. So I would say the first thing about being too overweight cash, we need to make sure that we're putting that to work. And whether that right amount in cash is 10%, 15%, we've seen those slightly elevated. It shouldn't be 30%. But you're absolutely right. Taking advantage of any type of tax-advantaged account or tax-deferred account, making sure that your wealth is structured in the right way is also critically important. And then also, there's more tax-efficient investment.

24:25So if you're invested in fixed income and you're a U.S. investor, look to the muni market. Look to some of these areas where your after-tax and after-fee returns are going to be more profitable for you. There are some people who take this to the extreme, right? There's the fire movement of financial independence, retire early, people who save very aggressively. I'm on that movement.

24:44Mike Wilson:I'm working hard. I think you're a little bit, you and I are past our prime when it comes to the fire. The surveillance casket's right over here. Yes, yes, that's right. I mean, the idea is to be able to retire in your 30s, 40s, and 50s and live your best life. But I'm sure there's traps that people fall into when they pursue fire at all costs. Yeah. I would also say though, the investors that we work with and the clients we work with, they are in specialized industries. So we work with lawyers. We work with professional services, asset managers, pre IPO, post IPO companies. A lot of our clients, they like to work.

25:17Like this is part of like, they enjoy their profession, they're ambitious. And so what we see is actually something different. They want to work longer. And even in retirement, there's a great organization that's called Luster, where it's founded by very successful women. And what they do is they say, like, this is actually like, I'm going to live my best life in retirement. I'm not fading into the background. I'm not giving up on my intellect and professional ambitions. I may do something different with my time, but I'm still very active and very busy.

25:44Mike Wilson:What I see day after day, this is a beautiful quote from Citigroup and Kristen Bitterly. Let's bring it up. And it's about the inertial force that's out there in our bad behavior. I'm as guilty of this as anyone. leaving excess capital, idling cash, hoarding cash far beyond the threshold, seriously penalizes long-term growth, inflation. It silently erodes the purchasing power of uninvested capital. Why do we do this? Start with, I mean, you're expert at this. What's the why of why we sit with cash up to our eyeballs? First thing is we don't teach people to invest. So when you think of our education in the U.S., yeah, you may be a business major and maybe you have some type of coursework in college.

26:28But many people grow. They could go to the best universities in the world and not actually understand financial planning, estate planning, and how to invest. So part of it is we are not educated to do that. Loss aversion is also a very, very powerful heuristic bias where people tend to think that it's safe, cash deal is safe. and the last thing that I would say is people are busy the inertia part is actually very real so Mike talked about this that you're kind of you could have the inappropriate allocation because you don't understand the outsized kind of positions in your portfolio you have to have a more proactive

27:04Mike Wilson:but to the chart we showed with Mike which we could also show with Kristen is there issue here Scarlett we're addicted to a bull market or we don't have to think right to me that's a lot of it. With a VIX of 14, the sweat's not out there. So I guess the question is, how do you go de-risking your portfolio? Mike talked about having too much concentration in the growthy parts of the market. And it's okay to actually take some profit and put it aside. And pay Uncle Sam sometimes. Pay Uncle Sam, even though everyone's scared to death of doing it. How do you go about de-risking your portfolio day in and day out?

27:36Because it's something people don't want to do. They're comfortable with seeing that number grow. Yeah. So this inertia concept, it's actually on two different fronts. It's one on being too overweight cash. So that's then an element of how do I actually put capital to work? And I think that's easier, actually. If you're too overweight cash, the idea that you can leg in, you can use dollar cost averaging, I think that's probably an easier psychological component. On the front of, okay, I need to rebalance, and potentially that does have tax impacts, one of the things that I would say is if tax is a major deterrent, that should not be the major deterrent.

28:08However, there are hedging strategies. There are a number of different strategies that you can employ where you take off some of the downside risk without triggering a taxable event. So I would encourage people who have really large embedded gains to speak to their advisor about that.

28:21Mike Wilson:And now we go over a few tread. Kristen Bitterly, one of the gimmicks is option writing. I bring in an income to get an enhanced income, and I give up some of the future capital gain. Is it a sound strategy? Option overwriting? Absolutely. Look, I grew up in derivatives, so I probably have a bias in the options market. I think options are a double-edged sword. When you use them for leverage, when you don't understand what your max downside, max upside is, and the risk return profile, clearly some people can get on the wrong side of that trade. If you are long an equity position and you think it's going to be relatively sideways, you don't want to sell out of it because you like the company, and you're finding ways of a more tax-efficient augmented yield by selling listed options or covered calls against it, that can be a way to enhance your income, stay in the stock, not trigger a taxable gain.

29:10You mentioned how people are not educated on investing. Are we also not educated on debt and the role that debt plays? Because you've pointed out that the way people look at debt is they're either scared to death of it or they have too much in it. They're carrying high interest personal loans and there's never any in between. It's so interesting because I think this is a very cultural component as to how you were raised that what you see is there are many people who were taught growing up, like debt is bad, that any type of debt is bad. Clearly, there are some types of debt that are really high interest bearing debt that are your credit card, for example, the idea that you're very disciplined about that because it's a very high interest rate.

29:46However, we were just talking about mortgages earlier. If you're someone who locked in a 30 year fixed mortgage at maybe a 3%, 2 % level, that is probably one of the, that's kind of the trade of the century. If you think about it in terms of very cheap financing, that is also, there's a tax-efficient element to it that is intelligent leverage, intelligent debt that helps you actually achieve your goals.

30:09Mike Wilson:Thank you so much for coming in today. Thanks for having me. Let's do it again soon, like before the year end. Kristen Bitterly, thank you so much. City Wealth had a global wealth at work. I noticed the 30-year mortgage, 6.77%. You keep rolling it higher to 7%. Well, I'm wondering. The world stops at 7%, but there it is. I mean, it's a big statistic. What fun last night? Field of Dreams, Netflix at the ball out of the park over the cornfield last night. We thought we'd do a baseball moment for you. Coming up, Scarlett has a killer book. It's Bloomberg Money. Good afternoon. I like how you stress that we're killer, because that's going to come back.

30:49That was magic.

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33:18Remember the movie Field of Dreams? No. The book about Field of Dreams, Shulist Joe Jackson?

33:23Mike Wilson:Spectacular. It was one of the rarest things where the movie was better than the book. Kevin Costner, starring Kevin Costner, 1989. Last night, there was a Field of Dreams game in that it took place in Iowa. Full disclosure, tears, the whole thing. Twins versus Phillies on Netflix. This was, it had been a couple of years since the last one, but both teams wore throwback uniforms, which I love. Yeah, and the corner was not knee-high by the 4th of July. It was spectacular. The Phillies and Twins delivered, Major League Baseball delivered, and all that. We thought we'd just take a look at this. Of course, the iconic movie, the Hall of Famers, coming out, Mike Schmidt there from the Phillies.

33:58You watched until the very end.

34:00Mike Wilson:No, I did not watch the whole thing because I have to get up and do a date, you know, the early morning gig. Okay, but you noticed the one Roger Clemens there. Roger Clemens at the end was playing catch with his son who was on the Twins. You know, the whole thing was just a huge, huge success to say at least. We go on it over to books. Here's the book for those younger who are like, Field of Dreams, I don't get it. It's Fossil TV. Shoeless Joe, Kinsella did it. And I'm sorry, this was the first of the books. W.P. Kinsella, Shoeless Joe. It's different than the movie. The movie is better than the book.

34:30Mike Wilson:But the book is a rite of passage for anybody that wants to understand the 20th century in America. We have a producer from New Zealand, grew up on a Sheep Farm doesn't get it. Doesn't understand it. Totally doesn't understand Field of Dreams. Well, you know, the movie has Kevin Costner, has Ray Liotta, Sleepless Joe. Killed it. Ray Liotta just killed it. Shoeless Joe, excuse me. Burt Lancaster, I think his last movie. Yes, it was. Just to watch Burt Lancaster up in Minnesota as a doctor's worth it. Tell us about The Bronx is Burning. Well, my book is also about baseball, but it's the opposite of gauzy and feel good.

35:00It's gritty and chaotic. It's about the 1977 New York Yankees when Billy Martin was feuding with George Steinbrenner. Reggie Jackson was dominating. And the title refers to what Howard Cosell said on air after a fire broke out in a school near Yike Stadium. There it is, ladies and gentlemen. The Bronx is burning. Remember in 1977, summer of Son of Sam was on the loose. Yeah. You had the blackout, the looting that happened across New York City. Ed Koch versus Mario Cuomo fighting for the mayoral. It's talked as a malaise.

35:32Mike Wilson:And of course, in New York City, it was front and center. And And you think of Mayor Giuliani and those following that pulled us out of it. But your book is brilliant of attention there from another time away from the magic and nostalgia. It's gritty. It's New York. It's history. It's baseball. It's all that. And it's my must read. All right. So let's talk about sports because we're going to stay on this theme. It just upsets me. Leave it into personal finance. It is pretty upsetting. We don't talk to each other before the show. And my people briefed what they learned from Scarlett's people. This is upsetting.

36:03It is upsetting. And this is a story that Bloomberg News wrote this week on our money platform. It's centered on how sports betting is entering wealth management plans, financial planning for Gen Zers. Zi Jia-sung joins us now to discuss. So the idea here is that certain members of the Gen Z cohort see sports betting as a legitimate alternative to investing or see it as a form of investing? Yes, exactly. So one in four Gen Z investors actually consider sports betting as part of their deliberate ongoing component of their long-term financial plans. And I think this really is related to how fast sports betting industry has grown.

36:39And along with it, it's the prediction markets, rapid expansion, where companies kind of brand themselves as investing platforms. And this is changing how Gen Z and younger Americans are thinking about wealth building and financial planning. Now, some of the people who do this say that they approach sports betting with kind of the dispassionate eye that they would look at investing, which I find really fascinating. Like they say they don't get let emotion get caught up in any of this. Yeah, that's what they say. And we talked to some long term sports bettors, actually, and they said they've gotten increasingly analytical in their approaches.

37:14They would do research on sports teams and then they would like maybe section off a part of their money to just put in sports betting. One person actually won some$2 ,500 this year and was able to fund their entire vacation to a bachelor party.

37:29Mike Wilson:Okay, but I just went to, you know, I went to AI and all that to look at this. How many people make money at Kelsey? How many people make money at FanDuel on the left field wall out at Field of Dreams last night? That's a really good question. It's actually, over the long term, consistent profiters off these platforms are at the top maybe 1 % or 2%, 5%. Okay, so let's be charitable. It's 5%. You're telling me 95 % of people lose money and we're calling it a financial plan of our personal finance? Over the long term, yes, they are not profitable, 95%. But I think it really has to do with... What are you laughing at?

38:07I'm the fossil here. For a certain cohort, they're thinking, you know what, I'm going to be the one that beats the odds. And, you know, you got to go big. Oh, come on.

38:16Mike Wilson:Last night, I mean, what'd you think? Did you watch Field of Dreams last night, the baseball game? I didn't, but I heard about it. You're killing me. It's like the Netflix ratings will be huge. The Hall of Famers are coming out of the cornfield Shoeless Joe came out of. Oh, dudes, yeah. And there's a FanDuel sign in the left field. Sign. I mean, that's what we, it's your fault. It's a dose of 2026 on your field of dreams, Tom. Can't be helped. We'll have to see. All right. Well, Zijia, thank you so much. I'm too upset to talk. You take this off. Really, really appreciate it. It's fascinating, this idea, because we talk about the financial nihilism among younger people.

38:48this is kind of an offshoot of that.

38:51Mike Wilson:I strongly agree.

38:56Oh, they're money.

38:57Mike Wilson:Why are you crying? Why are you crying? They're going to college. I'm so sad. It's just terrible. Here's the door. What's your hurry? Joining us, Lisa Matera. Are you going to cry when she goes to college? I know. I have like two weeks. I'm at my wit then. It's going to be difficult. But one thing I don't have to worry about, and this is what a lot of parents are going to be spending their money on this weekend, is Southern Sorority Rush. Tom, I know you're familiar with Bid Day. It is huge down there. Okay. So this is, for the past week, girls have gone to school early. These are all girls who want to go to these Southern schools.

39:34Okay. And they've been on Instagram and TikTok and all the things, picking out which organization they want to go to. And so they've been going through the interview process. They've been going to the events. They've been wearing the dresses, the makeup, just to make sure that they get into the sorority of their choice. And this weekend, they're going to find out if they do or not. But the money behind this is because there are parents out there who are paying, get this, sorority rush consultants in order for their kids to get into the sorority of their choice. How do they consult with them? They're not outreaches from the organizations themselves.

40:07They're kind of independent consultants. No. These are like, some of them are women who did pledge and so they're giving advice so they're charging these parents this much to get the inside scoop anywhere from three thousand to twelve thousand dollars what's some of the advice to go over to go over their resumes to get their headshots done to go through their social media feed to make sure they talk correctly wear the right thing say the right thing can i interrupt

40:26Mike Wilson:this is a girl talk okay 10 25 15th street boulder the tridel house the way you got ready to rush is you got a six pack of three two quarters beer i don't think so really the rich girls had a quarter keg out front, of course. That's how you did it. That's not how it's done anymore. Good morning to Tridel's an ancient life. What's making this story bigger is because it's finally becoming big in the Northeast, in the Midwest, in the West where it wasn't popular before. Now you have all these outsiders coming into this little community. Cornell, did they do this? I don't know about sorority rush consultants.

41:03I don't know about the amount of money that people are spending. When I went to school, that was ancient history.

41:08Mike Wilson:Well, to me, the number one thing here is a dad. Is anybody going to school? Is anybody taking Weston Sioux? Wait, wait. But this is why this is happening before the semester begins. Lisa made that clear. People are going to school. Oh, what, they end the first day of school? Yes, yes. And then they have to pay the dues after they pay the consultants. So the dues can be anywhere from$5 ,000 a semester to$10 ,000 a semester, depending on if you want the housing and the room and board and the members. Incredible. This is a story on the Bloomberg Turnbull, by the way, right? It was a story on the Bloomberg.

41:36Yes, you have to check it out. It was fascinating going through it, I'm telling you. There's a lot on social media about this as well. There is a ton of it. But thankfully, yes, my daughter's not involved in these things. Okay, well, let's get back to the calendar events of what's coming up next week. Because we've been talking about the consumer. The state of the consumer retail sales numbers came out today, which were disappointing. We get more of an inside read on retail companies, right? Yes, a lot of retail companies. So let's go through it. We'll start with, on Tuesday, you have Home Depot.

42:02That's a big one, right? Then you get to Wednesday, Estee Lauder, Target, Lowe's, TJX. And then we end off on Thursday with Walmart and raw stores too. So a big week for retail earnings next week.

42:13Mike Wilson:This is the Bloomberg Money Podcast, bringing you a smart look at the forces shaping your financial life. I'm Tom Keen with Scarlet Fu. You can watch the show live on Bloomberg TV every Friday at noon Wall Street time. Subscribe to the podcast on Apple, Spotify, or wherever you listen. and as always on the Bloomberg Terminal and the Bloomberg Business app.

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