The Fail-Safe Millionaire Investment Strategy | Tony Robbins EP 526

0:00Hi, my name is Lewis Howes and welcome to the Daily Motivation Show.

0:11How do we invest without fear of, oh, it's going down, I need to take it out, or like trying to time it? How do we do that? The first fact I give people is, why do people not invest? They're afraid of failing. You're a millennial, right? So you grew up witnessing 2008. So you're a young man, and you're watching the world melting down in front of you. For most millennials, they are the first generation since the generation that went through the depression that is not investing at the ratio they need to even close. They have more debt than everyone probably, right? They have more college debt than everyone?

0:44Absolutely true. Paying off your debt is not enough. You've got to become an owner or you're always going to be in that place. So yes, pay off your debt. But here's what you need to know. You've got to become an owner. You've got to get in the game. But you've got to understand the rules of the game. If you don't know the rules of the game, the old phrase is, you know, when a person with experience meets a person with money, we know the phrase. the money ends up with the experience ends up with your money right so i teach people the rules of the game so they don't get screwed but the most important thing is this winter's coming but people react so let's take last year last january 2016 we had the worst stock market opening in the history of the stock market first first i think was 10 days there was a drop of 2.3 trillion dollars with a t crazy everybody's freaking thinking the bear market's here the The market's over.

1:26The crash is here. I think the market dropped 800 points one day. And on that day, all the richest people in the world were in Davos, Switzerland, you know, for the big conference that they do every year. MSNBC went there and everybody's freaking, what's happened? What are we going to do? And they said, let's go ask Ray Dalio. Now, your listeners may or may not know Ray Dalio as, if you're not in the financial business, probably never heard of him. You've probably heard of Warren Buffett. But Ray Dalio has been more. You're going to have a$5 billion net worth and$100 million to give him where he wouldn't talk to you 10 years ago.

1:51But they go and they put Dalio on television. CNBC. he's the king what do we do and he says well you don't need to panic corrections happen all the time but you need a strategy that when markets go up and down you don't go up and down and he said i spent 15 years of my life to perfect such a strategy all of my money's in that plan and he said it's called all seasons and i've never revealed it before but i gave it to tony robbins he extracted from me and it's his book so you gotta go read his book so he says on national television the day the markets are crashing and that day to give you an idea i think it was nine days into February, the market was down 9 % in the first five weeks of the year.

2:28His strategy, which he gave me, which has made money 85 % of the time for the last 75 years, it's averaged a 10 % return just under. And the average loss, 15 % loss was 1.6. So if you go to Vegas and you could spend 85 % of the time, make money. And when you made money, it was 10%. Your loss is 1.6. You go forever. His plan made 2 % while the market was down 9%. So it was up 11 % difference. Now, I'm not suggesting that's the only strategy to do. There's many. His is the smoothest ride with the least risk. Everyone's afraid of the crash. So here's what you need to know, two terms you should understand.

3:04Correction versus crash. Anytime the market drops from its high by 10 % or more up to 20, it's called a correction. If it drops 20 % or more up to 80 % like, you know, the Great Depression, then it's called a crash or called a bear market. So how often does a correction happen? How often do we have to be prepared for it? Since 1900, we've had a correction on average every year for 116 years. So when is winter coming? This year on average. It's like, how often does winter come? You wouldn't be surprised if it stormed and rain. Now, some winters are long, some are short, some are harsh, some are light, but winter always comes so i wasn't panicked when this happened last year i'm not panicked whenever it happens because i know it's supposed to be how long does it last average 56 days okay so just under two months what's the average drop during that time 14 over the last 30 years 13.5 of last 100 years so i use the more recent one 14 gets your attention right 14 you get a little gut check.

4:06But here's what you need to know. 80 % of all corrections never become a bear market. 80%. So all this fear and what people do is what you said you did is they see it, it's freaking out, I'm losing money, I'm out of here. And they get out. The stock market never took a dime from anybody. Only you can take it from you. You sold. That's why you lost. Right. Right. So if you look back and say, what was it like in 2008? I can remember vividly being with my platinum partners and saying, you see these$80 stocks? This is six months before the crash. I told them in April, I brought them to Dubai and I said, these stocks are going to go to eight and some are going to go to a buck.

4:42And I told them what to do. So they were able to get out. October, I go on the Today Show in October of 2008 and they go, Tony, there's been$3 trillion meltdown. Pump the country up. You got four minutes. Ready, go. That's not what I do, first of all. And I said, that'd be a lie. I'm not going to put a moment. At that point, the$80 stocks were eight. I said, some of those. I said, I'm not a market forecaster, but I worked with Paul Tudor Jones, one of the greatest investors in the history of the world. In the biggest market crash in history, you know, 1987, he made 200 % when everybody else was losing their entire life.

5:15I've been coaching him continuously now for 24 years, every single day. So I said, I work with the best in the world. And they're telling me based on history in the 30s and history in the 70s, those$8 stocks, some are going to be a buck. And I remember the day in March of 2009, Citibank, which had been, I think,$70, sold for$0.97. You could go and take your money out of the ATM. It costs you more to take your money off than to own the bank, right? And then I told people it'll jump from$0.99 to$6,$10,$12 in a month or two. And that's exactly what it did, right? So what you got to know is corrections happen every year.

5:51You got another couple months. You've got to know it's 14 % and you won't lose because 80 % of the time it doesn't go to a bear. Now, what about the bear? The bear market happens, to give you an idea, in the last 100 years, every three to five years. You've gone eight without one. We're way overdue. In modern years, last 30 years, it's about every five years. The average length of a bear is one year. The average drop is 33%. A third of those drops go 40 % or above. That, I don't care how well prepared you are, that's a scary thing. but it is the greatest opportunity in your lifetime to go from wherever you are financially to where you want to be.

6:27I hope your audience is listening right now. If you want to leapfrog and you're a millennial and you think there's no future or you're a baby boomer and you think you're too old and it's too late, the greatest gift you have is coming. The stock market is the only place that when things go on sale, people freak out. If I said, you like Ferraris? If I said to you, Ferraris go on sale for 50 % off. Awesome. But when I tell you Apple's on sale for 50 % off, you go, oh. What am I going to do here? What's wrong? The world's coming to an end. If you didn't participate because you thought, oh, the market's too volatile, I can't trust it, all that stuff, you missed 250 % return in the last eight years.

7:02I mean, you've missed out on everything while you're waiting for things to be better. And if you won't do it when it's like this, when it crashes, you're not going to get in. So here's the good news about the bear. Good news about the bear, average ones a year. Could be longer, but that's the average. Could be shorter. But here's what's cool. Every single bear market in the history of the United States has led to a bull market. meaning right afterwards. So 2008, this plummeting, what happened in 2009, up 67 % in a year. I can show you every single bear market and the next year when it comes out, it's this explosion.

7:32Now that's not true in every market in the world. It's true for two centuries in the United States. That's why Warren Buffett says, I want to be greedy when people are afraid and I want to be afraid when people are greedy. If you remember 2008, he was telling everybody buy. He was having the time of his life. Buy, buy, buy, everything's on sale. So what you have to do to become unshakable, the metaphor I use is turn the snake into the rope. Meaning we all know the story. It's the middle of the night. You're walking through the yard or someplace and you see a snake and you pull back. You come in the morning and it's a rope.

8:01Once you know it's a rope, you're never afraid again. I want to take for people investing and show them how to turn that snake into the rope it really is. And I'll tell you one final stat on all this. Is there going to be correction? Yes. But when it corrects, you want to invest again. You'll get dollar cost averaging. If you paid a little too much here, you'll pay paying less here. It'll bring the average price to a reasonable place. It's going to allow you to succeed. But here's what people need to know about timing. If you are not in the market, it's the most dangerous thing. This is so counterintuitive, so I hope your audience is listening.

8:31There's two different research projects. J.P. Morgan did a study, and also Schwab did a separate study. 20-year studies. In the last 20 years, to give you an idea, the average S &P 500, that index, has produced 8.2%. Over 30 years, it was 10.28. In the last 20 years, a little bit less. Still great. You double your money, roughly, you're in a position where you double the money a little more than 10 years. Here's what they found out. If you miss the 10 best trading days in 20 years, because you're trying to time the market and you're not in it, during one of those days, you win from 8.2 % return over that period per annum, per year.

9:05It dropped down almost half, 4.5. What are the chances of you knowing the past 10 days to trade in 20 years? None. Yeah. Right. Warren Buffett said market timers and market forecasters are only there to make fortune tellers look good because no one can do it successfully. Even if they do it for a while, it doesn't last. It's luck. If you miss the 20 best trading days in the last 20 years, just 20 days in 20 years, one day a year in 20 years and you're wrong. You're wrong on timing. Your 8.2 doesn't drop to 4.5. It drops to 2 percent. You might as well have been unknowing a bond and had no risk.

9:40So you've got to get in the market. And if you're saying, what about my timing now? Study was done by Schwab. If you've got the perfect timing for the year, the right day, the best possible day to buy, some people the worst day, someone else dollar cost averages, just keeps spending the same amount every month regardless of prices, and somebody stays in cash. Who has the worst return? Cash. You get nothing for cash. Gotcha. The guy who was the best had the best timing. Got it. The guy that was the worst, the guy that dollar cost average and the one that was on the worst day were almost identical.

10:09but after seven years, there was only a$20 ,000 difference in accumulated assets between the worst day and the best day. The worst was not being in the market. So you got to be there. And I'm not saying put everything in stocks, but stocks in the last two centuries have provided the highest return. So you have to have significant exposure to that if you want to get the highest return.

10:36Thank you so much for listening to today's episode of The Dirt. daily motivation and I hope you have an amazing rest of your day. If you enjoyed this episode, make sure to click the link in the description that will take you to the full episode of our main podcast on the School of Greatness. And if you are loving the daily motivation, please follow us over on Apple Podcasts and Spotify and leave us a review over on Apple Podcasts right now. And if you want more exclusive content and ad-free listening experience, make sure to subscribe to our Greatness Plus channel on Apple Podcast right now. And if you want to get even more inspiration from our world-class guests and learn how to improve your life and take it to the next level, then make sure to sign up for the Greatness newsletter and get it delivered right to your inbox over at greatness.com slash newsletter.

11:26Again, have an amazing day, and I'll see you tomorrow with another episode of the Daily Motivation Show.

11:37Thank you.