TDI Podcast: The Probability Payoff (#955)

30:24And so what you're trying to do, you have this curve that occurs where you've got this tradeoff. And let's just use stocks versus bonds to keep it simple. It's stocks, bonds, cash, whatever else you want to throw in there. And so you start substituting these. and you move along this efficient frontier curve that eventually intersects the capital efficiency line at some point. Well, that's where we get this theoretical 60-40 portfolio, right? That's theoretically somewhere close to where it connects, where the efficient frontier connects. So what happens is as you get rid of more volatile things, i.e.

31:00stocks, and substitute in less volatile things, this is called risk dilution, by the way. You're diluting the risk of your portfolio, but of course you're diluting the return at the same time. So what happens is you move down the efficient frontier, but you move down more in risk. So it's becoming more efficient as you substitute some bonds with some stocks. The reason that occurs is non-correlation, right? Non-correlation in returns allows that to occur. So it's this beautifully elegant theory of how to design this optimal asset allocation, right? And so far, it sounds good. The problem is it's completely wrong, like not even close, like not even in the ballpark.

31:45I'm not even nitpicking. It's wrong, dead wrong. And the reason it's so completely wrong and completely useless is easily provable. What you can do is what happens, it's built on a flawed premise, right? The flawed premise is that you design this optimal portfolio based on the historical return, volatility, and correlations of the assets that you're working with when you design this model portfolio, right? Well, the assumption is everything. The point is there. Let me just mention it so listeners can understand this. The assumption is that everything in the past will be in the future. That's the problem of the assumption.

32:22Yeah, it's exactly what I was getting at, is the premise is that the past returns, volatility, and correlation will have some bearing on the future. Reality is it's not even close. Like, it doesn't have any bearing. You can have different assumptions that you optimize over. You could optimize a portfolio and come up with 100 % stocks for a 10-year, 15-year, 20-year period, and then you can come up with 100 % bonds for another period. Like not even in the same ballpark. It has absolutely no relationship to what an optimal portfolio is for the only time period that matters, which is your future, the unknowable future.

33:02And that's the key that people miss is the future is unknowable. And so you can't optimize based on past returns, volatility, and correlation. And so it's this gorgeous theory that is the foundation of the 64-day portfolio, much of the asset allocation used in conventional advice, and it's completely irrelevant. It doesn't work at all. I actually attended, back then, I was a bit of a geek when it came to this stuff because I was really interested in it, and I spent time with Brinson B. Bauer and Hood, well, B. Bauer actually, at meetings. William Sharp had dinner with him out in California, and I was the guy like, I don't understand.

33:38Can you explain something to me? Like why are we using standard deviation, not downside deviation, and utilizing that as part of the complex of this? And why are we doing this and not that? You know, there was a lot of little things in there that I really was hard-pressed to understand how this came into be and how – but, listen, fun families like DFA and all these guys made their mark with this. And there is some components of it I do like. if you can really find long-term sectors that are thinly correlated, not that that's going to always be the case, but if there is something, there's something to that to building a portfolio potentially for some downside risk mitigation and for some buffering.

34:22But I agree that the idea of spending time with a dial, trying to figure out the exact efficiency of a portfolio based on those metrics, as you mentioned, is great. And computers could do it looking backwards. But going forward, the whole thing just blows up right in your face. Right. So let's bring it to current times, right? You hit on a key point. The only way it has any validity is if you can find financial non-correlation of returns, volatility, and risk that has some financial basis to it. Like there's some logic that will persist going into the future. And so the reason stocks and bonds have historically been, and particularly in recent history, right?

35:05I'm talking like in the last 40, 50 years, right? It's been such a great diversifier and it's worked beautifully all the way up until 2022 when it failed is because bonds will tend to rise during a deflationary decline because the federal government will then lower interest rates, which raises the value of bonds. bonds. And so you have a financial logical basis of why bonds provided good non-correlation and was a good investment product for diversification of stocks. And that worked until it doesn't. And that's why you hear a lot now about people talking about a 60-20-20 portfolio, the other 20 being gold.

35:49So why is gold suddenly a good diversifier? The answer is inflation, right? So in an inflationary decline, there's only, let me put it a different way. Let me phrase it a different way. During a declining market, all assets correlate towards one. All correlations rise, usually with the exception of one asset. So in a deflationary decline, that one asset is bonds. So credit risk instruments, okay, in general, bonds specifically. And during an inflationary decline, it's precious metals, oil, commodities, et cetera, et cetera. And so real things in broad terms. And so that's why all of a sudden you're hearing a lot of talk is because we're an inflationary environment, gold's running.

36:40And there's a lot of reasons why gold's running. That's not it. But anyway, and so all of a sudden they're talking about a 60-20-20 to replace the 60-40. And going back to our earlier conversation, that was nowhere from any history that you would be running that leads up to current, that was nowhere on the capital efficiency line. Right, right. Right? Yep. There's just no relationship. You have to understand how this stuff works at a deeper level. These are just financial myths that are widely touted that don't work. Another one that's interesting on the same lines and within the same, I would say the same genre to a degree, but yet at the same timeframe when it was created, American funds for a long time had a mountain chart that you would look at.

37:25And it was this brochure that would show you over time. And it says, you know, if you missed the X number of days out of the trading year, you know, you would, I think it was the 10 best days. And I always said to myself, Todd, I said, how come they don't show us if I just escape to 10 worst days? Right. I'm just saying, I was always wondering that. I really, it was a big head scratcher to me. I'm like, well, this is great. And I'll tell you, let's just get to the punchline here for one second. These are all measures that were created by marketing teams that were utilized from some research that was done along the way somewhere.

38:04where they plucked out what they wanted to pluck out as the best way to convince people to give them their money. I mean, that's, that's the way I see it. Yeah. I'm actually shocked at how many really intelligent people subscribe to the 10 best days, 10 worst days myth. Yeah. Okay. It's mind blowing misuse of statistics and math and historical data. And yet there's so many really intelligent, well thought out people that have written pieces supporting this. And so it's just another widespread myth. And so let's go through the conventional wisdom. We agree that most people would only talk about the 10 best days.

38:42They don't talk about the 10 worst. Correct. Correct. I call it the 10 best days, 10 worst days, right? Yeah. You'll see it promoted as the 10 best days. You can even do the 20 best days. And so let's first of all, get the myth, right? The myth is that's widely touted. And again, high level experts. I mean, famous authors, you know, these are people that should know better and they're promoting this. And it says, if you miss the 10 best days over X years, you know, it's always different, right? Or the 20 best days over Y years. It doesn't matter. It's always the same thing. then your long-term returns will be a tiny fraction.

39:20Now, don't quote me on it, but it's a dramatic difference. It's like if you compounded at 8%, you might compound it like 2 % or 3 % by missing the 10 best days. It's a huge difference in your compound returns. And that part is legit. That part of the analysis is absolutely mathematically correct and legit. The problem is the conclusion. The conclusion they come to universally is, well, since you can't ever know where the 10 best days are going to be, you have to buy and hold because you can't ever miss any of them. So you have to buy and hold, right? So now let's look at what the truth is. What's really going on here.

39:5718 of the 20 best days all occur below the 200 day moving average. Okay. So it's, it's a who's who of the worst time to be invested because all market volatility occurs below the 200 day moving average. And I'm not using a 200 day moving average is any magical thing. You could say the 50-day moving average. You could say below trend line. You could say, I mean, there's a lot of ways to define it. But one way to put it out is a downtrending market. Yeah. Well, the bottom line is that all the best days you've ever seen usually in a market happens in a bear market. Yeah, exactly the point. That's exactly where I was going.

40:30Which by the way, when I look at it, I always confirm the fact that we're in a bear market if I see something crazy like that. Yeah. And you always see it. Every bear market, volatility clusters. So the actual truth is volatility clusters, both up and down. So the reverse of, so here's the reverse logic. They're basically really telling you when they advocated that you have to be invested during the worst possible losing periods in history in order to make money. Right. That's what they're actually advocating. Just to saying that out loud sounds ridiculous, by the way, because it is, it absolutely is.

41:05Right. And then the flip side math, which you alluded to was if you pick up the 10 best days, I'm sorry, the 10 worst days and remove those, then your returns are equally grown. So again, I'm not, don't hold me to the math, but it's something like if it was 8 % compound, it jumps to 12 or 14 % compounded if you threw out the 10 worst days. So what's the truth? The truth is volatility clusters, right? Volatility clusters, big days, both up and down occur during volatile periods, which is downtrending markets. And so what that does is that points out that the very thing everybody tells you to ignore, which is volatile market environments, are actually the most important.

41:47They literally determine the validity of your investment strategy, the volatile periods, the very thing everybody says you should ignore because eventually the market runs to new highs. So how do you conquer that or combat that as an investor? what's the bottom line i teach tactical asset allocation okay so tactical asset allocation works you know that would tie into another myth right people will tell you um you can't market time but then nobody defines what market timing is right people have this sense that they know what market timing is but they don't and so let's define it if you define market timing as predicting the future.

42:31So any investment strategy predicated on a prediction of the future, the market will go up. Oil stocks are going to do well. You know, the world's coming to hell in a hand basket, whatever the prediction is of the future. If you're investing based on prediction of the future, it doesn't work. Right. So that's how you're defining market timing. Any prediction of the future, it's correct. It doesn't work. However, if market timing is defined as a statistically valid risk management tool that never knows anything about the future, it's just working with serial autocorrelation and statistical validity, then it works.

43:07It works reliably. It works consistently. It works with mathematical discipline. And so you can create a tactical asset allocation model using statistical methods that has a buy and sell characteristic that can look like market timing, right? Because it'll be buying and selling. But the fact is it never knows anything about the future. If you look at the buy and sell signals in a valid TAA model, a valid tactical asset allocation model, it knows absolutely nothing about the future. There's no predictive quality to it whatsoever. And yet because it manages volatility, that affects the compound growth, that affects the safe withdrawal rate, that has all kinds of positive effects, which are all valid.

43:52Yeah. And I think what most people think of when they think of market timing is the gurus of the 80s who, you know, the Elaine Garazellas or this one or that one, or even some of the big hedge fund guys that, you know, when they say, hey, we're all in on Chinese tech stocks, you know, or, you know, hey, there's going to be a crash in two weeks and it happens. And it's like, wow, my God, this person's amazing. And then, by the way, where are they now? Yeah. Well, I mean, I was laughing when you said that because I haven't heard Elaine Garazellas' voice in years, or her name in years. shunned shunned she was a she was a huge name in her day so it was and she could move markets kathy wood kathy wood same thing yeah kathy wood is in the same is the same genre i think a little different kathy wood make predictions about the future that were bold that were absurd you know she did uh uh elaine did a couple different uh you know market crashes are going to happen and that's it god i'm trying to remember the guy's name before that i mean there was a guy that was huge before that, that literally could move markets based on money supply figures and all kinds of things.

44:59It wasn't Dan Dorfman, was it? No, it was somebody else. I remember Dan Dorfman too, though. He was arrested. I think. Yeah. Yeah. So all these guys are trying to predict the future, right? Cause it's great media. Oh, it's the best. What do you mean? That's the, if you could do that, if you can nail that once, you could ride that for a decade. Oh yeah. It's great media. It's great for eyeballs. It's great for advertising, all the things that run media. and it has absolutely no validity for investing, no useful practical value whatsoever. It's a complete waste of bandwidth. Yep. I want to go back to something you said and pick up on it because it was just said in passing.

45:34And you talked about how tactical allocation and some of the components of it. And we talked about briefly. We're not going to want to get into the depths of this, but you mentioned something that I think is really interesting about the safe withdrawal rate. The safe withdrawal rate from a portfolio. As a matter of fact, it's interesting. Just today, a client asked me, how much money would I need to generate$350 ,000 per year throughout my lifetime? I said, listen, there's a lot of variables that go into that. What's the inflation rate going to be? Are you leaving money to the next generation?

46:05You're going to say, screw that. I'm going to go down with the last dollar in my coffin. But that is the basic premise of a safe withdrawal rate. And the industry has had a number for years. It's been this 4 % to 5%. or I'll even go three to 5 % as a number. Yeah, I was going to say, you have to actually go under four to be, but go ahead. But that's the kind of an industry wide number. But again, that is a straight line number that we don't really know what's going to happen in the future. But why is, you know, tell me about that and how do we solve this problem of figuring this all out? The way you solve the problem.

46:46So there's a lot of questions in what you just asked. Okay. So I'm going to go with the last one you just asked, which was how do you solve it? You have to solve the volatility of your returns. So the difference between, so here's a fun question that very few investors ever really seriously consider, which is why is your safe withdrawal rate? Let's call it 3%, 4%, 5%, whatever the number, right? It varies with, here's the factors it varies with. And this leads to the answer. um the factors it varies with is inflation rate and market valuations right right and so if market valuations are low and inflation's low it's going to be higher and if market valuations are high and inflation's high it's going to be below four percent it's going to be like three percent the common thing was the four percent rule came from william bangen back when he did some research and people never ask why is safe withdrawal let's use four percent just because it's called the four percent rule.

47:44Why is that a tiny fraction of your compound return? So on the portfolio that supposedly supports a four percent safe withdrawal, maybe it compounds at eight percent historically. Right. Why is that? And that has to do with the volatility tax. Okay. The volatility tax, the volatility of returns, that very thing that conventional wisdom tells you to ignore is back on the table again as a key factor. The more volatile your returns, the more volatile return stream, which is why inflation and market valuations affect it, the more volatile return stream, the wider the gap between your compound annual growth and your safe withdrawal rate.

48:26So if you want to narrow the gap between your safe withdrawal rate and your compound growth, you have to narrow the volatility of returns. That's why, by the way, your safe withdrawal rate is actually higher than your return on T-bills because there's no volatility in the return stream. So you're literally spending the interest plus capital as you draw down over a 30-year amortization schedule. So it's the one example where your safe withdrawal rate actually exceeds the return stream. For every other asset, your safe withdrawal rate is less than the return stream. So you run with that and give me a new question.

49:04I'm just trying to think through this and that there's also the - By the way, that's the magic to tactical asset allocation. Tactical asset allocation is lowering the volatility of the return stream. It's not that it does that much better on the offense side, putting points on the board. What it does is it controls risk, right? So it's reducing the volatility of the return stream so that your compound annual growth is getting closer to your average growth and the dispersion of returns is smaller. So what that does is that increases your safe withdrawal rate. I've got tactical asset allocation models with safe withdrawal rates that theoretically, theoretically on a perpetual withdrawal rate, which is the most conservative measure, right?

49:48Perpetual. Of course, forever. Yeah, perpetual withdrawal rate runs up to 8%. Really? Yeah. That's impressive. I would never advocate that. Right. I would never advocate that. But just think about it. If you went from three and change, which is a realistic safe withdrawal rate for right now, given inflation, given market valuations, three and change is what most people would come up with for a safe withdrawal rate right now. And you moved it out to six. That means you've literally doubled the amount of lifestyle for any given portfolio, or you've cut in half the amount of savings you have to accumulate, or you've shortened the amount of life you have to give to accumulating those savings and you can retire sooner.

50:31It's a life-changing difference. Live a lot longer. Yeah, most people have no understanding of how this stuff works. Well, I mean, it's not easy. And that's why there's professionals and there's people out there. You know, the fact is that a lot of times I talk to people and they're like, I don't know what you just said. I said, what do you mean? That was pretty easy. I mean, I was trying to really keep it on the low here, you know. I remember my first book that I wrote, people were like, hey, this is great. I don't know what you said, but it's so interesting. I said, what do you mean? So then I wrote a second book that was kind of a lower version of that, you know, an easier read.

51:02And people are still like, I have no idea what you're talking about. I'm like, wait, I tried to explain some very basic points about compounding of interest. Well, the thing is not everybody is cut out for managing their own money or dealing with this. There's emotional issues. There's mathematical issues. There's just, listen, let's face it. There's right brain, left brain issues going on. and but these are the kind of things that people should be aware of that there are other options and that I think that if I was to summarize our discussion right now is that there's a lot out there in the media and marketing that makes things look a certain way that maybe not, it may not be the actual reality that there's a better way in some circumstances and that you don't have to follow along with just this simple like, give it to a broker and it's just going to buy and hold forever.

51:55You know, this, this concept, right. Or, or, um, uh, you know, simply go, uh, because, because they say it's cheap. We should go to ETFs that are passive only as an example. I don't know if, you know, I'm just making this up. Um, that, that, that's the only way to go. There's many ways to do the same thing, right. And to get, get ahead. I'm, I'm agreeing with you. I'm going to say it in a slightly different way to put a different spin on it, but it's basically, it's basically the same thing, but I'm going to put it in a different way. You have to be very careful of conventional wisdom for the very reason you said, which is, hey, Todd, that sounded really interesting.

52:28I have no idea what you just said, but that was really cool, right? Conventional wisdom is simple enough that people can understand it. It has intuitive appeal, and it's close enough to reality that passes the smell test. And so that's what becomes conventional wisdom. That's what's widespread throughout the internet. okay what you and i are talking about is more advanced and that does not become conventional wisdom so i have a thing i call level one versus level two so like buy and hold four percent rule you know 10 best days these are all level one right and they're they're fundamental misunderstandings of reality but they they intuitively appeal to people they make sense And they use the numbers close enough to reel that it takes an expert to take it apart and show why it matters.

53:22We're not taking this apart to entertain ourselves. This changes people's financial outcome in life. Right? So level two is a more advanced understanding. It's more nuanced. But it never has mass appeal. Okay? When was the last time one of your listeners heard me? Yeah. You know? We just cycled through, I know. Well, heard you through our listeners. They may have heard you. They may have stuck with you. Yeah, it's just, you know, it doesn't have mass appeal. Okay. And, but it's, it's accurate and it changes lives for the better. And so I choose to stand by level two wisdom. That's what I teach.

53:57And that's what my focus is because that's what works reliably. And just to be clear, level two is not counter. That's not the point. It's advanced. Yeah. And it's not even all that advanced. Like my students all tell me once you get this stuff, it's so obvious. they can't understand why it hasn't always been taught this way. Like, why don't they just teach finance this way is what my students always tell me. Because it's not that complex. You just have to put the puzzle pieces together. It's all built from mathematical expectancy and the future value equation. Because guess what? Those are the two equations that determine your financial outcome in life.

54:33Right. You have to, you can't violate the math. Everything we've talked about here ties back to those two equations in one form or another. It ain't complex. it's just not it's actually remarkably simple once you get it and actually in some ways it's easier because once you get how it works there are no contradictions like if you run around and you listen on the internet to all the various experts they all contradict each other you know one guy tells you you get rich in stocks another guy tells you get rich in real estate another guy tells you it's all about gold right and it varies from time to time they're all wrong okay because it's not about any specific asset.

55:12That's just a risk profile of a specific product. But it's such an easy sell. It's so easy when you start, you know, revving it up and you make it look good. I mean, I can't tell you how many times clients in the past, they don't do it anymore. I put my foot down. Like would send me a TikTok thing. I'm like, what, what, who, first of all, what are the credentials of this person talking? I mean, literally, I'm not talking about even questionable credentials. I'm like, this guy, I think this is just reading something that was put in front of them. And, you know, about, about Bitcoin, about, about this asset or that asset, or, you know, you want to stay away from this, the world is ending.

55:47How many, how many times have we heard the world is ending? So I think, you know, buyer beware, but also as Cy Sims would say, an educated customer is our best, right? An educated consumer is our best customer. An educated consumer, educated investor, I'm not talking about crazy time put into it. I'm not talking about, you know, a full straight up MBA in finance. I'm not talking about that. I'm talking about as you are learning the, and understanding the basics so that they could do really good things for themselves and their family. Yeah. What, what my students tell me is that when you get this stuff, you have a smell test and you can smell bullshit a mile away.

56:26Oh yeah. Yeah. Right. So you, you have a smell test. You can see it. I can see it. And my students can see it because they've learned the fundamental truths. They've learned how this stuff actually works in reality. So when, when these talking heads go up and they start pontificating nonsense, you just look at and go, Oh, look at that. He's predicting the future. I can dismiss that. Oh, look at that. He doesn't even have the math, right? Forget that. Oh God, he's violating volatility mathematics and volatility drag and volatility tax. Like he doesn't have any idea what he's talking about. And you can just, you can just sort the wheat from the chaff, like so fast and easy and i gotta tell you once you know how it works i have helped clients in real time steer clear of three different ponzi schemes big ones oh yeah because back when back back when i coached i had the same thing i would be working through a client's portfolio when i was a coach i don't do anymore right all i have is courses and books now but when i was a coach and i did coaching i would be i would be looking at clients portfolio and i'd say um this smells really bad.

57:29And it's part of the reason I wrote the book about financial fraud, how to detect financial fraud was because I was literally picking off financial frauds in people's portfolios and saving them because they would go back and like, it wouldn't be immediately, but it'd be a year later, two years later, whatever it was. And the fraud would get revealed and they'd be like, oh my God, you saved my rear. Yeah. I can't tell you how many millions of dollars I saved a few clients because they came to me and had me sit down on meetings. I'm like, excuse me, I have a question. You know what I mean? I did that again.

58:02I don't understand how you say you're leveraging this up three times on these treasuries and you're going to blend. What happens if the, if the, if the yields go up on, well, no, that's not going to happen. I'm like, but if it does, well, that's okay. And the bank you're using to back these, and these are considered CDs that you're going to hold who's in are Antigua. And what if I want to get my money? Where is the jurisdiction for me in the finance? It's Antigua. It's a little bitty island in the middle of nowhere. Seriously. So I got to go there and fight for my money. I don't think so. Two years later, two years later.

58:38Who's the big fraud that went down a few years ago? I'm forgetting. It was Madoff. Yeah. Madoff. I say people from that one too. Yeah. So Madoff, right. I'm looking at that. And I told my clients, I said, well, either he knows something I don't, which is unlikely because I spent, I'm not, I'm not blowing my ego here. Right. But I spent 12 years testing. I call it the a hundred thousand dollar garbage pile, testing most models out there to figure out what was valid, what wasn't, what actually produced results, what didn't. And so you get pretty clear on what works, what doesn't. Right. And so I go either he's figured out something I never did.

59:16He knows something I don't, or he's a fraud. And I said, the chances he knows something that would produce those returns is really close to zero, given everything he's claiming he's doing. And so it's got to be a fraud. And you can know it just by looking at the track record. Same thing happened, I don't know if you remember the educator Van Tharp. He used to do psychology of trading. And he had a star student called Maricopa Capital Management. and maricopa actually had the gall to show their track record and i went through that track record knowing the market conditions at the time and what they claimed they were doing and i said point blank i said it's a fraud you can't do that you can't produce those returns from those market conditions doing what he's claiming he's doing it's wrong a couple years later fraud shows up done yeah yeah it's like you can understand what the limitations are and what's valid and what isn't just by understanding how this stuff works.

1:00:12And it's not even so far as going the entire way towards fraud. It's also understanding what is possible and what isn't, which is a much different discussion. Yeah, like let's take Renaissance Fund. Renaissance Technologies and Medallion Fund, right? You could look at that on its surface and think, oh, gee, that's a fraud. But if you look at what they're doing, you realize it's not. They had floors of computers, guys with handheld devices on the trading floors, scalping eights and quarters left and right. They knew exactly what they were doing. It was completely valid. Now, it wasn't scalable, and that was proven by every one of Renaissance other funds, which could never duplicate the track record of Medallion.

1:00:57Right? It was limited by liquidity, and so those early investors that got in Medallion had a home run, whereas other Renaissance Technologies funds never performed to the same degree. Also, when his book came out, things kind of shut down. Yeah, I don't. What's his name? Jim. Jim Simons. Jim Simons, yeah. When his book came out and he was, you know, he wanted to come on the show. I'm like, no, I don't think so. But I'm giving an example of an extraordinary track record that was actually valid. Yeah, no, I got you. Right. And there's a financial reason why it was valid. What they were doing was legitimate.

1:01:32And they had a technology advantage they were exploiting. And they knew the math of how to play the game. and so that was legitimate, whereas you'd look at Maricopa or Bernie Madoff, and you'd go, nope, that's a fraud. Good stuff. Well, hopefully we're going to get together before 10 years elapses. I'd love to. I'd love to, too. I appreciate you having me on. And where can people get information on what you do and what you're talking about? Yeah, so everything is at financialmentor.com, so two words mashed together, financialmentor.com, and I have one course. It's a flag. I call it my master course called expectancy wealth planning.

1:02:11And anybody that listens to this conversation knows why it's named expectancy wealth planning. And it's unique in that it's the only financial strategy course, wealth strategy courses built from the ground up on the math that's valid. And it's not a math course. Like I have tons of people in there that have hate math and they're doing just great in there. So don't, don't be freaking out by math. But it's a master course in understanding financial planning, wealth planning. And if you think you don't need it because you have a financial advisor's financial plan, think again. It's completely different.

1:02:45It's level two. Okay. What you're living in is level one, if you've got a financial advisor financial plan. This is level two. It's also a huge community around tactical asset allocation. And that's what most of my students employ or a mix of that with buy and hold. And I teach a principle called deep diversification while it's true. So anyway, it's all over at financialmentor.com and I have one course and I have a few books and that's all I sell. Top Trusted, I appreciate it. You have a great one. I appreciate you coming on. Good time of the year to do this. Right at the beginning, people getting set for the rest of the year, the rest of their lives and all that.

1:03:20And let's make it happen for them. Yeah, thanks so much for having me. I enjoyed the conversation. Thanks, have a good day. See ya. Right. And that's going to be wrapping it up for this episode of the Disciplined Investor Podcast. That was pretty good. I like that. Going back, especially to the years when we talked about the efficient frontier, which, by the way, we still believe in. I think there's still good use for that, but it has to be modified. We use that as a core of what we do still. But the way that was done years ago, the way that was utilized initially, modifications needed to be made.

1:03:51The concept is there with non-correlating assets, and that's what we do in our portfolios on a regular basis, by the way, for clients. If you're thinking about becoming a client, well, we're looking for you to reach out because we can't find you. Go over to thedisciplinedinvestor.com. There's lots to see there. Find out about the TDI Managed Growth Strategy, our long-short strategy, equity-oriented, some hedging in there. We use options. We use short trading as well, as well as going short. the markets as well as individual stocks. Again, that's all over on the disciplinedinvestor.com. Thanks for joining me this week and every week.

1:04:29I'll see you real soon.

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