Structured Products (Plus Just Keep Buying with Nick Maggiulli) (EP.255)

26:29Ritholtz was founded by Barry Ritholtz and then soon after was joined by Josh Brown, who was our guest on episode 126, the Brian Portnoy and their book that they released. Barry hosts the very popular podcast Masters in Business, which is on Bloomberg. So we just reached out to him and this is early on, right? This is episode 57. So we reached out to him and he said, sure, come by my office in Midtown. So off you and I went, we packed our backpacks with the equipment and the mics. It's so crazy now to think about all the effort because doing it on Zoom just wasn't a thing that you did, right? I mean, what did we know?

27:08First of all, it was so early on. So we hopped on a plane, went to New York, and I mean, it was great to meet him, great to be in his office. A whole, quite the eclectic, fun, a little bit wacky environment they work in at Ritholtz, and that's kind of their character, which shows through as everybody knows. All right, so with that, here's a quick recap. So for episode 57, we sat down with Barry Ritholtz, founder and CIO of Ritholtz Wealth Management. Barry also hosts a master's in business podcast. Barry is a lawyer with a very long career on Wall Street and a keen reader of all sorts of content and someone who largely shares our investment philosophy.

27:45You add in some humor, some opinion, and a whole lot of energy and you get an incredible hour with Barry. I think it's safe to say that was a pretty interesting hour. He talks about the early days of starting his firm and starting his daily blog many years earlier. He was actually one of the very first financial bloggers and it's still going daily. Barry also shared with us how he decided to set up his firm and what it means to act as a fiduciary for clients. He talked about what is the greatest value add from an advisor and why that is worth paying for. At the end, we asked him, as someone who worked and acts near Wall Street, how stockbrokers and active mutual funds still survive.

28:22He said he has been wrong for 20 years and that when you incentivize someone to harvest a client's organs for a resell in the black market, they'll harvest the client's organs. Incentives matter. Can he change the world? His response was, I think you can change the viewpoints if people are willing to have their viewpoints changed. That was Barry Ritholtz on episode 57 and Ben, that was almost four years ago. Crazy. He said incentives matter. I didn't read that in the notes ahead of time, but that fits nicely with what I said, that exact same thing a minute ago. Yeah. So I chose that episode to review because the book review this week is from one of his colleagues, Nick Majuli, and the book is called Just Keep Buying, Proven Ways to Save Money and Build Your Wealth.

29:08And as you know, as part of our Back to Basics theme this year for our 23 and 23 challenge, we've been emphasizing financial literacy. And this week, I'll do a very quick review of that book. And then we'll jump into a conversation with Nick. So Nick is the chief operating officer at Ritholtz Wealth Management, where he oversees operations across the firm and provides insights on business intelligence, which is his specialty. He's also the author of the blog of dollarsanddata.com, which focuses on the intersection of data and personal finance. His work has been featured in the Wall Street Journal, Forbes, and CNBC.

29:44Nick graduated from Stanford with a degree in economics and lives in New York City. This book, Just Keep Buying, was published in April 2022. I found it quite an interesting and almost an inspirational read, and it's very compelling how he writes it. It's basically a philosophical way of viewing your savings habit, and it comes down to save what you can and just keep doing it. Just keep doing it. If you look back over time, if you believe in a prosperous future, then you should just decide to keep acquiring investment assets. Just keep buying into a portfolio that makes sense. Keep your head down and keep on buying.

30:29That's my biggest takeaway. He breaks the book down into two sections. One is sections on saving, the sections on investing. Of course, you invest to save for your future self, to preserve money against inflation, and replace your human capital with financial capital. but he highlights early on in the book that savings matters more when your rate of savings has a greater impact than your rate of return. Your savings matter far more than your return in your early years and later as your portfolio grows, the rate of return matters a lot more. He says basically make sure you focus your energy on what matters more.

31:11Earlier on, focus your energy on your savings rate. Later on, you can get arguably more focused on the actual portfolio. But the portfolio gets large enough, make sure you funded the life you need before you risk it for the life you want. So basically, as your portfolio gets larger, keep an eye out for the amount of risk you're taking on. He also, at length, talks about some of the very common herd investment advice to cut spending, such as skipping your lattes. He argues that most of this type of advice is based on guilt. His argument is instead of focusing on that, you should focus on what you can do to become more valuable and to command higher compensation, which will lead to a higher savings rate.

31:58He says to become more valuable, you should focus on five methods. Either sell your expertise, sell a skill, teach people, sell a product, or climb the corporate ladder. Basically, he said it's much more effective and much more fulfilling to be top line focused. Focus on your career, focus on getting the flow, focus on doing things where you can add value as opposed to feeling guilty but having that latte. So again, it's a philosophical viewpoint. Anyways, I really like the book, easy read, and lots of solid recommendations. So with that set up, let's go to our conversation with Nick Majuli. Nick Majuli, welcome to the Rational Reminder Podcast.

32:42Thanks for having me on camera. It's awesome to see you again and congrats on your book. I know it's been out for I think a year or so. The book is Just Keep Buying and I really enjoyed it. Congratulations. Thank you. I appreciate it. So your book has a very clear distinction between saving and investing. So what is the significance of this distinction? I think the difference between saving and investing kind of represents the typical financial journey we get throughout our lives, right? And so for those who are younger, let's say you're in your 20s, just starting out, the thing that's really going to move the needle in terms of changing your wealth is going to be your savings.

33:17How much money you can save from your job, your income, et cetera, save it, get it invested, et cetera. And then as you go through life, in theory, you're building up a nest egg and that portfolio should start generating income for you. And that amount of income should keep growing until once you hit retirement, it should be able to generate hopefully more income than you could at the time. And so I can give you a simple example of this. When you're, say you're 22 years old, let's say you have$1 ,000 invested, 10 % returns, like a hundred bucks, right? It's not too difficult to save$100. But now take the flip side.

33:49Now take someone who has, let's say they're 65, they've been saving their whole life. Let's say they did very well in their career. They have$10 million, right? A 10 % returns a million bucks, right? So for someone to save a million dollars in a year is just very, very difficult unless you have a super high income, right? So you can see like what's going on is people who are younger don't have as much focus on your savings, focus on how you're going to get your income, how you're going to save it, how you're going to get it invested. As you get older, then you have to think about tax optimization, your asset allocation, all those things, because that's where the investment piece that you can think of as levers, like in which lever you pull changes over time.

34:22So you recommend people should kind of think about that metric about when that crossover position happens. And I guess their mindset shifts as they go through that point, right? Yeah. And so I think most young people should just exclusively focus on career. Most mid-career people have to think about both. Like I would say I'm mid-career now where I can't just not care about my investments. I have to care about asset allocation. I have to care about all that stuff. And then once you're in the end game, once you're in retirement and stuff, it's all investments completely all the way down. And so you have to get just where you focus.

34:52I'm not saying if you're 22, just, okay, don't invest your money. No, I'm not saying that at all. But don't obsess over it. Get into some portfolio. It doesn't matter if you're in an 80-20 or a 60-40. When you're that young, it doesn't really matter. Of course, you should pick something that fits your risk characteristics and risk profile, but it's not going to make that much of a difference over the first five years of your career, but by the end, it can make a huge difference. So when you're 65, you really need to know your risk tolerance and stuff like that. What is the difference between just keep buying and dollar cost averaging?

35:25So I would say better branding. The term dollar cost averaging, as soon as you say that, most people's minds just shut off. And so I think just keep buying. I mean, besides like, it's just rebranding dollar cost averaging. It's also a more aggressive approach. And And I would say the psychological piece is built in. I mean, it explains itself in the phrase itself, right? And so I think it's a cool catchphrase. A lot of people are using it. I've noticed that. And I get so many comments all the time, just keep buying. And so it's like all... Especially when the markets are so declined, people just start sending me these.

35:53And so it's so funny. But I think that's the one thing. And then in addition, just keep buying what it represents is a philosophy of using data and evidence to support your arguments. That's really what the book is. And I don't just talk investing. As I said, there's savings. There's personal finance aspects of this I discuss, and then I get into the investment piece as well. So it's not just like, oh, if I just buy every month for the rest of my life, I'll be good. That could work. And if I could only give you three words, that's probably the best advice I can give you. Of course, there's a lot more to that.

36:21But I'm trying to say, think about your whole investment philosophy and then boil it down to as few words as possible. And that's the thing that I think is the most impactful for investors. Can you talk about the impact that that phrase, just keep buying, has had on you? because in your book is clear that it impacted you. So for me, it's like, for example, right now, the big thing everyone's time is the US debt ceiling, right? And like, oh, what's going to happen if this or that? And like, no one knows. Like if we technically default, I think markets will crash. If we actually default, we will definitely crash, right?

36:50And so it's a question of like, what's going to happen? It's like, let's look throughout history. We've never had this happen before. So we don't have a lot of data on like what happens when countries default, but they generally survive and they move on and we'll go through a crash, but the world will move on. And I also believe in diversification, right? That's another big piece of this, right? So just keep buying is not like just keep buying only US stocks and don't invest in anything else. I would never say that. I would say like own a diversified portfolio and just keep buying that whole basket and just, you know, see where it leads you.

37:17And I think that just that consistent behavior is more important than anything else. And that's what I emphasize. So almost antithetical to that is something that I'm sure you hear that we hear in our day jobs, which is I'm holding onto cash, keeping the dry powder just in case opportunities arise. So should people wait to buy on the dip? So generally, the answer is no, I would almost never recommend that. And the reason why is because if you actually look like throughout at least history, most equity markets, most of the time, like dips will occur, but they usually happen at a higher level than wherever you started investing.

37:51So let's say you started, let's say there was some index values at 100, right? Like, I'm gonna wait for a dip, wait for a dip. The index may get to 200 and then it dips by 50%. to 150, or I'm sorry, by 25 % to 150, and you just bought at 150, but it's like, you could have been buying at 100 way before. And that's the thing with this whole Just Keep Buying thing. I remember people were like, back in 2017, when I wrote a blog post called Just Keep Buying, which was the introduction of this, people were like, oh, the market's overvalued, market's overvalued, blah, blah, blah. Even if you had waited and held cash starting in 2017 and accumulated and waited until the bottom, the day of the bottom in March, 2020, right?

38:28March, I think it was 23rd, 2020 and bought then let's say you could perfectly time the market, which of course you can't, but let's just imagine you could, you still would have bought at prices 7 % higher than in the beginning of 2017, right? So it goes to show it's really tough to time. And if you do happen to get a dip and buy it and get lucky, like thank your lucky stars, take your victory lap, but don't do that again. Because if you keep trying to do that over the long haul, you're going to lose out like on average, because it's just too difficult to do, right? And no one can do it consistently.

38:58That's the other problem. So if you do it once, don't think you're gonna be able to do it again. That's my advice, honestly, to people. Why might people need to save less, less than they think? So I've looked at a lot of data on retirement in the United States. And one of the things that kind of like shocked me a little bit was like, there's a lot of people who are leaving a lot of money like on their deathbeds, right? So like, and you actually look at the data, people in their 70s leave more than people in their 60s, right? Who passed. People in their 80s leave more than people in their 70s on average, right?

39:28And it goes up from there generally. So the whole thing is like, what's going on, at least based on what I've seen in the data is like, a lot of retirees are actually just... Their portfolios keep going up. And they actually think like, oh, I'm going to run out of money. And I think the real problem they have is that their portfolio is growing faster than they can actually consume it. And so that can seem... I know right now in 2022, it won't feel that way. But most of the time throughout... Most of US history, retirees would have actually been pretty well off. And so the thing to keep in mind here is like, okay, so imagine like you want to pull money out of your portfolio.

40:02A lot of these people, they'll pull some money out, but they won't pull enough. They actually aren't pulling down their principal. They're like living on their investment gains or even less than that. And so actually five and seven retirees don't pull any money out of their principal. Only two and seven of those who have a portfolio, at least, right? Actually pull down principal, right? The rest don't. And so that's kind of the shocking thing here is like, there's very few people who are actually selling down their assets. And a lot of people just like have more investment gains than they spend in a year.

40:27And then they end up just reinvesting money, right? And there's a good minority of people who have to take required minimum distributions, which are things that the United States government requires. And they say, hey, you have to take this money out. And so a lot of these seniors, like, I don't know what to do with this. So they just reinvest it, right? So it's like, it's this thing where you look at the data and like a lot of the retirees are actually just keep buying as well. It's such a funny thing. I joke about, well, everyone's like, what about retirees? Do retirees just keep buying? Well, a lot of them actually do.

40:53They are still investing and they're still growing their portfolio. And I'll leave you with one other cool, probably the coolest data point I found when doing all the research on this. Michael Kitsis did this research and he found that over a 30-year time period in a 60-40 portfolio using the 4 % rule, so you're actually pulling money out 4 % a year, adjusting for inflation, all that, you are more likely to forex your portfolio over that 30-year period than you are to be below your starting value. So let's give you some numbers to make this real. Let's say you start with a million bucks, right?

41:21You start the 4 % rule, pull out your 40K, whatever. The next year, you adjust it, et cetera. And you run that through market history, right? You just pretend you did those 30 years as a simulation. At the end of the simulation, you're more likely to have$4 million than less than a million. And that's after pulling that money out over time, right? It's because I think people underestimate market growth. And so I think one of the things here with retirees, I think a lot of retirees probably need to save less than they think. And especially people, I'm guessing, listening to this podcast, who are probably super diligent investors are doing great at saving, I would assume so.

41:50And so their issue is not gonna be like, do I run out of money? It's gonna be like, how do I spend all that money I accumulate? And I think that is a real issue. And I talked to a room with a bunch of boggle heads once. And that was the thing I said, most of you guys are crushing it. You're absolutely crushing it. And it's not about like, oh, am I going to have enough money? It's like, how do I make sure to spend my money so that I can at least enjoy my life to the max? I mean, I'm not saying you have to... There's this great book out there, Die With Zero. And we may get into that a little more.

42:16Great book, but I'm not saying you have to die with zero, but I think it's direction accurate. Die closer to zero and not like, oh, I had$10 million. You could have done and given that to someone or something or whatever. This next question, I know the answer, of course, which is why I'm asking it, and I agree with you. What is the biggest lie in personal finance? Biggest line personal finance is that you can cut your spending to get rich. And don't get me wrong, there are people that have done it. There are people that have reused their dental floss and all sorts of crazy made their own laundry soap at home or something, and they've gotten rich from that.

42:49But most people don't. And you look at the data, and it's pretty clear that the thing that builds wealth is income. And if you looked at what's most correlated with savings rate, it's income level, right? The people with the highest incomes have the highest savings rate. And that's true on average across the board, which means it's gonna be true for most people. So sitting here and telling people to cut their lattes and this and that, it's just, it doesn't move the needle enough, right? And of course, those people like, well, if you just cut your latte every day and did that for 40 years, you know, you'd have a million bucks, right?

43:15But it's like, yeah, you have to have a 10 % return. You have to have, there's all these other assumptions that are built into that that are a little extreme. I mean, you know, I'm not saying that there's nothing to lattes, but it's like getting a latte could boost your morale and make you work harder and you get a bigger raise. Like there's, I think it's worth the cost for things like that. So I don't think spending is the problem for most people. I think it's income. And the data tends to show that. So that's why I kind of say that. Of course, every person on here is going to be like, well, what about this person?

43:41They had a huge income. They didn't get rich. It's like, and I love when people do this with celebrities. Like, oh, Mike Tyson went bankrupt or Lindsay Lohan. Like, you can name like, what, five, 10 celebrities that went bankrupt that had high incomes, you know, and that aren't rich. Guess how many I can name? Every other celebrity except those 10, right? Like, you have 10. Like, if N is all the celebrities, you have 10. And I have, you know, N minus 10. Like every other celebrity who's not, doesn't have a spending problem is rich because why? They have a huge income, right? It's like as simple as that.

44:07So I don't think the existence of a couple exceptions disproves the rule, right? And so that's something to keep in mind. What are the two different tips that when combined will allow you to spend your money, as you say, 100 % guilt-free? So yeah, I've come up with different ways of like looking at how to spend money. As I said, I think this is going to be a big issue for a lot of people who are doing well at accumulating. And one of the things I do if I'm like, oh, let's say I wanted to go a nice dinner that's going to cost 500 bucks or I want to get a nice pair of dress shoes, maybe they're$400, whatever it is, I will save twice the amount.

44:37So I'll call this the 2X rule. So instead of saving$400 for these dress shoes, I'll save 800 and I'll take the 400, buy the dress shoes and I'll take the other 400 and I'll invest it in income producing assets or my portfolio, et cetera, or I can donate the 400. There's different ways. I've done different things over time. And I think why that gets rid of the guilt is because like, okay, if I'm going to splurge on myself, at least I can invest in my future or help someone else out. And so I think that's the psychological barrier you have to get through in some way. And every person's splurge is different.

45:07For some people,$100 is a splurge. For someone else, it's going to be like two, five grand, who knows whatever it is. But you got to figure out what is a splurge for you. And then once you're in that realm, say, okay, I can spend this much. But if I'm going to do that, I'm going to also at the same time either invest in my future or help someone else out. So that's one of the rules, the 2X rule. Another thing I think people should focus more on is not necessarily maximizing happiness, but maximizing fulfillment. And so what I mean by that is like, there's a lot of things in life that don't necessarily make us happy, but can make us very fulfilled.

45:37And I think an example I give, I think I gave in the book was like climbing Mount Everest or running a marathon or something, right? Like these are things where once people do something like this, if they're into that, you know, they can have this deep sense of fulfillment that they accomplished this very hard goal, but it wasn't necessarily a happy experience. I don't think people run the marathon. Most people are like, oh, that was so happy. Like, no, it's tough. It's a tough thing to do. It's tough on your body. But at the end of it, you feel fulfilled. And so spending money to maximize fulfillment, I think, is a better way to go than to just like, oh, I want to maximize my happiness in every way possible.

46:07So that's kind of the main... You take those two rules together. You can kind of get rid of guilt. You kind of where to focus your money on, figuring out what you want to spend on and cut on the areas you don't want to. I think that Ramit said his idea of doing that is actually really great. And I think that is related to the fulfillment stuff, right? It's like, oh, I, for example, I love restaurants and I'm fine spending a lot of money at restaurants, but I don't particularly care too much about clothes. I don't spend too much on clothes relative to most people. And so I think that's, it's figuring out which areas you want, which areas bring you that fulfillment and then focusing on that.

46:39Having completed the New York City Marathon, it is very fulfilling and it is not that happy an experience. So you're spot on with that. Thank you. Thanks for backing that up. I can back you up. So someone's just kept buying all through their savings life. When it comes time to draw down in retirement, do they flip? They just keep buying to just keep selling? How does that work? I mean, in theory, you want to sell as late as possible. You want to buy as soon as you can, but you want to sell as late as possible because in theory, markets go up over time, all else equal, right? All else equal, same risk tolerance, everything else, right?

47:10Markets go up over time. So you want to sell as slowly as possible, right? But obviously, when you're in retirement, you're going to be selling over time. And so yes, you're going to have to start selling assets down to live your life and do the things you want to do. But if you want to find a selling strategy, I would say sell as slow as possible, right? All else equal. I mean, obviously, if you're like, well, I know I'm going to need this money for sure, then sell that, take the risk, de-risk that. But beyond that, I would say wait as long as you can to sell because on average, over a long period of time, you're going to see your portfolio is going to keep growing, right?

47:41And so I think that's the thing that a lot of people are going to be surprised by unless you're, you know, unless you have a very high withdrawal rate, that that will really pull your portfolio down pretty quickly. But things like 4 % rule, you'll find that, wow, I thought my portfolio was going to shrink and maybe it won't shrink as much as you thought it would. I'd like to go back to your comments about spending more in retirement. Do you have any practical advice for people on how they can become more comfortable spending more? This is always going to be an individual situation and you have to really understand your psychology.

48:10Like, I think this is, I wish I could be like, oh, you just do this. It's like some people are going to hear that and say that doesn't work for me. So you have to understand your psychology. Where does your money beliefs come from? Like I can give you an example. Let's just give you one small example. And you might be able to find like, oh, I've thought there's a couple of things like that in my life. So for example, as I said, I love restaurants. I regularly go to nice restaurants in New York City. They're very expensive, right? I don't worry about the money in that situation, right? You know, obviously I'm not going to Masa, which is like 2000 bucks a person.

48:37But like, you know, if it's 100 bucks a person, 200 bucks a person, that's not the most extreme thing. Okay. You know, it's an I want to go to a nice meal. That's where I spend my money. But every time I'm at McDonald's, I end up only ordering off the dollar menu. And it's like, why am I doing it? I regularly spend more money, but every time I go to McDonald's, I order off the dollar menu. And it's because when I was a kid, I was always taught to order off the dollar menu. We didn't have a lot of money, so we always ate cheap. And because of that, that's still in my psychology in some way to the point where I'm like, oh, I can't get that nice chicken sandwich.

49:05That's$6. I have to spend the$119 or$149 or whatever it is. Now the dollar menu is like a$2 menu, but you get the point, right? And so that's a particular psychological quirk I have where it's hard for me to get over. And I know I have it, but I still can't bring myself to go and spend$5 on a sandwich at McDonald's. And so figuring out what your spending quirks are and then how to address them. And I think this is where the book Die With Zero does help a lot. Because if you're like, I can't spend money, read this thing. Really dig into it and figure out why is it making you feel that way when you spend money?

49:39There could be scarcity things. There's a lot of stuff. And I understand a lot of reason why people oversave. I know people are going to hear this and say, Nick, I can't oversave. Oversaving is good because what happens if I have this crazy medical issue or if I have some other thing, right? And that's fair. And that's actually, you look at the data, that's why most people oversave. They're worried about these really low probability tail risks, which could happen. And it is unfortunate when that type of stuff happens, but it's very rare. And so we can't prepare for everything, right? You can't be like, okay, I'm going to prepare for every single scenario.

50:08Then you would never spend money ever. And I don't think that's a good way to go through life. Of course, you want to be somewhat conservative when you do things, but I don't think you need to be like, oh, I need to have 10 years extra worth of savings and cash just in case. There are people that are out there that are like that. And I'm just like, no, you probably don't need that. And it's just figuring out that balance and understanding your quirks and addressing those. That's where I would say to someone who's like, I need help spending money in retirement, figure out why, whether you have to talk to an advisor, talk to a therapist, whatever.

50:36And I don't mean it like that is a bad thing. figure out why you're doing that and then figure out how to address it in a way that you're comfortable with and just make progress. That's the first thing. Go try to do one big thing. Spend a couple of grand on a vacation that you would never do. Just go do it and just enjoy the money and try to enjoy the process instead of saying, oh my God, I'm spending so much on this one thing. Just enjoy it purposefully. Set yourself a goal to spend like two or three times what you normally would spend and see if you can do it and just enjoy it. That's what I would say.

51:03Any final pieces of advice? I mean, the main piece of advice I tell people, right, which is what I brought up earlier, is like, I think a lot of this comes down to income. As much as I want to be like, oh, your investment choices matter, all that stuff. For most people, it's like income is the thing that moves the needle, especially early on and through mid-career. And that's the thing that people really need to focus on, which is like, okay, well, what does that mean? Like, does that mean you need to get a side hustle? If you want to, if you're not at a place where you want to be financially, maybe you need to get a side hustle.

51:30Maybe you need to open a side business or you want to do tutoring or whatever. There's a lot of ways people can make income. And I kind of talk about these different ways in a book, creating a product, doing service, selling your time. There's a bunch of different ways of doing this. But I think it's something that a lot of people don't think about. And they just... Most people, at least in the United States, they have their W-2 job and that's it. And if they're not happy with their financial life, then it's like, okay, well, you need to spend time doing that. And the example I gave in my particular example is I spend 10 hours a week blogging.

51:58You don't have to do blogging, but find something that you enjoy doing and try and do that for a while until hopefully you can find a way to monetize. I didn't monetize for three years. The first three years of my blogging life, I didn't make a single dollar, basically. I had some Amazon affiliate links, but that's basically nothing. It's like four cents per whatever. It's 4 % of all the sales. So it's pretty small. So the point was like, I didn't really monetize for three years. And so it's like, but now it's a decent little side hustle. It's something I do and I enjoy doing. So find the thing that you like to do and see if you can monetize it.

52:28If you're trying to grow your income and do that, if you care about that, if you feel good, you're feeling like you're in a good place, then don't worry about that. You know, I mean, it's all about kind of what your goals are. That's the thing I would say. Yes. We talked about the five methods that you alluded to in the book in the intro to this conversation. So sell your expertise, sell a skill, teach people, sell a product and climb the corporate ladder. Yeah. And I think climbing the corporate ladder, people like, especially on Twitter, like dunk on that, like, oh, don't be a person who stayed at a job for years.

52:55there's a lot of people that really got a lot of fulfillment after out of doing something if you're at a place you like like there's nothing wrong with that i think there's a lot of people out here that just dunk on traditional careers and like look down on that and like traditional careers were a big thing in the united states for most of its history it's only in the last 20 30 years that people are like oh don't do that like don't and it's just the you know the trend the environment changes on how people feel about things and i don't necessarily agree with that i think there's a lot to be you can learn a lot in traditional careers and that's how you get the skills to go and be your own boss and open your own business one day, right?

53:26If you really want to do that, right? So I don't think there's anything wrong with that. Sometimes, you know, there's a lot of people that wouldn't be good entrepreneurs. They don't have a vision, but they're very good at executing, right? They don't have like, oh, I want to do this, this and this, right? But I'm very good at getting things done. So maybe you would be better off in an organization helping someone else build their vision and just being a really, really good operator. And you can make good money and have a good career doing that. So think about that. Nick, great to have you on. Congratulations again on your book.

53:51And thanks for coming on. Yeah. Thanks for having me on, Cameron. Appreciate it. That was Nick Bajuli and the book is Just Keep Buying, Proving Ways to Save Money and Build Your Wealth. So Ben, you got a flight coming up. Yep. By the time this is released, I guess you'll be back from your flight, but is that your first flight since the pandemic? In years, yeah. Interesting. I look forward to seeing how you enjoy it. I won't, but – You know that already. Well, how many flights have you enjoyed? Flying is not nice, is it? I actually had some pretty good flights lately. But again, weather can wreak havoc, but at least now it's almost summertime.

54:27So have you been on kayaking at all yet? Not kayaking. I've been hiking a few times. So I got a small story. So there's a crack in the stairs of our pool. We've got acrylic stairs in our pool. So you got to get the crack fixed, obviously, because it leaks. So the pool has been leaking, big mess. But we're changing the stairs later on. So I just want a quick repair. have you ever bought Flex Seal? Like you see the Flex Seal ads on TV, you know the Phil Swift ads, you see them on TV. It just shows that advertising work, it's like, okay, why spend 600 bucks to repair this for a couple of months? Flex Seal.

55:00So, I ordered the Flex Seal tape and it comes, this piece of tape that might be a foot and a half long. It is unbelievably adhesive. Like, you can barely get your fingers off. So, I put that on the crack in the stairs and took the Flex Seal spray around it to make sure the seal is sealed. Wow, this stuff is unbelievable. So, I have Flex Seal. That is not a plug for Flex Seal. It's just more that advertising works. That was kind of funny. I joined Toastmasters. I told you that. I have another meeting tonight. Super fun actually. Gets me out of my comfort zone, which I wanted to do. Oh yeah, I did it years ago.

55:34Definitely gets you out of your comfort zone. Oh, you did do it. I didn't know that. Yeah, no, I did it a long time ago. Yeah, it kind of all ties together. Just finished the book Storyworthy, which we'll talk about, I don't know, in a few weeks or so. And then Angelica recommended that I read a book she's reading now, Superfans, which also refers to the power of the stories. And this book Storyworthy talks about having a daily habit of finding a story in your day and tracking the impact of that story. And it makes the argument that if you can just have these very brief short stories and you can link them all together, thread them all together, is it really helps you understand what's going on in your life and what's important to you.

56:15And they have, there's not one in Ottawa, but there was called a moth story slam. Have you ever heard of this? Where it's like open mic night, but for storytelling. And there's a podcast called The Moth, which plays back some of these stories. They're incredible. And how people can structure stories. And in the book, Storyworthy, it helps you understand how to structure a story to be effective. But the whole power of storytelling is unbelievable, especially in this chaotic world is supposed to help you make form out of the chaos. And this is something I first got Galloway talk about, which is the greatest gift that he's trying to leave to his boys is to become good storytellers because he thinks it's incredibly good talent to have in their career.

57:00So yes, I'm working on storytelling as well. Next week, we welcome back Hal Hirschfield to talk about his book, Future Self. And the week after that, can't wait. It's going to be so much fun. We've got Giorgio Ugazio joining us, who you are on the Retire in Progress. What do you call it? Twitch? Twitcher? What was it called? Stream. Stream, whatever. Anyways, if you go to retireinprogress.com, you are still on the front page of Giorgio's website. So we're going to do a book review with Giorgio of the book he mentioned with you, which is Designing Your Life. Fantastic book. Are you going to start telling more stories?

57:39I don't know how I feel about that. We hear where the power of stories. There's something wrong with me, I think, because I can't stand when someone starts telling me a story. Same with books. If I'm reading a book and like half the chapter is a story or two-thirds of the chapter is a story, like show me the data that supports why the story is relevant I don't care about the story but I think that's a deficiency I have I think the point of the story is to understand why people do things and it's not just to tell a story for the sake of telling a story is like what did you learn how did you change from that story so there's more to it than just telling a story like I just tell a story about the time I almost drowned off the coast of Florida scuba diving once everyone's got stories like that.

58:22Most people, even they say in the book, don't care. How did you change? What did you learn? How did it impact your life? That's a little more interesting. So, it's the ability to tell that. I just find this mechanism. It's almost like how Seinfeld constructs jokes, how you do this. There's a whole, I don't know if it's science or not, but there's a whole methodology that the book goes into about how to tell an effective story. I have not figured it out yet. A couple of good reviews. Our friend Jason left a nice review calling the podcast a fantastic resource. Despite Cameron's refusal to condemn Tabasco as a garbage hot sauce, this remains the single best podcast for learning about evidence-based investing that there is.

59:02So thanks to our friend Jason for that. NPR intern 65 from Canada says personal finance for anyone. You don't have to be a finance wonk to enjoy this podcast, but if you are, you will love it even more. From basic personal finance to the inner mechanics of bonds and ETFs to happiness, this podcast has it all. The hosts, Cameron and Ben, make complex finance topics accessible while referencing the latest academic research. The caliber of their guests is impeccable. There is no podcast I would recommend more than this one. That's very nice. Perhaps you can talk about a couple of things going on in the community.

59:40So we have meetups coming up. We are in Toronto, September 20th, probably have something going on at the IAFP conference in Edmonton. The LA meetup going to be tough to pull off and there wasn't a ton of interest. So we're going to pass on that idea for now, but we're going to be hosting for advisors going to the future proof conference and try setting up a breakfast. So just drop us a note at info at rational reminder.ca. And then on July 15th, for those in Ottawa who might be interested, I've been invited to speak at the Ottawa Book Expo, which is at Lansdowne Park. So that's Saturday morning, July 15th.

1:00:20You can go to ottawabookexpo.ca for tickets. In the store, I think we just had our first week since we opened the store of no orders. I can tell you why. Why? Because you don't have my premium t-shirt in stock. Oh my God. So are we going to go to production with that? I don't know. Angelica said you didn't want to have any more SKUs. I don't want to have any SKUs. Oh, she said no more SKUs. I went on a website that lets you make your own shirt and I made it and ordered it. Okay. So describe the shirt and we'll see if there's interest. Well, it has. It's the five-factor model printed on the front of her shirt.

1:01:01MKT minus RF, market factor. and SMB, HML, RMW, and CMA in big white letters down the front of a black shirt. And it's called a premium t-shirt because it's got the premiums on it. It's funny. All right. So if you're interested in that shirt, drop us a note and maybe we'll set up SKUs. I don't think it's a big deal to set up SKUs. I asked about getting the premium t-shirt and I was rejected. So I went and got my own. Okay. I didn't get the premium parts. Now I get it. That actually is kind of funny. Anyways, go order stuff. It's super cheap. shipping's free in North America. We throw in a bunch of free stuff, so why not?

1:01:38You want to talk about an article that our friend Rob Carrick wrote? Yeah. Rob Carrick, he's often occasionally critical of financial advisors and a big proponent of do-it-yourself investing, as I think we are as well. But he had a really nice post recently talking about, it's kind of like the financial, and this is still a topic I want to cover in the podcast, like all the investor mistakes. We talked about that a bit when we talking about what is the value of a financial advisor. I want to do a whole episode on mistakes that investors make that are documented in household finance. Anyway, Rob had a post kind of like that, that was like, yes, you can save on fees if you ditch your advisor, but there are some ways that that can go wrong.

1:02:18He had an article on five ways firing an advisor can work against you. The five ways are if you don't have a financial plan to guide your investing. He says, good advisors base their investment plans for clients on a financial plan that maps out how financial goals will be reached. Key points covered in the plan include how much you need to invest over the years and what return you need to reach your goals. In other words, how much risk you need to take on. Another way it can go wrong is if you don't diversify properly, and this is absolutely one of the well-documented mistakes in the household finance literature.

1:02:47Too much in stocks could overexpose you to market downturns and tempt you to sell at low points. Too little in stocks could deny you the returns you need to generate is the way Rob articulated it, I would expand on that saying that we know again from the household finance literature that investors often hold concentrated portfolios. One of the reasons is maybe overconfidence, but there are other possible reasons too, like just straight up errors, like we talked earlier about wants and errors. We know from James Choi and Adriana Robertson's survey research that a lot of investors hold concentrated stock positions because they think that they're going to earn higher returns by doing so.

1:03:22But of course, statistically, that's very unlikely. Another way that firing your advisor can go wrong is if you suffer from analysis paralysis. If you're overwhelmed by information, you let cash sit idle in your investment account, expect zero interest paid on this money. And again, that's well-documented in the household finance literature. A lot of people are underexposed to stocks. It's called non-participation. Equity non-participation is a big thing in the household finance literature. A lot of this is top of mind for me right now because I just finished preparing the questions for James Troy, who we're talking to tomorrow.

1:03:55His area of expertise is household finance. I didn't just have this stuff talking points in my head. Another way Rob says that firing your advisor can go wrong is if you think you can outsmart the market. Market timing traps include going to cash because you hear a recession is coming, then waiting too long to get back into the market. Again, in the structured products segment, we talked about how people think that a major market crash is more likely than it actually is. And there's that old quote, I can't remember what it was, what it is that much more money has been lost trying to avoid market crashes than in market crashes themselves, which I think is probably true.

1:04:31And the last one from Rob is if you stop adding new money to your account and miss opportunities to buy during market lows, good advisors keep you on a regular investment plan and encourage you to take advantage of bargains when prices fall on your own, you can miss these opportunities. I don't know how well we time the market for clients, but as a commitment device sticking to a plan and making contributions continually, even when the market is choppy. And maybe that's what Rob meant. Maybe he didn't mean timing the market. That's just kind of how it read. Yep. So that's it. Those are the ways that firing your advisor can go wrong, which kind of we talked about, I guess, in that previous episode where yes, you can save on fees by not having a financial advisor.

1:05:11But at least if you look at the literature, there's a lot of ways that households make themselves worse off. Whether an advisor actually resolves that is a, that's a whole other question which we covered in that episode. Speaking of the Globe and Mail, you're now contributing to Ask an Advisor series. Can you talk about that? I didn't realize they created that series for me. I used to write for the Globe and Mail and I stopped because we were super focused on building up this podcast and on my YouTube channel and that just became such a big time commitment. At that time, I was still in a lot of client meetings and so it was just like I had to tell them that I had to stop writing.

1:05:49But I reached out recently and asked if I could start writing something again. And they said something about an Ask an Advisor column. And I was like, oh yeah, I can contribute to that. But then when they tweeted out my article, they said it was the first in the series. So I didn't realize that they had created this Ask an Advisor series. So you are the advisor? I think so. Okay. I guess I could ask them to be sure, but I - So it's Ask this Advisor. Yeah, I think so. Cool. Yes, we did the piece on covered calls. When that came out, I saw on Reddit because I go on the Personal Finance Canada subreddit when I'm sitting around.

1:06:26Somebody had posted about they'd invested in covered call funds, even though they knew from Ben Felix that for me, obviously, that dividends don't matter, that income doesn't matter, something like that. Then they wrote this whole long post about how they blew themselves up in covered call ETFs. and so I posted the article because it had just come out. I saw the post and the Globe Mail article came out so I posted saying something like, sorry, you had this experience. I know it's a little too late but I just wrote about this in the Globe Mail if you're interested and a lot of people upvoted that.

1:07:00Awesome. Both of us are on Twitter and in fact, both of us have our Calendly link in our bios on Twitter. You know what? Yes, we do. I clicked on mine the other day to remind myself what it looked like and I have no availability. So I was like, oh, maybe that's why no one's booking any meetings with me. Yeah. Well, we try to set up a meeting for both of us with somebody. I think there's like two time slots in the next two months available. Yeah. So I think we've become a little, at least I've become a little too proficient at putting in time blockers to protect myself and just the way the rules work in the settings.

1:07:39We're not that busy. It's just the way the rules work and the time blocks we put in and the time protection that Calendly builds in based on what we've asked for. So it makes it really tough. Yeah, we need to get better at using Calendly, I think is the takeaway there. You can always reach out at info at rationalminder.ca. It'll get through to us and we can try to find a different spot if you wish. I welcome all connections on LinkedIn, provided you don't turn around and try to sell me stuff, which has been happening more and more lately. What are you getting sold? All kinds of stuff. Marketing stuff.

1:08:13No, no, not product. Usually marketing stuff. What does that mean? We can help your SEO. We can help you get more followers. We can do all kinds of stuff. Rational Miter is on Instagram. And in fact, we just passed, Sandra is telling us 2 ,000 followers lately. Kind of fun. So we're on there. Ben, anything else this week? Nope. Hopefully people enjoyed the episode. Beautiful. As always, thanks everybody for listening.