Your Portfolio Is a Fingerprint of Your Personality | Jim Lebenthal

Financial crisis hits, it goes all the way down to $3 a share. Yeah. I am telling you just from empirical observations, it doesn't work. I've seen it work once in a while, which is the worst thing that can possibly happen to somebody. And what that does, Ryan, is it turns a temporary loss into a permanent loss.

I think the biggest investment virtue that somebody can have is patience. Your portfolio is a fingerprint of your personality. It really is. All right, Jim, I wanna start in a place that s- some of this is gonna be my own bias of thinking, but I really wanna get your, your kinda take on this idea and, and go wherever you want with it. But it's the starting spot that, that I wanted to, to, to, uh, begin our conversation with.

Which is much of the frustration, confusion, anxiety, stress that I see, um, maybe above the norm that we're experiencing today. So if we buy in that today there is a at least measurable amount of additional anxiety, frustration, stress that people are feeling maybe than what baseline would be in other times, if we can buy into that idea. I see so much of that being people not living in reality. Uh, you know what I mean? Not playing the game on the field, playing a game that they wished happened.

Like, I, I wish that I could just find one stock or one Polymarket bet or one crypto coin that's just gonna change everything for me, and tomorrow I'm a millionaire, right? And like, but it's like that's not, we all know that's not how the world works. Or, you know, I wish that this, this industry was gonna be the next thing and, or whatever and, and y- what you wish, what you hope happens, it, it, it, you can't invest, you can't build wealth around hopes and dreams, right? So like, how, one, do you, do you buy into and/or believe this idea of b- of operating in reality? And in the world that you live in and the work that you do, how, how do we do that?

Like, where do we start? How do we know we're, we're making decisions from ground truth versus, you know, some conceptual idea that some talking head had on X that we follow? Yeah. What, what a great place to start, Ryan. Thank you.

And I agree with you pretty strongly about people are living in, shall we say, alternate realities. Um, I have a pretty strong viewpoint that social media is a cauldron for cooking up those alternate, uh, realities. But, but let's not go down that rabbit hole, at least not just yet. I think I wanna start with the punchline, which is, uh, uh, you can, you can study what works and what doesn't work. And let me give you an example from the world of investing, which is where I live.

There are many stories that you can look at, again on social media, and you can see these people who look like they've made it rich quick. Generally speaking, that doesn't happen, okay? Making it rich quick is very much the exception, and when it happens, it happens in the world of investing by taking on gargantuan amounts of risk that almost randomly work out. So in terms of something that I very, very passionately believe, and this is a core truth of investing, that if somebody wants to say, to answer your question, what can they do, it matters that you stay in the market. Not try to time the market.

Not try to say, "Hey, I think the conflict with Iran is gonna end on this date and that's when I'll get invested. But then we've got the elections coming up and I'll get out a week before that." I am telling you just from empirical observations, it doesn't work. I've seen it work once in a while, which is the worst thing that can possibly happen to somebody. When they get market timing w- right once, then they think they can do it again and again.

And Ryan, I have seen wealth destroyed by that. I've seen people sell at the wrong moments and then try to chase the markets up and up, inevitably getting back in right at the wrong moment. So more than anything, stay in the market. It is your time in the market that matters. The old truism, it's not timing the markets, it's time in the markets.

One corollary to this, and believe me, I can go on for a while so I, I, you know, I wanna give you a chance to interrupt me here. But an important corollary to this is when you're investing and you're talking about being in the market for a long time, you have to be in high-quality stocks. Now anybody who has watched me on air talk about stocks, they know that I've got a few, you know, flyers in my portfolio. But out of a portfolio of 30 names, you're talking about less than five that are, uh, I don't wanna say speculative because I don't wanna be insulting to myself, but maybe have higher risk components to them. The rest of the portfolio, the 80%, that is tried and true Fortune 100 companies, they're gonna make it through thick and thin.

And I'll, I'll close this soliloquy, again I can go on for a while, by saying this. If you take the last five crises that the market has faced, so, you know, that's the great financial crisis, that's COVID, um, that's 9/11. If you happened to invest just before those downturns, like you got the timing absolutely wrong but you stayed in, so you had that downturn, say, in the great financial crisis of greater than 50% but you stayed in, your annualized return from investing at the exact wrong point in time is about 10% for each of the last five crises. You just have to stay in. You can only do that with high-quality companies.

Let me pause there for a second. What is the emotional trigger that we have to be aware of, watch, that we'll say the average investor, right? So someone who maybe- Wants to do a little m- I mean, and this might not be an average investor. Let's take this as kind of our ICP for the conversation, um, is someone who, uh, knowing my audience, most likely has probably most of their wealth in a business they own of some sort, whether it's a side hustle business or they're a b- a true- tried-and-true business owner. Um, they have a 401or something probably in some, like, mutual funds or whatever, and then they like to dabble a little more, right?

They like to do a little bit more, maybe some individual stocks, et cetera. Okay, so, so let's take that kind of as our, as our avatar. W-what are the, what are the feelings, the emotions, the triggers they're gonna get that are, that are gonna make them wanna pick up the phone and go, "Sell, sell, sell?" Or you know what I mean? You're like, like, how do they, w- how do, how do you create a, a, a system or a mentality that, that allows you to not fall for those moments and, and sell at the wrong time or, or panic sell or panic, panic buy, like chase, you know what I mean?

Like, just stay consistent, stay true. How do you, how do you develop that mindset? You know, that's another great question because I think we have to embrace that emotions are real. The idea that you're not going to have emotions is, in my opinion, an unrealistic expectation. Um, you know, I spoke before we started about, uh, one of your recent podcasts with Mr.

Buchi- Buchowsky, I believe, was his name, the fighter pilot, and I really admired that interview, and I admired him because he was so objective. You know, with, "Here's the mission," and everything works back from that. Every action works back to completing that mission. And that should be the way that you look at investing. But what I'm saying is just to add to that the reality that you're going to have emotions, and what may some of those emotions be?

It may be a form of greed that we call YOLO, or you only live once, or FOMO, fear of missing out. Um, that's where you feel like, "I've gotta get in today. I gotta invest right now." Now, if you feel that about a stock, there's a very simple solution. Just buy a little bit, okay?

Save some dry powder, because often the FOMO happens when a stock has already run up quite a bit. And my advice is just scratch the itch, okay? Buy a little bit so that it's not bugging you, but save enough capital that if it comes down, you can dollar-cost average over time into, uh, a bigger position. Um, but just, you know, again, what I'm saying is don't deny the emotion. Um, the other thing that you have to consider is fear.

And l-let, let's face it, uh, you know, the media does a very good job of fanning the flames of fear. I'm not just, you know, throwing rocks from, you know, from an island. I participate in the media, so I see it firsthand. And if I take a look at a, a current, uh, issue, by the way, such as private credit, um, that's something that, that's a story that is just tailor-made for the media. Because there's all these headlines about, you know, this company was fraudulent, and this executive says it's cockroaches, and this fund is gating its investors.

Okay, those headlines are catnip for the media, and they're also catnip for your fear processors. So what I invite you to do is when you're feeling that fear, is step back and remember what I just said, that if you're in high-quality companies, you're gonna make it through thick and thin. In the case of private credit, that means you've gotta be in the right managers, but you also have to think a little bit deeper about it. Now, I'm not selling anyone on private credit right now. I'm just gonna use the numbers.

Private credit is roughly a $2.5 trillion market, uh, cap asset class right now. Above that, or rather below that, is about $10 trillion in private equity capital that has been deployed that would have to basically go to zero for there to be a systemic risk in private credit. That's really unlikely to happen. So follow the data, and there's a heck of a lot more data on that one story. What I'm saying is acknowledge the fear, it's a real emotion, but then manage it.

In the case of fear, find out the data. Find out things like how many of these loans are in non-accrual status. What's the loan-to-value ratio? When you get those datas, data points, you start to get a lot more calmer. So that's, uh, you know, a-again, just to summarize, the emotions are real.

Don't deny them, but work with them. Yeah, I like that you said that. I think in, in anything, whether you're, it's starting a business, getting married, investing, this idea that you need to have the, you need to allow the emot- you need to experience the emotions. I think that's the first mistake is trying to act like somehow, you know, you see, you see your favorite talking head talk about some stock they just invested in, and it's ripping, and now all of a sudden you're like, "W-" Like, that's a... I get it.

I mean, there's probably no human in the world, yourself included, you see that. There's some small part of you that's like, "Shit, I'd love to get in there." You know what I mean? That looks, looks great. But to your point, if it's not part of your long-term plan, if it's not part of your investment thesis, if you don't know the industry, right, and, and it's anything other than some...

And, and I'm interested in, in kind of how you, how you think about this and how you talk about it around, like, what percentage of your portfolio can you do that with, right? Like, is there some, is it five, is it two? I've read all these different numbers. Like, where, okay, I see Micron and someone says, you know, before the big run-up, and someone says, "Hey," and I'm like, "You know what? I'm gonna take a shot at this," right?

I'm gonna take some small portion and maybe it hits, maybe it doesn't. Like, how do you, h-how do we start to structure our decision-making so that maybe if we are the type of person that has to chase that- We're chasing it in a way that it doesn't blow our entire portfolio up. Yeah. So I think, um, w- trying to answer your question, we can synthesize some of the things that we've been speaking about, and maybe bring in a new concept. Um, so synthesizing the idea of long-term investing.

We're not in this to get rich quick. We acknowledge that there are going to be those moments where we have FOMO, fear of missing out, and we wanna get into Micron. By the way, I just bought Micron last week, okay, in the portfolio that I run. Um, a relatively small position that I can add to over time. Um, I actually think it's fairly valued for the results that it's, uh, putting up.

I think it's undervalued, to tell you the truth. But let's face it, it's up about 600% since, uh, the last six or nine months so... or, or so. Um, so it's not like I'm getting in at the bottom. Um, so again, synthesizing the emotions, FOMO, being in this for the long run, taking small bites. But let me add another important critical element to investing, which is diversification.

Step back. I'm an equity investor. I'm very comfortable having all of my assets, my personal assets, invested in equities. I actually grew up in a family of municipal bond managers, so I was a, a dyed-in-the-wool conservative fixed income guy. Um, but I realized at an early age that you can make more money over the long run, uh, in equities, and I'm very comfortable being 100% equities.

Another, uh, client, another investor may not be that comfortable, and the worst thing as an advisor that I or anyone can do is give a client too much risk. So I may be comfortable with it, but if another client is not and you get a downturn in the market, what they're likely to do is call up me or whoever the advisor is at the worst possible moment and say, "You know what? I was up all night. Uh, I can't take this. Sell everything."

And what that does, Ryan, is it turns a temporary loss into a permanent loss. And, uh, a- again, I've done these studies, the last five crises that have faced the market. If you could just buckle your seatbelt and get through it, your long-term results are fabulous, but you've gotta get through it. And to get through it, you have to have the proper amount of risk, which means having some fixed income if you're not gonna get through those moments where you wake up in the middle of the night saying, "What's going on in the world?" Yeah, it's- There's another element- No, go ahead.

Go ahead. I, I want... Just give me one more second here. I- Yeah, yeah, no, go ahead ... maybe, maybe a few more seconds. Yeah, no, you're fine.

Another element of diversification which I very much believe in is not putting all of your eggs in one industry basket. Over the last 15 years, technology stocks have just shot the lights out, and it continues, and today we're talking about chips. Six months ago, we were talking about hyperscalers. Uh, you know, it's, it's always rotating. But for most of the last 15 years, tech has been the place to make money.

Don't go to sleep on sectors like healthcare or energy or financials or industrials because they have a way of sneaking up and giving you excellent returns when technology falters, as it sometimes does. Right now, we're seeing an incredible bid in the market to healthcare stocks, and for most of the last 18 months, healthcare has been... It, it's been dead money. It's done absolutely nothing. You know not when the time comes that that sector, uh, really catches fire.

Uh, obviously, we saw it earlier this year with energy which, if we go back a year ago, it was an untouchable sector. It was doing nothing. So make sure in your equity portfolio, which is a portion of your overall asset allocation, that you're properly diversified into other sectors as well. Yeah, I think that's great. You know, I was, I was gonna share, uh, a quick story about, um...

I really like Tesla, okay? For not just because of Elon, but for a lot of reasons. Uh, you know, both, um, you know, highly technical reasons as well as just long-term value or whatever. And what's funny is, um, you know, I started investing in Tesla probably three or four years ago and just every month buy a couple more shares, and it's just what it is. And, you know, I looked like a genius, and then the stock split.

It looked like even more of a genius, and then it's kinda sitting around three hundred, four hundred and everything's good, and I just had a stock split. And then all of a sudden, Elon joins DOGE, and it crashes down to, what, one forty or something like that it got down to. And now all my buddies, or not all my buddies, my buddies that we talk about investing stuff, they're like, "Oh, oh, yo, how smart do you look now, you know?" T- uh... And I'm like, "Guys, uh, what changed?

Like, I'm just gonna do the same thing I always do, buy a share or two every month like I do, and I'm just gonna keep going. Like, what do I care? I don't even... I didn't even know. To be honest with you, I didn't even know the stock price was one forty.

I didn't... I don't know. I just show up. I do my thing because, 'cause to your point, and this is, this is where I wanna go with this question, is like I spent time and built a thesis around that company, um, that I really liked and the portion of my portfolio I want it to be, et cetera. Okay.

So if I'm sitting here and I'm listening to this show, how do I find the industries, the, the sectors that I should be investing in? And when, and when I... And let me, I'm gonna give a little more context to this question then take it wherever you want. Like, 'cause, 'cause for me at least, I find, and let me know if you see this with yourself or with others, is like not only do I need to believe that it's gonna be g- good long term, right, or work long term, but I also feel like I kinda need to be interested in it. You know?

Like, if it's just some random manufacturing company, like I used to own, um, uh, I, I follow this one guy and I really liked his thesis around glass and corning and, and so I bought some shares. And like, it's going up and everything he's, you know, slowly and just the way this guy said and every... That's all good, and I'm looking at it and I'm just like, "I'm bored." Like, I just, I don't care about Corning. And, like, it's nice to see the stock price go up over time, but, like, I just could care less about glass company, you know?

Like, so I guess, one, am I crazy for that mentality? And two, how do I kinda pick the sectors that I wanna participate in? 'Cause it does seem like you need to know a little bit or you, you get frustrated, or you may not understand why it dives for a bit and comes back up. Man, there's a lot to unpack, a lotta good stuff to unpack in what you just laid out. Let's, um, let's just start with Tesla. It is exciting, and I think anybody who's going to be an investor should be excited in what they're invested in.

Um, Tesla's incredibly exciting, uh, l- least of all for the electric vehicles, mostly for the Optimus, uh, robots, for the artificial intelligence, uh, for the data collection from the electric vehicles, full self-driving, all of these things. I mean, there's a lot to be excited about there, and that's how I want investors to think. Um, I go back 30, 35 years to Peter Lynch, a very famous investor, ran the Fidelity Magellan Fund. Looks a little bit like Andy Warhol, or he did 35 years ago, with, you know, the shock of gray hair. And he was adamant that anybody investing in individual stocks should invest in something that they know, that they use every day.

Now, today, that might be an Apple iPhone. I think back in his day, he was talking about things like Coca-Cola. Start with something you know. Start with something you're passionate about. So that's the best way to get started.

If I tell you, um, you know, a, a stock that's boring to me is Procter & Gamble. Absolutely fine company from a financial point of view. You know, they make Tide. They make, uh, diapers and all that sorta stuff, but I, I just can't get excited about it. It has a purpose in a portfolio.

It's a stabilizer, gives a decent dividend, and over time it goes up. But it is not going to excite you the way Tesla excites you. But the reason to have a Procter & Gamble with a Tesla is because of what you just described, Ryan, about how Tesla is so volatile. If you're going to get the returns that Tesla has given you, which I'm not gonna look it up right now, but I think probably over the last 10 years it's 35% annualized return. I'm in the ballpark.

Th- that return is so far in excess of the S&P 500 that I don't really know how to compare it . Um, but you only get that return by taking on risk, by taking on the volatility that you so well described of, hey, you know, he joins DOGE, and all of a sudden people are, you know, keying the, the Cybertrucks. That was so stupid, by the way. But anyway, um, uh, a- and the stock goes down below 200, and now it's above 400. You only get those returns by being willing to accept that volatility.

I very strongly applaud you for closing your eyes. You're a young man, and you're just buying more shares as you go along. But for people who can't close their eyes, who look at it every day and they're like, "Oh, my God, I can't believe what's happening to the stock," just put a little stabilizer in your portfolio. It could be a consumer goods stock, like I said, Procter & Gamble. It could be a utility stock.

But just have something in the equity portfolio that's zigging when Tesla is zagging. Um, and there's just no question that if you want the returns that a Tesla has given you, you've got to accept that volatility. Yeah, I really like, um, property casualty insurance stocks as stabilizers. Like- They're doing well ... they just, they just don't ever go down. Like, they may not go up as much as others, but, like, if you, you know, when in doubt, pull out, right, like you pull back on their stock chart, it's just, like every single one of them just incrementally, slowly, boring, but just up and to the right.

They just keep making more money . You know, that's the home- and also that's my home industry, like the industry that I came out of and the businesses I started were in the property casualty insurance space, so I always go there. But I'm like, I, I agree with you, but it's like, to your point, like find, maybe find one that you are interested in, right? You can find, find a b- a boring sto- you know, one of those boring stocks that just kinda slowly goes up and to the right, you know. Those are terrible, boring stocks that do that.

Um, like just maybe find one. I do think that's interesting, and I think not a lotta people talk about that, right? Like, feel like not enough people talk about somehow having a connection to the stocks that you buy because it does... That, that, that could be one barrier to the quick sell because you, you, you're like, "Oh, I know these guys. Like, yeah, they went down a little bit, but I, I know this business.

Like, it's coming back. Like, I got it. Like, it's good." Um, if you don't know anything about it, like again, like I talk about Corning, nothing against the company. Like it's, uh, the investment actually is perfectly fine.

But it's like I don't know how Iran impacts the glass production industry. I don't know how natural gas production in the shale pits of Canada, you know, you know, whatever, increased the cost base. Like, I have no idea, so it's almost like you're, you feel like you're flying blind. Now, to that point, I know you've, you've talked a lot about individual stocks so far. What about ETFs?

Like, do ETFs play a role in... And, and, th- I'm, I'm interested because in the sectors that I don't feel confident enough to pick an individual stock, but I believe in the sector, and I'll give you an example like quantum, right? About two and a half years ago, I picked one of the quantum ETFs. I can't even tell you which one. Um, and I just started dollar cost averaging it like I do with Tesla.

And it's up like 75%. Uh, it's insane. I have no idea what stocks are in there, like in terms I couldn't tell you one individual stock. But I was like, I, I wanna make sure that if this quantum thing is real, like if this actually happens, that I'm kind of on board. So how does that fit in?

Am I doing it the right way ? Like, you know, like how do you think about these things? Yes, you are. So just we're gonna start by going back to your Tesla position because you used a key term. You said, "I have an investment thesis in Tesla, and because of that, I don't worry when the stock goes down.

I just buy more Okay. That's the critical starting point if you're gonna- going to invest in an individual stock is you have to have a well-thought-out investment thesis. And you really need to do your research, not just listen to what a guy like me says about a stock on CNBC, but really read the financial statements. Think about who the customers are, and then go analyze those customers to see if they're healthy, if they're getting benefits in their business from using the products of the company that you're thinking about investing in. Now, I could go on and on about that, but the key point is you have to have an investment thesis.

Let's say that you get to a point where you're in, um, a sector or you're interested in a sector that's somewhat esoteric, like you just pointed out about quantum computing. Um, and let's face it, I, I, I used to be a nuclear engineer. I've got some particle physics grounding. I couldn't-- I've read so much on quantum computing and, and you're in that nether region where reality gets distorted and electrons can appear simultaneously in two places and, and you're in this sort of wacky world, okay? I'm not gonna understand it.

Um, and so I can read all the financial statements that I want for these companies, but I'm not gonna understand the basic underlying, uh, engineering and physics that go into it. For that reason, it's far better for me or for you to use an exchange-traded fund to express that theme without deciding if somebody's got the right particle physics interpretation and the other, other company doesn't. Um, so that's number one. You get a theme, yes, use the ETFs. There's also, um, more coarse, uh, ETFs that I use from time to time.

So you may or one may think from time to time, "Hey, the financial sector is undervalued right now." For whatever reason, it's been oversold, as it actually has been for most of this year. And you've got all these catalysts coming. The catalysts could be the coming IPOs of OpenAI and Anthropic. We've already had SpaceX.

It could be that the market hasn't interpreted or, or appreciated yet how strong the economy is. It's worried about the consumer and high gas prices. All of these things may make a sector undervalued. And instead of trying to read through the financial statements, which for financial companies, and you know this 'cause this is your industry, financial statements for, uh, excuse me, for, for companies in the financial services industry, they're like reading the Bible. I mean, they are long and long and long.

Sometimes you just wanna push the easy button and buy an ETF. Here's what I strongly suggest. Look at the holdings of the ETF. Don't be surprised because sometimes an ETF can hold things you don't wanna hold, and you wanna make sure that what's in that exchange-traded fund really reflects those stocks that you mean to express in your investing. Yeah.

I, I, I... One of the things that I was shocked about when... So I'd say maybe, like, twenty seventeen, twenty eighteen is when I really started taking, um, investing seriously, beyond just, like, dump money in a four oh one k, right? And I started thinking like, "Hey, I'm-- this is my life. This is my retirement.

This is money that I wanna spend. Like, I need to... I wanna be a little more actively involved, you know? I'm not gonna become a financial planner, but I also w- wanna kinda understand what's going on." All right.

So my, my, my point in saying that is, um, one of the things that I was shocked by when I started to dig into ETFs is how with very different names, like if you just looked at the name of the ETF, th- they might have the same exact cross-cut. Like, you could think you're getting, like, small cap, you know, twenty-five hundred growth and, you know, uh, growth global whatever and, and they're, like, the same exact companies. Now you're buying two different ETFs with different management fees, you know, whatever you got going on, and you're essentially the same companies. Like, you're not really diversifying. So, like, you kinda...

Like, if you want to take ownership of this, you really do have to dig that deep into what's underneath, 'cause I feel like a lot of people just window shop this stuff. I think that's exactly right. And when you do dive deep, not even that deep, just look at the holdings of various ETFs, some things can surprise you. So I'll, I'll just give you an example, and I, I may touch a nerve with people who are listening, I don't know. But, um, ESG, um, e- environment, sustenance, governance, has been a theme over the last several years.

Sometimes when I look at stocks that are in an ESG ETF, I'm a little surprised. Um, now I haven't looked in a while, but if I go back six years ago, I might find ExxonMobil in an ESG. And that makes you scratch your chin and say, "How? H- How does that get in there?" And it's because of the fact that they have some green initiatives.

But if you really think about it deeper, I think what it is, is the fund manager for that exchange-traded fund saying, "Look, I think ESG is going to work, but I have to have the core of the S&P five hundred. I have to have the core of the market overall in there." And so you would see stocks in there like a Microsoft as well. Now, Microsoft maybe is not as egregious an example as ExxonMobil. But Microsoft, I sort of scratch my head again and say, "What are they doing that is ESG?"

They're really just a mic-- uh, a macrocosm, uh, of the market overall. And so you have to really look at what's in those exchange-traded funds. Um, I, I do-- You said... And, you know, I love talking to you, Ryan, because when you set up a question, you also, you plant a seed, and you did just now, and I've, I've gotta come back to it, even though it's not necessarily related to ETFs. I think you were talking about your four oh one k.

Uh, I think that's... Yeah. And you're younger than me. You're, you're a young man. You got a lot of, uh, of runway ahead of you.

And I think a lot of your listeners may similarly be young. And if there's a few principles in investing that I would want to impart, get your retirement accounts funded early. That power of tax deferral is incredible. And I say this first just from the experience of clients that come to me having retired with IRAs that are measured in the millions of dollars. And I can tell you they didn't get that way by contributing $8,000 a year.

They got that way by having that $8,000 contribution, or whatever it is today, grow without paying taxes year after year after year. And just having seen it so much, I want everybody who's listening to aspire to be that client who shows up when they're 60 with an IRA measured in millions. You-- All you have to do is just fund it. Now we can talk about, hey, should you be in this ETF or that ETF, but given that this is money that most people aren't gonna be touching for decades, I just want these young people to put it in the market overall. Buy the SPDRs, buy the S&P 500 depository receipts, uh, low expense, and you're in the market for decades and decades to come.

Yeah, especially with, like, a 401, it just... It's like you can't beat the S&P 500. You know what I mean? You can play around with some different stuff maybe, but, like, it just seems like you're never... You're not gonna wanna log into that account all the time.

You don't wanna be changing the funds you're invested in. It's like just... You know, it's, it's another... I, I think, you know, one of the things... I, I wanna take that idea and I wanna kinda build on this idea of diversification, 'cause we talked a little bit i-in sectors, but I'd also like to talk about it in terms of, like, vehicles.

So we have our 401, right? And, and I was always taught just put as much in as they'll match or, you know, as, like, a minimum. So if they're matching 2%, 3%, 5%, just do whatever they're matched. That's free money. Do that.

Okay, great. So I got my 401bucket. And then if I'm making under, I think, what is it, a buck 50 or a buck 30 or something like that, I can have a Roth IRA on the side as well. I can also always have another traditional IRA, and then I have individual accounts. And then, like, we haven't talked about any, like, alternative investments like, uh, um, uh, crypto or, uh, you know, physical, physical assets like gold and silver or even, um, you know, I got a buddy who's constantly trying to get me in this, and we, we can go here if you want to, but, uh, he's got a SPV for private companies that he runs, and he's always kinda trying to get me involved there.

And, um, so, like, I, I, I feel like the sector diversification, now I'm being very selfish with this question, like, I feel pretty comfortable with my sector diversification in terms of doing research, having a thesis, okay. But where I do get a little eh is in vehicle diversification and what, what that actually looks like and, and how I should think about the buckets the money is actually in. Right. Um, I like where you're going with this, Ryan, and I may, I may torture the description a little bit. You said vehicles.

I'm now really thinking about asset classes, meaning we've been talking about equities. That's an asset class. We touched a little bit on fixed income, and should you have that to help you sleep well at night, that's another asset class. But then you went into some of the critical asset classes of today's environment. What are you supposed to do about crypto, about precious metals, about private markets?

I think I'll answer that by just talking about what my firm-- how my firm is positioned right now. And when I say right now, this is how we've been positioned for several years. Um, and we do believe in the private markets. So we believe in private equity, private debt, uh, private real estate funds. But I, I have to say this very clearly.

You have to make sure you have enough liquidity first. You have to have enough liquidity to live your life. And I'm also thinking about this in terms of what we were just talking about of retirement accounts. Because I do think about people who are listening to you and me right now, and they may be saying, "Hey, listen, man, that's great that Jimmy Laventhal thinks you should put as much as you can in your IRA, but I can't afford that." I totally get that, and I, I, I always wanna meet people where they are.

Do what you can. However much you can put into an IRA, or if you can start funding a 529 plan for your kids, I'm just telling you that tax deferral is fantastic. But please, don't sacrifice your well-being right now. Don't make yourself miserable by funding what's gonna come decades down the line. And this applies- Yeah, I don't mean to cut you off, Jim- Go ahead ... but I saw a stat the other day that was, and I'm gonna butcher it, and I'm gonna try to find it, guys, in post-production.

But the essence of the stat was that, um, the amount of people, the amount of credit card-- Like, people are putting money in crypto and then running their life off credit cards, was essentially what this stat was. Like, they're, like, there's, they're, and a, a lot of this is the younger generation, like sub 35. They're, they're, they're leveraging these, like, YOLO-type asset classes like polymarket bets and, you know, all these kinds of things, and then living their life off, off negative cash flow and credit cards, which is absolutely bananas to me, but it's kinda like this... I don't know. I wanna get, I wanna get that down the line.

I just, I, I'll throw that in there. We'll, we'll, let's circle back to that. Keep going. We, we better come back to that. That's really- Yeah ... important.

That, that comes under the heading of speculative investment. Um, w- we, let's discuss that. Let me, let me continue on the private markets- Yeah ... for a second. Because what private markets do is they take out the randomness that comes in the public markets on a day-to-day basis. I'm a former engineer, former nuclear engineer.

I, I drove submarines for the Navy. And in that world, if you pull a control rod out of a reactor by half an inch, the reactor is going to respond the same way every time All right? The coolant is gonna go to a certain temperature. The, uh, steam pressure in the steam generator's gonna go to a cer- certain pressure. The turbine's gonna spin faster, and you're gonna reach a certain speed.

There's no question of what's gonna happen. But on any given day in the public markets, two plus two can equal five, and there doesn't have to be any reason to it. You were just using a great example with Tesla, which goes from four hundred to one forty to four hundred to two hundred. That's not, that's not a real measure of the company's worth. What private markets do is it takes out those vagaries of the day-to-day, uh, machinations of the public markets, and it just says, "Listen, we're investing in this company for the long run.

Here's what we're paying. Here's what we think it's gonna be worth, and we'll get there when we get there. We're not gonna, we're not gonna measure it every single day and drive ourselves crazy." Um, that's a very important feature in an overall asset allocation because it dampens out volatility. Now, somebody may wanna say, "Well, geez, I wish I could mark my own book of securities to whatever I wanted it to be."

Okay, you have to be with the managers in these funds that are noteworthy, that are credible, that have high integrity and a great track record, and then just let it go for the long run. Um, also in terms of current positioning, we do have a small allocation to gold right now. Gold, I, I... You know, sometimes people look into this and say, "Hey, it's done so well over the last year, two years," a-and they think that it's an absolute return vehicle. It's not.

For us, it's a hedge. It's a way of saying there's a lot going on in the world that changes on a day-to-day basis. There's been more than a few times in the last two years where the world has seemed to question US supremacy in terms... It's a bad word. I'm sorry.

US, um, the reserve currency status of the US dollar and the status of the US Treasury market as the risk-free benchmark. And as that gets questioned, gold serves as a hedge, what I call an end-of-days hedge. Um, but we're not saying that, oh, this is gonna go up ten, fifteen percent over the next year. It's something to protect, protect against on the downside. Which leads to a great question, and we're getting more and more speculative as we go on here, Ryan, um, what to do about cryptocurrency.

Because my rub against cryptocurrency is I can't value it. And so if I were to tell you or anyone as a client, "Hey, we're gonna buy crypto. We're gonna buy Bitcoin today at fifty-nine thousand dollars." Let's just say that we're not done with the crypto winter yet, and it goes to forty thousand dollars. And you, Ryan, call me up and you say, "Jimmy, why on earth did you buy it at fifty-nine thousand dollars?"

You do not want your advisor to lick his finger and stick it in the wind and say, "That's what I was doing. I thought fifty-nine thousand was good, and I turned out to be wrong." You wanna have some sort of framework, uh, which in equity investing or fixed income investing, you can look at a company, you can look at a balance sheet, you can look at cash flows. You know this. You ran a business, and you successfully, uh, grew it and sold it.

You know, there are metrics, key performance indicators that you can look at that are absent, um, in crypto. Um, I will be the first to admit that gold kinda has some problems valuing it as well, uh, but I do wanna have some hedge in the portfolio. That's why we have that. Now, let's go a little bit more into the real speculative stuff that you were alluding to, where, uh, people max out on credit card debt, which usually is, you know, well over ten percent in the interest rate. In some cases, it can be twenty, twenty-five percent.

So if you're doing that, you're saying, "Well, I think the investments that I'm making and financing with credit card debt can do better than that," to which I say maybe. Maybe. I mean, there's been times where cryptocurrency has more than doubled in a year, but you don't know when that's going to come, and you don't know how far down it's going to go in the first place, and you might lose your nerve and sell the, the cryptocurrency or whatever the speculative investment is too early, and now you're stuck with this enormous credit card debt. Um, this goes back to what we were talking about with Tesla. You cannot get return without risk.

They go hand in hand. So if you're gonna do this using credit card debt, you really have to have guts, and I, I don't think most people have it. I don't recommend, uh, using leverage. In fact, I wrote about this in, in my book, that leverage is really something dangerous, like riding on the outside of a subway. Um, most people don't know how to handle leverage, and they get called out.

Uh, they can get a margin call, for instance, when they least wanna sell their securities. So I recommend not using leverage. But let me close this on a positive note. There is room for speculation in anyone's portfolio. You just have to keep it in really small size.

Speculation is basically buying a security on the presumption that somebody will buy it for you later at a higher price, even though there's no framework for valuation. If you have a framework for valuation, you can say, "This is worth a dollar. I'm getting it for fifty cents in the public market. I'm fine with that." But speculation is you don't have a framework for valuation.

You just think somebody will buy it for you at a higher price. That may come true. It may not come true. I know plenty of speculative investments that have made money. I know plenty of speculative investments that have gone to zero.

You have to size it properly, and for most people, well, well below ten percent of your overall net worth should be in speculative investments. Yeah. So I do, I-- or have done in the past, I haven't taken on any in-- recently, um, a decent amount of angel investing. And it's like the same thing. You know, I mean, you're...

You know, you-- maybe you're, maybe you're betting on the founder, maybe you're betting on the industry, the product specifically, the problem they're solving. I mean, but there's no... When a, when a startup company hands you a deck, and maybe they have customers, maybe they don't, you know, at the angel level, most of the time they don't. Like That's pure, unadulterated speculation. There is literally no way to know how valuable that company's gonna be someday, and like I know people, and even myself, uh, maybe at different times, that you get carried away, right? 'Cause you start creating all these scenarios in your head.

"Hey, uh, I saw my favorite influencer on Instagram just told me Ethereum's going to 95," and you know what I mean? This, uh, derivative, uh, product options call over here on, you know, or, uh, what, what was it? The last one I read was, uh, everybody was, was pitching shorting, uh, SpaceX, you know? And it's like, yeah, but they're just guessing, too, you know what I mean? Like, I feel like there's like this somehow people think certain people just know what's gonna happen and it's like no.

Th- maybe they're right more often, maybe. Maybe their experience allows them to, to make some calls that other people don't see. But like at the end of the day, we're all still guessing, you know? And like, uh, to your point, and this is just kinda the way that I run things with my own investments, is I just assume that I don't know shit, right? I don't know anything.

And I do research, and I come up with a thesis I like, regardless of the asset or the industry or whatever, and then I just dollar cost average them. Because like you said, I have no idea. Like the idea that with all the things I'm doing, and then insert everyone who's listening and all the things they're doing, even yourself, right? It's not like you can track every stock that exists and every alternate investment exists and every n- new vehicle that's g- all these. You can't.

So it's like pick some things and then just dedicate. Like I put $25 a week into Ethereum. That's it. 25 bucks a week. That's what I do.

It's not a ton of money. It, I, I, I will never get super rich off of Ethereum, but it keeps me involved. I think the Ethereum is interesting. I do think it has a chance to make a move. It's 100 bucks a month, right?

Like even if it hits, it'll be a nice, you know, over the course of probably the five years it takes for Ethereum to really hit at some point, like if it does ever. Like, you know, it's a small, nice little thing. But I don't want it to be more than that, and I have literally no idea when it's gonna hit. I do think it'll go up. I think it has utility.

I think that it's, I think it's, uh, I think there's a lot of other things happening in the market that make it not as sexy or not as interesting right this second. But is it next week or is it a next decade? I have no clue. So it's like just put a small amount, let it build up over time, and if it hits, bonanza, you know? I don't know.

It just, you know, I feel like sometimes, like if you just stop chasing, I feel like things get easier. Not, not easy. Not easy, but easier. I think the biggest investment virtue that somebody can have is patience. So once you've done the investment thesis, which also is its own virtue, I mean, to really dive into something.

And I can tell from the way you're talking, you know what you're talking about with Ethereum. I understand what you're talking about. It has utility to a degree that Bitcoin doesn't have. Um, that Ether network underlies a lot of applications, uh, that are going on right now. I totally get it.

And, you know, on the other end of the spectrum, I don't wanna be in any of these altcoins, which have, you know, a different name that you'll use, but I won't. Um, that, that's just ridiculous. Um, but patience. Once you've made your investment thesis, stick with it. Now y- y- you know, again, the way you set things up, Ryan, you give me so much to work with, and I'm gonna respond.

I don't think I've ever s- said this story before, um, even in a, a private meeting, and it's gonna be macabre, but I'm gonna tell you it. When you were talking about your angel investing, I was thinking about a client who is now deceased. Um, and he was a friend, and I really, really liked him. And when he died, there was a financial autopsy, and there was all this stuff, okay? There were all these investments in private companies that people didn't know about and investments in restaurants.

And when you started to then have to value this, as I and the accountants and the, and the estate lawyers had to do, you started to get in touch with the proprietors of the restaurants and the business owners. And you've been one, so you may know exactly where I'm going with this. That financial autopsy of my friend Fred, um, showed what everybody kinda knew, which he's w- he wanted to help people. He didn't wanna just make money. He saw people starting businesses, and he wanted to help them.

And that, that forensic that came out of it made me and everybody love Fred even more than we already did because of how much he just wanted to help people. Now, he also made sure he had enough money to live his life. He wasn't betting his, uh, life savings on, uh, the local Italian restaurant that was just starting up. Um, but I want people to think about that. And I, I, God, I'm sorry this is so macabre.

But think about if you were to pass today and your wife or your kids or your accountant or whomever are looking at your finances. Would they understand why you've done what you've done? Would they see behind it a noble purpose? Maybe that purpose is investing for the long run. Maybe that purpose is, as I've said, helping people out as they're starting businesses.

Maybe it's patriotic. I'm not gonna wave the flag here. But there can be any of a number of reasons, but your portfolio is a fingerprint of your personality. It really is. I love that idea, and I completely agree with you.

Um, I completely agree with you. And I think, you know, just again speaking for myself, one of the reasons why I feel comfortable, uh, with my spread and where my-- I have various investments is b- for that reason. Like, and, and it wasn't always this way. I mean, it's, it's, it's been years and years to get to this mentality. But like I, the things, like I could give you a reason.

Like, if you said, "Why this? Why this? Why this?" I could give you a reason for every one of them. And I literally wrote down, like, is it worth creating a little investment narrative that I could throw up on Google Drive and if something ever did happen to me, you know, now my family, my kids, or whoever could go and read it and go, "Oh, one, we kinda know everything that he's got, and two, this is what he was trying to do and what he was thinking when he did it."

Like, do, do you think that's a valuable exercise? I do it for myself. I have a journal of my investments and what's behind it. Um, now it's, it's a little bit in shorthand. I'm not gonna b- uh, take the time to write prose.

But I do that because it also helps me. You and I have both spoken about an investment thesis in anything we invest in, and having to go back to that when the, th- when the stock goes against you. If you've written it down, it's so much easier to understand. Um, I also do this... Now this is...

I'm, I'm a stock analyst at heart, so when quarterly earnings comes out, come out, I make it a point of getting on the earnings call and writing up what I think of the earnings call right there, and I go back to it from time to time. 'Cause there are times where you're shaken in your investment thesis. Ryan, you're clearly a risk-taker. Nobody starts a company the way you did without being comfortable with risk. But I'm sure there are moments where you woke up in the middle of the night, that 3:00 AM wake up, and you're like, "What have I done? What have I done?"

And you do have to have some stability, some core, uh, of rationality, and if you've written it down, it becomes that much easier to understand why you've done what you've done. I love this idea of an investment journal where, you know, like you said, it does- you're not- it doesn't have to be, you know, three daily pages or whatever. But, you know, just any time you make a substantial investment or a decision, right, you just write in your thought process as to why you did it. Like, you know, I could say, hey, I could describe to you today why I'm in all these pl- paces, but maybe in truth, I don't know that I could articulate my exact thoughts at the moment when I decided to make it, right? Just 'cause of time, and I don't have it written down.

Like, I have a, a high-level idea, but, like, I couldn't reproduce the research for you as to... or the, the websites I went to or the r- you know what I mean? Like, I just have the high e- level idea in my head still. And I like this idea of just keep it under your desk or whatever, and even if you make one big investment a year, right, you just, "Here's why. Here's what we're doing. Here's the thought process," or, "Hey, I decided to, to DCA into, you know, SpaceX, and I talked to, you know, Jim, and Jim's got me my, you know, auto thing set up, and we're good to go, and, you know, that's, this is why we're doing it."

And, you know, that, that's a really interesting idea. I like it for austerity, but I also like it because then the next idea that you get, you could go back through and look at your winners and losers and say, "What was I thinking? What was I possibly missing?" And then apply it to maybe make a smarter decision the next time. So, Ryan, it will also show you your evolution as an investor.

I started doing a journal when I was doing a lot of trades, and history shows, and my own personal history included, that doing rapid trades generally is a good way to lose money. It's not, it's not the way, it's not the tried-and-true way. Um, I think a lot about the day traders from the late 1990s. Some of them are still around, but most of them just eventually lost all their money. As I started writing down my trades in a journal, I realized I was trading too much.

It was, it was great to just have that feedback of, "Slow down, you're doing too much." There, there are principles like that, um, things to consider not just in terms of the frequency of trades. But a lot of people today think that the options market, just going back to where we started with. Everybody has this, this, this reality that maybe, I'll use alternate from real reality. I think you said false.

There's this idea that with options, people can get rich. No. There's some stat that 95% of options that are ever issued expire worthless, that it's just, it's a speculative way of people to gamble. It's gotten even worse as time has progressed to the point where today there are these options called ZTE, zero time to expiration options. They're issued on a daily basis.

You can buy them in the morning, and it's a bet on where a stock or an index or a sector will close that day. That is not investing. That is being in an alley rolling dice with a bunch of other guys, and the house makes money, but the investors don't. I wouldn't even call them investors. That's speculation.

Um, writing things down is a good way to evaluate where you are and see yourself evolve over time as an investor. I think when most people do that, they get to the point where they realize the most success is picking high-quality companies, good management, solid balance sheets, defensible moats to competition, not perfect, but defensible enough, and sticking in it through time, uh, through long periods of time. And one... I'm gonna go back to patience here for a second. Some of my best investments have taken a long time to play out, and I can list a f- a few right off the bat.

Citigroup I'm currently in. Uh, Cisco Systems is another one, where for long periods of time they just lay fallow, and you... And they were so cheap you were scratching your head. "Am I wrong about this?" You go back to your investment thesis, which you've written down, and you realize, no, it's just the market getting it wrong.

And then when it hits, it more than makes up for all that time that you had to wait. But you have to be patient, and being patient helps if you've written down what it is you're doing. Yeah. Best investment I ever made in my life was Waste Management. I bought it at $31 in 2010 and DCA'd in for about four years, and I think it's, like, 175 now, 1, almost 200.

It just kept going up and up and up. And- It's like, and funny, guys, if you listen, and again, I'm not, not a professional investor in any regard, and I've had just as many not do what Waste Management did, so just be clear. Listen to Jim, don't listen to Ryan. But, um- We can listen to you. You, you, you, you know what you're talking about But the idea, to your point of like, I was living in the city of Albany at the time, and like, like any city, garbage is a problem.

Garbage everywhere. And the Waste Management trucks would come by, and then I saw like a different type of, uh, like another company go by, and I was like, "Okay." One, I didn't even realize there were multiple garbage companies. Again, this is 2010. I'm 15, 16 years younger, so take that for what it is.

And I- so I started looking at Waste Management, and I realized they have more available landfill space left than any other publicly traded garbage company. And I was like, "Well, we're never gonna have less garbage, s- and it's gotta go somewhere." And then the other thing that I liked about them was they were leading in turning the methane from the finished, um, landfills into renewable energy, into inter- into energy. And I was like, "Oh, so they're actually making it money twice on the garbage. Like, uh, this is worth something," right?

I mean, that was literally all I thought was, we're never gonna have more garbage, or we're never gonna have less garbage, and these guys have the most space for garbage. Like, that seems like a good thing. And like, like you said, it took, it took almost a decade, but then all of a sudden you're looking at it going, "I look brilliant now." I mean, I didn't when I first invested. I invested in a stupid garbage company that paid a one-point-something dividend.

You know, it hadn't gone up in years. And then, you know, 10 years later. But to your point, like it's that patience and having the thesis, and I think, you know, the maybe the biggest takeaway for this at, at a like step one level is w- take some notes and like have a plan or, you know, before you invest in something versus just my buddy on the golf course told me I should invest in Coca-Cola this month, so here we go. You know, like it's not meaningful to you, right? So we already, we talked about, just to recap here, like it should mean something to you, unless you're a big Coke drinker, I guess.

And then like you should have a thesis why you're actually doing it, how it fits in. And then m- my, my question here then becomes, okay, so I, I tend to be someone who likes to do it myself a little more. Um, I do have, uh, an advisor that I will go to, but he doesn't have a ton of my money. Um, mostly just my rollovers from other like businesses that I worked in. Um, but like how do you interact?

Like for you, w- what is, what does the most successful relationship look like when someone works with you directly? Like how do they communicate with you? How do they, what do they need to share with you so that y- together you guys can create the best results? Let me start with what I think the most important thing I do as an advisor is, and this won't surprise you based on what I've already said. It's hold people's hands during a downturn and get them through.

If we, you know, we can go through any of a number of crises, if we look at where stocks bottomed out in the great financial crisis, in COVID, the right thing to do was to hang on to where we are now. People often say, "Hey, how can I invest now? The market's at an all-time high." The market is always hitting an all-time high. Sometimes it spaces out time between that, but that's, that's a feature, not a bug, is that you're hitting all-time highs.

So the most important thing that I do is hold people's hands through a downturn. For that to be effective, um, they have to trust me. Now this is a, this is-- I don't wanna get smarmy here. Trust is, in my opinion, the currency of my industry. It's the most important thing.

But it's not something... If, if you and I, if you were interviewing me as an advisor, Ryan, and we've just met and I said, "I want you to trust me," you'd be like, "Dude, like I don't even know you. Don't, don't start with that." Trust is something that takes time to build. And it's unfortunate, because I have had times where I've started with a client, new client, just before a downturn, and it's very hard to get them through it.

On the other hand, if I look at the last 18 months, um, casting politics aside, we've had a big downturn because of the conflict with Iran, and then a year before that, we had a big downturn because of the tariff, uh, liberation day. Most of my clients who have been with me for 20 years or more, I'd call them up and they'd say, "I'm not worried. I know, I know how this, the experience gets you through this." Um, in both of those instances, the snapback was pretty pronounced, faster than I thought it would be. But the point is still made that it's just a question of when the markets come back, not if.

So the most important thing that I can do with a client is take the time to talk to them, get to know them. I'll meet with clients often. I'll meet with their family members. You really have to establish that bond because you can't just ask for trust. You have to deliver something that makes people trust you.

Unfortunately, it really takes time. Now let's talk about time for a second. I'm gonna, I'm gonna segue into something that's maybe not directly related to trust, but you've mentioned it a couple of times, and I think it's an important topic, which is DCA, or dollar cost average. And it is, it is somewhat involved with trust. Because the dollar cost averaging, folks, is when you say, "I'm gonna get into the market or a particular stock, but I'm gonna do it in segments over time."

I personally believe that you should really dogmatically lay that out. So if I'm going to invest $100,000, a million dollars into the market, I'm gonna do it over three months, and that's gonna be four equal tranches of $250,000 or, or $25,000, whichever number you're using, starting now, then one month after that, then one month after that, and one month after that, I'll be finished It's very important that you do it dogmatically, because what it does is it takes some of the psychology out of investing. People get worried, "Hey, if I buy something today, the stock market, I'm not gonna look right now. Maybe it's 1% off of its all-time high. I don't wanna put it all in and, and then see it go down.

No matter what Jimmy says about we'll be fine for the long run, I don't wanna see that. That's gonna upset me psychologically." Dollar cost averaging makes sure that you don't drop all of your money in at the worst time. It also makes sure that you're not gonna buy everything at the perfect time, but you're gonna have some of each of that. I find it's a very important psychological tool.

Now, Ryan, if you and I were computers, we would say to each other, "We should never dollar cost average." The numbers actually say that you're gonna do better just investing all at once. Yes, once in a while it'll go wrong, um, but over time it makes up for it. Still, as an advisor, and this does have to do with how you establish trust, you meet people where they are. You understand they're human beings with emotions.

You empathize with them. Dollar cost averaging, DCA was the, the, the abbreviation for it, um, that's a good way to just get people comfortable with investing and with you as an advisor. Yeah, I, I, I like the, I, I like that a lot and I like that you, that you're, that you agree with that philosophy 'cause I, I agree. Like, so much of investing for me has been like, I mean, this is gonna sound weird, and again, n- not a professional, but just the way that my mind works, um, I kinda detach from the outcome, not, not, on a, on a, on a, on a micro basis. On a macro basis, the outcome is incredibly important.

But on a micro basis, I kinda just, I com- I, like again, I committed to this thing, like, like my Ethereum, right? So, so every week, 25 bucks into Ethereum. I couldn't even tell you how much Ethereum is today, right? I have this thing, I put it in every da- and then that way my brain just goes $25 every week to Ethereum, right? It's $100, it's $1,200 a year.

You're not getting super rich, but you believe in the thesis. And look, if it does go from 2,000 or 1,900, wherever it is today, to 95,000, you know, that's a nice little hit, all things considered. I'd like to be a part of that. But that seems like a very small percentage happening, so this dec- this, this kind of dollar-ing in makes sense, and if it goes up to 3,000 and I make a couple $25 investments at 3,000 or, you know, make it 100 or whatever you're, whatever you can afford, right? Um, it's not the only thing I'm DCA-ing, that's why it's allocated that way.

Um, but like, it just, there's not that, like I'm not as emotionally connected to the outcome of each individual investment that way. Like, I feel like it's just, oh, that one, it was up a little bit. Okay. A couple weeks later it's down. Okay, I got a couple investments in when it was down a little bit.

All right. You know? Like, it's um, it just, like I say, I, I c- I just agree with you so much. It takes so much of that emotional toil out of the process. And- Ryan, you, you're, the degree to which you are an objective person is way outside what the average person is.

Um, and I'm, I'm saying that not to compliment you, but to level set for the people who are watching us today. If you're listening to Ryan saying, "I wanna be like Ryan," hey, you know what? I do too. Like, you, you sound cooler than me by a lot. Um, and you are objective, and I've, I've listened to your podcasts.

I mentioned earlier, y- you know, the one you did on 72% of your work gets you, is not in your flow state, and you gotta work on getting in that 28%. If you listen to that podcast, what you hear is an objective person saying, "These are the rules to get you where you've gotta go." Um, and I'm even thinking about the, the three rules you had about where AI can take, take over a task for you. Um, it's very, it's very thoughtful, it's very objective, it's very clear. Most people aren't like you.

Most people watching are watching you, Ryan, because they wanna learn to be like you. This dollar cost averaging and many of the principles that I'm talking about, folks, I'm just trying to help you be like Ryan in terms of how you invest. Ryan, you don't need me to tell you these things. You know these things. Um, I, the emotions are there.

This is where we started. The emotions are real. I feel them. Um, I think, Ryan, you're able to control your emotions better than me. I think I'm able to control my emotions better than the average investor by a meaningful amount.

Um, some, uh, just another principle that I wanna share with you, and I'm, I'm, I'm, I know I'm jumping around here, but it's an important principle about market timing. We already talked about it. I've said it many times. Just stay in the market. I want you to think about the damage that can be done by getting it wrong with market timing.

If you look at the last 30 years of investing, the annualized return on the S&P 500 is about 9%, which is pretty darn good. If you missed the 20 best days in that 30 years, your average return goes down by more than half. You're about 4%. It's a dramatic, just for 20 days. Now, that doesn't mean that the 20 days are once every year and a half.

They happen when they happen. Here's the worst thing, and here's why emotions and here's why objectivity really matter, is that those best days happen to be clumped, happen to be clustered right around the worst days. That's the way it works, is after a meaningful market downturn, you get these whooshes to the upside. And so if you're market timing and you're saying, "Well, I'll know to get back in at the right time," you have to consider that you're going to try to invest when every instinct, every emotion is gonna say, "Don't invest," because it's just been a bloodbath in the markets. Um, objectivity really matters here.

Objectivity really matters. Yeah, and uh, and while I, I appreciate your kind words, I will say, um, th- my approach to investing is because I am an, like a highly emotional person. Like, this is how I had to set the guardrails up, 'cause otherwise I would be in there every day looking at the stupid thing, watching it tick up and down by the second. Uh, just talking about timing, I have this horror story. I had a friend who worked for American Express in, in, uh, in, in New York City, um, during the financial crisis.

And I think, might butcher this a little bit, I think American Express was somewhere, like, in the 90s to around $100 a share pre-financial crisis. Financial crisis hits, it goes all the way down to $3 a share. He sells at $5 a share. Six months later, it's $120 a share. That's a painful story to hear.

I mean, that, that- You wanna see a grown man cry on a golf course? Have him tell you that story. I mean, he'll tell, he'll start crying today when he tells you about it. I mean, hundreds of thousands of dollars because he thought the credit... You know, he bought into all the craziness, the cred- you know, the world's going to crap, the credit system's done.

No one's... You know, they're gonna, they're gonna close American Express. You know, all these crazy stories, right? And to everything we talked about and why I love this conversation is that it- I feel like, like, the core thesis of what you've described and laid out is, is how to approach investing in a rational, objective, non-emotional way as much as you can. And, like, like, I, I hold that story and I tell that story only, and I feel horrible for him.

Uh, he's very smart and is made plenty of money in his life. He's not, he's not destitute. But, like, at the time, that was an enormous hit. I mean, that was, like, half of his personal wealth was in that one s- 'cause that's where he worked, and he had ac- you know, taken the shares with the paycheck and all that kinda stuff. And I mean, that's just, that's what happens when you let your emotions get to you, right?

I mean, if he believed in the company, he worked there. You know, he waits six months, just holds on for six months, and literally his stock is worth more than before the, the crisis. And, or, you know, it may have been longer than six months, but it was somewhere, it wasn't longer than a year. And, like, oh my God, I just, to this day, I think about that and I'm like, what are the cryptos called? Diamond hands.

That's right. You gotta have those diamond hands. You gotta have diamond hands when you're in this game. It's crazy. Uh- And HODL.

HODL. That's right, and HODL. Yeah, I love these new words. Um- But can I say something encouraging? Jim, this is...

Yeah, go ahead, please. Yeah. Just, hey, everybody's gonna make a mistake. Everybody. And you're gonna learn from the mistake.

So w- you know, when you're feeling like you wanna cry because an investment, you, you just got it totally wrong, just learn from it. You can cry if you want to, but learn from it, and you will see pattern recognition the longer that you invest. It's why I wanna get people investing early. You'll see the patterns that whenever the media is telling you that the world is ending because of tariffs or World War III or, or whatever, that it doesn't come to pass. And I was, as you were describing American Express and the great financial crisis, I remember being scared there.

I remember thinking, like, "We're gonna go back to a barter system here at the rate things are going." Um, it reminds me of a funny story, at least I find it's funny, from the 1950s. New York Stock Exchange, all of a sudden stocks go down one day. They go down hard, and everybody's asking what's going on, and somebody says, "Well, we just heard that Khrushchev launched an ICBM attack on the U.S." Now, this story's a little bit apocryphal, but let me work with it.

And some, some smart, uh, older man goes to his younger clerk. He says, "Go buy everything you can right now in the stock market." And the clerk looks at him amazed, "What are you, what are you talking about? We're about to have the world end." He says, "Look, one of two outcomes.

Either it's a rumor, in case, in which case we're getting everything on the cheap right now, or the world's gonna come to an end and it doesn't matter." A little bit witty, okay, but here's the real message. How many times have each of us heard in our lives that the world is ending, that, that tariffs are gonna undo the world order, the world trade order, that America is losing its standing in the world? I'm not being political here. I'm just saying, asking you, how many times have you heard that?

Back in 2022, Russia invades Ukraine and all the talk about nuclear war and World War III. Um, for the number of times that we have all heard the world is going to end, do you know how many times it's ended? Exactly zero. So odds are you shouldn't believe it when you hear that. Yeah, I, I, I, I, I completely agree.

I think it's, uh, it's, it's funny. Uh, thi- this is off topic, but, like, I get, I get a lot of hate because I'm a big AI optimist. Huge AI optimist. I, I-- And people are like, "Well, oh, you know, Dario said this and Sam Altman said this," and what... And I'm like, "Yeah, okay."

There's two options. Like, I, I feel the same way as, as your story, right? Like, either AI is the, you know, is the, the, the, the damnation of our society and takes over and we're either in matrix bubbles or, you know, whatever, like, pretty soon. Okay. In that case, being pro-AI doesn't matter.

Or AI works in our favor and it's all upside and you ride this wave and you have a chance to really take your life or your business and move it to a whole another level. Like, what-- Like, sometimes I look at these things and I'm like, "Okay, so the worst case happens. We're all F'd to begin with." So, uh, what do you, you know what I mean? Like, why would I even consider that option?

Like, what am I gonna do? Like, like you said, if the world's on fire and we're launching, God forbid, you know, missiles at each other, like, I'm not really gonna care so much about how, you know, my Tesla stock is doing. Like, I'm just not really gonna care as much. Like, that's not gonna matter. Where if that doesn't happen and AI does become a very positive influence and self-driving cars do reduce deaths on the road by the, you know, millions of people that are injured and die every year and, and all of a sudden the world's a safer and more energy efficient place because of all these, you know, new technologies and new, you know, uh, uh, medical healing and all this kind of stuff, well- I'd rather just, I'd rather tack towards that future and just deal with, you know, we're in a Terminator-style post-apocalyptic AI war.

You know, I'll just deal with that if it happens, and, you know, skew towards this way. I, I, I just don't understand... I, I don't l- I just don't understand s- I understand it, but I don't relate to, like, the scarcity mindset kind of fear-driven stuff. And it's like if you can start to create these reframes, I feel like not just with investing, but with so many things in your life, you can, like, reduce the, all these tension-filled brain cycles that you take 'cause it's just like, okay, so the worst thing happens. Well, then we're all screwed.

But otherwise, like, why not just, why not just plan for the good outcome? 'Cause if that happens, then you, you know, you're looking at huge, huge returns. I'm with you on the good outcome, both generally and specific to AI. I also wanna point out that the corollary to what you described is this nostalgia for times past that tends to idealize what really was. And I, I, I like to read Walt Whitman, and I absolutely love the Hudson River School of Painting, which is mid-19th century landscapes. I find it just gorgeous.

But here's the truth: as much as I might say, "Well, I wish I were back there myself," I'd have to worry about dying from smallpox or getting mauled by a bear, things that I just don't have to worry about today because technology has advanced. And I'll, I'll grant you, there is, there is something nostalgic about those paintings, and I love them. Um, but I, I live a more comfortable life today than I would have 200 years ago. With AI, I don't know the specifics of how it's going to turn out. Uh, I know there's a lot of concern about job losses.

Uh, there's an analogy I've been using that I find really quite pertinent. If we go back 30 years ago, uh, mid-1990s, um, digital technology was really just getting started. Think about the internet. Think about data storage. There used to be companies, Ryan, this may be before your time.

I'm not quite sure how old you are. You don't have to say. But there was this company called EMC which it bus- its business was selling data storage, which is hilariously quaint today, which, you know, an iPhone can store all the data needed to launch an Apollo mission today. Um, but that w- data was scarce back then, and fiber optics were being laid so all this data could be transmitted efficiently. What this meant is that trading on the New York Stock Exchange changed dramatically.

It was revolutionized. And whereas 30 years ago, there were 5,500 people on the floor of the New York Stock Exchange, today there's about 300 people, and I know this because I go do, um, CNBC shows down there about twice a week, and so I see it. There, it, it, it's a ghost town. Now, one might think, "Well, this is terribly tragic. All those jobs were lost."

And think not just about the New York Stock Exchange, but the same thing happened at the American Stock Exchange, and at the Chicago Board of Options, et cetera, et cetera. Yes, it did. But here's the punchline. Over the last 30 years, employment in financial services has gone up by 20%, inclusive of the demise of all those jobs. That is creative destruction.

And there is destruction, so there aren't as many New York Stock Exchange floor jobs, but there's all these new jobs, financial planners, performance reporters, high-frequency traders. You may not like high-frequency traders, but it's a job that did not exist before all this data became cheap and the ability to transmit it became effortless. Um, so jobs are destroyed, but more jobs are created. That's what will happen with artificial intelligence. I, I completely agree.

I think the grifters out there selling fear porn, um- I just- I know who you're talking about. Yeah, they have no... They have, like, they never tell the full story, right? When you, and, and this is how you can tell it's a grift is you get, well, you know, so-and-so company, uh, dropped 20,000 people and, uh, you know, in the, in the note, they referenced AI. Re- it's always referenced AI.

Never directly blamed on AI 'cause no one's actually done that, but they referenced that AI as one of the things. Now, what none of them say is how many of those people immediately found new jobs in the same field. They never talk about how many of those people immediately found other jobs that just are a different job title. They also never take into account the fact that most of the time, and in my personal opinion, most of these companies are u- using AI as an excuse to get rid of employees that they felt were bloated anyways, which in most of the companies they are. And, like, so you never get the full picture.

It's just someone, you know, insert company name that people know, there, the word AI was used in the announcement, and they dropped, you know, X tens of thousands of people, and therefore AI apocalypse. And I'm like, yeah, except I have, like, three buddies who have, who have, uh, uh, like, blue-collar jobs that are building startup little app companies and different things, and they're on the side now that, that, that... You know what I mean? So, like, there's all this additional new commerce that's being created by the new opportunities that AI's created. So it's like, I just look at it all and I go, there's no benefit, unless you are some sort of, like, crazy short seller.

There is no benefit to the, to, to, to operating the scarcity mindset version of this stuff. Like, if it happens, yeah, it's bad, but it's bad for everybody. But if you're properly positioned on the, on the optimistic side, that's where you're gonna capture all the value. At least that's, that's kinda the way that I look at the world is I just... If there was a positive to overindexing on scarcity and negativity and fear, then let's do that.

But I just don't see the data points to support That type of mentality. I just, I- Ryan, and the data supports you strongly. Consider that we're coming up on the fourth anniversary of ChatGPT being launched, four years. And for all the talk about how many jobs are gonna be destroyed by it, we've got unemployment here in the United States at about 4.3%. We're gonna get a labor report in a couple of days.

It's probably gonna be positive again. Initial weekly jobless claims have, have shown no uptick in firing. Uh, the, the, the, the... I like your term fear porn. Um, I'm not gonna use names, but there was a research, and for those of you, um, who are listening and not watching, I just put air quotes.

There was a research article that came out in February that started with the line, "We are not engaging in doom porn," which was then, you know, that was a, that was a, a, a spoiler alert that that's exactly what they were about to do, and they predicted that in two years unemployment would be above 10% and no companies would be making any profit. I can look at the soft- publicly traded software companies which have been beaten down badly this year on the fears of AI, and in particular, that n- research report. Um, they are still growing their top line. Their margins have gone down. Why?

Because they're investing in AI. They're doing exactly what you're doing, Ryan. They're embracing the future. And so instead of just getting run over, they're co-opting AI, and they're gonna be better for it as they're still growing their business. Don't give in to fear.

We talked about that earlier. It's a real emotion. Don't give in to it. History shows that that's the wrong thing to do. Jim, I could talk to you all day, man.

I love this conversation. I love your mentality. This has been such a, such a great conversation. I know my audience is gonna wanna go deeper into your world. Um, we'll have links to the book, but besides, uh, the book, where else, um, where else should people go?

And guys, um, whatever Jim references here, I'll have it, whether you're watching on YouTube or wherever you listen to the podcast, um, just scroll down the description. You'll find it. Sure. So I, I'm, I'm a partner and our chief investment officer, excuse me, chief market strategist at Cerity Partners, ceritypartners.com. You can find me there.

But probably the easiest way is, um, if you watch CNBC, uh, two to three times a week, I'm on the Halftime Report, which airs from 12:00 to 1:00, uh, Eastern Time, and, uh, it's a very vibrant show. It's kind of a, a talk show radio or a, a, a sports radio meets finance. Uh, very vibrant. We, we have a lot of robust discussions, and that's a good way to get to know me as well. Yeah, I love it.

I love it. Thank you so much for your time. This has been absolutely phenomenal, and, uh, anytime you wanna come back on and talk about this stuff, you got an open invitation, my friend. I, I, I could listen to you all day long, and in fact- Yeah ... I have been.

Uh, you're something special. Thank you, Ryan. Oh, thank you so much