1 00:00:00,800 --> 00:00:02,920 All right, here we are. Welcome back everybody. 2 00:00:02,920 --> 00:00:05,120 Welcome to the show. I appreciate you guys joining in 3 00:00:05,400 --> 00:00:06,960 on. It's pretty crazy. 4 00:00:06,960 --> 00:00:10,080 A week ago, well, actually three days ago I posted this video, 5 00:00:10,080 --> 00:00:12,440 the investing in Costco one. This is the most recent one I 6 00:00:12,440 --> 00:00:15,080 posted. And before that I hadn't posted 7 00:00:15,080 --> 00:00:19,480 in like 2 weeks. 2 weeks ago was the one before that in YouTube 8 00:00:19,480 --> 00:00:21,320 time. That's like eons of time. 9 00:00:21,440 --> 00:00:25,320 But it was awesome to see that this video had recordbreaking 10 00:00:25,320 --> 00:00:28,420 metrics for the channel as far as the amount of views and watch 11 00:00:28,420 --> 00:00:32,299 time right after posting it were incredible as well as when I was 12 00:00:32,299 --> 00:00:37,260 gone on vacation on a cruise, I still got like 2000 subscribers. 13 00:00:37,460 --> 00:00:40,060 People are joining the channel and joining the show. 14 00:00:40,420 --> 00:00:42,300 And so I really appreciate everybody new here. 15 00:00:42,300 --> 00:00:44,220 I appreciate everybody sharing the word and spread in this 16 00:00:44,220 --> 00:00:46,620 channel and thank you guys for doing that. 17 00:00:47,220 --> 00:00:50,020 To everybody new, this is a channel about investing, about 18 00:00:50,020 --> 00:00:53,250 finance, about getting things in order so that you don't have the 19 00:00:53,250 --> 00:00:55,650 financial anxiety that a lot of people have and so that you can 20 00:00:55,650 --> 00:00:57,970 get ahead in life, get out of this rat race everybody finds 21 00:00:57,970 --> 00:01:00,170 himself in. And that's what I'm doing with 22 00:01:00,170 --> 00:01:02,330 this portfolio. This portfolio is a dividend 23 00:01:02,330 --> 00:01:06,010 growth portfolio where every week I go over it, talk about 24 00:01:06,010 --> 00:01:09,490 different investing subjects and the news, answer comments and 25 00:01:09,490 --> 00:01:11,930 questions. And it's a little bit just like 26 00:01:11,930 --> 00:01:15,850 a community we have here. As far as an outline of what I'm 27 00:01:15,850 --> 00:01:19,370 going to be going over today, if you guys follow me on Instagram, 28 00:01:19,370 --> 00:01:21,930 you'll know the main subject I'm going to be talking about today. 29 00:01:21,970 --> 00:01:25,290 You already know that which it I posted this right here. 30 00:01:25,730 --> 00:01:28,810 This is my Instagram. So if you guys haven't followed 31 00:01:28,810 --> 00:01:31,690 this, come and follow if you want to see more like behind the 32 00:01:31,690 --> 00:01:35,290 scenes background type of stuff and then like the latest one 33 00:01:35,290 --> 00:01:37,490 here for instance, I go that we're going to be talking about 34 00:01:37,850 --> 00:01:40,770 gambling and that's going to be the subject a little bit about 35 00:01:40,770 --> 00:01:42,770 gambling, how it relates to investing. 36 00:01:43,090 --> 00:01:46,050 I noticed a lot of people they ask what's the difference 37 00:01:46,050 --> 00:01:47,410 between gambling and investing, right? 38 00:01:48,010 --> 00:01:50,970 And I've seen this asked over different Reddit threads and and 39 00:01:50,970 --> 00:01:53,770 different things and I don't agree with them the answers that 40 00:01:53,770 --> 00:01:55,890 are typically given. So I'm going to give you my 41 00:01:55,890 --> 00:01:58,450 answer of what the difference between those two are and what 42 00:01:58,450 --> 00:02:03,250 really separates the two. Beyond that we have news to get 43 00:02:03,250 --> 00:02:04,810 to. A lot of stuff has happened in 44 00:02:04,810 --> 00:02:06,370 the past two weeks. I haven't talked about any of 45 00:02:06,370 --> 00:02:07,970 it. So one of them is United 46 00:02:07,970 --> 00:02:13,050 Technology Rathon merger that's going on, Bill Ackman, who is a 47 00:02:13,090 --> 00:02:16,670 hedge fund manager and he has a pretty colorful past. 48 00:02:16,670 --> 00:02:19,550 I mean, he has had huge concentrated bets and different 49 00:02:19,550 --> 00:02:22,950 companies, some of them he's made tons of money with and some 50 00:02:22,950 --> 00:02:24,350 of them he's lost tons of money with. 51 00:02:25,030 --> 00:02:28,230 He is a share owner of United Technologies. 52 00:02:28,710 --> 00:02:30,990 He's an activist investor, which means he gets involved. 53 00:02:30,990 --> 00:02:33,430 He tries to voice his opinion and influence decisions of the 54 00:02:33,430 --> 00:02:36,070 company. And he does not like this deal 55 00:02:36,070 --> 00:02:39,030 that's going on. And he wrote a letter to United 56 00:02:39,030 --> 00:02:41,710 Technologies, of whom he's a shareholder of, a large 57 00:02:41,710 --> 00:02:45,300 shareholder, of laying out his case for why he doesn't like 58 00:02:45,300 --> 00:02:48,460 this merger. And I'll show you that letter. 59 00:02:48,460 --> 00:02:50,980 I think it's pretty amazing. Some of the stuff he says in it 60 00:02:50,980 --> 00:02:52,340 is just really entertaining to read. 61 00:02:52,580 --> 00:02:54,260 So I'll be going over that a little bit, giving you my 62 00:02:54,260 --> 00:02:57,180 opinion on it. This article I found, this is 63 00:02:57,180 --> 00:02:59,180 smaller news. So this isn't like really big 64 00:02:59,180 --> 00:03:02,500 national news, but it's a story on how seniors were sold these 65 00:03:02,500 --> 00:03:06,460 riskfree retirement reverse mortgages, right, which is a 66 00:03:06,460 --> 00:03:09,180 product most people do not like the reverse mortgage. 67 00:03:09,630 --> 00:03:12,510 But I thought it relates really well to a different principle 68 00:03:12,790 --> 00:03:16,270 that other people do like. And I wanted to talk about this. 69 00:03:16,270 --> 00:03:18,790 So I'll hit on these reverse mortgages at the end of the 70 00:03:18,790 --> 00:03:21,030 show. So I first wanted to do just a 71 00:03:21,030 --> 00:03:23,550 quick portfolio update. I promise I won't spend too long 72 00:03:23,550 --> 00:03:25,390 on this. I wanted to just look at the 73 00:03:25,390 --> 00:03:28,670 week and the month view. So if I go to the week view 74 00:03:28,670 --> 00:03:33,590 here, .63% return and we're up to $157.00. 75 00:03:33,870 --> 00:03:37,910 But the earned dividends for this week was $36.53. 76 00:03:37,990 --> 00:03:41,750 Pretty awesome that I was paid $36 just in the last five days. 77 00:03:42,230 --> 00:03:46,790 Now if I go to the month view here, look at that 2.3%. 78 00:03:46,830 --> 00:03:49,790 If I go and I look at the S&P 500, right? 79 00:03:49,790 --> 00:03:52,350 Yeah, Okay. So here we are at the S&P 501 80 00:03:52,350 --> 00:03:58,390 month view .37 percent .37 compared to 2.3. 81 00:03:58,750 --> 00:04:02,630 So absolutely crushed S&P 500 for the past 30 day performance. 82 00:04:02,990 --> 00:04:09,230 But even cooler than that, look at this earned dividends $176.70 83 00:04:09,390 --> 00:04:14,270 in the past 30 days that since May 14th I've been paid like a 84 00:04:14,270 --> 00:04:17,790 paycheck $176 from these different companies. 85 00:04:18,190 --> 00:04:20,550 They say, hey, you're a shareholder of these companies, 86 00:04:20,550 --> 00:04:22,950 we want to let you in on the profits of our company. 87 00:04:23,150 --> 00:04:25,230 So we're going to go and pay you these dividends. 88 00:04:25,350 --> 00:04:27,990 That's what this is, $176 that I've earned. 89 00:04:28,530 --> 00:04:32,570 Now if you are using M1 Finance, you probably know that the 90 00:04:32,610 --> 00:04:35,690 earned dividends here are different than the paid 91 00:04:35,890 --> 00:04:37,650 dividends here. These are already paid. 92 00:04:38,050 --> 00:04:40,530 And it's like when you're working at your day job, you go 93 00:04:40,530 --> 00:04:42,770 and you earn your paycheck throughout the two week period, 94 00:04:43,010 --> 00:04:45,370 then you're usually paid at the end of a two week period or like 95 00:04:45,370 --> 00:04:47,690 a one month period. That's the same type of thing 96 00:04:47,690 --> 00:04:50,250 that happens here. So there might be on stocks a 97 00:04:50,250 --> 00:04:51,850 little different. It might be a few weeks until 98 00:04:51,850 --> 00:04:54,620 you're actually paid them. Either way, I'm owed that much 99 00:04:54,620 --> 00:04:57,100 money. I will get the $176. 100 00:04:57,140 --> 00:05:00,060 It'll show up in the activity feed and that's where it just 101 00:05:00,060 --> 00:05:02,660 cycles through. Now, I don't want to spend too 102 00:05:02,660 --> 00:05:04,180 much time on the portfolio update. 103 00:05:04,180 --> 00:05:07,060 I want to get into a little story and that has to do with 104 00:05:07,060 --> 00:05:10,220 the vacation that I went on. So many of you that have 105 00:05:10,220 --> 00:05:12,460 followed the channel, you are familiar with it and you know 106 00:05:12,460 --> 00:05:15,620 that I went on a vacation, I went on a cruise to Bermuda and 107 00:05:16,020 --> 00:05:17,700 it was pretty cool to see because that was an island that 108 00:05:17,700 --> 00:05:20,460 my mom was born and raised on. She was able to show us around a 109 00:05:20,460 --> 00:05:23,600 lot of different places that she grew up and spent time and 110 00:05:23,600 --> 00:05:26,560 before she moved to the States. But regardless, I want to 111 00:05:26,560 --> 00:05:28,360 specifically talk about cruise ships. 112 00:05:28,560 --> 00:05:31,080 So take a look at this ship. These things are absolutely 113 00:05:31,080 --> 00:05:32,880 massive. This one in particular, the 114 00:05:32,880 --> 00:05:35,160 Norwegian escape, was the one that we went on. 115 00:05:35,160 --> 00:05:37,120 It's the tallest ship in the world. 116 00:05:37,240 --> 00:05:39,560 And here's I'll just show you a couple pictures of this real 117 00:05:39,560 --> 00:05:41,200 quick. I mean this is the deck of them. 118 00:05:41,480 --> 00:05:43,640 They've made these a lot more modern, these new ships, they 119 00:05:43,640 --> 00:05:45,320 have like entire water parks on them. 120 00:05:45,680 --> 00:05:48,080 Here's another picture of it that it shows off. 121 00:05:48,080 --> 00:05:50,800 In the background you can see the ropes course that you can 122 00:05:50,800 --> 00:05:53,220 walk around on. Up here has one part called like 123 00:05:53,220 --> 00:05:56,500 the Plank where it extends over the edge of the ship so you can 124 00:05:56,500 --> 00:05:59,420 look down like 40 stories into the water. 125 00:05:59,580 --> 00:06:02,180 It's pretty freaky. Regardless, it was a lot of fun. 126 00:06:02,180 --> 00:06:05,300 We went on the cruise we left here from New Yorkers right when 127 00:06:05,300 --> 00:06:08,100 it was docked, leaving. You can see the city skyline 128 00:06:08,100 --> 00:06:11,340 there and then. I mean, they feed you nonstop. 129 00:06:11,340 --> 00:06:13,180 So like if you go on a cruise, you're probably going to gain 130 00:06:13,180 --> 00:06:15,180 about £10. And then here's a photo of 131 00:06:15,180 --> 00:06:16,940 Bermuda. Pretty amazing place if you've 132 00:06:16,940 --> 00:06:19,180 ever been there. One of the things that stuck out 133 00:06:19,180 --> 00:06:22,390 to me on this vacation was the gambling. 134 00:06:22,550 --> 00:06:25,270 Here's a video I took of a machine that people would play 135 00:06:25,270 --> 00:06:27,190 all night long. I'd see the same group of people 136 00:06:27,190 --> 00:06:29,670 playing this machine every single night of the cruise, and 137 00:06:29,670 --> 00:06:32,270 some of them would play it for like two or three hours or more 138 00:06:32,310 --> 00:06:35,750 every single night. It's called a coin pusher, and 139 00:06:35,750 --> 00:06:38,190 it's actually a pretty addictingly fun game. 140 00:06:38,630 --> 00:06:40,510 It does it. I mean all these gambling games, 141 00:06:40,510 --> 00:06:42,510 they do a lot of things to play on human nature to get you to 142 00:06:42,510 --> 00:06:47,150 keep playing, but this one's particularly fun. 143 00:06:47,430 --> 00:06:50,830 You put the coins in here on the slot at the top, they drop down 144 00:06:50,830 --> 00:06:53,910 in here, and then these coins that are just overhanging the 145 00:06:53,990 --> 00:06:56,150 edge, they get knocked down into the tray. 146 00:06:56,750 --> 00:07:01,510 The idea of course, is for you to put in less money than gets 147 00:07:01,510 --> 00:07:04,470 knocked over. And then on top of that, if I go 148 00:07:04,470 --> 00:07:08,030 to another video here, this shows a more close view where 149 00:07:08,030 --> 00:07:12,550 you can see dollar bills, these wads of cash here on top. 150 00:07:12,990 --> 00:07:15,510 A lot of people, what they try to do is they try to knock these 151 00:07:15,510 --> 00:07:19,550 wads of cash into the tray. And now, of course, casinos do a 152 00:07:19,550 --> 00:07:22,990 lot of things to make it so that the your chances of winning are 153 00:07:22,990 --> 00:07:24,670 a little bit more misleading than it seems. 154 00:07:24,870 --> 00:07:27,630 A lot of people, for instance, like this bill right here, it's 155 00:07:27,630 --> 00:07:30,350 already almost like 1/4 of the way over the edge. 156 00:07:30,590 --> 00:07:34,070 You think it'd be very easy to get this thing to move over, but 157 00:07:34,070 --> 00:07:36,950 people would spend entire nights and you did see this thing 158 00:07:37,110 --> 00:07:39,830 barely moving centimeter after centimeter. 159 00:07:40,190 --> 00:07:43,550 I mean, just to get this wad of cash is probably like 40 bucks. 160 00:07:43,790 --> 00:07:46,630 They'd have to put in hundreds and hundreds of dollars to get 161 00:07:46,630 --> 00:07:49,790 it to move a couple inches. And that's how these things 162 00:07:49,790 --> 00:07:51,070 work. And it's interesting. 163 00:07:51,230 --> 00:07:53,750 I've seen this before. I've seen this statement said 164 00:07:53,750 --> 00:07:56,750 before many times where people refer to the stock market is 165 00:07:56,750 --> 00:07:59,350 like a casino or like you're gambling, You're really risking 166 00:07:59,350 --> 00:08:01,430 your money. You're just hoping to make money 167 00:08:01,430 --> 00:08:02,990 easily. That type of thing. 168 00:08:03,350 --> 00:08:05,500 And I don't think that that's true at all. 169 00:08:05,580 --> 00:08:08,300 In fact, I think that there's a distinct difference in what 170 00:08:08,300 --> 00:08:10,100 separates gambling from investing. 171 00:08:10,380 --> 00:08:12,340 There's been a lot of discussion on this in past. 172 00:08:12,340 --> 00:08:14,500 I can go back and find these old Reddit threads. 173 00:08:14,500 --> 00:08:17,940 There's literally dozens and dozens of them of people asking 174 00:08:18,220 --> 00:08:20,340 how is the stock market not considered gambling? 175 00:08:20,340 --> 00:08:23,620 And they make their cases of how people have lost money, how 176 00:08:23,620 --> 00:08:25,780 people have gained money. Just like happens in casinos, 177 00:08:25,780 --> 00:08:27,550 right? And some of these comments are 178 00:08:27,790 --> 00:08:29,830 good. In response, they explain that 179 00:08:29,830 --> 00:08:32,150 you're buying equity in companies and what you're doing 180 00:08:32,390 --> 00:08:34,309 as opposed to just playing games, right. 181 00:08:34,669 --> 00:08:37,630 But I don't think that they go to the core of the difference 182 00:08:37,630 --> 00:08:40,789 between investing and gambling on a really broad sense. 183 00:08:41,150 --> 00:08:44,590 In my opinion, the difference between investing and gambling 184 00:08:44,950 --> 00:08:49,710 is called expected return. Really, in mathematics it's 185 00:08:49,710 --> 00:08:53,430 referred to as expected value, which I'll go and read the 186 00:08:53,430 --> 00:08:57,050 definition of that real quick. Expected value is a predicted 187 00:08:57,050 --> 00:09:00,850 value of a variable calculated as the sum of all possible 188 00:09:00,850 --> 00:09:03,690 values, each multiplied by the probability of its occurrence. 189 00:09:04,410 --> 00:09:06,130 All right, you got that? Understand it? 190 00:09:06,650 --> 00:09:09,370 No, just kidding. It's a little bit complicated 191 00:09:09,370 --> 00:09:12,090 when you look at it that way, but really, it's not complicated 192 00:09:12,090 --> 00:09:13,130 at all. Pretty much. 193 00:09:13,130 --> 00:09:17,730 Expected value is if you took an action and there's all these 194 00:09:17,730 --> 00:09:22,150 different possible outcomes. It just is an average of what 195 00:09:22,150 --> 00:09:25,470 the median outcome would be, what the middle outcome, what 196 00:09:25,470 --> 00:09:28,270 the average outcome would be based off of all the possible 197 00:09:28,270 --> 00:09:30,310 outcomes. That's the expected value. 198 00:09:30,790 --> 00:09:34,190 And the difference is, is anything where the expected 199 00:09:34,190 --> 00:09:38,550 value is below 0, you're gambling anything or the 200 00:09:38,550 --> 00:09:41,830 expected value is above 0. You're investing. 201 00:09:42,030 --> 00:09:43,550 That's where I would draw the line. 202 00:09:43,710 --> 00:09:45,270 Now this still might not be clear. 203 00:09:45,350 --> 00:09:48,760 I want to go ahead and go to the drawing board and I think I can 204 00:09:48,760 --> 00:09:53,800 actually explain this better. Let's go ahead and draw some 205 00:09:54,000 --> 00:09:59,640 dice here. Now as you know, dice have six 206 00:09:59,640 --> 00:10:05,160 sides and there is a one in six probability of rolling each 207 00:10:05,160 --> 00:10:07,240 number. So I'll go ahead and to make 208 00:10:07,240 --> 00:10:10,160 this clear, I'll go ahead and just unravel this dice and just 209 00:10:10,400 --> 00:10:19,900 draw six different boxes. So here we have 123456. 210 00:10:20,300 --> 00:10:23,820 There's a one in six chance of rolling any of these numbers 211 00:10:23,820 --> 00:10:27,300 when you have a normal dice, not one that's a trick dice or 212 00:10:27,300 --> 00:10:30,700 something like that. Now to explain how you get 213 00:10:30,700 --> 00:10:35,060 expected value or expected return, I'll give an example of 214 00:10:35,060 --> 00:10:36,380 this. Let's say that somebody comes to 215 00:10:36,380 --> 00:10:38,540 you and they offer to play a game with you, right? 216 00:10:38,540 --> 00:10:41,540 They say I have a dice here, it's a normal dice. 217 00:10:41,580 --> 00:10:46,130 And if you roll the numbers 1-2 or three, you lose $100. 218 00:10:46,170 --> 00:10:49,890 You have to pay me $100.00. So these numbers are all minus 219 00:10:49,890 --> 00:10:54,770 $100 right now. If you roll 4-5 and six, you 220 00:10:54,770 --> 00:10:59,450 gain $100. What is the expected return on 221 00:10:59,450 --> 00:11:01,570 this proposition? You're going to just calculate 222 00:11:01,570 --> 00:11:03,330 the odds. What is your expected return? 223 00:11:03,650 --> 00:11:07,290 Your expected return is 0. It's completely nothing. 224 00:11:07,570 --> 00:11:10,290 And the reason why is you have a 50% chance of losing $100. 225 00:11:10,290 --> 00:11:12,410 You have a 50% chance of gaining $100. 226 00:11:12,700 --> 00:11:16,140 If you did this over and over and over again enough times, the 227 00:11:16,140 --> 00:11:18,780 results would likely average out to just be 0. 228 00:11:19,100 --> 00:11:22,580 So this is right in between. Now if you change the game and 229 00:11:22,580 --> 00:11:28,100 somebody said if you roll 1-2 and three you lose $110.00. 230 00:11:28,620 --> 00:11:33,820 So if we change this and said 110 and then you roll 4-5 and 231 00:11:33,820 --> 00:11:37,140 six, you gain 100 and dollars. What is your expected return 232 00:11:37,140 --> 00:11:39,550 now? Well, looking at this, it's easy 233 00:11:39,550 --> 00:11:43,070 to see that half the time you're going to lose $110 and half the 234 00:11:43,070 --> 00:11:44,470 time you're going to gain $100.00. 235 00:11:44,710 --> 00:11:47,990 So now your expected return is -5%. 236 00:11:48,430 --> 00:11:51,070 And this can go on. And it gets a lot more complex 237 00:11:51,070 --> 00:11:54,670 when people in investing world, they look at expected return. 238 00:11:54,870 --> 00:11:58,950 What they do is they look at all the different possibilities a 239 00:11:58,950 --> 00:12:01,630 stock can have or at least they try to map out all these 240 00:12:01,630 --> 00:12:05,150 different results and there can be like 10s of thousands of 241 00:12:05,150 --> 00:12:09,180 different possibilities and then they try to find the overriding 242 00:12:09,180 --> 00:12:13,300 average and then that's the expected return, right? 243 00:12:13,780 --> 00:12:16,460 And that's difficult to do. That's not what I'm saying that 244 00:12:16,460 --> 00:12:18,060 you should try to do for your different stocks. 245 00:12:18,060 --> 00:12:21,140 There's some people that try to model this out and they do 246 00:12:21,140 --> 00:12:23,580 regression testing and all these different complicated things, 247 00:12:23,980 --> 00:12:27,500 and sometimes that proves well. But the overriding principle is 248 00:12:27,500 --> 00:12:31,180 that whenever you gamble, for instance, if I go back to this 249 00:12:31,180 --> 00:12:36,900 machine, every time you gamble, your expected return is below 0. 250 00:12:37,420 --> 00:12:40,860 If there was a gambling machine at a casino and the expected 251 00:12:40,860 --> 00:12:44,420 return was anything above 0, you would not be gambling. 252 00:12:44,420 --> 00:12:46,460 You'd be investing. Because you know that if you 253 00:12:46,460 --> 00:12:49,140 play that game enough, eventually you're going to come 254 00:12:49,140 --> 00:12:51,220 out on top. That is, the difference between 255 00:12:51,220 --> 00:12:54,620 investing and gambling is the certainty that if you play it 256 00:12:54,620 --> 00:12:58,420 enough over and over and over again, you're expected to have a 257 00:12:58,420 --> 00:13:00,540 positive return. You're expected to have a 258 00:13:00,540 --> 00:13:02,220 positive return. That makes it investing. 259 00:13:02,580 --> 00:13:04,780 If you're expected to have a negative return, that makes it 260 00:13:04,780 --> 00:13:06,500 gambling. If I go ahead and I look at the 261 00:13:06,500 --> 00:13:11,140 list here, look at this, this is the expected return of all these 262 00:13:11,140 --> 00:13:13,420 different gambling machines. You can see the house edge. 263 00:13:13,500 --> 00:13:17,820 This means by how much the house is going to win, their margin of 264 00:13:17,820 --> 00:13:22,340 winning Blackjack has like one of the smallest craps does too. 265 00:13:22,740 --> 00:13:24,980 And then the rest of them, some of these, I mean the house has 266 00:13:24,980 --> 00:13:27,980 really big edges on them and what you can see is not all of 267 00:13:27,980 --> 00:13:29,620 them are a lot. You know, casinos. 268 00:13:29,700 --> 00:13:31,860 Casinos don't need to win every single time. 269 00:13:32,180 --> 00:13:35,540 What keeps people gambling and keeps people addicted to it is 270 00:13:35,540 --> 00:13:37,740 the fact that they do win some of the time. 271 00:13:38,020 --> 00:13:44,100 They will win the 49.8%, the 49.5%, but the house in the end 272 00:13:44,260 --> 00:13:46,780 always wins just by these slim margins. 273 00:13:46,780 --> 00:13:51,500 These two percent, 3% point 6% leads to a lot of money, gets 274 00:13:51,500 --> 00:13:54,500 people addicted, gets people using these all the time, but 275 00:13:54,500 --> 00:13:56,540 their expected return is always negative. 276 00:13:56,780 --> 00:13:59,500 That's why gambling over long periods of time is usually a 277 00:13:59,500 --> 00:14:01,220 very financially destructive thing. 278 00:14:02,100 --> 00:14:06,220 In some circumstances, people can use specific skills and 279 00:14:06,220 --> 00:14:09,460 knowledge to overcome these odds against them, but they got to 280 00:14:09,460 --> 00:14:11,260 know that their expected return is negative. 281 00:14:11,260 --> 00:14:13,700 Starting out, they're swimming in an uphill current. 282 00:14:13,700 --> 00:14:16,180 Here, the stock market is completely different. 283 00:14:16,180 --> 00:14:20,100 The expected return is positive. The average annualized total 284 00:14:20,100 --> 00:14:23,540 return for over the last 90 years, this is for the S&P 500 285 00:14:23,820 --> 00:14:28,980 is 9.8%. So 9.8% a year for 90 years, 286 00:14:29,420 --> 00:14:32,860 that's a lot of data to go by and we expect that to continue 287 00:14:32,860 --> 00:14:36,820 because as economies we grow and expand and populations expand 288 00:14:36,820 --> 00:14:40,220 and companies expand as well. That leads to this return, the 289 00:14:40,220 --> 00:14:43,580 9.8% year over year. Now that's the difference 290 00:14:43,580 --> 00:14:45,980 between what is gambling and what is investing. 291 00:14:46,060 --> 00:14:48,580 When you put your money in the stock market, when you put it 292 00:14:48,580 --> 00:14:52,180 into the S&P 500 or whatever these good solid companies that 293 00:14:52,180 --> 00:14:55,700 you're buying, the expected return is positive. 294 00:14:55,900 --> 00:14:58,860 If you don't do anything, you're likely going to make money 295 00:14:58,860 --> 00:15:02,620 investing in the stock market. You have to go out of your way 296 00:15:02,620 --> 00:15:07,020 and do self-destructive actions to lose money over the long term 297 00:15:07,020 --> 00:15:10,180 in the stock market. Meaning you'd have to buy high 298 00:15:10,180 --> 00:15:13,180 right before a recession and then sell low like at the bottom 299 00:15:13,180 --> 00:15:14,620 of a recession. Those type of things. 300 00:15:14,620 --> 00:15:17,780 You can lose money, but the expected return is positive. 301 00:15:17,780 --> 00:15:20,340 If you just leave your money in for long enough period of time, 302 00:15:20,540 --> 00:15:23,730 you're expected to make money. And that to me is the absolute 303 00:15:23,730 --> 00:15:25,770 key difference between gambling and investing. 304 00:15:26,050 --> 00:15:28,130 So you can look at that. If you go to these different 305 00:15:28,130 --> 00:15:31,810 games, just know that these type of things are like intentionally 306 00:15:31,810 --> 00:15:34,730 set up to make it so that over playing them for long enough 307 00:15:34,730 --> 00:15:36,930 periods of time you're going to lose money with them. 308 00:15:37,250 --> 00:15:39,330 It was interesting actually looking at this one 309 00:15:39,330 --> 00:15:41,810 specifically. I tried to figure out how the 310 00:15:41,810 --> 00:15:44,730 casino makes money with it. Not only is it difficult to move 311 00:15:44,730 --> 00:15:48,780 these bills, they have this lip at the edge here that lifts 312 00:15:48,780 --> 00:15:51,660 these coins up and makes them so even though they look like 313 00:15:51,660 --> 00:15:54,420 they're just on the edge of falling over, it really takes a 314 00:15:54,420 --> 00:15:57,100 lot more than is expected to push them over the edge. 315 00:15:57,620 --> 00:15:59,180 Now there's other things they do as well. 316 00:15:59,340 --> 00:16:01,980 This video showed that a lot of these machines, they have this 317 00:16:02,100 --> 00:16:05,100 metal triangle in the middle, and it's interesting. 318 00:16:05,100 --> 00:16:08,300 So what it does is it's just the width of like 1/4. 319 00:16:08,740 --> 00:16:11,260 But as the coins are being pushed, they're being pushed to 320 00:16:11,260 --> 00:16:14,660 the sides and notice they're avoiding this middle part here. 321 00:16:15,110 --> 00:16:18,110 And you can see if I go back to the video, where are all the 322 00:16:18,110 --> 00:16:20,150 bills? They're right in the middle. 323 00:16:20,390 --> 00:16:22,670 If you look at this, isn't that amazing? 324 00:16:23,710 --> 00:16:27,110 People playing this would have no idea that all the coins are 325 00:16:27,110 --> 00:16:30,310 being directed away away from the bills. 326 00:16:30,610 --> 00:16:32,570 Now, I couldn't confirm whether this was the case. 327 00:16:32,570 --> 00:16:35,530 Every single night they'd go and they'd restock all the coins and 328 00:16:35,530 --> 00:16:37,970 make sure that this whole middle part is completely covered. 329 00:16:38,210 --> 00:16:42,130 But that's my suspicion is that there is a metal triangle that 330 00:16:42,130 --> 00:16:45,250 directs most of the pressure of these coins moving towards the 331 00:16:45,290 --> 00:16:47,410 edge. In fact, to confirm my 332 00:16:47,410 --> 00:16:49,730 suspicion, I brought this up to my wife and she noticed 333 00:16:49,730 --> 00:16:53,170 something that most of the bills, the ones that were for 334 00:16:53,170 --> 00:16:56,210 higher dollar amounts, like the 20 and 10s, they were always in 335 00:16:56,210 --> 00:16:59,250 the middle. If I go, here's another 120 and 336 00:16:59,250 --> 00:17:01,860 10 in the middle, there's another 120 and 10 in the 337 00:17:01,860 --> 00:17:05,140 middle, there's another 120 and 10 in the middle. 338 00:17:05,420 --> 00:17:08,180 You can see it. I mean these things you don't 339 00:17:08,180 --> 00:17:10,140 notice if you just sit down and play it, but if you actually 340 00:17:10,140 --> 00:17:13,619 look at these things, all these things are are going to make it 341 00:17:13,619 --> 00:17:16,140 so your expected return is much lower than you think. 342 00:17:16,380 --> 00:17:19,099 These type of machines, I bet they bring in thousands a night 343 00:17:19,300 --> 00:17:22,099 and net profit. They're just wealth transfer 344 00:17:22,099 --> 00:17:24,339 systems from people wanting to have a fun time gambling. 345 00:17:24,660 --> 00:17:27,339 It's just to get their money from you into the casino's 346 00:17:27,339 --> 00:17:28,820 pocket. That's really what they do. 347 00:17:29,340 --> 00:17:31,980 Now again there's certain situations you might come out on 348 00:17:31,980 --> 00:17:35,340 top, but I really think that the methods they do are pretty 349 00:17:35,340 --> 00:17:38,740 incredible and and being able to take your money while making it 350 00:17:38,740 --> 00:17:41,940 so that you continue to play. But anyways, interesting 351 00:17:42,020 --> 00:17:43,700 principle I wanted to bring that up. 352 00:17:43,700 --> 00:17:45,380 I want to know your guys thoughts on it as well. 353 00:17:45,380 --> 00:17:47,260 If you think that this is the difference between gambling or 354 00:17:47,260 --> 00:17:49,980 not, I think it is. But I'd be interested to know 355 00:17:49,980 --> 00:17:52,780 what you guys's take is as well. Well, let's go ahead and move on 356 00:17:52,780 --> 00:17:54,740 from that and jump into some news. 357 00:17:54,860 --> 00:17:58,140 Today's top corporate story Dow, Component, United Technologies 358 00:17:58,140 --> 00:18:01,460 and Raytheon announcing an all stock merger after planned 359 00:18:01,460 --> 00:18:03,140 spinoffs. The combined company is going to 360 00:18:03,140 --> 00:18:06,700 be valued at more than $100 billion and have annual sales of 361 00:18:06,700 --> 00:18:11,260 around $74 billion. So we have United Technologies 362 00:18:11,500 --> 00:18:15,660 and Rathon 2 defense companies merging together now. 363 00:18:15,660 --> 00:18:18,180 I wanted to look at the specific argument that Bill Ackman here 364 00:18:18,180 --> 00:18:21,420 had for this merger and why he's against it. 365 00:18:21,620 --> 00:18:23,940 I like looking at the argument these guys give because he gets 366 00:18:23,940 --> 00:18:27,980 he has a lot more money invested in United Technologies than any 367 00:18:27,980 --> 00:18:30,780 of us do. And so looking at why he has 368 00:18:30,780 --> 00:18:32,660 concerns about this, I think is interesting. 369 00:18:32,820 --> 00:18:35,540 And his letter, I have it right here that he wrote the United 370 00:18:35,540 --> 00:18:37,700 Technologies. This was kind of like an open 371 00:18:37,700 --> 00:18:40,220 letter to voice his concerns. And I want to go through and 372 00:18:40,220 --> 00:18:42,100 read some of it because I actually think it was pretty, 373 00:18:42,430 --> 00:18:43,830 pretty amazing some of the stuff, he says. 374 00:18:44,590 --> 00:18:47,990 One part, he says we were quite surprised to read recent press 375 00:18:47,990 --> 00:18:50,430 reports that United that suggested that United 376 00:18:50,430 --> 00:18:54,150 Technologies is close to announce a merger of equals with 377 00:18:54,150 --> 00:18:57,790 Rathon as early as Monday. While we do not know the precise 378 00:18:57,790 --> 00:19:01,310 details of such a potential merger, we are extremely 379 00:19:01,310 --> 00:19:03,750 concerned that such a transaction will significantly 380 00:19:03,750 --> 00:19:07,310 lower the business quality of pro forma United Technologies 381 00:19:07,350 --> 00:19:10,590 aerospace business. And to make matters worse, will 382 00:19:10,590 --> 00:19:14,110 be accomplished through a highly diluted issuance of large 383 00:19:14,110 --> 00:19:16,630 amounts of United Technology stock, which is currently 384 00:19:16,630 --> 00:19:19,430 trading at an enormous discount to its intrinsic value. 385 00:19:19,710 --> 00:19:22,270 So he's saying United Technologies is already trading 386 00:19:22,270 --> 00:19:25,070 out of discounted value, which means that it's more valuable 387 00:19:25,070 --> 00:19:27,350 than really what the price is indicating right now. 388 00:19:27,630 --> 00:19:29,830 And he thinks that once they separate into three separate 389 00:19:29,830 --> 00:19:33,350 companies that United Technologies is doing, each of 390 00:19:33,350 --> 00:19:35,630 those individual companies is going to be worth a lot more 391 00:19:35,630 --> 00:19:39,380 than they are together. And so merging with Rathon with 392 00:19:39,380 --> 00:19:43,020 a pure equity deal is something that is not giving it its full 393 00:19:43,020 --> 00:19:46,060 value. It therefore makes no sense to 394 00:19:46,060 --> 00:19:48,780 us why you would consider a stock acquisition using today's 395 00:19:48,780 --> 00:19:52,820 massively undervalued UTC common stock to buy a large business of 396 00:19:52,820 --> 00:19:56,340 inferior quality to the company's existing business and 397 00:19:56,340 --> 00:19:59,660 for which we cannot comprehend the strategic logic behind such 398 00:19:59,660 --> 00:20:02,620 a transaction. We believe that post the planned 399 00:20:02,740 --> 00:20:05,600 Otis and Carrier spinoff. United Technologies current 400 00:20:05,600 --> 00:20:08,520 aerospace business will become the world's premier aerospace 401 00:20:08,520 --> 00:20:12,920 company with a highly focused portfolio of assets in enviable 402 00:20:12,920 --> 00:20:15,720 market positions and embedded growth for decades to come. 403 00:20:15,880 --> 00:20:19,200 We believe that UTC's aerospace business is uniquely valuable 404 00:20:19,200 --> 00:20:23,200 asset that will achieve an appropriately high mid 20s P/E 405 00:20:23,240 --> 00:20:26,640 multiple valuation when it begins to trade as a standalone 406 00:20:26,640 --> 00:20:31,010 company later, he says. Rathon is significantly inferior 407 00:20:31,010 --> 00:20:33,690 quality business compared to Collins Airspace and Pratt and 408 00:20:33,690 --> 00:20:36,530 Whitney as pureplay defense contractor. 409 00:20:36,690 --> 00:20:39,450 Rathon's growth and profit margins are tied to Department 410 00:20:39,450 --> 00:20:42,370 of Defense budgets which have a limited visibility and high 411 00:20:42,370 --> 00:20:45,490 volatility and which can change drastically based on dominant 412 00:20:45,490 --> 00:20:49,730 political parties priorities. As a pureplay company, Rathon is 413 00:20:49,730 --> 00:20:53,010 also not suffering from a conglomerate discount, as is 414 00:20:53,010 --> 00:20:55,210 UTC. So you're saying Rathon is 415 00:20:55,210 --> 00:20:58,250 already a single company? It's not a conglomerate, and so 416 00:20:58,250 --> 00:21:01,250 there's no discount for it being a conglomerate, and it's still 417 00:21:01,250 --> 00:21:04,090 not valued, Well says. We believe that Rathon's 418 00:21:04,090 --> 00:21:07,010 diversified portfolio, which spans missile systems and 419 00:21:07,010 --> 00:21:10,050 cybersecurity, is much less competitive advantage than 420 00:21:10,050 --> 00:21:13,450 Collins Aerospace and Pratt and Whitney as it has a lower 421 00:21:13,490 --> 00:21:15,810 longterm growth rate, substantially more business 422 00:21:15,810 --> 00:21:19,410 volatility and greater risk. Moreover, given the limited 423 00:21:19,410 --> 00:21:22,410 portfolio overlap between the companies, we believe that 424 00:21:22,410 --> 00:21:26,370 United Technologies lacks the expertise provided effective 425 00:21:26,370 --> 00:21:29,770 oversight of Rathon's business and in attempting to do so, at a 426 00:21:29,770 --> 00:21:32,250 minimum will lose focus. In summary, we believe the 427 00:21:32,250 --> 00:21:36,010 combination of Rathon and UTC's aerospace business will 428 00:21:36,010 --> 00:21:39,610 meaningfully degrade the overall quality of UTC's pro forma 429 00:21:39,610 --> 00:21:42,690 aerospace business and likely harm its operational 430 00:21:42,690 --> 00:21:45,010 performance. So in saying not only are you 431 00:21:45,010 --> 00:21:46,970 going to get the true value, but it's actually going to damage 432 00:21:46,970 --> 00:21:49,550 the business. And I mean this just goes on and 433 00:21:49,550 --> 00:21:51,790 he actually gets more and more bold with the statements as this 434 00:21:51,790 --> 00:21:55,190 letter goes on later on to at the end of this letter he says 435 00:21:55,230 --> 00:21:58,950 obviously we are extremely concerned about what we have 436 00:21:58,950 --> 00:22:01,870 read this afternoon. If the company intends to go 437 00:22:01,870 --> 00:22:05,150 forward with such a transaction, we will oppose it publicly if 438 00:22:05,150 --> 00:22:09,030 necessary as we expect will the substantial majority of company 439 00:22:09,030 --> 00:22:11,590 shareholders. We would welcome the opportunity 440 00:22:11,590 --> 00:22:14,470 to present our views in person to you and the board at the 441 00:22:14,470 --> 00:22:18,110 board's earliest convenience. I hope this is simply fake news, 442 00:22:18,190 --> 00:22:21,110 as it does not seem consistent with the Greg Hayes we know. 443 00:22:21,110 --> 00:22:24,430 Sincerely, bill. Wow. 444 00:22:24,670 --> 00:22:28,710 So he's literally saying that he hopes that this is all fake news 445 00:22:28,830 --> 00:22:30,710 and that this is just something that he misread. 446 00:22:31,070 --> 00:22:32,390 That's how strongly he opposes it. 447 00:22:32,550 --> 00:22:34,550 And say what you will about bill Ackman. 448 00:22:34,550 --> 00:22:35,950 I know. I mean people go. 449 00:22:35,950 --> 00:22:37,990 I mean, he lost a ton of money on Herbalife. 450 00:22:38,550 --> 00:22:40,070 He lost a ton of money on valiant. 451 00:22:40,070 --> 00:22:42,060 Right. But that doesn't mean that 452 00:22:42,060 --> 00:22:44,060 everything that he's saying, the arguments he's saying are 453 00:22:44,060 --> 00:22:46,140 invalid. And he has made a lot of money 454 00:22:46,140 --> 00:22:49,500 on other concentrated bets. He's had an extremely good year 455 00:22:49,500 --> 00:22:52,100 this year, and his hedge fund has performed really well this 456 00:22:52,180 --> 00:22:54,820 past, like I think past six months, he's done extremely 457 00:22:54,820 --> 00:22:58,140 well. So I actually agree with a lot 458 00:22:58,140 --> 00:23:00,940 of the things that he says. I don't think that this deal for 459 00:23:00,940 --> 00:23:02,420 United Technologies is good for them. 460 00:23:02,980 --> 00:23:05,140 I don't think that they're going to be able to properly manage 461 00:23:05,140 --> 00:23:06,980 your Athon. And The thing is, I was in 462 00:23:06,980 --> 00:23:09,460 support of United Technologies breaking up into three separate 463 00:23:09,460 --> 00:23:12,580 companies because I believe that he they can manage them 464 00:23:12,740 --> 00:23:14,860 individually better than they can as a conglomerate. 465 00:23:15,140 --> 00:23:16,540 Conglomerates don't do that well. 466 00:23:16,820 --> 00:23:19,940 But now they're merging with another company that is more in 467 00:23:19,940 --> 00:23:24,300 the direction of a conglomerate having a big massive diversified 468 00:23:24,300 --> 00:23:26,700 company that spans into a bunch of different things. 469 00:23:26,700 --> 00:23:29,860 So I I'm more side with Bill on this one. 470 00:23:30,060 --> 00:23:31,540 I don't know exactly how it will turn out. 471 00:23:31,540 --> 00:23:32,700 I bet this deal will come through. 472 00:23:33,450 --> 00:23:36,170 Bill has stayed out of the news recently, but it looks like he's 473 00:23:36,170 --> 00:23:39,570 about to throw a fit over this so we'll see what happens. 474 00:23:39,890 --> 00:23:41,890 I'll keep you guys up to date if he comes and makes any like 475 00:23:41,890 --> 00:23:44,690 public appearances and goes on the news and talks about this 476 00:23:44,690 --> 00:23:45,370 deal. So. 477 00:23:45,770 --> 00:23:47,650 But anyway, I thought this was interesting to mention. 478 00:23:48,370 --> 00:23:51,130 Now the last bit of news, this really isn't big news, but I 479 00:23:51,130 --> 00:23:53,010 wanted to touch on it because I thought this was really 480 00:23:53,010 --> 00:23:55,610 interesting. This is a post on Reddit, the 481 00:23:55,610 --> 00:23:58,330 real estate subreddit, and it says seniors were sold a 482 00:23:58,370 --> 00:24:00,290 riskfree retirement with reverse mortgages. 483 00:24:00,290 --> 00:24:02,650 It wasn't. And what this is, this is an 484 00:24:02,650 --> 00:24:05,450 article that goes through and talks about how these seniors, 485 00:24:05,890 --> 00:24:09,650 they were sold this financial thing called a reverse mortgage. 486 00:24:09,810 --> 00:24:12,930 We're pretty much what happens is they've been buying and 487 00:24:12,930 --> 00:24:15,610 paying for their home mortgage for the majority of their life 488 00:24:15,610 --> 00:24:18,450 or whatever their working life, right There's 30 years. 489 00:24:18,450 --> 00:24:20,890 Mortgages are the standard one that usually people get. 490 00:24:21,290 --> 00:24:23,450 But if you didn't really plan your retirement while you're in 491 00:24:23,450 --> 00:24:26,250 a situation where you don't have a lot of cash in retirement and 492 00:24:26,250 --> 00:24:30,410 to not live on Social Security, what will happen is some people 493 00:24:30,410 --> 00:24:32,930 will buy this product called a reverse mortgage. 494 00:24:33,010 --> 00:24:37,010 And as the name implies, it works exactly as it sounds. 495 00:24:37,250 --> 00:24:39,690 Just like when you're when you have a mortgage and you're 496 00:24:39,690 --> 00:24:42,210 slowly paying that down and paying off the debt in your 497 00:24:42,210 --> 00:24:46,410 home, reverse mortgage is slowly selling back equity to the bank. 498 00:24:46,770 --> 00:24:50,370 That's how it works. And so hopefully what happens, 499 00:24:50,370 --> 00:24:54,970 the idea is, is that by the time the home is all the way sold to 500 00:24:54,970 --> 00:24:59,230 the bank, you're either dead or you're able to move on, move to 501 00:24:59,230 --> 00:25:01,430 something else. Most of the time it's so that 502 00:25:01,430 --> 00:25:04,310 you're able to die before then. That's pretty much the idea, to 503 00:25:04,310 --> 00:25:06,670 be frank. In fact, that's why they have an 504 00:25:06,710 --> 00:25:09,070 age limit where you can't even start one until you're at a 505 00:25:09,070 --> 00:25:11,310 certain age. Now, if I look at the comments 506 00:25:11,310 --> 00:25:13,190 of this, this is the part that I think is interesting. 507 00:25:13,550 --> 00:25:15,950 Those foreclosures were riped out hard, earned generations of 508 00:25:15,950 --> 00:25:18,190 wealth in the decades since the Fair Housing Act. 509 00:25:18,970 --> 00:25:21,730 But the reason that people don't like reverse mortgages is 510 00:25:21,730 --> 00:25:24,130 because what happens to the kids in this situation? 511 00:25:24,330 --> 00:25:26,970 These parents worked. They raised their families in 512 00:25:26,970 --> 00:25:29,730 these homes and then they sell them back to the bank. 513 00:25:29,730 --> 00:25:32,490 All that work that they went through for decade after decade 514 00:25:32,490 --> 00:25:36,210 after decade, they give that all back to the bank and the kids 515 00:25:36,210 --> 00:25:38,330 get nothing. Their generation gets nothing. 516 00:25:38,650 --> 00:25:40,530 For most people, you know, there's there's always people 517 00:25:40,530 --> 00:25:42,130 that say, well, you don't want your kids to be entitled, you 518 00:25:42,130 --> 00:25:43,090 don't want to give them anything. 519 00:25:43,490 --> 00:25:46,930 But for most people, you do want your kids to have it easier than 520 00:25:46,930 --> 00:25:48,440 you did. Most people want to have a 521 00:25:48,440 --> 00:25:51,120 better life for their kids, and then they did the struggles that 522 00:25:51,120 --> 00:25:52,600 they had. At least I do. 523 00:25:52,600 --> 00:25:54,000 That's the perspective I come from. 524 00:25:54,320 --> 00:25:57,040 I don't want them to be instant millionaires from the, you know, 525 00:25:57,040 --> 00:25:59,880 the day they're born, but I want them to have it a little bit 526 00:25:59,880 --> 00:26:03,840 easier than I did. And so when you're just giving 527 00:26:03,840 --> 00:26:07,240 back your wealth that you've accumulated from this generation 528 00:26:07,240 --> 00:26:10,200 back to the bank, people see that as a negative thing. 529 00:26:10,520 --> 00:26:13,280 And for this, I mean the comments on it are always 530 00:26:13,280 --> 00:26:14,880 negative about reverse mortgages. 531 00:26:15,280 --> 00:26:19,680 In fact, this one here says it mostly screws over the next of 532 00:26:19,680 --> 00:26:22,440 kin who are essentially buy back the house at the current market 533 00:26:22,440 --> 00:26:24,080 value since equity was tapped out. 534 00:26:24,360 --> 00:26:25,560 That's right. You're giving back all the 535 00:26:25,560 --> 00:26:27,720 equity in your home. And there's comment after 536 00:26:27,720 --> 00:26:32,240 comment after comment blatantly realizing that when you take on 537 00:26:32,240 --> 00:26:35,400 a reverse mortgage, you're just giving back all this wealth back 538 00:26:35,400 --> 00:26:36,880 to the bank. That's exactly what you're 539 00:26:36,880 --> 00:26:38,720 doing. Now the thing that I think is 540 00:26:38,720 --> 00:26:41,880 odd is what is the argument for stocks? 541 00:26:42,760 --> 00:26:45,880 What is it for growth stocks? Well, everybody will tell you 542 00:26:46,490 --> 00:26:48,650 that what you do is you accumulate these growth stocks 543 00:26:48,690 --> 00:26:51,530 over and over and over again all throughout your life, decade 544 00:26:51,530 --> 00:26:53,730 after decade after decade. And then what do you do in 545 00:26:53,730 --> 00:26:56,570 retirement? You slowly start selling them. 546 00:26:56,650 --> 00:26:59,330 You slowly start selling them and giving them back to other 547 00:26:59,330 --> 00:27:02,010 people and cashing out. That's what most people are 548 00:27:02,010 --> 00:27:05,130 doing with their wealth is when they get to retirement age, they 549 00:27:05,130 --> 00:27:07,570 saved up all this money in stocks and then they start 550 00:27:07,570 --> 00:27:09,770 giving back that equity to other people. 551 00:27:10,050 --> 00:27:12,530 All that wealth that they generated and created, all that 552 00:27:12,570 --> 00:27:15,730 ownership they have of different companies and different real 553 00:27:15,730 --> 00:27:17,850 estate and things, they start to give it back. 554 00:27:18,170 --> 00:27:19,490 And that is what I don't agree with. 555 00:27:19,770 --> 00:27:21,930 In fact, the same argument applies here. 556 00:27:22,050 --> 00:27:25,090 Here's one of the comments, and this is for reverse mortgage. 557 00:27:25,570 --> 00:27:28,170 Unless your market appreciates faster than the interest 558 00:27:28,170 --> 00:27:32,970 compounds, So he's saying unless your home appreciates faster 559 00:27:32,970 --> 00:27:35,050 than the rate that you're selling it, Well, what does that 560 00:27:35,050 --> 00:27:37,170 sound like? That is the same exact argument 561 00:27:37,170 --> 00:27:40,770 that people make when they say, well, if I sell 3% of my 562 00:27:40,890 --> 00:27:43,970 holdings a year, 4%, it's going to appreciate at 8%. 563 00:27:43,970 --> 00:27:45,050 So I'm still going to make money. 564 00:27:45,630 --> 00:27:48,110 But why does that never work with reverse mortgages? 565 00:27:48,230 --> 00:27:50,910 It's the same exact principle. You're just trying to sell it at 566 00:27:50,910 --> 00:27:52,630 a lower rate than the home appreciates. 567 00:27:53,150 --> 00:27:57,030 I hold the same ideas both ways. I think that if you work your 568 00:27:57,030 --> 00:27:59,710 whole life to accumulate something, you should try to 569 00:27:59,710 --> 00:28:01,670 keep the principal. You should try to keep the 570 00:28:01,670 --> 00:28:03,670 underlying assets that you've accumulated. 571 00:28:04,150 --> 00:28:05,830 I do not agree with reverse mortgages. 572 00:28:05,830 --> 00:28:07,470 I don't think that you should sell back your home. 573 00:28:07,790 --> 00:28:10,070 Just like I don't think that you should sell back all of the 574 00:28:10,070 --> 00:28:12,350 stocks and all the assets that you accumulate throughout your 575 00:28:12,350 --> 00:28:14,520 life. You should put them in things 576 00:28:14,760 --> 00:28:17,200 that create passive income and then live off the yield that 577 00:28:17,200 --> 00:28:19,480 they generate. Just like if you have a reverse 578 00:28:19,480 --> 00:28:21,680 mortgage, you should be able to either live in the house till 579 00:28:21,680 --> 00:28:24,600 you die or be able to rent it out and so that your kids have 580 00:28:24,600 --> 00:28:26,760 that. So just a different line of 581 00:28:26,760 --> 00:28:29,760 thinking. I see reverse mortgages very 582 00:28:29,760 --> 00:28:33,560 similar to the idea of building up a bunch of assets and stocks 583 00:28:33,560 --> 00:28:35,480 and slowly selling them off as well. 584 00:28:35,840 --> 00:28:39,160 You know, hopefully, hopefully your portfolio outlives you. 585 00:28:39,240 --> 00:28:41,640 That's the idea behind it. Hopefully this reverse mortgage 586 00:28:41,840 --> 00:28:43,940 outlives you. I don't love that idea. 587 00:28:44,100 --> 00:28:47,620 I like it the way that my dad is doing it more where he has real 588 00:28:47,620 --> 00:28:50,140 estate and things that generate passive income, hasn't had to 589 00:28:50,140 --> 00:28:52,100 sell a thing in retirement, just has. 590 00:28:52,100 --> 00:28:55,700 And it's not a huge income, just enough that you can live stress 591 00:28:55,700 --> 00:28:57,380 free. When you have no debt and no 592 00:28:57,380 --> 00:28:59,620 expenses, that money goes a lot further. 593 00:28:59,620 --> 00:29:01,660 And so that's what I'm moving towards. 594 00:29:01,660 --> 00:29:04,540 That's what I advocate for. I think it's much safer, much 595 00:29:04,540 --> 00:29:07,940 more sensible way of looking at building wealth and being able 596 00:29:07,940 --> 00:29:09,740 to pass it on from generation to generation. 597 00:29:10,550 --> 00:29:12,710 Anyway, I'll go ahead and move on to a couple questions before 598 00:29:12,710 --> 00:29:14,870 ending. These questions were actually 599 00:29:14,870 --> 00:29:17,310 really interesting and in fact, I'll go ahead and I'll throw up. 600 00:29:17,750 --> 00:29:19,950 I'll put up like 3 different questions because I feel like 601 00:29:19,950 --> 00:29:22,950 they're all pretty much in different ways asking the same 602 00:29:22,950 --> 00:29:25,150 exact thing. First one's from Billy. 603 00:29:25,150 --> 00:29:27,870 He says, hey Joe, I really like your videos and I've watched 604 00:29:27,870 --> 00:29:30,270 most of them, but I don't think this has been brought up yet. 605 00:29:30,910 --> 00:29:34,070 What are your thoughts on ESG scores and ethical investing? 606 00:29:34,510 --> 00:29:37,670 I see portions of your dividends coming from Exxon, Duke and 607 00:29:37,670 --> 00:29:41,040 Chase, etcetera. And being 29 years old, you will 608 00:29:41,040 --> 00:29:43,840 most likely be retiring during some of the worst effects of the 609 00:29:43,840 --> 00:29:46,600 climate crisis. Not trying to be preach to your 610 00:29:46,600 --> 00:29:49,080 judgmental, but I think you are investing. 611 00:29:49,280 --> 00:29:52,000 I think what you're investing in is a reflection of your values. 612 00:29:52,280 --> 00:29:55,080 And of course I don't think that just you stopping investing in 613 00:29:55,080 --> 00:29:56,880 Exxon will stop the climate crisis. 614 00:29:57,200 --> 00:30:00,160 But if a retail investor, if all retail investors gave up the 615 00:30:00,160 --> 00:30:02,600 worst fossil fuel companies, that could help make a 616 00:30:02,600 --> 00:30:04,800 difference in the fight and wanted to know your thoughts on 617 00:30:04,800 --> 00:30:07,520 it. OK, so that's one of them. 618 00:30:07,520 --> 00:30:10,520 He's asking why I'm investing in these oil companies when they're 619 00:30:10,520 --> 00:30:14,120 contributing to, you know, climate change and all of that 620 00:30:14,120 --> 00:30:15,720 stuff, bad stuff for the environment, right. 621 00:30:16,320 --> 00:30:20,280 Another question has, well, this is a comment from a guy he says 622 00:30:20,480 --> 00:30:22,160 Lockheed Martin. Really. 623 00:30:22,240 --> 00:30:25,640 Why do you invest in weapons screwed up if you ask me dot, 624 00:30:25,640 --> 00:30:29,320 dot dot, Here's another one. Hey Joseph, what's your take on 625 00:30:29,320 --> 00:30:31,520 sin stocks like tobacco and alcohol? 626 00:30:32,560 --> 00:30:35,400 Do you see the similarities in all these questions? 627 00:30:35,920 --> 00:30:40,040 They everybody has these different you have different 628 00:30:40,040 --> 00:30:42,240 standards, everybody comes from different backgrounds and 629 00:30:42,240 --> 00:30:45,400 contexts, and you develop your own kind of moral guidelines. 630 00:30:45,400 --> 00:30:48,240 And some people feel more passionate about some issues 631 00:30:48,240 --> 00:30:51,080 than others. The person that might say I'm 632 00:30:51,080 --> 00:30:54,680 never investing in oil companies climate crisis is, you know, 633 00:30:54,680 --> 00:30:57,400 this big thing that we have to fight in combat, right? 634 00:30:58,020 --> 00:31:00,940 That person might invest in Lockheed Martin and then another 635 00:31:00,940 --> 00:31:03,140 person might criticize them for saying, hey, you're investing in 636 00:31:03,140 --> 00:31:05,220 Lockheed Martin, They build missiles that go out and blow 637 00:31:05,220 --> 00:31:07,660 people up and then, you know, Middle East or wherever. 638 00:31:08,780 --> 00:31:11,940 And some people might not have any issue with building that. 639 00:31:12,020 --> 00:31:13,540 And there's arguments for everything. 640 00:31:13,540 --> 00:31:15,660 And one person might say, well, you're investing in tobacco and 641 00:31:15,660 --> 00:31:18,020 alcohol. These things are addictive and 642 00:31:18,060 --> 00:31:21,900 destructive to people's health. So this just is a revolving 643 00:31:21,900 --> 00:31:25,590 thing and a lot of it comes down to your own personal, your own 644 00:31:25,590 --> 00:31:27,870 personal standards, your own personal morals, investing in 645 00:31:27,870 --> 00:31:31,430 things that you like. As far as me personally, yes, I 646 00:31:31,430 --> 00:31:36,230 own some oil companies Now. Overall, it makes up I think 647 00:31:36,350 --> 00:31:40,550 less than 2% of My Portfolio, which as a dividend investor, 648 00:31:40,590 --> 00:31:44,110 that's a tiny amount of My Portfolio and I also have the 649 00:31:44,110 --> 00:31:46,310 percentage lowered. So pretty much at this point all 650 00:31:46,310 --> 00:31:48,630 I'm doing is taking the dividends they pay and putting 651 00:31:48,630 --> 00:31:52,090 them into other companies. Now I probably don't share the 652 00:31:52,090 --> 00:31:55,650 exact same level of fervor and fighting the climate crisis that 653 00:31:55,650 --> 00:31:59,730 Bill does here or Billy does here, but I, I, I work for a 654 00:31:59,730 --> 00:32:01,610 solar company. So I have, I'm trying to 655 00:32:01,610 --> 00:32:04,650 contribute to a, you know, I like buying things that are 656 00:32:04,650 --> 00:32:07,450 electric and run clean and and efficient. 657 00:32:07,490 --> 00:32:10,930 I like the move towards that. There is a clip that I wanted to 658 00:32:10,930 --> 00:32:13,650 share that I think it was on the Joe Rogan podcast. 659 00:32:13,650 --> 00:32:16,970 One of the guests and I totally agree with his way of fighting 660 00:32:16,970 --> 00:32:18,010 this issue. You. 661 00:32:18,010 --> 00:32:21,410 Lower the price of clean technologies massively. 662 00:32:21,730 --> 00:32:24,770 So you basically make clean technologies cost competitive 663 00:32:24,770 --> 00:32:27,810 with some clean technologies innovation. 664 00:32:27,930 --> 00:32:30,810 Ideally you can subsidize in the short to medium term until the 665 00:32:30,810 --> 00:32:33,570 innovation curve is is crossed. I mean like Tesla doesn't have 666 00:32:33,570 --> 00:32:36,450 any patents right? Or they they freely give away 667 00:32:36,450 --> 00:32:38,090 their patents. That's the example of how you 668 00:32:38,090 --> 00:32:41,840 can do it. What he's saying there is 669 00:32:41,840 --> 00:32:44,800 completely what I agree with on as far as this issue goes is 670 00:32:44,800 --> 00:32:47,240 that I don't think destroying oil companies is going to be the 671 00:32:47,240 --> 00:32:49,520 solution. If we don't, if I don't invest 672 00:32:49,520 --> 00:32:51,960 in them and I don't buy their products, if I said everyone to 673 00:32:51,960 --> 00:32:53,760 buy, I would never want to fill up gas in my car. 674 00:32:54,080 --> 00:32:57,000 They will find other consumers. There's there's other countries 675 00:32:57,080 --> 00:33:00,440 that do not feel that they do not share the same passion that 676 00:33:00,720 --> 00:33:02,960 you or I do and they'll find a man there. 677 00:33:03,080 --> 00:33:06,760 The way that I think that this transitions into cleaner energy 678 00:33:07,120 --> 00:33:10,640 is exactly what he said, which is making clean energy more 679 00:33:10,800 --> 00:33:15,760 costeffective than oil and other nonrenewable energy. 680 00:33:16,040 --> 00:33:18,080 So once it breaks the point, we're actually more 681 00:33:18,080 --> 00:33:20,200 costeffective. We don't have to take a moral 682 00:33:20,200 --> 00:33:22,920 stand against it. The market will naturally reward 683 00:33:22,920 --> 00:33:24,800 these more costeffective forms of energy. 684 00:33:25,280 --> 00:33:27,760 And in my opinion, I think we're going to get there pretty soon. 685 00:33:27,960 --> 00:33:30,200 I I don't think the planet will be destroyed by the time we get 686 00:33:30,200 --> 00:33:32,880 there because I see the advances that we're making in such a 687 00:33:32,880 --> 00:33:35,410 short period of time, like working in the solar industry, 688 00:33:35,410 --> 00:33:38,690 stuff is getting cheaper and cheaper every single year by 689 00:33:38,690 --> 00:33:42,050 pretty large margins. And so the sun has unlimited 690 00:33:42,050 --> 00:33:44,690 amounts of energy. We're finding better ways to to 691 00:33:44,690 --> 00:33:47,010 grab that energy and transform it. 692 00:33:47,010 --> 00:33:48,930 So I I think we'll get there eventually. 693 00:33:48,930 --> 00:33:51,930 That's kind of my take on it. As far as these other questions, 694 00:33:52,610 --> 00:33:54,890 what's your take on sin stocks now? 695 00:33:55,730 --> 00:33:57,930 You might notice actually I don't invest in tobacco or 696 00:33:57,930 --> 00:33:59,130 alcohol. I don't have any of those 697 00:33:59,130 --> 00:34:01,970 companies in My Portfolio and that was actually a deliberate 698 00:34:01,970 --> 00:34:06,610 choice because I don't feel, I feel like some products there is 699 00:34:07,090 --> 00:34:08,650 some kind of good outcome with them. 700 00:34:08,650 --> 00:34:11,730 Like there's a trade off with it and tobacco especially, I just 701 00:34:11,730 --> 00:34:13,770 don't feel like there's a really good trade off with it. 702 00:34:13,770 --> 00:34:16,810 It seems like people use it mostly because they're addicted 703 00:34:16,810 --> 00:34:20,650 to it and they now today's, they become like a social pariah. 704 00:34:20,650 --> 00:34:22,610 It's not really a social thing anymore. 705 00:34:23,170 --> 00:34:24,770 And so I just don't think it's a good product. 706 00:34:24,770 --> 00:34:28,730 And I especially don't like the idea of people using a product 707 00:34:29,010 --> 00:34:31,010 because they're helplessly addicted to it. 708 00:34:31,510 --> 00:34:33,989 And I think that is the case for a lot of people that are 709 00:34:34,710 --> 00:34:37,870 Alcoholics or that have issues with alcohol or tobacco. 710 00:34:38,750 --> 00:34:40,670 So I don't know. I just don't put my money into 711 00:34:40,670 --> 00:34:42,710 it. I don't have any judgments if 712 00:34:42,710 --> 00:34:44,870 other people do. Again, it's not going to make a 713 00:34:44,870 --> 00:34:47,469 huge difference in the grand scheme of things, but there's 714 00:34:47,469 --> 00:34:49,989 some products that I I don't think that they have a great 715 00:34:49,989 --> 00:34:51,429 effect on people's lives overall. 716 00:34:51,429 --> 00:34:53,389 I just don't think that they're that enriching to people's 717 00:34:53,389 --> 00:34:56,110 lives. Now I have a brother that this, 718 00:34:56,110 --> 00:34:58,110 this like the same thing. He doesn't invest in Cocacola. 719 00:34:58,270 --> 00:35:02,480 He says that Cocacola creates these highly concentrative, like 720 00:35:02,480 --> 00:35:06,480 addictive caffeinated sugar, addictive drinks that cause 721 00:35:06,480 --> 00:35:09,480 diabetes and heart attack and disease later on in life and run 722 00:35:09,480 --> 00:35:12,360 up medical costs on the country and everything. 723 00:35:12,360 --> 00:35:15,920 And so he has an argument for how immoral that company is with 724 00:35:15,920 --> 00:35:17,280 the amount of problems it's causing. 725 00:35:17,560 --> 00:35:21,920 So again, this is every company that sells anything, most things 726 00:35:21,920 --> 00:35:25,600 you can take and find different ways to look at them negatively, 727 00:35:26,000 --> 00:35:27,680 very difficult to do as an investor. 728 00:35:28,100 --> 00:35:30,420 I would say the specific things you feel passionate about 729 00:35:30,660 --> 00:35:32,820 definitely guide your investment that way. 730 00:35:33,220 --> 00:35:36,100 But also realize that not everybody might share the exact 731 00:35:36,100 --> 00:35:38,700 same ideas and and passions and they might be coming from a 732 00:35:38,700 --> 00:35:42,540 different background on it. And then yeah, Lockheed Martin, 733 00:35:42,900 --> 00:35:46,580 those type of companies, you know I, they make mostly 734 00:35:47,020 --> 00:35:49,620 technology for our defense. So I don't really see too too 735 00:35:49,620 --> 00:35:51,340 much of an issue with that. I think that we need to have 736 00:35:51,620 --> 00:35:53,780 some kind of national National Defense. 737 00:35:53,980 --> 00:35:56,260 But I'll move on to the next question. 738 00:35:56,710 --> 00:35:59,230 It's from Stace Norman. This is from Instagram. 739 00:35:59,230 --> 00:36:00,830 So I'm going to be taking questions from Instagram as 740 00:36:00,830 --> 00:36:02,950 well. He says I'm pretty excited about 741 00:36:02,950 --> 00:36:04,870 you getting an Instagram. I do not have a YouTube account, 742 00:36:04,870 --> 00:36:06,550 so I've not been able to ask a question. 743 00:36:06,830 --> 00:36:10,350 One, my first question is, are you constantly averaging in your 744 00:36:10,350 --> 00:36:12,950 portfolio 2? If not, then when do you buy 745 00:36:12,950 --> 00:36:14,950 each sector? I don't buy. 746 00:36:15,150 --> 00:36:17,270 I don't do orders for specific sectors. 747 00:36:17,270 --> 00:36:18,630 At least I haven't done that in the past. 748 00:36:18,630 --> 00:36:20,910 Now, I might change the weighting of different sectors 749 00:36:20,910 --> 00:36:23,470 and move those around so that future funding does go into 750 00:36:23,470 --> 00:36:25,910 them. But really I use the auto Invest 751 00:36:25,910 --> 00:36:29,150 feature for M1 Finance, which is just based off of your portfolio 752 00:36:29,150 --> 00:36:31,550 allocation. You set a target allocation that 753 00:36:31,550 --> 00:36:34,430 you want each company to hold. So it's like going in and saying 754 00:36:34,750 --> 00:36:40,990 I want Apple to be 1.3% of My Portfolio, I want Costco to be 755 00:36:40,990 --> 00:36:42,830 2%. I want, you know, you pretty 756 00:36:42,830 --> 00:36:45,630 much go through and set all of that and then M1 Finance will go 757 00:36:45,870 --> 00:36:47,590 well. Does this equal this much? 758 00:36:47,590 --> 00:36:50,990 And the ones that are the most off, the most underfunded, those 759 00:36:50,990 --> 00:36:54,090 ones will get the money first. So as you're going throughout 760 00:36:54,090 --> 00:36:56,450 the year, companies are dropping down. 761 00:36:56,690 --> 00:36:58,570 They will get funded until they're back up to where they're 762 00:36:58,570 --> 00:37:00,650 supposed to be. Companies that are going up, 763 00:37:00,770 --> 00:37:04,170 they'll be, they'll be waiting to get funded until everything 764 00:37:04,170 --> 00:37:07,370 else catches up to it. And so sometimes I'll mess 765 00:37:07,370 --> 00:37:09,450 around with that throughout the year because I want to direct 766 00:37:09,450 --> 00:37:11,970 money flow into other different companies or different sectors. 767 00:37:12,290 --> 00:37:15,050 But no, I don't like have any specific buying strategy as far 768 00:37:15,050 --> 00:37:18,290 as that's concerned. Most of the research I do on 769 00:37:18,290 --> 00:37:21,410 when I buy companies is upfront. Then from there, it all comes 770 00:37:21,410 --> 00:37:24,900 down to if anything really drastic happens to them, if they 771 00:37:24,900 --> 00:37:27,980 have a dividend cut, if they have some huge issue or huge 772 00:37:28,220 --> 00:37:31,540 scandal or something happen. But as far as the reinvesting, I 773 00:37:31,540 --> 00:37:34,300 just let the cash keep flowing into companies over and over 774 00:37:34,300 --> 00:37:35,980 again. Most of it gets directed into 775 00:37:35,980 --> 00:37:39,100 the ones that are underfunded from M1 finances, auto invest, 776 00:37:39,100 --> 00:37:41,660 future, All right. But that's all the questions 777 00:37:41,660 --> 00:37:43,540 I'll take this time. I appreciate you guys tuning in. 778 00:37:43,780 --> 00:37:46,580 I have another video coming up next week and I'm going to try 779 00:37:46,580 --> 00:37:49,790 to do a video on my Roth IRA. So I think you guys will be 780 00:37:49,790 --> 00:37:51,990 interested in that. I've made some changes to it. 781 00:37:52,150 --> 00:37:53,830 I have it being funded for the year. 782 00:37:53,830 --> 00:37:56,510 I'm going to actually be maxing out the funding this year, like 783 00:37:56,510 --> 00:37:59,110 next week. So once that money is put in, 784 00:37:59,110 --> 00:38:01,270 I'll go ahead and do a video on it and show you guys what I've 785 00:38:01,270 --> 00:38:03,150 come up with. I don't think, I don't know if 786 00:38:03,150 --> 00:38:05,830 it's perfect yet, but we'll see if we'll discuss it next week 787 00:38:05,830 --> 00:38:08,430 and see what you guys think. But anyway, you guys have a good 788 00:38:08,430 --> 00:38:08,910 one. We'll see you.