Welcome back, everybody. Thanks for joining.
We have a lot to go over in this episode.
I'm pretty excited. So first of all, this is my
portfolio. It is not worth five hundred
thousand dollars. This one is worth eighty eight
thousand dollars. Now, there's another portfolio
we're going to be looking at in this episode that is worth half
a million dollars. It's right here.
It has a balance of five hundred.
Twenty four thousand. I have gone over this one once
and an episode. A couple months ago.
I showed this one. It's somebody that I know
personally they were good enough to show me this portfolio and
how its performed over the past. Decade.
It goes all the way back to 2006.
So we get a chance to take a look at this.
Now. I'll be showing how this
performed during this downturn and how it's grown over time.
It's somebody's 401K. So we'll be taking a look at
this. There's also a lot of things in
the news, the jobs report for April were down, 20 million
jobs, 20 and a half million jobs.
Unemployment is up to, almost 15%.
That's just the amount of people that have actively been applying
for unemployment. So, the real unemployment is
probably much higher people that just are unemployed, but not
really. Into work right now, but out of
the people looking to actively find a job.
It's 15 percent which is pretty incredible with all that
unemployment. We have a lot of borrowing the
treasury expects to borrow four point five trillion dollars this
year, four and a half trillion dollars.
Think about this before the pandemic.
We were borrowing seven hundred billion dollars.
That was the deficit. Now.
It's up to four and a half trillion and that's not the end
of it. We have bills like this where
Congress is wanting to pass another 750 billion dollars.
In stimulus. So almost another trillion
bucks, this brings in the question of how much money can
we just give away four and a half trillion dollars, five and
a half trillion. Why not 10 trillion?
Why not 20? This is a real question that a
lot of people have. We're giving away, seemingly
endless amounts of money. The federal government is giving
stimulus after stimulus passing as much money as they can.
And we have the FED at the same time doing quantitative easing,
their balance sheet has completely exploded to almost
seven trillion dollars. There's some people that are
notable People that have commented on this like Charlie
Munger. And they talked about this prior
to this, pandemic going to be taking a look at some things
that Charlie Munger has said on the subject.
I think it's very interesting, but it paints a pretty Grim
picture. Now before getting into any of
that. I want to take a look at my
portfolio and do a little bit of damage assessment.
See what has happened with the coronavirus with the pandemic
and the shutdown and all of that stuff.
See how it's affected my portfolio.
So, we can view the value over time and you can see we He had
some trouble right here, my portfolio drop down from seventy
nine thousand dollars to 60 thousand dollars and then it
returned quite a bit and I've been adding money as well, but
it's regained a lot of it. We're mostly flat right now.
So I'm down for thousand dollars in market gains, but the earn
dividends is up three thousand dollars.
It Nets out to negative, twelve hundred bucks.
So, I've said this over and over again, for people that are new,
you might not believe me, but I say all the time, I don't pay
attention to much to the market gains and Not saying that
because it's convenient because I'm in the red.
If you go back to previous videos, I've said it dozens of
times when I'm in the green by like twelve thousand dollars.
I've said the exact same thing. That's great.
I'm in the green right now by twelve thousand dollars, but
market gains are volatile. They can change any different
day. So right now, I'm in the red
with the market gains, but my Dividends are what I focus on.
And that's what I want to look at with this assessment.
Now, before jumping into the different sectors, I'll mention
that there's a link in the description of this video.
If you'd like to look at my portfolio.
Folio, it's the link called my main portfolio.
So if you click on that, it'll allow you to click into any of
these sectors and view any of my companies.
So if you're interested in that, you can look at it.
Now. I first want to look at some
graphs. These are way I track the
progress of me becoming financially independent just
like passive income. Some people think it's a
buzzword financial Independence, passive income, all that type of
stuff. I don't consider it buzzwords.
Having Financial Independence, means that you're less dependent
on your day job. That's something that everybody
should be striving for. I view this graph right here.
As kind of a graph to my financial Independence, its way
to visually look at it and see how close I am to that goal.
Now, I started off in 2018 earning nothing and passive
income. So at that point, I was not
financially independent at all. I relied 100% on my active
income to pay for everything since then I have continued to
do deposits, reinvest dividends and build up my portfolio.
When you start off most of the building of it is going to be
with your deposits. There's no easy way around it.
Your money is not going to compound.
And to hundreds of thousands of dollars overnight.
So most of it is you depositing money figuring out your
budgeting putting money in every single week over and over again,
and the dividend start to roll in.
They start to become a bigger Factor as time goes on, so you
can see this play out with my portfolio when I started off.
I was earning 15 to 20 bucks a month.
Now, I'm earning three hundred fifty, three dollars in one
month. 163 last month. I earned $229.
So it's built up over time. In fact, if I go and throw a
Line on this. This is from Google to like this
isn't a line that I draw. If you can see this, it's this
gray trend line going through it.
Look at the projection. If I continue on the same path,
I am by the end of 2020. I'll be making over three
hundred dollars a month in dividends.
My goal is to be making around 400 bucks a month.
So that's the goal. We'll see if I can do it but
even earning over $300, a month in dividends is pretty cool.
That's thousands of dollars a year in passive income that I
was earning before. So I'm at the start of this
journey. I'm a young guy.
III have a long time to be able to build up this portfolio, but
you can see the progress over time.
I could focus on this right here, the capital gains and get
worried about every single daily change.
I just don't think it's that helpful or that motivating.
This is the type of thing. I focus on.
Now, the monthly graph, this is just one way to visualize it,
but there's other ways as well. We could go down and look at a
quarterly graph. I have one here.
It's really just the same data. The amount of dividends that
I've earned instead of on a monthly basis on a quarterly
basis. So it's not so sporadic.
I look at Q 1. I earned eight dollars and 76
cents in dividends over 90 day period.
Then if we get into a queue for 2019, I earned $705 in
dividends. That's quite a bit of money in
three months. Quarter, one of 2020.
It went down a little bit $617. But if I compare that to quarter
one of 2019, it's three times as much and then 2019 to 2018, not
even comparable. So you see the growth year over
year. I'm earning a lot more money in
dividends. Again.
The majority of this is building up your portfolio through having
Appling in your budgeting and putting some of the money in
your portfolio, every single week continually doing that over
and over again. You start to build this stream
of passive income. Another graph that I can look at
is the total portfolio value. This is a pretty basic one.
It's literally my portfolio value month by month.
So it starts off pretty small. I put in some money to begin
with stuck around 4,000 bucks for the first few months.
And then I continue to add money to overtime.
I've been depositing about at a rate of two thousand a month.
Typically on average. I have some months where I A lot
more, some months where I put lesson and then during this
downturn, I tried to put in as much money as I safely, could.
So that's where I am right now. This whole thing with M1
Finance, this portfolio is just a vehicle to be able to create
that income stream. So that's the way that I view
it. I buy these companies with that
in mind that I want companies that can continue to pay
dividends despite different market conditions.
Now, what the pandemic this is brought some very unique
circumstances that has challenged my portfolio and
pretty unique ways. One of them by far is real
estate. This is Where I've lost the most
value. I had about 30% allocated the
real estate, and it really got hurt.
I mean, having companies have to literally close their doors and
people told not to go outside. That's not a good thing for Real
Estate. So you can see the red right
here down 42% four thousand dollars in the red.
This is money weighted return. So it's a little bit different
but regardless, it's a lot of money in the red.
Not only am I on the red on most of these companies, but I was
well within the green on every one of them.
I mean I was up quite a bit. Fifty percent on all these
companies, everything was going good.
And then you're told that retail is pretty much shut down.
So let's go ahead and look at the damage here, realty income,
Corp somehow. I'm in the green on this
company. I was in the green a lot more.
I was up like two thousand dollars in the green now.
I'm in the green by 200 bucks, but regardless, this is the best
of breed. It kind of has a cult following
because people like this company so much.
It's a very boring real estate company.
It owns triple net lease Standalone buildings.
The type that like Walmart rents from Ins those type of
buildings. So, it has a pretty simple
business model. They own about five thousand
properties. This company has done so good
over the past 10 years. It has blown away the S&P 500.
So the tech-heavy S&P 500 Realty and come Corp, has crushed it
over the past ten and fifteen year period.
I mean, even with the downturn over the past month, it's still
in the lead by a long shot. So it's done really good so far.
And I think the future outlook of it is good as well.
But there's a lot of unknown right now.
Store Capital runs a very similar business model.
It has a diversified tenants. It collected, less rent in
April. So it's in a little bit worse of
a position. I could see store Capital,
cutting its dividend sometime soon, but I plan on holding it,
even if it does now. LTC properties and well Tower.
Again, those are both similar companies.
They're both senior, Assisted Living type of facilities.
Nursing facilities. The reason that I bought these
companies was because first of all, I didn't think we're going
to have a pandemic with a virus. That targets elderly people.
So that wasn't part of my thesis.
When I bought these companies, I bought it because the group of
people that are going to be living in nursing facilities is
supposed to increase drastically over the upcoming years.
We have a whole generation of Baby Boomers and all the
surrounding gears. We're over the next 10, to 20
years. There's going to be more people
that need a live in nursing facilities.
So that's the thesis that I bought it and That Remains the
Same even with this pandemic, even with the added cost of them
fighting the coronavirus and all their tenants struggling to do
that. Don't think there's more moving
towards our advantage. They have a lot of tail winds.
They have more people going to be moving into these homes
occupancy. Rates are expected to go up as
people age. So, I plan on holding both these
companies regardless of the short-term troubles.
They face. Now, the next one is a tough one
Simon Property. This is the mall company.
They own hundreds of miles. This is one where there was a
lot of risk, you're taking a bet on this one before coronavirus
if you can believe that. So there was a whole debate of
whether malls are going to be a relevant thing in the future.
ER anyway, that was something that you were kind of gambling
on my thought process was. I do think they're going to be a
thing of the future. I think they need to adapt and
be more of like a lifestyle experience place where there's
lots of restaurants and events and a few High scale shopping
places, but even then we have a lot of risk there and then the
pandemic came along and it puts into question going out and
shopping in places like malls to begin with in the future.
So this is caused a tremendous amount of uncertainty investors.
Do not like uncertainty. I'm down, 60 Hundred dollars in
this one. Holding down quite a bit on this
one. So this one is really hurt the
gains of the portfolio. I'm down quite a bit.
I will continue to hold this company.
I just think that they're the best chance with malls.
Simon Property owns the highest quality places.
These aren't cheap strip malls and random corners of bad parts
of town. These are the high quality City
plazas in the middle of Highly dense high-income areas.
So if there's a chance that malls are going to be successful
and they're going to be a thing of the future Simon.
Property is the group to bet on. They also bought Kalman, which
is a another smaller Mall read that has really high quality
places. So I just think they're the best
bet with malls. They have a good balance sheet.
They can make it through a long time period.
So this is a company that has been irresponsible.
They have a lot of cash on balance.
They can float for a long time until things recover.
So I'm going to continue to hold this company.
I think there's a lot of potential upside with them.
A lot of this is dependent on how quickly things return to
normal and they're not being a new Colonel where people only
shop online. If we have a new normal where
people don't go outside. They don't go to malls.
They don't shop that way. Then this is going to be a Bad
Bet. So that's obviously something I
don't think is going to happen. I think malls, will still be a
thing in the future. Now, there's a couple other
sectors that have been pretty beat up during the downturn.
We got Finance, industrial, and energy.
So, first, look on to finance, this is another one that I had a
lot of money and I'm down 1500 bucks right now.
I think it will recover. None of these companies have cut
their dividend, all of them. I think are doing pretty well.
They're doing okay. The reason that people sell out
of banks during recessions is because Banks make money lending
out money to businesses and during a recession.
It's more likely those businesses can't pay them back.
So that's the main factor there. People don't like owning Banks
during recessions. Another reason that they go down
in value is because they're less profitable.
They make money with higher interest rates.
Interest rates are at zero and it's likely to remain that way
for a while. So those are the main reasons
again, none of these companies have cut their dividend.
So they're all paying the one that is probably most It has
some kind of dividend reduction is main.
This is the highest yielding one.
They take on the riskiest loans of companies that normal Banks.
Don't lend to this company has the highest risk.
It hasn't cut its dividend yet and it's one that I intend to
hold so we'll see what happens with that one.
Then we have the energy sector. This has been an area that I've
mostly lost money in ever since starting to invest in it.
If I go and it's only 1% of my portfolio.
This is not a lot there but I'm down nearly 40% 500 bucks.
So let's go take a look at this. I used to own a bunch of smaller
oil companies, but months ago. I sold out of them into these
two really big oil companies Chevron and ExxonMobil.
The reason that I selected them is because they're really big.
That's the reason why the Saudis and the Russians have been
producing a lot of oil. That's driven down the price of
it, because we have overproduction of oil at a time
that we have under-consumption. So we have too much oil.
The prices have dropped down and all the smaller oil companies
are really struggling right now. So I plan on holding these two
companies will see if they cut their Didn't right now they
haven't. It depends on how low oil prices
stay for. How long but I have these two
companies not too much invested in them thousand bucks right
now, but I continue to hold them.
So that's it. That's the damage so far.
I'll keep you updated on it as companies continue to try to
make their way through this recession, whatever you want to
call it through this really unique downturn.
We'll see what happens. Now, moving on.
Let's take a look at a much bigger portfolio.
This is a five hundred thousand dollar portfolio.
Let me go to the ending balance there.
Right there. Five hundred and twenty four
thousand dollars is a current balance of it.
I've shared this portfolio before.
This is somebody's that they I know them personally and they've
been good enough to allow me to share this with you.
So this is a 401k, you can see that the employer contributes as
well as the employee. This is why you should max out
your 401 K's if your employer saying that they're going to
give you a match, you should always try to Max that out
before putting your money into other things, but regardless you
can see how this has grown over time back in 2007, before the
financial crisis. He had a hundred and thirty four
thousand dollars in this portfolio.
Then it had a severe downturn dropped a 92,000 and it
continued to go back up a little bit.
And then, it dropped down, more and more all the way to 77
thousand dollars. So he nearly cut in half his
portfolio. 134,000, two years later.
That's a long time. Put yourself in that situation,
two years of seeing your money. Go down over and over again
while you're contributing to it. So his portfolio got cut in half
and he's probably doing contributions all throughout.
This time now, keep in mind that right hair.
When it's portfolio, value was 73,000.
It's been wiped out by half. It used to be 134,000 but two
years later. It's half as much money 73
thousand bucks. This was February of 2009.
This was the very bottom of the market, right here.
Was the very bottom this wasn't some magical time when everybody
got together and the News was very positive and people said,
hey guys, this is the bottom of the recession is over.
Things are going to go up now. Things are looking up.
That is not Happened. These news stories, still
exists. You can go look at them.
It was unbelievably - when the market decided to turn around
and February of 2009. The news was largely
overwhelmingly negative. So this is something that in
hindsight. It looks like, oh, I could just
invest, that would be the best time to buy.
Think about what you've gone through though.
It'd be very difficult to do that.
The news was overwhelmingly negative and you had to stay
invested during that time not knowing that this was the bottom
of the market, but that's what he did.
He continue to invest and you can See the results of that five
hundred and seventy seven thousand dollars.
This is the highest point that this portfolio hit.
Let's take a look at how much money he lost in like two
months. It goes down to four hundred and
seventy thousand dollars. So from 577 2470, he lost a
hundred and seven thousand dollars in the course of two
months, 107 thousand dollars. That's a lot of money,
especially if your portfolio is just over half a million.
So that's a pretty big drop. But then of course it's
recovered quite a bit. It went from 472 524.
So he's down maybe fifty thousand dollars from his
all-time high. So, you know, I look at my
portfolio and I lost a couple thousand bucks here mind of down
I think into the red by - 15,000 I compared to portfolios like
this a hundred and seven thousand dollars lost in the
course of two months and you put it all in context.
If you're worried about losing the couple thousand dollars
because the market went down a little bit, realize that there's
people that have hundreds of thousands of dollars.
They have a lot of money in their portfolios.
There's have gone down a lot more, you know, the same.
Um, so don't stress about it too much.
Look at it through the context of the long-term view.
He looks at this and he says, well I'm going to be working for
at least the next 10 years. So I'm going to continue doing
exactly what I've been doing. Just continue to invest, have
your employer contribute, if you're in a 401 k, so if you're
looking at it through that lens, through the long-term view, you
can see what happens. But when you're in these type of
areas, 2009, lot of people sold out.
That's why the market went down. This is something where I think
it's really difficult when you're in these times, but
eventually will come out on top. My feeling with it and I feel
the same way with the coronavirus.
There's a lot of things going on, a lot of scary news, but
eventually we'll move on from it.
Now, speaking of a scary news. This is something that I think
is actually scary news. So a lot of things in politics,
I don't really concern myself with too much.
A lot of the social issues people.
Argue about things, back and forth.
Everybody has their different sides.
I think we're always going to have that different opinions on
things. But one thing I think should be
scary to everyone, everybody should be concerned about it is
Massive amounts of debt that a country can get in.
We have the US Treasury, this is from The Wall Street Journal.
The US Treasury expects to borrow four and a half trillion
dollars this year. And this is from spending in a
couple months, like two months were borrowing four and a half
trillion dollars. This is astronomical.
If you look at our total debt, the amount of debt that the u.s.
Government has it's like twenty five trillion dollars.
So we added on a big chunk of that in a couple months.
All this money comes from somewhere.
The government has to Raise this money, by raising more debt that
debt goes on to our federal budget.
And we have to pay for that interest every single year.
So the interest makes up a growing portion of the pie of
our income out of our whole budget and makes up like seven
percent plus. So that will continue to grow.
We'll be paying more and more in interest every single year just
to maintain the debt. Not even to pay it down.
On top of that. We have more to come another 750
billion dollars in Aid to State and local governments to help
them pay for unemployment. So, So this again, is an
enormous amount of money 750 billion just to put that in
reference just this additional stimulus going to State and
local governments. 750 billion is worth more than every company
in the u.s. Aside for four companies.
There's four that have a market cap bigger than this amount, and
it's Apple, Amazon, Google, and Microsoft.
This is worth more than Facebook.
So, this amount of money is astronomical the government's
giving it away. We're paying for unemployment
all this time. Stimulus.
It's helping get the economy by, but it also causes a lot of
problems. Anytime, the government gives
away trillions of dollars like this.
There's going to be a lot of winners and losers, everybody
knows about groups and entities that have received money.
That really have no business needing or receiving money.
There's lots of colleges that have billions of dollars in
Investments That received millions of dollars in
government Aid and they receive that money while they're paying
their president, millions of dollars to run the college.
So, their situations like that. There's lots of big businesses.
Like Delta Airlines and others that have received, billions of
dollars that they've done stock BuyBacks over the past years.
There's individuals that have received money that probably
don't need it. There's people that haven't
received money that do need it. This is the type of thing that
happens. When you give away this amount
of money, the government cannot be expected to give away
trillions of dollars and have it be done in a way that is
Equitable to everybody. That's fair and even everybody,
it's never going to happen. So this creates a lot of winners
and losers. Now, another issue that this
stimulus has caused is what's called perverse.
Tips, pretty much in economics. It's the study of incentive.
That's really all you're studying with economics.
People make decisions based off of incentives.
The reason they go to work is a want to earn money.
The reason that they spend money is because they want to have
things and enjoy them. Everybody runs on incentives.
It's normal, human behavior. Anytime that you do something
like this, where you give away trillions of dollars.
You give away money, you pay people to stay home that creates
what's called perverse incentives, normal.
You want to try to avoid doing that as much as possible.
If we look at this article. Kle.
It highlights. What's going on here?
It says, business is looking for a quick return.
To normal are running into a big hitch.
Workers on unemployment benefits are reluctant to give them up.
That's complicating, plans to reopen States.
As the u.s. Gets the economy.
Back on track. I Lana who was laid off from her
job as a bartender. At New York said she hopes her
boss doesn't call her back soon. Let me read that again.
She hopes her boss, doesn't call her back soon.
I was crying at work to leave but then as time went on, I did
receive benefits. It was like, wow.
Getting more than I was when I worked there.
She's getting paid more than she was at her bartender job in this
airport in New York city. So she doesn't want her boss to
call her. She's getting paid more to stay
home right now. We continue on with this
Congress passed a coronavirus stimulus package in March that
boosted unemployment benefits by six hundred a week.
So Most states already pay you unemployment coverage.
They pay out about 400 bucks a week.
It's not a whole lot. But then the federal government
a this up by adding an channel, six hundred dollars a week that
leads to about 1,000 bucks a week.
That's a lot of money for thousand dollars.
A month is a lot of money for most people.
Now, we look at this about half of us.
Workers stand earn more if laid off than they did at the job.
Before the pandemic, half of people that have been laid off
are earning more staying home. And it says that this is going
to go on at least until July. So they have a very long time to
reap the benefits of this. This amped up, stimulus package
unemployment until they need to get a job.
Again, all the way to the end of July.
So you can see the issue here. This isn't a judgment on Alana.
She's not dumb. She's doing the same thing that
I would be doing or any normal person.
She's working a job at an airport as a bartender.
I'm guessing that's not her dream job.
That's not something. She wakes up in the morning,
really looking forward to going to.
So it would be nice if she could just make more money, staying
home. And that's what the government
has provided her with. She has absolutely no incentive
to go back to work. She can risk getting a virus.
Iris and go back to work and earn less money than if she
stays home. Why would any normal person do
that? So this is a judgment on her or
anybody else in the situation. They're normal.
They're working off of normal incentives.
If you're paid more to stay home and watch Netflix.
Most people are going to choose that option and I don't blame
them. But this does create a lot of
problems. It creates things that weren't
intended and that's exactly what this is doing.
Half. The people that are being laid
off, are making more money, staying home, and this is
causing issues for employers. Unquote here.
It says it just puts Employers in an awful position said, mr.
Dinelli whose employees earn between 14 and 19 dollars an
hour. There's a big resentment there.
They're missing out on a lot of money.
So this guy employees people and they're working for him, knowing
that if he fired them, they would be earning more money than
he's paying them. That's the situation he's put
in. So what does he have to do?
Does he have to artificially increase the amount that he's
paying them? So that he can beat out the
competitor unemployment? Now, unemployment is a
competitor in the amount of Say that they're getting.
That's the type of situation that employers are being put in
there competing with unemployment.
Not a good thing to have happened.
So we're printing a lot of money.
We're taking out a lot of debt. The fed's balance sheet is up to
almost seven trillion dollars, which it's never been that high
before. So there's a lot of Uncharted
Territory, we're entering and we're creating a lot of bad
incentives for people. Now, it's better to stay home
than it is to go to work. You get paid more to stay home.
So this is causing a lot of issues.
There's some people that have talked about these type of
events happening. Charlie Munger is one of them.
This was back in 2019 before the coronavirus.
So keep in mind, the context of when he said this, this was
before this recent event with all this money printing.
I am. So afraid of all democracy,
getting the idea that you can just print money to solve all
problems. And eventually I know that will
fail. He's so afraid of an economy
that gets the crazy idea that you can print endless amounts of
money to solve all problems and he knows that that eventually
will fail. This stands in stark contrast to
Jerome Powell. So they're on the other ends of
this drone pal, seems to have the idea that you literally can
print endless amounts of money to solve all problems.
He said that he's going to support the economy and all the
markets by offering liquidity printing, as much money, buying
as many assets until this blows over.
That's pretty much his strategy right now and Charlie Munger
doesn't think that's a good idea.
But he goes on to explain this further where he thinks this
leads Singapore, which has a marvelous economy as Zero debt,
if I were running the world, I would like the United States to
be in that position. That is not the typical.
That's that's nobody's position. All these politicians in Europe
and America have learned to print money.
Who knows? When money Browning runs out of
control. And we at the end if you print
too much, you end up in something like benzoyl.
Keep in mind. Again.
This is before the recent downturn.
This is before the four and a half trillion dollars in debt.
The FED balance sheet going to seven trillion dollars and the
amount of money printing we've done over the past couple
months. So he's saying this before and
he says, it's going to lead to something like Venezuela, which
obviously they had a great economy.
Their GDP was growing. They printed a lot of money.
They devalued their currency. It got to a point where they had
hyperinflation. So that's his opinion on the
subject. Not such a positive outlook on
it. He Really updated this so far.
Other than Warren Buffett. And Charlie Munger really
haven't bought anything during this downturn.
They said that they're there waiting this out pretty much, so
that's not something. They typically do usually during
downturns. We see them buying a lot of
assets, but I'll keep you updated.
If Charlie Munger has any opinion on the recent money
printing, I'll go ahead and show that as well.
Now, on a related note, Elon Musk has a lot to say about the
same thing and he mimics some of the same things that Charlie
Munger just said, so we'll be looking at that.
He's been in the news a lot. Lately for like five different
reasons. So, we have the whole drama with
California. He doesn't like the lockdowns,
the way that it's being handled, his kid's name.
That's another thing. What does the name X?
And then these weird symbols, it mean Ash.
And then 8:12, I think is the name that he's giving his kid,
California is not going to let him name his kid that name.
That's what the news is that, they're not going to allow it.
I think they should for one reason.
It's Elon Musk, you know, it's not an exception for
billionaires to be able to name their It's weird things.
I think there should be a general exception.
You can name your kid, whatever you want.
If you sent a rocket ship out to space.
If you've done that. I think we just make a broad
exception. Now.
You can name your kid. Whatever you'd like, X Ash, a
12, go for it. So I think they should allow him
to name. This kid that, you know, it's
Elon Musk. Who cares?
Well, let's go ahead and jump into this portion of the
interview where Elon Musk talks about the same thing that
Charlie Munger was just talking about.
There's no shame though. That, you know, you can just
sort of send checks out everybody and and things will be
fine is not true. Obviously the there's some
people have this absurd like view that the economy is like
some magic Horn of Plenty. Like it just makes stuff stuff.
You know, what? If it just there's a magic water
plenty and the goods and services.
They just come from this magic Horn of Plenty.
And then if like, if somebody has more stuff than somebody
else's because they More from this magic Horn of Plenty.
Now. Let me just break it to the
fools out there if you don't make stuff, there's no stuff.
Now, of course, Elon Musk is 100% Correct there.
I agree with them 100%. A lot of people do seem to view
the US economy, the way that he's describing that can provide
infinite amounts of money to everybody.
And I don't think the government really helps with that
perception by giving away trillions of dollars of stimulus
in a couple months. It certainly does give you the
impression that we can just give away infinite amounts of money.
This is something where a lot of people I think have the wrong
perception of the US economy. You can't have only consumption
without production, the consumption.
Arms after the production. And I think Elon Musk has a
better understanding of this, because he sees a front row view
in depth of the relationship between creating something and
consuming it. He's designing, and creating
these vehicles. He's producing them in these
factories assembling them, and then they're being consumed,
they're being enjoyed by people. So he sees both sides of it.
He knows that you can't have just the the Tesla without all
the stuff that goes into, engineering it creating it
manufacturing it and selling it. So he knows that all this work
behind the scenes goes Into creating it.
A lot of people seem to have the perception that you can just
have the consumption side that things will work like that.
Obviously, that's not the case. Now the last part I'll share of
this interview is how quickly Elon Musk thinks the economy is
going to be opening back up how quick.
He thinks businesses are going to be here is what he has to say
about it. Well, I think we're rapidly
moving towards opening up the country.
It's going to happen extremely fast over the next few weeks.
So he thinks it will happen. Extremely fast over the upcoming
weeks. I agree with them, I think.
It businesses want to get packed a business.
They want to open back up. We're seeing a lot of States
already open up a lot of businesses that have been shut
down, theaters, and Barbers, and restaurants with lower capacity,
all this type of stuff. So there's going to be some
politics at play. Some governor's, want to keep
things certain businesses, shut down longer than others.
That's going to happen. But generally speaking, I think
things are going to open back up soon.
Now the big thing people are going to watch is a Resurgence
of cases. So we're going to be looking at
the new The cases and I'll show you if we have a spike in new
daily cases if we see that go back up, that's going to be the
big thing people look at when we have the reopening of the
economy. Okay, let's get to some emails.
Joseph at Joseph Carlson show.com., That's Joseph at
Joseph Carlson show.com. If you'd like to email in a
question, you can also comment on the YouTube videos.
You can message me on Twitter or Instagram.
I check those as well. The first one is from Maverick.
He says, hi Joseph. I am a young investor.
Only 20 years old. I have just gotten started and
Money into the market. At the beginning of the year.
I saw some gains briefly only 5 to 10% and then this pandemic
happen. I am told time and time again,
that I shouldn't worry too much because I'm young and I'll
recoup the losses. However, it's difficult for me
to continue to keep dollar cost averaging when all I've ever
known right now is being in the red.
Should I continue on the path of dollar-cost averaging every
month or so into Blue Chip companies, or should I hold cash
right now? Well, this is a good question
Maverick. It's the age-old question.
Ian should you be holding cash? Should you be dollar cost
averaging again? I think you know what I'm going
to say before I even answer this question.
I think you know the answer because I don't have a strategy
of holding a lot of cash and waiting around until a downturn
happens. The reason why is I don't know
if a downturn is going to happen and even if I do know what's
going to happen. I don't know when it's going to
happen. So I might be waiting a very
long time with cash for a downturn so not a strategy that
I take to hold cash. I do think that there's some
space. In between going to cash and
having a full portfolio of equities.
I think there's there's room in between those two options.
A couple things that you might consider.
One of them is to have a portfolio allocation where it
doesn't matter to you if the stock market Falls because you
have the correct risk tolerance and portfolio.
Allocation may be a mixture of stocks and bonds like my
portfolio before going into this downturn, a couple months ago.
I had 20% of my portfolio in bonds.
That turned out to be really helpful because when everything
else was going down bonds, they actually went up quite a bit and
I was able to sell out a lot of those bonds to buy companies
that I think were undervalued. So that's something that I did.
I still hold ten percent bonds just in case, we have another
downturn, if we do have another big dip.
I have ten percent of my portfolio in these treasury
bonds that work as a hedge. So if a lot of people are
selling out of companies, they got to put that money somewhere,
a lot of times that goes into us.
Treasuries. So that's the reason.
Have 10% in bonds. So there's a couple different
options you can do there. I think it's fine to have some
money in cash. You could make a portfolio
allocation, that's little bit more conservative.
You could have some of your money and treasuries and
corporate bonds, maybe but I do think the main issue here is not
really what you're asking saying.
Should you dollar cost average or hold cash?
I think the issue is is that you're becoming less confident
in your Investments because you're seeing red.
I think that's the main issue here and That's something really
tough to deal with. Like Mike Tyson says, I think
the phrase is everybody has a plan until they're punched in
the face. That is kind of the same with
the stock market. You have your plan.
You're excited. You start investing dollar cost,
averaging you buy all these companies that you want to buy.
And then the stock market goes down.
You see yourself entering the red, you're losing money every
day, all of a sudden, the plan that you had doesn't seem so
great. You're just looking at yourself
losing money. So this is something I think
that stuff to deal with, you have to change your mentality
and realize that you're in this for the long term.
ERM. You're 20 years old.
You're really young guy. You're going to be investing for
at least 10 to 20 more years at a minimum.
So you're at the very beginning of your investment Journey.
This isn't something that you should be concerned about at
all. If the stock market goes down a
little bit. In fact, you should be taking
the opposite approach and celebrating the decline in
prices. Even if you previously bought a
higher price, even if you've been investing and you have a
some companies go down in value. The stock market going down is a
good thing in your phase of Investments.
It's going down. Now, that's a good thing.
So, I think the mentality that you have to have is one where
you really figure out a portfolio, allocation that fits
with what you're wanting to do and you need to celebrate when
the stock market goes down. As long as you're in the buying
face, what you clearly are. So a change in mentality, I
think so needed thing. And to answer your question.
I don't really have the approach of holding too much cash.
I don't have anything against it.
I just don't really like the strategy that much myself.
I'd rather just build a portfolio that I think can go
through. Different environments and
continue with that plan. Carter says hi Joseph.
I've been watching lots of your investing episodes lately on
YouTube channel and have a quick question.
How would you recommend someone new to investing?
He's into the stock market? I don't have much capital, and I
don't want to put that little amount.
I have all in right away. However, I'm afraid only of
putting a small amount in will never return any results that
are really worth noting. Can you help me with the
situation to give some background?
I just recently invested twenty five hundred dollars into an
index fund. It's similar to the S&P 500 to
hopefully have my money grow rather than sit in a savings
account. However, this is over 50 percent
of my total cash. I'm just unsure of the path to
follow and I realize, I have to play it long term, but it's hard
to do that without being able to really dive into start.
If you could help guide me and possibly others through this,
that would be great Carter. I think you're overthinking this
a little bit. You put twenty five hundred
dollars into the S&P 500. You said that's over 50 percent
of your total cash. You're not sure what path to
follow. Investing is a very long-term
thing. You're not going to build up a
big portfolio that you can rely on for passive income or to tap
into later on in life. If you don't build it up on a
consistent basis, so you're right that 2500 dollars in and
of itself if you did nothing invested no more money.
That's not going to do a whole lot over the course of your
life. It might double or triple or
quadruple. But even then it's you know,
it's not going to turn into a fortune that you can rely on.
The way that you build up Investments is through
consistent effort, every single paycheck that you have, some of
that money that you earn needs to go to savings and
Investments. That's the way that you build it
up whether it's $50 every paycheck or 100, you know, it's
different amounts for different people that earn different
amounts of money. You need to figure out how much
money you can put into Investments and be really
consistent with it. So, depending on your situation,
I don't know how much money you make, but if you don't make a
lot of money, try putting a little bit into Investments
every single Week. It might not feel like a lot,
but it adds up over time, and then situations do change.
If you end up making more money, but your life is adjusted to
making less money. Now, you're able to invest at a
much higher rate because you've already figured out how to
invest, how to be consistent with it.
But now you're making more money and you're budgeting for a lower
budget. So, you know, circumstances
change, if you end up making more money, you can invest at a
higher rate, but consistency is the key, every study that I've
read, all the stuff that I've read on the subject people.
That consistently put money into their portfolio and they buy
Quality Companies. They come out on top.
So don't worry about the absolute dollar amount.
How much money you can put in right now.
Worry about being consistent? Okay.
Well, thank you for the emails. I'm going to go ahead and end
this episode there. I will talk to you guys soon.