YouSaid · the spoken record

Nick Maggiulli

lines on the record: 42
first: 2022-04-15
most recent: 2022-04-15
sittings or episodes: 1
sources: podcast

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“Yeah, so of dollarsandata.com, that's the book. You can find, just keep buying on Amazon, Barnes& Noble, like a lot of other retailers should have it. And yeah, and just if you want to ask me a question, just DM me on Twitter. My DMs are open. My handle is at dollars in data, just all one word, at dollars in data if you just start trying to name Nick Majulie. You're not going to be able to spell that. Just copy paste from the show notes or something. Just do that. You can find me. Feel free to DM me.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“But I know from experimentation, all these different, there's so much evidence there that you'd have to really be like, okay, no, the Earth is still flat. Even though I cannot physically, I cannot prove my eyes that I've seen, you know, I haven't been in a space shuttle or anything, right? So because I haven't seen it, that doesn't mean it's right. The flatness of the Earth is intuitive, but the data shows otherwise, right? It's one of those things. That's what it's all thing behind data science. We're trying to find the truth, not just what we think feels right. And so I think that's the whole premise of the book is like, I wrote this thing because I'm like, there's a lot of things that intuitively make sense. When you actually look into the data, it doesn't actually back that intuition. So we're sometimes wrong. And that's okay.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“I think I slowly just became more evidence based. Like, obviously, in high school, I don't remember being like this at all. Like, obviously, how do I study and stuff? I wasn't making arguments. I think in college, when I had to start making arguments and writing papers and things like that, I just get more and more data oriented. I found this old presentation I gave, like my senior year in college. I was like giving to my, it was like a writing class and we had to like present something and PowerPoint, whatever. And at some point in there, I have the videos still. And I said, like, if you don't have data, like personally, I think you have nothing. I say some crazy stuff like that. And of course, data can be deceptive. You can warp numbers to tell all sorts of stories. I know how you can use it. Like I've studied all that stuff too. I know how people use certain biases, selection bias, things like that. So I know about that stuff. And so data is not a silver bullet, but I like using it because I think there's a lot of stuff that makes intuitive sense to us, but then it's not true. And so, I mean, simple as an example is like the world isn't flat. The world's a globe, right? It's round, right? So it's like, I do not have any personal experience that can prove that. I cannot. Everything, even when I'm in a plane, I'm like, the world looks pretty flat to me, right?”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Million by the time he was 30. Remember, that's not adjusting for inflation. If you adjust for inflation, it's like 9 million. So I didn't adjust for inflation. And then I cut in half because I'm not Warren Buffett. I'll just get to half a billion. And I didn't make it. I did not even make it to half a million. So I was like down on myself. And I was like, bringing research on this. And this makes sense because like a lot of people have these high expectations for themselves and then you don't meet those expectations and you start to get really down on yourself. So you have this like midlife crisis and start feeling bad. But then you start getting a lot of things happen that you don't expect and you get all these upside surprises. So we started these gross stocks. The expectations don't meet. We kind of start to fall down. We become value stocks, but then there's all these upside surprises as we get older, retirement, you know, whatever that's children, grandchildren, all these sort of things in our lives that surprise us and bring us choine ways that we never would have expected. And that kind of brings our happiness back up. So it's kind of cool like the happiness data and kind of relating that to investing and a lot of stuff. So I thought it was like kind of a cool little analogy and you can kind of relate to, you know, I saw in my personal life. So if you see that too, it's very normal, very normal thing.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“So, yeah, so just a quick definition growth stocks are those stocks that everyone has, they're growing a lot. There's a lot of high expectations for the future and people really pay attention to that growth. If that growth starts to slow, usually the price and the value of those stocks comes down. And those value stocks are usually beaten down pretty badly, but usually they're oversold and people think they're not going to do well. And then any sort of upside surprise is good. And that's why generally over the history, values outperform growth over the long run, because these stocks get beaten down and then they outperform. Now, of course, recently that's not been true. Value has been getting crushed relative to growth over like the last decade. But how it relates to people is that a lot of people, what they do, like especially in like your early 20s, you'll probably have like all these expectations for yourself. By the time I'm 30, I'm going to have this and that. You have all these like dreams for yourself. And maybe all of them don't come true. And as a result, people start to kind of, you know, feel bad about themselves and think they didn't achieve. But this happens to everyone. It's not just you. This happens to everybody. Happened to me too. And I give the example I give is when I was 30, I said, you know, I want to have half a million dollars by the time I'm 30. And where did I get that from? Buffett had it.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“I think the example I gave was Jay Z and Alicia Keys, Empire State of Mind, people know that song. And you could buy the royalties, and I can't remember exactly the numbers here, but you can go see, like, you could have paid this much and you would have got this income stream and assume those royalties are the same every year. This is the yield you would have gotten. It was actually pretty good, right? It's better than a lot of bonds and things like that. So the question is, are people going to keep listening to music and will stay the same going into the future?”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I just think it's interesting. I'm a big music fan, and I know you are as well, Trey. So it's like one of these things where it's just interesting to think you could own the royalties on a song. And as long as people are listening to that song, like in theory, there's probably some natural decay to a song over time, unless obviously something happened to one of the artists. If one of the artists were to pass or something, you might see a huge surge or something and listens. And so it's one of those type of things where it's just another type of income producing asset, right? Where it's being produced through streams or played at festivals or whatever it is. So I think it's just cool, just a different type of income producing asset. And obviously my book doesn't include every possible income producing asset out there, right? You could be like, I could own vending machines or ATM machine. There's a lot of different things you can own and get yield from in different ways. I just thought it was a cool thing to throw in there because I don't plan on doing anytime soon, but eventually I think because there's a larger buy-in, there's a little bit more fees to get in there. And by the way, I don't have any sort of full disclosure. I have no relationship with royalty exchange. I just threw them in there because they're very easy to look at their site. So no partnership with them. So that's it. I just think it's kind of interesting. I'm big into music and it's just cool to see like.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Thing is, you really can't plan for it, unfortunately. When you were born, it affects so many things. Like, if you were born in 1990, you're going to start investing around, you know, what is that, 2020, or I guess 2010, yeah, something like that. You're born in 2000 and be investing around 2020, right? So it's like all these things, or that's just how it happens, right? And so obviously over the long run, a lot of these differences kind of average out a little bit. So that's not as much of a concern. But the best thing you can do is just like try and have a plan as best you can and then react obviously if something's happening where like, oh, hey, you know, we had a bad decade. We'll just keep bombing.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“If you were using the 4% rule in a 6040 portfolio, your chance, you're more likely to forex your wealth over 30 years than see your principal drop. So if you start with a million dollars after doing this, pulling 4% out of year for 30 years in a 60, 40 historically, you're more likely to see that 1 million become 4 million than to be less than a million after the 30 years. And that's like, what? Like your wealth's going to keep growing. You think like, oh, I'm retired and like I'm pulling money out and then my money's never going to return. Like imagine, you know, you retire in 2015 and then you see like 2017 was a huge return. 2019 was a big return. 2020 despite COVID was a big return 2021 was a big return. Like your money can keep growing and that's what I think surprises retirees. They expect the compounding to stop as soon as they hit 65 and it's not true.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“So, I mean, there's already data showing that retirement spending decreases by about 1% a year. So after 10 years, you should be spending about 10% less than you were when you started. That's one piece. The other thing is only about one in six retirees is actually drawing down on their principal. Most are just living off their dividend, like their capital gains and their social security, right? So when you look at that, it's like most people retirees aren't doing it. You're saying, what about the people that don't have a big portfolio? They're just living on Social Security. Like they live on what they can get. And so I'm not saying it's the greatest lifestyle in retirement, but they're living off of it, obviously. So that's the thing is like you actually look at the data, like a lot of people, they have this money and then they just, you know, if they haven't planned on how they're going to spend it, they usually don't even pull down their principal, right? So it's kind of, it's wild. And if you look at like bequests, like after people dying, they're leaving inheritances, it goes up like in this people in their 60s and the average like close to 300,000. And then by their 70s, it's a little bit higher in the 80s, a little bit higher, right? So it's like people are dying later and just like their wealth keeps growing. And I think one of my favorite stats in the books came from a study from Michael Kitsy's. He's”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“United States having the, you know, not all your listeners in the United States, but I'm suing many of them are just like realizing how well you have it relative how things could have been. And so just kind of remembering that, I think it makes you more grateful. And there's a lot of things to think about there. So that's kind of my take on it. And so, yeah, I think a lot of people won't ever feel rich unless you kind of trick yourself into being like, you know what? I actually am already rich if you look at the data.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“90% of people on the planet. So I would say the top 10% of any sort of thing is like pretty high. That's a high end of the distribution. So I would say you're rich, right? You're like, but Nick, that's not fair. You can't compare me to people in impoverished countries like you just said. You can't compare me to them. Well, Lloyd Blankfein's going to make the same argument about you and me. He's going to say you can't compare me to those normal, average people. Like you can't do that. And so like I get that argument. It's a ridiculous argument, but I get it. And people make the same argument when they're comparing themselves to people in empowerish countries. It's the same thing. And so I think you have to just, you know, say like, hey, I think how you trick yourself is you have to be like, okay, like look at things on absolute terms and say like, okay, how well off do I really have it? And just be fortunate for that. You know, like I'm not a millionaire, but I identify as a rich person of the globe. I identify as rich. And I have to, I think you have to say that to yourself because if you don't, you'll always be chasing the goalposts. And so I mean that in a way. I don't mean that as a bragging thing. There's nothing like that. I mean in a way to kind of reorient your mind so you realize how well you have it in terms of just being in the”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I think, I mean, you hit it on the head there, that's relative. Wealth has always been a relative thing, and it always will be. And because we don't think an absolute, it's very hard to realize like how rich you might be already. So the example I give in the book is Lloyd Blankfein, who's like the ex-CEO of Goldman Sachs. And he was in an interview and he said, I'm not rich. I'm well to do or something. It's like, you're a billionaire. You're rich. Like no normal person would say you're not rich, right? And so, but think about his friends. Like one of his best friends are like, I don't have his best friends exactly, but like I see him with David Geffin and Jeff Bezos, like, these people have 10 a hundred times as wealth. He feels very differently, right? It would be like if you had a net worth of $10,000 and they have a net worth of, you know, $100,000 or $10 million, you would feel very differently around these people, right? I mean, so it's interesting to me because he probably feels that way because, you know, it's relative. And so for him to make that argument like, oh, that's silly. But then I say, okay, well, to be in the top 10% in the world, you only need about $93,000 in wealth. Let's say $100,000 to make to round it off. So if you know anyone with over $100,000 net worth, they are richer than.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I think it depends on your goals. This is completely a question about goals. Like if you're trying to become a billionaire, like keep.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Education, or I need to sell because I want to pay for a wedding, or I want to pay for this new house or whatever, like whatever you want to do, like, it's fine to sell to live your life. That's, I think, the most important time to sell. I think you should be selling if you're trying to do something that can help you live your life. So those are the three cases I would throw in there.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I think there's three cases. One, which I just mentioned is rebalancing. So if you're doing a normal rebalance and one of your assets just shot up a ton in price, like I had Bitcoin, I bought Bitcoin a long time ago when it was like 8,000, shot up to 52. So it went up to like my target allocation for it. It went up like two or three X. And I was like, this is way beyond. So I sold because not because cared about the price, just because like, hey, I have a certain amount of risk I want to take. So if that keeps eating up my entire portfolio, you know, there's a lot more risk there. So rebalance is one. Another one is if you're in a concentrated position, like let's say you've been working at a company for a long time, you've been getting stock options, and then you leave the company and you're like, oh, I need to get out of this. It's okay to sell. The question of how much and not I discussed that a little bit in the book. And then the third thing would be if you just need to fund your lifestyle, like that's the point, like the point of, I'm not saying, oh, just get money just to get money. No, like the whole point of this is so you can live the life you want to live, right? Ultimately, that's the end goal. So yes, it's okay to sell. Like I'm saying it's okay. So I know the book's called Just Keep Buying, but there are times when you need to sell, right? If you're like, oh, I need to sell because I want to fund my child.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so equity is generally global equities have done very well because businesses usually can pass those on to consumers and we're seeing that now like, you know, my Chipotle bowl is $15 now in New York City. So, I mean, it's cheaper in other places. But you'll see prices are going up. And as the input prices go up, they just raise prices across the board. And we all kind of pay into that inflation, right? So generally, equities will rise with inflation. There's tons of data showing this. I've written pieces on this. And yeah, you can look this up. But I genuinely recommend equity. The other thing, too, I mean, I don't recommend this, but this is an option. If you think inflation is going to stay high forever, if you like, knew inflation is going to be high, like 8% a year for the next five years. Another thing is like take out debt to like buy physical real estate because you can take out your debt and guess what? Your payment's fixed, but you're paying back, assuming you can capture some of that inflation. You're paying back in depreciated dollars. So that payment's fixed, but over time in real terms, it's going smaller and smaller and smaller. So that's one of the benefits. Anyone who bought real estate in like, you know, 2017, 2019 probably feeling pretty good right now, not only because prices are up, but because”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Asset has too much relative to another, you just buy more of the underweight asset to try and get it back to even, right? You put your new funds, you kind of direct the new funds into the underweight thing so that it kind of gets back to even. So imagine you have too much stocks and out of bonds by mid-year, you would just say, okay, instead of sending 60, 40, whatever, 60% of my new money to stocks and 40% to bonds, I may send 80% to bonds and 20% to stocks or 100% to bonds until I get it closer. And then I go back to 60, 40, something like that. There's different ways you can do this. And obviously you can't do that forever at some point once your portfolio is so large. You're not going to have enough income to offset just random changes in the market. That's one of the things like rebalancing for me is important just because I think if you have set some risk level, you have some idea of how much risk you want to take. If you don't rebalance stocksole basically, you know, if they continue to perform they have historically stock suit up your entire portfolio over 30 years. Like 30 years from now, you could be 60, 40 by the end, you're 95, 50s.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so the short answer is I do it once a year because it coincides with tax season, right? So if you're rebalancing, you have to sell something in one of your brokerage accounts. You have to pay taxes. You know, that's not great. I try to, I say minimize selling. The book's called Just Keep Buying for a reason. So they've studied this and they said, okay, rebalancing stock bond, rebalancing. It doesn't matter if you do it twice a year, four times a year. They basically say there's no one period that always dominates. There's a lot of random luck and noise there. And that's even true if you're rebalancing across risk assets. So William Bernstein, who I brought up earlier, he did analysis like balancing equity different equities like global equities and US equities. He found that no one rebalancing period dominates. So there's no one best answer. So I say just do it once for tax season. And I really think the best way to rebalance, which I talk about in the book, is what I call an accumulation rebalance. So instead of actually selling one asset and buying more of another, over time as you're buying, you have to kind of like maybe every quarter or something or, you know, maybe halfway through the year, you just say, hey, where's my asset allocation today? And where was the beginning of the year and kind of what are my targets?”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Kind of de risk systems, I think we have in a lot of ways. I'm not saying there's no risk left, that'd be silly. But we don't have to worry about necessarily, I don't think we're having to worry about bread lines like there were in the Great Depression. I think we have so much food. We have an obesity crisis, not a crisis of shortage, right? So I think, yes, there are shortages and things happening now with certain types of materials, but society generally, I think, is de-risking. Like children are living longer. People are living longer. We look at all these measures, like humanity's improving a lot of good and big ways. I think that's why interest rates have come down in some way. That's my take. And, you know, I'm not sure if it's completely right, but I'm throwing it out there. So it's interesting.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I don't try and care too much about what the Fed's doing. I know there's a lot of day traders that all they care about is what the Fed's doing here and there. And I try not to worry about those things. Obviously, if there's some major event where there's like hyperinflation or something else, usually that's caused by something else going on in the country. It's not necessarily just monetary actions, at least historically, most times of hyperinflation of societal collapse. Something else happened and then the currency goes last, right? So I'm not too worried about things like that. The other thing too is, so I actually have a very different take on interest rates. I think interest rates are low because we've actually de-risked a lot of the world. And what do I mean when I say that? Like if you actually look at like interest rates for the last few hundred years, they've just been on a slow, slow decline over like the last few hundred years, like globally. And so what's happened? That's why most debt around the world is why is it all negative yielding? Because like people are probably going to pay back, right? The whole point of an interest rate is a measure of risk. Like if one person's not going to pay me back and I think they're not going to pay me back or one group of people is not going to pay me back, I'm going to charge them more than another group of people who I think is going to pay me back vice versa. And so as we've”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Course, they can sell off, they even sold off a little bit during the COVID crash, but they didn't sell off even as close to as much as stock. So that's really it's risk. It's all risk, right? It's risk all the way down. So yeah, if you're like, oh, I don't want to own bonds. And how else do you de-risking? Do you have more cash? What are you going to do? I mean, you're losing less in bonds and you're losing in cash because you're getting some yield, right? Versus no yield.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I agree. Right now, it's probably the toughest it's ever been for bonds because yields are low, inflation's high. Like you are losing money on owning bonds. But I mean, I guess my favorite quote about owning bonds comes from William Bernstein. We don't own bonds for the return on capital, but for the return of capital, which is basically like, it's a risk. It's all about risk, right? If you're trying to like grow your wealth to maximize your wealth as much as possible, yes, you should not own any bonds. But you're going to take a lot more risk by not owning bonds. So the question now is, is the 60-40, does that need to become like a 75, 25, you know, stock bond mix in order to get you, because you don't have yield, but you don't want to be losing as much money. So you move to something like that. I don't know. But now that means that retirees or people in those types of portfolios are taking a lot more risk without realizing. And the market has been doing well for a long time, even despite the COVID crash. But there will be another crash at some point. And it'll be really rough for those people that are 75, 25 instead of 60, 40. So I think generally bonds are when things go bad, bonds hold up a little well.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think I would say that's probably the biggest one. But then at the same time, there's more to it. I think you need to talk to real estate experts about this. And I'm not just trying to give a cop out. Like, I don't want to talk about rental properties in the same way because I don't know as much. I never owned a rental property, right? So, I mean, the guys I trust on this, like the guys that have to money, like listen to that podcast, they're really good. They know about rental properties. And I was speaking with them about this as well. So, yeah, I would just kind of think about that a little bit. But, you know, I would just get deeper into the space. I'm just saying if you're someone who's like, I know for sure I don't want to deal with that, then RETs are the way. Like that's, and I know because I'm very biased against real estate and I know I'm biased. So I know I'm never going to probably one of these people that has a bunch of investment properties because I have biases from 08 and I saw what happened to my parents and we don't have to go into all that. But in addition to that, like I don't like the hassle. Like I like having to get up and oh, I got my whatever. I get my little dividend payment from the wreath. That's great. I'd rather just get that and go on with my life.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I'm not a real estate expert. I'm not going to be able to tell you how to find the best retreats out there. I just try and find ones that are like, you know, broad-based market, own commercial properties, things like that. But the reason I own REITs is just because.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Lucky and you don't know, and anyone who's telling you otherwise, you can't know, and you have to take a really long time, you need a sufficient sample size, like how long does it take, five years, ten years before you know if you're good? And my other counters, even if you are good, like there's a Bayard study that went out, like even the best top performing money managers have periods of underperformance. The best people who we know have skill have periods of unlucky underperformance. And so that's the kind of issue. It's like you have to sit there and grind through all that, not know if you're good at it, and then like wake up, look yourself in the mirror every day and like, oh yeah, I'm just going to keep doing this even though I don't know if I'm good at it, right? It's just it messes with me internally. And obviously some people enjoy it and that's fine if you enjoy it, do your thing. But if you're one of those people who's on the fence, like, why am I doing this? You probably need to really reconsider. So that's my argument. Just the existential argument, I think, is more important than the performance one.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Good, and they didn't studies where they show there is skill. There are people that can beat the market. I'm not debating that, but they think it's about 10%. There have been studies that done 10, maybe 15%. So let's just say 10% of people can beat the market. They have skill, known skill. Let's also assume we can identify people who are really bad at it, right? The bottom 10%. That means the top 10 and the bottom 10 are gone. So that means we have 80% of people, four out of five people picking stocks have no idea if they're good. And that's my thing to you is like, how are you going to play this game where you don't know if you're good at it? Like if in almost any endeavor in life, you know if you have skill pretty quickly and the example I give is like if you went under the basketball court with LeBron James and let's say you didn't know who LeBron James was, he was just like good, but he was secretly good knowing who he was, you would know within minutes like you don't play basketball like this guy played basketball, right? You would just know he has skill. If you went and sat down with like a famous computer programmer, you know, and you tried to write a computer program, like they would just beat you or something like that. Like, you would know who has skill and who doesn't. But with stock picking, you can't know. Like you and I can pick stocks and we can wait a year. And if you beat me, does that mean you're better or does that mean you're better?”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so there's basically two arguments, and I'm assuming most of your audience has heard the first argument, so I'll just summarize that briefly. I call that the financial argument or the performance argument. And that argument basically says over any three to five year period, most stock pickers, active managers, whatever you want to call them, don't beat their benchmarks, don't beat like the market after fees, right? So you look at and there's the reports that are called the Spiva reports, SPIVA, Spiva. Look them up. You can look at any equity market around the world, and it's like somewhere between 60 to 80 percent of managers will not beat their benchmarks. They just can't do it. It's tough to do. And so most people know that argument. So, hey, this is why you shouldn't pick stocks because you probably won't beat the market. Now, the second argument, which I think is the better argument, is how do you know if you're good at stockpicking? I call this the existential argument. So if you want to put 5% of your money, whatever, even 10% of your money into individual stocks and do it, go ahead, have fun with it, right? I don't care about that. I'm talking to people that are like most of their wealth is an individual stocks and picks. And the reason I say that is because how do you know if you're”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“This is why we diversify, right? And also there's a couple things there's two problems with that argument. First thing is like, yes, if you sold a business in Japan in 1988 and you put all of your money in one lump sum payment in 1989 into Japanese equities only, yes, you're the unluckiest investor in human history probably up there. So like that's bad. But if you diversified, if you had some money elsewhere, if you were buying over time, that's the second argument. If you're buying over time, it's very different. And I show in the book in chapter 17, I say, pick someone who's putting just a dollar into the market. up through 89, the crash happens. And yes, there are times when they're above their cost basis, which means they made money and there's time when they're below what they've invested or they've lost money. If you do that over 30 years and like, yeah, the return wasn't great. I'm not going to lie, but you still probably made a little bit of money on that if you would just done it, even despite the fact that Japan hadn't recovered by the end of 2020. So the thing I say is get diversified. And if you're buying over time, that get de-risks a lot of these things here. So that's a thing I would say to people. Like, yes, it happens, but get diversified and buy over.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Just get my point. Just do a linear extrapolation because it's easier. So imagine you think, oh, I think the market's going to recover in two years. Okay, then that's 25% a year. Do you not want 25% a year right now? And so I looked at this and I was, I thought the market would take two to three years to recover. And I'm looking at the data and I'm just like, wow, even then, like this is a great time to buy. Like if I wish I had more cash, like I don't because I invested it already, right? So now, yes, those people that were buying the dip, now you should have been plowing everything you had into there. And if you didn't, because you got scared, then this shows why you don't buy the dip because it's really tough. So that's the simple equation. You just figure out, okay, how much upside do we need to get back to even to get back to like our new all-time high and then take that and divide by the number of years you expect? And that's roughly the percentage yield you would have going forward. So in this case with 50%, five years like a 10% gain, even if it took 10 years, you're getting 5% gains, which is not bad. But I mean, that's obviously not great. It's much lower than the market average.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, okay. So the example I'll give is well, let's just use the March 2020 correction. At that point, the market was down about 33%. So if the market's down 33%, and you can do this mathematically, so let's say the market started at $100 to make this easy. It drops to 66. So to get back to $100, how big of a gain do you need? Do you need a 50% gain? Half of 66 is 33, or you're the 3 plus 66 is basically 100. So it's down to 33. You need a 50% gain. So my question is, how long do you think it's going to take the market to recover? That's the only piece of information I need from you. Once I have that, I can back out what you just called the expected yield. So if you think it's going to take five years and you know there's a 50% upside, I mean, this is not the exact math. I'm just doing this linearly to make this simple, but let's say 50% divided by five years, you're basically guessing about a 10% return per year, which is pretty good. I mean, if you actually do the math on that, you know, 1.5 to the 1 fifth power, it's like 8.5% or something. So it's not as high as I said. It's, you know, because of compounding, but.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“I'm not 100% sure, obviously, but there's like this, I don't know, it kind of just gave me a little bit of like I was a little like, okay, we'll recover from this. Obviously, like if this guy thinks like the audacity of it, right? Like to sell flowers right now, like to still think like this guy wasn't bothered, like, you know, and so I was like, okay, there's something there. And so I don't know, it gave me a little bit of optimism in that moment when it was pretty dark.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“I think Yeah, so it was March 22nd, which is the Sunday, the 23rd, which I didn't know was the bottom at the time, obviously, was the next Monday. But it was on that Sunday. And I was in New York City. It was in Manhattan. And so I was basically ground zero for like all the COVID attention. Everything was happening. The city was empty. It was crazy. And I remember going to the grocery store like every Sunday morning I do get my groceries. And there's a fair way in Murray Hill and I went over to like, there's like a, you enter on the ground level and there's like an escalator going down into the atrium of the store. And as I'm going down the escalator, I see like there's a man. There's always flowers at the bottom. And this man was arranging flowers. And I was, I remember I had gotten texts like friends, what's going to happen? What's going on next? Everyone's panicking. It's panic, panic, panic. And there's this guy just arranging flowers. Like, if you just walked in and seen that, like, ignore the shelves, ignore like there's no canned goods. There's no flour. Ignore all that, ignore the meat section's gone, right? Ignore all that stuff. And if you had just walked in that day, you would have thought nothing weird was happening. The man was arranging flowers like anything else. And it was just this moment of normalcy for me that I was like, I think things are going to be okay.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Have gotten if you just invested at the beginning. So that's the real issue with buying the dip is people wait in cash. And so even if you get it right once, you're going to get it wrong later. So it's like something that kills you slowly, not quickly, right? So buying the dip, you're like, oh, wow, I'm not going to experience a market crash by doing that. That's true. But at the same time, there's going to be some point in the future when you're sitting in cash for years and the market's just rallying upward and you missed out big and that's when it gets you. So if it doesn't happen right away, you might have gotten lucky once. It's going to get you eventually. Anyone with like a 40, 50 year time horizon is going to underperform relative to someone who's just buying every single month.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so that strategy can work, obviously, but most of the time it doesn't because most markets, most of the time are going up and to the right and that's the problem. So the simple example I can give is like at the beginning of 2017 I had written a post called Just Keep Buying, which became basically the intro and kind of the seed for what became this book eventually. And it was early 2017. I remember some of the comments I got were like, oh, valuations are too high. We can't be buying right now. Market's going to crash. You know, the same old stuff I've always heard. And sometimes they'll be right. But like even if you had stayed out of the market and were holding cash then and you waited until the absolute minimum, you know, the absolute lowest point we had in March 2020, which was March 23rd, and you wait until the market was down 33% and you put all your cash in then, you still would have bought at a price that was 7%. higher than you would have bought in 2017 like we just bought it earlier so the issue is these dips occur but a lot of times they happen and even to the lowest point they get to is higher than what you could have bought originally right so most of these dips that happen they dip to a price that's still higher than what you could”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“So, I'm actually going to argue that that is the same strategy. So when you're buying in your 401k, like let's say every two weeks, you don't take that money, let's say 4%, let's say put 4% in your company matches. You don't take that 4% and then slowly spread it out. You put it in right away. So if you had a big windfall, you sold a company, got inheritance, whatever, let's say you have $100,000. I would argue if you put that money to work right away, you're behaving the same as if you're behaving in your 401k, right? You're putting it to work immediately instead of what I call averaging in. I call that in the book averaging in. Now, people do call that dollar cost averaging as well, but as you can see, that's very different. If you have 100K and you slowly add it into the market, that's very different than what you're doing in your 401k, which are like these miniature lump sum payments that you're making every two weeks. So I would say like the first term of dollar cost average is buying over time. I think that is still valid. But really what you're doing, you're buying as soon as you have the money or you're investing as soon as you have the money. And so I think that is the strategy. That's what matters most is like getting invested sooner. And if you're worried about like market volatility and stuff, then it's probably.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Job, right? So it's like it's conditional, like the incentives are aligned in the right way versus college. It's like you've already paid me. I don't care what happens to you. I mean, they care in terms of the prestige, but in theory, they don't have to care about any individual. But with an income sharing agreement, which some people don't like for various reasons, I actually like it a little bit because it's like the incentives are aligned. Like there's every incentive for a lambda school to go out there and get you the highest paying job because they want to make their 18%. And so they want to match.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, that's definitely a problem, right? That's been happening. And I think, I don't think cost can keep going up forever because at some point, especially I think COVID really opened people's eyes to this. Like, wait, I'm paying the same amount and I'm getting a digital class. Like the experience is completely different. So I think that can't go on forever. I do think credentials still matter to some degree, but the question of which ones and which colleges are going to see those effects, I think you're going to maybe won't see that like the top schools, but you will probably see that at schools that are maybe that are super expensive, but they're like obviously lower tier. They don't have the same job placement as maybe other places. So that's one thing to keep in mind. The other thing too is I think the future of work is going to change a little bit in the sense of there's a lot of, I think, you know, people thinking about things like income sharing agreements. So if you don't know if you heard of Lambda school, but they have this model where like we train you, you don't pay anything, but then once you get a job, you basically owe us X dollars and you pay us out of your paycheck until. So it's like you're taking a loan, but you're just, you only pay it off if you get a good paying.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so Roth and Ottsaroth, there's a lot of factors, and this is why I really, it's my least favorite thing to discuss is taxes, because everything is based on personal situation. Like a lot of things investing, you can kind of generalize to people, but everything's based on your personal situation. So, you know, if you're young and you know you're going to make a lot more later, then it's probably better to roth early and then switch to pre-tax later in life. If you know tax rates are going to go up in retirement, then you're probably going to want to wroth now. But you don't know that, right? I thought tax rates would only be going up throughout my life. And then the 2017 Act cut taxes. So I was like, what? Yeah, it's kind of like wild to think that, but that's what happened. So it's hard to predict the future. That's one thing. But yeah, so I'd say, and you can do both. Like, I actually think both's a great solution because you have a little bit of flexibility. You can kind of pick and choose what you want to do. And technically, anyone doing a Roth, if you're getting a match, that matches in a traditional, like that match is not post-tax. That's pre-tax money that your employer is probably putting away. So because of that, anyone who's doing a Roth and getting a match is technically doing both without realizing it. So doing both is probably my go-to.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Now, and there are going to be low tax states in retirement. Yes, it probably makes sense to max, but that's not necessarily true for everybody. So just the one take out of there.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Raise awareness around this problem because I don't think it's right for everyone. And I think I probably put too much into retirement savings early. And I think everyone should go all the way to the match, get the full match. It's free money. Definitely do that. But everything above the match is the question. And so for some people, like if that's their only way to save, then do it. You got to max, right? If you have no discipline outside, you have to max, right? It's a good behavioral crutch. But for the people that are a little bit more disciplined can put money in their brokerage account in order to invest that way. I think you should just run the numbers and see how much am I actually paying for my 401k all in, not just the fees of the funds, but the fees associated with the 401k itself. And once you get all those numbers, you can say, wow, I'm actually paying, maybe I'm paying more than I thought. And so it doesn't necessarily make sense to max this when that money, I have to lock it up till 15 and a half. So you lose a lot of flexibility. And you may be, you know, losing money relative to just a brokerage account. So those are the things I would just think about. And so obviously the chapter goes into more depth or with the mathematics and all that, but that's kind of the high level thing is it's not right for everyone. So those people are in high tax state.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so if you had asked most personal finance experts, I'd say 10 out of 10 would have told you max out your 40k. It's something I've heard my whole life. I used to say that myself, but I ran the numbers of the little simulation where I said, how much tax savings are you getting in one of these non-taxable accounts, like let's say a Roth 400 versus just doing a well-managed brokerage account where you're not day trading or anything like that and getting a bunch of taxes. Now what I found is that the annual benefit is about 0.73% a year. So 73 BIPs, we'll call it 0.7% 70 BIPs just to make this around number. And that's not a huge benefit. That is something there, but that's before even looking at differences in fees. So if the fees in your 401k plan, because you can't really select your investments necessarily, you got to pick from what they give you. If you're all in fees or, you know, 1% or you'd say 0.7%, 70 bips, then there's no benefit at all to doing it compared to like a brokerage account, right? And so there's simple things like that when I was like, wow, this is not maybe great for everybody. And so I think I'm just trying.”
2022-04-15 · We Study Billionaires · TIP439: How to Buy Stocks During A Crisis w/ Nick Maggiulli · IDENTIFIED FROM THE TRANSCRIPT