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Inflation- Is it Transitory or Long Term?

Show Description:

–          Stats on Inflation:

o   Inflation still dominates much of the headlines in the news. Google searches for “Inflation” are up over 100% and has dominated company conference calls by and increase of 350% for S&P 500 companies

o   More than half of the total increase in CPI over the past two months has been due to used cars, rental cars, hotels, and airfare.

o   These large price jumps in these small categories are due to reopening and supply chain disruptions, HOWEVER both of these are temporary

o   When looking back to historical data, the last 30 years have actually experienced very little volatility in CPI and lower than average levels of inflation, (the average being 2.9% since 1926) so we should expect an increase and look at it as a sort of rebalancing. Too low of inflation can also even be a bad thing.

o   One thing to point out is how everyone talks about what’s been going up in price, however there are some key sectors that have actually gone down in price being health insurance, airline fares, tickets to sporting events

o   Health care costs take out a large portion of most people’s paychecks and this decrease in costs isn’t talked about enough

o   All in all, inflation is looking to be more transitory than long term with lumber prices dropping 40% in June alone

–          Bonds

o   Why own them?

o   The current status of the bond market

o   10-year Treasury yields have dropped significantly since late May, which at the time were at almost 1.75 to almost 1.2 as of late July (roughly a 30% drop) ○ This leads to the continued push and pull between Growth and Value stocks, however we maintain our barbell approach and direct exposure to Developed Market value stocks

–          Real Estate

o   What is causing the massive increase in prices locally?

o   What are some of the best ways to incorporate real estate into your overall investment strategy given the current market conditions?

–          Commodities

–          Equities

–          Alternative Investments

View Transcript of This Weeks Show Here

Speaker 1 (00:00):

This is financial detox, helping you retire with confidence. Featuring Jason labrum, certified financial planner and founder of Ida wealth intelligence driven advisors. For over 20 years, Jason has shown people how to steer clear of toxic advice, achieve financial peace of mind and manage their wealth for maximum impact. Join Jason and cohost Alex Klingensmith. As they simplify the complex share industry secrets and provide proven strategies designed to take you from financial insecurity to financial independence. This is financial detox. Hello.

Speaker 2 (00:42):

Hello. Welcome to financial detox. I’m Jason labrum and in studio with Alex Klingensmith Alex. That’s great. Great to be back. We’re finally on. I feel like we’ve, I feel like I don’t even know what I’m doing here. This is brand new. This is not uncommon for us to, to slow down in the summer on this type of, well, I think we get busy, right? My kids aren’t in school in the summer. We try to like balance back, like that way somewhat. So it’s moved back when we were driving down, remember to the studio and the track that the Del Mar racetrack would start again. And then we only last like two or three weeks of the season. We’re like, we got to take the summer off according on a Friday or no, it was just happening every day. It traffic going south. Yeah, I think it was like Wednesdays, but either way there was like, it was, it was bad.

Speaker 2 (01:22):

Well, it’s financial detox as a podcast, as a podcast, only this show we’ve focused in on the podcast here going to do that while we reevaluate some of our radio show positioning and different things. So we invite you to check us out@financialdetox.com. That’s financial detox.com. And if you want to get ahold of us, we’d love to hear from you. If you have any questions you want us to talk about or any topics for the show we’d love to hear from you. And that is 8 7 7 7 0 7 88 89. That’s 8 7 7 7 0 7 88 89. It’s a financial need doc show. I’m Jason labrum with Alex Klingensmith. So this is going to be kind of cool because previous to this recording, we had one month break. We were doing a radio show and a podcast as a hybrid. And I think what we realized is it’s just hard to do that because a radio show has a different cadence has a different call to action, trying to, you know, give people something to really get them going where a podcast is just much more chill and conversational and, and informational, hopefully an educational.

Speaker 2 (02:25):

But, um, so this is kind of our first, since a month and just straight podcast, kind of fun. I’m open to people listening to this are like currently on a run, for example, or like doing some sort of exercise or driving, driving, maybe if you’re driving and you don’t like the radio. Cause I don’t like the radio personally, man. I can’t say I am into podcasts that are, you know, that are interesting. As I’m trying to learn about something like it’s a great way to get perspective and information. Right? I started looking at podcasts the other day on flying. Cause I’m getting back into flying, getting current did my medical yesterday, bro. I’m good. What does that mean? Medical? And that means that every two years when you’re above 40 and unfortunately I’m above 40, you have to go in and have some FAA approved.

Speaker 2 (03:03):

Doctor say that you’re medically fit to fly an airplane. Does he make you do burpees and squats? He makes you do nothing. It is bizarre. It is like going back in time to, until like the doctor you went to, uh, when you were like in the seventies where he like puts a telescope, is it a telescope on your stethoscope? Listen to your heart. He listens to your, well, it’s been a while as you breathe. You’re like, yeah, that kind of stuff looks in your ear. Looks up to your nose, the physical. Okay. Yeah. So it’s not like you don’t have to like do any sort of exercise activity. Now they check your eyes, they check your blood pressure and yeah, it’s fine. You pass good job. These people don’t so flying requires that. That’s good. And then yeah, let’s do a podcast as an interrupted flight plan, right.

Speaker 2 (03:51):

Or I was saying I was listening to podcasts about flying. It’s totally cool. Yeah. There’s great podcasts out there on almost every topic now. Definitely. So now you’ve got a podcast just to our, our listeners get to listen to a podcast where we talk about what is financial detox. I mean, Alex, let’s re let’s just kick it off from the beginning. It’s like, what can you get from our podcast? Not only this show, but previous shows tell it to new people. We have hired a few new people lately because we reached a point of where our capacity was being challenged. We had so many clients coming in last year that we kind of caught up first quarter and we were like, we are new people. So I explain it like this. I say we have is we have a lot of stories in our company.

Speaker 2 (04:29):

We just spend a lot of time with a consultant talking about the stories that the five key stories that resonate. Yeah. Financial detox to me was like a spin off of a story where I feel like, and this is your story. So this is me looking at you from the outside kind of weird, right? Like a existential moment. I was like, so what’s financial detox. The one of our newest in place. Well, what it is, I think Jason like did he, you know, he broke away. He had the breakaway story from the big wirehouse, big firm, like created his own future with, with your father, Rick and then two other founding advisors, Darcy and Sean and Jordy came along to run, you know, to keep operations in order. And then a couple years into that, even you just, you were still fresh. So frustrated with the industry that you’re like, even this side of the industry that we feel as much more transparent, transparent, both time fiduciary, all the things we talked about, even this part can be frustrating.

Speaker 2 (05:17):

So the financial detox was born out of the idea of like let’s remove even our agenda, which is to serve clients and get paid for it, which is true. Removing that from the equation and just have this consumer focused way to communicate with them any agenda there. Right? Yeah. I mean the subtitle of the book, financial detox is to help avoid toxic financial advice. And the reason why we say that is because there is lots of toxic financial advice, actually bad financial advice, just because somebody’s giving you financial advice doesn’t mean it’s good. And in fact, most cases you should evaluate where it’s coming from and how it’s being given to you because it could likely be bad, but avoid toxic financial advice and manage your wealth for maximum. Yeah. So financial detox is about just helping people get the right information and the right advice.

Speaker 2 (06:04):

And this goes back to people, generally seeking financial advice, went to big institutions because big institutions had the information right there. Wasn’t the internet just there 20 twenty-five years ago, 30 years. And there’s no internet, right? So there’s no automatic instantaneous flow of information. And just, you can’t pull up charts and quotes and information and analyst reports and research reports and do trades on your phone. You couldn’t do that. So you went to these big firms for information it’s become, the pendulum has come so far. Then now there’s so much information. Everybody feels radically educated and knowledgeable about the subject that you now come to. Wealth advisors, I believe is one of the best things that we do for people is help bring them the right information, detox, all that nonsense, that, that isn’t good for them. And that can hurt them and bring them the right stuff.

Speaker 2 (06:53):

So like what’s the Nick Murray quote that you put all the time. Well, I think we talk about, you know, we don’t, we’re going to help people avoid the great behavioral blunders that destroy long-term returns, which the blunders come from within personally. But because they get so much bad information, you got to take responsibility for your own actions, right? Like just, I can blame the media. Yes. I can blame my friend or my neighbor or, but I’m the one who’s the one who’s buying or selling or panicking or freaking out or doing the, for sure. There’s like seven of them that he or that Dalbar has coined terms for and psychology stuff anyways. So yeah, that’s what we’re doing. We’re going to help you on. So one of the things is on the forefront of everybody’s mind and that is practically happening to you. You are losing money every single day and you are having money stripped out from your family’s wealth through what we call inflation, the rise in costs of goods and services that you are using.

Speaker 2 (07:46):

It is happening intensely severely. This has really started with the new presidency as Biden, shut down the pipeline and has taken us from a completely and totally energy independent country, which was awesome. We got to the first time in a long time or ever that we had become a completely energy independent country and we are now not an energy independent country anymore. So the first place you see inflation happening is at the pumps at the gas station, the cost to operate your vehicle, get to and from work. If you happen to go to work, we can talk about that too. But the cost to operate your vehicle is, is significantly higher. That means the cost to get on an airplane is significantly higher. That means the cost of the Amazon, the supplies and things you’re buying that are being delivered to your house through an Amazon truck are going up.

Speaker 2 (08:37):

Don’t think they’re not they’re going up because the cost of gas is going up so that the decisions made by our administration to limit our petroleum production have, uh, led to a temporary and certain increase in the part where I love to just, I like to always challenge both sides. Whenever politics come up, I don’t like to ever show my cards right on this topic. I’m totally independent. Right? What if, what if you actually brought the timeline back even further and place more responsibility on the pandemic that actually started to shut down supply chain a year and a half ago could not be part of the also part of this gigantic. Part of it is some of the very unnecessary shutdowns to the, for the pandemic. Yes. And or necessarily just the thing itself, but the fact that you can [inaudible], then you could go bigger to the what’s really disrupting.

Speaker 2 (09:25):

And I, I, I was talking to you prior to the show, Alex, we have lots of clients who run some really big businesses and lots of small businesses and almost unequivocably. They are experiencing issues with getting employees, getting people to come to work. And the bigger companies who have distribution and supply chain issues are, are severely hampered. They are unable to get the things they’re trying to sell. So the things that they do get, and they are selling, they have raised the prices intensely on because they have to because they’re also costing them more. So what’s happening is rent everywhere, the effects of COVID and in shutting down the economy. And then furthermore, continuing to pay people, extra money to stay at home. When there’s tons of jobs available, we have more jobs available right now in the country. I think, from what I’ve, and I don’t know the stats exactly, but there is an enormous amount of jobs available.

Speaker 2 (10:25):

People who are totally capable to go do those jobs, but yet they’re not doing those jobs because we, as a government are taking taxpayers’ money. Those few who are still actually working or taking money from them. And we are pumping it to the people who are choosing to stay at home. And this is causing a problem because now you don’t have workers on the dock. You don’t have workers in the factories. You have all the supply chain. I flew over long beach. The other day I counted 80 is when I lost count, there was scarce tanker sitting out there trying to get in what I had a client. Tell me today on the phone, they deal with big supply issues, stuff coming out of China, out of Mexico or whatever. And they said that now they tell you this, the corruption now is, is filling into these spaces where they tell you that, Hey, you want that on the container?

Speaker 2 (11:13):

Well, it’s supposed to cost you 4,000. But if you say, if you give us 20,000, it’ll get on the container this week. If you don’t, you’re going to go to the back of the line and you’ll get on whatever we can get you on. Wow. So that’s, what’s now happening and in all the supply chain. So you think about TV’s refrigerator, paper, goods, supplies, bags, toilet, paper, paper, towels, anything, and everything that know, this is another thing is, well, this is causing inflation because if I have to pay $20,000, as opposed to four, to get my goods shipped over to the United States, then what am I going to do to my price? Right? And so I’m going to raise my price to cover my 20,000. When I, I mean, I’m thinking back to economics in college. When you think about what causes inflation, traditionally, I was taught, I remember being taught at least, maybe it was a long time ago now, but it’s usually interest rate stuff.

Speaker 2 (12:00):

Right. And the fed. And so now our supply chain issues are causing inflation and have both working against us at the same time, in a sense, right? This is a complex topic that I would say inflation is caused by lots of money chasing too few of resources, right? So if you have not a lot of something and a lot of money chasing it, then inflation happens when the government stimulus of trillions of dollars over the course of 18 months, for example, since 2009, really, I mean, we haven’t ever stopped this massive stimulus and the official depressants, the debt crisis, right? So, I mean, if you think about, we’ve never stopped, we got hooked. We took this heroin shot and we just kind of keep doing it. Are we 30 trillion now? Um, it’s big. Yes. So not only that you have that, but now, you know, inflation comes from lots of different things.

Speaker 2 (12:43):

When you don’t have enough workers and you have to pay to get your stuff in the front of the line, you get inflation. Cause you have to pay wages more. Right? Right. Now a different client told me they are a pain they’re people who now they, they used to hire nobody who had drug problems or were drug addicts. And they would wouldn’t hire anybody who had criminal backgrounds right now they’re hiring almost exclusively people with criminal backgrounds who can’t pass drug tests and they’re paying them 15 to 25% more than they used to pay really good employees, meaning good employees without criminal backgrounds. And they could pass a drug test. So he says, oh, at risk of mine’s business, half of my employees are on drugs. I know this. They can’t pass the drug test. Wow. Half of the employees, now we have our criminals.

Speaker 2 (13:36):

We know they’re active. They’re in there. They’re missing work for court dates. They’re active criminal. They have a criminal background and I’m paying them 25% more than I used to pay good beef. So this is, this is inflationary. Now I gotta pay bad people. 25% more. They don’t do as good a job. What happens to my production and my business, everything. And, and folks like if St folks sounds so stupid, if you’re listening to this, every thing you buy is effected by this. Yeah. Okay. You go to home Depot and buy some sprinkler heads and some wood for a project. You’re building a garden in your backyard. It’s affected by this. You go on Amazon and buy your kid a new helmet for his lacrosse game. It’s affected by this. You go buy a new airsoft gun for your kid. My kids love air soft stuff.

Speaker 2 (14:19):

It affects everything. It affects the food at the grocery store. You’re buying apples. There’s nobody to pick the apples, right? There’s the whole supply chain is jacked because we are adopting policies. Well because of a lot of reasons. But one of the things is when you have policies as a country that encourages people to not become productive members of society, society starts to break down and you get what you have in Cuba and you get what you haven’t been as Suela. And you get to what you have in all the third world countries that are led by politicians, they’re focused on power and control and dictatorship. It doesn’t work. I think the reason why is this is one of the things that frustrates you the most too, because there are a lot of factors, but there it’s the same thing we do with wealth management, investment management specific typically is there are things that we’ve, we can actually control policies, literally within our control.

Speaker 2 (15:07):

We create them. We have proven through multiple steps in the government, $300 a week to stay home. When they’re totally capable of going to work is a bad policy. Or I was sharing with you the real story of last week, where I received a check for $500 from the IRS, the treasury department. Right. And then, and then it took three or four days later, by the way, to understand it, just to check no explanation. I was like, I’m like, why wouldn’t they send the letter with the chat? I’m like, honey, don’t deposit that. I don’t know what this is. Don’t ever take money. You don’t know where it’s coming from. And then I think it was Monday. So that was a couple of days ago. So it took like three visits or three days for the letter to come explaining what it was. And it was, you knew the term for it.

Speaker 2 (15:44):

It was the child, child care act, something act. So we’re basically, they’re giving money to anyone who has a child, whether you qualify or not, there’s no income qualification, there’s no tax. And I was like, they’re just giving money away. Like with like, why? I mean, why? I mean, it gets very political, right? And I don’t want to be political because I respect. We have great clients that are, that are very liberal and very Democrat. And we have clients that are very conservative and, and very religious it’s okay. For a Republican to be frustrated at a Republican policy. It’s also okay for a Democrat to be frustrated at a Democrat falls. Unfortunately right now, what we’ve done is created complete and total bipolarism nation in our, in our world where our society, where if you’re a Republican, you just have to hate Democrats. And if you’re a Democrat, you just have to hate the Republicans.

Speaker 2 (16:29):

I can, I can, I can be frustrated with both at the same time. I think you’re, you’re unique and semi political, which is great because that’s the way we all should be. We all should be independent. I mean, if you really think about this country, and I know the people that I talked to that are extreme liberals, I mean, they’re liberals and you know what? This is so funny is I say, so you’re mad at me. And you, you think I’m so bad because I’m a conservative and really, I think I’m an independent truly I do. And you think you’re kind of an independent, but yet we have to hate each other. Why don’t we talk? What about some of the real serious issues? You know, what you find out is that we actually agree on at least 90% of the issues, the major ones, for sure, the other ones by and large, we’re both willing to compromise.

Speaker 2 (17:09):

I say, I see your point. You could have it your way. How about we’re a free country. You do what you want. I’ll do what I want on those issues. But we agree. And unfortunately what’s happened is the media has done a phenomenal job in certain evil forces in this world have done a phenomenal job extremists of separating and pulling us all to the sides and leaving this big gap, vacuum this, this big hollow sucking sound in between the two, where is where actually we should all be. And I think if we just had a radically charismatic, intelligent well-spoken somebody who is independent, you could, you could really bring back the country together. I think it would take more than just an Impala person. It would take people in all the movement and also in the house in the Senate, like you’d have to have some three or four people that were all kind of had that similar thought.

Speaker 2 (17:54):

Cause even one person isn’t, it doesn’t seem to be enough. Sure. Right. But I mean, I guess I’m saying one idea, one movement, Hey, we’re done with letting the media terrorists apart and letting the extremist on each side, tear us apart because that’s what’s happening. It’s so sad. But from a policy standpoint, it does not make sense to give money to people who are capable or should be capable of earning their own money and becoming productive members of society. It doesn’t work. You can’t Rob the rich and give to the poor. And then the poor don’t do anything. And the rich go on and produce because all of a sudden it doesn’t, it doesn’t work. It breaks down, you run out of other people’s money. Right. It’s really confusing to me to get that $500 check. I told him, I had my wife. I’m like, we should give it back.

Speaker 2 (18:41):

And then she’s like, well, what are they going to do with it then? Just so I know what I’m gonna do. Now I’m meeting actually with the, the, the new CEO of the boys and girls club later today, I’m like give it away because that’s, I don’t know what else to do. That’s, that’s great. If you you’re going to give it to somebody who can eat it, right. There are kids who have two working parents. They’re working, you know, all day, every day, the kids get out of school. Where do the kids go? After school, they go to the boys and girls club. They get tutoring, mentoring, safe environment, where they can be without bullying, what a great place. Right. And, and that’s the thing about our society is in our country specifically, is we’re generally speaking, quite a generous site. What did all the writing non-profits that is those people are making money.

Speaker 2 (19:22):

Striving nonprofits are getting donations from people who are willingly and voluntarily giving their money to good causes. And you don’t have to have the government take your money to give it to them, what they view as a good cause. Um, instead encourage and allow people to find it out of the goodness of their heart, to give their money to good causes. And you’ll find it works really well. It was called the test. It was a big test. It was called the foundation of America, right? It started about 207 years. It works great. Unfortunately, we have a whole bunch of people are trying to break it down and say that we’re a broken country. One we’re, we’re actually the best country that’s ever lived. Every nothing’s perfect ever. It’s always going to be in flux and trying to be better, but it certainly, but we use it.

Speaker 2 (20:07):

I think a large part of our inflationary issues are a direct result of bad policy. Some of them are a result of, you could say COVID, but I would also say COVID is a bad policy. All right. Action to COVID you mean no COVID was developed because of bad policy like it or not. If you do the research and find the facts, or you listen to Ron Paul, which some people hate him, but some people love him. But if you want facts, you can listen to him and Fowchee debate and listen to what he says. Okay. So the bottom line is Fowchee was involved in funding, gain of function. Research gain of function. Research is a forbidded, uh, forbidden for the United States to finance research. I could be off a little bit on this. This is just my general understanding of it. But the fact of the matter is Fowchee was very involved in getting the money to the Wu Han lab in China to fund a gain of function research, which in fact is created COVID.

Speaker 2 (21:03):

So it is policy that actually allowed this to get created in the first place. And is it nasty? Yes. Are we holding anybody accountable? No, because there’s a large swaths of people in our country and our political system that don’t want to hold anybody accountable for anything they want to just blame everyone else. Nobody will be personally held accountable. So I would say that COVID unfortunately it was started partially because of that policy. Somebody didn’t follow the rules. Right. And therefore bad things happened. That’s pretty scary. So we have, we do have real inflation. If anybody doesn’t think we have inflation. No, I don’t know anybody who would think, and that’s why it’s coming up. And more people are like, what are you talking about on this show? Like, what do people want to hear about on this podcast? Like you guys are trying to detoxify and give good information.

Speaker 2 (21:49):

Like, what do you do with everything we’ve talked about so far on the shows seems very much out of my control. So what can I control in this as a personal investor, as someone who, you know, is working and saving and investing, you can vote for different policies. That’s one thing you can do. You can control and vote for different policies and vote for administrations that believe that personal responsibility and personal contribution to the benefit of society is important. And certainly we need to help people who are, are hurt and need to get up and need it a chance. Yes. We’ve always been a country that does that phenomenally. Well. In fact, we’ve saved most of the world from tyranny stick, uh, governments all the time. They know oppression and tiering. We have saved the whole world from that. So we, we, uh, we, as a country, I’ve done a very good job with that.

Speaker 2 (22:37):

We need to vote for people who, who are interested in personal accountability. Secondly, the things that you can do is be aware and be, you know, get your information from different sources and be knowledgeable about it. And then from a very practical standpoint, right, we got to talk about how do you invest? You know, I wouldn’t own a lot of long-term bonds right now because the reason what happens there is if you have a long-term bond, you’ve been promised a certain interest rate at today’s interest rates for a long period of time where let’s say that that’s a 20 year bond and it’s a 3% interest rate or 2% interest rate. If interest rates go up and all of a sudden in a year from now, somebody can buy that same bond and it’s going to pay them a 4% interest rate because insurance has gone up, your bond is not very attractive.

Speaker 2 (23:26):

And you’re now stuck holding the bag, right? 20, you’ve got the stinky poopoo and you’ve got the bag and it is paying you a bad interest rate given what’s out there. So, Hey, nobody will buy your bond so you can’t get out. You’re now have a major liquidity issue, unless you’re willing to take a much lower much. You can sell it, but you just get paid a lot less. You’re going to get crushed. So you will have bought that bond for, let’s say a hundred thousand dollars and now gone up 2%. And then the same bond. I get an extra percentage of straight, 20% more interest. Your bond is going to be worth 50 cents on the dollar. So you just lost half of your money in your safe investment. This is really important because the most common, a question I’m hearing lately from people and it’s, it’s such an interesting, and it’s such a common one throughout history, but stock markets at all time high.

Speaker 2 (24:11):

Yeah. Got cash. Like lots of cash. I know I shouldn’t keep it in cash because inflation is eroding my purchasing power. Right. But I’m scared to invest the cash into the market stock and bond market. Let’s say diversify globally, beautiful. The way you do things. And then it crashes, oh my gosh, that was bad timing. Like that’s a lot of people right now. It is. And if you think about it, I mean the market’s at all time highs, the market’s been at all time highs since 2009. I mean, we’ve been hitting all time highs for years and years and years. So the thing about all time highs is they oftentimes they just keep coming and tell them it was a new high. Yeah. A new high, then another new high then another, and you get years, sometimes years and years and years of new highs.

Speaker 2 (24:55):

So just because the market’s at a new high doesn’t mean it’s done, but then eventually there is a correction coming. But we know, I think we know with lots of statistical and, and data that statistics, statistical evidence and data, that if you’re in a properly diversified portfolio, the next downturn is not a loss. It is coming. There will be a downturn. It’s not a loss. As the gold commercials, try to tell you don’t lose your money in the stock market. If you’re properly diversified that next downturn is some volatility. Sure. It’s a temporary decline in the values. But the companies, the greatest company he’s in the world that are producing goods and services and that whole story, they will rebound. They will continue to produce goods and services and they will continue to grow. Some of the junk may fall off the bottom. Some things may go bankrupt.

Speaker 2 (25:48):

Some things may not work, but the large majority will probably survive a new innovation. A new ingenuity will come into the top for that funnel. So to speak some junk falls out the bottom and you will prevent well because we, as investors are going to demand a certain, the rate of return for our money being invested in historically speaking, that’s been around eight to 12% for equities, right. That probably isn’t going to change a lot. It could, there’s no promises, no guarantees. The show doesn’t guarantee any financial advice we need to know you and your personal situation. And even then we don’t guarantee anything financial outcomes, because for the most part, none of them are guaranteed. We stress test them a lot. But yeah. So yeah, I think you have to. Yeah. I think that that person to answer specifically, Alex, that has a lot of cash, you have to, you have to be an investor it’s time in the market, not timing of the market.

Speaker 2 (26:35):

However, you may want to tiptoe in over the course of the next six months or 12 months, you may want to have other alternative asset classes as some real estate. I mean, I’ve talked to a client this morning. We put a half a million dollars to work in a real estate fund that pays 5.2, 5%. It’s massively diversified in real estate, not only office, but industry. It’s got a small amount of office, but it’s got industrial and it has multifamily and it has some commercial and it has got everything in it. Totally diversified managed by some of the best real estate managers in the world. This is a great diversification piece. Could it go down? It could go down, but it helps diversify the portfolio. So it puts some money to work in that you put some money in stocks, maybe you put some money in bonds, and then you find maybe even the right annuity, which annuities unfortunately have a bad rap because they are sold.

Speaker 2 (27:21):

They rightfully so. They’re sold in a disgusting broker commission focused way, but there are some annuities right now that can protect your principle and give you upside to the stock market. It’s interesting right now, especially versus owning bonds, right? Why would I own bonds? When we know it’s, it’s a really low, they could go up. Bond prices could be faced with a lot of pressure and the yields are low. So why not buy something? It gives me upside to the equity markets, but yet also protects my principal. You have a lot of responses to that, but that’s a whole other show. I’ve got a whole bunch of reasons why I would challenge that back. But I think this is the part of usually when we were doing the radio show, at least, um, and even on this podcast, I think it’s really good to know like how we help people when they have these kinds of questions coming up.

Speaker 2 (28:06):

And it comes in a couple of forms. One, one very clear action call to action. We call it right. Is, you know, we’ll, we’ll, we’ll talk to you, we’ll do a discovery meeting. We’ll build you a financial plan. We’ll look at the entire picture and tell you what we think. Uh, and no costs. It’s a really easy non-threatening way to start a conversation and, and kind of give an assessment kind of like your FAA physical. It’s not, it’s not very uncomfortable. There’s nothing crazy to make you do some too weird, nothing too crazy, no burpees. The other one, which is for those that are really, really investment minded, I’m thinking of like the engineers or the people that have been managing their money for a long time. It actually kind of like it, you know, but they’re kind of wondering like, whoa, like inflation all-time market highs, bonds, all these things.

Speaker 2 (28:48):

And you know, you know what, you, you know what you know, and you know, you, there’s a lot of things you don’t know that kind of person, right? Yeah. That kind of person we literally will go through and use all of our software and prepare a portfolio analysis, showing you where there might be some huge gaps in what you’re doing. And maybe we’ll show you, you know, there’s not that many gaps actually. And reaffirm that you’re doing a great job. And we used to do that a lot, especially when things were at all time highs a few years ago and now they’re higher, but that’s a good, does the two key things. I think anyone listening to this show and we’ll put it out there on the website, um, and anywhere else, but we have a great team that does that. Nice people. They’re friendly though, 800 years of combined experience.

Speaker 2 (29:26):

So if you, you know, it’s not 300 people with one year each. I mean, we have a team of about 20 people, but bring tons of experience. And the cool thing about what we’re doing and helping people is, and you should seek out financial advice. That is from a fiduciary perspective, that is unbiased and from conflicts are not free from, but at least all the conflicts are disclosed totally and upfront. And there’s a small subset of wealth advisors, financial advisors, financial planners, a small subset of those in the country who operate as this under a fiduciary capacity. And just cause when you ask them, are they, are you a finisher? And they say, yes, that doesn’t really mean they’re a fiduciary. You actually have to check unfortunately. And they have to work for an RIA, a registered investment advisory firm. They can’t clear through a broker dealer because a broker dealer oftentimes has conflicts of interest with how they compensate.

Speaker 2 (30:16):

The broker dealer could be getting paid the 12 B one fees while they’re charging, uh, ask them how they in their firm get paid. Yeah. They usually answers the question. If the answer isn’t just from me, the client, then, then start asking way more questions. That’s right. Yeah. Neither client is just really tricky. But even if you go to any of the big name firms, quote, unquote, that are in a fee-based rap program and say, how do you get paid? And say, I pay a percentage of assets under management. That’s what they answer seems great. Yeah. However, what they don’t tell you, that’s how they that’s what the client pays. How does the firm get paid? No advisors. No, none of those advisors, very few of those advisors probably answer that question comprehensively. Well then at least try and then you can tell them the answer, whether they’re, maybe they can say, I don’t really know.

Speaker 2 (30:56):

And that’s, that’s enough. You’re putting a lot of faith and confidence in how they would answer that question. I want to go ask a bunch of, I’m not sure. I’m not sure they even know. Um, and if they do know I’m certain, they’re not going to say to the client, well, listen, our firm gets paid a bunch of money to distribute certain products and certain mutual funds. And we don’t tell you about that, but we are, by the way, we have a preferred fund family list that pays us $25 billion a year that we do all of our annual retreats on that. We take all of our top producers on and that’s, we get paid a bunch of money that way. And so a lot of the products I’m trying to sell you are going to be conflicted, but I’m not going to tell you about that conflict. But since you asked, okay, now I’m telling you that’s not good, just like that.

Speaker 2 (31:39):

So you’re putting a lot of fake done. The best way to simply know is work with somebody who is with an RIA and doesn’t have a broker dealer affiliation and then ask them if, if it’s appropriate and you sell me any annuity or any insurance, will you please disclose to me? And will you promise to disclose to me the compensation that you get paid for selling that particular product? Certain stuff? Yes. So if, because if somebody is at an RIA, they have a lot of fiduciary oversight to be transparent and disclose all conflicts of interest. If you read their ADV, you’ll see all that stuff. So that is, to me, the best way to find the right advice is go to an RA. You don’t trust. They’re going to answer the other questions. No, I don’t. And maybe I’m just a cynical old man, but I think people are smart too.

Speaker 2 (32:26):

If, if, if a lot of our clients, if they were out there kind of like, um, what do they call them? Mystery shoppers, you know, go mystery, shop a few advisors and ask them these questions. I mean, if you give them the BS answer, they’re going to know. They’re like, okay. So like, okay, let me ask the question. Maybe a different way. I think you’re giving too much crap. All right. Fine. All right. I think we should do that. All right. Here’s the deal. If you want to be here, we’re going to give you the question she seems to ask. That’s a good thing though. Like seriously, if you want to know what questions to ask and how to drill down on those questions to get true answers from your advisor, we’ll give you those that, why don’t we do that as a fall, a show note, follow up.

Speaker 2 (33:02):

As I’m saying, question to ask, as we’re saying this out loud, this is the part rice. I think it’s important. This is not just for fun. Like there’s a reason why it matters, right? It matters how they, how your advisor and their firm gets paid because you are the product, right? You’re the client are, what’s getting quote unquote sold. So it’s important to know like, like when I buy something, I kind of want to know what the other person’s getting out of it, just to make sure that we’re on the same page. And if we’re not, that can be okay sometimes. But it could mean it could mean huge differences in, and your ability to create, grow and preserve your wealth and, and whether you get good products or bad. Yeah. So this isn’t just a fun game. This is not just a game, but so the questions are cool.

Speaker 2 (33:38):

We should do that. And then we should seriously send out some mystery shoppers. Is that legal? Can we do that? We’ll have to check with [inaudible], but that’d be cool. Like setting up mystery shoppers and be like, so tell me you wouldn’t that be so fun? Can we just send Kendall last names and you send Ken, oh my gosh, that’d be it. And he just mystery shops. So wait, you mean your firm doesn’t get paid at all? All right. Let me, he’s a business guy too. He’ll know. He’d be like, wait a minute. How do you guys get your revenues yet? What’s really going on. What else we got to talk about? We’re coming up on 35 minutes real quick, just because this is, we’re already on random tangents, which is actually really fun to get off some of that other stuff. But, so how do you feel about this crazy space race stuff?

Speaker 2 (34:19):

Cause people were talking. I heard about it. I feel like it’s, it’s, it’s worth like from a financial wealth management, the political thing you in perspective, because that all ties together in this. I think it’s kind of crazy. I don’t really have any thoughts about it. You’re just bored by it at the moment. I’m not interested. I mean, I think it’s cool. I’m stoked. People are launching themselves into space. Um, I think it’s interesting that those all sort of the proponents of the people who are saying how we need to not pollute the environment and, and they’re very environmentally focused, which I love the environment. I love clean water. I love trees and mountains and fresh air. It’s just my favorite thing in the world probably. But I find it quite hypocritical that, you know, people like Jeff Bezos are launching themselves with rockets, which by the way, if you measure the pollution that came off of his single rocket and whatnot, it was probably equivalent to thousands of diesel’s driving up and down the freeway for, you know, I don’t know what it actually is.

Speaker 2 (35:16):

I’m making that up. Seems like a lot, but it’s probably not insignificant. But then furthermore, that he, Jeff Bezos is, is, you know, selling products of which almost all are made in China and China is the worst polluter ever. And then I find it really hypocritical and crazy that, you know, you have these, uh, environmental conferences and yet who are they full of? Bill gates and Jeff Bezos and all these guys flying in on 7 47, private jet, huge private jets, just nuking the environment while they go in and lecture to us, layman and us little people about how we need to protect the environment. So I find the whole thing somewhat tied to that. Yeah. And why do you think they’re doing it right now? What’s the point, man. Think of the business opportunity, space travel. I mean, what every rich person in the world paying $200,000 to fly, to space the profits.

Speaker 2 (36:08):

That’s what it is. Just, it’s another, I think it’s a hobby. I think these guys are having fun and a toy. It’s like, you know, some people collect nice cars, some people collect guns, some people collect airplanes. Like my, my rockets bigger than your rocket. I got there faster for sure. Big rocket contest. And I’m learning by the way. It’s cool. I mean, they’re advancing technology. That’s rad, right? I mean the, the Wright brothers who w what would you have said the Wright brothers are trying to put wings on this thing and fly, like when they started the first aviation. Yeah. I mean, it’s pretty awesome. It could lead to amazing benefits for all of society. Right. So it’s pretty quick. Musk’s was kind of cool that you can actually launch it and they can come back. Right. Versus like, did benzos stay out there?

Speaker 2 (36:48):

Hopefully he’s still on. Now. He came back in the same day, but Musk Musk, I didn’t go. I don’t think, but his, this is like a while ago. Like maybe a year or two ago. It’s not right now, but his, he, he created that rocket that’ll go out there and it all, she can land come and land back itself versus just launch them. They blow up or disappear or whatever. They come space junk. I don’t know. No, I don’t know much about this topic. I just, I’m just learning and listening because it’s, to me, it seems kind of random, but I mean, it’s, it’s, I it’s technological evolution and people who have the money to do it are spending it. And it’s, I mean, I think it’s cool. I’m not that interested in it, but I think it’s cool. You don’t want to go to space.

Speaker 2 (37:25):

Um, and you’re flying again. You’re like a little further in, in inside the gravitational pole, of course, with that for now. I mean, it’d be great to walk out. If somebody told me, if somebody told you, you can go tomorrow and go to the moon and walk on the moon who wouldn’t say, yeah, that sounds rad. I’d check it out. Like for free, or I have to pay $200,000, whatever. Well, I don’t know either one. I wouldn’t do, I don’t know. I pay a couple hundred grand. The other stuff I want to do first. I just want to go to your semi Jacqueline. The moon is not even thinking glacier national park or something. I don’t know. I haven’t paid much attention to this space rockets. Okay. I was just curious, but we’re talking about it right now. So I think it’s, it’s one of those topics.

Speaker 2 (38:11):

Other than that, I think we covered the things we wanted to cover. It’s the most commonly talked about things that our clients and prospective clients and our, and our employees are talking about. Right? Inflation, why should I own bonds? Stuff like that. And I think there’s a lot to that. And I think you have to prepare and protect your portfolio. You need to think about how your portfolio is positioned and you need to stress test your portfolio. Most importantly, against your full life financial plan and your purpose. But specifically you got to stress test it like we do on our Aladdin system that we use through BlackRock. But you got to stress test against inflation, and you got to think about my money becoming worth less, right? If everything I’m trying to buy is worth more, I’m becoming poor and I’m becoming less wealthy by the moment as things are becoming more expensive, because my money doesn’t do as much for me.

Speaker 2 (38:55):

So you definitely don’t want a bunch of money sitting around in cash, not working. I don’t think that’s a great, the good news for all of our clients. If you’re listening, it’s already been part of the plan the whole time. You’ve been a client of Ida. We’ve had an in your financial plan in your Monte-Carlo stress test. Yeah. It’s not a surprise to us. And actually we’ve been overcompensating for inflation for now. Now we’re kind of bringing it back to the average and it’s all good for us. And that’s the next thing. If you’re not a client of ours, you need to know what you’re going to do when there is that crash that comes that correction, that comes, what do you do when it’s going to happen? So are you prepared to know how to rebalance or should you rebalance? What should you rebalance to stay the course and keep it discipline or panic and freak out and then sell it the bottom and wait, and get back in the next top.

Speaker 2 (39:34):

And that’s a good note to leave off this financial detox. This is what we’re doing. We’re helping you get detoxified financially speaking, avoid toxic advice, manage your wealth for maximum impact. So you can enjoy the true fruits of your labor and you can live your best financial life. It’s financial detox, and, uh, we’ll close it out right there, Alex. Thanks for your time. It was awesome. Uh, hanging out with you again and doing the show it’s financial detox.com. You can reach us at 8 7 7 7 0 7 88 89. Financial detox.com is, is a, I got a bunch of information. You can learn more about us there. So check it out and we’ll come back to you with another show here. Soon, if you have any ideas, topics, or you want us to talk about anything Pacific, we are, uh, specific. We are open to that, your thoughts and ideas, and you can give us a call or go to financial detox.com and check us out and connect with us there. Thanks so much for listening. Hope you have a great one

Speaker 1 (40:27):

To learn more about financial detox and to get access to today’s show notes, transcript and resources, visit financial detox.com. Call Jason and the team at intelligence driven advisors. If you’re ready for financial detox and a better tomorrow, call 8 7 7 7 0 7 88 89. Get answers to your questions. That’s 8 7 7 7 0 7 88 89. That’s financial detox.com for podcasts and information. And if you like what you’ve heard, be sure to hit the subscribe button that way you’ll be notified about upcoming podcasts. You’ll take one more step toward financial peace of mind. This content is provided for informational purposes only, and should not be considered investment advice or recommendations to buy or sell any types of securities. Mr. Labrum and intelligence driven advisors are not responsible for the consequences of any decisions or actions taken as a result of information provided in this program and do not warrant or guarantee the accuracy or completeness of information provided information discussed today, reflects the views of Mr.

Speaker 1 (41:30):

Labrum and his guests. As of the date of the show and subject to change without notice past performance is no guarantee of future results. We’re looking statements or forecasts are based on assumptions and actual results may vary from any such statements or forecasts. No reliance should be placed on any statements or forecasts when making an investment decision. Accordingly listeners should not rely solely on information provided today in making any investment decisions. There’s a risk of loss of investing in securities, including the risk of loss of principle. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for particular investors by natural situation or risk tolerance, asset allocation and portfolio diversification cannot assure or guarantee better performance and cannot eliminate the risk of investment losses.

 

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