Ben Felix: Why indexing wins but your brain fights it

1. 0:00 – 2:54

   Intro

   1. BFBen Felix0:00

      Renting versus owning a home is the biggest financial decision most people make in their life. So we're gonna talk about all of the unrecoverable costs of owning a home, including property taxes, maintenance costs, which is the one that I think people underestimate the most, and then there's also emergency costs. I've got a whole stack of them, as well as a 5% rule to figure out if renting is a better financial decision.

   2. SBSteven Bartlett0:18

      We'll go through that. What else have we got?

   3. BFBen Felix0:19

      So this is something that people just don't think enough about, which is the top 10 financial mistakes that I think people make. For example, tax planning opportunities. Like, there are simple things that people can do to minimize the amount of tax they're paying, and we'll go through those.

   4. SBSteven Bartlett0:31

      Ben Felix's firm manages the money of more than 3,000 people, ranging from people with huge amounts of money and not so much money. His whole thesis is giving people money advice that is based on academic research.

   5. BFBen Felix0:44

      Our brains, our psychology absolutely gets in the way of making good long-term financial decisions.

   6. SBSteven Bartlett0:49

      And today, we're gonna answer the big money questions like, "What should I invest in?"

   7. BFBen Felix0:54

      A lot of people believe they need to have a lot of background information before they can start investing, but I would argue that people who know just a little bit, they will be better long-term investors. There's a ton of evidence supporting that this will outperform most other investment strategies.

   8. SBSteven Bartlett1:07

      And also, what is the mentality, the mindset of people that end up making money over the long term?

   9. BFBen Felix1:13

      Psychology's important for determining what your financial goals are. So this is a framework that we developed to elicit higher quality goals.

   10. SBSteven Bartlett1:20

       What would you say to young people that are thinking about their financial strategy?

   11. BFBen Felix1:23

       A lot of young people feel a lot of pressure to save, but there is research suggesting that it's probably suboptimal for young people to save, which we'll talk more about later.

   12. SBSteven Bartlett1:31

       And then in a world of AI where everything is changing so quickly, what should I be doing with my money right now? Ben Felix has the answers. This is super interesting to me. My team give me this report to show me how many of you that watch this show subscribe, and some of you have told us, according to this, that you are unsubscribed from the channel randomly. So favor to ask all of you, please could you check right now if you've hit the subscribe button if you are a regular viewer of the show and you like what we do here. We're approaching quite a significant landmark on this show in terms of a subscriber number. So if there was one simple free thing that you could do to help us, my team, everyone here, to keep this show free, to keep it improving year over year and week over week, it is just to hit that subscribe button and to double-check if you've hit it. Only thing I'll ever ask of you. Do we have a deal? If you do it, I'll tell you what I'll do. I'll make sure every single week, every single month, we fight harder and harder and harder and harder to bring you the guests and conversations that you wanna hear. I've stayed true to that promise since the very beginning of The Diary of a CEO, and I will not let you down. Please help us. Really appreciate it. Let's get on with the show. [upbeat music] Ben, there are lots of people out in the world talking about personal finance and investing and all these adjacent subjects. What is the approach you take that you think is different to lots of the other sort of finance experts that are on YouTube that are giving people

2. 2:54 – 3:57

   Why Most People Overcomplicate Finance

   1. SBSteven Bartlett2:54

      advice?

   2. BFBen Felix2:55

      What I think and the approach that I've always tried to take is what can we take from academic literature, very smart people who've spent a lot of time thinking about these things, what can we take from them and apply to making good financial decisions for a typical person?

   3. SBSteven Bartlett3:08

      And what are the key questions that you've sought to answer for the audiences that you have?

   4. BFBen Felix3:13

      Is renting versus owning a home. So that's always been big. Asset allocation is another big one. How much should you invest of, of your long-term money that you can, uh, uh, afford to take some risk with? Uh, and, and another important question people wonder about is, uh, why should I not do this other investment strategy that seems very attractive?

   5. SBSteven Bartlett3:30

      And who, who are we appealing to with this conversation? Is it just people that have lots of money, or is it-

   6. BFBen Felix3:35

      No, I think these questions need to be answered. I mean, the, the renting versus owning a home one is applicable to pretty much everyone because that is the biggest financial decision most households will make in their lives, regardless of what their net worth is. But investing or what should you do with your long-term investments, that's applicable to anybody. Anybody that's going to be saving for their future, whether they have $10,000 or $10 million, the same principles apply.

3. 3:57 – 5:26

   How Your Psychology Secretly Controls Your Investments

   1. SBSteven Bartlett3:57

      And how much of this game of investing, making money is, comes back to psychology?

   2. BFBen Felix4:03

      So I like to say investing's been solved. We're gonna use index funds. That's it. The hard part is actually doing that because our brains, our psychology absolutely gets in the way of making good long-term financial decisions, where our, our brains are designed for survival. They're not designed for thinking about long-term abstract concepts like taking your money today, investing in the stock market, ignoring all the stuff that happens in between, and then having money left over later, uh, to, to fund your retirement.

   3. SBSteven Bartlett4:32

      That's so interesting 'cause m- a lot of the time people talk about tactics and strategies, but I guess underpinning your ability to execute on any of those tactics or strategies are one's own psychology. And is there academic research about the best sort of mental approach to take towards money and finance and investing?

   4. BFBen Felix4:47

      So one of the best approaches, and it's a little bit counterintuitive, is to not look at your investments. There is a, an academic paper showing that the more people look at their investments, the less risk they take and the lower returns they earn. Because when you look at your investments every day, the stock market goes up and down. We know that. If you're looking every day at your portfolio and it's down 5%, up 6%, and going up and down all the time, that can be very stressful, and it makes it seem like the stock market is very risky, and so people will invest less in the stock market. In reality, for, for long-term investors who can invest in stocks, buy and hold for a very long period of time, that they're a lot safer than people think.

4. 5:26 – 7:14

   The Real Frameworks Behind Financial Freedom

   1. SBSteven Bartlett5:26

      Mm. So we've got some props here for some demonstrations we're gonna do. Could you just give, explain to me the high level of what these things are on the table and the different frameworks we're gonna go through?

   2. BFBen Felix5:36

      Sure. So we have a bunch of things here. Uh, this is one of my favorites that I bring up in a lot of my videos. So this is the, the PERMA model, which comes from positive psychology. Psychology's important for investing well, but it's also important for figuring out what your long-term investing strategy should be.

   3. SBSteven Bartlett5:54

      We'll go through that. What else have we got here?

   4. BFBen Felix5:56

      This is the top 10 financial mistakes that I think people make.Uh, this is the, the three steps for investing your first $10,000.

   5. SBSteven Bartlett6:04

      Okay. And we've got $10,000 there, so you're gonna talk me through how we do that-

   6. BFBen Felix6:08

      Yeah

   7. SBSteven Bartlett6:08

      ... as well.

   8. BFBen Felix6:09

      We're gonna talk about all of the unrecoverable costs, got a whole stack of them-

   9. SBSteven Bartlett6:14

      Oh

   10. BFBen Felix6:14

       ... that you incur when you own a home.

   11. SBSteven Bartlett6:17

       Okay, and I, I, I guess this begs the question: who is Ben Felix? What is your background, and what is the education, the reference points, the experiences that you're drawing upon to give us this information today?

   12. BFBen Felix6:28

       Probably where it starts for, for being relevant is I, I did a degree in mechanical engineering at Northeastern University, and I say that's relevant because when I came into finance, I wanted to approach it like an engineer, and a lot of finance, a lot of financial services of, of investing and wealth management is not approached like an engineer. Uh, it's approached like a... I feel almost bad saying this, but it, it's approached like a, like a car dealership-

   13. SBSteven Bartlett6:54

       Mm-hmm

   14. BFBen Felix6:55

       ... like selling, selling product. Uh, so I was disappointed in that and, and had to f- find my, find my own way. And I-

   15. SBSteven Bartlett7:01

       So they haven't got my best interests at heart?

   16. BFBen Felix7:03

       In, in a lot of cases, I don't think so.

   17. SBSteven Bartlett7:05

       Mm-hmm.

   18. BFBen Felix7:05

       So I started spending a lot of time reading through academic literature so that I could be very confident and comfortable that the advice that I was giving to people was good, high-quality advice.

5. 7:14 – 9:40

   Why You Don’t Need Much Money To Start Investing

   1. SBSteven Bartlett7:14

      And where is the best place to start? Is it in the psychology? Is it one, one of these frameworks? Is it somewhere else? Is there a background understanding of the economy one needs to, to get going?

   2. BFBen Felix7:24

      That is a great question. I don't think so, and I think that's where a lot of people get stuck, where they believe that they need to have a lot of background information before they can start investing. Uh, they may do research on specific industries. They may look at, like, the energy sector so they can build out an energy portfolio, as one example. But investing the way that I would say is sensible for most people, which is just using low-cost index funds, capturing market returns. The, the market returns have been there, and they're going to continue to be there. They should continue to be there in the long run. Uh, doing that doesn't require a lot of background knowledge. I would argue that people who know just a little bit, just enough, they just know that index funds are sensible, and they have enough conviction they can stick with that, they will be better long-term investors than someone who knows enough to hurt themselves.

   3. SBSteven Bartlett8:09

      What would you say to young people that are thinking about h- their financial strategy? D- would you say that someone in their early 20s, 21 years old, should adopt a completely different approach to money based on what you've just shown me versus someone that's 51 years old?

   4. BFBen Felix8:26

      It's gonna be different for sure. I, I think, and this is a, it's a tricky subject, but a lot of young people feel a lot of pressure to save, and that might be saving for their retirement. It might be saving to buy a home. But they feel a lot of pressure from their parents, uh, and just from society in general that they need to be saving money, that if they're not saving money, they're being irresponsible. But a- again, if we come back to academic research, there is research suggesting that it- it's probably suboptimal for young people to save. General point is that you should save more when you have a higher income and save less when you have a lower income, and what that ends up meaning is that young people may not need to save or may not need to save as much as they feel pressured to save. The reason this topic is tricky is that while what I just said is true, it can cause bad habits where if people spend all of their income and then don't have that shift towards saving at some point, then they'll, they'll end up in a difficult position later on in life. Someone who's 50, uh, it's gonna depend on their situation. If they're the person who I just mentioned who never saved, they're in a tough position and, and they are going to need to save a lot in order to have some wealth later on in life. But if they've already saved and they have wealth, then they can focus more on some of these topics.

6. 9:40 – 13:17

   The 10 Money Mistakes That Quietly Keep You Broke

   1. SBSteven Bartlett9:40

      And you've got the, the 10 money mistakes people make here. Can you run me through those ones? And just let me know if any of them is particularly pertinent or interesting that we should dive deeper into.

   2. BFBen Felix9:50

      So this, this one's controversial. It's not earning enough money. A lot of people feel like they d- don't have an option, that they're not er- earning enough money because that's just the way things are and there's nothing that they can do about it. I don't think that's necessarily true. Investing in your human capital, and that can be formal education. It can be gaining skills. It can be becoming an entrepreneur. Those are all ways to make your, your own self a more valuable asset, to increase the value of your human capital and allow you to earn more money. So that's a, that's a big one, and I think people who get stuck in the, in, in the feeling or the thought that they do not have the ability to increase their income and that this is just the way things are, I think that can be very problematic.

   3. SBSteven Bartlett10:34

      I've always thought of it across these sort of five buckets. The first two buckets that we attempt to fill when we're starting our careers are our knowledge and then our skills, and kind of like when knowledge is applied, it becomes a skill. Uh, and these two first buckets are so imperative because they can almost never be unfilled, whereas the other three buckets, which is your resources, your network, and your reputation, you can have career fluctuations and earthquakes that cause those buckets to unfill. So as like, uh, you were saying earlier on about young people, one of the things I've always thought is like when you're young, just, like, optimize for filling your knowledge and skills as much as you possibly can. And actually, I guess the, the level of nuance there is acquiring a, a rare but complementary stack of knowledge and skills that the market values. And I think over the long term, you know, this doesn't apply to everybody 'cause things happen in life and bad things can happen, but over the long term, I think life tends to land you pretty much in and around the value of and the rarity and the compli- complementarity of those knowledge and skills as it relates to the market's demands.

   4. BFBen Felix11:35

      Uh, that's absolutely true. There's data on this too, where we, we know that there is a mechanical relationship, at least historically. We can talk about the future, but historically, there's been a mechanical relationship between formal education or trade edu- edu- education and lifetime earnings. And we also know that certain degree types, like engineering, finance, uh, business, some other sciences, have higher lifetime earnings than other degrees. So it's... You're... I think you're absolutely right. There are... And the hard part is we don't know what exactly those degrees and skills that are gonna be the highest paying in the future are going to be.10 years ago, we might have said software developers. Today, we might not

   5. SBSteven Bartlett12:11

      But even you as an example, so you did engineering, and then you did finance, and now you've added this other string to your bow, which is you know how to make content on YouTube, and that makes you as a finance expert and professional and CIO so extremely rare. It almost makes you, like, one of h- one hun- 100 on planet Earth maybe.

   6. BFBen Felix12:31

      [laughs]

   7. SBSteven Bartlett12:31

      Uh, and this is what I mean by rare and complementary skills. You could have just learnt more finance, and I don't think that would have moved you up this sort of earning ladder, but because you added this really rare skill of being able to make content to y- your, your other skill stack, I'm guessing it made you money.

   8. BFBen Felix12:47

      It did. It has, and I, I continue to be paid well. And, you know, it was [laughs] ... Please don't, but if you were to go back and watch my old videos, which are still up, I am so rigid and nervous, and I, and I was, and it took probably years of recording, and we do a podcast too, so just being in front of the camera, for me to feel pretty good. I mean, I, it probably took me three years to smile on camera. [laughs]

   9. SBSteven Bartlett13:10

      Really? [laughs]

   10. BFBen Felix13:12

       So yes, that was a skill that I acquired through just practice, I guess.

7. 13:17 – 20:06

   How Monetizing Your Skills Can 10x Your Income

   1. SBSteven Bartlett13:17

      So I say this because I really want people to think about how rare their skill stack is. It's not something we're taught. And then also, one of the things I no- So I used to work in a, a biotech company for a little while, while I was in between things, and we were looking for a writer, a biotech writer. Now, the other writers that we'd hired at our other companies might have been paid, I don't know, $50,000, whatever it is. For a biotech writer, we would pay them a quarter of a million, and all... The only difference is the biotech writer had, like, some base... They didn't have to go to medical school. They just needed experience in writing about biotech.

   2. BFBen Felix13:48

      Yeah.

   3. SBSteven Bartlett13:49

      And it 5X'd their earnings. So this other point is you might have a skill stack, but are you selling them on the right market? And even me, the first part of my career was marketing. I was helping Uber and fizzy drinks company and dress seller company sell their dresses. As I just said, the, the second little stop I took in my career was helping biotech companies with marketing that are about to IPO. [laughs] My first contract with one of those companies was worth 8 million, six months work, and I j- it ma- it was a real pivotal moment in my career where I go, "It's not just the skills you have. It's, like, where you, the m- the market and industry where you sell those skills can wildly change your, your, as you say on that card, your earning potential."

   4. BFBen Felix14:31

      Yeah. And as you say, th- this is something that you don't have full control over because you could do all of those things and not find work as a biotech writer.

   5. SBSteven Bartlett14:38

      Mm-hmm.

   6. BFBen Felix14:38

      But putting yourself in that position, I think, does increase the odds.

   7. SBSteven Bartlett14:41

      What's the second one you've got there?

   8. BFBen Felix14:43

      Second one is not saving enough. Touched on this a little bit. Y- young people maybe don't need to save, but at some point you do have to start saving, and the tricky thing about saving is that wealth compounds over time, and if you're not saving out enough, you're missing out on compounding, and it gets a lot harder to catch up with the amount of savings you would have otherwise had if you'd started earlier. Uh, so that, that's a big one. And some people will wake up when they're 50, 55, maybe even 60 and realize they haven't saved enough, but by that time, there's nothing that you can do about it or very little that you can do about it. There's a lot of parallels with health here, where if you eat poorly and don't exercise, you can wake up when you're 55 and you can have heart disease. That is very difficult to reverse, and it's the same effect. It's compounding over time. I think health and wealth have a lot of parallels. Anyway, so not saving enough can be very problematic because it is so hard to reverse the effects of it once you've realized it's a problem.

   9. SBSteven Bartlett15:39

      Interesting. I read a book, um, called The Slight Edge by, uh, I think it's Jeff Olson, when I was 18, which talks exactly about that. I think it uses, one of the analogies it uses is, like, brushing your teeth. Don't brush them today, it's fine. Don't brush them every day this week, you're fine. Don't brush them every day this month, you're fine. But in five years, you're fucked.

   10. BFBen Felix15:54

       That's right. [laughs]

   11. SBSteven Bartlett15:55

       [laughs] And in five years' time, you can't, like, start brushing them then.

   12. BFBen Felix15:58

       Yeah.

   13. SBSteven Bartlett15:58

       You're in a dental chair having them ripped out, and I guess finance is the same in this regard.

   14. BFBen Felix16:02

       Exactly, yeah. Number three is not setting financial goals.

   15. SBSteven Bartlett16:05

       Okay.

   16. BFBen Felix16:05

       And that's... We, we, we talked a little bit about this earlier as well. If people don't set goals, they will do things like think they need to earn more money because, because, because that's what you do, or they'll think they need to buy a house because that's what you're supposed to do, but they won't step back and reflect on what are the components of a good life for them, what do they want their life to look like, and what would they need to do to achieve that. And if you don't go through that exercise, you can end up spending years or dollars achieving things that don't really matter to you. And again, because of compounding, by the time you realize those things didn't matter, that's time and money that you can't get back.

   17. SBSteven Bartlett16:43

       So how do I go about setting good financial goals? What is the process there?

   18. BFBen Felix16:47

       So this is the, the process that we created is three steps. List your goals.

   19. SBSteven Bartlett16:56

       Okay. So h- what does that look like?

   20. BFBen Felix16:57

       So you're gonna sit down with a piece of paper, or we, we built an app for this, uh, that we use with, with clients. Uh, you, you just list out your goals.

   21. SBSteven Bartlett17:06

       So I could say, "I wanna be a dad. I, you know, I wanna buy a Ferrari."

   22. BFBen Felix17:10

       Yep.

   23. SBSteven Bartlett17:10

       "We wanna go on holiday to Cancun."

   24. BFBen Felix17:12

       Yep.

   25. SBSteven Bartlett17:13

       M- "I wanna be able to retire at 50." Those kinds of goals.

   26. BFBen Felix17:17

       Yep. Now step two, so you've got your list of goals. You're gonna double the list.

   27. SBSteven Bartlett17:21

       Double it?

   28. BFBen Felix17:22

       Yep.

   29. SBSteven Bartlett17:23

       Why?

   30. BFBen Felix17:23

       So you came up with, I think, four goals just now. You're gonna write down eight goals, because this forces you to think harder about what other import- what other goals might be important to you, and, uh, research does show that this elicits more goals that people later identify as being at least as meaningful as the initial goals that they listed. And then the last thing, we're gonna come back to the PERMA model. So the PERMA model is a five-factor model of human flourishing. If you have these components contributing to your life, there's a very good chance that you'll live a good, satisfying life. I think you've, you've lived through this experience, where you've seen that wealth does not lead to a good life.
8. 20:06 – 21:10

   Why Most People Never Set Financial Goals

   1. SBSteven Bartlett20:06

      be.

   2. BFBen Felix20:06

      Yeah.

   3. SBSteven Bartlett20:07

      Okay. How many people in the general public do you think have actually thought about what a good life for them looks like?

   4. BFBen Felix20:13

      Not, not enough. Not many. I think everyone's-- people are so busy with their day to- day-to-day lives. And I know this is true for me and my family too. It's really, really hard to step back and have this kind of thoughtful discussion about what you actually want your life to look like.

   5. SBSteven Bartlett20:27

      'Cause I was just thinking about that. I was think- thinking I don't even know if I've got, um, really clearly defined life goals for myself. Like, I think most of us just kind of act on how we feel.

   6. BFBen Felix20:36

      Yeah.

   7. SBSteven Bartlett20:37

      And that can somewhat dri- drift us towards the short term. Like if I just, yeah, what, what's gonna make me feel good today, and do that every day. I don't know. Some might argue that you have to be a bit more long-term thinking.

   8. BFBen Felix20:50

      It can h- it can help, right? 'Cause it, it, it can help you from making decisions that you might regret in the future.

   9. SBSteven Bartlett20:55

      Mm-hmm. Yeah, 'cause when I look at this PERMA model, there's some things on here that I've optimized for which have sacrificed the other things that I care about.

   10. BFBen Felix21:00

       That's it. That's it. Yeah.

   11. SBSteven Bartlett21:02

       Like, yeah, I might have, I might have over-indexed on this, like achieving things, but it might have cost me some relationships. [lips smack] So what's the fourth mistake people

9. 21:10 – 21:46

   Are You Spending Money In Ways That Actually Improve Your Life?

   1. SBSteven Bartlett21:10

      make?

   2. BFBen Felix21:10

      Yeah. So this is related to what we were just talking about.

   3. SBSteven Bartlett21:12

      Okay.

   4. BFBen Felix21:12

      But it's, it's overspending on the wrong things.

   5. SBSteven Bartlett21:15

      Okay.

   6. BFBen Felix21:17

      When you think about what is a good life for you, and you reali- i- if you realize that you're spending on things that are not contributing to that, which is resulting in you not being able to save toward things that would contribute to what you want your life to look like, that's probably not a great position to find yourself in. So it could be spending $12 on a, an iced coffee every morning and not enjoying it, 'cause you couldn't get positive emotion out of that. But you're like rushing to work, chugging down the $12 coffee every day. That's probably not contributing to a good life.

10. 21:46 – 25:48

    Why Taking Investment Risks Matters More Than You Think

    1. SBSteven Bartlett21:46

       Mm-hmm.

    2. BFBen Felix21:47

       Number five m- might be one of the bigger ones, which is not taking investment risks, and that's really the stock market has delivered these incredible long-term returns, and on expectation it should continue delivering strong returns for investors. Not participating that, in that is a huge mistake, and it's a mistake that many, many people make. A lot of people don't invest in stocks at all, and a lot of people who do invest in the stock market don't invest enough in stocks. They have very conservative portfolios, and that has a very large implicit cost. By not participating in the stock market when you could be, you're giving up a huge amount of, uh, of economic gain.

    3. SBSteven Bartlett22:29

       How do you quantify that for the average person in terms of what kind of gain they're giving up, or the size of the gain they're giving up?

    4. BFBen Felix22:35

       Well, you can look at the historical returns on stocks. Uh, a- and you can also look at the expected returns on stocks. So let's say it's, uh, let's say it's 7% that we expect stocks to, to earn in the, in the long run. And if you could get 2% by sitting in cash, that 5% difference is your opportunity cost of not investing in the stock market when you otherwise could be. And 5% compounded over the long term is enormous.

    5. SBSteven Bartlett23:03

       So say I have $10,000, uh, and I invest it in the stock market, and I'm getting, what did you say? 8%?

    6. BFBen Felix23:12

       Seven. Say 7%.

    7. SBSteven Bartlett23:14

       How much money is that? Let's have a look. So I've done $10,000, which is what we have here.

    8. BFBen Felix23:22

       Mm-hmm.

    9. SBSteven Bartlett23:23

       Invested in the stock market at 7% return over 40 years, that would be $150,000. Do you know what's, um, do you know what's quite scary when I think about that? Is does that... That kinda means that today if I spend $10,000, I'm actually spending $150,000.

    10. BFBen Felix23:41

        Yes.

    11. SBSteven Bartlett23:43

        Which makes me not wanna spend any money on anything.

    12. BFBen Felix23:45

        Yeah.

    13. SBSteven Bartlett23:46

        'Cause if you buy, I don't know what costs 10. What does, what costs $10,000? Like a, a, a car, small car?

    14. BFBen Felix23:51

        Yeah, maybe. Yeah.

    15. SBSteven Bartlett23:51

        You're actually spending $150,000 when you factor in the fact that if you'd put that $10,000 into the stock market, you could have made 7% a year and it would've turned into $150,000.

    16. BFBen Felix24:01

        Yeah. That's, that's one side of the coin. I think you also have to think about any enjoyment or utility that you get out of that car. If that car lets you drive to a job you couldn't have otherwise done, it may have a significant economic value to you in the long run.

    17. SBSteven Bartlett24:15

        And you know-

    18. BFBen Felix24:15

        As one example

    19. SBSteven Bartlett24:16

        ... you know, I've got a coffee here. Some people spend$10 on a cup of coffee with frappa chappa-

    20. BFBen Felix24:22

        [laughs]

    21. SBSteven Bartlett24:22

        ... toppings and all that stuff. Looking at that over the long term, in 40 years if you'd not bought that coffee and put it into the stock market and got just 7% return, you would have had $150. So when you buy that $10 coffee, you're actually, but theoretically, spending $150 in 40 years' time.

    22. BFBen Felix24:41

        So you better really enjoy the coffee.

    23. SBSteven Bartlett24:44

        Is there a bit of a fear that it makes us not want to spend money on any, on, on anything, and therefore we end up having a sh- shitty life in the near term?

    24. BFBen Felix24:49

        No, I, I think that's why this, this framework, that's why the, the PERMA framework for thinking about these decisions is so important. Because you do wanna have positive emotion and engagement, relationships, meaning, and accomplishment. Those are all really, really important. And yes, that money could be worth more in the future, but it can also be worth a lot today if you're optimizing on the right things.

    25. SBSteven Bartlett25:09

        What else? Number six.

    26. BFBen Felix25:11

        It's another big one. So not taking enough risk is, is important. Taking the wrong risks with your investments. So I, we j- we just ran some numbers about a 7% stock market return. You can basically get that using an index fund. The problem is a lot of people don't invest in index funds. They pick individual stocks hoping to earn really high returns. They trade individual stock options. Uh, they trade crypto tokens and all that kind of stuff. And a lot of those types of risks have negative expected returns or they have high costs if you're doing a lot of trading, and that can really erode long-term investment growth.

11. 25:48 – 33:27

    Is Buying A House Actually A Smart Investment Today?

    1. SBSteven Bartlett25:49

       What about buying a house? Is that a good investment?

    2. BFBen Felix25:54

       I wouldn't consider buying a house to live in an investment. It sort, it sort of is. You get an asset, but you're really, you're buying an asset that funds your housing consumption. It kinda pays you a dividend that's sorta like getting rent from the house that you own. When you do the side-by-side comparison, which I think is the only way to think about this, if you compare buying a house, so that means i- in, in Canada you'd usually save up for a 20% down payment. So you put 20% down on your house. Uh, you take out a mortgage to finance the rest. You're now living in the house. You're paying your mortgage payment. You're paying for some maintenance costs. You're paying for property taxes. Alternatively, you could've rented the house. That 20% that went into buying a home could've been invested in the stock market. So again, we're back to the idea of opportunity costs. And the other important thing here is that renting typically has lower cash flow costs than owning. So these are the unrecoverable costs of owning a home. Mortgage interest, so that's when you buy a house and you borrow to, to fund the purchase. You're paying interest to the bank. That's a, like I call these unrecoverable costs. That's money that you're paying for the use of money in this case, and you're not going to get those dollars back. It's gone. Opportunity costs, so that's what I just mentioned. Whatever equity you have in a home is equity that you could have otherwise invested in the stock market. The capital portion, the principal, the, the price of homes has increased around inflation, at the rate of inflation, maybe a little bit higher historically. Stocks have far outpaced inflation. So by having money sitting in a house as opposed to invested in the stock market, you have what is called an opportunity cost. You're not earning returns you could've otherwise been earning. So that opportunity cost is one of the largest costs of owning a home. So I've got mortgage interest, the opportunity cost of equity. Property taxes are another big unrecoverable cost. Property taxes vary depending on where you are, but it's say between .5% and 1%, maybe some- sometimes a little bit higher. You get utilities and some services in exchange for it, but it's, again, it's an unrecoverable cost. You pay that, you've got nothing left afterwards. Then we've got maintenance costs.

    3. SBSteven Bartlett28:13

       Oh, this is the annoying one.

    4. BFBen Felix28:14

       This is the [laughs] it's, it's the annoying one, and it's the one that I think people underestimate the most.

    5. SBSteven Bartlett28:18

       Mm-hmm.

    6. BFBen Felix28:19

       I started making content about renting versus owning a home years ago. I used to say 1% was a reasonable estimate of maintenance costs, and people would push back and say that's way too high. There's a bunch of academic literature on this too that's, it says it could well be over 2%, and that's probably a more reasonable estimate. Having been a homeowner now for six years after renting prior to that, I'm fairly confident, at least in my case, that maintenance costs are far higher than 1 or 2% of the property value per year.

    7. SBSteven Bartlett28:46

       Yeah, I mean, I, I bought my first home a, a while ago and, uh, fucking hell, I d- I didn't think-

    8. BFBen Felix28:52

       [laughs]

    9. SBSteven Bartlett28:52

       ... about the gardening, and the pool pump gets broken, and then there's a crack in the, the patio outside, and then the heating system breaks, and then everything just seems to break.

    10. BFBen Felix29:02

        And it's always breaking.

    11. SBSteven Bartlett29:03

        It's always breaking. Every time I go back there, which is, it's in a different country, I'm j- the first week I'm just spent looking at the things that have broken since I was last here. I'm like making a list of the new expenses, and it's never cheap. [laughs]

    12. BFBen Felix29:14

        No.

    13. SBSteven Bartlett29:15

        And if I was renting, that wouldn't be my problem.

    14. BFBen Felix29:17

        No. It's not your problem.

    15. SBSteven Bartlett29:18

        There's also like another cost here which we don't talk about, which is like the time you waste on the maintenance. Like, when we think of maintenance cost, I imagine people are thinking about the fees to fix things, but actually the time I spend having phone calls and speaking to people for me is, is worth a lot more than just the costs. But anyway, yeah, maintenance cost.

    16. BFBen Felix29:39

        Yeah, the coordination is huge, and y- you could outsource that, but that would be expensive. And depending on how valuable y- your time is, it, it could make sense to outsource it, but I, I agree with you. I do the same thing. I spend time on the phone finding which contractor's gonna come in and fix this thing.

    17. SBSteven Bartlett29:53

        Mm-hmm.

    18. BFBen Felix29:54

        And then you have to wait for them, and then maybe they're late.

    19. SBSteven Bartlett29:56

        Mm-hmm.

    20. BFBen Felix29:57

        Yeah. So that's maintenance costs. We have emergency cost here, which is really a, a subset of maintenance costs. You can have big things, like the roof needs to be redone, uh, the foundation cracks, whatever. Those can be very significant, and one of the challenges with those types of big costs is that you kinda have to have liquidity available to fund them.

    21. SBSteven Bartlett30:16

        Mm.

    22. BFBen Felix30:17

        And that means that you have to have cash sitting somewhere, or at least some liquid assets sitting somewhere, so probably not invested in the stock market, which also has an implied cost to it.

    23. SBSteven Bartlett30:27

        Which is more opportunity cost, right?

    24. BFBen Felix30:28

        More, more opportunity cost. Exactly. And then this one's, this one's interesting, and, and this is one that I don't think I appreciated until I owned my own home-

    25. SBSteven Bartlett30:35

        Hmm

    26. BFBen Felix30:35

        ... which is renovation spending. We talked about maintenance. When you fix something in your house, you don't just fix it to get it back to the baseline level that it was at before.

    27. SBSteven Bartlett30:44

        Yeah.

    28. BFBen Felix30:44

        You make it a little bit nicer.

    29. SBSteven Bartlett30:45

        You're right. W- I never did that when I was renting. So the side-by-side.

    30. BFBen Felix30:49

        So you run the side-by-side comparison. You account for all of those unrecoverable costs the owner has. You account for the renter investing in the stock market and investing the cost difference, the cash flow cost difference between renting and owning each month or, or whatever frequency. And what you'll find, uh, and I've done this with projections, so looking at expected stock returns and expected real estate appreciation, you can very easily show that there is an equivalence. There is a level of rent where you are indifferent between renting and owning. I did a video years ago that has millions of views now, where I, I came up with this idea called the 5% rule. So I took some of those costs. I took property taxes, maintenance costs, and the cost of capital, which is the, the opportunity cost and the cost of, of borrowing. I wrapped all that up and said, "We've got roughly 1% for property taxes, roughly 1% for maintenance costs," which is probably way too low, as we just talked about, and I said 3% for opportunity cost, which I think is also on the, on the low end. And you put all that together, and you get 5%. So I said, "Okay, if you divide the price of a home by 5% and then divide that number by, by 12, you will get the monthly rent that has equivalent, that is equivalent to the unrecoverable cost of owning that home."
12. 33:27 – 35:11

    Why Young People Are Rethinking Home Ownership

    1. BFBen Felix33:27

       thumb.

    2. SBSteven Bartlett33:27

       Do you think for the average young person, let's say someone that's, I don't know, 25 years old, they should... and they're thinking about building their wealth over the long term, do you think they should buy, be buying a house as an investment, or sh- should they be doing something else?

    3. BFBen Felix33:40

       I think for young people it's really tough, and it's tough for a couple reasons. One is because home prices are high. You have to save up a lot of money to buy a house. Another one is that it can limit your mobility. We've seen in, in Toronto, in Canada, where I'm from, uh, prices, condo prices in particular, have plummeted. They've fallen off a cliff. If you bought a condo in Toronto and you get a job offer somewhere outside of Canada, what are you gonna do with that condo that's at, that's at a big loss?

    4. SBSteven Bartlett34:07

       Hmm.

    5. BFBen Felix34:08

       You're kinda stuck.

    6. SBSteven Bartlett34:09

       Yeah.

    7. BFBen Felix34:10

       Or you're, you have to try and rent it out, and now you've got this, this just difficult situation to deal with. And plus, there are big transaction costs if you're, if you're selling a place. So for young people, I do think that homeownership can be tricky because it can limit your mobility, your, your ability to go and find maybe higher paying work. It introduces a risk that you probably don't need in your life because you may end up moving somewhere else. And then people often move up, where they want a condo today, but they're gonna want a house later. For my family, I, I met my wife, I was renting a place. The first place we met in, a second place, a third place, and a fourth place. We rented four different places as we were having our family. We have four kids, and so our needs were changing over time. We needed a bigger, a bigger condo, and then we had a townhouse, then we had a house. Uh, but we just, the lease ended, and we gave notice and we left, and we found a better rental that was more suitable for our needs. If we had been homeowners, the amount we would've paid in transaction costs to do that would've been insane. Or we would've had to buy the house that we were gonna have forever much earlier, which would've introduced significant opportunity

13. 35:11 – 36:41

    What Happens If You Delay Buying A House?

    1. BFBen Felix35:11

       costs.

    2. SBSteven Bartlett35:11

       That's one of those things that's just impossible to measure and because it's so intangible, but, like, the psychology of feeling like you can't easily move. And I see this a lot actually with people that apply for jobs in our company-

    3. BFBen Felix35:24

       Hmm

    4. SBSteven Bartlett35:24

       ... is in the interview process they'll say, "Well, I've just bought a house in," insert city. And you can see this, that sort of psychology is, is, um, holding them back from taking an opportunity because they've made a, an investment in a particular city. And so they might lose, as you say, like, an opportunity in New York or LA or London because mentally they feel committed to a place.

    5. BFBen Felix35:46

       Yeah. Now, the flip side of that is that if you're really sure that you want to stay in one place, one of the best ways to accomplish that is buying.

    6. SBSteven Bartlett35:55

       Who can be sure?

    7. BFBen Felix35:56

       Yeah, you can't. But if, if someone was really sure, maybe someone has, maybe like me. I have four kids. They're all in the same school. It's very unlikely that we would move.

    8. SBSteven Bartlett36:04

       The other big mistake I think I made is I bought a holiday home. That was a ter- well, I shouldn't say terrible idea, but kind of a terrible idea, in part because of the same reason, in part because it means you only go, you only go on holiday to one place. [laughs]

    9. BFBen Felix36:17

       Yeah.

    10. SBSteven Bartlett36:17

        Which is, like, defeats the point of a holiday.

    11. BFBen Felix36:19

        Yeah. And it's... I, I have not done that, and the main reason is the mental overhead. I don't like having to think about one property.

    12. SBSteven Bartlett36:27

        Mm-hmm.

    13. BFBen Felix36:28

        I can't imagine having to think about a second one that I'm not at.

    14. SBSteven Bartlett36:31

        Such a dumb idea. I don't know what I was doing.I don't know why I did it, especially when you're, like, young. It's like the whole point is you can still walk up mountains and do things.

    15. BFBen Felix36:38

        Yeah.

    16. SBSteven Bartlett36:39

        You don't wanna be sitting in a, in the same house every day.

    17. BFBen Felix36:40

        Yeah.

14. 36:41 – 37:35

    Are Homeowners Really Happier Than Renters?

    1. SBSteven Bartlett36:42

       Are homeowners happier than renters?

    2. BFBen Felix36:44

       Mm. Depends how you slice the data. If you control for property types and neighborhoods and all that kinda stuff, no, they're not. If you don't control for those things, I think owned homes do tend to be a little bit nicer and, and better maintained. They do tend to be in better neighborhoods. So uncontrolled renters are a little bit less happy. There's a, there's multiple studies on this. Statistics Canada has a really good one that does exactly that. They have controlled and uncontrolled, uh, life satisfaction differences for renters and owners. If you're a professional who is thinking about buying a house in a nice neighborhood or renting a nice house in a nice neighborhood, it's unlikely that you'll be happier in either case. If you are forced to be a renter in a not very nice neighborhood because it's all you can afford, you may be less happy, but it's not necessarily the renting that's making you less happy.

15. 37:35 – 38:41

    Who Should Actually Buy A House

    1. SBSteven Bartlett37:35

       Is there any particular group of people that you think should be buying a house?

    2. BFBen Felix37:38

       Yeah. So people who are very risk-averse, people who want to stay in one place for a very long time-

    3. SBSteven Bartlett37:43

       Because they have a family or something.

    4. BFBen Felix37:44

       Yep.

    5. SBSteven Bartlett37:45

       Yeah.

    6. BFBen Felix37:45

       And you don't wanna be priced out of, of, of the market that you live in. This did happen in, in some cities in Canada in recent history. It's now reversed, but there were people who were getting priced out of their market. They'd been renters for a long time, and rents went up so quickly that they, they just couldn't keep pace.

    7. SBSteven Bartlett38:01

       Mm-hmm.

    8. BFBen Felix38:01

       It depends on your rental market. Some rental markets are controlled, where that's less of an issue, so you do have to think about things like that. But yeah, if you wanna stay in one place, owning your home is, is the way to do that. But it's a double-edged sword because if you realize you want to leave, you might be, you might be stuck. Uh, and then the other big one for who should own a home is, uh, taxable investors with, with high tax rates. And again, that comes back to the opportunity cost, where if you're paying a lot of tax on your investments, whereas real estate tends to be tax preferred, in Canada gains on your primary residence are tax-free. US has a, a, a, I believe, unamount. And so that's, that's another thing to think about, where the opportunity cost changes depending on your specific tax situation.

16. 38:41 – 39:01

    The Biggest Myths About Home Ownership - Debunked

    1. SBSteven Bartlett38:41

       When we have these conversations about buying a house or not buying a house, one of the things I see a lot in the comment section is people, um, sharing their case studies of them buying a house 30 years ago and how it went from being worth $100,000 to $600,000, and they're, they're asserting that that's evidence that it's a good idea.

    2. BFBen Felix38:59

       Yeah.

    3. SBSteven Bartlett39:00

       You probably see this a lot.

    4. BFBen Felix39:00

       Oh,

17. 39:01 – 39:53

    What Happiness Data Really Says About Owning Vs Renting

    1. BFBen Felix39:01

       this is, this is the thing. This is the example. Uh, and everyone has the family member that bought a house for $70,000 and sold it for a million.

    2. SBSteven Bartlett39:09

       I'm just gonna read you the top four comments, and I'd like to get your response o- on, on them. Now, the first one is, "The not buying a house does not work in the UK, as 90% of rents are higher than a mortgage cost. Also, if you want to start a family, you need a stable place to raise your children. And with renting, you can be kicked out within a few months' notice, and your whole life could be turned upside down."

    3. BFBen Felix39:30

       I personally think there are ways around that, and I, as I mentioned earlier, I did rent for six years of my life with a wife and an increasing number of kids. The two things that I always made sure to do were to rent from professional landlords. We did have one experience renting from a, a sort of mom-and-pop person who had bought a condo and rented it out, and that, that wasn't great. But after that, we, we were

18. 39:53 – 41:08

    The Hidden Criteria That Decide If You Should Buy

    1. BFBen Felix39:53

       very careful about vetting our landlords and only renting from professionals. And then the other thing that we did, which addresses, at least in Canada, uh, addresses one of the other points there, is we would sign long leases. If we wanted to stay in a house for a few years, we would sign a multi-year lease, and landlords do tend to, to like that. The other point that was, was in there that I think is really important is that rents are higher than mortgage payments. I think this is one of the biggest mistakes that people make when they're making the rent versus own comparison, is they'll say, "This is my mortgage payment. This is my rent. If the mortgage payment is lower, owning must be better." But that's not the case. As we talked about a minute ago, you have property taxes, maintenance costs, potential renovation spending that you wouldn't do otherwise, and the opportunity cost of, of capital. When you add all that up, the cost of owning a home is far more than the mortgage payment.

    2. SBSteven Bartlett40:44

       This guy here said, "I bought a house. It's the best thing I ever did. It's launched my mindset in new directions. Remember that having your own space has profound psychological impact and can be life-changing for some of us that want to live in a healthy environment." What do you make of that point?

    3. BFBen Felix41:03

       If-

    4. SBSteven Bartlett41:03

       Does it have profound psychological impact?

    5. BFBen Felix41:05

       If someone believes that it does, and they've

19. 41:08 – 42:37

    Why Common Advice About Home Ownership Falls Apart

    1. BFBen Felix41:08

       really taken the time to reflect on their life and has decided that, yes, it i- it is in fact true that it has had a profound psychological impact, of course, that person should own a home. Of course, they should.

    2. SBSteven Bartlett41:18

       I believe-

    3. BFBen Felix41:18

       But is it, is it true for everybody? I don't think so.

    4. SBSteven Bartlett41:21

       Dawn said, "My experience, I purchased a house in 2013 with 20% down payment deposit. My total payment, including taxes, insurance, HOA," which, homeowners insurance?

    5. BFBen Felix41:32

       Yeah, yeah.

    6. SBSteven Bartlett41:32

       "Insurance, um, is $1,800 a month. As of today, the exact same house is renting for $4,000. The property value has also gone up 3X. I'm glad I bought my house."

    7. BFBen Felix41:44

       Yes. So there are cases where, uh, real estate allows you to use leverage very easily, as, as Don mentioned, and if you end up buying in a market that goes up a lot in a short period of time, it can be really, really good. However, and this is what we've seen in Canada more recently, it hasn't touched other markets yet, although of course the US has had their own declines and so have other countries. But Canada's right now in one of the biggest real estate price drawdowns when you adjust for inflation going back to 1975. And so if you had bought, yes, seven years ago, and then, well, and then looked at the price in 2022, you'd think, "Wow, I'm a genius. Of course everybody should buy." But if you had bought in, I think it's 2021 was the, was the kinda peak, and you look at, at today, you're thinking like, "Wow, I've ruined my life." [laughs]

    8. SBSteven Bartlett42:30

       [laughs]

    9. BFBen Felix42:31

       So yes, there are examples like that, for sure, but that, that is not what people should expect every time that they purchase a home.

20. 42:37 – 44:37

    Will House Prices Keep Rising?

    1. SBSteven Bartlett42:37

       So are you saying that the future's not gonna be as, like, as the past?

    2. BFBen Felix42:42

       Uh, for this, I know the Canadian market best, but I think these, it, it, it generalizes outside of Canada. We're, we've seen record decreasing interest rates, so that's, that's changed a little bit now, but for a period of time we had interest rates going down, down, down. In Canada, we had a ton of immigration. I have no problem with immigrants, uh, but we had levels of immig- immigration that were just not compatible with the amount of housing that we had in, in Canada, which is contributing to prices going up. We, we have a housing supply just not growing, uh, quickly enough, which are all things that Canada's addressing now, but all that causes price, caused prices to go crazy, which is, I think, why they've come down in such an extreme way. So I'm not, I'm not saying necessarily that we're never gonna see high house prices again or house prices going up at an extreme rate again, but in Canada at least, that has now normalized or at least started to normalize. I don't think it's reasonable to expect stock-like returns from real estate forever, even though we did see that for, for some years.

    3. SBSteven Bartlett43:38

       So for most people then, you think if their goal is to make money and they care about mobility, being able to get up and go if opportunity arises, a better investment decision would probably be just investing in an index fund which gives you exposure to the stock market.

    4. BFBen Felix43:52

       Yeah. Uh, the, I think the mobility piece is key there because remember, just from a wealth perspective, we can show that, hey, these are pretty close to equivalent.

    5. SBSteven Bartlett43:58

       Mm-hmm.

    6. BFBen Felix43:59

       But if mobility matters to you, yeah, I think that, that matters a lot. If you have unique investment opportunities, then that can be another reason where your opportunity cost is really high. Like, I had an opportunity to buy equity in my company years ago, and if I had been a homeowner at the... I think I actually had just bought a house, and I think I even had to reduce the amount of equity I bought because our, I think our well pump broke, like, around the same... A- anyway, it was a whole thing.

    7. SBSteven Bartlett44:23

       It's annoying, isn't it?

    8. BFBen Felix44:24

       But that's like, there's opportunity cost in the stock market, which is, you know, call it 7% or whatever, but then there's other opportunity costs that can be a lot higher, like in that specific situation.

    9. SBSteven Bartlett44:34

       And the next one there is number seven?

21. 44:37 – 45:29

    How The Wealthy Legally Pay Less Tax

    1. BFBen Felix44:37

       Yeah. Missing tax planning opportunities. This is something I th- think, I think people just don't think enough about, but it's not terribly complex. But there are sim- simple things that people can do to minimize the amount of tax they're playing, paying. For most people, it's just optimally using things like in Canada we have the RSP and the TFSA. In the US, it's the, the Roth and traditional IRA and, and 401ks. Uh, using those things optimally make a lot of sense. So then the rest, uh, other types of tax planning tend to get more country specific. There tend to be lots of things for, particularly for higher income people that you can do to pay a little bit less tax. And I think-

    2. SBSteven Bartlett45:15

       What about for lower income people?

    3. BFBen Felix45:17

       For lower income people, the government accounts that are provided, uh, are-

    4. SBSteven Bartlett45:21

       Like the ISA in the UK.

    5. BFBen Felix45:22

       Yeah, exactly. Those are probably the best thing for people to be focusing on. But even then, I don't... Like, people are often not using them optimally.

22. 45:29 – 46:05

    The Real Tax Strategies The Rich Don’t Talk About

    1. SBSteven Bartlett45:29

       One of the things people don't talk about enough is all the ways that rich people do things to avoid paying tax. They have, like... They hire people so that they don't have to pay tax. And I hear about all these crazy stories of like, "I've started this business on the side here so I can get a real estate license, and if I get a real estate license, I don't have to pay the same tax on this thing here, and I move the money around here and I flip it round there, and then I don't have to pay any tax." Most people, like the average p- people don't have any loopholes that they can, they jump through.

    2. BFBen Felix45:54

       Yeah, it's true.

    3. SBSteven Bartlett45:56

       And even one of the crazy ones I learned about when I got some money was that you can take a loan against your stocks and there's no tax on the loan.

23. 46:05 – 47:35

    What Happens Next To Housing Prices?

    1. SBSteven Bartlett46:05

       So if I have a million dollars of Facebook stock, I can go to a bank and get 500K in cash loaned against that stock without having to sell it, and then on that 500K, I have no tax to pay, and I can just hold that Facebook stock. And when it goes up to two million, I can go back to the bank and say, "Give me another 500K."

    2. BFBen Felix46:26

       You could, but if it goes down, you get margin called and you have to come up with the cash to-

    3. SBSteven Bartlett46:30

       Don't they just sell? Don't they just sell the stock?

    4. BFBen Felix46:32

       They might, but then you're selling after it's come down, so it's not risk-free. But yeah, that is a thing that people do.

    5. SBSteven Bartlett46:38

       I guess everybody could do that, right? I, I... Most people could, if they invested in the, the S&P 500, they could go and get a loan against that investment, and that loan would be tax-free.

    6. BFBen Felix46:48

       Yep. Same, same rules for everybody. But I would still say that you're, you're taking a lot of risk by borrowing money against risky assets like that.

    7. SBSteven Bartlett46:56

       Mm-hmm. Okay. So tax planning, there's nothing else to cover there in terms of the average person?

    8. BFBen Felix47:01

       Yeah, I don't think so, but it is an important thing for people to think about. If they're thinking about what mistakes might I have been making in my financial plan, they should definitely be thinking about are there tax planning opportunities that I am, that I'm missing?

    9. SBSteven Bartlett47:10

       How would they find out?

    10. BFBen Felix47:12

        It's a tough one. A, a good CPA.

    11. SBSteven Bartlett47:15

        What's a CPA?

    12. BFBen Felix47:15

        Uh, uh, an accountant. A good tax professional should be able to identify tax pla- planning opportunities for you. Good financial planners similarly should be able to identify good tax planning opportunities for your situation. But as you said earlier, the reality is there aren't that many things that people can be doing, and it's really things that you could figure out how to optimize once and then you're kind of

24. 47:35 – 49:38

    Ads

    1. BFBen Felix47:35

       set.

    2. SBSteven Bartlett47:36

       Much of the reason most people haven't posted content or built their personal brand is because it's hard and it's time consuming, and we're all very, very busy. And if you've never posted something before, there's so many factors in your psychology that stop you wanting to post. What people will think of you. Am I doing this right? Is the thing I'm saying absolutely stupid? All of these result in paralysis, which means you don't post and your feed goes bare. I'm an investor in a company called Stan Store, which you've probably heard me talk about, and what they've been building is this new tool called Stanley that uses AI, looks at your feed, looks at your tone of voice, looks at your history, looks at your best performing posts, and tells you what you should post, makes those posts for you. You can also just use it for inspiration, and sometimes what we need when we're thinking about doing a post for our social media channels is inspiration. Building an audience has fundamentally changed my life, and I think it could change yours too. So I'm inviting you to give this new tool a shot and let me know what you think. All you have to do is search coach.stan.store now to get started.I run multiple companies that have multiple sales teams, and one of the things as a founder of a company that's often confusing is you find it hard to figure out where sales are. So about 10 years ago, I started using Pipedrive in my former company, and it's also the reason why I switched over all of my commercial teams in my current media company called steven.com to use Pipedrive as well. Not only do they sponsor this show, but they've been an incredibly effective way of scaling our sales engine over the years. Pipedrive is an easy-to-use intelligent CRM, and at its very core, it makes your sales process visible through one dashboard, a visual pipeline showing every deal, what stage it's in, what needs to happen next, and it's all in real time with no delay. It doesn't magically close the deal for you, of course, but it does replace complexity with clarity. If you wanna join over 100,000 companies already using Pipedrive, you can use my link for a 30-day free trial with no credit card payment needed. Head to pipedrive.com/ceo to get started. That's pipedrive.com/ceo. I'll see you over there. Who does

25. 49:38 – 50:41

    The Hidden Problems With Financial Advisors

    1. SBSteven Bartlett49:38

       need a financial advisor?

    2. BFBen Felix49:40

       Probably a lot of people, but the financial advice profession has a lot of challenges. We were chatting about the, the, the sales nature of the financial services industry, and I do think that's a big problem because if someone has... Here, here's Ben say, "Okay. Ben said I should have a financial advisor," and they go to a bank or they go even to some random firm, uh, there's a good chance that they're going to be sold products that they don't need, and I don't have a solution for that. Like, that's a, it's, it's a difficult situation when that is the state of the financial advice industry.

    3. SBSteven Bartlett50:16

       I guess to get around that, one might ask their friends and family who, uh, does their financial planning and then go with a trusted referral.

    4. BFBen Felix50:24

       Yeah. But pe- people often trust people that aren't giving them great advice. Like, it's-

    5. SBSteven Bartlett50:28

       Interesting

    6. BFBen Felix50:28

       ... it's really, it's really problematic. I, I think a lot of people can benefit from financial advice. It's just finding the right person, and a, and a lot of people don't need financial advice because you do pay fees for it.

    7. SBSteven Bartlett50:39

       What's the next one, number eight, Ben?

    8. BFBen Felix50:40

       Eight

26. 50:41 – 51:37

    Why Ignoring Estate Planning Can Cost Your Family Everything

    1. BFBen Felix50:41

       is, it's kind of a similar discussion that we just talked about, but it's, it's missing out on estate planning.

    2. SBSteven Bartlett50:47

       What does that mean?

    3. BFBen Felix50:48

       Figuring out how your assets are going to be distributed to the people that you want them to or the entities that you want them to when you die.

    4. SBSteven Bartlett50:57

       This is an interesting one 'cause nobody's... well, most people aren't expecting to die-

    5. BFBen Felix51:01

       That's right

    6. SBSteven Bartlett51:01

       ... anytime soon.

    7. BFBen Felix51:02

       Yeah.

    8. SBSteven Bartlett51:02

       So they haven't really thought much about this.

    9. BFBen Felix51:05

       Yeah.

    10. SBSteven Bartlett51:05

        And, you know, some might also say, "Listen, I'm, I'm not gonna be here, so why should I care?"

    11. BFBen Felix51:10

        [laughs]

    12. SBSteven Bartlett51:11

        Especially people that... I guess that's a mindset of someone that doesn't have kids, but-

    13. BFBen Felix51:14

        Yeah. It can cause a lot of problems. If you don't think through and plan for the way you want your estate to be distributed, you can pay a lot more tax than you otherwise would have, and your estate can go to people that you may not have wanted it to go to.

    14. SBSteven Bartlett51:26

        You can pay more tax?

    15. BFBen Felix51:27

        I- if you don't have things set up properly, and a- again, this is gonna be country specific, but yeah, there, there's cases where you would pay more tax if things were not set up properly than if they were.

27. 51:37 – 52:02

    Do You Really Need A Will?

    1. SBSteven Bartlett51:37

       Do you think everybody should write a will?

    2. BFBen Felix51:39

       Everybody that has any dependents should w- write a will. I've heard a, an estate planning lawyer joke that everybody has a will, but it's the government's default will, uh, which you may not actually agree with.

    3. SBSteven Bartlett51:50

       It's like prenups.

    4. BFBen Felix51:51

       Yeah, kind of like that, yeah.

    5. SBSteven Bartlett51:52

       Yeah. [laughs]

    6. BFBen Felix51:53

       It's, it's exactly like that. You could say everybody should have a will because it can help from having a big mess for other people to clean up, but for sure, if you have kids, if you have dependents, I think having a will is really

28. 52:02 – 53:18

    How Your Partner Choice Impacts Your Financial Future

    1. BFBen Felix52:02

       important.

    2. SBSteven Bartlett52:02

       And on that point of prenups, number nine is about who you marry.

    3. BFBen Felix52:05

       [sighs] Yeah, this is a, this is a tough one. It's a tough one because-

    4. SBSteven Bartlett52:12

       I mean, this is front of mind for me because as you can see from these photos, I just, I just, uh, proposed to my fiancée.

    5. BFBen Felix52:17

       Yeah.

    6. SBSteven Bartlett52:18

       And, um, I mean, this is not the ring, but, 'cause this is a bit extra, but, um-

    7. BFBen Felix52:22

       That's awesome.

    8. SBSteven Bartlett52:23

       Oh my God, they put my face in. Their team put my face in the box.

    9. BFBen Felix52:25

       [laughs]

    10. SBSteven Bartlett52:26

        That's creepy. But yeah, so why is this so important who you decide to marry as it relates to how rich you'll be or, or won't be?

    11. BFBen Felix52:33

        Well, it's not just how rich you'll be, it's how satisfied you'll be with your life and with your marriage. Academic research has identified two spending profiles that you can categorize people into. One is tightwads. It's people who don't like to spend money. And one is spendthrifts. That's people who do like to spend money. The names are kinda funny, but that's just, that's what the research calls them. And the crazy thing about this is that tightwads and spendthrifts are more likely to end up marrying each other than to marrying someone who has the same profile as them. So two... A, a, a tightwad and a spendthrift are more likely to get married than a tightwad and a tightwad or a spendthrift and a spendthrift.

    12. SBSteven Bartlett53:13

        Why do you think that is?

    13. BFBen Felix53:15

        The, the, the research on this talks just about kind of opposites attracting,

29. 53:18 – 54:27

    Why Some Financial Advice May Be Working Against You

    1. BFBen Felix53:18

       and there may be some sort of thrill to the, to the differences, um, initially. But tightwads and spendthrifts, as they go through their marriages, do tend to be less satisfied in their marriages and have more marital conflict around money, and again, that's based on an academic paper.

    2. SBSteven Bartlett53:35

       Now, that's in the reasons why the marriage might not last, but in terms of how it might impact your financial success.

    3. BFBen Felix53:43

       If you really wanna save, if you have, if you go through your goal-setting exercise and your PERMA model and you have, have a vision for the life that you wanna live that requires saving, and you have a spouse that wants to spend a lot of money today, that can be very, very difficult. It can make it a lot harder for you to achieve your goals. I don't think it's insurmountable. I think a tightwad and a spendthrift can work. I mean, it's not like all of them end up getting divorced, uh, but it does require a different level of coordination and communication and being on the same page.

    4. SBSteven Bartlett54:12

       Do you have to speak to clients about this often?

    5. BFBen Felix54:15

       I... it, it comes up a lot. We have lots of clients who were single and end up getting in relationships and then getting married, and we have to all, have all kinds of conversations about marriage contracts or prenups, um, estate planning,

30. 54:27 – 56:41

    Should Everyone Get A Prenup?

    1. BFBen Felix54:27

       and-

    2. SBSteven Bartlett54:27

       Do you think everybody should get a prenup? Going back to what you said earlier where you said you, you, if you don't write your own, the government will give you theirs.

    3. BFBen Felix54:33

       Yeah.

    4. SBSteven Bartlett54:34

       Which just to simplify that, if you don't write your own prenup-Then you are, the default position is the government will decide through the law how your assets are divided at a time when you g- when you break up. Problem is, people find prenups to be really unromantic.

    5. BFBen Felix54:50

       That's right.

    6. SBSteven Bartlett54:51

       And they also think there's an implication that we're assuming we're gonna break up, which is also not so sexy.

    7. BFBen Felix54:57

       Right.

    8. SBSteven Bartlett54:58

       Do you think people should get them?

    9. BFBen Felix55:00

       If both partners are on the same page and comfortable with them, it's not gonna cause a major rift, and if it does, maybe that's a red flag-

    10. SBSteven Bartlett55:06

        Do you know what I mean?

    11. BFBen Felix55:07

        On its own.

    12. SBSteven Bartlett55:07

        Why would it cause a rift?

    13. BFBen Felix55:08

        Yeah, yeah, yeah. [laughs]

    14. SBSteven Bartlett55:08

        Do you know what I mean? And it's not to say that I'm just keeping all my stuff and you're keeping yours, it's just to say, "Let's agree now what would happen-"

    15. BFBen Felix55:15

        Yeah

    16. SBSteven Bartlett55:15

        ... "in the, like, 50% probability that this doesn't work out."

    17. BFBen Felix55:18

        Yeah. We've seen both. We've seen clients come up with very creative and interesting, uh, marriage contracts that have, you know, specific formulas for how things are gonna work, and depending on how many kids they have is, you know, it's kind of an interesting exercise, and in that case, it was kind of fun and they, they, they were engaged in the process, and it didn't cause an issue. And we've also seen people who did not have anything in place and have had very bad divorce outcomes from a financial perspective.

    18. SBSteven Bartlett55:43

        Ugh, I had a friend go through a divorce recently, and he's a very successful person. His wife was there from the beginning. She to- looked after the family while he was off gallivanting around the world building his, his businesses all over the place, so obviously she, you know, they, she's contributed hugely to his success. What I noticed, though, is it's destroyed what could've otherwise been a good relationship as they separated.

    19. BFBen Felix56:08

        Hmm.

    20. SBSteven Bartlett56:08

        They now really, really hate each other because lawyers have stood in between both sides-

    21. BFBen Felix56:12

        Yeah

    22. SBSteven Bartlett56:12

        ... and basically caused tension, because that's their job. They're gonna get paid more, and the, her lawyers are incentivized to squeeze every single penny they can out of this, uh, separation. And so I think it, he said it'd been like six or seven years since they decided to divorce, and he's still in court-

    23. BFBen Felix56:29

        Yeah

    24. SBSteven Bartlett56:29

        ... arguing with l- lawyers about how they separate, and it's destroyed their relationship, and they've got two kids.

    25. BFBen Felix56:36

        Yeah.

    26. SBSteven Bartlett56:36

        You just think, gosh, like, if you had a prenup, this would have been quick and it could've saved the relationship.

31. 56:41 – 58:24

    What Your Spending Habits Reveal About Your Future Wealth

    1. SBSteven Bartlett56:41

       Okay. Anything else to say on this, this point of marriage and compatibility?

    2. BFBen Felix56:46

       The academic research on this does have a, a short quiz. I don't know if we have it kicking around anywhere here.

    3. SBSteven Bartlett56:51

       I think this is it. It's called the Tightwad and Spendthrift Quiz, developed by researchers at Carnegie Mellon and the University of Michigan.

    4. BFBen Felix56:58

       Yeah.

    5. SBSteven Bartlett56:59

       This scale measures the pain of paying, the emotional distress some people feel when spending money. Uh, and here's a quick DIY version of that quiz. Question number one is you see a high quality coat on sale for $100, which is r- usually $300. You need a coat, and you have the money. Do you buy it? Answer A, no, $100 is still a lot of money, I'll wait for a better deal; B, yes, it's a great value, I need something; C, yes, and I might buy a scarf to match since I saved so much. Which one are you?

    6. BFBen Felix57:30

       I mean, if I need the coat, I'm B.

    7. SBSteven Bartlett57:32

       I think I'm C. [laughs]

    8. BFBen Felix57:37

       [laughs]

    9. SBSteven Bartlett57:37

       But actually, to be fair, I just don't buy stuff, so I don't even know if I'd buy it anyway. Question two: You are at a restaurant with friends. The bill is being split evenly, but you ordered the cheapest item. How do you feel? A, physically pained, I'll likely mention that I should pay less; B, a bit annoyed, but I'll pay it to keep the peace; or C, fine, it all will even out in the end.

    10. BFBen Felix58:01

        I'm between B and C.

    11. SBSteven Bartlett58:02

        Really?

    12. BFBen Felix58:03

        I, I, I might, I might feel a little bit annoyed.

    13. SBSteven Bartlett58:04

        Really?

    14. BFBen Felix58:05

        But I wouldn't, I wouldn't cause a fuss about it.

    15. SBSteven Bartlett58:07

        I'm C, again, fine, it'll even out in the end. Number three: Which statement describes you best? A, I have trouble spending money, even on things I actually need; B, I balance my spending and saving pretty well; or C, I often spend more than I intended and regret it later.

32. 58:24 – 1:00:29

    The Real Reason Prenups Matter More Than You Think

    1. BFBen Felix58:24

       I think I'm B.

    2. SBSteven Bartlett58:26

       You said B, which is, "I balance my spending and savings pretty well." Um, I would say I'm C again. But again, the caveat here is I actually don't-

    3. BFBen Felix58:36

       Hmm

    4. SBSteven Bartlett58:36

       ... I don't spend money on stuff anymore.

    5. BFBen Felix58:38

       Mm-hmm. Mm.

    6. SBSteven Bartlett58:38

       I don't buy stuff anymore. But I can spend it on, like, ex- travel and experiences and stuff.

    7. BFBen Felix58:44

       Yeah.

    8. SBSteven Bartlett58:45

       Last question: When you buy something expensive, your primary emotion is A, anxiety or regret; B, satisfaction in the utility of the item; or C, excitement and a rush.

    9. BFBen Felix58:57

       I think I'm B again.

    10. SBSteven Bartlett58:59

        I, I reckon I'm B as well there. So scoring your results. If you're mostly As, then you're a tightwad. If you're mostly Bs, you are the unconflicted. And if you're mostly Cs, you are the spendthrift. So I guess with that, you, you are a unconflicted. You're in the middle. You have a healthy relationship with money, where you can save when necessary, but enjoy the fruits of your labor without guilt. And I am a C, which is you feel very little pain when spending, you enjoy the moment, but you might struggle with long-term saving goals or buyer's remorse. [laughs] That's so fucking true.

    11. BFBen Felix59:30

        [laughs]

    12. SBSteven Bartlett59:31

        Everyone should do that at home. Okay, that makes sense.

    13. BFBen Felix59:33

        So we, we know that, that tightwads and spen- spendthrifts are incompatible. Uh, I d- I do think it's an interesting concept, like, how do you have that discussion with a potential partner? Or do you just observe it and kind of infer?

    14. SBSteven Bartlett59:46

        On, on a date you can say, say to your partner, say, "Oh, there's this great podcast on YouTube called The Diary Of A CEO. We should listen to it." Then listen to this episode. They're listening with you n- right now if this, you've done this. And then just play along.

    15. BFBen Felix59:57

        [laughs]

    16. SBSteven Bartlett59:57

        Play along with your partner at home. Are you looking for your partner to be the opposite, then? Because you said opposites attract.

    17. BFBen Felix1:00:02

        No. Well, no.

    18. SBSteven Bartlett1:00:02

        But they don't do well over time.

    19. BFBen Felix1:00:04

        No. Uh, opposites end up together, but then have conflict because of that.

    20. SBSteven Bartlett1:00:08

        Oh, okay.

    21. BFBen Felix1:00:10

        Yeah.

    22. SBSteven Bartlett1:00:10

        Hmm, interesting.

    23. BFBen Felix1:00:12

        Yeah. I think if you're a, if you're a tightwad, being with the same is probably good. If you're a spendthrift and you end up with another spendthrift, they have to be really careful about your, like, household finances. [laughs]

    24. SBSteven Bartlett1:00:22

        Oh my gosh, yeah. I don't think my partner's a spendthrift. I think she's in the middle with, like you.

    25. BFBen Felix1:00:26

        Yeah.

    26. SBSteven Bartlett1:00:26

        Doesn't really care.

    27. BFBen Felix1:00:27

        Yeah.

    28. SBSteven Bartlett1:00:28

        Which is useful.

33. 1:00:29 – 1:01:19

    Why People Underestimate Catastrophic Financial Risks

    1. BFBen Felix1:00:29

       We, we do have one more-

    2. SBSteven Bartlett1:00:30

       Okay

    3. BFBen Felix1:00:31

       ... card in the mistakes, uh, which is underinsuring catastrophic risks. And I think that's one, particularly for people who are not currently financially independent, that's really, really important. If, if your household income i- relies on your income-To maintain the lifestyle of the household, it's really important to have sufficient life insurance, where if you die, your, your human capital, your ability to earn income in the future, is replaced by the insurance. And also disability insurance, where if you lose your ability to work, you have insurance to replace that income.

    4. SBSteven Bartlett1:01:06

       Do many people think about this?

    5. BFBen Felix1:01:08

       Probably not enough. And it's cheap. Well, disability insurance is not always cheap. Life insurance is generally pretty cheap if you're buying low-cost term life insurance, which is what most people need.

34. 1:01:19 – 1:07:40

    Stocks Vs Bonds: Which Is Actually Safer Right Now?

    1. SBSteven Bartlett1:01:19

       You made a video called The Most Controversial Paper in Finance.

    2. BFBen Felix1:01:23

       Yeah.

    3. SBSteven Bartlett1:01:23

       What paper was that?

    4. BFBen Felix1:01:24

       That was a paper, we, we didn't have it out here, but that was a paper on, uh, life cycle asset allocation.

    5. SBSteven Bartlett1:01:31

       What does that mean?

    6. BFBen Felix1:01:31

       So it's answering the question of how should your mix of stocks and bonds change throughout your lifestyle? Conventional wisdom says that you should start out riskier in stocks and then move towards safer bonds as you get older. This paper took a, a huge amount of data. They had data from 39 countries going back, uh, as far as 1890, I believe. They sampled from that large set of data to simulate a million potential sort of hypothetical lifetimes that you could live through. And then they asked the question of, in this simulated data, which asset allocation gives the best outcomes? And they tested target date funds, which increase the weight in bonds over time, and those are, a lot of people have those through their retirement accounts. So it's just one fund, and it starts out when you're younger with more equities and then transitions to bonds over time. That's a target date fund. They tested, I believe, a 60/40, 60% stock, 40% bond asset allocation. There might've been some other stuff in there too. They might've tested only domestic stocks. And what they find in this paper is that the optimal portfolio from the perspective of a retirement, uh, consumption utility and, and b- and bequest utility-

    7. SBSteven Bartlett1:02:46

       What does that mean?

    8. BFBen Felix1:02:46

       It's like the satisfaction you get from retirement spending-

    9. SBSteven Bartlett1:02:49

       Okay

    10. BFBen Felix1:02:50

        ... measured in a, with a formula, um, so that it can be studied. And then likewise for the amount of money that you have left over at, at death. Uh, they, they measure the probability of running out of money as well as a whole bunch of different metrics they look at. And they find that a, a 100% equity portfolio with a, a, a big chunk in international stocks is optimal. It is a one-third domestic, two-thirds international stocks.

    11. SBSteven Bartlett1:03:15

        When you say domestic, what does that mean?

    12. BFBen Felix1:03:17

        That's a great question. So the way they set up domestic in the paper is that it, it can be any country. So the way they do the simulations is that for each draw, so they're drawing, uh, it's on average 10 years of returns. We'll say we're in the US. They'll draw the US returns measured in US dollars for a 10-year block. That's the domestic return. And then the international block is gonna be 10 years on average of all the other countries' samples returns measured in US dollar. So I've got the domestic return, the international return. The next block might be 10 years from Italy measured in, uh, whatever the Italian currency was at the time, and then the international portion is gonna be all the other countries excluding Italy measured in Italian currency. And so they're weaving together all these blocks. That's called bootstrap simulation. So domestic, to answer your question, is whatever country you live in.

    13. SBSteven Bartlett1:04:11

        So the outcome or the conclusion from this should be that you should invest, I mean, if we're following this, and if it was 100% accurate, what, 60% in whatever country you live in, in the stocks of whatever country you live in?

    14. BFBen Felix1:04:22

        30%.

    15. SBSteven Bartlett1:04:23

        30%.

    16. BFBen Felix1:04:23

        Domestic. So yeah, one-third domestic, two-thirds international.

    17. SBSteven Bartlett1:04:26

        Okay. So if I'm in the United States, one, so I get 30% of my capital and invest it in the American companies.

    18. BFBen Felix1:04:35

        Yeah.

    19. SBSteven Bartlett1:04:35

        And then 60% in international stocks.

    20. BFBen Felix1:04:38

        Yeah. Well, so yeah, 67%. Yep. Yep. So that one important finding in the paper, and I talk about this in the video, is that the, the curve for how optimal the domestic amount is is pretty flat, if I remember correctly, between sort of 10% and 50%. So they do say in the paper that for a US investor, you, you don't necessarily have to be a third domestic. Even if you're 50 or even, even if you're just market cap weighted, which is currently around 60 or 65%, that's probably fine. But for a Canadian investor or someone who's in a country other than the US, one-third in your domestic country ends up being a pretty big home country bias.

    21. SBSteven Bartlett1:05:14

        In these simulations, are they saying that you need to invest in international stocks because sometimes in the simulations your domestic country, your home country, has problems?

    22. BFBen Felix1:05:23

        Yeah. High, high inflation tends to be bad for retirement consumption, you're spending a lot more, and for domestic stock returns, and international stocks protect against that.

    23. SBSteven Bartlett1:05:33

        So it diversifies you a little bit.

    24. BFBen Felix1:05:35

        Yeah. Well, that's exactly what it is. It's a diversification. And that paper wa- it was controversial. I mean, we had the co-author on our podcast twice to talk about it, but it, it was met with a lot of controversy from everybody. From a lot of professionals, uh, from other academics.

    25. SBSteven Bartlett1:05:50

        Why?

    26. BFBen Felix1:05:52

        Uh, it's an extreme finding. The conventional wisdom that you should be allocating more toward bonds throughout the life cycle is so ingrained in everyone's thinking that, uh, a finding like this that shows that that's basically wrong, uh, of course it's going to be met with controversy. But at the very least, I think it's an interesting paper. It's telling us that stocks are a little bit safer for long-term investors than we probably thought, and bonds, which are typically considered safe, are actually a little bit riskier than we may have thought for long-term investors. The reason being that during periods of high inflation, bonds get absolutely decimated.

    27. SBSteven Bartlett1:06:25

        What's a bond?

    28. BFBen Felix1:06:27

        A bond is a debt instrument. So you're effectively lending money to a government and you're receiving interest payments over time, and then your principal back at the end.

    29. SBSteven Bartlett1:06:35

        What is the, uh, the most important thing we haven't talked about that your audience come to you to understand?

    30. BFBen Felix1:06:40

        Oh. Well, a lot of, a lot of the things that I talk about are financial products that you should not invest in-
35. 1:07:40 – 1:09:43

    The Financial Products You Should Avoid At All Costs

    1. BFBen Felix1:07:40

       call products where they do that, that strategy that, that I just described inside of an ETF, and they charge usually a, a, a higher fee. Uh, and these are being marketed really heavily to investors on the premise that you're gonna get appreciation, capital appreciation, and you're also going to get income. But I think my, my view on this and what I tried to explain in those videos is that you're giving up so much upside that I don't think most investors realize that they're giving up, that the implied cost of these products is enormous.

    2. SBSteven Bartlett1:08:08

       On that point of fees, I've got this graph here, which I think is pretty pertinent to what you're saying because when we start investing in ETFs and various index funds, we often don't think about fees. It'll say, oh, 0.5%. We think, okay, whatever, 0.5% is fine, 1% fine, small numbers. But when you look at that graph, you see how that can impact your outcome over time.

    3. BFBen Felix1:08:30

       Yeah. Fee- fees compound. Any rate of return that compounds over long periods of time can be very impactful in dollar terms. Yeah.

    4. SBSteven Bartlett1:08:37

       And, and some people choose to keep their money in cash, um, because most of us are never educated on this subject of inflation and what inflation means. So some of us, you know, we might keep $10,000 under the bed. What do you say to those people?

    5. BFBen Felix1:08:52

       Yeah. So inflation is-- it's everywhere. It's, it's been around for, for, uh, throughout history, and it's probably not going to go away. We have central bank policies in most developed countries that actually target a low but stable rate of inflation, and there's, there are reasons for that. But what it means is that if you have money sitting under your mattress, its purchasing power will decrease over time, and that can be very damaging to your wealth. You can maybe keep pace with inflation using short-term government debt instruments, which are gonna pay you a little bit of an interest rate. Uh, but again, periods of high inflation can cause even that to, to de- decline in real value. So one of the best ways to fight, fight inflation for long-term investors, something we've been talking about, is just investing in low-cost index funds to avoid the fee issue, uh, and participate in the stock market, which throughout history has far outpaced inflation.

    6. SBSteven Bartlett1:09:41

       [page flips] One of the smartest

36. 1:09:43 – 1:10:58

    Why Cash Loses Value Faster Than You Realize

    1. SBSteven Bartlett1:09:43

       things a business can do is build like a bigger company without actually hiring like one. But the problem we all face is that most companies don't have every skill in-house. So when I look at the businesses seeing real success today, the consistent pattern with all of them is how quickly they move. They bring in specialists with skills in emerging areas to keep themselves ahead. Even in our company, we've spent the last year pulling in talent across areas like AI native strategy, no code builds, and product workflows, and we find this talent through our longtime partner, Fiverr Pro. Their premium service only shows you vetted talent, so you've always got the safeguard that anyone you pull in to help you with a complex project has the skills that you're after and will deliver to the same high standards as your internal team. And most importantly, they'll keep up with the pace. It's a simple strategy, but it lets us stay agile without compromising on quality. So if you need these kind of skills in your business, head to pro.fiverr.com to find pioneering talent to fill your business' gaps. That's pro.fiverr.com. [page flips] This is something that I've made for you. I've realized that The Diary Of A CEO audience are strivers, whether it's in business or health. We all have big goals that we want to accomplish. And one of the things I've learnt is that when you aim at the big, big, big goal, it can feel incredibly psychologically uncomfortable because

37. 1:10:58 – 1:11:31

    Ads

    1. SBSteven Bartlett1:10:58

       it's kind of like being stood at the foot of Mount Everest and looking upwards. The way to accomplish your goals is by breaking them down into tiny, small steps, and we call this in our team the 1%. And actually, this philosophy is highly responsible for much of our success here. So what we've done so that you at home can accomplish any big goal that you have is we've made these 1% diaries, and we released these last year, and they all sold out. So I asked my team over and over again to bring the diaries back, but also to introduce some new colors and to make some minor tweaks to the diary. So now we have a

38. 1:11:31 – 1:13:53

    Your Cash Under The Mattress Will Lose Value Fast

    1. SBSteven Bartlett1:11:31

       better range for you. So if you have a big goal in mind and you need a framework and a process and some motivation, then I highly recommend you get one of these diaries before they all sell out once again. And you can get yours at thediary.com. And if you want the link, the link is in the description below. [page flips] Is this broadly accurate? This graph here shows the impact of inflation on cash kept under the mattress over 30-- over 20 years, and you start with $10,000 in terms of purchasing power. And 20 years later, if that cash is under the mattress, you have $5,336. It doesn't show me the inflation rate. Oh, um, that's at 3% inflation. You're leaving-- losing half of your money effectively, and the source here is St. James' Place. So a lot of people who are just holding onto cash don't really realize that over a 20-year period, assuming a 3% inflation rate-

    2. BFBen Felix1:12:22

       Yeah

    3. SBSteven Bartlett1:12:22

       ... they're halving their money.

    4. BFBen Felix1:12:23

       Uh, it ties back to, I don't remember which number it was, but it ties back to one of those biggest mistakes in, in personal finance we talked about, which is, uh, yeah, not, not investing, not taking the right kinds of risk with your investments.

    5. SBSteven Bartlett1:12:34

       And just hoarding cash.

    6. BFBen Felix1:12:35

       Hoarding cash is, is, it's in its own way, taking a type of risk. You, you, you don't have an expected return when you hold cash. You, you, in real terms, have a negative expected return.

    7. SBSteven Bartlett1:12:47

       Do you think we should all be thinking about retirement planning?

    8. BFBen Felix1:12:50

       I think it ties into the permanent thinking and designing the life that you want to live. But at some point, it, it, I mean-At some point we can't work anymore. It's rare for somebody to, to be able to work into their, you know, I don't know, 80s. I think that it's, it's sensible to plan for, for that. But beyond that, a lot of people don't want to have to work forever. People might choose to work forever, but they might choose to do lower paying work. Uh, but the idea that you will be forced to work forever I don't think is very attractive to anyone. So from that perspective, building financial independence by saving and planning for retirement, yeah, I think it's important for everyone, everyone to think about.

    9. SBSteven Bartlett1:13:25

       Is the, is the sort of social contract of retirement changing based on how the economy's changing? 'Cause I hear a lot of people saying you're not gonna be able to retire and get a pension because there's not enough money, or you're gonna have to work later than ever before.

    10. BFBen Felix1:13:38

        I think the onus has been put back on individuals. B- pensions used to be much more common, uh, from companies and, and governments. So, uh, retirement's changed from that perspective for sure, but I, I don't know if we can say we're in a crisis. I think people have

39. 1:13:53 – 1:15:25

    Do You Really Need A Retirement Plan?

    1. BFBen Felix1:13:53

       more personal responsibility now than they've had in the past, but they also have better tools than have his- historically been available. 30 years ago, we, we were just starting to get low cost index funds proliferating and being readily available to everybody. Prior to that, you were paying 2% or more to invest in a mutual fund.

    2. SBSteven Bartlett1:14:08

       Mm-hmm.

    3. BFBen Felix1:14:09

       So the tools people have available to them are, are better today than, than they've been in the past, but it's also, th- there's also a lot more responsibility people have to take for their own personal finances.

    4. SBSteven Bartlett1:14:19

       You, you were naming the things that people shouldn't invest in. The first is that call thing.

    5. BFBen Felix1:14:26

       Yeah, covered calls.

    6. SBSteven Bartlett1:14:27

       Covered calls. What else?

    7. BFBen Felix1:14:29

       Another one that I think is really problematic is thematic ETFs, and so that's like, uh, an AI ETF or, I don't know, a space or energy. Like any, any specific, uh, e- ETF that's targeting a specific theme.

    8. SBSteven Bartlett1:14:42

       Why?

    9. BFBen Felix1:14:43

       What tends to happen with thematic ETFs is that something becomes really hot. So maybe it's AI, maybe it's cannabis. Uh, electric vehicles was another one.

    10. SBSteven Bartlett1:14:51

        Sustainable energy.

    11. BFBen Felix1:14:52

        Yeah. That was another good one. Clean energy. And so what happens is asset prices in that theme go up because there's a lot of interest in it. Everybody wants to invest in that space. Asset prices go up, an index provider creates an index for that hot theme, and then an ETF gets launched, but it gets launched when the asset prices are up here.

    12. SBSteven Bartlett1:15:13

        Mm-hmm.

    13. BFBen Felix1:15:13

        And what tends to happen is the asset prices come down, and the returns on thematic funds tend to be very poor.

    14. SBSteven Bartlett1:15:20

        Ah, okay. Yeah, I think I was guilty of that in my early career-

    15. BFBen Felix1:15:23

        [laughs]

    16. SBSteven Bartlett1:15:23

        ... was like, "Oh my God, a sustainable energy

40. 1:15:25 – 1:17:04

    Investments You Should Avoid!

    1. SBSteven Bartlett1:15:25

       ETF. I believe in sustainable energy. I should invest in that."

    2. BFBen Felix1:15:27

       Yeah.

    3. SBSteven Bartlett1:15:28

       But you're right. They created that when it was hot.

    4. BFBen Felix1:15:31

       That's right.

    5. SBSteven Bartlett1:15:31

       So you should have invested, I guess you're saying just invest in the FTSE 100, the S&P 500 instead, or technology, which is a broader basket?

    6. BFBen Felix1:15:40

       Technology's tough. Technology has performed so incredibly well, uh, but it is still one sector.

    7. SBSteven Bartlett1:15:46

       Okay.

    8. BFBen Felix1:15:47

       I have trouble saying you should invest in tech. If you had invested in tech for the last 20 years, w- well done. Should you choose to invest only in tech or, or have a big concentration in tech today, I think that's a lot less obvious.

    9. SBSteven Bartlett1:15:59

       One would say, "Well, look at all this AI stuff. There's... How do I invest in all the AI stuff?"

    10. BFBen Felix1:16:03

        A lot of it's private right now, although a lot of the public companies do own chunks of, of some of these private companies. Uh, we'll see how that plays out. But, uh, that's another one [laughs] that's been tough recently, where a lot of investors are interested investing in, in, in investing in some of these private companies, a l- a lot of them AI related, but SpaceX is another one. And it's really hard for retail investors to get access to those types of things. But there are companies who are creating products that say that they can give you access to these, to these things. They're charging high fees. Uh, it's not obvious that they've been able to buy the underlying securities that they're saying they have access to at good prices. But it's just another example of financial companies preying on the, the desires and biases of investors. Financial firms are very good at seeing what investors want, even if that thing is not good for them, and then creating a product to fulfill that desire.

    11. SBSteven Bartlett1:16:57

        So if, if someone listening now is, f- let's say they're 50 years old, and they've got $20,000

41. 1:17:04 – 1:19:56

    Should You Invest In AI?

    1. SBSteven Bartlett1:17:04

       in savings in cash, and you had to be decisive. You don't know the nuance and the, the, the detail of their life. You don't know their PERMA framework necessarily, but your job was just to make them money in the next 10 years. What, how do you think you would allocate that? Let's say $10,000. That's easier. $10,000 in cash. How would you allocate it?

    2. BFBen Felix1:17:23

       That's a [laughs] ... I don't-

    3. SBSteven Bartlett1:17:24

       It's a tough question intentionally

    4. BFBen Felix1:17:25

       ... I don't know if it's answerable. E- especially over 10 years is tough.

    5. SBSteven Bartlett1:17:29

       What about 20 years?

    6. BFBen Felix1:17:30

       [laughs]

    7. SBSteven Bartlett1:17:31

       [laughs]

    8. BFBen Felix1:17:32

       If they have a long time horizon, so I, I can tell you personally, I, I like to invest in stocks. I, I have a, a globally diversified stock portfolio with a Canadian home country bias, kind of like what that, that paper, the controversial paper found. Uh, we were doing that prior to that paper coming out. Uh, but I think that general concept of a globally diversified portfolio, maybe with some home country bias, makes a lot of sense for most people, including for retirees. But there are so many, like, what's, what's his risk tolerance? If he's gonna panic when the market goes down and sell everything, then it wasn't a very good idea, and he's not gonna get the outcome, the, the good long-term outcome he may have otherwise gotten.

    9. SBSteven Bartlett1:18:11

       And would you go all in on stocks?

    10. BFBen Felix1:18:14

        All at once?

    11. SBSteven Bartlett1:18:15

        Yeah.

    12. BFBen Felix1:18:16

        Like dollar cost averaging versus lump sum?

    13. SBSteven Bartlett1:18:18

        Yeah, like how would you invest? Would you go 100% in stocks, or would you even diversify that?

    14. BFBen Felix1:18:22

        Yeah, that's what I'm saying. I'd, uh, I think 100% stocks is personally, uh, a, a portfolio that I'm very comfortable with. And I, I'm not, I'm not old enough to be thinking about retirement, but it's a portfolio that I don't expect to change throughout my personal life cycle.

    15. SBSteven Bartlett1:18:38

        Is that how you allocate your personal finances now? You, you, I know you have a home, but otherwise, the money you do invest is in the stock market.

    16. BFBen Felix1:18:45

        Yeah. So I've got my home. I have my stock market investments, and I do have a pretty significant chunk of equity in the company that I work for.

    17. SBSteven Bartlett1:18:52

        Mm-hmm. No crypto.

    18. BFBen Felix1:18:55

        No crypto.

    19. SBSteven Bartlett1:18:56

        No crypto. [laughs]

    20. BFBen Felix1:18:56

        I've never touched it.

    21. SBSteven Bartlett1:18:57

        Never touched it.

    22. BFBen Felix1:18:58

        That's not true. I, I, when I was researching, uh, uh, Ethereum and Bitcoin-I remember when that was. It was a few years ago. I bought $1,000 of each just so I could feel like I was-

    23. SBSteven Bartlett1:19:08

        Mm-hmm

    24. BFBen Felix1:19:09

        ... participating while I was learning about it.

    25. SBSteven Bartlett1:19:12

        What do you think of Bitcoin and Ethereum and other cryptocurrencies?

    26. BFBen Felix1:19:15

        Uh, I, I think that they, they solved a really interesting problem. The, the premise of digital cash is something that the cypherpunk community, the kind of libertarian community of, of, uh, privacy-focused computer nerds, uh, where they were trying to solve this problem for, for many, many years of digital cash. How do you create digital cash that doesn't require a trusted third party to mediate transactions? And they, they solved that. Satoshi Nakamoto solved that in, uh... and that, that was cool. And he used a bunch of different pieces. I can kind of see in the paper how he used Adam's ba- Adam Back's ideas that he had created to stop email spam, and it's just how it all came together. It's unbelievable. Fascinating story. The technology was really interesting.

42. 1:19:56 – 1:21:45

    Crypto: Opportunity Or Risk?

    1. BFBen Felix1:19:56

       I think it has become, uh, an ideological vehicle where people who believe that the world should be a certain way or believe that government's role in money should be a certain way, they can invest in Bitcoin and feel really good about it. I think it's, it's got that component to it, and then the other component that it has to it is that it's a speculative asset. People buy Bitcoin because they think it's gonna go up.

    2. SBSteven Bartlett1:20:23

       So it's not a good investment. Is that what you're saying?

    3. BFBen Felix1:20:25

       I, I, I personally wouldn't. We don't allocate, uh, to it for our clients at PWL. We manage quite a bit of money for quite a lot of people, and we've decided not to touch it, and I personally don't touch it, so.

    4. SBSteven Bartlett1:20:39

       I had a phone call, actually, from a friend of mine. She, she's very well known in the UK, and she was, um... 'cause there's lots of wars going on everywhere, and there's the Strait of Hormuz is closed, and there's Russia, Ukraine. There's all of this stuff going on. She was, she was asking me for financial advice on what she should do in such a moment. I don't know why she's calling me. [laughs] I just thought I'll ask you when you come here. But it, but it's interesting 'cause my, my team found this article from 1847, which was in a magazine, and it almost sounds like today. The article says this: "Things are bad all over. It is a gloomy moment in history. Not in the lifetime of any man who reads this paper has there ever been so much grave and deep apprehension. Never has the future seemed so dark and incalculable. In France, the political c- cauldron seethes and bubbles with uncertainty. England and the English empire is being sorely tried and exhausted in a social and economic struggle. The United States is behest with racial, industrial, and commercial chaos drifting we know not where. Russia hangs like a storm cloud on the horizon of Europe,

43. 1:21:45 – 1:24:36

    How War Changes Investing

    1. SBSteven Bartlett1:21:45

       dark and silent. It is a solemn moment, and no man can feel indifference. Of our own troubles, no man can see the end." An apt description of things. Very apt. And that was on October the 10th, 1847 in a magazine. And it very much sounds like today.

    2. BFBen Felix1:22:01

       It could be today, yeah.

    3. SBSteven Bartlett1:22:04

       So as we zoom out on the cycles, the big sort of economic cycles, the geopolitical cycles, my friend that called me and said, "Listen, there's lots of stuff going on in the world. Should I be thinking about my money differently, my investing strategy? What the hell is going on?" What would you say to those people?

    4. BFBen Felix1:22:17

       Yeah. Well, as, as the clip that you read suggests or, or, or tells us, the world has been through a lot of crazy stuff, a lot of crazy times, a lot of wars, a lot of turmoil, a lot of polit- political upheavals, and we've come out okay in general. It's-- there, there's been pain and suffering and, and not everybody's had good outcomes, but generally speaking, here we are. And if we think about that, that from the perspective of financial markets, stock returns have been positive despite all the craziness going on in the world. There's, there's lots of interesting charts that overlay news headlines about all the madness going on in the world on top of the stock chart that's just going up. Doesn't mean the stocks are always going to be up. They will go down when, when things get crazy, like when, when this war started. Stock returns did get a little bit negative for a while. They've since come back. But there will be volatility in financial markets, volatility up and down day to day. But in the long run, stock returns, they, they should continue to be expected to be positive. So for your friend, I, I don't know how their assets are set up, um, but someone who's globally diversified, exposed to the stock market, they don't have to make changes to their portfolios when the world's getting crazy.

    5. SBSteven Bartlett1:23:31

       I remember what she said to me. She said that she was gonna remortgage her house because I think she'd paid it down, and she was wondering what to do with that money. She was saying, "Do I just go buy another house, or do I invest it in the stock market?" Now, my, my bias is the stock market, but I don't know what-- what would you say to someone in that situation?

    6. BFBen Felix1:23:50

       I'd wanna know why she's mortgaging her house, but given there's a good reason for that, I would, I would probably go in the stock market, not into real estate.

    7. SBSteven Bartlett1:23:58

       Do you think people shouldn't remortgage their houses?

    8. BFBen Felix1:24:01

       This is a tough question. L- leverage, kinda like how exposure to the stock market is good, borrowing money to invest in positive expected return assets like, like the stock market, is actually kind of a good thing on paper. Borrowing money generally improves long-term expected outcomes. But it's stressful. You ca- you can have bad outcomes where you lose all of your money. So should people borrow money to invest? Should people mortgage their house to invest? That's a, that's a very personal question. It's kinda like the stock/bond question. Should you invest in stocks or bonds? Should you invest in stocks with leverage

44. 1:24:36 – 1:25:52

    Remortgage Or Invest: Which Move Builds More Wealth?

    1. BFBen Felix1:24:36

       or not? It really depends on your goals and your situation. Uh, but generally speaking, if we just look at what, what, what do the data say about borrowing money to invest, it's not, it's not a terrible idea.

    2. SBSteven Bartlett1:24:46

       One of the things we haven't talked about is AI. And does AI change any of this equation? A lot of people are worried at the moment about losing their jobs. Anthropic released a report, who are one of the big AI companies, saying that entry-level people in particular are gonna have a hard time. And I think they said they're already seeing 13% of entry-level jobs being disrupted because of these new AI and AI agents.

    3. BFBen Felix1:25:09

       Since I'm, to be clear, not a labor economist, um, it's not my area of expertise. I do think, though, that when we look back through history, I like looking at, at history, there have been lots of technological revolutions that have been major, major upheavals to the entire economy. Yes. So ATMs, A- ATMs are one of those fascinating examples. People thought that ATMs were going to wipe out bank tellers because ATMs could do everything that bank tellers do, but it was automated, and you didn't have to pay a person to do it. So there was a lot of concern, and one e- what ended up happening was very counterintuitive, is that the cost of operating a bank branch

45. 1:25:52 – 1:40:48

    Will AI Replace Your Job?

    1. BFBen Felix1:25:52

       decreased because you needed fewer people to do all the bank teller stuff 'cause you had the ATMs, and banks opened more branches because it cost less, and their customers liked that, and the end result was that there were actually more bank teller jobs at the end of the day. So the cost of providing the service decreased, which caused it to proliferate more, provide that service to more people, and it expanded the market instead of shrinking it.

    2. SBSteven Bartlett1:26:21

       Similar story with, uh, Jevons paradox and, um-

    3. BFBen Felix1:26:23

       It's the same concept

    4. SBSteven Bartlett1:26:25

       ... what's that story? Where coal became cheaper at a time when they used coal to ship freight on trains, and the coal engine got more efficient with coal. C- coal industry panics, "We're screwed." But then what it meant is people used trains not just sh- for shipping freight, but also for other things like travel, and people started traveling on trains because it got cheaper, so the coal industry actually boomed in the end.

    5. BFBen Felix1:26:48

       That's it.

    6. SBSteven Bartlett1:26:49

       I have thought a lot about this Jevons paradox idea, and I think it's, I think it's gonna be true for artificial intelligence for sure, i.e., there will be lots of other jobs created. And actually, companies like mine, if we save money, we invest it in something else, which then would, would probably create jobs, whatever that is. The part that I sometimes struggle with is the speed of adoption in AI and then also when you factor in robotics. Like, my car in, in LA drives itself, and I think one of the biggest employers on Earth is driving in all its forms. But then if you look at warehousing and supply chains, a lot of those are run by people all over the world. And there was a video that I played the other day, we can throw it up on the screen, which shows that in factories in certain parts of the world now, they're having their labor force wear cameras on their head showing what they're doing with their hands-

    7. BFBen Felix1:27:34

       Mm

    8. SBSteven Bartlett1:27:34

       ... because the robots are ultimately gonna repl- replace that labor force. And I just, I, I haven't, I guess this is maybe something that happens in history. I haven't been able to think about where those people go and what they then can go on to do-

    9. BFBen Felix1:27:48

       Yeah

    10. SBSteven Bartlett1:27:48

        ... especially if it happens in short order.

    11. BFBen Felix1:27:50

        Yeah, so I, I've heard you, I've heard you ponder this-

    12. SBSteven Bartlett1:27:52

        Yeah

    13. BFBen Felix1:27:52

        ... in your other episodes, and I, I, I agree that the speed of this is likely to be different. As you've said, it's, we're, we're talking about the internet, so you can deploy these things at the snap of a finger, and that is different. But where do those people go? This is one of the interesting things. I don't know. We, we don't know.

    14. SBSteven Bartlett1:28:08

        And through history we didn't know.

    15. BFBen Felix1:28:10

        Exactly. Through history it's been the same sentiment where people worry about where are these people going to go. And they might be unemployed for a while, and there might be hard times, but things have worked out. And so two ways to think about it. One, one way is as a, as an individual, what should you be doing? We talked about earlier, uh, having complementary skills that make you very unique I think is important. Personally, content, as you mentioned, has been a big part of that for, for me. Not everybody can necessarily do that, but finding those things that you can do when combined better than anybody else in the world I think is very valuable. And then the other perspective is as an investor, how should we think about this? And there I would come back to again, we have seen many technological revolutions that have changed the world. They've changed financial markets. They've changed our culture. They've changed the way we interact with each other. The world has changed so many times due to technology, and the same cycle has repeated itself. Uh, there, there has been unemployment. There has been social unrest. There has been wealth inequality, but this [laughs] happens every time.

    16. SBSteven Bartlett1:29:12

        Are you expecting the stock market to collapse because there's been a huge overinvestment in artificial intelligence, and at some point the investors that put their money into these sort of speculative AI startups that raised tremendous amounts of capital at crazy valuations, at some point through history, doesn't the market always contract at some point?

    17. BFBen Felix1:29:31

        There's a great book by an economist named Carlota Perez. Uh, the book is Technological Revolutions and Financial Capital, and she documents this exact cycle throughout history, and yes, that's part of it. Part of it is asset prices getting really high and then coming back down. Now, am I worried about a catastrophic market collapse? I think that's always a concern. I think that's part of the risk of investing in stocks. We never know when it's going to happen or what the trigger is going to be, so it's not something that you can do anything about. You need to have an asset allocation that you can stick with even if that outcome is going to materialize.

    18. SBSteven Bartlett1:30:06

        And in that book is, does it suggest that the writing is on the wall for the current economy and the way that we're heavily investing in AI and data centers? And, you know, a couple of years ago everyone was investing in crypto and Web3 and NFTs and all this stuff, and all of the money seems to have been sucked out of that industry. Really, honestly, sucked out of almost every industry and into AI. Um, and you-

    19. BFBen Felix1:30:30

        Oh, I remember when DeFi was gonna kill-

    20. SBSteven Bartlett1:30:32

        Yeah

    21. BFBen Felix1:30:32

        ... banking and finance. [laughs]

    22. SBSteven Bartlett1:30:34

        Yeah. [laughs] And that was only a couple of years ago. In fact, a lot of the developers have moved from my industry-

    23. BFBen Felix1:30:38

        Yeah. [laughs]

    24. SBSteven Bartlett1:30:38

        ... into the AI industry. But I, but I think, I, I do think about this a lot, and I've got a few startup friends who are getting a little bit nervous and are raising a lot of money now because they think that in the next couple of years, maybe in the next 24 months, there's gonna be a big market contraction when investors who invested in some startup idea that had $100 million valuation realize that they're losing their money, and some d- domino usually falls in the market. Some catalyst moment means that there's a contraction. Stock markets go down. It be- get- gets really hard to raise money.

    25. BFBen Felix1:31:06

        Yep.

    26. SBSteven Bartlett1:31:07

        Clients who you might be relying on now to pay your advertising budget start to lower their budgets.And in such a scenario, you're gonna wanna w- wish you'd prepared a little bit. Some people are

    27. BFBen Felix1:31:17

        This is part of the cycle. The, the cost of capital for bubble companies, we'll call them, I don't love the term bubble, but for companies who are in the industry that becomes the focus of a technological revolution, so now we're talking about AI, the cost of capital gets really low, which means asset prices get really high, and a lot of people want to invest in that space. But those asset prices are not typically sustainable, and they do tend to come down. Does that mean a total market collapse or catastrophe or, or, or, or panic for diversified investors? No.

    28. SBSteven Bartlett1:31:47

        Oh, is the writing on the wall?

    29. BFBen Felix1:31:49

        I don't think we can say that. If the writing were on the wall, the, the way that I view financial markets is that if the writing were on the wall, m- prices would reflect that today.

    30. SBSteven Bartlett1:31:57

        Okay.

Episode duration: 1:40:48